Vale’s board member steps down, denouncing political interference

The drama surrounding the succession process for the chief executive position at Vale, one of the world’s biggest mining companies, got a new chapter after one of its board members gave up his seat — firing at all sides.

José Luciano Duarte Penido, an independent board member since 2019, said in a letter to current board chairman Daniel Stieler that the succession process for Vale’s CEO position has been “manipulated,” ensnared by “harmful” political influence, and does not serve the company’s interests.

Over the weekend, Vale extended CEO Eduardo Bartolomeo’s term until the end of the year. He is supposed to support a leadership transition process planned for early 2025. Mr. Bartolomeo’s term was set to expire this May, and he expected a renovation for another three years. President Luiz Inácio Lula da Silva’s interference in the process, however, got in the way.

In late January, President Lula asked his Mines and Energy Minister, Alexandre Silveira, to call some of the company’s largest shareholders and suggest they appoint Guido Mantega, Brazil’s Finance Minister between 2006 and 2015, as the new CEO. 

The market has not welcomed the move, which the company’s shareholders read as authoritarian — executives who received calls from Mr. Silveira took them as threats. After the conflict became public, with Vale postponing a board meeting to discuss the CEO’s role, the government apparently backed down.

However, Mr. Pinedo said in the letter that most shareholders have acted on their own specific interests and that the succession process has been marked by frequent and biased leaks to the press “in clear disregard for confidentiality.” In this context, he added, his role as an independent advisor became “completely ineffective, unpleasant, and frustrating.”

The government’s chance of direct influence in Vale is minimal, but not nonexistent. The company was privatized in the 1990s, and the government of former President Jair Bolsonaro reduced the participation of state companies and funds in Vale’s shareholding composition. 

The percentage of shares under the influence of the federal government fell from 26.5 percent in 2019 to 8.7 percent at the end of 2022 — this stake belongs to Previ, the pension fund for employees of state-owned bank Caixa Econômica Federal. In total, Vale’s current board has 13 members, eight of whom are independent. 

This high level of governance, however, doesn’t seem enough to shield Vale from political influence.

Representatives of shareholders such as the Japanese Mitsui and the investment funds BlackRock and Capital, who in a first meeting had voted for Mr. Bartolomeo to remain as the head of the company for longer, voted for his replacement this time. In addition to Mr. Penido, only one other independent advisor, Paulo Hartung, was against the departure of the current CEO at the end of this year.

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