(Bloomberg) -- Vale SA has been willing to do a lot to improve governance and close a valuation gap with rivals, including restructuring its ownership and board. There’s one thing it’s not willing to do yet: disclose executive pay.
For months, Vale has been celebrating its transition from a quasi-state-controlled miner to an autonomous global player and member of Brazil’s corporate elite. But its adoption of global transparency standards doesn’t extend to giving a breakdown of remuneration, with the board invoking a 2010 court ruling meant to protect top executives from kidnappings.
Not all directors were in agreement with that late-February decision, according to minutes of a meeting released this month. Both of Vale’s new independent directors, Sandra Guerra and Isabella Saboya, unsuccessfully pushed for compensation to be divulged.
Vale isn’t alone in withholding specific pay details for bosses in a country with much higher rates of crime and inequality than the U.K. or the U.S. But it is in the minority.
Among the 140 members of the stricter segment of the exchange, known as Novo Mercado, just 22 keep pay specifics secret on the grounds that they expose executives to security risks. Even Petroleo Brasileiro SA, the state-run oil producer that was the center of a giant corruption scandal, releases compensation details.
The local securities regulator, CVM, requires companies release the minimum, average and maximum paid to top executives. Novo Mercado demands the same level of disclosure, but only if a company became a member this year. Vale joined late last year.
“Any company that’s not publishing the information is not being transparent and isn’t aligned to best practices of corporate governance,” Mauro Cunha, president of the Sao Paulo-based Association of Capital Markets Investors, said by telephone.
Renato Chaves, a Brazilian corporate-governance expert, pointed to a 2015 study that debunks any connection between security threats and pay disclosure. The report also contends that those who don’t comply tend to be less profitable.
Vale said in an emailed response that it and other publicly traded companies will evaluate this year the possibility of developing a new pay disclosure policy. The company reiterated that a large portion of compensation for executives is derived from their ability to generate value. The shares have handed holders a 50 percent return in the past year, more than triple the average among peers.
Like many of Brazil’s biggest companies, Vale currently reports the aggregate compensation it pays to its six senior managers including CEO Fabio Schvartsman. Regulatory filings show the company paid about $28.8 million to top executives in 2017 and plans to increase that to $31 million this year.
That may put Vale ahead of its peers. In 2017, rival BHP Billiton Ltd.’s six top-paid executives got a combined $25.9 million, while counterparts at Rio Tinto Group got about $21 million, filings show. Vale had $34 billion in revenue last year, while BHP and Rio generated $38.3 billion and $40 billion, respectively.
Providing individual compensation breakdowns for senior managers is legally mandated in countries such as the U.S., U.K. and Canada.
The CVM hasn’t given up on its push to force the disclosure of at least the minimum, average and top compensation, according to Cunha, who said the agency appealed the 2010 lower-court decision. After three years, the presiding judge still hasn’t issued a decision, he said.
“It’s definitely not the gold standard,” Vaquero Global Investment CEO Wilbur Matthews said, referring to Vale’s decision to withhold compensation details. While he owns Vale securities and likes the company’s fundamentals, he said pay transparency matters.
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