The composition of management compensation is aligned with the Company’s short, medium and long-term interests. The fixed remuneration reflects the market median and the variable portion is related to the results obtained in the short term (periods of 12 months) and in the long term (periods longer than one year), which is intended only for the statutory board. Each plan has payment criteria, as follows:
The fixed portion of our executives’ compensation is defined and adjusted based on the professional’s merit in the performance of their duties, based on performance evaluation for the period. It can also be aligned in relation to the market, in case there is a mismatch identified by the surveys carried out annually. These changes must be proposed by the People, Governance and Nominations Committee and approved by the Board of Directors.
The performance evaluation considers the Financial Results, Ebit and Free Cash Flow, individual goals, specific projects and the area.
Incentives of Short Term (ICP)
The variable portion of the remuneration is fully linked to the achievement of the goals defined for the year. They vary according to the degree of achievement or surpassing of goals and affect all executives in the organization.
Our key performance indicators are linked to our financial results. The company also establishes specific projects and goals for each business area and a set of individual goals for each manager, in the concept of a goal contract. In line with our ESG strategy, targets linked to variable compensation are also linked to environmental, social and governance levels, which vary by area. These targets represent 10% of variable compensation.
Long Term Incentives (ILP)
Long-Term Incentive Plans (ILP) contribute to these goals by aligning interests between Dexco’s directors and shareholders. The ILP can represent 25% of the total remuneration.
The plans include the Performance Shares and Matching incentives. They guarantee to our directors the right to subscribe for common shares of Dexco, within the limit of the authorized capital. However, shares will only be granted in relation to years in which sufficient profits have been recorded to allow the distribution of the mandatory dividend to shareholders.
Our executives (CEO, VPs and statutory directors) receive shares issued by Dexco in case of meeting the performance target. The release of this compensation is based on Dexco’s strategic planning goals for a five-year period.
The Performance target is defined annually by our People, Governance and Nomination Committee and approved by the Board of Directors. For the transfer of shares, the grace period of five years and the participant’s permanence in Dexco must be observed.
The number of shares will have as a price reference the average of the last 30 trading sessions. In the event of dismissal without just cause, or non-renewal to the position, after the 37th month, the participant will receive, at the end of the five-year period, shares in proportion to the period worked. But if the participant voluntarily leaves Dexco, he will lose the right to the shares, regardless of the period elapsed.
We invite the beneficiary to purchase shares of the Company, investing a percentage of the net received from its Short-Term Incentive. The Matching of shares will be carried out as follows:
- Upon completing four years of investment, Dexco transfers 50% of the shares to the beneficiary, who will only be able to trade the transferred shares;
- the entirety of 100% of the Matching contribution takes place with the maintenance of the investment for five years. After this period, 50% of the remaining shares are transferred to the beneficiary. But if he sells the shares before completing this grace period, the beneficiary loses the right to Matching;
- the transfer is also conditioned on the beneficiary’s permanence at Dexco. If he is dismissed from the company without just cause or is not reappointed to the position, as of the 13th month of the concession, he will be entitled to pro rata temporis Matching, which will be paid off at the end of five years. The Matching Plan will only apply to non-employed directors (statutory directors).
Granting of ILP of the last programs versus Capital Dilution
|Current Plan||Amount Granted per year||2018||2019||2020||2021|
|Perf Shares + Matching||815,947||0.12%|
|Perf Shares + Matching||560,000||0.08%|