Comissão do Mercado de Valores Mobiliários
Annual Report
on the
Corporate Governance
of
Listed Companies
in Portugal
2008
Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
CMVM
INDEX
INDEX ...... 2 List of Charts ...... 3 List of Tables ...... 5 List of Textboxes ...... 6 Introduction ...... 7 I. Shareholder Capital Structure ...... 9 I.1 Share Capital, Market Capitalisation and Trading Volume ...... 9 I.2 Ownership Concentration and Shareholder Capital Structure ...... 10 I.2.1 Ownership Concentration and Major Shareholders ...... 10 I.2.2 Shareholder Structure ...... 12 I.3 Shareholders’ Place of Residence ...... 19 I.4 Stock-Option Plans ...... 20 II. Corporate Governance Models, Boards and Structures ...... 23 II.1 Corporate Governance Models ...... 24 II.2 General and Supervisory Boards ...... 26 II.3 Boards of Directors ...... 33 II.4 Executive Management Boards and Executive Committees ...... 44 II.5 Audit Boards and Committees ...... 52 II.6 Other Committees ...... 57 III. Remuneration of Corporate Boards ...... 62 IV. General Meeting ...... 73 V. Other Issues ...... 89 VI. Conclusions ...... 97 VII. Attachment II – Assessment of Compliance with CMVM Recommendations on Corporate Governance (2005 version) ...... 106
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List of Charts
Chart 1 – Own Capital, Market Capitalisation and Trading Volume ...... 9
Chart 2 – Shareholder Capital Concentration ...... 11
Chart 3 – Shareholders Exercising Significant Influence over the Company’s Affairs ...... 12
Chart 4 – Shareholder Structure ...... 13
Chart 5 – Distribution of Capital held by Reference Shareholder ...... 15
Chart 6 – Percentage of Capital with Voting Rights held by Institutional Investors ...... 17
Chart 7 – Place of Residence of Shareholders with Qualifying Holdings ...... 20
Chart 8 - Stock-Option Plans for Members of the Board of Directors ...... 21
Chart 9 – Stock-Option Plans for Employees and Co-Workers ...... 22
Chart 10 – Corporate Governance Models ...... 25
Chart 11 – Average Size of the Boards of Directors ...... 33
Chart 12 – Weighting of Non-Executive Directors ...... 35
Chart 13 – Independent Member Weighting ...... 38
Chart 14 – Accruement of Management Duties ...... 40
Chart 15 – Average Size of the Board or Executive Committee ...... 45
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Chart 16 – Accruement of Duties by Members of the Board or Executive Committee ……………46
Chart 17 – Number of General Meetings held during 2007 ...... 73
Chart 18 – Nature of Participation at General Meetings ...... 76
Chart 19 – Restrictions imposed on Voting and the Functioning of the General Meeting ...... 78
Chart 20 – Share Capital represented in the Shareholder Agreements ...... 83
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LIST OF TABLES
Table I – Attendee List of the General Meetings in 2007 and 2008 ...... 20
Table II – Typology of Members of the Board of Directors ...... 36
Table III – Meetings of the Board of Directors and Attendance ...... 40
Table IV – Companies having Non-Executive Committees on the Board of Directors ..... 41
Table V – Chairmanship of the Board of Directors ...... 43
Table VI – Assessment of Compliance with Recommendations 5, 5-A, 6 and 7 ...... 49
Table VII – Audit Committees within the Board of Directors ...... 54
Table VIII – Total, Fixed and Variable Remuneration in 2007 ...... 62
Table IX – Medium and Long-Term Responsibility ...... 64
Table X – Assessment of Compliance with Recommendations 8, 8-A, 9 and 10 ...... 70
Table XI – Minimum Amount of Shares required for One Vote ...... 76
Table XII – General Meetings: Voting via Postal or Electronic Means ...... 79
Table XIII – Assessment of Compliance with Recommendation 2 ...... 81
Table XIV – Assessment of Compliance with Recommendation 3 ...... 85
Table XV – Assessment of Compliance with Recommendation 4 ...... 88
Table XVI – Assessment of Compliance with Recommendation 10-A ...... 93
Table XVII – Assessment of Compliance with Recommendation 1 ...... 96
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LIST OF TEXTBOXES
Textbox I – Assessment of Compliance with Recommendation 11 ...... 18
Textbox II – Assessment of Compliance with Recommendations 5, 5-A, 6 and 7...... 48
Textbox III – Assessment of Compliance with Recommendation 8, 8-A, 9 and 10 ...... 68
Textbox IV – Assessment of Compliance with Recommendation 2 ...... 80
Textbox V – Assessment of Compliance with Recommendation 3 ...... 84
Textbox VI – Assessment of Compliance with Recommendation 4 ...... 86
Textbox VII – Assessment of Compliance with Recommendation 10-A ...... 92
Textbox VIII – Assessment of Compliance with Recommendation 1 ...... 95
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INTRODUCTION
This document contains the answers to the CMVM’s questionnaire sent out between the months of June and August 2008 on the governance of listed companies. The questionnaire was sent to national companies with shares listed on the Portuguese market. All companies responded to said questionnaire.
The questionnaire was composed of 36 main questions and 306 leading questions on the situation as at 31 December 2007. Some responses to the questionnaire were filled in first- hand by the CMVM using the available information. The questionnaire was then sent to the companies for same to validate information and to fill in the required responses.
Apart from the questionnaire, the reports for the financial years as at 31 December 2007 (30 June 2007 for Porto SAD and Sporting SAD, and 31 July 2007 for Benfica SAD) were analysed. The corporate governance reports provided a substantial amount of essential information for drawing-up the chapter on ‘Corporate Governance Models, Boards and Structures’.
This document also includes a compliance assessment by Portuguese companies of the CMVM Recommendations on Corporate Governance which was previously disclosed by the latter as ‘Compliance Assessment of the CMVM’s Corporate Governance Recommendations’. In 2007, the CMVM Recommendations on Corporate Governance underwent their 4th revision and subsequently approved Regulation 1/2007 and the Corporate Governance Code in December of same year. However, same Code only came into force in 2008, hence the recommendation assessment by companies in the relevant Governance Report and in this document, are dated 2005. Albeit, whenever possible and appropriate, consideration is given to compliance with the new version of the recommendations which aim to assess whether companies are complying with said recommendations.
Some of the main conclusions taken from this report are as follows: Firstly and overall, Portuguese companies show a low dispersion of the shareholder capital as well as a highly stable shareholder capital structure. As to the management and supervision of the companies, the majority of the Portuguese companies used the Latin Model. However, all the models admitted by Law are being used by Portuguese companies and in many cases, companies have informally adopted management boards with similar characteristics as those legally set by other models.
Thirdly and albeit taking into consideration that the shareholder capital in many companies is very highly concentrated, the weighting of independent directors is significantly reduced.
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On the subjects of general meetings and voting rights, the percentage of share capital present at shareholder meetings held in 2007 has in average surpassed 2/31, which is a considerable amount. However, this is evident by the reduced activity of national institutional investors, particularly regarding attendance at the shareholder meetings. On the other hand, in circa 1/3 of the companies, one share corresponds to one vote and also, for said number of companies, 100 shares are required for the right to one vote. Hence, one may almost safely assume that the investment required for a voting right is quite high in Portuguese companies. However, certain restrictions are imposed on the full exercising of the voting rights inasmuch as there are companies (some of which are the largest) where the maximum percentage of voting rights that can be exercised per shareholder, is less than 100%. There are also situations in which certain shareholders have special rights including the right of veto.
As regards compliance of the CMVM Recommendations on Corporate Governance, the average global compliance with these Recommendations reached 62.5% in 2007 which is higher than the 59.1% experienced in 2006. Although this growth was slight, it shows the effort that Portuguese issuers have made in trying to level their corporate governance structures with that of international best practices.
Recommendation 5 and 10 are those which are more complied with. The first recommendation pertains to the effective guidance of the management body as regards the management of the company. The second relates to share allocation/share option plans as a supplementary means of company remuneration. Both recommendations are complied with by companies, but in the second instance, hardly any companies have established said plans.
The recommendations that are least complied with are Nos. 6, 8 and 8-A on independent non- executive members of the Board of Directors, the disclosure of individual remuneration by members of the Board of Directors and the approval of the remuneration policy by the Shareholders’ General Meetings, respectively.
In closing, certain companies did not comply with the recommendations and did not explain their non-compliance in the relevant corporate governance report, meaning that they did not comply with the ‘comply and explain’ principle which is included in the CMVM’s 2005 version of the Recommendations on Corporate Governance.
1 Unless otherwise stated, the average data mentioned in the text refers to the average data for each company.
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Furthermore, there is disagreement between the companies’ and the CMVM’s assessment in several other situations, which further entails non-compliance with the ‘comply and explain’ principle.
This document is structured in the following format: The share capital structure, analysis of the models, the boards and corporate governance structures. The remuneration of the members of the corporate structures is analysed in the third section, followed by the analysis of the general meetings and other subject themes. The report ends with a concluding section and statistical attachments.
I. Shareholder Capital Structure
I.1 Share Capital, Market Capitalisation and Trading Volume
The 47 Portuguese companies with shares listed on Euronext Lisbon at as 31 December 2007 had on said date, an own capital average of € 778 million, which shows a 5.6% increase apropos the end 2006. The financial sector companies showed higher values for this benchmark (€ 2 471.3 million) than the remainder (€ 561 million). The companies within the PSI-20 held an own capital average of circa 14 times the own capital average of the remaining companies.
Chart 1 – Own Capital, Market Capitalisation and Trading Volume
7000 Average Market Average Trading M 6000 Capitalisation Volume ili l l 5000 i o Own Capital n 4000 Average
3000
E 2000 u r o 1000 s 0 2006 2007 2006 2007 2006 2007 Non-Financial Sector Financial Sector Within the PSI-20 Non PSI-20 Average
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The average market capitalisation of the 47 companies was € 2 014 million as at 31 December 2007 (increasing by 12.9% apropos end 2006). The average market capitalisation was higher in the financial sector companies (€ 4 734.1 million) and those within the PSI-20 Index (€ 4 393.3 million). The average market capitalisation growth was higher than the own capital growth average in non-financial companies and in those within the PSI-20, whilst the opposite occurred in the financial companies and in non PSI-20 Index.
The average trading volume in shares on a regulated market was € 2 234.3 million in 2007 which represents circa 2.9 times the own capital average and 1.1 times the average market capitalisation at the end of the year. The average share trading volume increased 89.1% in 2007 fuelled by the growth of the financial companies (115.4%) and non PSI-20 Index issuers (131.6%).
I.2 Ownership Concentration and Shareholder Capital Structure
I.2.1 Ownership Concentration and Major Shareholders
Shareholder capital was greatly concentrated in the Portuguese market. In average, the major shareholder owned 46% of the capital of listed companies. This average value was much higher in non-financial companies (47.0%) and in the non PSI-20 index companies (50.0%).
Out of a total of 25 companies, the major shareholder owned more than 50% of the company capital. Twelve companies surpassed latter percentage by over two-thirds of the company capital (three of the PSI-20 and another from the financial sector, respectively, Galp Energia2, Portucel, Soares da Costa and Finibanco). In contrast, only in 4 companies did the major shareholder own less than 10% of the company capital (BCP, Novabase, Pararede and Portugal Telecom).
If we consider the capital concentration of the three major shareholders, 9 companies did not hold more than 50% of the company capital (Altri, BCP, Cofina, Compta, EDP, Novabase, Pararede, Portugal Telecom and Zon). In 23 other companies (6 of PSI-20 and 2 financial), the three major shareholders held over 2/3 of the share capital. As to capital concentration in the 5 major shareholders, only 7 companies held less than 50% of the relevant capital. In average, the 5 major shareholders held 70.3% of the companies’ capital – this average value was less for companies of the financial sector (63.5%) than in those within the PSI-20 Index (64.5%).
2 In Galp Energia’s case, this value is determined due to the mutual introduction of voting rights as per the shareholders’ agreement of this company. 10 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Chart 2 – Shareholder Capital Concentration
80%
70%
60%
50%
40%
30%
20%
10%
0% Non-Financial Financial Sector Within PSI-20 Non PSI-20 Average Sector Major Shareholder Three Major Shareholders Five Major Shareholders
Except for one company, all companies stated that at least one shareholder had a significant influence in the day-to-day running of the company, namely in what concerns selecting the members of the corporate boards. In average, 2.3 shareholders have a significant influence in the day-to-day running of the company and hold in average, 56.1% of the share capital. For financial sector and PSI-20 companies, the average number of shareholders in similar circumstances was higher; however they show a lower percentage of the share capital of those companies, yet still higher than 50%. In 26 issuers, only one shareholder had a significant influence with the maximum value (10) registered by a sole company.
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Chart 3 – Shareholders Exercising Significant Influence over the Company’s Affairs
4.5 62%
4.0 60% 3.5
3.0 58%
2.5 56% 2.0
1.5 54%
1.0 52% 0.5
0.0 50% Non-Financial Financial Sector Within the PSI-20 Non PSI-20 Average Sector No. of shareholders having same power Percentage of capital held or assigned to those shareholders
I.2.2 Shareholder Structure
There are several types of shareholders representing the companies’ share capital. This document covers the following: Members of the Management and Supervisory Boards, Portuguese State, institutional investors, other reference shareholders and own company portfolio. The remainder is dispersed amongst other shareholders.3 As at 31 December 2007, the members of the management and supervisory boards, in average had directly and indirectly (as per article 20 of the Securities Code) 28.1% of the companies’ share capital. This percentage was significantly higher for companies in the financial sector (38.3%) and for issuers in the PSI-20 (34.7%). On the other hand, for 19 issuers (12 within the PSI-20 and 1 in the financial sector), the capital held by those members was less or equal to 1% but in 18 companies (6 PSI-20 and 3 financial) the capital held was higher than 50%, actually reaching 94.4% in one company.
3 The data in this report is not comparable to that shown in the document ‘Corporate Governance of Listed Companies in Portugal’: Situation as at December 2005’ since its data only concerns direct investment and thus indirect investment was not included therein. 12 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Chart 4 – Shareholder Structure
100%
90% 21.9 24.1 26.8 27.7 24.4 80% 70% 60% 50% 40% 30% 20% 10% 0% Non-Financial Financial Sector PSI-20 Non- PSI-20 Average Sector Management Board Members and Supervisory Bodies State Institutional Investors Other Reference Shareholders In own portfolio Other Shareholders
Members of the Board of Directors did not have any stake in the capital of 6 companies (Cires, Corticeira Amorim, Lisgráfica, Papelaria Fernandes, Portucel and Semapa) and owned an insignificant stake (equal or less than 1%) in another 21 companies. However, two financial companies, Banif and Finibanco and two PSI-20 companies, Impresa and Mota-Engil held a major stake of over 50% of the capital of 12 companies. The remaining members of the Board of Directors did not hold any stake in 26 companies, whilst 6 surpassed their holding by 50%. The members of the supervisory bodies (Audit Committee, Supervisory Board or the Committee for Financial Matters of the General and Supervisory Board) held a stake in the share capital of 11 issuers, albeit it did not surpass 1%. The stake percentage held by the remaining members of the General and Supervisory Board was insignificant.
The Portuguese State represented4 the share capital of 6 companies: EDP (20.49%), Galp Energia (7%), Inapa (32.72%), Portugal Telecom (0.07%), REN (31%) and Zon (0.04%).
Institutional investors (banks, insurance companies, pension funds and investment funds) were among those in the majority of the companies’ capital5. To this end, this type of investor solely did not have a qualifying holding in the capital of 13 issuers (three of which were PSI-20 companies).
4 For the purposes of this study, CGD’s investment is included in the title ‘Institutional Investors’ (although these holdings are ascribed to the State as per Article 20 of the Securities Code). 5 The mention of institutional investors here refers to qualifying holdings in the companies’ capital. 13 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Institutional investors also held a stake equal or higher than 20% in 13 companies (7 of the PSI-20 and 3 financial), attaining the maximum value of 59.86% in Vista Alegre. In average, institutional investors held a stake of 11.7% in the companies’ capital with a higher concentration in financial sector companies (16.7%) and those within the PSI-20 Index (15.8%).
The other reference shareholders6 which have not been included in the previous paragraphs, did not hold any stake in the share capital of the 11 issuers (4 of the PSI-20 Index and none from the financial sector) and owned a major stake greater than 50% in 16 others, namely in 7 PSI-20 companies: Brisa, Cimpor, Galp Energia, Jerónimo Martins, Portucel, Semapa and Sonaecom. They held in average 32.3% of the capital of the companies with 17.3% weight in the financial sector and 34.1% in the non-financial sector.
Shares in the issuers’ own portfolio merely represented 1.3% of the average companies’ capital and was less significant within the financial sector companies and in the PSI-20 Index companies with 0.2% and 0.6%, respectively. Furthermore, 20 companies did not hold any own-shares in the relevant portfolios. However, the capital percentage in own portfolio did not surpass 2% in 6 issuers (Grão Pará, Ibersol, Mota-Engil, SAG, Semapa and Sumolis). In the cases of Grão Pará and Ibersol, the capital percentage surpassed 9%.
Lastly, as at 31 December 2007, the capital dispersed among other shareholders7 of Portuguese companies with shares listed on Euronext Lisbon, was in average 24.4%. This amount is higher in the financial sector companies (26.8%) and in the PSI-20 (27.7%). Only two issuers showed dispersion of capital among shareholders higher than 50% (Compta and Pararede8). On the other hand, the dispersed capital was less than 10% in 10 companies and Media Capital registered less than 1%.
In the calculation of qualifying holdings referred to in article 20 of the Securities Code at 31 December 2007, the average total of qualifying holdings reached 74.3% of the companies’ share capital. This average was lower in the financial sector companies (70.3%) and in the PSI-20 companies (70.5%). On the other hand, the total amount of qualifying holdings was less 40% of the share capital in only two (Compta and Pararede), reaching amounts over 90% in 9 companies (two of these from the PSI-20).
6 A reference shareholder holds either directly or indirectly, a position of equal to at least 2% of the share capital. 7 Capital not included in the previous groups is considered to be dispersed. 8 After the resolution by the General Meeting in June 2008, Pararede changed its name to Glintt - Global Intelligent Technologies. In this report we will continue to use the name employed during 2007. 14 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Reference shareholders have kept a stable presence throughout. Shareholders with continuous holdings for at least three years, held in average, 56.5% of the companies’ capital, which means that recent reference shareholders only represented in average, 17.8% of the companies’ capital. Permanence of reference shareholders in the companies’ capital has been higher in financial companies and in non PSI-20 companies once in both types of companies, recent shareholders with qualifying holdings (i.e. at least three years) merely show in average, 12.9% and 15.8%, respectively, of the companies’ capital.
Chart 5 – Distribution of the Share Capital held per Reference Shareholder
90%
80%
70%
60%
50%
40%
30%
20%
10%
0% Total Shareholders with continuous holding in the company for at least 3 years
Non –Financial Sector Financial Sector Within the PSI-20 Non PSI-20 Average
However, there are significant differences among companies. Thus, there are 22 companies in which recent qualifying holdings represent 10% of the capital of the relevant company and in another 5 companies same qualifying holdings are over 45% of the company’s capital. This means that the group or control relationship has been kept in the majority of the companies, although in 2007 a great number of takeover bids were launched.
Commercial liaisons between the company and its reference shareholders, creditors, clients, competitors and suppliers take on an extremely important role insofar as conflicts of interest may arise. In average, 6.2%, 3.2%, 2.8% and 5% of the companies’ share capital is held by relevant creditors, relevant clients and relevant suppliers, respectively.
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Relevant creditors are represented in the capital of 4 PSI-20 companies and in 9 non PSI-20 companies.9 In certain situations, the weighting of the relevant creditors surpasses 20% of the share capital, reaching over 50% in one specific case. On the other hand, in one financial sector company, the relevant creditors represent just less than 50% of the relevant share capital.
Competitors represent the share capital of 7 companies (5 PSI-20 and 3 financial). 10 The weighting of the competitors manages to surpass 50% of the share capital in one PSI-20 financial company. Cross holdings reached 34.8% in one non-financial company.
Relevant clients are reference shareholders in 7 companies (one of these is a financial sector company of the PSI-20 Index).11 Weighting of relevant clients surpasses 20% of the share capital of three companies and actually reached 44.1% in one situation.
Relevant suppliers are reference shareholders in 9 companies (5 of the PSI-20 and 3 of the financial sector). In 4 companies, relevant suppliers hold at least 25% of the share capital and this percentage surpasses 50% of two of same.
Institutional investors play an important role in the shareholder structure of listed companies in Portugal. As previously mentioned, banks, insurance companies, pension funds and investment funds are present in the capital of the majority of companies and did not hold any stake in 13 companies (Estoril Sol, Porto SAD, Fisipe, Grão Pará, Lisgráfica, Papelaria Fernandes, Portucel, Reditus, Orey Antunes, Sonaecom, Sonae Indústria, Sporting SAD and Sumolis)12.
In average, residing institutional investors held 7.1% of the companies’ capital and non- residing, 4.7%.
Non-resident institutional investors held a stake in the capital of 18 companies – the share capital percentage swayed between a minimum of 4.7% (Mota-Engil) and a maximum of 31.6% (Portugal Telecom). Non-resident institutional investors hold shareholder positions with high significance in PSI-20 companies, for instance: they represent in excess 1/4 of the share capital in 4 of these companies.
9 Two companies (one PSI-20) did not respond to this issue. 10 One company did not respond to this issue. 11 Two companies (one PSI-20) did not respond to this issue. 12 Institutional investors with qualifying holdings. 16 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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The permanent presence of institutional investors in the companies’ capital for at least 3 years was detected in 22 companies13, which in average represents 6.7% of the capital. The shareholder stability of institutional investors represents a higher capital percentage of financial sector and PSI companies. However, non-resident institutional investors permanently present in companies for at least 3 years, is witnessed in 7 companies (Altri, BPI, BCP, BES, Corticeira Amorim, EDP and Portugal Telecom).14
In another 11 companies, the presence of non-resident institutional investors is more recent. On the other hand, resident institutional investors are permanently present during at least 3 years in the capital of 20 companies and in another 10 companies; the presence of resident institutional investors is less than three years. Non-resident institutional investors are represented in two companies albeit non-resident companies are not represented at all (Altri and Corticeira Amorim).
Chart 6 – Percentage of Share Capital with Voting Rights held by Institutional Investors
18%
16%
14%
12%
10%
8%
6%
4%
2%
0% Total Shareholders with continuous holdings in the company for at least 3 years Non-Financial Sector Financial Sector Within PSI-20 Non PSI-20 Average
13 One company did not respond to this issue. 14 One company did not respond to this issue. 17 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Textbox I – Assessment of Compliance with Recommendation 11
Recommendation 11:
«Institutional investors shall be responsible for acting diligently, efficiently and critically as to the relevant rights of their securities or the management of securities that have been entrusted to them, namely in what concerns information and voting rights.»
The role conferred to institutional investors in the securities markets has a tendency to increase. Several studies have concluded that an active role played by institutional investors in corporate governance control contributes towards minimizing agency costs and safeguards shareholders’ interests. It is therefore evermore important that securities’ corporate rights be used diligently, efficiently and critically.
A first approach to active participation of institutional investors in our market may be conducted by analysing the participation of the type of investor in the company’s general meetings.
After consulting the attendee lists of some of the general meetings held in 2007 and in 2008 as well, one is able to have a general idea of the active participation of institutional investors. These lists contain all the shareholders that were present at the general meeting regardless of whether same have qualifying holdings or not.
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Table I – Attendee List of the General Meetings in 2007 and 2008
Foreign Foreign Portuguese Portuguese Portuguese Portuguese Portuguese Nº de GMs Funds Banks Banks Insurance Cos Brokers PF’s IF’s 19 (2008) 14 13 3 4 2 5 2 % 73.7 68.4 15.8 21.1 10.5 26.3 10.5 17 (2007) 12 10 8 4 4 7 8 % 70.6 58.8 47.1 23.5 23.5 41.2 47.1 PF: Pension Funds; IF: Investment Funds; GM: General Meetings The data collated herein is derived from the attendee list of the General Meetings available at the CMVM and thus may not be .entirely representative of same.
Thus, the attendee list showed that of the 17 general meetings held in 2007, foreign funds (pension and investment) were represented in 12 companies – 70.6%. Conversely, the Portuguese pension funds were present in 41.2% and investment funds in 47.1% of those general meetings. Foreign banks were represented in more general meetings than national banks (58.8% and 47.1% respectively of the general meetings analysed).
In 2008, the situation was further unbalanced with funds and foreign banks represented at a higher number of general meetings and the funds and national banks represented at a lower number of general meetings. One is able to conclude that in relative terms and by using this benchmark, Portuguese institutional investors have not been particularly active in the corporate governance control of Portuguese national companies with shares listed on Euronext Lisbon.
I.3 Shareholders’ Place of Residence
The percentage of capital held by non-residents in Portugal is an estimate15 figure as to the share capital percentage held by non-residents and in average, amounted to 13.3% of the companies’ share capital. This figure is highest for PSI-20 Index companies (19.2%) and represents 19.6% in the financial sector.
Twenty-one companies did not have qualifying holding by non-residents; quite the opposite, in 4 companies, non-residents held over 50% of the companies’ share capital.
15 This estimate figure may be interpreted as the minimum percentage that non-resident shareholders have in Portuguese companies with shares listed on Euronext Lisbon. Thus, non-resident shareholders that hold less than 2% of the capital are not included in those qualifying holdings but rather in ‘dispersed’ capital. 19 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Chart 7 – Place of Residence of Shareholders with Qualifying Holdings
90.0 % 80.0 % 9.0% 70.0 12.6 13.3 % % % 60.0 19.6 19.2 % % % 50.0 % 40.0 % 68.1 30.0 62.2 % 61.0 % % 50.7 51.3 % 20.0 % % % 10.0 % 0.0% Non-Financial Financial Sector Within the PSI-20 Non PSI-20 Average Sector Resident Non-Resident
I.4 Stock-Option Plans
As at 31 December 2007, the members of the Board of Directors of 4 companies had share- option plans (BPI, Cimpor, Novabase and Pararede). These plans did not include non-executive members within same Board16.
The percentage of share capital that executive members of the Board of Directors may have is in average 2.53% except for cases in which same exercise options fully. This percentage is significantly higher in two non PSI-20 companies. In same companies, share-options were not included in own portfolio and thus as per the companies’ response to the CMVM questionnaire, companies are obliged to increase their capital should the options be exercised.
16 EDP and Brisa have stock-option plans, however we did not obtain a response to the detailed questions on this issue mentioned in the questionnaire. In EDP’s case, the option exercising on shares of the Chairman of the Board of Directors and the Chairman of the Executive Committee and same’s executive members within the previous mandate of the Management Body (2003-2005) and a new plan is not envisaged for the 2006-2008 triennium. In Brisa’s case, this plan encompasses executive directors and some employees (totaling 127 individuals in 2007). This data was collated from the relevant Corporate Governance Reports.
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This situation is different to the one witnessed in the other two PSI-20 companies and in which the corresponding shares are included in own portfolio.
The average ratio of the average exercising price of the options/price of the security with reference to 31 December 2007 was 111.4%. However, in the two PSI-20 companies, this average ratio was 63.9%, and 159.0% for the remaining two. Identical ratio with reference to the issuance date of said plans was 95% (average values for three companies).17 In one company, the value of this ratio with reference to the issuance option date was less than 100% and equal to 100% in one case and 110.8% in another.
