Introduction
An open corporation not listed on a stock exchange since 2007, when it held a public issue of debentures, Algar Telecom adopts the best corporate governance practices, following the same principles that were introduced by its founder and are now upheld by all the Grupo Algar companies. The Company's commitment to transparency, accountability and fairness serves as a basis for the set of practices intended to create value for all stakeholders in a consistent manner. Currently, Algar Telecom has no formal, structured process to engage or define a "stakeholder", but it seeks to understand its stakeholders’ needs by means of an ongoing dialogue.
Another key feature of the Group’s corporate governance model is a continuous search for improvement and innovation. This effort led to the development of unique tools such as the Governance Portal, a channel with restricted and exclusive access to relevant documents and information for the members of the Board of Directors and Advisory Committees, as well as several performance monitoring tools.
Grupo Algar’s consistent governance policy has been recognized with awards such as that of Instituto Brasileiro de Governança Corporativa (IBCG) (Brazilian Corporate Governance Institute) in the category of unlisted companies, and Prêmio da Ordem de Economistas do Brasil (Economists’ Association of Brazil Award), won in 2009 and 2010, respectively. Additionally, Grupo Algar has been in the Companies Circle, a select group of 19 Latin American companies that studies and disseminates the best practices in the region since 2010. The Company has a direct communication channel with its associates by means of the Associates’ Committee.
Corporate Governance Structure
Board of Directors
Introduced in 1999, Algar Telecom’s Board of Directors’ mission is to enforce the Company’s sustainability policy by deliberating on its business guidelines, upholding its values and beliefs, and ensuring a balance between family control and professional management.
At present, there are nine effective directors, five of whom are outside directors holding no executive positions at the Company or at the parent company and not belonging to the controlling group. They are all elected by the Shareholders' Meeting for a one-year term and may be re-elected for a second one-year term. The Board usually meets six times a year, according to a pre-established schedule, and at such other times as may be deemed necessary. Besides approving Algar Telecom’s annual budget, the Board also guides and advises the Executive Board in managing the business in order to maximize the sustainable return on investments, in line with the interests of all parties.
All the Board’s activities follow the guidelines set out by an internal policies and procedures guide, which complies with the Brazilian Business Corporation Act and the Company’s Bylaws, and is based on the recommendations contained in IBCG’s Code of Good Corporate Governance Practices.
| Composition of the Board of Directors on 12/31/2011 | |
|---|---|
| Luiz Alberto Garcia | Chairman |
| Luiz Alexandre Garcia | Deputy Chairman |
| Alexandrino Garcia Neto | Director |
| Eliane Garcia Melgaço | Director |
| Hélio Marcos Machado Graciosa(*) | Director |
| Geraldo Sardinha(*) | Director |
| Walter Fontana Filho(*) | Director |
| Ozires Silva(*) | Director |
| Darc Antonio da Luz Costa(*) | Director |
Luiz Alberto Garcia (chairman) – Mr. Garcia has a degree in Electronic Engineering from Escola Federal de Itajubá (State of Minas Gerais), and specializations in (i) Global Business Leadership from Georgetown University, in Washington, DC (USA); (ii) Leading the Family Business from IMD, Lausanne (Switzerland); and (iii) Owner/President Management Program from Harvard University, Massachussets (USA). He is a former Chairman of Associação Nacional dos Prestadores de Serviço Móvel Celular (Acel) (Brazilian National Association of Mobile Phone Service Providers), of Anatel’s Board, of Associação Brasileira de Agribusiness (Abag) (Brazilian Agribusiness Association), of Telebrasil and of SindiTelebrasil. He was also a Board member at Fundação Orsa. He is also sitting on the Boards of Fundação CPqD and FIEMG and is a member of Instituto de Estudos para o Desenvolvimento Industrial (IEDI) (Institute for Industrial Development Studies) and Fundação de Pesquisas da Universidade Federal de Uberlândia (Fundap) (Research Foundation of the Federal University of Uberlândia).
Luiz Alexandre Garcia (deputy chairman) – Mr. Garcia has a degree in Economics from Universidade Gama Filho (State of Rio de Janeiro) and specializations in (i) Marketing from the American University of Paris (France); (ii) an MBA from the Catholic University of America, Washington, DC (USA); (iii) Leading the Family Business; and (iv) Program for Executive Development, both from IMD, Lausanne (Switzerland). He has worked for IFC/World Bank, Washington, DC (USA); Ericsson, Dallas (USA) and São Paulo; and Groupe Bull, Les Clayes-sous-Bois (France). He is a former President of Associação Comercial e Industrial de Uberlândia (Aciub) (Uberlândia Commercial and Industrial Association) for two terms and of Associação Nacional das Operadoras de Celular (Acel) (Brazilian National Association of Mobile Phone Companies). He is a member of the third generation of the family controlling Grupo Algar and has been the group’s CEO since 2006.
