Assaí’s shareholders rejected the proposed compensation for directors and directors for this year, as well as the ratification of last year’s compensation.
What bothered investors: the significant increase that was proposed in the remuneration for 2022, and this year, and the low component of shares in the remuneration of the board of directors.
The proposal for this year was a remuneration of R$ 101 million, of which R$ 75.8 million would go to the management and R$25.2 million for the board.
For last year, Assaí had proposed to increase by almost 40% the remuneration that had been initially proposed, to R$ 98 million. Of this total, R$60 million would go to the board of directors and R$38 million to the board.
This year’s compensation was rejected by 63% of the shareholder base present at the meeting, while last year’s was rejected by 60%. For approval, more than 50% of the base needed to vote in favour. At the meeting, shareholders representing almost 1 billion shares, out of a total of 1.3 billion, voted.
The assembly also approved by a large majority the new board proposed by the company.
A manager who once had a position at the company, but recently zeroed it out, said that Casino has historically always had an aggressive compensation policy for executives and the board. This time, however, investors expected a change because Belmiro has always been critical of compensation when it applied to other executives and directors.
Casino, which is still the company’s largest shareholder with 12% of the capital, voted in favor of the proposal.
Another manager, who has a position and voted against, said that the factor that most bothered shareholders in the 2022 proposal was the 40% increase in relation to the initial proposal. “In the current context of the market, with more difficult results, many people hit this point,” he said.
Another point that the market did not like is the fact that a large part of the directors’ remuneration is in cash, with only R$ 7 million in shares, which does not generate alignment with the shareholders at a time when the company has opened many stores and need to show the results.
Assaí’s argument for the increase in remuneration for 2022 was that the company opened more stores than it had promised and delivered a margin above the guidance also.
“They said they delivered the largest square meter expansion in Brazilian retail, which is true. But you can’t earn that much more by opening more stores. Stores take time to ‘ramp’ and for you to know if it was really a good investment,” said the manager.
Regarding the remuneration for 2023, two points bothered the market: the increase in the remuneration of the board on top of an already high package (the remuneration increased from R$ 60 million to R$ 75 million), and the fact that the remuneration of the board fallen a little.
“The remuneration of Assaí’s board has always been seen as very high. The market expected a greater reduction for this year.”
According to this manager, Belmiro’s remuneration is one of the highest in Brazilian retail. “Obviously he is a very important president for a company that is now a corporation. Many people even compare it to Renner at the time of Galló. But the increases were scary.”
Assaí’s shareholder base is extremely dispersed, with large international managers such as Blackrock, Vanguard and Norges Bank. Many of them ended up voting by following the proxy votingwho recommended rejecting the proposal.
With the rejection of the two proposals, Assaí will have to propose new remuneration values, which will be voted on in a new meeting on a date yet to be defined.
Peter Arbex