Chart 8 - Stock-Option Plans for Members of the Board of Directors
160%
140%
120%
100%
80%
60%
40%
20%
0% Ratio (average exercising price / quotation) Ratio (average exercising price / quotation) with with reference to 31.12.2007 reference to the plan issuance date
Non-Financial Sector Financial Sector Within PSI-20 Non PSI-20 Average
The average term for existing option rights was 153 days, and 0 days in one situation and 14 months in another situation. The possibility of revising the exercising price for plans in force was provided for in only one company albeit without a significant change to the exercising price of the options that had already been issued. The characteristics of stock-option plans present in these 4 companies, was approved at the General Meeting.
17 One company did not respond to the issue. 21 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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BPI, Cimpor, Novabase and Orey Antunes have stock-option plans for employees and co- workers. The share capital percentage that employees and co-workers of these 4 companies are entitled to should they fully exercise same options, is 3.35%. This percentage was significantly lower in the two PSI-20 companies (0.36%). Same two companies had own portfolio shares that are allocated to these plans as at the date of the remuneration system which did not occur in the other two companies. In one of these situations, the company wished to buy market shares and in the other situation, the company wished to issue shares in a percentage representing 3.16% of the relevant share capital.
The average exercising price for options represented 91.4% of the company’s share market value as at the date of the options issuance with a ratio below 100% for two companies. The average value of this ratio was 96.1% with an increase for two companies and a decrease for another two, as at 31 December 2007. The option rights’ average time-period as at 31 December 2007 was 373 days – and 0 days for one company. The option of reviewing the exercising price for share-option plans in force are present in two non PSI-20 companies and in one case, a significant change in the options exercising price already issued. These employee and co-worker company plans were approved in the general meetings of 4 companies.
Chart 9 – Stock-Option Plans for Employees and Co-Workers
140%
120%
100%
80%
60%
40%
20%
0% Ratio (average exercising price / quotation) Ratio (average exercising price / quotation) with with reference to 31.12.2007 reference to the plan issuance date
Non-Financial Sector Financial Sector Within PSI-20 Non PSI-20 Average
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There are a further 3 PSI-20 companies (BPI, Sonaecom and Sonae SGPS) that base their remuneration system on shares (excluding stock options) that members of the management board, employees and co-worker may access. The maximum share capital that beneficiaries of this system may access, was in average 1.51% for members of the management board and 1.70% for employees and co-workers. In two of these companies, shares to be allocated according to this remuneration system were not found in own portfolio on the date the remuneration system was set and thus its acquisition was market-based. The characteristics of the plans of these two companies were approved at the General Meeting. In the other company, shares were found in own portfolio and the plan’s characteristics had not been approved at the General Meeting.
II. Corporate Governance Models, Boards and Structures
Before the legislative change via Decree-Law 76-A/2006 of 29 March, the Commercial Companies Code allowed for the option of one of two models for the structuring of management and supervisory boards: i) Modist Model composed of a Board of Directors as the sole management body and a Supervisory Board as the supervisory body; and ii) Dualist Model composed of an Executive Board, a General Board and a Statutory Auditor.
Following this legislative change, the management and supervision of companies was structures as per one of the three models: i) Board of Directors and Statutory Auditor (Latin Model); ii) Board of Directors with a Audit Committee and a Statutory Auditor (Anglo-Saxon Model); iii) General and Supervisory Board (including a Financial Matters Committee), and Executive Board of Directors and a Statutory Auditor (Continental or New Dualist Model). Companies are obliged to choose one of these models.
Prior to the coming into force of the legislative framework, all listed companies adopted the Monist Model and thus no company had a dualist model based on an Executive Board and a General Board. However, as regards the adoption of listed corporate governance structures and models, the situation at the time was far from uniform. In actual fact and as a case in point, circa half the companies had an Executive Committee and in about a quarter of the companies, a non-executive based committee was solely formed by members of said body. Apart from this, at end 2005, 9 companies have audit-duty committees although from the formal-legal viewpoint, the format of the Audit Committees was yet to be included in the Commercial Companies Code.
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The starting point for adopting said models envisaged in the new legislation is thus unanimous as regards the formal-legal plan and by uniformity to the practices in place namely at structural and organizational level of the Board of Directors.
II.1 Corporate Governance Models
At end 2007, 35 out of 47 companies had opted for the Latin Model (74.5% in total). Thirty- three of these companies (94.3%) are non-financial companies and only two (5.7%) are financial companies. The Latin Model is in fact the model that is most adopted by non – financial companies (78.6%), since only 8 companies (19.0%) chose the Anglo-Saxon Model and only one company (2,4%) opted for the Dualist Model.
The Latin Model is the most preferred by non PSI-20 issuers and is also the governance model that is most preferred by PSI-20 companies which has been adopted by 55% of the companies within said index at end 2007.
The preference given to this model by non PSI-20 issuers is actually quite meaningful because it corresponds to the choice of 24 out of 27 companies with said characteristics (88.9%). Only three companies opted for the Anglo-Saxon Model and none of the non PSI-20 issuers chose the new Dualist Model.
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Chart 10 – Corporate Governance Models
100.0 % 90.0 % 80.0 % 70.0 % 60.0 % 50.0 % 40.0 % 30.0 % 20.0 % 10.0 % 0.0% Non-Financial Financial Sector Within PSI-20 Non PSI-20 Average Sector
Latin Model Dual Model Anglo-Saxon Model
The Anglo-Saxon Model is the second most adopted model and was selected by 10 companies with two financial companies (BES and BPI). Amid the PSI-20 companies, 5 adopted this model (Impresa, Jerónimo Martins, Portugal Telecom, REN and Zon Multimédia). Non PSI-20 issuers, such as Inapa, Media Capital and Novabase adopted the Anglo-Saxon Model.
There is however a breakup of the three model financial companies, given that Banif and Finibanco opted for the Latin Model, BCP for the Dualist Model whilst BES and BPI preferred the Anglo-Saxon Model18.
Lastly, besides BCP, the Dualist Model was preferred by EDP and was thus the least adopted of the three models that the Commercial Companies Code allows for.
The Latin Model is the dominating Model. However, if one is to consider the importance of each of the models as to its market capitalisation instead of the number of companies as at 31 December 2007, one is able to see that the relative significance of the different alternatives is more balanced. When using said benchmark, the weighting of the Latin Model is 40.6%, the Anglo-Saxon Model is 31.9% and the Dualist Model, 27.5%.
In summary, the majority of the companies adopted the Latin Model, however many financial companies and some of the larger companies opted for other models, particularly the Anglo- Saxon Model.
18 BPI reverted back to using the Latin Model in 2008. 25 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Besides the former, the situation among issuers that adopted the Latin Model is not inconsistent inasmuch as in 15 cases, an Executive Committee was created while in the other 20 cases, this did not occur.19 Furthermore, Compta does not have an Executive Committee but does have a sole CEO and the remaining members are non-executive. One of the non- executive directors of Compta carries out duties of Market Liaison Officer. In three cases (Brisa, Sonae Indústria and Sonaecom), a committee with audit duties was created within the Board of Directors although the Latin Model had been adopted and as such, the supervisory duties were conferred on the Supervisory Board.
The Anglo-Saxon model is also worthy of note in the company Media Capital, due to the fact that although having 3 executive directors, it does not have an Executive Committee with a CEO figure.
II.2 General and Supervisory Boards
(i) Size of the General and Supervisory Board
Only EDP and BCP adopted the Dualist Model, both having General and Supervisory Boards. These companies adopted said model at the end of the 1st half-year of 2006.
EDP’s General and Supervisory Board is composed of 14 members who have been elected for a 3-year mandate. BCP’s General and Supervisory Board is composed of 11 members and is also elected for a 3-year mandate.
Due to the situation at 31 December 2006, the number of members of EDP’s General and Supervisory Board was reduced by two members due to the entry of two new elements and the exit of 4 and keeping with 12 members.
Although the number of BCP members has remained constant, several changes occurred in the Board’s composition. During 2007, 4 permanent members resigned, including the Chairman and two alternate members. Thus, the new composition of the Board after the election during the General Meeting of 15 January 2008 is quite different from that of end 2006. Thus, only 6 members among those as at the date of this report were included in this board (55% of the total number) were part of its composition as at 31 December 2006. The current Chairman is part of the latter composition and was Vice-Chairman at the time of the previous Board.
19 The cases in which an Executive Committee was created are: Brisa, Cimpor, Corticeira Amorim, Fisipe, Galp, Ibersol, Portucel, SAG, Semapa, Soares da Costa, Sonae-SGPS, Sonae Indústria and Sonaecom, Sporting SAD and Vista Alegre Atlantis. 26 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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The number of members of the Supervisory Board exceeds in both situations, the number of members of the Executive Board of Directors. However, in EDP’s case, the number of members of the General and Supervisory Boards is twofold the number of members of the Executive Board of Directors, while in BCP’s case, the difference between the number of members of the two boards was 2 during the 2007 financial year and is currently 4.
CMVM’s Recommendation 5-A stipulates that the Management Board shall include a sufficient number of non-executive directors whose role is that of permanently monitoring and assessing the management of the company by the executive members. Assessing the compliance of this recommendation within the Dualist Model, involves knowing whether the number of members of the General and Supervisory Board is sufficient to carry out this role. Recommendation 5-A is complied with by both companies (please refer to Textbox 2).
(ii) Functions of the General and Supervisory Board
Article 441 of the Commercial Companies Code assigns a wide-ranging set of duties to the general and supervisory boards, namely: i) Appointing and dismissing directors, if such power is not conferred on the General Meeting in the articles of association; ii) Appointing the director who shall serve as chairman of the Executive Board of Directors and dismissing him, if such powers are not conferred upon the General Meeting in the company’s articles of association; iii) Representing the company in liaisons with the directors; iv) Supervising the activities of the Executive Board of Directors; v) Ensuring that the law and the articles of association are observed; vi) Verifying the regularity of books, accounting records and supporting documents, as deemed fit and in the manner which is appropriate, as well as the situation of any assets or securities held by the company through any means; vii) Verifying whether the accounting policies and valuing criteria adopted by the company allow for the correct valuation of the assets and the results; viii) Issuing a statement of opinion on the annual report and accounts for the financial year; ix) Supervising the efficiency of the risk management system, the internal control system and the internal audit system; x) Receiving communications on irregularities presented by shareholders, company employees or others; xi) Supervising the process of preparing and reporting financial information; xii) Making a proposal to the General Meeting as regards the appointment of the statutory auditor; xiii) Supervising the auditing of the company’s financial statements; xiv) Supervising the independence of the statutory auditor, in particular with regard to the provision of additional services;
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xv) Engaging the services of experts to assist one or several of their members in the exercise of their functions. The hiring and remuneration of experts must take into account the importance of the matters committed to their attention and the economic situation of the company; xvi) Granting or denying consent for the transfer of shares, whenever this is required under the terms of the articles of association; xvii) Convening the General Meeting, whenever deemed fit; and xviii) Exercising other functions which are assigned to it by law or by the articles of association. This is a wide-ranging set of functions, albeit the companies are free to statutorily confer other functions on the General and Supervisory Board. Within this context, the CMVM recommended in its 2007 version and which is not applicable to the current exercise, that besides their supervisory role, these boards carry out an advisory, monitoring and on-going assessment role in the management of the company by the executive board of directors.
The matters that the General and Supervisory Board should cover under the terms of this Recommendation, include i) the company’s strategy and the general policies; ii) the corporate group structure; and iii) decisions that are considered to be strategic due its value, risk or special characteristics.
It is thus interesting to analyse the duties that are specifically given to the general and supervisory boards besides those which result strictly from the Law. It is particularly relevant to analyse the duties of these boards both regarding the nomination and dismissal of the executive directors, as well as the approval of matters covered in the CMVM’s new Recommendation.
Election and dismissal of the members of the Executive Board of Directors is due on the General Meeting in EDP’s case. In this company, the articles of association confer on the General and Supervisory Board, the duty to propose to the General Meeting the dismissal of any member of the Executive Board of Directors but does not confer it with dismissal powers. EDP’s General and Supervisory Board, via statutory obligation, has the duty to draw-up succession plans and is obliged to provide in accordance with the Law, the substitution of members of the Executive Board of Directors in case of actual non-attendance or temporary hindrance.
BCP’s general meeting is responsible for the election and dismissal of the members of the Executive Board of Directors. Its General and Supervisory Board is also responsible for drawing up succession plans and issuing opinions on the co-opting of directors.
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BCP’s articles of association stipulate that the General and Supervisory Board may either through own initiative, or at the request of the Chairman of the Executive Board of Directors, issue a favourable vote of trust for directors as per article 455 of the Commercial Companies Code. In all, the differences in both cases are relatively low for the election and dismissal powers. The differences between duties of the two general and supervisory boards are notorious as regards the role they play in defining the company’s strategy, in the main decisions to be taken on the establishment and definition of the corporate group structure.
In EDP’s case, a prior favourable vote by the General and Supervisory Board is required for the approval of the company’s strategic plan and the following operations by the company or companies controlled by EDP: i) acquisitions and disposal of assets, rights or stakes with significant economic value; ii) finance contracting with a significant value; iii) opening or closure of establishment or important parts of establishments or important increase or decrease in the activity; iv) other business deals or transactions with significant economic or strategic value; v) establishing or terminating strategic partnerships or other forms of durable cooperation; vi) demergers, mergers and conversions; vii) amendments to the articles of association including change in head-office and capital increase by the Executive Board of Directors. The General and Supervisory Board shall set the measurement parameters of the economic or strategic value of the transactions that shall be submitted to the Board for opinion.
In BCP’s case the situation is substantially different. In actual fact, the articles of association of this bank only state that the General and Supervisory Board is required to permanently monitor the company’s management activity and to provide advice and assistance on same to the Executive Board of Directors as regards strategy definition, implementing objectives and compliance with the applicable legal ruling. For instance, as regards the company strategy, the Executive Board of Directors may under no obligation, submit the strategic plan for prior report by the General and Supervisory Board and should the opinion of said report be required of the said board, it will have no binding result.
BCP’s Governance Report mentions that it is incumbent on the Higher Corporate Governance Board, the monitoring of corporate life and through prior opinion, report on the most relevant aspects of the company and the group’s activity, namely on: the general management policy; activity plan, annual budgets and investment plans; convening notices for the general meeting and proposals or reports to be submitted to the general meeting; annual management report and accounts; important extensions and reductions of the company activity and significant changes to the company’s organisation; change of head-office, share capital increases, mergers, demergers and conversions in the company.
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Nevertheless, the control of the Higher Corporate Governance Board (a Board that is not typified in the Commercial Companies Code) does not replace the required control by the General and Supervisory Board, since it is not subject to responsibility, election, composition and independency rules that apply to the latter.
Lastly, as to the duties incumbent on either Board, EDP’s General and Supervisory Board nominates a committee for setting the remunerations of the members of the Executive Board of Directors. The remuneration of BCP’s directors is set by a committee that is elected at the General Meeting. The General and Supervisory Board is not involved in this matter.
(iii) Chairmanship of the General and Supervisory Board
For both EDP and BCP, the relevant Chairman of the General and Supervisory Board carries out duties on a full-time basis. Albeit, in either situation, the Chairman is not independent. Both situations do not entail specific requirements for the position of Chairman of the General and Supervisory Board. The Vice-Chairman is independent in both cases.
(iv) Independency of the Members of the General and Supervisory Board
In EDP’s case and as per the independency requirements in article 414/5 of the Commercial Companies Code, 9 out of the 14 members (64.3%) of the General and Supervisory Board are considered to be independent. There are 6 independent and 5 non-independent members at BCP – independent member percentage within the board is thus 54.5%.
Non-independency of members at EDP occurs due to the fact that one of the members was re- elected for more than two mandates in a continuous or interleaved way (article 414/5/b of the Commercial Companies Code) and in the other 4 cases due to being a holder or acting on behalf of or for the account of holders of stakes equal or greater than 2% of the share capital of the company (article 414/5/a).
One non-independent member at BCP was elected for more than 2 ongoing mandates for its supervisory board and the remaining 4 (including the Chairman) are not considered to be independent once they are either holders or act on behalf of or for the account of holders of stakes equal or greater than 2% of the share capital of the company.
Bearing in mind the number of independent members of this supervisory board, Recommendation 6 (a sufficient number of independent members shall exist among the non- executive members of the board of directors) both EDP and BCP have complied with said recommendation. (see Textbox 2).
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(v) Functioning of the General and Supervisory Board
In 2007, the General and Supervisory Board of BCP met 12 times while EDP met 8.
In BCP, the articles of association entitle the Chairman of the Executive Board of Directors to attend the General and Supervisory meetings although as expected, without voting right. EDP’s internal regulation of the General and Supervisory Board established that the Chairman of the Executive Board of Directors is entitled to attend whenever he/she deems fit, the General and Supervisory Board except for when the meetings discuss issues regarding the supervision of the Executive Board of Directors.20
At BCP, three committees were created for the internal work structuring of the General and Supervisory Board: i) Audit and Risk Committee; ii) Selection Committee; and iii) Corporate Governance Committee. These committees are not exclusively composed of members of the General and Supervisory Board but also of experts employed by the company and in one case, by the Chairman of the Executive Board of Directors.
In short, the Audit and Risk Committee is, as provided for by law, the Financial Matters Committee. This committee is composed of three independent members of the General and Supervisory Board (one of the members chairs this committee) and is assisted by an expert which is not a member of the General and Supervisory Committee.
The Selection Committee assists and advises BCP’s General and Supervisory Board in the profiling of the duties and composition of the internal structures and boards. Furthermore, it presents recommendations to the General and Supervisory Board on member lists for the corporate boards and holdings, as well as in the opinions given on the annual vote of trust in the members of the Board of Directors. This committee has two members from the General and Supervisory Board – one, the Chairman is independent and the other, non-independent and two additional experts.
Lastly, the Corporate Governance Committee assists and advises the General and Supervisory Committee regarding Corporate Governance issues. During 2007, this committee replaced the Sustainability and Corporate Governance Committee. The current Corporate Governance Committee is composed of two members of the General and Supervisory Board (an independent member and a chairing non-independent member), three expert members and the Chairman of the Executive Board of Directors.
20 The internal regulation of EDP’s General and Supervisory Board may be consulted on the company’s website.
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EDP has three committees within the General and Supervisory Board: i) Audit Committee; ii) Remuneration Committee; and iii) Corporate Governance and Sustainability Committee. Each of these committees is solely composed of members of the General and Supervisory Board and is considered entirely as specialised committees of that Board.
The Audit Committee includes the Financial Matters Committee and its setting up is compulsory as per article 444/2 of the Commercial Companies Code, for issuers of securities admitted to trading. It is composed of 4 independent members.
The Remuneration Committee is a specialised committee within the General and Supervisory Board. Its duties entail setting the remuneration policy of the Executive Board of Directors and are different from the Remuneration Committee appointed at the General Meeting for setting the remuneration policy of the remaining boards. This committee is composed of three members – two, including the Chairman, are independent.
Lastly, apart from other duties, the Corporate Governance and Sustainability Committee permanently monitors issues on corporate governance, strategic sustainability, assessment systems, resolution of conflicts of interest and the drawing up of succession plans. This committee is composed of 7 members, 5 of which are independent. The Chairman of the General and Supervisory Board also presides this committee.
In summary, despite there being in both cases three working committees for the General and Supervisory Boards, at least three important differences are visible among the companies that adopted the Dualist Model. Firstly, all of EDP’s committees are solely composed of members of the General and Supervisory Board, albeit same does not occur with BCP. Secondly, EDP’s committees are majorily composed of independent members which is not the case with BCP. Thirdly, one of EDP’s committees sets directors’ remuneration and BCP has no committee with this type of responsibility which results from the fact that the General and Supervisory Board of this company does not have powers on this issue. On the other hand, BCP has a Selection Committee responsible for handling election issues – same does not occur in EDP albeit same has a Corporate Governance and Sustainability Committee which draws up the nomination plans.
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II.3 Boards of Directors
Besides other aspects, this chapter focuses on the size, composition, independency and the way the boards of directors function, taking into consideration that 35 companies opted for the Latin Model and 10, for the Anglo-Saxon Model.
(i) Size of the Boards of Directors
The average size of the boards of directors is 8.5 members. The financial companies have the highest number (average of 15.5) together with the PSI-20 companies with an average of 13.3.
Chart 11 – Average Size of the Boards of Directors
18.0
16.0 15.5
14.0 13.3
12.0
10.0 7.8 8.5 8.0
5.8 6.0
4.0
2.0
0.0 Non-Financial Financial Sector Within PSI-20 Non PSI-20 Average Sector No. of Members
The situation among the financial sector companies is quite uneven. Whilst BES is composed of a 30 member Board of Directors and BPI, 21, the identical bodies Banif and Finibanco are composed of 6 and 5 elements, respectively.
The following non-financial companies find themselves in quite a different situation, swaying between three directors for Grão Pará, Ibersol, Lisgráfica, Papelaria Fernandes, and Orey Antunes and 22 directors for Portugal Telecom.
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The difference is notorious between the companies that adopted the Latin Model and those that opted for the Anglo-Saxon Model. The latter show an average size of 13.8 and a maximum number of 30 (BES) and a minimum of 6 directors (Impresa). Companies that opted for the Latin Model show an average size of 6.9 and the maximum number is 18 (Galp Energia) – the minimum number is 3 for Grão Pará, Ibersol, Lisgráfica, Papelaria Fernandes and Orey Antunes.
In 15 companies (42.9%) that adopted the Latin Model, the number of directors surpasses the minimum number of directors of companies that opted for the Anglo-Saxon Model.
Such is the case with Brisa, Cimpor, Corticeira Amorim, Estoril Sol, Galp Energia, Mota-Engil, Portucel, SAG, Semapa, Sonae-SGPS, Sonae Indústria, Sonaecom, Sumolis, Teixeira Duarte and Toyota Caetano. It is likely that the reasons for opting for the Latin Model instead of the Anglo-Saxon Model did not involve the size and functioning costs of the Board.
Even for those companies that adopted the Latin Model, the situation is distinct between those that created an Executive Committee, thus having executive and non-executive directors and those in which all directors are executive members.
The first group with 15 companies, the average number of directors is 8.9 with a maximum of 18 (Galp Energia) and a minimum of 3 (Ibersol). In the second group with 20 companies, the average number of directors is 5.2. with a maximum of 9 (Estoril Sol) and a minimum of 3 (Lisgráfica and Orey Antunes).
Highlight must be given to the cases of Ibersol, Mota-Engil and Teixeira Duarte. The fact that an Executive Committee exists at Ibersol notwithstanding the low number of directors on the Board of Directors of Mota-Engil and Teixeira Duarte for not having this Executive Committee although the size of the company and the number of directors on the Board of Directors is high in comparison to the rest of the companies that opted for an identical form of governance. 21
Banif and Finibanco both have Latin Model-based governance without an Executive Committee and thus these companies do not have non-executive directors that could carry out, besides other functions, those relating to advising, contesting, supervising and assessing the performance of executive directors.
21 Not applicable once one of the managers of Teixeira Duarte is non-executive.
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(ii) Composition of the Board of Directors
In global terms, the average number of executive directors (4.8) surpasses that of non- executive directors (3.7). Yet again, the global situation differs from that of companies within the PSI-20 Index. In the latter, the number of non-executives surpasses that of executives with 51.9% being the former’s average weighting.
Chart 12 – Weighting of Non-Executive Directors
Average 64.6%
75.7% Non PSI-20
48.1% PSI-20
69.2% Financial Sector
64.2% Non-Financial Sector
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
Executive Non-Executive
If one excludes from the assessment companies that only have executive directors, the weighting of non-executives will then be 50.3%. If one analyses the Latin Model for the latter, the weighting of non-executives will be 46.4% with a maximum of 80.0% and a minimum of 11.1%.
Compta is an important case once it has a sole CEO and 4 non-executive directors and conversely, Teixeira Duarte only has one non-executive director.
If one analyses the companies that opted for the Anglo-Saxon Model, the weighting on non- executives increases by 58.3%, with a maximum of 72.7% (Portugal Telecom) and a minimum of 36.4% (Novabase). BPI, Jerónimo Martins and Zon Multimédia are also worthy of note due to the fact that the number of executives does not surpass a third of the Board of Directors.
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As to the directors’ source, in average, 40.9% of the directors are shareholders or family members of reference shareholders and circa 29.9% are company staff. The independent directors show 19.2% of the total number of directors.
Table II – Typology of Members of the Board of Directors
Non-Financial Financial Within Non PSI-20 Average Sector Sector PSI-20 Shareholders or Family Members 3.5 3.0 4.0 2.8 3.5 Non-Shareholders or without qualifying holding 4.3 12.5 9.3 3.0 5.0 Company Staff 2.4 4.3 3.1 2.4 2.5 Are not or were Company Staff during the last 5 years 5.4 11.3 10.3 3.4 5.9 Independent 1.5 3.3 3.0 0.5 1.6 Non-Independent 6.3 12.3 10.3 5.3 6.8 Total 7.8 15.5 13.3 5.8 8.5
Even PSI companies reflect shareholder concentration on the structure of the board of directors. Within this group, 29.9% of the directors are reference shareholders of their family members. The situation is however quite different in the financial sector. The weighting of reference shareholders and their family members in financial companies, is circa 20%.
Table II shows that in average, the number of members of the Board of Directors that are not reference shareholders or their family members and/or company staff and are thus professionals that have been recruited from within the market is 8.3 (53.2%) for financial companies, 6.3 (47.1%) for PSI-20 companies and 0.6 (9.6%) for non PSI-20 companies.
Of the latter, independent members represent proportionally 39.4% for the financial sector, 47.7% for PSI-20 companies and 86.7% for non PSI-20 companies. It is thus evident that non PSI-20 companies hardly resort to the market to recruit professionals for their boards of directors and when they do, they only recruit independent directors.
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Foremostly, management staff carry out executive functions since the number of previous non- executive management staff represents only 9.1% of the total number of previous staff with managerial duties. Also, the majority of directors that are reference shareholders or their family members, carry out executive functions. In this case, the non-executive percentage reaches 37.7%.
The average percentage per governance model of reference shareholders or their family members on the boards of directors is 50.3% for the Latin Model and 34.1% for the Anglo- Saxon Model. Conversely, the same percentage of directors from company management staff is higher for the Latin Model than for the Anglo-Saxon Model (34.% versus 22.4%). However, in both cases, the percentage of external directors (neither reference or family-member shareholders, nor staff for the last five years) decreases: 8.1% for the Latin Model and 9.1% for the Anglo-Saxon Model.
The average age of executive directors is 52.2 years and for non-executive directors, 59.1. Age averages are highest in financial companies (57.3 and 62.8 years, respectively), but there is no significant difference between PSI-20 companies and the remainder. The average age for PSI-20 companies is 52.1 and 59.5 years, respectively.
(iii) Independence of the Members of the Board of Directors
The best practices in Corporate Governance recommend that the Management Board includes a number of non-executive members that are able to ensure effective supervision, auditing and assessment of the executive members’ activity. Furthermore, including a sufficient number of independent members in non-executive members of the board of directors is an essential tool for sound corporate governance.
As such, same occurs with the CMVM Recommendations 5-A and 6. Textbox 2 concerns information on the compliance with these recommendations and focuses on all the governance models for each company. However, it is important to analyse the overall outlook of the Portuguese market as to the situation wherein the Monist structure has been adopted.
