BB CEO can earn up to R$4 million per year

The General Shareholders’ Meeting of Bank of Brazil will decide this Friday (26) on the proposal for a salary increase for the bank president, Tarciana Medeiros, and other members of the board. If approved, the CEO’s fixed monthly remuneration will increase from R$74,972 per month to up to R$117,470. That would represent an increase of up to 56.7%, according to meeting documents. If approved, the increase will still have to be formalized, which should only occur next week.

Therefore, adding the remunerations for participation in boards – including those of Brasilprev, Fundação BB and BB itself – and the bonuses paid by the bank, Medeiros’ annual remuneration could be close to R$4 million. According to BB, “the proposal from the Board of Directors is subject to consideration by the Secretariat for Coordination and Governance of State Companies (Sest) and for deliberation by the General Shareholders’ Meeting (AGO).”

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Is it a lot or is it little? Despite being robust and several orders of magnitude higher than the Brazilian average salary, the amount is far below Tarciana’s peers in the private sector.

A Forbes consulted the survey carried out by the corporate governance specialist Renato Keyswith data provided by companies listed on the stock exchange in the reference forms deposited in the Securities and Exchange Commission (CVM). The most recent information is from 2022 and numbers for 2023 are not yet available.

Banks do not disclose individual information. However, regulation requires the disclosure of the highest, lowest and average remuneration. Chaves’ study is based on the premise that the highest remuneration in the boardroom is always that of the CEO. “In more than 25 years of experience in public companies, I have never seen a director earn more than the CEO. Therefore, I assumed in the study that the highest remuneration on the board is always that of the main executive.”

According to Chaves’ survey, in 2022 the highest remuneration of a CEO of a publicly traded Brazilian bank was that of Milton Maluhy, from Itaú Unibanco. His remuneration, including salaries and bonuses, was R$59.188 million. The BB president’s remuneration is just 6.7% of this amount. In other words, the salary of Itaú’s CEO is almost 15 times higher than Tarciana’s.

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But why is there this discrepancy? Forbes spoke with Guilherme Filgueiras, business manager at Randstad Brasil, and Humberto Wahraftig, partner at Page Executive, to explain how executive remuneration works in banks, which have a fixed portion and a variable portion.

A remuneration fixed considers the experience and responsibilities of the position, which are independent of the executive’s performance. Meanwhile, the remuneration variable is subject to a number of issues, including the individual performance of the CEO and the bank, financial and non-financial goals, as well as market fluctuations. “The purpose of variable remuneration is to align the CEO’s interests with the shareholders’ objectives and the bank’s performance as a whole”, says Filgueiras.

Wahraftig adds that a long-term variable portion may also involve shares, stock options, stock options (options to purchase a share, in the future, for a pre-defined value) or deferred cashwhich refers to a portion of the executive’s pay that can be withheld and paid later.

“Variable remuneration, both short and long term, is seen as a strategic way to ensure greater employee engagement, reducing turnover and attracting talent to institutions”, adds Wahraftig.

Filgueiras says that, as they have greater flexibility in their remuneration policies, private banks are commonly more aggressive than state-owned banks in terms of variable compensation to attract and retain the best talent on the market, especially at the executive level. When contacted, Itaú Unibanco informed that it does not disclose individual remuneration. Bradesco and Santander did not grant an interview.