Skip to main content Accessibility help
×
Hostname: page-component-7479d7b7d-t6hkb Total loading time: 0 Render date: 2024-07-13T23:19:32.774Z Has data issue: false hasContentIssue false

6 - Directors, Corporate Governance, and Executive Compensation in Brazil, c. 1909

Published online by Cambridge University Press:  30 January 2010

Aldo Musacchio
Affiliation:
Harvard Business School
Get access

Summary

Shareholder abuse today is commonly associated with excessively large executive compensation packages or outright fraud. Directors extract value, for example, through compensation packages that pay large fixed salaries and provide significant additional payments or fees if a company meets or exceeds performance goals. But many of these concerns are related to the secrecy of executive compensation. Both in Brazil and in other places such as the United States, shareholders in large corporations have no clear idea of how much the CEO makes after stock options and other fees and benefits are taken into account.

During the period under study in this book, Brazilian companies exhibited a very different approach to executive compensation. The statutes of all corporations had to be published in newspapers with wide circulation (in the state where the company was going to operate) and these statutes included valuable information for shareholders, including the fixed salary of all of the directors and the percentage of profits that they would receive as performance-based compensation.

The company statutes of Brazilian corporations typically included three provisions to keep directors' incentives aligned with those of shareholders. First, most company bylaws required that directors be shareholders. On average, corporations required that directors own at least 1.2% (standard deviation 2.5%) of total paid-up capital and keep their shares on deposit with the company throughout their tenure, a provision referred to as directors' “qualifications” in company statutes. Second, corporate statutes typically required that directors' annual or monthly fixed salaries be disclosed. Third, shareholders often used additional performance-based compensation to align directors' interests with their own.

Type
Chapter
Information
Experiments in Financial Democracy
Corporate Governance and Financial Development in Brazil, 1882–1950
, pp. 135 - 154
Publisher: Cambridge University Press
Print publication year: 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×