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CMVM Chart 13 – Independent Member Weighting
50.0 % 45.6 44.9 45.0 % 41.9 42.9 % % % 40.0 % % 36.6 35.0 % % 30.0 % 25,0% 22.5 19.4 21.0 % 19.7 20.0 % % % % 15.0 % 9.6% 10.0 % 5.0%
0.0% Non-Financial Financial Sector Within PSI-20 Non PSI-20 Average Sector % of Independent Non-Executive Members % of Total Independent Members on the Board of Directors
Chart 13 clearly shows that the average weighting of independent members on the Board of Directors of Portuguese companies, is quite low. In average, independent directors hold 19.7% of management posts and have a 44.9% of weighting among the non-executive directors. In fact, taking into consideration that many Portuguese companies’ capital is highly concentrated, one can obviously conclude that there is a sub-representation of small shareholders, inasmuch as independent directors are in a better position to safeguard small shareholders’ interests.
The average value of independent members in the financial sector is 41.9% of non-executive members and 21.0% of the total number of board members. This was mainly due to the fact that Banif and Finibanco have no independent directors. As to other banks, independent members of BPI represent 57.1% of non-executive members and 38.1% of the total number of directors. The percentage of BPI’s independent members apropos the number of non- executive members, is 29.4% and the percentage of independent members of the total within the board, is 16.7% (quite a low value). 42.9% of non-executive members are independent for PSI-20 companies and apropos the total number within the board, independent members show an average weighting of 22.5%.
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The companies that adopted an Anglo-Saxon Model stand at a satisfactory level whilst those that adopted a Latin Model, same is unsatisfactory. In fact, companies that adopted for the former model are in average non-executive directors by 58.3% and 62.4% of the non- executive members are independent and 35.7% of the total number are independent. For the Latin Model, the percentages are 28.8%, 32.8% and 9.9%, respectively. These values are low taking into consideration the strong concentration of the shareholder structure that characterises the Portuguese market. (refer to Chapter I).
(iv) Rotation Policy of the Board of Directors
On 31 December 2007, the current members of the boards of directors maintained their executive duties in average for 7.6 years. This average is higher for financial sector companies than for non PSI-20 companies with 10.4 years and 8.7 years, respectively.
As to non-executive members, in average, the current directors carry out board duties for 5.2 years. Once again, the value is higher for financial companies than for the rest.
(v) Attendance and Activity of the Board of Directors
In average, the boards of directors met 13.3 times – slightly over than once per month. This value is higher for non PSI-20 companies (16.1 times). Furthermore, the value is higher for Latin Model companies (14.2 meetings) than for the Anglo-Saxon Model (10.1 meetings), which is resultant from the fact that some companies do not have an Executive Committee for the former Model.
The attendance level of executive members was higher than that of non-executive members (94.9% versus 83.6%) and the attendance level for non-executive independent members is higher than for the rest of the non-executive members.
On the other hand, the average attendance values are slightly higher for financial sector companies and PSI-20 companies. At any rate, the attendance levels must be considered as higher and same is applicable to the other types of companies.
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Table III – Meetings of the Board of Directors and Attendance
Independent Executive Total Non-Executive Executive Number Member Member Attendance Attendance Member Attendance Attendance Non-Financial Sector 13.7 90.8% 83.5% 94.9% 89.0% Financial Sector 11.5 92.9% 84.5% 96.7% 89.5% Within PSI-20 8.8 91.3% 85.7% 96.7% 90.1% Non PSI-20 16.6 90.7% 81.1% 94.0% 86.6% Average 13.5 91.0% 83.6% 95.1% 89.0%
The first aspect that is worth noting concerning the accruement of duties, is the low number of situations in which non-executive directors carry out executive duties in other companies within the group (see Chart 14), inasmuch as it shows greater availability for effective company business. On the other hand, the outlook is different concerning duties carried out by executive directors. In average, this type of executive director carries out duties in 6.2 companies outside the group and 10.6 in companies within the group (including the listed company involved).
The number of companies wherein the executive directors carry out management duties is particularly high in non-financial companies and in PSI-20 companies. In what concerns the exercise of duties outside the group, the situation is similar among the different types of companies.
Chart 14 – Accruement of Management Duties
14.0 13.2
12.0 10.9 10.6 10.0 8.9 8.1 8.0 7.4 7.1 6.0 6.2 6.0 5.6
4.0
2.0 0.5 0.5 0.3 0.1 0.3 0.0 Non-Financial Financial Sector Within PSI-20 Non PSI-20 Average Sector Companies within the Holding Outside the Holding Executive Functions carried out by Non-Executive Members GrouptheddddddddGroupp 40 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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(vi) Functioning of the Board of Directors
Twenty-six companies out of a total of 45 (57.8%) set up committees within the relevant management body. Of these 26, 10 (Corticeira Amorim, Ibersol, Fisipe, Galp Energia, Portucel, SAG, Semapa, Soares da Costa, Sporting SAD and Vista Alegre Atlantis) only have executive committees, whilst the number of companies with committees within the Board of Directors is 16. Table IV lists these companies and the type of committees.
Several situations are worth mentioning in this Table: the build-up of the audit committees which is 14 in total, 10 Anglo-Saxon Model which is obligatory and 4 Latin Model by the companies own iniciative (Brisa, Sonaecom, Sonae Indústria e Sonae SGPS) since supervision is carried out via the supervisory boards.22
Table IV – Companies having Non-Executive Committees on the Board of Directors
Appointments Anglo- Corporate Latin Corporate Saxon Sustainability and /or Assessment Number of Model Governance and/or Model and Responsibility Auditing Executive Committees Remuneration e Banco BPI [1] 4 BES 2 Brisa [1] 3 Cimpor [1] 2 Cofina 1 Grupo Media Capital 2 Impresa 2 Inapa 2 Jerónimo Martins 2 Novabase 2 PT [1] 3 REN 2 SonaeCom 3 Sonae Ind. 4 Sonae SGPS 3 Zon Multimédia [1] 3 Note: [1] Duties that are partially carried out by another Committee.
22 Besides the fact that the Audit and Finance Committee is composed of 4 non-executive and independent directors (considered as an audit committee), Sonae SGPS has another committee called the Audit Committee. However, the latter, due to its composition may not be considered as an audit committee and is merely a staff committee of the Executive Committee. Furthermore, Mota-Engil has an Investment, Audit and Risk Committee although ‘Auditing’ is included in the name, it may not be considered as such. Accordingly, and although its composition includes executive directors, the duties covered are not completely compatible as explained further on, with the audit committee functions. 41 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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There are 5 Boards of Directors with corporate governance committees.23 Three cases are Anglo-Saxon model companies and the remaining companies have adopted the Latin Model. There are a further 5 Boards of Directors where the committees have election, assessment and remunerations responsibilities. Sonae Indústria has a Committee called the Social Responsibility and Environment Committee which fits the Sustainability and Social Responsibility Committees’ category.
However, as further explained, the corporate governance committees carry out duties as regards sustainability and social responsibility.
Out of a total of 18 companies, none have a committee within the Board of Directors. The companies in this situation are: Altri, Banif, Benfica SAD, Cires, Cofina,24 Compta, Estoril Sol, Porto SAD, Finibanco, Grão Pará, Lisgráfica, Martifer, Papelaria Fernandes, Pararede, Reditus, Orey Antunes, Sumolis, Teixeira Duarte and Toyota Caetano.25
In another plan, 20 companies stated that the functioning of the board of directors is based on rules included in an internal regulation and whereof 10 stated that such regulation is for public access. The latter companies are: Altri, BPI, Cimpor, Cofina, Jerónimo Martins, Novabase, REN, Sonaecom, Sonae SGPS and Zon Multimédia. In all, there are 14 companies that state that at least one of their committees have functioning rules.
In the new CMVM recommendations on corporate governance issued in 2007, the following is included: «Unless the company is of a reduced size and depending on the adopted model, the Board of Directors and the General and Supervisory Committees, shall set up the necessary Committees in order to: i) ensure that a competent and independent assessment of the Executive Directors’ performance is carried out, as well as its own overall performance and further yet, the performance of all existing Committees; ii) study the adopted governance system and verify its efficiency and propose to the competent bodies, measures to be carried out with a view to its improvement».
23 Soares da Costa has a Corporate Governance Committee within their Executive Committee. This committee is not part of any member of its Board of Directors and thus, no non-executive directors sits on said committee. It is a simple staff body of the Executive Committee. 24 Cofina has a Remuneration Committee which is composed of three executive directors (the company does not have any non-executive directors). 25 A previously mentioned, Compta has a sole executive director and the remaining are non-executive directors. Teixeira Duarte has a sole non-executive director. 42 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Again, this version does not apply to the current assessment, albeit it is worth noting that the perspective described in the previous paragraphs shows that a significant number of companies are still far from having corporate governance practices in conformity with this Recommendation.
(vii) Chairmanship of the Board of Directors
In ten companies, the Chairmanships of the Board of Directors and the Executive Committee at end 2007 were held by the same person (Brisa, Corticeira Amorim, Fisipe, Ibersol, Impresa, Novabase, Portugal Telecom, REN, Semapa and Vista Alegre Atlantis). There are 12 companies with the Board of Directors and Executive Committee’s structure, where the make-ups of ‘Chairman’ (Chairman of the Board of Directors) and the ‘CEO’ (Chairman of the Executive Board) include 12 companies, namely: BPI, BES, Cimpor, Galp Energia, Inapa, Jerónimo Martins, Portucel, SAG, Soares da Costa, Sonaecom, Sonae Indústria and Zon Multimédia.
As to separation of duties, only in BPI, Galp Energia, Inapa and Jerónimo Martins does the Chairman of the Board of Directors carry out full-time duties. In those cases where the Chairman of the Board of Directors is also Chairman of the Executive Board, these duties are not carried out on a full-time basis in Semapa. In total, the percentage of cases wherein the Chairman of the Board of Directors carry out full-time duties, is 62.2% and same percentage is highest in financial sector and in non PSI-20 companies.
Table V – Chairmanship of the Board of Directors
Accruement with Fulfilling Full-time Executive Independency Chairmanship Chairmanship Requirements Non-Financial Sector 61.0% 24.4% 7.3% Financial Sector 75.0% 0.0% 25.0% PSI-20 44.4% 27.8% 16.7% Non PSI-20 74.1% 18.5% 3.7% All Companies 62.2% 22.2% 8.9%
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Only 3 companies consider the Chairman of the Board of Directors to be independent (Cimpor, Media Capital and Zon Multimédia). Note that Recommendation II.2.3 (2007) stipulates that «should the Chair of the Board of Directors carry out executive duties, the Board of Directors shall set up efficient mechanisms for coordinating non-executive members that can ensure that these may decide upon, in an independent and informed manner, and furthermore shall explain these mechanisms to the shareholders in the corporate governance report».
In order to comply with this Recommendation, the 10 companies wherein the Chairman of the Board of Directors and of the Executive Committee accumulates duties, should change the chairmanships of these boards or establish alternative mechanisms which are mentioned in said Recommendation. Galp Energia is the only company with requirements at to the election of the Chairman of the Board of Directors – the Chairman of the Board of Directors must have a favourable vote in the majority of the votes pertaining to category-A shares.
II.4 Executive Management Boards and Executive Committees
This section deals with several aspects on the functioning of the boards and executive committees – 24 executive committees (15 Latin and 9 Anglo-Saxon Models) and two executive management boards (Dualist Model) were analysed. In other cases, the executive boards are either committed to a sole executive director (two companies) or the entire Board of Directors (21 companies). Latter cases are not analysed herein once the executive directors are not managed by a college of executive directors supervised and/or overseen by a specific board (General and Supervisory Board) or by non-executive directors.
(i) Size and Composition of the Executive Management Boards and the Executive Committees
The size of the Board or Executive Committee (Executive Management Boards or Executive Committees) and the total number of companies, the number of members is on average 5.6. The financial companies have the largest boards or executive committees and the average number is composed of 9.3 members, once the executive committees of BPI and BES are composed of 7 and 13 elements, respectively. The Executive Management Board includes 8 members.
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Chart 15 – Average Size of the Board or Executive Committee
10.0 9.3 9.0 8.0 7.0 6.0 5.7 5.6 5.0 4.8 4.0 3.6 3.0 2.0 1.0 0.0 Non-Financial Financial Sector Within PSI-20 Non PSI-20 Average Sector
No. of Members
BES’ Executive Board is actually the largest among the listed companies. As to non-financial companies, EDP, Galp Energia, Novabase and Semapa hold the highest number of executive directors (7 in each case).
In average, the PSI-20 companies have larger executive boards or committees than the rest which is to be expected since these companies are generally larger in size. SAG, a non PSI-20 company has an Executive Committee composed of 5 members and has the largest executive structure. The company with the lowest average sized executive structure is Ibersol with two members on the Executive Committee. As regards governance models, Dualist Model based executive boards have the highest average size (7.5 elements) followed by the Anglo-Saxon Model based executive committees (5.7 elements) and lastly, the Latin Model based executive committees (4.3 elements).
Seventeen companies state that at least some of its executive committee members are independent apropos any shareholder. Five of these companies adopted the Anglo-Saxon Model while the remaining 12 adopted the Latin Model. BPI states that this independency condition is applicable to 7 directors (100%), three for Inapa (100%), one for (14.3%), four for Portugal Telecom (66.7%) and 4 for Zon Multimédia (100%).
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Latin Model based companies, Fisipe, Galp Energia and Ibersol simply acknowledge that none of their executive directors are independent from any shareholders. The rest of the companies state that a number of directors are independent as to shareholder interests and its weighting varies from 28.6% (Semapa) to 100% (Soares da Costa, Sonae Indústria, Sporting SAD and Vista Alegre Atlantis).
(ii) Accruement of Duties
As regards accruement of duties, in average, the members of boards or executive committees carry out executive duties in 8.9 companies of the group and in 0.7 companies outside the group. In terms of non-executive duties, the average numbers are 2.1 and 0.8 within and outside the group, respectively – in average each executive director carries out executive duties in a total of 9.6 companies and non-executive duties in 2.9 companies.
Chart 16 – Accruement of Duties by Members of the Board or Executive Committee
10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Non-Financial Financial Sector Within PSI-20 Non PSI-20 Average Sector Executive Functions within the Holding Executive Functions outside the Holding Non-Executive Functions within the Holding Non-Executive Functions outside the Holding
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These values lead to a total of 12.5 companies which cannot be considered insignificant. Accumulating executive functions in several companies is carried out with greater intensity in non-financial companies that in the rest. In actual fact, in the financial sector, numbers are quite low: 0.4 within the group and 0.3 outside the group.
As to non-executive functions, the level of the values do not differ much between financial companies and non-financial companies as regards the exercising of functions within the group and are even higher for financial companies as regards exercising functions outside the group.
(iii) Meetings of Executive Board or Committee and Attendance
In average, the Executive Boards of Directors met 58.5 times in 2007 and the Executive Committees, 29.8 – an average total of 32.0 meetings. The executive committees of Anglo- Saxon Model companies met more times than the executive committees of Latin Model companies (35 versus 27 meetings). Extreme cases on this issue are BES with 70 meetings and Sonae, SGPS with 7 meetings.
Attendance of members at the meetings of boards and executive committees is high with a total average rate of 94.6%. Same attendance drops substantially if one considers only the directors that carry out duties on a part-time basis. In this case, the average attendance rate is only 56.4%.
(iv) Chairmanship of the Executive Board or Committee
As regards the chairmanship of the bodies or executive committees and in addition to the information that was previously provided on the separate roles of the Chairman and the CEO, it is worth highlighting that Galp Energia has specific requirements for the election of the Chairman of the Executive Committee. In this company and by force of the shareholders’ agreement, the shareholders of Amorim Energia and ENI both indicate a director for the CEO duties and is subject to favourable opinion by the CGD shareholders and which may not be refused based on unreasonable grounds26.
26 There are other shareholder agreements in which shareholders agree on nomination of members of the Board of Directors. Albeit, in the responses to the questionnaires, the other companies did not mention this fact as a specific requirement for electing the Chairman of the Executive Committee. 47 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Textbox II – Assessment of Compliance with Recommendations 5, 5-A, 6 and 7
2005’s version of CMVM’s Recommendation 5 reads as follows: «The management board shall be composed of a number of members who provide effective guidance for the management of the company and the persons responsible for said management».
The adopted procedures and the diligence with which the information is provided by the Executive Board of Directors and by the Executive Committee to the General and Supervisory Board and to the Board of Directors, respectively, were analysed. Furthermore, several situations wherein a number of members existed were identified and distinction was made between executive and non-executive members, as well as independent and non-independent members. The way the Board of Directors functions and the number of meetings held during 2007 were also covered in this analysis.
The compliance with Recommendation 5 is summarised in Table VI. This is one of the two recommendations that is complied with by all issuers similarly to what occurred during 2006.
Recommendation 5-A states that, «The Board of Directors shall include a sufficient number of non-executive directors, whose role is to continuously monitor and assess the management of the company by the Executive Members of the Board. Members of other corporate boards may exercise ancillary roles or, at the very most, substitute board members, if the supervisory powers involved are equivalent and exercised in fact ».
Complying with said Recommendation entails that management board/s include/s in general, at least 1/3 of non-executive directors so as to be able to carry out a constant analysis of the company’s management thereby effectively monitoring and assessing the fulfillment of the company’s strategy.
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Table VI – Assessment of Compliance with Recommendations 5, 5-A, 6 and 7
Recommendation (31.12.07) 5 5-A 6 7 Altri, SGPS, SA Y N/D N/NE N/NE Banco BPI, SA Y Y S S Banco Comercial Português, SA Y Y S S Banco Espírito Santo, SA Y Y N/D S Banif - SGPS, SA Y N/NE N/NE N Brisa - Auto Estradas de Portugal, SA Y Y Y Y Cimpor - Cimentos de Portugal, SGPS, SA Y Y Y Y Cofina, SGPS, SA Y N/D N N Companhia Industrial Resinas Sintéticas - Cires, SA Y Y N N Compta-Equipamentos e Serviços de Informática, SA Y Y Y N/NE Corticeira Amorim,SGPS, SA Y Y N Y EDP - Energias de Portugal Y Y Y Y Estoril Sol - SGPS, SA Y N N/NE N Finibanco - Holding, SGPS S.A. Y N N N Fisipe - Fibras Sintéticas de Portugal, SA Y Y N/NE N/D Futebol Clube do Porto - Futebol SAD Y N/NE N N/NE Galp Energia Y Y N/D N/NE Grupo Media Capital, SGPS, SA Y Y Y N/D Grupo Soares da Costa, SGPS, SA. Y Y N Y Ibersol - SGPS, SA Y Y N N Imobiliária Construtora Grão Pará, SA Y Y N N Impresa - SGPS, SA Y Y Y N Inapa - Investimentos, Participações e Gestão, SA Y Y Y Y Jerónimo Martins - SGPS, SA Y S S S Lisgráfica - Impressão e Artes Gráficas, SA Y N/NE N N Martifer - SGPS, SA Y N/D N N/D Mota-Engil, SGPS, SA Y Y Y N/D Novabase - SGPS, SA Y Y Y Y Papelaria Fernandes - Indústria e Comércio, SA Y Y Y N Pararede - SGPS, SA Y N N Y Portucel - Empresa Produtora de Pasta e Papel, S.A. Y Y N Y Portugal Telecom, SGPS, SA Y Y Y Y Reditus - SGPS, SA Y N/NE N N/D REN - Redes Energéticas Nacionais, SGPS, SA Y Y Y N SAG Gest - Soluções Automóvel Globais, SGPS, SA Y Y N Y Semapa - Sociedade Investimento e Gestão, SGPS, SA Y Y N/D Y Sociedade Comercial Orey Antunes, SA Y N/NE N Y Sonae - SGPS, SA Y Y Y Y Sonae Indústria, SGPS, SA Y Y Y Y SONAECOM - SGPS, SA Y Y N/D Y Sport Lisboa e Benfica - Futebol SAD Y N/D N N Sporting - Sociedade Desportiva de Futebol, SAD Y Y N/NE N Sumolis - Comp. Ind.de Frutas e Bebidas, SA Y N N N Teixeira Duarte - Engenharia e Construções, SA Y N/D N N Toyota Caetano Portugal, SA Y N/D N N VAA - Vista Alegre Atlantis, SGPS, SA Y Y N N Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA Y Y Y Y Compliance Level 100.0% 68.1% 38.3% 44.7%
Note 1: Data concerning recommendation compliance is comprised of three factors. Firstly, companies that comply are indicated as (Y) whilst those that do not comply with the Recommendation are shown as (N). For non-compliance situations, (NE)/(NR) is indicated when no explanation has been given and lastly, for situations in which there is divergence between the CMVM’s assessment and the self-assessment carried out by the company, (D) is shown.
Note 2: EDP considers that it does not comply with Recommendation 5-A, because the adopted corporate models include an Executive Board of Directors which does not include non-executive directors. However, the General and Supervisory Board fulfills the supervisory and monitoring functions set in said Recommendation. 49 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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This Recommendation was complied with by 68.1% of companies in 2007. This percentage is slightly lower apropos the previous year. The drop of the compliance percentage with this recommendation is explained by the fact that the number of companies that were assessed was different in the two years once the market and the sample witnessed company entries and exits.
In 13 companies (Altri, Banif, Cofina, Estoril Sol, Finibanco, Porto SAD, Lisgráfica, Martifer, Pararede, Reditus, Orey Antunes, Sport Lisboa e Benfica SAD and Sumolis), the management board did not include any non-executive directors. In two companies (Teixeira Duarte and Toyota Caetano), the management boards included non-executive directors but the percentage was less than 1/3, meaning that these 15 companies did not comply with the recommendation.
Among the companies that did not comply with recommendation 5-A, Banif, Lisgráfica, Porto SAD, Orey Antunes and Reditus did not justify said non-compliance in their corporate governance reports and cannot be considered to have complied with the ‘comply and explain’ principle. On the other hand, 6 non-complying companies (Altri, Cofina, Martifer, Benfica SAD, Teixeira Duarte and Toyota Caetano), the company’s assessment differs with that of the CMVM.
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Recommendation 6 states the following: «non-executive members shall include an adequate number of independent members. A sole non-executive director shall also be independent. Independent members of other corporate bodies shall also carry out a complementary or at most, a substituting role, if the relevant supervisory duties are equivalent and in actual fact, carried out».
In order for this Recommendation to be considered complied with, the issuer would have to mention the existence of independent non-executive directors as per the concept referred to in article 1/2 of Regulation 7/2001 with the text of Regulation 10/2005 with a number not less than 25% of the total number of members of the management body. The evaluation of independency carried out by companies was in all not questioned except for cases where the company has stated explicit criteria that show inconsistency with the recommendation (e.g. when executive directors existed among independent non- executive directors listed by the company). Compliance with this recommendation is
38.3% with circa 6 out of 10 companies lacking a sufficient number of independent directors within the management body.
Twenty-five companies did not have independent non-executive directors and for another
4, the number was less than 25% of the total number of the management body. These 4 companies (Galp, BES, Semapa and Sonaecom) state that they complied with this recommendation. On the other hand, 2 companies (Ibersol and Benfica SAD) consider that they have complied with this recommendation although not having any independent non- executive members in the management body. A further 6 companies did not reason why they did not comply with this recommendation (Altri, Banif, Estoril Sol, Fisipe and Sporting
SAD), or justify stating that independent members should exist in the Executive
Committee (Soares da Costa), which is not incorporated in the recommendation’s text.
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Recommendation 7:
«The management body shall establish internal control committees responsible for evaluating the structure and corporate governance of the company».
The criterion used to assess the compliance with this recommendation was the existence of
a permanent internal structure created by the management body responsible for
evaluating the structure and corporate governance of the company.
The level of compliance with this recommendation was 44.7% in 2007 which was lower
than that registered in 2006 due to the fact that the new companies used in the sample did not comply with the recommendation. There is a different opinion between the CMVM
and the company in 5 cases (Fisipe, Martifer, Media Capital, Mota-Engil and Reditus).
Fisipe solely has a Quality Assurance Board. Martifer, Media Capital and Mota-Engil does not mention this structure in their corporate governance report. In Reditus’ case, the
existing committees do not evaluate the structure and corporate governance of the
company. On the other hand, Altri, Compta, Galp and Porto SAD did not give any explanation for their non-compliance.
Lastly, the reduced size of the companies, the minor dispersion of shares and the fact that the company is a holding and has no staff, are among the reasons given by the companies for their non-compliance with this recommendation.
II.5 Audit Boards and Committees
There are distinct solutions for applying supervisory matters by companies in the Portuguese market. Thus, for companies that adopted the Dualist Model, said supervision is carried out by the Financial Matters Committees established within the relevant supervisory bodies27. For those companies that adopted the Anglo-Saxon Model, this function is performed by the Audit Committee within the relevant Board of Directors.
27 The Financial Matters Committee is analysed herein, despite the fact that the General and Supervisory Board supervises the company. 52 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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For companies that adopted the Latin Model, supervision is carried out by the Supervisory Board. However, some Latin Model companies decided to create within their relevant Board of Directors, committees with audit duties similar to those provided for Anglo-Saxon Audit Committees and Dualist Model Financial Matters Committees.
(i) Type of Supervisory Structure
A total of 14 companies have committees with audit duties. Ten of these are Anglo-Saxon Model companies with audit committees provided for by legislation and 4 are Latin Model companies that voluntarily create these type of committees.
The body that carries out supervisory functions for Latin Model companies is the Supervisory Board. Thus, the 4 companies that also have an Audit Committee (Brisa, Sonaecom, Sonae Indústria and Sonae SGPS), are reinforcing the company’s monitorisation. If we add the Supervisory Boards of the Latin Model companies to the latter, there are a total of 35 Supervisory Boards. Thus, there are 49 supervisory structures for 45 companies.
As mentioned previously, Mota-Engil has an Investment, Audit and Risk Committee composed of two executive directors and one independent non-executive director with the main duties of suggesting and assessing investment policies and business risks. Although the term ‘Auditing’ is included, it cannot be considered as such neither for functions nor for its composition.
Worthy of note is the fact that none of these Latin Model companies were legally obliged to create an Audit Committee since both are supervised by audit boards that constitute a supervisory board as foreseen by Law for the governance model that said companies adopted. Nevertheless and worth noting, these companies saw it necessary to create additional supervisory structures.
(ii) Financial Matters Committees
The Financial Matters Committee is present in two Dualist-Model companies (BCP and EDP). The chapter on general and supervisory boards also covers the financial matters committee. It is thus important to note that in BCP, the Audit and Risk Committee includes three independent members of the General and Supervisory Board (one of the two is the presiding member) and further includes an expert that is not part of the General and Supervisory Board. This committee met 11 times in 2007 and the attendance level was 97%.
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In EDP, the Financial Matters Committee (Audit Committee) is composed of 4 independent members. This committee met 17 times in 2007 and maintained an attendance level of 86%.
In both cases, the Chairman of the Committee is considered by companies to hold a graduate degree which is adequate for the duties and has experience both in the audit and accountancy fields. A further two members have financial, accountancy and auditing education. No members carry out full-time duties in any company.
(iii) Audit Committees
As previously mentioned, there are 14 companies with audit committees within their board of directors - ten of which due to the legal imperative of the governance model adopted and a further 4 are voluntary. Table VII shows the companies and their audit committee structures.