Alexandrino Garcia Neto (director) – Mr. Garcia Neto is an agribusiness entrepreneur and a member of Grupo Algar’s controlling group.
Eliane Garcia Melgaço (director) – Ms. Melgaço has a degree in Business Administration from Pontifícia Universidade Católica de Minas Gerais (PUC/MG) and specializations in (i) MBA from the Catholic University, Washington, DC (USA); (ii) Leading the Family Business from IMD (Switzerland); and (iii) PGA from Insead, Fontainebleau (France). She has worked for Banco Nacional, Cartão Unibanco and ATL in Relationship Marketing and Commercial areas. She belongs to Grupo Algar’s controlling group and is currently its Corporate VP-marketing and sustainability.
Hélio Marcos Machado Graciosa (outside directors) – Mr. Graciosa has a bachelor’s degree in Telecommunications Engineering and a master’s degree in Electric Engineering from Pontifícia Universidade Católica do Rio de Janeiro (PUC/RJ). He is a former Research & Development officer at Telecomunicações Brasileiras S.A. – Telebras, president of Sociedade de Telecomunicações (SBrT) and chairman of the Board of Directors of Telesc and Telebahia. He is currently the chairman of CPqD – Centro de Pesquisa e Desenvolvimento em Telecomunicações (Telecommunications Research & Development Center), in Campinas/SP, and of CPqD Technologies & Systems Inc., in Fort Lauderdale, Florida (USA), and the Institutional Relations officer at Cleartech. He is also the chairman of the Advisory Council and a Board member of Telebrasil, in addition to other prominent companies.
Geraldo Sardinha Pinto Filho (outside director) – Mr. Pinto Filho has a degree in Economics from Faculdade de Ciências Econômicas da Universidade Federal de Minas Gerais (UFMG) and a specialization in Finances from J.L.Kellogg Northwestern University (USA) and from INSEAD – The Business School for the World (France). He is an officer at Sardinha & Sant’Ana Consultoria Empresarial, in which he is a corporate finance consultant for large corporations focusing on value creation. He is a visiting professor at Sauder School of Business – University of British Columbia (Canada) and INSEAD – The Business School for the Worl (France), in addition to an associate professor at Fundação Dom Cabral (Brazil). He is a member of the Boards of Directors of Hermis Pardini, Grupo Seculus, Dori Alimentos and Odonto System.
Walter Fontana Filho (outside director) – Mr. Fontana Filho has an undergraduate and a graduate degrees in Economics from Pontifícia Universidade Católica de São Paulo (PUC/SP) and specialization in Marketing Management from Fundação Getúlio Vargas. He is a former CEO and chairman of the Board of Directors of Sadia. He currently sits on the Boards of Directors of the Estado de São Paulo newspaper and the Instituto de Estudo para o Desenvolvimento Industrial (Iedi).
Ozires Silva (outside directors) – Mr. Silva has an undergraduate degree in aeronautical engineering from Instituto Tecnológico da Aeronáutica (ITA), or (Technological Institute of Aeronautics) and a graduate degree in aeronautics from (California Institute of Technology (CALTECH)), California (USA). He headed the group that created Embraer – Empresa Brasileira de Aeronáutica S.A., a company that he managed between 1970 and 1986 and between 1991 and 1995, when he conducted the company’s privatization process. He has been the CEO of Petrobras – Petróleo Brasileiro S.A., Ministro do Estado da Infraestrutura (Brazilian Infrastructure Minister) and CEO of Varig S.A. He is currently a member of several trade and civil servant associations and of the Boards of Directors of prominent companies.
