The succession process at mining company Vale was affected by manipulation, conflicts of interest and personal agendas of its participants, stated José Luciano Duarte Penido in his letter of resignation from the company’s board of directors. According to him, there is “harmful political influence” in the debate.
Of the 13 councilors, Penido and Paulo Hartung voted against the solution for Eduardo Bartolomeo’s succession as president of the company, in a process that took on political contours after pressure from President Luiz Inácio Lula da Silva (PT) to replace former minister Guido Mantega .
“The council formed a majority cemented by the specific interests of some shareholders represented there, some with very personal agendas and others with obvious conflicts of interest”, says Penido’s letter, obtained by Sheet.
He did not mention names, but the proposal to replace Bartolomeo had the support of Previ, the pension fund for Banco do Brasil employees. On another front, Cosan tried to replace its former president Luiz Henrique Guimarães.
Penido complained about “frequent, detailed and biased leaks to the press, in clear lack of commitment to confidentiality”.
“I no longer believe in the honesty of purposes of the company’s relevant shareholders in the objective of raising Vale’s corporate governance to the international standard of a corporation [empresa com controle disperso]”, he wrote.
In a statement, the company stated that “the board of directors will continue to carry out the actions foreseen in Vale’s governance processes and execute its mission diligently.”
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In addition to Previ and Cosan, Vale’s relevant shareholders are Bradesco and the Japanese Mitsui, which also have seats on the board.
Large global investment funds such as Capital Group and BlackRock also have relevant stakes, but without representatives on the board.
Penido had been on Vale’s board since 2019. He was re-elected in 2023, with a mandate until 2025. His resignation was published first by Reuters.
By making the decision, he gives up a salary of R$1.4 million per year, which is how much Vale proposes to pay each advisor in 2024.
“Despite respecting collegial decisions, in my opinion the current succession process for Vale’s CEO has been conducted in a manipulated manner, does not serve the company’s best interests and suffers from clear and harmful political influence”, stated the now former advisor.
“In this context, my role as an independent advisor becomes completely ineffective, unpleasant and frustrating”, he concluded.
The statements had a bad impact on the company’s other directors, who negotiated a solution to overcome the division of the board of directors over Bartolomeo’s succession.
At the first meeting on the topic, in February, six members voted in favor of reappointing the president, six voted in favor of opening a succession process and one abstained.
On Friday (8), the alternative solution, which keeps Bartolomeo in office until the end of this year, was approved by 11 votes to 2.
The meeting lasted around 13 hours until the final result was reached, highlighted a counselor heard by the Sheet. Thus, the attack on the process made by Penido was received with surprise, especially when dealing with an executive with extensive experience on boards of directors.
Vale’s bylaws provide that, in the event of a vacancy in one of its members, the board itself can choose a replacement until the next shareholders’ meeting, which is scheduled for the end of April, elects a definitive name.
As Penido was one of the seven independent directors required by the company’s bylaws, his replacement must have the same profile, with no connection to relevant shareholders of the mining company.
In a note about Penido’s letter, the company stated that “Vale’s board of directors clarifies, with regard to the process of defining the company’s president, that his actions are strictly in accordance with Vale’s bylaws, the internal regulations of the body and corporate policies”.
The dispute for command of Vale involves one of the highest paid executive positions in the country. According to a survey carried out by corporate governance specialist Renato Chaves based on figures submitted to the stock exchange, Bartolomeo received R$59.9 million in 2022.
It was the highest salary among the 31 Brazilian companies with revenues exceeding R$30 billion that year, surpassing the R$59.2 million paid by Itaú to its president.
Read the full letter:
Dear President
I forward to you my resignation from the mandate of independent member of the Board of Directors of VALE SA, for which I was elected at the VALE General Shareholders’ Meeting, with a mandate from May/2023 to April/2025.
Despite respecting collegiate decisions, in my opinion the current succession process for Vale’s CEO has been conducted in a manipulated manner, does not serve the company’s best interests, and suffers evident and harmful political influence.
A majority was formed on the board based on the specific interests of some shareholders represented there, some with very personal agendas and others with obvious conflicts of interest. The process has been operated by frequent, detailed and biased leaks to the press, in a clear commitment to confidentiality.
I no longer believe in the honesty of the company’s relevant shareholders’ intentions in raising Vale’s corporate governance to the international standard of a Corporation.
In this context, my role as an Independent Advisor becomes completely ineffective, unpleasant and frustrating.
For this reason I present my resignation.
Read the full note from Vale:
In light of the press reports that reproduce the content of the resignation letter signed by Mr. José Luciano Duarte Penido, Vale’s Board of Directors clarifies, with regard to the process of defining the Company’s President, that its performance is strictly in accordance with Vale’s Bylaws, the body’s Internal Regulations and corporate policies.
The Board of Directors will continue to carry out the actions foreseen in Vale’s governance processes and execute its mission diligently.
Vale will keep the market updated on the topic as necessary.
With Marta Nogueira, from Reuters