Table VII – Audit Committees within the Board of Directors
No. of Independent Chairman Anglo Latin No. of Non-Executive Independent with Audit and No. of Meetings Saxon % Model Members Director Chairman Accountancy in 2007 Model Members Knowledge
Banco BPI 5 [1] [1] 9 BES 3 2 66.7 7 Brisa 3 2 66.7% 3 Grupo Media Capital [2] 4 3 75.0% 5 Impresa 2 2 100.0% 4 Inapa [2] 3 2 %66.7 4 Jerónimo Martins [2] 3 3 100.0% 4 Novabase 3 3 100.0% 5 PT 3 2 %66.7 4 REN 3 3 100.0% 13 SonaeCom 4 3 %75.0 5 Sonae SGPS 4 4 100.0% 4 Sonae Ind. 3 2 %66.7 6 Zon Multimédia 3 3 100.0% 10 %
As per article 414/5 of the Commercial Companies Code and concerning Anglo-Saxon Model committees, within issuers of shares admitted to trading on a regulated market, the Audit Committee shall include at least one member with a graduate degree which is adequate for carrying out the duties and has the expertise in auditing and accountancy. The members of the Audit Committee of these companies shall be majorly independent.
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Thus, persons are independent when they are not associated with any group with specific interests in the company and do not find themselves in any situation that might affect their impartiality in respect of the analysis or decision made due to: i) being holders or acting on behalf of or for the account of holders of stakes equal or greater than 2% of the share capital of the company; ii) having been re-elected for more than two mandates in a continuous or interleaved way.
The 10 companies that follow this corporate governance model consider that the supervisory boards’ chairman has a graduate degree which is adequate for carrying out of the relevant duties. Besides that and in average, 2.4 members of the mandatory audit committees are considered to have experience in the financial, accountancy and audit fields.
As to independence criteria, the final part of article 414/5 has given rise to certain uncertainties by some companies. Such is the case of BPI that interprets the sentence «having been re-elected for more than two mandates in a continuous on interleaved way» as strictly referring to mandates within the Audit Committee itself. BPI considered that 80% of the members of its Audit Committee (including the Chairman) were independent. However, non of these 4 members followed the independence criterion provided for in article 415/5/b and had thus to be revised. BPI has in the meanwhile amended its governance model and has adopted the Latin Model. Consequently, the supervisory board is no longer the Audit Committee but the Supervisory Board. BPI also voluntarily established an Audit Committee with functions different to those of the Supervisory Boards.
Apart from BPI, the weighting of independent members varies between 2/3 and 100% which is considered as quite positive on the overall.
Latin-model committees to which specific legal ruling for audit committees is not applicable, it is worth highlighting that one of the members of the Audit and Finance Committee, as opposed to the remaining three, is not an independent director – Corporate Governance Director and thus in a management position.
Albeit, this committee is included in the audit committees’ catalogue due to their non- mandatory nature and in which nearly all the members are non-executive independent directors.28
28 It is worth noting that this situation is substantially different from Mota-Engil’s Committee (Auditing duties) given that in the other case, such committee not only includes same but is also mainly composed of executive directors. 55 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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The average number of meetings held in 2007 was 6.1 fluctuating between a minimum of three (Brisa) and a maximum of 13 at REN. The number of meetings for mandatory audit committees is 4 and same occurred in several companies.
The overall attendance level of audit committee members is high. Within the Anglo-Saxon model, only BPI (91%), Jerónimo Martins (92%) and Zon Multimédia (90%) registered an attendance level lower than 100%.
(iii) Audit Boards
The number of existing audit boards is 35 and the average number of members within same is 3 given that in all cases, the board is composed of 3 members.
Only one company responded unenthusiastically to the question on whether the Chairman of the Board had a graduate degree that was adequate for carrying out the related duties and whether same had experience in the audit and accountancy fields. 79.6% of supervisory board members are experienced in the financial, accountancy and audit fields and at least one of the members of the supervisory boards has these characteristics. 23.1% of the members of the supervisory board have working experience at executive management level within the company or in companies of same. In 22 companies (62.9%), none of the members of the supervisory boards have this type of working experience.
None of the supervisory board members carry out full-time duties. In 2007, the average number of meetings held was 4.8 per board – which equals a little more than one meeting per quarter and cannot be positively compared with the average number of audit and financial matters’ committee meetings. Nonetheless, the number of meetings held is highlighted in the case of Galp Energia (13 meetings), Cimpor (12 meetings) and Finibanco (12 meetings).
Conversely, highlight is given to the unenthusiastic low number of meetings held by Benfica SAD, Fisipe, Grão Pará, which registered one meeting each and Corticeira Amorim, Reditus, Toyota Caetano and Vista Alegre Atlantis, with two each. Shareholders of these companies should question whether an annual or a half-yearly meeting is sufficient for an adequate supervision of the companies.
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II.6 Other Committees
The dualist-model companies, BCP and EDP, the anglo-saxon model companies, Media Capital, Portugal Telecom and Zon Multimédia, the Latin model companies, Brisa, Cimpor, Sonaecom, Sonae Indústria and Sonae SGPS have other committees that are neither non-executive nor audit. This section focuses on the analysis of these committees.
(i) Corporate Governance Committees
BCP, BPI, Brisa, Cimpor, EDP, Portugal Telecom and Zon Multimédia have corporate governance committees.
BCP and EDP’s corporate governance committees have already been mentioned under the section ‘Functioning of the General and Supervisory Boards’ except for the fact that BCP’s corporate governance committee met 6 times in 2007 and EDP, 7 times.
BPI’s corporate governance committee is a Consultative Board of the Board of Directors and is composed of 6 members and its duties concern issues related to social responsibility, ethics, professional deontology and environmental protection. This committee draws up an annual report on the functioning of the corporate governance structure. It is also responsible for proposing measures for improving the implemented governance model. All members are non- executive directors, 5 of which are independent. The Committee’s Chairman is also Chairman of the Board of Directors. This committee met thrice in 2007.
Brisa’s Corporate Governance and Sustainability Monitoring Committee is composed of three non-executive directors, two of which are independent (including the Chairman) and the third is non-independent. Its main duties are: monitoring compliance with the rules and standards of the companies’ corporate governance system as well as the performance of sustainable policy; monitoring the making of the Management Report and giving opinions on the chapters on corporate governance sustainability; monitor the application of the Ethics Code and propose to the Board of Directors, any improvements and initiatives deemed fit for achieving its goals. This committee met 5 times in 2007.
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In Cimpor’s case, the Internal Consultative Committee for the Board of Directors on Corporate Governance and Social Responsibility is a Committee within the Board of Directors that studies, prepares and advises said Board as to the internal rules and procedures to be adopted by same as regards the development and improvement of corporate governance conduct principles and practices, including the internal functioning and relationship of the Board itself as well as preventing conflicts of interest and information control. This committee is also responsible for issues on social responsibility and is composed of three directors, two of which are non-executive and the third is executive. This committee is not composed solely of non- executive directors and thus does not entirely correspond to the typical committee that is recommended by all the internationally accepted codes of best practice. This committee met thrice in 2007.
Portugal Telecom’s Corporate Governance Committee assists the Board of Directors in supervising the company in the following fields: i) permanently adopting, revising and assessing the corporate governance model as well as the company’s conduct principles and practices in compliance with the legal provisions and statutory regulations and further, with the national and international recommendations, standards and best practices on this issue; and, ii) assessing the performance of the Board of Directors. This committee met 5 times in 2007 and is composed of 6 non-executive directors, three of which (including the Chairman) are considered independent.
Zon Multimédia’s Corporate Governance Committee is composed of three non-executive members of the Board of Directors including the Chairman who also chairs this committee. These three members are independent. The Corporate Governance Committee’s duties are to: i) assist and support the Board of Directors in carrying out the company’s supervisory role in matters of corporate governance, conduct and social responsibility; ii) study, propose and recommend its adoption by the Board of Directors of the policies, rules and procedures required for the compliance with that which is stipulated in the Regulation and in the applicable legal, regulatory and statutory provisions, as well as the national and international recommendations, standards and best practice recommendations in matters referred to in the previous sub-paragraph; iii) carry out any other duties or responsibilities that the Board of Directors delegates to this Corporate Governance Committee. This Committee was set up on 20 December 2007.
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Lastly, the companies of Sonae Group (Sonae Indústria, Sonae SGPS and Sonaecom), although lacking a Corporate Governance Committee, it has adopted a person responsible for corporate governance and same is carried out by a non-member of the Board of Directors reporting to same via the Chairman and carries out duties that are typically conferred upon corporate governance committees.
Although this situation is different to that of Soares da Costa, which was previously mentioned - the Corporate Governance Committee is also composed of persons that are not members of the Board of Directors, but reports to the Executive Committee and not to the Board of Directors – this structure is far from being ideal as considered by all the sound governance codes, for the governance system adopted and verifying its efficiency and proposing to the competent boards, measures to be carried out for its improvement.
(ii) Sustainability and Social Responsibility Committees
Only Sonae Indústria has a specific committee for issues relating to sustainable development and social responsibility. This committee is called the Social Responsibility and Environment Committee which is presided over by the Chairman of the Board of Directors and includes two other non-executive directors, both of which are thus independent. Said committee’s main duty is that of analysing the impact of the company’s activity in the economy, environment and social sustainability. Two meetings took place in 2007.
However, in some companies, the typical duties of the sustainability and social responsibility committees are carried out by the corporate governance committees, which is the case in EDP’s Corporate Governance and Sustainability Committee. The same happens with BPI’s Corporate Governance Committee that apart from other duties, has to decide on issues of social responsibility, ethics, professional deontology and environment protection.
Brisa’s Corporate Governance and Sustainability Committee also include same duties as previously mentioned, which are usually carried out by the sustainability committees. However, this committee does not carry out social responsibility duties although it does include sustainability issues in their sustainability policies.
Cimpor’s Corporate Governance and Sustainability Committee, on the other hand, has social responsibility duties but no responsibilities on sustainable developments issues. Same is applicable to Zon Multimédia’s Corporate Governance Committee.
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(iii) Nomination and/or Assessment and/or Remuneration Committees
Within the committees with nomination, assessment and remuneration duties29, the current situation is far from stating that in general, Portuguese listed companies have the necessary committees for ensuring competent and independent assessment of the executive managers’ performance and for ensuring the assessment of their own overall performance as well as of the other committees. Likewise, it is far from being stated that the members of the remuneration committees or equivalent are entirely independent apropos the executive members of the management board.
The main characteristic of the BCP’s Nominations Committee and EDP’s Remuneration Committee is its adoption of the Dualist Model. Thus, it is important to characterise similar situations in companies with other governance models.
BPI’s Nominations, Assessment and Remunerations Committee is a consultative board of the Board of Directors. It is composed of 6 non-executive members and its duties are that of submitting for consideration on occupying posts in the corporate boards, the selection of directors to be designated by the Executive Committee, the assessment and the annual variable remuneration of the members of the Executive Committee. The Chairman of the Board of Directors accrues the Chairmanship of this Committee. There is an independent member among the other members. As regards the remuneration, said committee decides on variable remuneration of the executive directors. The setting of different components within the remuneration is due on the Remunerations Committee which is composed of the three shareholders that have been elected by the General Meeting. As from 2008, the General Meeting established limits to the fixed remuneration of the members of BPI’ Board of Directors and the variable remuneration of the Executive Committee – this is considered as a best practice. The assessment of the performance of EDP’s Board of Directors is carried out by the Corporate Governance Committee. However, as regards this issue, its duties are limited to assisting the Board of Directors in assessing its performance, in order to contribute towards its efficiency and transparency, and does not include an actual assessment of the actual action of the Executive Committee or of its members.
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Sonae Indústria has a Nominations and Remunerations Committee which is chaired by the Chairman of the Board of Directors (including a CEO and three non-executive directors, two of the latter are independent). The main function of this Committee is to analyze and present recommendations on behalf of the Board of Directors concerning remuneration and other benefits of other senior staff of the group. Remunerations are formally set by a Remunerations Committee that is elected at the General Meeting. In 2007, this committee met twice. Said committee is not exclusively composed of non-executive directors even though it is majorily composed of this type of directors.
Sonae Indústria’s Nominations and Remunerations Committee Model repeats itself particularly as regards the duties both at Sonae SGPS as well as at Sonaecom. However, as to the composition, while Sonae SGPS’ situation is similar to Sonae Indústria, Sonaecom’s situation is substantially different. Materially, Sonae SGPS’ Nominations and Remunerations Committee includes the Chairman of the Board of Directors, the Chairman of the Executive Committee and two independent non-executive directors. Sonaecom’s Nominations and Remunerations Committee is composed solely of a Chairman of the Board of Directors and a non-executive director and only the latter is independent.
Media Capital’s Nominations and Remunerations Committee is responsible for establishing and revising the material aspects of the group policy regarding the compensation of senior directors as well as any performance bonuses. This committee is composed of 4 members of the Board of Directors, including the CEO and three non-executive directors (two are independent).
(iv) Other Committees
Cofina has a Remunerations Committee, whose mission is that of defining remunerations of the main staff of the companies within the group and does not have the duty to set the remunerations of the relevant members of the Board of Directors.
However, Cofina’s Remunerations Committee is composed of three executive directors, whereas contrary to Media Capital, there is no control by the independent non-executive directors (which in actual fact does not exist in this company) on the remuneration policy of senior staff. It is in actual fact an Executive Committee for the decision-making of employee remuneration and not a Remunerations Committee as such.
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Mota-Engil also has an Investment, Audit and Risk Committee as previously mentioned, composed of two executive directors and one independent non-executive director. Its mains duties and responsibilities are that of suggesting and analysing investment policies and business risk.
Other companies have other types of committees. These committees included external consultants or group staff and are thus mere support and advisory boards.
III. Remuneration of Corporate Boards
(i) Total, Fixed and Variable Remuneration
In 2007, the total average remuneration of the members of the Board of Directors was € 2.8 million and the total average remuneration of the executive committees was € 3.8 million. The total average remuneration of the executive boards of directors was € 6.1 million. If one considers the executive committees and the boards of directors solely composed by executive directors so as to establish a more reliable estimate as to the remuneration of executive, the average value per company is € 3.0 million.
Table VIII – Total, Fixed and Variable Remuneration in 2007
Variable Total Remuneration Remuneration and Other Per Capita (€) Fixed Remuneration Performance Bonus Factors Remuneration(€) Remuneration of the Members of the Board of Directors Non-Financial Sector 2 454 420.1 72.4% 24.9% 2.7% 291 693.4 Financial Sector 6 074 342.8 51.4% 48.6% 0.0% 433 753.1 PSI-20 5 081 086.8 57.9% 38.5% 3.7% 449 111.9 Non PSI-20 1 239 593.9 78.5% 19.8% 1.7% 201 394.5 Average 2 776 191.0 70.5% 27.0% 2.5% 306 806.2 Remuneration of the Members of the Executive Committee Non-Financial Sector 3 370 034.3 64.3% 32.7% 3,0% 679 609.4 Financial Sector 8 250 765.5 33.0% 67.0% 0,0% 840 354.1 PSI-20 4 921 043.4 55.4% 40.6% 3.9% 873 538.3 Non PSI-20 1 219 365.2 75.7% 24.3% 0.0% 282 270.5 Average 3 794 445.7 61.6% 35.7% 2.7% 693 587.2 Remuneration of Members of the Executive Management Board Non-Financial Sector 7 398 288.0 47.0% 46.0% 7.0% 1 056 898.3 Financial Sector 4 710 000.0 100.0% 0.0% 0.0% 588 750.0 PSI-20 6 054 144.0 73.5% 23.0% 3.5% 798 821.6 Non PSI-20 NA NA NA NA NA Average 6 054 144.0 73.5% 23.0% 3.5% 798 821.6 Remuneration of the Members of the Executive Committee and of the Executive Management Board Non-Financial Sector 2 724 042.2 65.7% 31.1% 3.2% 530 887.9 Financial Sector 5 174 740.2 58.3% 41.7% 0.0% 617 925.4 PSI-20 4 886 621.2 56.6% 39.7% 3.7% 843 285.5 Non PSI-20 1 206 383.8 72.8% 25.3% 1.9% 241 394.9 Average 3 046 502.5 64.7% 32.5% 2.8% 542 340.2
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The total average remuneration is higher in financial companies and in PSI-20 companies apropos all the members of the Board of Directors and when limited only to the Executive Committee. In capita terms, the same occurs. Furthermore, in average, the remuneration of PSI-20 companies is circa thrice the per capita remuneration of other companies apropos executive committees or boards of directors composed of executive directors.
As to distribution of fixed and variable remuneration, a little less than 2/3 of the remuneration of directors is fixed and a little over a third is variable or reflects allocation of performance bonuses. Financial companies have over 2/3 of the remuneration of executive committee members as variable or performance bonus based. Only 14 companies (61%) remunerate their executive committees with a variable component. On the other hand, performance bonuses paid to executive committees in 2007 were only registered in 6 cases (26.1%). Lastly, other types of remuneration of executive committees were only reported by 4 companies (17.4%).
Only 18 companies reported the ratio between the Executive Committee member with the highest remuneration and Executive Committee member with the lowest remuneration. This ratio is in average 3.1 and its maximum and minimum values are 11.3 and 1.0, respectively.
In average and as regards the origin of the remuneration of the members of the board of directors, 68.1% of said remuneration originates from the company itself and 31.9% from other companies within the group.
If the analysis is restricted only to executive committees, in average, 79.4% of the remuneration derives from the company itself and 20.6% from other companies within the group.
(ii) Medium and Long-Term Responsibility
Medium and long-term responsibility by the companies on managers showed an average value of € 3.5 million as at 31 December 2007. If one only takes into account the executive committees, the average responsibility reaches € 4.4 million.
Nevertheless, the number increases significantly for the executive board of directors wherein the average level of responsibility rises to € 42.9 million, mainly due to the high level of responsibility incumbent on BCP. The major responsibilities’ average concerning employment termination benefits is found at the level of the executive boards of directors (€ 22.5 million), and yet again, shows the financial sector as the highest (€ 45.1 million).
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CMVM Table IX – Medium and Long-Term Responsibility
Employment Share-based Retirement Other Long-Term Termination Payments Benefits (€) Benefits (€) Benefits (€) (€) Total (€) Responsibilities with the Board of Directors Non-Financial Sector 3 074 088.7 0.0 0.0 38 557.4 3 112 646.0 Financial Sector 7 293 172.8 70 198.8 0.0 381 000.0 7 744 371.5 Within PSI-20 7 519 582.2 3 055.6 0.0 172 491.8 7 695 129.6 Non PSI-20 735 475.8 8 362.8 0.0 0.0 743 838.6 Average 3 449 118.4 6 239.9 0.0 68 996.7 3 524 355.0 Responsibilities with the Executive Committee Non-Financial Sector 393 806.5 0.0 0.0 37 640.2 431 446.7 Financial Sector 12 255 938.0 0.0 0.0 0.0 12 255 938.,0 Within PSI-20 1 887 691.3 0.0 0.0 51 755.3 1 939 446.5 Non PSI-20 371 570.0 0.0 0.0 0.0 371 570.0 Average 1 275 985.4 0.0 0.0 31 849.4 1 307 834.8 Responsibilities with the Executive Board of Directors and the Executive Committee Non-Financial Sector 486 379.0 65 000.0 0.0 0.0 551 379.0 Financial Sector 85 382 000.0 0.0 45 065 000.0 0.0 130 447 000.0 Within PSI-20 42 934 189.5 32 500.0 22 532 500.0 0.0 65 499 189.5 Non PSI-20 NA NA NA NA 0.0 Average 42 934 189.5 32 500.0 22 532 500.0 0.0 65 499 189.5 Responsibilities with the Executive Board of Directors and the Executive Committee Non-Financial Sector 397 831.4 2 826.1 0.0 36 003.7 436 661.2 Financial Sector 36 631 292.0 0.0 15 021 666.7 0.0 51 652 958.7 Within PSI-20 6 448 413.3 3 611.1 2 503 611.1 46 004.7 9 001 640.2 Non PSI-20 371 570.0 0.0 0.0 0.0 371 570.0 Average 4 712 172.3 2 579.4 1 788 293.7 32 860.5 6 535 905.8
The most significant long-term responsibility is retirement benefits. Albeit share-based payments are also significant as regards the responsibility due on the members of the board of directors of financial companies.
(iii) Setting of Remunerations
The legislation establishes that the general meetings or the committees elected by the general meetings set the remuneration of the members of the corporate boards of the company. However, in the Dualist Model instance, the setting of the remuneration of the members of the general and supervisory boards is set by a Remunerations Committee created within the relevant General and Supervisory Board. Furthermore, and as a practice that many sound governance codes recommend, non-executive members of the boards of directors are entitled to pronounce themselves on the assessment and remuneration of the executive members. There are committees created within the management boards or general and supervisory boards, in line with the remuneration committees that have been elected by the general meetings.
As previously mentioned, such is the case for EDP. Said company has a specialised committee within the General and Supervisory Board that sets the remuneration of the Chairman and of the other members of the Executive Board of Directors and a Remunerations Committee nominated by the General Meeting, responsible for setting the remuneration policy of the remainder of the corporate boards.
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As noted before, BPI has a Nomination, Assessment and Remuneration Committee which functions as a consultative board of the Board of Directors. This Committee is responsible for giving opinions on the assessment and annual variable remuneration of the members of the Executive Committee. Setting of different remunerations is however the duty of the Remunerations Committee which is composed of three shareholders elected by the General Meeting. This company has no limits established by the General Meeting itself as regards fixed remuneration of the members of the Board of Directors of BPI for the variable remuneration of the Executive Committee.
Lastly, the Sonae group of companies (Sonaecom, Sonae Indústria and Sonae SGPS) has committees with different compositions although their common duty is that of analysing and presenting proposals and recommendations regarding the remuneration and other types of compensation of the members of the Board of Directors. However, in these companies too, remunerations are set by the Remunerations Committee which is elected at the General Meeting.
Committees that are solely elected by the general meetings will be dealt with subsequently and thus committees created within the general and supervisory boards or boards of directors will not be excluded.
Of the 47 companies analysed, 44 remuneration committees were elected by the general meetings and are responsible for setting the remunerations of the members of the corporate boards. Only Altri, Grão Pará and Lisgráfica do not have this type of committee. At Grão Pará and Lisgráfica, the remuneration is set directly at the general meetings. At Altri, as per the relevant articles of association, the remuneration of the members of the corporate boards will be set by a three-shareholder committee (one will be the chairman and will have voting capacity) all elected by shareholders’ resolution. However, this committee has not been nominated yet and thus members of the corporate boards are not remunerated by the company.
In Cofina’s case as well, the member of the corporate boards are not directly remunerated by said company but by the subsidiary companies wherein they carry out functions. Despite this fact, there is an elected Remuneration Committee responsible for defining the remuneration of the senior staff of the controlled companies.
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Cofina was also excluded from this analysis. This analysis covers remuneration committees elected by the general meetings of the 43 companies. Lastly, Ibersol’s directors are remunerated by a corporate group (the mother holding, ATPS) as per the remuneration earned from the contract between ATPS and another company, Ibersol Restauração.
Thus, in the cases of Altri, Cofina and Ibersol, shareholders have no control on the amounts earned by each director, neither directly via the General Meeting nor indirectly via the Remunerations Committee.30
As a rule, remuneration committees are composed of three members. Exceptions to this rule are the remunerations committees Media Capital, REN, Semapa, Sonaecom and Sonae Indústria, which are composed of only two members. In total, 26 companies show that all the members of the remuneration committees are independent apropos the members of the board of directors. Another 9 companies, Cimpor, Impresa, Papelaria Fernandes, Pararede, Portugal Telecom, Soares da Costa, Sonae SGPS, Sporting SAD and Teixeira Duarte, show that this occurs in only 2/3 of the members and two companies (Media Capital and Sonaecom) state that this happens in 50% of the members. Three companies (Estoril Sol, Finibanco and Mota- Engil) state that this occurs in 1/3 of the members and in three companies (BPI, Martifer and Sumolis) there is no member of the relevant committee that was elected at the general meeting that is independent as to the members of the board of directors.
However, as to independency of the members of the Executive Committee, there are 21 companies that state that all their members are independent. BPI, Portugal Telecom, Soares da Costa and Sporting SAD are included in this group and thus their Remuneration Committees are entirely independent from the executive committee, albeit same does not occur apropos the Board of Directors.
The average number of meetings held for the Remunerations Committees was 1.8 in 2007 and Portugal Telecom registered 6 meetings - the highest number. Conversely, the remuneration committees of Benfica SAD, Compta, Porto SAD, Fisipe, Inapa, Papelaria Fernandes and Vista Alegre Atlantis did not convene in 2007.
30 In average and as previously mentioned, 31.9% of the total remuneration of the members of the boards of directors derives from other companies within the group inasmuch as in other companies, payment situations might go unseen as to the decisions of the remuneration committees. 66 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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(iv) Disclosure of Remuneration
For several years, the CMVM has recommended the disclosure of individual director remuneration. During the recommendations’ revision in 2007, the CMVM yet again recommended the individual remuneration disclosure of members of management and supervisory boards and when need be, differentiating the different types of remuneration received in other companies of the group or in companies controlled by shareholders with qualifying holdings.
However, only Papelaria Fernandes, Novabase and Grão Pará disclose the remuneration of the members of the management and supervisory boards, individually.
Papelaria Fernandes disclosed all the remunerations as fixed. Novabase disclosed its information as fixed, variable remuneration and allocated options. Grão Pará also disclosed fixed and variable remuneration individually by each of the members of the Board of Directors. However, the amount paid to the directors of Grão Pará by companies in a group or control relation as to the management positions within those companies, was only disclosed aggregately.
Although EDP, Sonae SGPS, Sonae Indústria and Sonaecom do not disclose the individual remunerations of the members of the Executive Board of Directors, they do however differentiate between the remuneration of the Chairman of this remuneration board and the aggregate remuneration of the rest of the members. Once the main and acceptable difference between executives is the Chairman’s remuneration, this might be an acceptable approach to said recommendation.
The shareholder of each company will judge the reasons given for each case on compliance with this Recommendation. Without prejudice to latter, it is worth noting that from the reasons mentioned by companies in their Corporate Governance Reports, none is convincing enough to doubt the worthiness of the Recommendation.
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Textbox III – Assessment of Compliance with Recommendation 8, 8-A, 9 and 10
Recommendation 8.
«The remuneration of the members of the Board of Directors shall be aligned with the interests of the company and shall be annually disclosed in individual terms».
Criteria for complying with the CMVM Recommendation on this issue are: variable remuneration for the executive management (relying on accountancy or market items that are related with the company’s performance) and the disclosure of directors’ remuneration individually.
This was the least followed Recommendation by national listed companies and the level of compliance in 2007 was a mere 12.8% which means that only 6 companies complied with this Recommendation (EDP, Novabase, Papelaria Fernandes, Sonae SGPS, Sonae Indústria and Sonaecom). The fact that this Recommendation states that remuneration should be disclosed individually has brought on major difficulties for fulfilment by issuers. In fact, a high number of companies state that the disadvantage of the directors’ privacy is not compensated by the advantage of shareholders knowing what each of the directors are paid, and thus justifies the non-disclosure of individual remunerations.
There is however another company, Grão Pára that discloses its directors’ remuneration individually. Albeit, the CMVM considers that this company does not comply with the recommendation since the amounts paid to the relevant directors by companies in a control or group relationship, were not reported individually.