Darc Antonio da Luz Costa (outside director) – Mr. Costa has a degree in Engineering from Pontifícia Universidade Católica (PUC/RJ), a master’s degree in Production Engineering from the same university and a doctor’s degree in Production Engineering from COPPE/UFRJ. He is a former vice-president of Banco Nacional do Desenvolvimento Econômico e Social (BNDES) (Brazilian National Bank of Economic and Social Development). He is also a member of the Managing Board of Centro Brasileiro de Estudos Estratégicos (Cebres) (Brazilian Center for Strategic Studies); a director (and former coordinator) of Centro de Estudos Estratégicos da Escola Superior de Guerra (Center for Strategic Studies of the War College); and president of Federação das Câmaras de Comércio e Indústria da América do Sul (Federation of the Chambers of Commerce and Industry of South America); a member of Academia Brasileira de Ciências Morais e Políticas (Brazilian Academy of Moral and Political Sciences) and a managing partner of DLC – Desenvolvimento, Logística e Cenários Simples Ltda.
Advisory Committees
In order to advise, inform and guide the decision-making process concerning specific topics, three internal specialized permanent but non-decision-making committees have assisted Algar Telecom’s Board of Directors since 2005. They consist of members of the Board of Directors and outside experts, appointed on an annual basis by the Board of Directors itself, to which they respond. Each committee has a policies and procedures guide which sets rules for its working process, as well as its duties and responsibilities.
Audit and Risk Management: This Committee exists to ensure that the Company’s financial statements are prepared in an appropriate, comprehensive, transparent and trustworthy manner. It also ensures the effectiveness of internal and independent audit processes, and internal controls, as well as compliance with applicable legislation. It also makes sure that business risks are adequately managed. It consists of five members – three of whom are experts – and meets on a quarterly basis.
Human Talents: This Committee monitors and sets guidelines for human talent compensation, attraction, retention and development. Its mission is to the guarantee the execution of a policy that values and promotes the development of Human Talents, in keeping with the best people management practices. It is composed of four members, of whom one is a director and one is an outside expert. This committee is mainly in charge of monitoring the development program for potential successors, leadership development, the organizational climate and the Brazilian labor market.
Corporate Governance: This Committee examines, assesses, monitors and makes proposals for the improvement and effectiveness of the Company’s Corporate Governance practices, based on the principles of transparency, fairness, accountability and corporate responsibility. This Committee consists of five members, two of whom are outside directors.
Executive Board
Responsible for enforcing the policies on business management, operations and corporate attitude, in addition to executing the plans and achieving the targets set by the Board of Directors, the Executive Board has skilled professionals who oversee the Company’s everyday operations. It is composed of seven members: the CEO and six officers for specific areas, as seen below:
| Composition of the Executive Board on 12/31/2011 | |
|---|---|
| Divino Sebastião de Souza | Chief Executive Officer |
| Jean Carlos Borges | Chief Governance and Strategy Officer |
| Tatiane de Souza Lemes Panato | Chief Financial Officer and Investor Relations Officer |
| Marineide da Silva Peres | Chief Human Talent Officer |
| Luis Antônio Andrade Lima | Chief Operations and Technology Officer |
| Osvaldo César Carrijo | Chief Retail Commercial Officer |
| Márcio Estefan | Chief Corporate Commercial Officer |
Divino Sebastião de Souza (CEO) – Mr. Souza has a 35-year experience in the field of Information Technology, especially telecommunications. He was involved in the first implementation of mobile phone services in the interior of Minas Gerais, São Paulo and Mato Grosso do Sul States. He was involved in the conception and creation of the Company’s Call Center (ACS), now Algar Tecnologia (a provider of business process and technology outsourcing services), where he has an officer for eight years. He has a bachelor’s degree in Electrical Engineering from Faculdade de Engenharia Elétrica de Ituiutaba (State of Minas Gerais) and graduate degrees in (i) Corporate Management from Universidade Federal de Uberlândia; (ii) Strategy Management from Insead (France) and (iii) Strategic Management from Wharton University (USA).
Jean Carlos Borges (Chief Governance and Strategy officer) – with a 22-year professional experience, Mr. Borges started his career as an engineer at IBM Brasil, where he was a Commercial in the States of Minas Gerais and Mato Grosso. He worked for Algar Tecnologia for five years, two of which as a Chief Financial officer. He has been in the Company since 2003 and has held the positions of Chief Financial Officer, Technical-Operational officer and Chief Governance and Strategy officer. He has a bachelor’s degree in Mechanical Engineering from Universidade Federal de Uberlândia and graduate degrees in (i) Corporate Management, (ii) Controllership and Accounting from the same university and (iii) Business Administration and Marketing from Universidade do Triângulo (Unitri). He also attended the Program For Executive Development (IMD), in Lausanne (Switzerland), for two months.
