Compensation - ESG
Compensation
As a global company, Vale knows that attracting the best professionals, retaining talent, motivating and engaging leaders in strategic positions, especially Statutory members of the Executive Board, members of the Board of Directors, Advisory Committees and the Fiscal Council, is a critical challenge for the company’s success at all times. Therefore, the market is always a reference within a global perspective, as well as the vision of aligning the organization's long-term success with the management’s compensation policies and practices. Vale considers the compensation policies and practices adopted by the main mining companies and other large global companies in similar industries and sectors, among other elements, such as its long-term strategy.
The annual compensation proposal is prepared based on these market principles, also taking the responsibilities of each member, their skills and the value of their services into account. The Company also considers market practices, their alignment with short- and long-term strategies, shareholder returns and the sustainability of its businesses.
Compensation proposals and policies are prepared with the support from the People and Compensation Committee (“CPR”), which is composed of five members, four of whom are members of the Board of Directors, and one is an external specialist.
One of the core pillars of designing the compensation proposal is the establishment of targets linked to the Company's sustainable performance and to the returns to its investors.
Short-term variable compensation
Short-term variable compensation is based on performance goals of different natures, which are an important management tool and have been increasingly relevant to the evolution and implementation of the Company’s main strategic plans. It is associated with economic and financial, health and safety, sustainability and strategic goals.
Long-term variable compensation
Long-term variable compensation programs are comprised of Matching (program in the Restricted Shares modality) and VSP - Vale Shares Plan (program in the Performance Shares modality) and are applicable only to the company's leadership levels, excluding Board of Directors, Fiscal Council and Advisory Committees, that would not be entitled to any type of variable compensation.
Vale's long-term compensation is associated with the performance of the common share, thus is directly related to the return given to shareholders. In the case of VSP, compensation is calculated as a direct function of Vale's Total Shareholder Return (TSR) indicator, which takes into account stock price fluctuations and dividends (or interest on equity) paid to shareholders over the plan period.
It is worth noting that, in 2019, the maintenance of share ownership was implemented, in which the executive must accumulate and hold on their Vale shares in the amount equivalent to at least thirty-six (36) honorary fees to the CEO and twenty-four (24) honorary fees for the Executive Directors. Shares may be accumulated through the share-based variable compensation programs offered by the Company throughout their terms.
Vale Shares Plan (VSP)
This represents a variable long-term compensation amount, linked to the Company's performance against other large mining and similar companies, and focuses management efforts on the creation of value and wealth for Vale, aligning executives and shareholders’ interests and reinforcing the culture of sustainable performance.
The VSP payment metric consists on the Total Shareholder Return (TSR) relative to the peer group, taking into consideration the businesses and regions where Vale operates and the influence of Brazilian market fluctuations.
If Vale comes first in the ranking (P100 percentile), the value is increased by 50%; if Vale is at P25 (first quartile) or below, there is no payment; and for Vale's intermediate positions in the companies ranking (between P25 and P100), it is paid according to the performance, which may vary between 10% and 150% of the value, as follows:
In addition to the TSR metric, the Company included, in 2020, the performance metric related to ESG - Environmental, Social and Governance: it includes (i) Health & Safety, with the indicator of High Potential Recordable Injuries (N2), that is, incidents that can generate fatalities and/or high potential injuries, with the objective of zeroing N2 incidents by 2025, according to the curve presented to the market in 2020; and (ii) Sustainability, with metrics based on Vale's 2030 commitments , applicable to the entire Company, at a global level, such as greenhouse gas reduction and Dow Jones Sustainability Index (DJSI) performance.
Additionally, as approved at the 2021 Annual Meeting of Shareholders, the award at the end of the cycle, conditioned to the achievement of the performance factor, from the 2021 cycle onwards will be made through the delivery of Common Shares issued by the Company, after the end of the cycle. In addition to the regular award, in 2021 the additional payment related to virtual dividends was also included, conditioned to the distribution of dividends or interest on capital by the Company.