There is a certain disparity between the company’s assessment and that of the CMVM, in two situations. Thus, Sporting SAD considers that the recommendation has been complied with but the non-disclosure of fixed remuneration in individual terms affords the CMVM with a different opinion. In Compta’s case, this company generically complies with the recommendation but does not disclose its directors’ remuneration individually.
Lastly, Soares da Costa, Mota-Engil and Reditus did not justify why this Recommendation was not complied with.
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Recommendation 8-A
«A statement on remuneration policy of the corporate boards shall be submitted for approval at the annual general meeting».
According with said Recommendation, all cases wherein the remuneration policy of the corporate boards was approved at the shareholders general meeting, or when the remuneration was set at the general meeting, are considered as complied with.
This Recommendation was the second least complied with in 2007 and its average compliance level reached 34.0%, albeit higher than the previous year’s number.
The compliance assessment carried out by the company differs from that of the CMVM in 6 cases (Altri, Cofina, Compta, Fisipe, REN and Toyota Caetano). All these companies consider that the Recommendation has been complied with. Altri considers that the recommendation has been complied with since the corporate boards are paid by its subsidiaries and that, in itself, is reason enough. However, the shareholders’ general meeting could have (and should define) that same situation was the company’s policy and should further establish criteria to be complied with by the subsidiaries and same does not occur.
In Cofina’s case, the Remuneration Committee is composed of company directors and same defines the remuneration of the corporate boards and as such, there is no direct involvement by the general meeting. No reference to the way in which the corporate boards’ remuneration policy is mentioned in Fisipe’s corporate governance report, and as such this Recommendation has not been complied with.
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CMVM Table X – Assessment of Compliance with Recommendations 8, 8-A, 9 and 10
Recommendation (31.12.07) Issuer 8 8-A 9 10 Altri, SGPS, SA N N/D N/D NA Banco BPI, SA N N/NE N/D Y Banco Comercial Português, SA N Y Y NA Banco Espírito Santo, SA N Y Y NA Banif - SGPS, SA N N N NA Brisa - Auto Estradas de Portugal, SA N Y Y Y Cimpor - Cimentos de Portugal, SGPS, SA N N N Y Cofina, SGPS, SA N N/D N/D NA Companhia Industrial Resinas Sintéticas - Cires, SA N Y Y NA Compta-Equipamentos e Serviços de Informática, SA N/D N/D N/D NA Corticeira Amorim,SGPS, SA N N/NE Y NA EDP - Energias de Portugal Y* N/NE Y Y Estoril Sol - SGPS, SA N N N NA Finibanco - Holding, SGPS S.A. N N N NA Fisipe - Fibras Sintéticas de Portugal, SA N N/D N/D NA Futebol Clube do Porto - Futebol SAD N N Y NA Galp Energia N N Y NA Grupo Media Capital, SGPS, SA N N N NA Grupo Soares da Costa, SGPS, SA. N/NE N/NE N/D NA Ibersol - SGPS, SA N N Y NA Imobiliária Construtora Grão Pará, SA N Y NA NA Impresa - SGPS, SA N N Y NA Inapa - Investimentos, Participações e Gestão, SA N N/NE Y NA Jerónimo Martins - SGPS, SA N N Y NA Lisgráfica - Impressão e Artes Gráficas, SA N N/NE NA NA Martifer - SGPS, SA N N/NE N/D NA Mota-Engil, SGPS, SA N/NE N/NE N NA Novabase - SGPS, SA Y Y Y Y Papelaria Fernandes - Indústria e Comércio, SA Y N/NE N/D NA Pararede - SGPS, SA N N/NE N/D Y Portucel - Empresa Produtora de Pasta e Papel, S.A. N Y Y NA Portugal Telecom, SGPS, SA N Y N/D NA Reditus - SGPS, SA N/NE Y Y NA REN - Redes Energéticas Nacionais, SGPS, SA N N/D Y NA SAG Gest - Soluções Automóvel Globais, SGPS, SA N Y Y NA Semapa - Sociedade Investimento e Gestão, SGPS, SA N Y N/D NA Sociedade Comercial Orey Antunes, SA N N Y Y Sonae - SGPS, SA Y* Y N Y Sonae Indústria, SGPS, SA Y* Y N/D Y Sport Lisboa e Benfica - Futebol SAD N N/NE N/D NA Sporting - Sociedade Desportiva de Futebol, SAD N/D N/NE N/D NA Sumolis - Comp. Ind.de Frutas e Bebidas, SA N S N NA Teixeira Duarte - Engenharia e Construções, SA N S N/D NA Toyota Caetano Portugal, SA N N/D S NA VAA - Vista Alegre Atlantis, SGPS, SA N N N NA Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA N N S NA Compliance Level 12.8% 34.0% 44.4% 100.0%
NB: Data concerning recommendation compliance is comprised of three factors. Firstly, companies that comply are indicated as (Y) whilst those that do not comply with the Recommendation are shown as (N). For non-compliance situations, (NE) is indicated when no explanation has been given and lastly, for situations in which there is divergence between the CMVM’s assessment and the self-assessment carried out by the company, (D) is shown.
* Although EDP, Sonae SGPS, Sonae Indústria and Sonaecom, do not disclose all the members of the Executive Board of Directors’ remuneration individually, they do however disclose the individual remuneration of the Chairman. This might be an acceptable approach to this Recommendation and is thus considered to be implemented.
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Compta’s remuneration conditions are set by the Remuneration Committee which is elected by the shareholders albeit the remuneration policy is not submitted to the general meeting.
REN’s Remuneration Committee reports to the general meeting and is composed by members that are not part of any corporate board and are independent of any member of the Board of Directors. This committee is responsible for proposing the fixed and variable remunerations to the corporate boards. However, during 2007 and due to the resignation of the Chairman of the Remuneration Committee, remunerations were not submitted to the general meeting. The nomination of a new chairman, as well the resuming of this committee’s duties were postponed for the scheduled general meeting for assessment of the 2008 financial year.
Toyota Caetano’s Remuneration Committee is elected by the general meeting. However, the company has not duly reported in their Corporate Governance Report the fact that said company has submitted the remuneration plan to the general meeting for approval.
On the other hand, a large number of companies (10) does not comply with this recommendation and does not present reasons for its non-compliance. In Sporting SAD’s case, the company does not even mention this recommendation in its Corporate Governance Report. Same occurs with Papelaria Fernandes.
The situation is different in BPI and EDP’s case. As to the former, the proposal of the remuneration policy for the corporate boards was only submitted for the general meeting held in 2008. As regards EDP, the remuneration policy of the executive board of directors was submitted to the general meeting but as to the general and supervisory board, said situation was not submitted to the general meetings and thus, said recommendation has not been complied with.
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Recommendation 9
«Members of the Remuneration Committee or alike, shall be independent from the Members of the Board of Directors ».
Certifying this compliance with the Recommendation implies identifying all the members of the Remuneration Committee. On the other hand, the independence of all the members of the committee must be explicit apropos the members of the Board of Directors.
Almost half of the companies complied with this Recommendation in 2007 (44%) with 2006 registering similar percentage. However, CMVM and the issuers’ understanding is biased in several cases. There is disagreement between the assessment carried out by the CMVM and the one carried out by the companies themselves, in 16 cases (Altri, BPI, Cofina, Compta, Fisipe, Soares da Costa, Martifer, Papelaria Fernandes, Pararede, Portugal Telecom, Semapa, Sonae Indústria, SonaeCom, Sporting SAD, Benfica SAD and Teixeira Duarte). CMVM‘s disagreement in all, is based on the lack of independence of all the members of the Remuneration Committee or equivalent. In BPI’s case, the company acknowledges this in its recent prospect for capital increase.
Recommendation 10
« A proposal shall be submitted to the General Meeting concerning the approval of plans for the allotment of shares and/or options for share purchase or further yet, on the variations in share prices, to members of the Board of Directors and /or employees. The proposal shall mention all the necessary information for its correct assessment. The proposal shall contain the regulation plan or in its absence, the plan’s general conditions ».
Recommendation 10 was complied with if the companies held share allotment plans and/ or options for share purchase and, if same were approved at the general meeting. The Recommendation was not applicable in those cases were no plans existed.
The high level of compliance with this Recommendation (100%) results firstly from the fact that only 9 companies (BPI, Brisa, Cimpor, EDP, Novabase, Orey Antunes, Pararede, Sonae SGPS and Sonaecom) have share allocation and/or share acquisition plans and all these were submitted to the general meeting.
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IV. General Meeting
(i) Number of General Meetings
The average number of shareholder general meetings held in 2007 was 1.7, swaying between 1 as the minimum (in 28 companies) and a maximum of 6 (in only one case, Pararede). This number was higher in financial sector and non PSI-20 companies.
Chart 17 – Number of General Meetings held during 2007
Maximum 6
Minimum 1
Average 1.7
Non PSI-20 1.8 2007 Within PSI-20 1.6
Financial Sector 1.8
Non-Financial Sector 1.7
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0
Number
(ii) General Meeting Board
Apart from two PSI-20 companies and one non PSI-20 company, within the remainder of the 44 companies, the Chairman of the General Meeting is independent.31. On the other hand, 10 companies (5 PSI-20 and 1 financial), the company secretary is also the secretary of the General Meeting Board.
31 The CMVM started procedures to remedy this situation. 73 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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(iii) Participation at the Meeting
In all, shareholders with voting rights are entitled to participate in the company’s general meetings. However, 13 companies were identified as requiring at least 100 shares for attendance at the general meeting. BCP, Grupo Media Capital and Soares da Costa establish a higher minimum limit conferring participation right: 1 000 shares. All these companies mentioned the absence of any other requirement for participation in general meetings in terms of share holding time.
The deposit or blocking of shares for participation at the General Meeting required a 5-day period for all PSI-20 companies. In the other companies, same period swayed between a minimum of 2 days (Lisgráfica) and a maximum of 20 days (Vista Alegre Atlantis).32 Similarly to PSI-20 companies, the period for depositing or blocking shares for participation at the general meeting was 5 days in all the financial companies. The period for the deposit or blocking of shares was higher than 5 working days in 6 companies and same were non- financial and non PSI-20 companies (Compta, Porto SAD, Fisipe, Ibersol, Orey Antunes and Vista Alegre Atlantis).
(iv) Shareholder Representation
There are several forms of shareholder representation at the companies’ general meetings. Shareholders may either physically attend said meetings or may be represented by proxy via a member of the board of directors or through another person. Besides this, they may further vote via post or electronic means whenever such is allowed by the issuer.
As per the companies’ responses to the CMVM questionnaire, physical attendance of the shareholders at the general meetings (including some that took place in 2008) was absent in 6 companies (Ibersol, Jerónimo Martins, Martifer, REN, Sonaecom and Sonae SGPS). Physical attendance of shareholders was greater than 50% of the share capital in 9 companies (2 PSI- 20 and 1 financial).
Representation via a member of the board of directors was absent or hardly relevant in 14 companies (8 PSI-20) and major in 16 companies (5 of the PSI-20 and 2 financial). On the other hand, representation via another person was predominant in 18 companies. In 3 companies, the capital present at the general meetings was fully represented by other persons other than members of the board of directors of the company (REN, Sonaecom and Sonae SGPS).
32 One company did not respond to this issue. 74 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Although postal voting is not allowed in all companies, it was significant in 6 PSI-20 companies (BPI, BCP, Brisa, EDP, Novabase and Portugal Telecom), and always represented a share capital percentage of less than 0.3%. Voting via electronic means was carried out in 6 companies (BPI, BCP, Brisa, EDP, Novabase and Portugal Telecom), and was in average less significant than postal voting.
The total percentage of capital at the general meetings in 2007 reached in average, 67.2%. This average value was higher in financial companies (73.0%) and in non PSI-20 companies (67.4%). Shareholder participation at the relevant general meetings was however quite inconsistent. Five companies (Altri, Cofina, Compta, Pararede and Reditus) were present or represented less than 50% of the share capital. The lowest value was registered in Pararede (in 6 general meetings in 2007, only 12.0% of the capital was present by this company). Opposingly, Cires, Toyota Caetano and Fisipe represented over 90% of the share capital at the general meetings.
Physical attendance reached 19.6% on average and was lower for PSI-20 and financial companies. Said attendance was higher in the company Toyota Caetano (92.1%) and lower by 1% of the share capital in 18 companies. Representation through a member of the board of directors or another person, reached an average value of 47.6% of the capital – 22.0% for representation via a member of the board of directors and 25.6% for representation via another person. Participation via representation was greater in Zon, Galp Energia, Cires and Fisipe, surpassing 80% of the capital and was nil for Sumolis, Media Capital and Lisgráfica. On the other hand, voting by mail or via electronic means is less expressive reaching an average value of 0.02% of the capital (maximum value of 0.53% for BPI).
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Chart 18 – Nature of Participation at General Meetings
100.0 % 90.0 % 80.0 % 70.0 % 60.0 22.5 13.8 % 26.0 % % 25.6 50.0 % % % 41.6 40.0 % 25.7 % 33.2 % 22.0 30.0 20.7 % % % % 20.0 17.0 % 27.8 % 10.0 19.9 17.2 % 19.6 % % 8.4% % 0.0% % Non-Financial Financial Sector Within PSI-20 Non PSI-20 Average Sector
Physical Attendance Attendance via Representation by a Member of the Board of Directors
Attendance via Representation Votes issued via post
(v) Voting and Exercing Voting Rights
In average, the minimum number of shares required for one vote is 269. However, this average value contains very significant differences throughout companies, as seen in the high value of the standard deviation (469). The average value is less in non-financial companies (258) and in PSI-20 companies (260). Notwithstanding, in 9 PSI-20 (Altri, Brisa, Cimpor, EDP, Jerónimo Martins, REN, Sonaecom, Sonae Indústria and Sonae SGPS) and in 8 non PSI-20 companies (Cofina, Porto SAD, Inapa, Novabase, Papelaria Fernandes, SAG, Orey Antunes and Teixeira Duarte) only one share is necessary for one vote. In another 17 companies 50 or 100 shares are required. On the other hand, Lisgráfica required 2 500 shares for one vote at a General Meeting.
Table XI – Minimum Amount of Shares required for One Vote
Range Bracket No. of Companies 1 17 [1 to 100] 17 [200 to 500] 6 [500 to 1000] 6 1000 1 Total 47
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Among the new CMVM recommendations on corporate governance issues in 2007, the following is included: «companies should include in their articles of association the one–share, one-vote principal». Although this recommendation is not yet applicable to the assessment at hand, one can say that circa one in three Portuguese companies requires a minimum number of shares (one) for one vote. As regards the investment value required for voting rights, the highest number exists in Ibersol (€ 5 310). Semapa, Portugal Telecom and Media Capital (€ 2 572, € 3 000 and € 3 500, respectively) require an investment of over € 2 000. In any of these companies an investment of less than € 2000 is required for one vote.33 Note than as per article 384/2/b of the Commercial Companies Code, € 1000 of share capital is equivalent to one vote.
There are different category shares in 9 companies (Benfica SAD, EDP, Estoril Sol, Porto SAD, Galp Energia, Portugal Telecom, REN, Soares da Costa and Sporting SAD). In nearly all the situations, different category shares correspond to identical voting rights. The difference is the absence of limitations (as is the case of the State) and the existence of rights of veto (State and sports clubs). In Estoril Sol’s case, the different categories correspond only to registered or bearer shares.
In 7 companies, the maximum percentage of voting rights that can be exercised by a sole shareholder is less than 100%. Such is the case in 6 PSI-20 companies wherein 2 are financial companies and 1 is a non PSI-20 and non-financial company.34 In these cases, the maximum percentage fluctuates between 5% (EDP and REN) and 17.5% (BPI), and a further 10% in 4 companies (BCP, Compta, Portugal Telecom and Zon Multimédia). The veto right exists in two companies - Portugal Telecom and Sporting SAD. Although the companies did not mention it, veto rights also exist in Benfica SAD and Porto SAD, deriving from the law itself. EDP and GALP have special State veto rights. As such, resolutions that have to be approved favourably on certain category shares, is required. Likewise occurs in Portugal Telecom. Special State rights resulting from legal requirement occur in REN.
33 The 17 November 2008 closing price was used. 34 The situation of the three sports clubs is different to that which is described herein. Thus, it derives from the legal framework of sporting clubs that the founding club shall always maintain a direct holding of at least 15% of the company capital. This means the maximum that can be held by shareholder and not the club, is 85%. However, the club has special rights linked to the stakes it holds regardless of its size. The shares purchased by the club forfeit those rights (from category A to category B) and if repurchased by the club, said rights are reacquired from category B to category A. 77 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Chart 19 – Restrictions imposed on Voting and the Functioning of the General Meeting
400 7.0
350 6.0 Minimum Minimum Advance Amount 300 5.0 Period of for Shares 250 4.0 Share required Deposit 200 for and 3.0 Voting Blocking 150 (days) 2.0 100
50 1.0
0 0.0 Non-Financial Financial Sector Within PSI-20 Non PSI-20 Average Sector Minimum Amount of Share for Voting Minimum Advance Period for Share Deposit and Blocking (working days)
All companies allow for postal voting. However, in 4 companies, postal voting is not allowed in all issues (Ibersol, Martifer, Mota-Engil and Sonae SGPS). Two companies (Ibersol and Martifer) postal voting was not allowed on matters concerning changes to the memorandum of association and the election of corporate bodies. On the other hand, two companies (Mota- Engil and Sonae SGPS) only allowed voting on the latter mentioned issues.35
The statutory time period for receiving postal votes is in average three days, fluctuating between 0 days in Papelaria Fernandes and 8 days in Orey Antunes.36 In 11 companies, this time period is greater than three days (Altri, Cires, Cofina, Corticeira Amorim, Estoril Sol, Porto SAD, Fisipe, Grupo Media Capital, Orey Antunes, Sumolis and Toyota Caetano) and is meticulously defined at each general meeting in Pararede and Portugal Telecom. Thus, under the provided for in the CMVM new recommendations which are included in the Corporate Governance Code, the 11 companies in which the statutory time period for receiving postal votes is greater than three days, should thus amend their articles of association so as to decrease said time period which will then allow them to comply with said new recommendation.
35 One company did not respond to the issue. 36 Four companies did not respond to the issue. 78 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Electronic voting is allowed in 10 companies, (BPI, BCP, Brisa, Corticeira Amorim, EDP, Finibanco, Jerónimo Martins, Novabase, Portugal Telecom, and Zon Multimédia). The time period for receiving electronic votes is 3.3 days in average and varies between 3 days as seen in 5 companies (BPI, BCP, Brisa, EDP and Novabase) and 5 days as seen in Corticeira Amorim. In two companies such a deadline is variable (Jerónimo Martins and Portugal Telecom), as defined in the convening notice of the General Meeting.37
Table XII – General Meetings: Voting via Postal or Electronic Means
Non-Financial Financial Within PSI-20 Non PSI-20 Average Sector Sector
Postal Voting on All Issues 90.5% 100.0% 90.0% 92.6% 91.5% Postal Voting on Certain Issues 9.5% 0.0% 10.0% 7.4% 8.5% IssuesIssues Electronic Voting on All Issues 16.7% 60.0% 35.0% 11.1% 21.3% Electronic Voting on Certain Issues 0.0% 0.0% 0.0% 0.0% 0.0%
37 Two companies did not respond to this issue. 79 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Textbox IV – Assessment of Compliance with Recommendation 2
As per CMVM’s Recommendation 2, « the active exercise of the voting right may not be restricted either directly or indirectly via post or proxy. The following are restrictions to the active exercise of the voting right: a) imposing more than a 5 working day period prior to the deposit or blocking of shares for participation at the general meeting; b) any such statutory restriction on postal voting; c) imposing more than a 5 working day period for receiving the voting ballots sent via post; d) lack of voting ballots at the disposal of the shareholders for postal voting».
As at 31 December 2007, 11 issuers did not comply with this recommendation (Altri, Compta, Fisipe, Porto SAD, Ibersol, Lisgráfica, Martifer, Mota-Engil, Orey Antunes, Sonae SGPS and Vista Alegre Atlantis), registering less 12 than at end 2006. The level of compliance with this recommendation was 76.6%. The major part of companies that did not comply with this recommendation were non PSI-20 companies (8). All financial sector companies complied with this recommendation.
The reasons for this non-compliance were linked with the issue of postal voting (in 4 issuers it was restricted to certain issues and in two companies it was restricted to the election of corporate boards and to statutory changes, and in another two companies it was allowed for all issues except for statutory changes and the election of corporate boards) and to the issues of the lack of voting ballots (in 5 companies) and further to the fact that the time period for the deposit or blocking of shares for participation at the general meetings was greater than 5 working days (6 companies) and the time period for receiving the voting ballots issued via post was higher than 5 working days (1 company).
Furthermore, in only one company (Mota-Engil) does the compliance assessment of this recommendation carried out by the CMVM and the issuer, not match. The company states that it does comply with the recommendation when in reality it does not due to the fact that the postal voting may not be exercised in all matters – only for company changes and election of the corporate boards.
Compta, Lisgráfica and Martifer did not substantiate their reasons for not complying with said recommendation.
80 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
CMVM Table XIII – Assessment of Compliance with Recommendation 2
Issuer Recommendation (31.12.07) 2 Altri, SGPS, SA N Banco BPI, SA Y Banco Comercial Português, SA Y Banco Espírito Santo, SA Y Banif - SGPS, SA Y Brisa - Auto Estradas de Portugal, SA Y Cimpor - Cimentos de Portugal, SGPS, SA Y Cofina, SGPS, SA Y Companhia Industrial Resinas Sintéticas - Cires, SA Y Compta-Equipamentos e Serviços de Informática, SA N/NE Corticeira Amorim,SGPS, SA Y EDP - Energias de Portugal Y Estoril Sol - SGPS, SA Y Finibanco - Holding, SGPS S.A. Y Fisipe - Fibras Sintéticas de Portugal, SA N Futebol Clube do Porto - Futebol SAD N Galp Energia Y Grupo Media Capital, SGPS, SA Y Grupo Soares da Costa, SGPS, SA. Y Ibersol - SGPS, SA N Imobiliária Construtora Grão Pará, SA Y Impresa - SGPS, SA Y Inapa - Investimentos, Participações e Gestão, SA Y Jerónimo Martins - SGPS, SA Y Lisgráfica - Impressão e Artes Gráficas, SA N/NE Martifer - SGPS, SA N/NE Mota-Engil, SGPS, SA N/D Novabase - SGPS, SA Y Papelaria Fernandes - Indústria e Comércio, SA Y Pararede - SGPS, SA Y Portucel - Empresa Produtora de Pasta e Papel, S.A. Y Portugal Telecom, SGPS, SA Y Reditus - SGPS, SA Y REN - Redes Energéticas Nacionais, SGPS, SA Y SAG Gest - Soluções Automóvel Globais, SGPS, SA Y Semapa - Sociedade Investimento e Gestão, SGPS, SA Y Sociedade Comercial Orey Antunes, SA N Sonae - SGPS, SA N Sonae Indústria, SGPS, SA Y SONAECOM - SGPS, SA Y Sport Lisboa e Benfica - Futebol SAD Y Sporting - Sociedade Desportiva de Futebol, SAD Y Sumolis - Comp. Ind.de Frutas e Bebidas, SA Y Teixeira Duarte - Engenharia e Construções, SA Y Toyota Caetano Portugal, SA Y VAA - Vista Alegre Atlantis, SGPS, SA N Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA Y Level of Compliance 76.6%
NB: Data concerning recommendation compliance is comprised of three factors. Firstly, companies that comply are indicated as (Y) whilst those that do not comply with the Recommendation are shown as (N). For non-compliance situations, (NE) is indicated when no explanation has been given and lastly, for situations in which there is divergence between the CMVM’s assessment and the self-assessment carried out by the company, (D) is shown.
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(vi) Quorum and Resolutions
Twenty-one companies require qualified majorities for shareholder resolutions: 8 PSI-20 companies (EDP, REN, BPI, BCP, Cimpor, Galp Energia, Portugal Telecom and Soares da Costa), as well as 3 financial sector companies (BPI, BCP and Finibanco). Matters that require a qualified majority include the following: winding-up (11 companies), demerger (10), merger (11), changes to articles of association (13), capital increase or decrease (3), impeachment of the Board of Directors or one of its members without justifiable reason (3), dividend distribution (3), disposal and encumbrance of the assets included in the real estate assets of the company (2) securities issuance (3). The percentage of the necessary voting rights for approving each decision is 2/3 or 3/4 of the share capital in the majority of the situations. However, in the case of Corticeira Amorim, 85% is required. In 13 companies said percentage is calculated on the issued share capital, in 3 companies on the capital present at the general meeting and in another company, on the capital issued at the general meeting if it is represented by 1/3 of the share capital and by simple majority of the present capital if during the second convening notice, 50% of the share capital is represented.
(vii) Corporate Control Measures
As at 31 December of 2007, shareholder agreements and other types of agreements were in force in 6 companies (EDP, Galp Energia, Martifer, Novabase, Sonaecom, Toyota Caetano and Semapa).
These agreements represented in average 60.6% of the share capital and pertained to 4.4 shareholders in average (maximum of 9 in two companies and a minimum of 2 in another two companies). In 2 companies (EDP and Novabase) the capital represented in these agreements was less than 50%. Shareholders’ agreement and other types of agreements covered issues such as the composition and election of the corporate boards, preference in share disposal, dividend distribution policy, capital increase and reduction, management bonus policy on its distribution to the directors of the company besides other members.
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Highlight is given to Semapa – this company has no shareholders’ agreement but rather coordinated voting rights amongst a set of shareholders.
Chart 20 – Share Capital represented in the Shareholder Agreements
80.0 4.7
70.0 4.6
60.0 Percentage 4.5 of 50.0 Number Company 4.4 of Capital 40.0 Shareholders in 4.3 Shareholder 30.0 Agreements 4.2 20.0
10.0 4.1
0.0 4.0
N º Non-Financial Financial Within PSI-20 Non PSI-20 Average Sector Sector
Percentage of Company Capital represented in the Shareholder Agreements No. of Shareholders in Shareholder Agreements
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Textbox V – Assessment of Compliance with Recommendation 3
As per the CMVM’s Recommendation 3 « Companies shall set up internal control systems in order to efficiently detect any risk to the company’s activity by protecting its assets and keeping its corporate governance transparent. »
Eight companies did not comply with this Recommendation in 2007 (Compta, Fisipe, Grão Pará, Impresa, Martifer, Benfica SAD, Teixeira Duarte and Toyota Caetano). Two companies (Impresa and Benfica SAD) explained their non-compliance. In the other 6 cases, the CMVM’s assessment and that of the companies, differs. Five of these companies do not have an internal audit body and the internal risk control procedures are not described which makes the compliance with the Recommendation, unachievable. On the other hand, the company has an internal audit unit body but fails do describe the internal procedures used, albeit one cannot conclude that the company has the effective means of internal risk control for its activity.
Lastly, Reditus did not comply with this Recommendation in 2006 but does so in 2007, once it has adopted a internal audit unit and has also described the procedures adopted.