Tatiane de Souza Lemes Panato (Chief Financial officer and Investor Relations officer) – with a 12-year experience in finances, she has been an Administrative-Financial coordinator at Algar Tecnologia, Controllership coordinator and head of the Controllership and Planning Division at both Companies. Ms. Panato has a bachelor’s degree in Accounting Sciences from Universidade Federal de Uberlândia and a graduate degree in Corporate Finance and Planning from the same university, an MBA in Corporate Management from Fundação Getúlio Vargas, São Paulo and an MBA in Finance, Communications and Investor Relations from Fipecafi.
Marineide da Silva Peres (Human Talent officer) – Ms. Peres has a 32-year professional experience in the fields of Finance, Trading and Strategic Planning. She has been a Chief Operations officer at PwC BPO Brasi – a provider of finance, accounting, human talent and purchasing outsourcing services. She was a Chief Financial officer at the Company for teen years and, later, a Business officer at the Uberlândia Regional Office. Ms. Peres has a bachelor’s degree in Business Administration from Universidade Federal de Uberlândia and a graduate degree in Corporate Management from the same university. She has attended educational programs in the fields of Leadership, Marketing, Finance and Sales for Executives, highlighting the Harvard Business School’s Case Studies program and IMD’s Executive Development Program, in Switzerland.
Luiz Antônio Andrade Lima (Chief Operations and Technology officer) – Mr. Lima has a 29-year experience in the telecommunications industry and has been involved in fixed-line and mobile phone and data communication network projects, implementation, operations and maintenance. He has held several positions at the Company, such as project engineer, technical advisor of the Regional Operations Board in Franca (State of São Paulo), General Operations coordinator and head of the Strategic Project Division. He has a bachelor’s degree in Electronic Engineering and an MBA in Advanced Business Management from Fundação Getúlio Vargas (State of São Paulo). He also has a specialization in Computer Networks from Universidade Federal de Uberlândia and a graduate degree in Business Administration from Universidade Algar. He has also attended a refresher course in Industrial Electric Systems at Universidade Federal de Uberlândia.
Osvaldo Cesar Carrijo (Chief Retail Commercial officer) – with a 30-year professional experience in Retail and Technology, Mr. Carrijo founded and headed Universidade Martins do Varejo (UMV), as well as introduced and coordinated Grupo Martins’s client relationship programs. He created and implemented the brand Rede de Valor and Grupo Martins’s Rede Smart de Supermercados. He has sat on the Boards of Directors of Le Postiche, as well as on the Academic Boards of ENS and Universidade Cândido Mendes (State of Minas Gerais). He has also developed several franchising and relationship marketing projects, including those of Le Postiche, Leo Madeiras, Marisol, Agora Sênior and Milenia. He has a degree in Civil Engineering and specializations in Information Systems from IBM, in White Plains (USA); Food Retail from Fleming Retail University, Oklahoma (USA); and Advanced Management from Insead/FDC (Brazil/France).
Márcio Estefan (Chief Corporate Commercial officer) – with a 21-year professional experience in the telecommunications industry, Mr. Estefan has worked in Sales, Pre-Sales and Marketing at large telecom corporations, such as Telefônica, MetroRED, Comsat and Vicom. He has a degree in Electronic Engineering from Universidade Federal do Rio de Janeiro, with extension courses in Marketing and Knowledge Management from Fundação Getúlio Vargas, Management from IESE, Spain, and Innovation from Wharton Business School (USA).
Audit
In order to enhance its corporate governance practices continuously, Algar Telecom is submitted to both internal and independent audit. The Internal Audit Committee consists of five people and exists to inspect, assess and propose improvements in the Company's processes and control mechanisms. It reports directly to the Group’s holding company to ensure that it can work autonomously from the Executive Boards.
In addition to the Internal Audit Committee, a renowned independent audit company hired by the Company also assesses information standards and compliance with the current accounting and tax legislation and rules. Since 2009, this service has been provided by KPMG Auditores Independentes, one of the Big Four, or the group of the four largest audit and consulting companies worldwide.
Code of Ethics
Algar Telecom’s Code of Conduct was adopted to make explicit the behavior rules and guidelines to be followed by all associates, based on the Company’s principles and values. Clear and straightforward, the document translates into everyday practices the Company’s commitment to having a lasting and reliable relationship, based on ethics and integrity, with all its stakeholders: clients, directors, shareholders, regulatory bodies, the Government, suppliers, creditors, employees and the community.