In accordance with Regulation 303A.06 of NYSE Corporate Governance in force at the New York Stock Exchange (NYSE), Gerdau S.A. must disclose any differences in its corporate governance practices compared to the rules defined by the NYSE for U.S. companies.
Notable distinctions between NYSE corporate governance standards and our corporate governance practices include:
- Audit Committee: NYSE standards mandate U.S. listed companies to establish an audit committee exclusively composed of independent members. Additionally, the audit committee must have a written charter that includes the requirements of Regulation 303.A.07(b) of the NYSE, in addition to performing internal audit functions and meeting the requirements of the NYSE and Regulation 10A-3. Gerdau has a fiscal council that currently performs some of the functions assigned to the audit committee, although its assignments are not fully comparable to U.S. law requirements. The company has adapted its corporate governance practices and those of the audit committee (with certain qualified exemptions for SEC exemption, due to the Brazilian Corporations Act) to ensure compliance with NYSE Regulations and 10A-3.
- Remuneration Committee: NYSE standards mandate U.S. listed companies to establish a Remuneration Committee composed exclusively of independent members, while Brazilian law does not provide for the existence of such a committee. Gerdau has instituted a Remuneration and Succession Committee guiding the Board in compensation and hiring policies for employees and executives, incentive programs, and related matters. This committee does not have its own charter and is constituted by a majority of independent members.
- Corporate Governance Committee: NYSE standards mandate U.S. listed companies to establish a Corporate Governance Committee composed exclusively of independent members, while Brazilian law does not mandate the existence of such a committee, Gerdau has a Corporate Governance Committee, an advisory body linked to the Board of Directors, with the competence to (i) assess governance trends and benchmarks; (ii) assess recommendations from capital markets and financial market agents and specialized bodies; (iii) review and opine on corporate governance information in the company’s official documents intended for market disclosure; and (iv) evaluate the overall performance of the Board.
According to NYSE standards, publicly traded U.S. companies must be mostly composed of independent members who must meet periodically without the presence of management, while such requirements do not exist in Brazilian Governance practices. Gerdau’s Board of Directors includes 3 (three) independent members out of a total of 7 (seven) members, without separate meetings.
According to NYSE standards, U.S. companies must adopt and disclose their corporate governance guidelines, while Brazilian law does not mandate such requirement, however, Gerdau has adopted corporate governance guidelines based on Brazilian law and its Code of Ethics and other institutional policies, which can be consulted here.
According to NYSE standards, U.S. companies must adopt and disclose a business code of conduct and ethics for board members, officers, and employees, as well as immediately report any waivers of compliance granted to board members or executive officers. Gerdau complies with a similar requirement of Brazilian law, having adopted a code of ethics applicable to its board members, officers, and employees. Gerdau’s Ethics Code can be viewed on the website www.gerdau.com.br, and copies can be obtained by contacting Gerdau’s Investor Relations department.
According to NYSE standards, shareholders must have the opportunity to vote on all equity compensation proposals by the Company, as well as on their significant revisions, within the exemptions described by the NYSE Regulation. Currently, Gerdau has such na equity compensation program for executive officers. Any relevant changes to this program or the establishment of a different or new program will require the favorable vote of shareholders holding common shares of the Company. Shareholders holding preferred shares, including holders of Gerdau’s American Depositary Shares (ADRs), do not have the right to vote on such a program or any revisions.
According to NYSE standards, any of the Company’s Executive Officers is required to immediately notify the NYSE in writing upon becoming aware of any non-compliance with the NYSE corporate governance regulations applicable to Gerdau.