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CMVM Table XIV – Assessment of Compliance with Recommendation 3
Issuer Recommendation (31.12.07) 3 Altri, SGPS, SA Y Banco BPI, SA Y Banco Comercial Português, SA Y Banco Espírito Santo, SA Y Banif - SGPS, SA Y Brisa - Auto Estradas de Portugal, SA Y Cimpor - Cimentos de Portugal, SGPS, SA Y Cofina, SGPS, SA Y Companhia Industrial Resinas Sintéticas - Cires, SA Y Compta-Equipamentos e Serviços de Informática, SA N/D Corticeira Amorim,SGPS, SA Y EDP - Energias de Portugal Y Estoril Sol - SGPS, SA Y Finibanco - Holding, SGPS S.A. Y Fisipe - Fibras Sintéticas de Portugal, SA N/D Futebol Clube do Porto - Futebol SAD Y Galp Energia Y Grupo Media Capital, SGPS, SA Y Grupo Soares da Costa, SGPS, SA. Y Ibersol - SGPS, SA Y Imobiliária Construtora Grão Pará, SA N/D Impresa - SGPS, SA N Inapa - Investimentos, Participações e Gestão, SA Y Jerónimo Martins - SGPS, SA Y Lisgráfica - Impressão e Artes Gráficas, SA Y Martifer - SGPS, SA N/D Mota-Engil, SGPS, SA Y Novabase - SGPS, SA Y Papelaria Fernandes - Indústria e Comércio, SA Y Pararede - SGPS, SA Y Portucel - Empresa Produtora de Pasta e Papel, S.A. Y Portugal Telecom, SGPS, SA Y Reditus - SGPS, SA Y REN - Redes Energéticas Nacionais, SGPS, SA Y SAG Gest - Soluções Automóvel Globais, SGPS, SA Y Semapa - Sociedade Investimento e Gestão, SGPS, SA Y Sociedade Comercial Orey Antunes, SA Y Sonae - SGPS, SA Y Sonae Indústria, SGPS, SA Y SONAECOM - SGPS, SA Y Sport Lisboa e Benfica - Futebol SAD N Sporting - Sociedade Desportiva de Futebol, SAD Y Sumolis - Comp. Ind.de Frutas e Bebidas, SA Y Teixeira Duarte - Engenharia e Construções, SA N/D Toyota Caetano Portugal, SA N/D VAA - Vista Alegre Atlantis, SGPS, SA Y Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA Y Compliance Level 83.0%
Note 1: Data concerning recommendation compliance is comprised of three factors. Firstly, companies that comply are indicated as (Y) whilst those that do not comply with the Recommendation are shown as (N). For non-compliance situations, (NE) is indicated when no explanation has been given and lastly, for situations in which there is divergence between the CMVM’s assessment and the self-assessment carried out by the company, (D) is shown.
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Textbox VI – Assessment of Compliance with Recommendation 4
Recommendation 4 reads as follows: « Measures aimed at preventing successful takeover bids, shall respect both the company’s and the shareholders’ interests. In cases such as change of control or changes to the composition of the Board of Directors, defensive measures should not be adopted that instigate immediate and serious asset erosion in the company, and further disturb the free transmission of shares and voluntary assessment of the performance of the Board of Directors by the shareholders. »
Thirty seven companies complied with this Recommendation in 2007 and 10 did not, meaning that the level of compliance with this Recommendation was 78.7%. Nine non- complying companies (BPI, BCP, Compta, Corticeira Amorim, EDP, Galp Energia, Portugal Telecom, Sumolis and Zon Multimédia) put forward the reasons for such non-compliance as being the limits to exercising the voting rights which ran simultaneously with the special rights of one or more shareholders.
Limits to exercising voting rights was justified in some cases due to the fact that limitations promoted a balanced participation of the main shareholders thus ensuring that small shareholders could have a greater influence in the company’s running. This reason would be acceptable if the company’s articles of association allowed for the ‘breakthrough rule’ or the periodic re-assessment of such limitation at the general meetings (without the requirements of a super-quorum as to the legally imposed) by counting all the issued votes without the functioning of the limitation.
In another two situations (Martifer and Novabase), the clauses of the shareholder agreement justify their non-compliance. In another, the issuer (Sumolis) may without the holder’s consent, write-off shares of the holders of competing companies. In this case, one is faced with an anti-takeover measure and Recommendation 4 is thus not complied with.
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Furthermore there are shareholders with special rights in the 3 sports clubs, albeit it seems that same comply with said Recommendation. The Recommendation is complied with by virtue of same special rights being legally imposed. Likewise, limits to the exercising of voting rights as well as special rights of some shareholders results from REN’s legal requirement and thus considers this Recommendation to be complied with.
On the other hand, the compliance assessment of this Recommendation is carried out by the CMVM, is non-conforming with the self-assessment made by the companies in 6 cases. All of these companies (BCP, Compta, EDP, Galp, Portugal Telecom and Zon Multimédia) believe they have complied with the Recommendation whilst CMVM thinks otherwise. The CMVM’s opinion is based on the fact that there is limitation to the exercising of voting rights in these companies and that in 4 of these cases shareholders had special rights that did not result from legal requirement.
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CMVM Table XV – Assessment of Compliance with Recommendation 4
Issuer Recommendation (31.12.07) 4 Altri, SGPS, SA Y Banco BPI, SA N Banco Comercial Português, SA N/D Banco Espírito Santo, SA Y Banif - SGPS, SA Y Brisa - Auto Estradas de Portugal, SA Y Cimpor - Cimentos de Portugal, SGPS, SA Y Cofina, SGPS, SA Y Companhia Industrial Resinas Sintéticas - Cires, SA Y Compta-Equipamentos e Serviços de Informática, SA N/D Corticeira Amorim,SGPS, SA Y EDP - Energias de Portugal N/D Estoril Sol - SGPS, SA Y Finibanco - Holding, SGPS S.A. Y Fisipe - Fibras Sintéticas de Portugal, SA Y Futebol Clube do Porto - Futebol SAD Y Galp Energia N/D Grupo Media Capital, SGPS, SA Y Grupo Soares da Costa, SGPS, SA. Y Ibersol - SGPS, SA Y Imobiliária Construtora Grão Pará, SA Y Impresa - SGPS, SA Y Inapa - Investimentos, Participações e Gestão, SA Y Jerónimo Martins - SGPS, SA Y Lisgráfica - Impressão e Artes Gráficas, SA Y Martifer - SGPS, SA N Mota-Engil, SGPS, SA Y Novabase - SGPS, SA N Papelaria Fernandes - Indústria e Comércio, SA Y Pararede - SGPS, SA Y Portucel - Empresa Produtora de Pasta e Papel, S.A. Y Portugal Telecom, SGPS, SA N/D Reditus - SGPS, SA Y REN - Redes Energéticas Nacionais, SGPS, SA Y SAG Gest - Soluções Automóvel Globais, SGPS, SA Y Semapa - Sociedade Investimento e Gestão, SGPS, SA Y Sociedade Comercial Orey Antunes, SA Y Sonae - SGPS, SA Y Sonae Indústria, SGPS, SA Y SONAECOM - SGPS, SA Y Sport Lisboa e Benfica - Futebol SAD Y Sporting - Sociedade Desportiva de Futebol, SAD Y Sumolis - Comp. Ind.de Frutas e Bebidas, SA N Teixeira Duarte - Engenharia e Construções, SA Y Toyota Caetano Portugal, SA Y VAA - Vista Alegre Atlantis, SGPS, SA Y Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA N/D Compliance Level 78.7%
NB: Data concerning recommendation compliance is comprised of three factors. Firstly, companies that comply are indicated as (Y) whilst those that do not comply with the Recommendation are shown as (N). For non-compliance situations, (NE) is indicated when no explanation has been given and lastly, for situations in which there is divergence between the CMVM’s assessment and the self-assessment carried out by the company, (D) is shown.
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V. Other Issues
(i) External Auditing and Risk Management
The number of years in average that an external audit company consecutively provides its services to the issuer, has increased. As at 31 December 2007, the average length of service of the external audit company in an issuer was 8.2 years, particularly the average 14.2 years that the same auditor provides services to financial sector companies.
Four companies have maintained the same external auditor for at least 20 years (BPI, Banif, BCP and Compta). The maximum amount of years is 28 at Compta.
Only one company (Orey Antunes) mentions limitations on the number of years that an external audit company may provide services to the company. Said company mentions the change of external auditors at the end of the mandate of the management bodies.
The assessment of the external auditor is not carried out in 7 companies (none belong to the PSI-20 Index). As regards companies that assess external auditors, the board responsible for assessing external auditors is the Supervisory Board (14 companies), the Audit Committee (11 companies), the Board of Directors (11 companies), the General and Supervisory Board (2 companies) and the Executive Committee (1 company). Furthermore, one company mentions that the external auditor’s work is subject to approval at the General Meeting. In the majority of the cases, the assessment is carried out on an annual basis. However, there are two companies in which the assessment is carried out on a tri-annual basis and another on a half- yearly basis. The assessment is submitted to the General Meeting for approval in 14 companies. As to the length of service in which the partner of the the audit company provides the service, the situation is similar to that of 2005 in which the average length of service in 2007 was 5.4 years (5.3 years in 2005). Highlighted is the fact that two companies (BCP e Teixeira Duarte) have maintained the same partner for over 20 years and 14 companies have had the same auditor for 7 years or over. It is worthy of note that as per Article 42/2 of Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006, key audit partner/s responsible for carrying out a statutory audit, rotate/s from the audit engagement within a maximum period of seven years from the date of appointment.
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As per said terms and taking into account that this directive was transposed into national law in November 2008 (Decree-Law No. 224/2008), companies are expected to rotate their audit company partner. On the other hand, and although sporadic , there are situations in which the partner provides services to the issuers for more years than the audit company for which said partner currently works.
The percentage of companies stating the existence of internal control systems for detecting risk is 91.5% (72.3% in 2005) and in 74.5% of the cases (50% in 2005), these systems include other internal auditing procedures. 66.0% of the companies have an internal auditing unit. The average number of persons within said internal audit unit is 13.6 and is higher in financial sector companies (49.4) and the PSI-20 Index (15.6).
(ii) Related-Party Transactions
The average total value of the business established by the company and companies within the consolidation perimeter with shareholders having a qualifying holding, reached € 118 million.38 The average global value of business of the companies that are not 100% held, was € 140.4 million.39 The average values are quite higher for companies in the financial sector (circa 7 times for the first benchmark and 83 for the second) and those which are within the PSI-20 Index (circa 26 times in the first benchmark and 22 for the second).
The average global value of business established by the company or and companies within the consolidation perimeter with companies held by their managers or by their families reached € 13 million, and was higher in PSI-20 and financial companies.40 The highest value was represented by a financial company (€ 536.2 million). Only 18 companies (6 of the PSI-20) showed positive values for this benchmark.
(iii) Civil Responsibility Insurance
The members of the Board of Directors of 36 companies have civil responsibility insurance. Among eleven companies in which latter does not occur, one belongs to the PSI-20 index and the other, to the financial sector.
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The average value covered by said insurance was € 9.5 million, with a higher value for financial companies with € 12.8 million and € 18.5 million for PSI-20 companies. However, these average values are strongly influenced by the amount covered in 6 PSI-20 companies. The amount covered is in average lower in all the other 30 companies, reaching very low values, equal or lower than € 5 000, in 3 non PSI-20 companies.
(iv) Conduct Code
Twenty-five companies state that they have conduct codes.41 Of these twenty-five, 16 belong to the PSI-20 Index and 5 to the financial sector. However, only 13 companies have formal tools in place for assessing the compliance with the conduct code. The conduct codes are at the disposal of the investors in 16 companies (12 of the PSI-20 Index and 4 in the financial sector) usually on the company’s website (BCP, BES, Brisa, Cires, EDP, Jerónimo Martins, Portugal Telecom, Ren, Sag, Sonaecom and Zon), at the company’s head-office (Sporting SAD and Banif), in the company’s report and accounts (Portucel) or at both the company’s head- office and the respective website (BPI and Cimpor).
(v) Policy on the Communication of Irregularities
There are 25 issuers with a communication of irregularities policy. Fifteen are PSI-20 companies and 4 from the financial sector. Apart from one company, in the other 24, same policy and its description is disclosed internally within the company. As in 2005, several models exist as to the responsibility for executing the communication of irregularities policy.
However, the results (acquired from the companies’ self-assessment) differ in certain situations from the assessment carried out by the CMVM and same is mentioned in Textbox VI. In this case, one decided to keep the responses of the companies to the questionnaire and to justify the CMVM’s disagreeance to these responses in the Textbox.
41 A PSI-20 company did not respond to this issue. 91 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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Textbox VII – Assessment of Compliance with Recommendation 10-A
Recommendation 10-A:
«The company shall adopt a policy whereby irregularities occurring within the company, are reported. Such reports shall contain the following information: i) the means through which such irregularities may be reported internally, including the persons that are entitled to receive the reports; ii) how the report is to be handled, including confidential treatment, should it be required by the persons making the report. The general guidelines on this policy shall be disclosed in the corporate governance report.»
The Recommendation is considered to be complied with when there is a clear indication that a policy for communicating irregularities is in place as well as the general guidelines (type of handling and the bodies or persons responsible for receiving such information and the means for the disclosure of same policy).
The percentage of issuers that comply with this recommendation attained 44.7% in 2007, registering a higher value than in the previous year (37%). Twenty-six companies did not comply with this Recommendation (Altri, Cofina, Compta, Corticeira Amorim, Fisipe, Ibersol, Grão Pará and Toyota Caetano). The companies Altri, Cofina and Compta do not have a policy for communication irregularities – only a generic compliance statement for compliance with the CMVM Recommendation, exists. Corticeira Amorim states a partial compliance with said Recommendation. Fisipe, Ibersol, Grão Pará and Toyota Caetano do not mention this Recommendation in their Corporate Governance Reports. On the other hand, 5 companies (Benfica SAD, Brisa, Porto SAD, Galp and Pararede) did not provide any reason for this recommendation’s non-compliance. It is worth bearing in mind that it is not the CMVM’s responsibility but that of the shareholders, to substantiate whether the reasons put forward by companies for their non-compliance, are valid and whether the alternative solution adopted by the company adequately fits the veracity of each case in particular.
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CMVM Table XVI – Assessment of Compliance with Recommendation 10-A
Issuer Recommendation (31.12.07) 10-A Altri, SGPS, SA N/D Banco BPI, SA Y Banco Comercial Português, SA Y Banco Espírito Santo, SA Y Banif - SGPS, SA Y Brisa - Auto Estradas de Portugal, SA N/NE Cimpor - Cimentos de Portugal, SGPS, SA Y Cofina, SGPS, SA N/D Companhia Industrial Resinas Sintéticas - Cires, SA N Compta-Equipamentos e Serviços de Informática, SA N/D Corticeira Amorim,SGPS, SA N/D EDP - Energias de Portugal Y Estoril Sol - SGPS, SA N Finibanco - Holding, SGPS S.A. Y Fisipe - Fibras Sintéticas de Portugal, SA N/D Futebol Clube do Porto - Futebol SAD N/NE Galp Energia N/NE Grupo Media Capital, SGPS, SA N Grupo Soares da Costa, SGPS, SA. Y Ibersol - SGPS, SA N/D Imobiliária Construtora Grão Pará, SA N/D Impresa - SGPS, SA Y Inapa - Investimentos, Participações e Gestão, SA N Jerónimo Martins - SGPS, SA Y Lisgráfica - Impressão e Artes Gráficas, SA N Martifer - SGPS, SA N Mota-Engil, SGPS, SA N Novabase - SGPS, SA Y Papelaria Fernandes - Indústria e Comércio, SA N Pararede - SGPS, SA N/NE Portucel - Empresa Produtora de Pasta e Papel, S.A. Y Portugal Telecom, SGPS, SA Y Reditus - SGPS, SA Y REN - Redes Energéticas Nacionais, SGPS, SA Y SAG Gest - Soluções Automóvel Globais, SGPS, SA N Semapa - Sociedade Investimento e Gestão, SGPS, SA Y Sociedade Comercial Orey Antunes, SA N Sonae - SGPS, SA Y Sonae Indústria, SGPS, SA N SONAECOM - SGPS, SA Y Sport Lisboa e Benfica - Futebol SAD N/NE Sporting - Sociedade Desportiva de Futebol, SAD N Sumolis - Comp. Ind.de Frutas e Bebidas, SA Y Teixeira Duarte - Engenharia e Construções, SA Y Toyota Caetano Portugal, SA N/D VAA - Vista Alegre Atlantis, SGPS, SA N Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA Y Compliance Level 44.7%
NB: Data concerning recommendation compliance is comprised of three factors. Firstly, companies that comply are indicated as (Y) whilst those that do not comply with the Recommendation are shown as (N). For non-compliance situations, (NE) is indicated when no explanation has been given and lastly, for situations in which there is divergence between the CMVM’s assessment and the self-assessment carried out by the company, (D) is shown.
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(vi) Internet Website
All companies have a website and as well as an English version of their website except for the following 9 companies (Benfica SAD, Compta, Estoril Sol, Lisgráfica, Papelaria Fernandes, Sporting SAD, Sumolis, Teixeira Duarte and Vista Alegre Atlantis). On the other hand, 15 companies have the same contents in both the Portuguese and English languages. To this end, it is worth being reminiscent about the new CMVM Recommendation on general information duties:
«III.1.3 The following information that is made available on the company’s website, shall be disclosed in the English language: a) The company, public company status, headquarters and remaining data provided for in Article 171 of the Commercial Companies Act; b) Articles of Association; c) Credentials of the Members of the Board of Directors and the Market Liaison Officer; d) Investor Assistance Unit – its functions and access tools; e) Accounts Reporting documents; f) Half-Yearly Calendar on Company Events; g) Proposals sent through for discussion and voting during the General Meeting; and, h) Notices convening meetings.»
The average number of visitors to the site in 2007 was 4.6 million with a higher incidence being registered by the PSI-20 and the financial sector companies.42
There is an average of 3-year record available of the General Meetings with the minutes and resolutions passed (maximum of 7 years at Novabase; minimum of 1 year at Corticeira Amorim, Inapa, Jerónimo Martins, Lisgráfica, Martifer, Media Capital, REN and Zon).43 However, the entire contents of the resolutions on entrusting duties passed by the Members of the Board are disclosed on the company’s website in only 6 companies. (BPI, Brisa, Portucel, Sonaecom, Sonae Indústria and Sonae SGPS). Albeit, the minutes of the general meetings of the company are made available on same website in 15 cases (BCP, Cires, Compta, Finibanco, Ibersol, Impresa, Lisgráfica, Novabase, Papelaria Fernandes, Portucel, Ren, SAG, Semapa, Sonaecom and Sonae SGPS), in average 9 days after the General Meeting is held. 44
42 Twelve companies did not respond to this issue; it is important to note that there might be significant discrepancies in the obtained results due to the fact that in certain cases, a specific website dedicated to investors exists (containing statistical data) and in other cases, the information provided to investors is not selected in a segregated format by indicating the global accesses to the companies’ websites. 43 Seven companies did not respond to this issue. 44 BES and Jerónimo Martins’ General Meeting minutes are made available on their websites since 2008. 94 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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The following Recommendation is included in the new CMVM’s Corporate Governance Code:
«I.5.1 The minutes of the General Meetings shall be made available to the shareholders on the company’s website within 5 days, irrespective of the fact that such information may not be legally classified as material information. The list of attendees, agenda items of the minutes and resolutions passed during such Meetings, shall be kept on file for a 3-year period on the company’s website.»
Within this context, Portuguese companies still have to make efforts in order to adjust their practices to the CMVM recommendations on this issue as well as to the international best practices.
Textbox VIII – Assessment of Compliance with Recommendation 1
Recommendation 1
«Companies shall maintain permanent contact with the market thus upholding the principle of equality for shareholders and ensure that investors are able to access information in an uniform fashion. To this end, the company shall create an Investor Assistance Unit.»
A company complies with this Recommendation when it has an Investor Assistance Unit within said company or an organised structure that is always available for responding to investor queries (disclosing the contacts for set purpose) and that duly clarifies the market in a timely manner.
The compliance level of this Recommendation was 87.2% in 2007 – 6 companies did not comply with said Recommendation (Compta, Fisipe, Porto SAD, Lisgráfica, Sporting SAD and Benfica SAD). There is no investor assistance unit in three of these companies (Compta, Lisgráfica and Benfica SAD) but the market liaison officer carries out similar duties. However, no company describes these duties, which is why there seems to be dissonance with the CMVM’s assessment. Furthermore, 4 of the complying companies (Altri, Cires, Estoril Sol and Toyota Caetano) do not have an investor assistance unit but rather an organised structure that is always available for responding to investor queries and the relevant contacts are always provided for said purpose.
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Table XVII – Assessment of Compliance with Recommendation 1
Issuer Recommendation (31.12.07) 1 Altri, SGPS, SA S Banco BPI, SA S Banco Comercial Português, SA S Banco Espírito Santo, SA S Banif - SGPS, SA S Brisa - Auto Estradas de Portugal, SA S Cimpor - Cimentos de Portugal, SGPS, SA S Cofina, SGPS, SA S Companhia Industrial Resinas Sintéticas - Cires, SA S Compta-Equipamentos e Serviços de Informática, SA N/D Corticeira Amorim,SGPS, SA S EDP - Energias de Portugal S Estoril Sol - SGPS, SA S Finibanco - Holding, SGPS S.A. S Fisipe - Fibras Sintéticas de Portugal, SA N Futebol Clube do Porto - Futebol SAD N Galp Energia S Grupo Media Capital, SGPS, SA S Grupo Soares da Costa, SGPS, SA. S Ibersol - SGPS, SA S Imobiliária Construtora Grão Pará, SA S Impresa - SGPS, SA S Inapa - Investimentos, Participações e Gestão, SA S Jerónimo Martins - SGPS, SA S Lisgráfica - Impressão e Artes Gráficas, SA N/D Martifer - SGPS, SA S Mota-Engil, SGPS, SA S Novabase - SGPS, SA S Papelaria Fernandes - Indústria e Comércio, SA S Pararede - SGPS, SA S Portucel - Empresa Produtora de Pasta e Papel, S.A. S Portugal Telecom, SGPS, SA S Reditus - SGPS, SA S REN - Redes Energéticas Nacionais, SGPS, SA S SAG Gest - Soluções Automóvel Globais, SGPS, SA S Semapa - Sociedade Investimento e Gestão, SGPS, SA S Sociedade Comercial Orey Antunes, SA S Sonae - SGPS, SA S Sonae Indústria, SGPS, SA S SONAECOM - SGPS, SA S Sport Lisboa e Benfica - Futebol SAD N/D Sporting - Sociedade Desportiva de Futebol, SAD N Sumolis - Comp. Ind.de Frutas e Bebidas, SA S Teixeira Duarte - Engenharia e Construções, SA S Toyota Caetano Portugal, SA S VAA - Vista Alegre Atlantis, SGPS, SA S Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA S Compliance Level 87.2%
NB: Data concerning recommendation compliance is comprised of three factors. Firstly, companies that comply are indicated as (Y) whilst those that do not comply with the Recommendation are shown as (N). For non-compliance situations, (NE) is indicated when no explanation has been given and lastly, for situations in which there is divergence between the CMVM’s assessment and the self-assessment carried out by the company, (D) is shown. 96 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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VI. Conclusions
Share Capital Structure
The initial conclusion drawn from this report is that despite the significant company variance, overall Portuguese companies display a reduced dispersion of their share capital. Apart from the capital held by members of the management and supervisory boards, institutional investors, the State, by the company itself via own shares or by reference shareholders (i.e. shareholders with positions of less that 2% of the equity capital), in average 24.4% of the capital is dispersed among other investors.
Likewise and in average terms, the major shareholder holds 46,4% of listed companies’ capital and there are only 4 cases in which the major shareholder holds less than 10% of the shareholder capital and only 9 situations in which the three major shareholders do not hold the majority of the share capital.
In the Portuguese market, the typical shareholder structure of listed companies is also characterised by high instability. The reference shareholders with a continuous stake for at least three years, held in average 56.5% of the capital, whereas the average reference shareholders’ weighting with recently established positions, is limited to 17.8%.
It is thus not surprising, apart from one company, that all the remaining companies have one or more shareholders with a significant influence in the company’s day-to-day running, namely with regard to the selection of the corporate board members.
Besides this, in average, 6.2%, 3.2%, 2.8% and 5% of the companies’ social capital is held by relevant creditors, competitors, relevant clients and relevant suppliers. As regards institutional investors with qualifying holdings, their average weighting is 7.1% for residents and 4.7% for non-residents. Some institutional investors registered a continuous presence of at least three years in the share capital of 22 companies.
In so being, the protection of small shareholders of Portuguese companies must be based on two versants: i) ensure that executive managers strictly follow the objective of value generation for their shareholders as opposed to acting in own interest or in the interest of creditors, clients, suppliers and other persons; ii) ensure that the generated value is equally distributed among all the shareholders.
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One is not only aligning the interests of both the executive managers and shareholders, but also ensuring that the interests of small shareholders are adequately safeguarded as opposed to the interests of major shareholders and other stakeholders. This is the role that legislation plays in corporate governance. The CMVM recommendations also follow same aim, albeit with optional compliance but subject to the ‘comply and explain’ principle, which seeks to promote governance practices that adequately protects said interests.
Models, Bodies and Structures of Supervisory and Management Governance
Following the amendments introduced to the Commercial Companies Code in 2006, the management and supervision of companies may currently be structured as one of the three forms: Latin Model, Anglo-Saxon Model, Continental Model or the recent Dualist Model.
The majority of the companies opted for the Latin Model. However, many financial companies and other larger companies opted for other models, particularly the Anglo-Saxon Model (which is second in terms of preferred model). Thus, the relative importance of the different alternatives is more balanced if measured by market capitalisation. However, the situation whereby issuers adopted the Latin Model is not consistent. For example, in several situations an Executive Committee was created while in many other cases, this did not occur. Furthermore, in certain cases, other types of committees were created, including audit committees whilst in other cases, same did not happen. Also, when specifically applying the other two models, relevant differences were noted in several companies.
All the models allowed for by law are being used by Portuguese companies and many ad-hoc bodies are being created.
There are several and differentiated situations as to the size and composition, both for the general and supervisory committees, as well the separation between executive and non- executive directors as well as the weighting of independent directors and its origin.
In all, the weighting of shareholders, their family members and the company’s management is quite significant, albeit the weighting of recruited professionals from the market differs greatly from sector to sector and from company to company.
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The situation of the weighting of independent members of the boards of directors of Portuguese companies, is far from desirable. In fact, taking into consideration that many Portuguese companies’ capital is very much concentrated, one can obviously conclude that there is a sub-representation of small shareholders45, when one considers its weighting as to the entire board. (19.7%).
This situation is however diverse inasmuch as, in certain companies the structure may be considered entirely adequate and in other situations, the weighting of independent directors are greatly reduced and null in many cases. This situation is particularly unsatisfactory for companies that adopted the Latin Model.
As to the structure of the committees within the management board, a total of 18 companies do not have any committee within the Board of Directors. However, 24 companies already have executive committees. Thus, if one adds the former to the two companies that are based on the Executive Board of Directors’ structure, we come to the conclusion that 26 companies have an adequate separation between the structures of the Executive Board of Directors and the Non-Executive Board of Directors.
Regarding size and composition of the executive committees, the situation is also characterised by a certain degree of disparity. However, highlighted is the fact that in average, every director carries out executive functions in a total of 9.6 companies and non-executive functions, in 2.9 companies – this cannot be considered as a minimal number. Albeit, attendance at executive committee meetings is high (94.6%), notwithstanding that the number of meetings is also high (in average 29.8 meetings annually).
As regards chairmanship accruement, there are 10 companies that still have accruement of functions but in the majority, there is a separation between the image of the Chairman of the Board of Directors and that of the Chairman of the Executive Committee. These 10 companies will shortly be required to provide efficient coordinating mechanisms for the works of non- executive directors in order to comply with the CMVM’s recommendations.