Historical summary
The evolutions and improvements strengthen the ownership feeling and the executive engagement, in addition to aligning their actions with the shareholders’ interests.
Matching
Matching Program is one of the long-term variable compensation programs; although it is voluntary for eligible leaders, participation and retention of shares is mandatory for Statutory Officers. To comply with the program, the Statutory Officers must use their own resources to acquire common shares issued by the company (through the purchase in the market or the use of shares that the executive already owns, detached from current cycles) and keep them in their possession for at least the three-year cycle, observing the Stock Ownership Guidelines (SOG) or Mandate of Share Ownership. After the three-year cycle, the executives who are still in the Company and own these shares receive the program award, of at least the same number of shares originally acquired.
Compensation of the Named and Non-Named Board of Executive Officers
Compensation of the Executive Officers
Vale's Executive Compensation has been constantly improved. In recent years, the Company has been actively listening to investors and has carried out foreign market research and data and performance metrics analysis to advance its compensation practices, contributing to the strategy execution, competitiveness, alignment with shareholders’ interests and Vale’s cultural transformation.
Fixed Compensation
Base fee: this is the monthly fixed fee, which aims to attract and retain executives with experience and capacity compatible with the scope and responsibility of the position assigned to them in the Company’s management. These components are not associated with Vale’s performance.
Direct and Indirect Benefits: Executives are entitled to a benefits package compatible with market practices, which includes medical, hospital and dental care, supplementary pension plans and life insurance. The benefits, in addition to being in line with market practices, are intended to support executives and their dependents in key areas, such as healthcare and housing.
Direct and Indirect Benefits: Executives are entitled to a benefits package compatible with market practices, which includes medical, hospital and dental care, supplementary pension plans and life insurance. The benefits, in addition to being in line with market practices, are intended to support executives and their dependents in key areas, such as healthcare and housing.
Participation in Committees: Executives are not entitled to compensation for participation in executive committees.
Compensation of the Non-Named Executive Officers
These are employees of the Company with an employment relationship and may be responsible for global corporate functions or business units, or for regional or local corporate functions, or for areas or operating systems in the Company's various businesses.
Fixed Compensation
Base fee: They are entitled to receive a monthly fixed amount, defined on the basis of the Company structure of positions, which is aligned to the market practices and the purpose of which, according to the employment agreement signed with each executive, is to remunerate the services provided within the scope of responsibility assigned to each one in the different activities of the Company.
Direct and Indirect Benefits: They are entitled to a package of benefits compatible with market practices including Medical-Hospital-Dental Care, Complementary Pension (Valia) and Life Insurance. The benefits, in addition to being aligned with market practices, are intended to support executives and their dependents in key areas, such as health care and housing.
Participation in Committees: They are not entitled to compensation for participation in committees.
Variable Compensation
Profit sharing: Refers to Short Term Variable Compensation (annual), based on the Company’s results and defined through indicators and targets, derived from the strategic planning and annual budget approved by the Board of Directors.
Vale Shares Program ('VSP'): The rules and conditions of the VSP offered to these stakeholders are the same as those applied to the Named Executive Officers.
Matching: The rules and conditions of Matching offered to these stakeholders are the same as those applied to the Statutory Officers except for the voluntary rule (for non-statutory leaders, participation in the program is voluntary).
It should be noted that the Stock Ownership Guidelines (SOG) rule does not apply to this group.
