COMPOSITION OF THE BOARDS OF DIRECTORS OF PUBLICLY QUOTED COMPANIES IN BRAZIL Luciano Carvalho Ventura LCV Consultoria em Governança Corporativa e Representação de Acionistas SURVEY RESULTS Sponsors December 2000

2 CONTENTS A.Introduction B.Board of Directors……… Number of Board Members Duration of Mandate Does the Board have a Vice-Chairman? Is the Board Chairman the CEO?……… …………… Is the CEO a Board Member? ………………… Is the Investor Relations Officer a Board Member? ….…………… Percentage participation of Executive Management in the Board …10 8.Other Results… … C.Attachment - Executive Management ………………  Number of Officers  Duration of Mandate  What percentage of Officers is on the Board?….…………  Chief Conclusions…

3 A.INTRODUCTION  Objective Composition of the Board of Directors of Publicly Quoted Companies in Brazil Some aspects of the relationship between the Board of Directors and Executive Management Universe 585 Active publicly traded companies / Market: Stock Exchange  Sample 438 companies. – 75% of the Universe.  Methodology IAN/99 data available at the CVM in chapter 02. Management

4 B.BOARD OF DIRECTORS 1.Number of Directors Brazilian Corporation Law.  Minimum of three board members Code of the Best Corporate Government Practices of the Brazilian Corporate Governance Institute - IBGC  Five to nine board members Survey Results Cos. Number of Directors

5 B.BOARD OF DIRECTORS 2.Diration of Mandate Brazilian Corporation Law.  One to three years. IBGC Code  Duration should be short, from one to three years. Survey Result Cos.

6 B.BOARD OF DIRECTORS 3.Does the Board have a Vice-Chairman? Brazilian Corporation Law.  The method for replacing the Chairman must be established in the company’s by-laws. IBGC Code  Does not cover this matter. Survey Results Cos.

7 B.BOARD OF DIRECTORS 4.Is the Board Chairman the CEO? Brazilian Corporation Law.  This is permitted. IBGC Code  Recommends separation of these two positions. Survey Results Cos.

8 B.BOARD OF DIRECTORS 5.Is the CEO a Board Member? Brazilian Corporation Law.  This is permitted. IBGC Code  Does not cover this matter. Survey Results Cos. 72% As BDM As Chairman

9 B.BOARD OF DIRECTORS 6.Is the Investor Relations Officer a Board Member? Brazilian Corporation Law.  This is permitted. IBGC Code  Does not cover this matter.. Survey Results Cos.

10 B.BOARD OF DIRECTORS 7.Percentage participation of Executive Management in the Board. Brazilian Corporation Law.  Up to one-third of total board members. IBGC Code  The majority the Board should consist of Independent Members. Survey Results Cos. Percentage participation of Executive Management in the Board

11 B.BOARD OF DIRECTORS TypeOccurrenceSample % 1) Proxy19 companies4% 2) Non-standard mandate58 companies13% 3) IR on the Board (CB/CEO) with 19 (4%) as CB 29 companies7% 8.Other results 9.NB: a)CB subordinate to the CEO as an Officer b)CB as Vice-President of the Executive Management Board and CEO as Vice-Chairman of the Board of Directors.

12 C.ATTACHMENT 1.Number of Officers. Brazilian Corporation Law.  Minimum of two Officers. Survey Results EXECUTIVE MANAGEMENT Cos. Number of Officers 0% represents one or two occurrences in the total survey.

13 C.ATTACHMENT 2.Duration of Mandate. Brazilian Corporation Law.  One to three years. Survey Results EXECUTIVE MANAGEMENT Cos.

14 C.ATTACHMENT 3.What percentage of Executive Management is on the Board? Brazilian Corporation Law.  No limit. Survey Results EXECUTIVE MANAGEMENT Cos. Percentage of Executive Management on the Board

15 D.CHIEF CONCLUSIONS 1.Boards of Directors are small. Almost 30% consist of the legal minimum (three members) and only 50% apply the IBGC Code. 2.Over extended mandate duration, leading to problems with replacements. 3.The Vice-Chairmen of over 50% of Boards are not elected by the shareholders. 4.Over 40% of Board Chairmen are CEO’s. 5.Over 70% of CEO’s are Board Members.. 6.In only 16%of companies is the IR officer position at Board level. 7.Only 23% of Boards are entirely independent of Executive Management. GENERAL CONCLUSIONS In the context of their composition and their relationship with Executive Management, the Boards of Directors of Publicly Quoted Companies in Brazil are in need of substantial change, and the IBGC has a vital role to play in this process.