45 A small shareholder does not have a qualifying holding. By applying the concept of small shareholder to holders of 5% of the capital, will allow this statement to be reinforced. 99 Annual Report on the Corporate Governance of Listed Companies in Portugal - 2008
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As to other committees, there are 7 companies with corporate governance committees and 1 company with a specific committee for sustainability and social responsibility, although several other companies have committees that partially carry out duties in these fields. Regarding the matter of committees with nomination and/or assessment and/or remuneration committees created within the General and Supervisory Boards or within Boards of Directors, although some companies have these types of duties, one may not as yet, state that nearly all the Portuguese listed companies have these types of committees.
CMVM Recommendation 5 on the composition of the board of directors is complied with by all the companies and as such, the board of directors is composed by multiple members that carry out effective guidance for the company’s management and that of their senior staff.
However, as regards Recommendation 5-A on the number and role of non-executive directors, only 68.1% of the companies are compliant. Recommendation 6 on independent directors, the level of compliance is 38.3%, although registering a slight increase in comparison to the previous assessment, this situation is still far from desirable.
Lastly, Recommendation 7 on the creation of internal committees responsible for assessing the company’s structure and governance, only 44.6% of the companies have complied and said value is lower than that of 2006 (46.7%) which is due to the fact that the companies used in the sample did not comply with the recommendation. Note that besides the fact that some companies did not comply with the recommendations, they also did not explain their reasons for not doing so in their corporate governance reports, thereby non-complying with the ‘comply and explain’ principle. In those cases where an explanation was given, said reasons are varied in nature and it is thus up to the shareholder to discuss their reasons and adequacy.
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Audit Boards and Committees
Fourteen companies carry out audit duties. Ten of these 14 companies are Anglo-Saxon Model based and have audit committees as provided for by legislation, and 4 Latin Model based companies voluntarily created committees with similar functions and type. Additionally, there are two financial matters committees that carry out audit committee functions within the scope of the Dualist Model. Lastly, there are 35 companies with Audit Boards and in 31 cases, the Audit Board solely carries out said functions. In 4 cases, an audit committee was established voluntarily. It is worth noting that the establishment of these informal audit committees or similar committees merits additional consideration since audit functions are solely incumbent on the Audit Committee and thus its duties and conditions for its adequate performance must be ensured.
An important aspect is the high amount of independent members in the audit committees which, with the exception of one case, varies between 2/3 and 100%. In 2007, the CMVM identified certain inconsistencies and its resolution was imposed.
On the other hand and in general, the supervisory boards met less frequently. Three companies only met once during the year. This fact should be considered by the relevant shareholders. Several inconsistencies were also detected in the supervisory boards and same was resolved by the CMVM during the course of 2007.
Remuneration of the Members of the Corporate Boards
In general, the setting of remunerations is conferred on the remuneration committees that are elected by the general meetings (there are 43 operational committees like these) or set directly by the general meetings (in 2 cases) and in the two remaining cases, directors are not paid by the listed company but rather by their invested companies. The latter cases cannot be considered as adequate, once no control by independent members exists, as well as the control by shareholders over these remunerations.
As to the remunerations’ structuring, a little less than 2/3 of executive remuneration is fixed and a little over one third is variable remuneration or shows up as performance bonuses. However, in the case of financial companies, the situation is considerably different.
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Over two thirds of the remuneration of Executive Committee members is either variable or performance bonus based. Furthermore and in average, 31.9% of the total remuneration of members of the Boards of Directors derives from other companies of the group.
As to the compliance with the CMVM recommendation, Recommendation 8 on the structure and disclosure of remuneration was only complied with by six companies and was the least complied with recommendation. This is due to the absence of individual remuneration disclosure. Only three companies disclose these remunerations and one of these companies does not comply with the recommendation once the amount paid to the directors of companies in a control or group relation, is not disclosed individually. Although EDP, Sonae SGPS, Sonae Indústria and Sonaecom do not disclose the individual remunerations of the members of the Executive Board of Directors, they do however differentiate the Chairman’s remuneration from that of the aggregate remuneration of the other members.
In what concerns Recommendation 8-A on the submission of a statement on the boards’ remuneration policy for approval at the General Meeting, the level of compliance has been met, albeit higher apropos the previous year. Said amount is still insufficient and hardly surpasses 1/3. Recommendation 9 on the independency of the committees’ members that set the remunerations, almost half the companies comply with this Recommendation (44.4%). Lastly, the Recommendation on the submission of stock option plans to the general meetings (Recommendation 10), all companies that adopted said plans, have complied with said recommendation.
As to the option exercising price, the existence of a sole case in which the exercising price was lower than that of the quotation on the issue date, is worthy of note and thus in this situation, options may figure as ‘in-the-money’ which can give rise to gains for directors without the share market value increasing and without shareholders profiting.
General Meetings and Voting Right
General Meetings have registered positively as regards the share capital percentage present at shareholder general meetings, reaching in average 67.2%, which is a considerable amount. However, national institutional investors must be more active since they have not been active in controlling the corporate governance of Portuguese companies with shares listed on Euronext Lisbon, as witnessed by the low participation at the general meetings which is lower than their non-residing counterparts.
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The high capital percentage represented at general meetings is to a certain extent due the increasing use of representation instruments, postal and electronic voting. However, physical attendance still dominates the exercising of voting rights.
All companies allow for postal voting and the time period for receiving the vote is three days. Electronic voting is allowed in 10 companies and covers all subject matters and the time period for receiving the vote is in average 3.3 days.
The level of compliance with the CMVM’s Recommendation 2 as regards the non-restriction of exercising the active voting right, either directly via post or via representation, is 76.6%. The number does not reach the desirable 100% figure, albeit it is still considered high.
Electronic voting is allowed in 10 companies, (BPI, BCP, Brisa, Corticeira Amorim, EDP, Finibanco, Jerónimo Martins, Novabase, Portugal Telecom, and Zon Multimédia). The time period for receiving electronic votes is 3.3 days in average and varies between 3 days as seen in 5 companies (BPI, BCP, Brisa, EDP and Novabase) and 5 days as seen in Corticeira Amorim. In two companies such a deadline is variable (Jerónimo Martins and Portugal Telecom), as defined in the convening notice of the General Meeting.
In average, the minimum number of shares required for one vote is 269. There are certain restrictions to the full exercise of the voting right. At end 2007, 7 companies had restrictions to the full exercise of said right. In one case, restrictions resulted from legal requirement. In a further 6 cases, such requirement had a voluntary nature and the limits sway between 5% (in one case), 10% (in 4 cases) and 17.5% in another case. Thus, voluntary restriction of voting right situations is low albeit, said number is meaningful in the market, inasmuch as it includes some of the largest listed companies. Furthermore, in 21 companies, 8 of which are PSI-20 companies, qualified majority is required for certain shareholder resolutions in varied issues including the case of three companies concerning the dismissal of the board of directors or its members. Moreover, in some cases, certain shareholders have special rights, including the right of veto. The combination of said restrictions with shareholders’ interests will hopefully continue to be reflected upon periodically by those shareholders.
Ultimately, on 31 December 2007, shareholder agreements were in place in 7 companies and covered several theme subjects including the composition and the nomination of the corporate boards and share preference disposal.
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Voting right restrictions, special rights for some shareholders and shareholder agreements show a compliance level of 78.7% for Recommendation 4 concerning the measures adopted to successfully block takeover bids.
Other Issues
In what concerns issues that are relevant to the characterisation of the current situation of Portuguese company governance, it is important to note that only 8 companies complied with Recommendation 3 in what concerns the company’s establishment of an internal system capable of efficiently detecting and managing activity related risks. It might well be that the current financial crisis may ultimately serve as a wake-up call for shareholders and company managers to see how important it is to be able to identify, measure and manage their risk- associated activity.
As to external auditing, highlight is given to the high level of the average length of services of auditors in companies (14.2 years), and so too, that in some cases the provider of external auditing services has been the same for over 20 years and in some of these providers, the partner himself has been the same for over two decades. However, it is also important to note that only 7 companies do not assess the external auditor and that in 14 cases, said assessment is submitted to the General Meeting for approval.
The average total value of business established by the company and companies within the consolidation perimeter with shareholders having a qualifying holding, reached € 118 million – such value cannot be considered insignificant. Also, evidence is shown concerning the need for companies to adopt control and transparency tools in order to guarantee shareholders that such transactions safeguard their interests.
Still on the subject of other issues, it is worth mentioning that Recommendation 10-A on the communication of irregularities that supposedly occur within the company, is complied with by 44.7% of the companies which surpasses the previous year’s percentage (37.0%), is still a far from desirable value. As regards Recommendation 1 on the creation of an investor assistance office, the level of compliance is 87.2%.
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In summary, although improvements are evident in the corporate governance of Portuguese companies, there are still several aspects that are outlying from best corporate governance practices. Such requires that shareholders reflect on the reasons for such discrepancies and whether current mechanisms are in fact the most adequate for the company.
105 VII. Attachment II – Assessment of Compliance with CMVM Recommendations on Corporate Governance (2005 version)
Issuer Recommendation (31.12.07) Level of 1 2 3 4 5 5-A 6 7 8 8-A 9 10 10-A Complaince Altri, SGPS, SA Yes No Yes Yes Yes No No No No No No NA No 33.3% Banco BPI, SA Yes Yes Yes No Yes Yes Yes Yes No No No Yes Yes 69.2% Banco Comercial Português, SA Yes Yes Yes No Yes Yes Yes Yes No Yes Yes NA Yes 83.3% Banco Espírito Santo, SA Yes Yes Yes Yes Yes Yes No Yes No Yes Yes NA Yes 83.3% Banif - SGPS, SA Yes Yes Yes Yes Yes No No No No No No NA Yes 50.0% Brisa - Auto Estradas de Portugal, SA Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes No 84.6% Cimpor - Cimentos de Portugal, SGPS, SA Yes Yes Yes Yes Yes Yes Yes Yes No No No Yes Yes 76.9% Cofina, SGPS, SA Yes Yes Yes Yes Yes No No No No No No NA No 41.7% Companhia Industrial Resinas Si ntéticas - Cires, SA Yes Yes Yes Yes Yes Yes No No No Yes Yes NA No 66.7% Compta-Equipamentos e Serviços de Informática, SA Yes No No No Yes Yes Yes No No No No NA No 25.0% Corticeira Amorim,SGPS, SA Yes Yes Yes Yes Yes Yes No Yes No No Yes NA No 66.7% EDP - Energias de Portugal Yes Yes Yes No Yes Yes Yes Yes Yes No Yes Yes Yes 84.6% Estoril Sol - SGPS, SA Yes Yes Yes Yes Yes No No No No No No NA No 41.7% Finibanco - Holdi ng, SGPS S.A. Yes Yes Yes Yes Yes No No No No No No NA Yes 50.0% Fisipe - Fibras Sintéticas de Portugal, SA No No No Yes Yes Yes No No No No No NA No 25.0% Futebol Clube do Porto - Futebol SAD No No Yes Yes Yes No No No No No Yes NA No 33.3% Galp Energia Yes Yes Yes No Yes Yes No No No No Yes NA No 50.0% Grupo M edia C apital, SGPS, SA Yes Yes Yes Yes Yes Yes Yes No No No No NA No 58.3% Grupo Soares da Costa, SGPS, SA. Yes Yes Yes Yes Yes Yes No Yes No No No NA Yes 66.7% Ibersol - SGPS, SA Yes No Yes Yes Yes Yes No No No No Yes NA No 50.0% Imobiliária Construtor a Grão Pará, SA Yes Yes No Yes Yes Yes No No No Yes NA NA No 50.0% Impresa - SGPS, SA Yes Yes No Yes Yes Yes Yes No No No Yes NA Yes 66.7% Inapa - Investi mentos, Participações e Gestão, SA Yes Yes Yes Yes Yes Yes Yes Yes No No Yes NA No 75.0% Jerónimo Martins - SGPS, SA Yes Yes Yes Yes Yes Yes Yes Yes No No Yes NA Yes 83.3% Lisgráfica - Impressão e Artes Gráficas, SA No No Yes Yes Yes No No No No No NA NA No 25.0% Martifer - SGPS, SA Yes No No No Yes No No No No No No NA No 16.7% Mota-Engil, SGPS, SA Yes No Yes Yes Yes Yes Yes No No No No NA No 50.0% Novabase - SGPS, SA Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes 92.3% Papelaria Fernandes - Indústria e Comércio, SA Yes Yes Yes Yes Yes Yes Yes No Yes No No NA No 66.7% Pararede - SGPS, SA Yes Yes Yes Yes Yes No No Yes No No No Yes No 53.8% Portucel - Empresa Produtora de Pasta e Papel, S.A. Yes Yes Yes Yes Yes Yes No Yes No Yes Yes NA Yes 83.3% Portugal Tel ecom, SGPS, SA Yes Yes Yes No Yes Yes Yes Yes No Yes No NA Yes 75.0% Reditus - SGPS, SA Yes Yes Yes Yes Yes No No No No Yes Yes NA Yes 66.7% REN - Redes Energéticas Nacionais, SGPS, SA Yes Yes Yes Yes Yes Yes Yes No No No Yes NA Yes 75.0% SAG Gest - Soluções Automóvel Globais, SGPS, SA Yes Yes Yes Yes Yes Yes No Yes No Yes Yes NA No 75.0% Semapa - Sociedade Investi mento e Gestão, SGPS, SA Yes Yes Yes Yes Yes Yes No Yes No Yes No NA Yes 75.0% Sociedade Comercial Orey Antunes, SA Yes No Yes Yes Yes No No Yes No No Yes Yes No 53.8% Sonae - SGPS, SA Yes No Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes 84.6% Sonae Indústria, SGPS, SA Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No NA No 83.3% SONAECOM - SGPS, SA Yes Yes Yes Yes Yes Yes No Yes Yes Yes No Yes Yes 84.6% Sport Lisboa e Benfica - Futebol SAD No Yes No Yes Yes No No No No No No NA No 25.0% Sporting - Sociedade Desporti va de Futebol, SAD No Yes Yes Yes Yes Yes No No No No No NA No 41.7% Sumolis - Comp. Ind.de Frutas e Bebidas, SA Yes Yes Yes No Yes No No No No Yes No NA Yes 50.0% Teixeira Duarte - Engenharia e Construções, SA Yes Yes No Yes Yes No No No No Yes No NA Yes 50.0% Toyota Caetano Portugal, SA Yes Yes No Yes Yes No No No No No Yes NA No 41.7% VAA - Vista Al egre Atlantis, SGPS, SA Yes No Yes Yes Yes Yes No No No No No NA No 41.7% Zon Multi médi a - Serv. Tel. Multi média, SGPS, SA Yes Yes Yes No Yes Yes Yes Yes No No Yes NA Yes 75.0% Level of Complian ce 87.2% 76.6% 83.0% 78.7% 100.0% 68.1% 38.3% 44.7% 12.8% 34.0% 44.4% 100.0% 44.7%
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Recommendation 1: Contact with the Market 2007 Existing Funtions of Compliance Issuer Office the Office Altri, SGPS, SA No Yes Yes Banco BPI, SA Yes Yes Yes Banco Comercial Português, SA Yes Yes Yes Banco Espírito Santo, SA Yes Yes Yes Banif - SGPS, SA Yes Yes Yes Brisa - Auto Estradas de Portugal, SA Yes Yes Yes Cimpor - Cimentos de Portugal, SGPS, SA Yes Yes Yes Cofina, SGPS, SA Yes Yes Yes Companhia Industrial Resinas Sintéticas - Cires, SA No Yes Yes Compta-Equipamentos e Serviços de Informática, SA No No No Corticeira Amorim,SGPS, SA Yes Yes Yes EDP - Energias de Portugal Yes Yes Yes Estoril Sol - SGPS, SA No Yes Yes Finibanco - Holding, SGPS S.A. Yes Yes Yes Fisipe - Fibras Sintéticas de Portugal, SA No Yes No Futebol Clube do Porto - Futebol SAD No Yes No Galp Energia Yes Yes Yes Grupo Media Capital, SGPS, SA Yes Yes Yes Grupo Soares da Costa, SGPS, SA. Yes Yes Yes Ibersol - SGPS, SA Yes Yes Yes Imobiliária Construtora Grão Pará, SA Yes Yes Yes Impresa - SGPS, SA Yes Yes Yes Inapa - Investimentos, Participações e Gestão, SA Yes Yes Yes Jerónimo Martins - SGPS, SA Yes Yes Yes Lisgráfica - Impressão e Artes Gráficas, SA No No No Martifer - SGPS, SA Yes Yes Yes Mota-Engil, SGPS, SA Yes Yes Yes Novabase - SGPS, SA Yes Yes Yes Papelaria Fernandes - Indústria e Comércio, SA Yes Yes Yes Pararede - SGPS, SA Yes Yes Yes Portucel - Empresa Produtora de Pasta e Papel, S.A. Yes Yes Yes Portugal Telecom, SGPS, SA Yes Yes Yes Reditus - SGPS, SA Yes Yes Yes REN - Redes Energéticas Nacionais, SGPS, SA Yes Yes Yes SAG Gest - Soluções Automóvel Globais, SGPS, SA Yes Yes Yes Semapa - Sociedade Investimento e Gestão, SGPS, SA Yes Yes Yes Sociedade Comercial Orey Antunes, SA Yes Yes Yes Sonae - SGPS, SA Yes Yes Yes Sonae Indústria, SGPS, SA Yes Yes Yes SONAECOM - SGPS, SA Yes Yes Yes Sport Lisboa e Benfica - Futebol SAD No Yes No Sporting - Sociedade Desportiva de Futebol, SAD No No No Sumolis - Comp. Ind.de Frutas e Bebidas, SA Yes Yes Yes Teixeira Duarte - Engenharia e Construções, SA Yes Yes Yes Toyota Caetano Portugal, SA No Yes Yes VAA - Vista Alegre Atlantis, SGPS, SA Yes Yes Yes Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA Yes Yes Yes
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Recommendtion 2: Exercising the Voting Right 2007 Advance Period Postal Deadline Rules Warding required f or Share Voting f or Reception Off Deposit and Blocking Compliance Model of Postal f or Participation at Postal Voting the General Meeting Issuer Voting Altri, SGPS, SA Yes No Yes Yes No Banco BPI, SA Yes Yes Yes Yes Yes Banco Comercial Português, SA Yes Yes Yes Yes Yes Banco Espírito Santo, SA Yes Yes Yes Yes Yes Banif - SGPS, SA Yes Yes Yes Yes Yes Brisa - Auto Estradas de Portugal, SA Yes Yes Yes Yes Yes Cimpor - Cimentos de Portugal, SGPS, SA Yes Yes Yes Yes Yes Cof ina, SGPS, SA Yes Yes Yes Yes Yes Companhia Industrial Resinas Sintéticas - Cires, SA Yes Yes Yes Yes Yes Compta-Equipamentos e Serv iços de Informática, SA Yes Yes No Yes No Corticeira Amorim,SGPS, SA Yes Yes Yes Yes Yes EDP - Energias de Portugal Yes Yes Yes Yes Yes Estoril Sol - SGPS, SA Yes Yes Yes Yes Yes Finibanco - Holding, SGPS S.A. Yes Yes Yes Yes Yes Fisipe - Fibras Sintéticas de Portugal, SA Yes No No Yes No Futebol Clube do Porto - Futebol SAD Yes No No Yes No Galp Energia Yes Yes Yes Yes Yes Grupo Media Capital, SGPS, SA Yes Yes Yes Yes Yes Grupo Soares da Costa, SGPS, SA. Yes Yes Yes Yes Yes Ibersol - SGPS, SA No No No Yes No Imobiliária Construtora Grão Pará, SA Yes Yes Yes Yes Yes Impresa - SGPS, SA Yes Yes Yes Yes Yes Inapa - Investimentos, Participações e Gestão, SA Yes Yes Yes Yes Yes Jerónimo Martins - SGPS, SA Yes Yes Yes Yes Yes Lisgráf ica - Impressão e Artes Gráficas, SA Yes No Yes Yes No Martif er - SGPS, SA No Yes Yes Yes No Mota-Engil, SGPS, SA No Yes Yes Yes No Nov abase - SGPS, SA Yes Yes Yes Yes Yes Papelaria Fernandes - Indústria e Comércio, SA Yes Yes Yes Yes Yes Pararede - SGPS, SA Yes Yes Yes Yes Yes Portucel - Empresa Produtora de Pasta e Papel, S.A. Yes Yes Yes Yes Yes Portugal Telecom, SGPS, SA Yes Yes Yes Yes Yes Reditus - SGPS, SA Yes Yes Yes Yes Yes REN - Redes Energéticas Nacionais, SGPS, SA Yes Yes Yes Yes Yes SAG Gest - Soluções Automóvel Globais, SGPS, SA Yes Yes Yes Yes Yes Semapa - Sociedade Inv estimento e Gestão, SGPS, SA Yes Yes Yes Yes Yes Sociedade Comercial Orey Antunes, SA Yes Yes No No No Sonae - SGPS, SA No Yes Yes Yes No Sonae Indústria, SGPS, SA Yes Yes Yes Yes Yes SONAECOM - SGPS, SA Yes Yes Yes Yes Yes Sport Lisboa e Benf ica - Futebol SAD Yes Yes Yes Yes Yes Sporting - Sociedade Desportiv a de Futebol, SAD Yes Yes Yes Yes Yes Sumolis - Comp. Ind.de Frutas e Bebidas, SA Yes Yes Yes Yes Yes Teixeira Duarte - Engenharia e Construções, SA Yes Yes Yes Yes Yes Toy ota Caetano Portugal, SA Yes Yes Yes Yes Yes VAA - Vista Alegre Atlantis, SGPS, SA Yes Yes No Yes No Zon Multimédia - Serv . Tel. Multimédia, SGPS, SA Yes Yes Yes Yes Yes
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Recommendation 3: Internal Control 2007 Description of Internal Auditing Internal Procedures Departments Compliance Issuer Altri, SGPS, SA Yes No Yes Banco BPI, SA Yes Yes Yes Banco Comercial Português, SA Yes Yes Yes Banco Espírito Santo, SA Yes Yes Yes Banif - SGPS, SA Yes Yes Yes Brisa - Auto Estradas de Portugal, SA Yes Yes Yes Cimpor - Cimentos de Portugal, SGPS, SA Yes Yes Yes Cofina, SGPS, SA Yes No Yes Companhia Industrial Resinas Sintéticas - Cires, SA Yes No Yes Compta-Equipamentos e Serviços de Informática, SA No No No Corticeira Amorim,SGPS, SA Yes Yes Yes EDP - Energias de Portugal Yes Yes Yes Estoril Sol - SGPS, SA Yes Yes Yes Finibanco - Holding, SGPS S.A. Yes Yes Yes Fisipe - Fibras Sintéticas de Portugal, SA No No No Futebol Clube do Porto - Futebol SAD Yes No Yes Galp Energia Yes Yes Yes Grupo Media Capital, SGPS, SA Yes Yes Yes Grupo Soares da Costa, SGPS, SA. Yes Yes Yes Ibersol - SGPS, SA Yes No Yes Imobiliária Construtora Grão Pará, SA No Yes No Impresa - SGPS, SA No No No Inapa - Investimentos, Participações e Gestão, SA No Yes Yes Jerónimo Martins - SGPS, SA Yes Yes Yes Lisgráfica - Impressão e Artes Gráficas, SA Yes No Yes Martifer - SGPS, SA No No No Mota-Engil, SGPS, SA Yes Yes Yes Novabase - SGPS, SA Yes Yes Yes Papelaria Fernandes - Indústria e Comércio, SA Yes Yes Yes Pararede - SGPS, SA Yes Yes Yes Portucel - Empresa Produtora de Pasta e Papel, S.A. Yes Yes Yes Portugal Telecom, SGPS, SA Yes Yes Yes Reditus - SGPS, SA Yes Yes Yes REN - Redes Energéticas Nacionais, SGPS, SA Yes Yes Yes SAG Gest - Soluções Automóvel Globais, SGPS, SA Yes Yes Yes Semapa - Sociedade Investimento e Gestão, SGPS, SA Yes Yes Yes Sociedade Comercial Orey Antunes, SA Yes No Yes Sonae - SGPS, SA Yes Yes Yes Sonae Indústria, SGPS, SA Yes Yes Yes SONAECOM - SGPS, SA Yes Yes Yes Sport Lisboa e Benfica - Futebol SAD No No No Sporting - Sociedade Desportiva de Futebol, SAD Yes No Yes Sumolis - Comp. Ind.de Frutas e Bebidas, SA Yes Yes Yes Teixeira Duarte - Engenharia e Construções, SA No No No Toyota Caetano Portugal, SA No No No VAA - Vista Alegre Atlantis, SGPS, SA Yes Yes Yes Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA Yes Yes Yes
