Shareholders voted against the 2011 compensation package, which meant executives received no pay until a deal was reached letting investors request the numbers without having them published. After a new CEO took over in 2012, PDG again withheld the information, a step that Guerra said contributed to the stock’s 44 percent plunge that year.
In another turnaround, the company is providing full disclosure in 2014, he said. Rio de Janeiro-based PDG declined to comment.
Companies that don’t heed CVM’s rules tend to be less profitable, according to a 2013 report by academics led by Alexandre Di Miceli da Silveira, a University of Sao Paulo professor of corporate governance. Stock prices at non-compliant companies dropped the day they announced they wouldn’t give full details, the report found.
‘Don’t Issue Shares’
Embraer rose 0.3 percent this year through yesterday, while Vale declined 8 percent. Itau’s 11 percent gain topped the 0.2 percent advance for Brazil’s benchmark Ibovespa index.
Corporations have a responsibility to report salaries because stockholders need to know the incentive structure of those using their money, said Mauro Cunha, president of the Sao Paulo-based Association of Capital Markets Investors.
“You need relatively detailed information that includes a notion of the magnitude of what a bonus might be, what stock options might be,” Cunha said. “If a company doesn’t want to divulge that information, that’s fine, just don’t issue shares.”