Compensation of the Board of Directors, Advisory Committees and Fiscal Council
Compensation of Boards, Councils and Comittees
Total compensation (%) - From 2016 to 2018
Total compensation (%)
Fiscal Year 2018
|
|
Board of Directors
|
Fiscal Council
|
Statutory Board of Executive Officers
|
Non- Statutory Board
|
Committees
|
|
|---|---|---|---|---|---|---|
|
Monthly Fixed Compensation
|
|
|
|
|
|
|
|
Salary or pro-labore
|
86.54%
|
83.33%
|
12.37%
|
20.80%
|
86.65%
|
|
|
Direct and Indirect Benefits
|
|
-
|
4.24%
|
5.49%
|
-
|
|
Other
|
13.46%
|
16.67%
|
2.60%
|
5.26%
|
13.35%
|
|---|---|---|---|---|---|
|
Variable Compensation
|
|
|
|
|
|
|
Bonus
|
-
|
-
|
18.81%
|
-
|
-
|
|
Profit Sharing
|
-
|
-
|
-
|
32.76%
|
-
|
|
Other
|
-
|
-
|
9.02%
|
6.55%
|
-
|
|
Termination of Position
|
-
|
-
|
41.15%
|
-
|
-
|
|
Share-based Compensation
|
-
|
-
|
11.81%
|
29.14%
|
-
|
|
Total
|
100%
|
100%
|
100%
|
100%
|
100%
|
Fiscal Year 2017
|
|
Board of Directors
|
Fiscal Council
|
Statutory Board of Executive Officers
|
Non- Statutory Board
|
Committees
|
|
|---|---|---|---|---|---|---|
|
Monthly Fixed Compensation
|
|
|
|
|
|
|
|
Salary or pro-labore
|
87.16%
|
83.33%
|
14.17%
|
34.81%
|
83.83%
|
|
|
Direct and Indirect Benefits
|
|
-
|
3.88%
|
5.56%
|
-
|
|
Other
|
12.84%
|
16.67%
|
3.08%
|
|
16.17%
|
|
|---|---|---|---|---|---|---|
|
Variable Compensation
|
|
|
|
|
|
|
|
Bonus
|
-
|
-
|
16.00%
|
27.27%
|
-
|
|
|
Other
|
-
|
-
|
12.78%
|
8.59%
|
-
|
|
|
Termination of Position
|
-
|
-
|
39.91%
|
-
|
-
|
|
|
Share-based Compensation
|
-
|
-
|
10.17%
|
15.69%
|
-
|
|
|
Total
|
100%
|
100%
|
100%
|
100%
|
100%
|
Fiscal Year 2016
|
|
Board of Directors
|
Fiscal Council
|
Statutory Board of Executive Officers
|
Non- Statutory Board
|
Committees
|
|
|---|---|---|---|---|---|---|
|
Monthly Fixed Compensation
|
|
|
|
|
|
|
|
Salary or pro-labore
|
92.83%
|
90.44%
|
41.55%
|
67.81%
|
95.24%
|
|
|
Direct and Indirect Benefits
|
|
-
|
11.03%
|
8.26%
|
-
|
|
Other
|
7.17%
|
9.56%
|
8.53%
|
15.21%
|
4.76%
|
|---|---|---|---|---|---|
|
Variable Compensation
|
|
|
|
|
|
|
Other
|
-
|
-
|
4.95%
|
1.45%
|
-
|
|
Termination of Position
|
-
|
-
|
28.03%
|
-
|
-
|
|
Share-based Compensation
|
-
|
-
|
5.91%
|
7.27%
|
-
|
|
Total
|
100%
|
100%
|
100%
|
100%
|
100%
|
For more information about Vale's compensation access our Reference Form 2019
Total compensation ($) - From 2016 to 2019
Total compensation ($)
Fiscal Year 2019
Total compensation of the Board of Directors, Statutory Board of Executive Officers and Fiscal Council
Total compensation estimated for the current year December 31st, 2019 - Annual Amounts
|
|
Board of Directors
|
Fiscal Council
|
Statutory Board of Executive Officers
|
Total
|
|---|---|---|---|---|
|
Total number of members
|
13.67
|
5.00
|
6.00
|
24.67
|
|
No. of members receiving compensation
|
13.67
|
5.00
|
6.00
|
24.67
|
|---|---|---|---|---|
|
Annual fixed compensation
|
|
|
|
|
|
Salary or pro-labore
|
7,679,188.00
|
1,816,801.02
|
21,801,612.41
|
31,297,601.43
|
|
Direct and Indirect Benefits
|
0.00
|
0.00
|
8,675,163.30
|
8,675,163.30
|
|
Other
|
1,199,687.00
|
363,360.20
|
4,490,099.79
|
6,053,146.99
|
|
Description of other fixed compensations
|
Social contribution charges under Vale’s responsibility - INSS
|
Social contribution charges under Vale’s responsibility - INSS
|
Social contribution charges under Vale’s responsibility - INSS
|
|
|
|---|---|---|---|---|---|
|
Variable Compensation
|
|
|
|
|
|
|
Other
|
0.00
|
0.00
|
2,636,113.32
|
2,636,113.32
|
|
|
Description of other variable compensations
|
|
|
|
|
|
|
Termination of Position
|
0.00
|
0.00
|
21,999,445.33
|
21,999,445.33
|
|
|
Share-based. including options
|
0.00
|
0.00
|
25,676,497.22
|
25,676,497.22
|
|
|
Total compensation
|
8,878,875.00
|
2,180,161.22
|
85,278,931.36
|
96,337,967.58
|
Fiscal Year 2018
Total compensation of the Board of Directors, Statutory Board of Executive Officers and Fiscal Council
Total compensation estimated for the current year December 31st, 2018 - Annual Amounts
|
|
Board of Directors
|
Fiscal Council
|
Statutory Board of Executive Officers
|
Total
|
|---|---|---|---|---|
|
Total number of members
|
12.08
|
5.00
|
6.00
|
23.08
|
|
No. of members receiving compensation
|
12.08
|
5.00
|
6.00
|
23.08
|
|---|---|---|---|---|
|
Annual fixed compensation
|
|
|
|
|
|
Salary or pro-labore
|
6,608,146.89
|
1,705,551.75
|
20,543,646.36
|
28,857,345.00
|
|
Direct and Indirect Benefits
|
0.00
|
0.00
|
7,050,290.66
|
7,050,290.66
|
|
Other
|
1,028,229.38
|
341,110.35
|
4,317,265.39
|
5,686,605.12
|
|
Description of other fixed compensations
|
Social contribution charges under Vale’s responsibility - INSS
|
Social contribution charges under Vale’s responsibility - INSS
|
Social contribution charges under Vale’s responsibility - INSS
|
|
|
|---|---|---|---|---|---|
|
Variable Compensation
|
|
|
|
|
|
|
Bonus
|
0.00
|
0.00
|
31,237,934.71
|
31,237,934.71
|
|
|
Other
|
0.00
|
0.00
|
14,983,080.22
|
14,983,080.22
|
|
|
Description of other variable compensations
|
|
|
|
|
|
|
Termination of Position
|
0.00
|
0.00
|
68,346,721.83
|
68,346,721.83
|
|
|
Share-based. including options
|
0.00
|
0.00
|
19,622,073.35
|
19,622,073.35
|
|
|
Total compensation
|
7,636,376.27
|
2,046,662.10
|
166,101,012.52
|
175,784,050.89
|
Fiscal Year 2017
Total compensation of the Board of Directors, Statutory Board of Executive Officers and Fiscal Council
Total compensation estimated for the current year December 31st, 2017 - Annual Amounts
|
|
Board of Directors
|
Fiscal Council
|
Statutory Board of Executive Officers
|
Total
|
|---|---|---|---|---|
|
Total number of members
|
14.92
|
4.82
|
6.77
|
26.51
|
|
No. of members receiving compensation
|
14.92
|
4.82
|
6.77
|
26.51
|
|---|---|---|---|---|
|
Annual fixed compensation
|
|
|
|
|
|
Salary or pro-labore
|
5,870,112.79
|
1,630,344.40
|
22,874,587.57
|
30,375,044.76
|