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Recommendtion 4: Conveyance of Shares 2007 Restrictions Special In Shareholder applied to Shareholder Compliance Agreements Voting Rights Rights Issuer Altri, SGPS, SA Yes Yes Yes Yes Banco BPI, SA No No No No Banco Comercial Português, SA No Yes Yes No Banco Espírito Santo, SA Yes Yes Yes Yes Banif - SGPS, SA Yes Yes Yes Yes Brisa - Auto Estradas de Portugal, SA Yes Yes Yes Yes Cimpor - Cimentos de Portugal, SGPS, SA Yes Yes Yes Yes Cofina, SGPS, SA Yes Yes Yes Yes Companhia Industrial Resinas Sintéticas - Cires, SA Yes Yes Yes Yes Compta-Equipamentos e Serviços de Informática, SA No Yes Yes No Corticeira Amorim,SGPS, SA Yes Yes Yes Yes EDP - Energias de Portugal No No Yes No Estoril Sol - SGPS, SA Yes Yes Yes Yes Finibanco - Holding, SGPS S.A. Yes Yes Yes Yes Fisipe - Fibras Sintéticas de Portugal, SA Yes Yes Yes Yes Futebol Clube do Porto - Futebol SAD Yes No Yes Yes Galp Energia No No No No Grupo Media Capital, SGPS, SA Yes Yes Yes Yes Grupo Soares da Costa, SGPS, SA. Yes Yes Yes Yes Ibersol - SGPS, SA Yes Yes Yes Yes Imobiliária Construtora Grão Pará, SA Yes Yes Yes Yes Impresa - SGPS, SA Yes Yes Yes Yes Inapa - Investimentos, Participações e Gestão, SA Yes Yes Yes Yes Jerónimo Martins - SGPS, SA Yes Yes Yes Yes Lisgráfica - Impressão e Artes Gráficas, SA Yes Yes Yes Yes Martifer - SGPS, SA Yes Yes No No Mota-Engil, SGPS, SA Yes Yes Yes Yes Novabase - SGPS, SA Yes Yes No No Papelaria Fernandes - Indústria e Comércio, SA Yes Yes Yes Yes Pararede - SGPS, SA Yes Yes Yes Yes Portucel - Empresa Produtora de Pasta e Papel, S.A. Yes Yes Yes Yes Portugal Telecom, SGPS, SA No No Yes No Reditus - SGPS, SA Yes Yes Yes Yes REN - Redes Energéticas Nacionais, SGPS, SA Yes Yes Yes Yes SAG Gest - Soluções Automóvel Globais, SGPS, SA Yes Yes Yes Yes Semapa - Sociedade Investimento e Gestão, SGPS, SA Yes Yes Yes Yes Sociedade Comercial Orey Antunes, SA Yes Yes Yes Yes Sonae - SGPS, SA Yes Yes Yes Yes Sonae Indústria, SGPS, SA Yes Yes Yes Yes SONAECOM - SGPS, SA Yes Yes Yes Yes Sport Lisboa e Benfica - Futebol SAD Yes No Yes Yes Sporting - Sociedade Desportiva de Futebol, SAD Yes No Yes Yes Sumolis - Comp. Ind.de Frutas e Bebidas, SA No Yes Yes No Teixeira Duarte - Engenharia e Construções, SA Yes Yes Yes Yes Toyota Caetano Portugal, SA Yes Yes Yes Yes VAA - Vista Alegre Atlantis, SGPS, SA Yes Yes Yes Yes Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA No Yes Yes No
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Recommendation No. 5: Composition and Fun ctioning of The Board 2007 Infor mati on supplied to Number of Identity of the the Management Board Management Executi ve Other Members of the on the Handling of Issues Board Meetings Compliance Committee Committees Management and Decision-Making by the during the Board Executi ve Committee, respecti ve ter m Issuer shoul d it exist of Office Altri, SGPS, SA No No Yes NA 12 Yes Banco BPI, SA Yes Yes Yes Yes 12 Yes Banco Comercial Português, SA (*) Yes Yes Yes Yes 67 Yes Banco Espírito Santo, SA Yes Yes Yes Yes 5 Yes Banif - SGPS, SA No No Yes NA 15 Yes Brisa - Auto Estradas de Portugal, SA Yes Yes Yes Yes 8 Yes Cimpor - Cimentos de Portugal, SGPS, SA Yes No Yes Yes 8 Yes Cofina, SGPS, SA No No Yes NA 12 Yes Companhia Industrial Resinas Si ntéticas - Cires, SA No No Yes NA 6 Yes Compta-Equipamentos e Serviços de Informática, SA No No Yes NA >12 Yes Corticeira Amorim,SGPS, SA Yes Yes Yes Yes 10 Yes EDP - Energias de Portugal (*) Yes Yes Yes Yes 50 Yes Estoril Sol - SGPS, SA No No Yes NA 12 Yes Finibanco - Holdi ng, SGPS S.A. No No Yes NA 14 Yes Fisipe - Fibras Sintéticas de Portugal, SA Yes No Yes Yes 4 Yes Futebol Clube do Porto - Futebol SAD No No Yes NA 9 Yes Galp Energia Yes Yes Yes Yes 18 Yes Grupo M edia C apital, SGPS, SA No Yes Yes NA 10 Yes Grupo Soares da Costa, SGPS, SA. Yes Yes Yes Yes 6 Yes Ibersol - SGPS, SA Yes No Yes Yes 13 Yes Imobiliária Construtor a Grão Pará, SA No No Yes NA 7 Yes Impresa - SGPS, SA Yes No Yes Yes 8 Yes Inapa - Investi mentos, Participações e Gestão, SA Yes Yes Yes Yes 11 Yes Jerónimo Martins - SGPS, SA Yes Yes Yes Yes 7 Yes Lisgráfica - Impressão e Artes Gráficas, SA No No Yes NA >52 Yes Martifer - SGPS, SA No No Yes NA 12 Yes Mota-Engil, SGPS, SA No Yes Yes NA 6 Yes Novabase - SGPS, SA Yes No Yes Yes >12 Yes Papelaria Fernandes - Indústria e Comércio, SA No No Yes NA 10 Yes Pararede - SGPS, SA No Yes Yes NA 12 Yes Portucel - Empresa Produtora de Pasta e Papel, S.A. Yes No Yes Yes 7 Yes Portugal Tel ecom, SGPS, SA Yes Yes Yes Yes 16 Yes Reditus - SGPS, SA No Yes Yes NA 13 Yes REN - Redes Energéticas Nacionais, SGPS, SA Yes No Yes Yes 7 Yes SAG Gest - Soluções Automóvel Globais, SGPS, SA Yes No Yes Yes 14 Yes Semapa - Sociedade Investi mento e Gestão, SGPS, SA Yes No Yes Yes 4 Yes Sociedade Comercial Orey Antunes, SA No No Yes NA 20 Yes Sonae - SGPS, SA Yes Yes Yes Yes 6 Yes Sonae Indústria, SGPS, SA Yes Yes Yes Yes 9 Yes SONAECOM - SGPS, SA Yes Yes Yes Yes 7 Yes Sport Lisboa e Benfica - Futebol SAD No No Yes NA 35 Yes Sporting - Sociedade Desporti va de Futebol, SAD Yes No Yes Yes 17 Yes Sumolis - Comp. Ind.de Frutas e Bebidas, SA No Yes Yes NA 42 Yes Teixeira Duarte - Engenharia e Construções, SA No No Yes NA 37 Yes Toyota Caetano Portugal, SA No No Yes NA 27 Yes VAA - Vista Al egre Atlantis, SGPS, SA Yes No Yes Yes 10 Yes Zon Multi médi a - Serv. Tel. Multi média, SGPS, SA Yes No Yes Yes 13 Yes
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Recommendation 5-A: Executive / Non-Executive Balance 2007 Meetings among Non-Executi ve Percentage of Non-Executi ve Members Number and/or Members Non-Executi ve of the Management Occurrence of on the Members in the Compliance Board without the Meetings hel d Management Board of attendance of Executi ve Board Directors Issuer Members Altri, SGPS, SA No NA NA 0.00% No Banco BPI, SA Yes No 12 66.67% Yes Banco Comercial Português, SA Yes Yes 12 57.89% Yes Banco Espírito Santo, SA Yes No 5 57.00% Yes Banif - SGPS, SA No NA NA 0.00% No Brisa - Auto Estradas de Portugal, SA Yes No No 61.54% Yes Cimpor - Cimentos de Portugal, SGPS, SA Yes No No 54.55% Yes Cofina, SGPS, SA No NA NA 0.00% No Companhia Industrial Resinas Si ntéticas - Cires, SA Yes No No 50.00% Yes Compta-Equipamentos e Serviços de Informática, SA Yes No No 60.00% Yes Corticeira Amorim,SGPS, SA Yes No 10 57.14% Yes EDP - Energias de Portugal Yes Yes 8 66.67% Yes Estoril Sol - SGPS, SA No NA NA 0.00% No Finibanco - Holdi ng, SGPS S.A. No NA NA 0.00% No Fisipe - Fibras Sintéticas de Portugal, SA Yes No No 40.00% Yes Futebol Clube do Porto - Futebol SAD No NA NA 0.00% No Galp Energia Yes No No 61.11% Yes Grupo M edia C apital, SGPS, SA Yes No NA 62.50% Yes Grupo Soares da Costa, SGPS, SA. Yes No NA 50.00% Yes Ibersol - SGPS, SA Yes NA NA 33.33% Yes Imobiliária Construtor a Grão Pará, SA Yes No NA 33.33% Yes Impresa - SGPS, SA Yes Yes 4 50.00% Yes Inapa - Investi mentos, Participações e Gestão, SA Yes No NA 57.14% Yes Jerónimo Martins - SGPS, SA Yes Yes 4 66.67% Yes Lisgráfica - Impressão e Artes Gráficas, SA No NA NA 0.00% No Martifer - SGPS, SA No No 12 0.00% No Mota-Engil, SGPS, SA Yes No NA 33.33% Yes Novabase - SGPS, SA Yes Yes 6 36.36% Yes Papelaria Fernandes - Indústria e Comércio, SA Yes No No 33.33% Yes Pararede - SGPS, SA No NA NA 0.00% No Portucel - Empresa Produtora de Pasta e Papel, S.A. Yes No No 44.44% Yes Portugal Tel ecom, SGPS, SA Yes No No 73.00% Yes Reditus - SGPS, SA No NA NA 0.00% No REN - Redes Energéticas Nacionais, SGPS, SA Yes No NA 54.55% Yes SAG Gest - Soluções Automóvel Globais, SGPS, SA Yes No No 44.44% Yes Semapa - Sociedade Investi mento e Gestão, SGPS, SA Yes No No 46.15% Yes Sociedade Comercial Orey Antunes, SA No NA NA 0.00% No Sonae - SGPS, SA Yes Yes 5 55.56% Yes Sonae Indústria, SGPS, SA Yes No No 50.00% Yes SONAECOM - SGPS, SA Yes Yes 2 50.00% Yes Sport Lisboa e Benfica - Futebol SAD No NA NA 0.00% No Sporting - Sociedade Desporti va de Futebol, SAD Yes No No 40.00% Yes Sumolis - Comp. Ind.de Frutas e Bebidas, SA No NA NA 0.00% No Teixeira Duarte - Engenharia e Construções, SA Yes No No 11.11% No Toyota Caetano Portugal, SA Yes No No 28.57% No VAA - Vista Al egre Atlantis, SGPS, SA Yes No No 50.00% Yes Zon Multi médi a - Serv. Tel. Multi média, SGPS, SA Yes No No 69.23% Yes
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Recommendation 6: Independent Directors 2007 Percentage of the Number Non-Executive of Independent Non- Independent Compliance Members Executive Members of Issuer the Management Board Altri, SGPS, SA No 0.00% No Banco BPI, SA Yes 38.10% Yes Banco Comercial Português, SA Yes 32% Yes Banco Espírito Santo, SA Yes 16.60% No Banif - SGPS, SA No 0.00% No Brisa - Auto Estradas de Portugal, SA Yes 30.76% Yes Cimpor - Cimentos de Portugal, SGPS, SA Yes 36.36% Yes Cofina, SGPS, SA No 0.00% No Companhia Industrial Resinas Sintéticas - Cires, SA No 0.00% No Compta-Equipamentos e Serviços de Informática, SA Yes 40.00% Yes Corticeira Amorim,SGPS, SA No 0.00% No EDP - Energias de Portugal Yes 42.86% Yes Estoril Sol - SGPS, SA No 0.00% No Finibanco - Holding, SGPS S.A. No 0.00% No Fisipe - Fibras Sintéticas de Portugal, SA No 0.00% No Futebol Clube do Porto - Futebol SAD No 0.00% No Galp Energia Yes 11.11% No Grupo Media Capital, SGPS, SA Yes 50.00% Yes Grupo Soares da Costa, SGPS, SA. No 0.00% No Ibersol - SGPS, SA No 0.00% No Imobiliária Construtora Grão Pará, SA No 0.00% No Impresa - SGPS, SA Yes 50.00% Yes Inapa - Investimentos, Participações e Gestão, SA Yes 28.57% Yes Jerónimo Martins - SGPS, SA Yes 44.44% Yes Lisgráfica - Impressão e Artes Gráficas, SA No 0.00% No Martifer - SGPS, SA No 0.00% No Mota-Engil, SGPS, SA Yes 33.33% Yes Novabase - SGPS, SA Yes 27.27% Yes Papelaria Fernandes - Indústria e Comércio, SA Yes 33.33% Yes Pararede - SGPS, SA No 0.00% No Portucel - Empresa Produtora de Pasta e Papel, S.A. No 0.00% No Portugal Telecom, SGPS, SA Yes 36.00% Yes Reditus - SGPS, SA No 0.00% No REN - Redes Energéticas Nacionais, SGPS, SA Yes 27.27% Yes SAG Gest - Soluções Automóvel Globais, SGPS, SA No 0.00% No Semapa - Sociedade Investimento e Gestão, SGPS, SA Yes 15.38% No Sociedade Comercial Orey Antunes, SA No 0.00% No Sonae - SGPS, SA Yes 44.44% Yes Sonae Indústria, SGPS, SA Yes 38.46% Yes SONAECOM - SGPS, SA Yes 20.00% No Sport Lisboa e Benfica - Futebol SAD No 0.00% No Sporting - Sociedade Desportiva de Futebol, SAD No 0.00% No Sumolis - Comp. Ind.de Frutas e Bebidas, SA No 0.00% No Teixeira Duarte - Engenharia e Construções, SA No 0.00% No Toyota Caetano Portugal, SA No 0.00% No VAA - Vista Alegre Atlantis, SGPS, SA No 0.00% No Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA Yes 38.46% Yes
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Recommendation 7: Internal Corporate Assessment 2007 Issuer List of Committees Compliance Altri, SGPS, SA No No Banco BPI, SA Yes Yes Banco Comercial Português, SA Yes Yes Banco Espírito Santo, SA Yes Yes Banif - SGPS, SA No No Brisa - Auto Estradas de Portugal, SA Yes Yes Cimpor - Cimentos de Portugal, SGPS, SA Yes Yes Cofina, SGPS, SA No No Companhia Industrial Resinas Sintéticas - Cires, SA No No Compta-Equipamentos e Serviços de Informática, SA No No Corticeira Amorim,SGPS, SA Yes Yes EDP - Energias de Portugal Yes Yes Estoril Sol - SGPS, SA No No Finibanco - Holding, SGPS S.A. No No Fisipe - Fibras Sintéticas de Portugal, SA No No Futebol Clube do Porto - Futebol SAD No No Galp Energia No No Grupo Media Capital, SGPS, SA No No Grupo Soares da Costa, SGPS, SA. Yes Yes Ibersol - SGPS, SA No No Imobiliária Construtora Grão Pará, SA No No Impresa - SGPS, SA No No Inapa - Investimentos, Participações e Gestão, SA Yes Yes Jerónimo Martins - SGPS, SA Yes Yes Lisgráfica - Impressão e Artes Gráficas, SA No No Martifer - SGPS, SA No No Mota-Engil, SGPS, SA No No Novabase - SGPS, SA Yes Yes Papelaria Fernandes - Indústria e Comércio, SA No No Pararede - SGPS, SA Yes Yes Portucel - Empresa Produtora de Pasta e Papel, S.A. Yes Yes Portugal Telecom, SGPS, SA Yes Yes Reditus - SGPS, SA No No REN - Redes Energéticas Nacionais, SGPS, SA No No SAG Gest - Soluções Automóvel Globais, SGPS, SA Yes Yes Semapa - Sociedade Investimento e Gestão, SGPS, SA Yes Yes Sociedade Comercial Orey Antunes, SA Yes Yes Sonae - SGPS, SA Yes Yes Sonae Indústria, SGPS, SA Yes Yes SONAECOM - SGPS, SA Yes Yes Sport Lisboa e Benfica - Futebol SAD No No Sporting - Sociedade Desportiva de Futebol, SAD No No Sumolis - Comp. Ind.de Frutas e Bebidas, SA No No Teixeira Duarte - Engenharia e Construções, SA No No Toyota Caetano Portugal, SA No No VAA - Vista Alegre Atlantis, SGPS, SA No No Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA Yes Yes
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Re commendation 8: Board of Directors’ Remuneration 2007 Are the Board Directors’ Individual Remuneration interests in line w ith those Compliance Issuer of the company’s Altri, SGPS, SA No Yes No Banco BPI, SA No Yes No Banco Comercial Português, SA No Yes No Banco Espírito Santo, SA No Yes No Banif - SGPS, SA No No No Brisa - Auto Estradas de Portugal, SA No Yes No Cimpor - Cimentos de Portugal, SGPS, SA No Yes No Cofina, SGPS, SA No Yes No Companhia Industrial Resinas Sintéticas - Cires, SA No Yes No Compta-Equipamentos e Serviços de Informática, SA No No No Corticeira Amorim,SGPS, SA No Yes No EDP - Energias de Portugal Yes* Yes Yes* Estoril Sol - SGPS, SA No No No Finibanco - Holding, SGPS SA. No Yes No Fisipe - Fibras Sintéticas de Portugal, SA No No No Futebol Clube do Porto - Futebol SAD No Yes No Galp Energia No Yes No Grupo Media Capital, SGPS, SA No Yes No Grupo Soares da Costa, SGPS, SA. No Yes No Ibersol - SGPS, SA No No No Imobiliária Construtora Grão Pará, SA No Yes No Impresa - SGPS, SA No Yes No Inapa - Investimentos, Participações e Gestão, SA No No No Jerónimo Martins - SGPS, SA No Yes No Lisgráfica - Impressão e Artes Gráficas, SA No No No Martifer - SGPS, SA No Yes No Mota-Engil, SGPS, SA No Yes No Novabase - SGPS, SA Yes Yes Yes Papelaria Fernandes - Indústria e Comércio, SA Yes Yes Yes Pararede - SGPS, SA No Yes No Portucel - Empresa Produtora de Pasta e Papel, S.A. No Yes No Portugal Telecom, SGPS, SA No Yes No Reditus - SGPS, SA No Yes No REN - Redes Energéticas Nacionais, SGPS, SA No Yes No SAG Gest - Soluções Automóvel Globais, SGPS, SA No Yes No Semapa - Sociedade Investimento e Gestão, SGPS, SA No Yes No Sociedade Comercial Orey Antunes, SA No Yes No Sonae - SGPS, SA Yes* Yes Yes Sonae Indústria, SGPS, SA Yes* Yes Yes SONAECOM - SGPS, SA Yes* Yes Yes Sport Lisboa e Benfica - Futebol SAD No Yes No Sporting - Sociedade Desportiva de Futebol, SAD No Yes No Sumolis - Comp. Ind.de Frutas e Bebidas, SA No Yes No Teixeira Duarte - Engenharia e Construções, SA No Yes No Toyota Caetano Portugal, SA No No No VAA - Vista Alegre Atlantis, SGPS, SA No Yes No Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA No Yes No
* Although EDP, Sonae SGPS, Sonae Indústria and Sonaecom, do not disclose all the members of the Executive Board of Directors’ remuneration individually, they do however disclose the individual remuneration of the Chairman. This might be an acceptable approach to this Recommendation and is thus considered to be implemented.
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Recommendation 8-A: Approval of Remuneration Policy 2007 Document presented at the Compliance Issuer General Meeting Altri, SGPS, SA No No Banco BPI, SA No No Banco Comercial Português, SA Yes Yes Banco Espírito Santo, SA Yes Yes Banif - SGPS, SA No No Brisa - Auto Estradas de Portugal, SA Yes Yes Cimpor - Cimentos de Portugal, SGPS, SA No No Cofina, SGPS, SA No No Companhia Industrial Resinas Sintéticas - Cires, SA Yes Yes Compta-Equipamentos e Serviços de Informática, SA No No Corticeira Amorim,SGPS, SA No No EDP - Energias de Portugal No No Estoril Sol - SGPS, SA No No Finibanco - Holding, SGPS S.A. No No Fisipe - Fibras Sintéticas de Portugal, SA No No Futebol Clube do Porto - Futebol SAD No No Galp Energia No No Grupo Media Capital, SGPS, SA No No Grupo Soares da Costa, SGPS, SA. Yes Yes Ibersol - SGPS, SA No No Imobiliária Construtora Grão Pará, SA Yes Yes Impresa - SGPS, SA No No Inapa - Investimentos, Participações e Gestão, SA No No Jerónimo Martins - SGPS, SA No No Lisgráfica - Impressão e Artes Gráficas, SA Yes Yes Martifer - SGPS, SA No No Mota-Engil, SGPS, SA No No Novabase - SGPS, SA Yes Yes Papelaria Fernandes - Indústria e Comércio, SA No No Pararede - SGPS, SA No No Portucel - Empresa Produtora de Pasta e Papel, S.A. Yes Yes Portugal Telecom, SGPS, SA Yes Yes Reditus - SGPS, SA Yes Yes REN - Redes Energéticas Nacionais, SGPS, SA No No SAG Gest - Soluções Automóvel Globais, SGPS, SA Yes Yes Semapa - Sociedade Investimento e Gestão, SGPS, SA Yes Yes Sociedade Comercial Orey Antunes, SA No No Sonae - SGPS, SA Yes Yes Sonae Indústria, SGPS, SA Yes Yes SONAECOM - SGPS, SA Yes Yes Sport Lisboa e Benfica - Futebol SAD No No Sporting - Sociedade Desportiva de Futebol, SAD No No Sumolis - Comp. Ind.de Frutas e Bebidas, SA Yes Yes Teixeira Duarte - Engenharia e Construções, SA Yes Yes Toyota Caetano Portugal, SA No No VAA - Vista Alegre Atlantis, SGPS, SA No No Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA No No
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Recommendation 9: Remuneration Committees’ Independence 2007 Composition of the Distinction between Are all Remuneration Independent and Members Compliance Committee or Non-Independent Independent? Issuer Similar Entity Members Altri, SGPS, SA No NA No No Banco BPI, SA Yes Yes No No Banco Comercial Português, SA Yes Yes Yes Yes Banco Espírito Santo, SA Yes Yes Yes Yes Banif - SGPS, SA Yes Yes No No Brisa - Auto Estradas de Portugal, SA Yes Yes Yes Yes Cimpor - Cimentos de Portugal, SGPS, SA Yes Yes No No Cof ina, SGPS, SA Yes Yes No No Companhia Industrial Resinas Sintéticas - Cires, SA Yes Yes Yes Yes Compta-Equipamentos e Serv iços de Informática, SA No No No No Corticeira Amorim,SGPS, SA Yes Yes Yes Yes EDP - Energias de Portugal Yes No Yes Yes Estoril Sol - SGPS, SA Yes Yes No No Finibanco - Holding, SGPS S.A. Yes Yes No No Fisipe - Fibras Sintéticas de Portugal, SA Yes No No No Futebol Clube do Porto - Futebol SAD Yes Yes Yes Yes Galp Energia Yes Yes Yes Yes Grupo Media Capital, SGPS, SA Yes Yes No No Grupo Soares da Costa, SGPS, SA. Yes Yes No No Ibersol - SGPS, SA Yes Yes Yes Yes Imobiliária Construtora Grão Pará, SA NA NA NA NA Impresa - SGPS, SA Yes Yes Yes Yes Inapa - Investimentos, Participações e Gestão, SA Yes Yes Yes Yes Jerónimo Martins - SGPS, SA Yes Yes Yes Yes Lisgráf ica - Impressão e Artes Gráficas, SA NA NA NA NA Martif er - SGPS, SA Yes Yes No No Mota-Engil, SGPS, SA Yes Yes No No Nov abase - SGPS, SA Yes Yes Yes Yes Papelaria Fernandes - Indústria e Comércio, SA Yes Yes No No Pararede - SGPS, SA Yes No No No Portucel - Empresa Produtora de Pasta e Papel, S.A. Yes No Yes Yes Portugal Telecom, SGPS, SA Yes Yes No No Reditus - SGPS, SA Yes Yes Yes Yes REN - Redes Energéticas Nacionais, SGPS, SA Yes Yes Yes Yes SAG Gest - Soluções Automóvel Globais, SGPS, SA Yes Yes Yes Yes Semapa - Sociedade Inv estimento e Gestão, SGPS, SA Yes No No No Sociedade Comercial Orey Antunes, SA Yes Yes Yes Yes Sonae - SGPS, SA Yes No Não No Sonae Indústria, SGPS, SA Yes No No No SONAECOM - SGPS, SA Yes Yes No No Sport Lisboa e Benf ica - Futebol SAD Yes No No No Sporting - Sociedade Desportiv a de Futebol, SAD Yes Yes No No Sumolis - Comp. Ind.de Frutas e Bebidas, SA Yes No No No Teixeira Duarte - Engenharia e Construções, SA Yes No No No Toy ota Caetano Portugal, SA Yes No Yes Yes VAA - Vista Alegre Atlantis, SGPS, SA Yes No No No Zon Multimédia - Serv . Tel. Multimédia, SGPS, SA Yes Yes Yes Yes
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Recommendation 10: Share and Options Allocation 2007 Main Characteristics Options Reason. for Plan of the Plan Compliance Plans Adoption Issuer submitted to the GM ? Altri, SGPS, SA NA NA NA NA Banco BPI, SA Yes Yes Yes Yes Banco Comercial Português, SA NA NA NA NA Banco Espírito Santo, SA NA NA NA NA Banif - SGPS, SA NA NA NA NA Brisa - Auto Estradas de Portugal, SA Yes Yes Yes Yes Cimpor - Cimentos de Portugal, SGPS, SA Yes Yes Yes Yes Cofina, SGPS, SA NA NA NA NA Companhia Industrial Resinas Sintéticas - Cires, SA NA NA NA NA Compta-Equipamentos e Serviços de Informática, SA NA NA NA NA Corticeira Amorim,SGPS, SA NA NA NA NA EDP - Energias de Portugal Yes No Yes Yes Estoril Sol - SGPS, SA NA NA NA NA Finibanco - Holding, SGPS S.A. NA NA NA NA Fisipe - Fibras Sintéticas de Portugal, SA NA NA NA NA Futebol Clube do Porto - Futebol SAD NA NA NA NA Galp Energia NA NA NA NA Grupo Media Capital, SGPS, SA NA NA NA NA Grupo Soares da Costa, SGPS, SA. NA NA NA NA Ibersol - SGPS, SA NA NA NA NA Imobiliária Construtora Grão Pará, SA NA NA NA NA Impresa - SGPS, SA NA NA NA NA Inapa - Investimentos, Participações e Gestão, SA NA NA NA NA Jerónimo Martins - SGPS, SA NA NA NA NA Lisgráfica - Impressão e Artes Gráficas, SA NA NA NA NA Martifer - SGPS, SA NA NA NA NA Mota-Engil, SGPS, SA NA NA NA NA Novabase - SGPS, SA Yes Yes Yes Yes Papelaria Fernandes - Indústria e Comércio, SA NA NA NA NA Pararede - SGPS, SA Yes Yes Yes Yes Portucel - Empresa Produtora de Pasta e Papel, S.A. NA NA NA NA Portugal Telecom, SGPS, SA NA NA NA NA Reditus - SGPS, SA NA NA NA NA REN - Redes Energéticas Nacionais, SGPS, SA NA NA NA NA SAG Gest - Soluções Automóvel Globais, SGPS, SA NA NA NA NA Semapa - Sociedade Investimento e Gestão, SGPS, SA NA NA NA NA Sociedade Comercial Orey Antunes, SA Yes Yes Yes Yes Sonae - SGPS, SA Yes Yes Yes Yes Sonae Indústria, SGPS, SA NA NA NA NA SONAECOM - SGPS, SA Yes Yes Yes Yes Sport Lisboa e Benfica - Futebol SAD NA NA NA NA Sporting - Sociedade Desportiva de Futebol, SAD NA NA NA NA Sumolis - Comp. Ind.de Frutas e Bebidas, SA NA NA NA NA Teixeira Duarte - Engenharia e Construções, SA NA NA NA NA Toyota Caetano Portugal, SA NA NA NA NA VAA - Vista Alegre Atlantis, SGPS, SA NA NA NA NA Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA NA NA NA NA
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Recommendation 10-A: Communication of Irregularities 2007 Policy on Description of Means of Communication the Policy on Disclosure on the Compliance of Irregularities Communication Communication Issuer in Place of Irregularities Policy Altri, SGPS, SA No NA NA No Banco BPI, SA Yes Yes Yes Yes Banco Comercial Português, SA Yes Yes Yes Yes Banco Espírito Santo, SA Yes Yes Yes Yes Banif - SGPS, SA Yes Yes Yes Yes Brisa - Auto Estradas de Portugal, SA No NA NA No Cimpor - Cimentos de Portugal, SGPS, SA Yes Yes Yes Yes Cofina, SGPS, SA No NA NA No Companhia Industrial Resinas Sintéticas - Cires, SA Yes No No No Compta - Equipamentos e Serviços de Informática, SA No No No No Corticeira Amorim,SGPS, SA No Yes No No EDP - Energias de Portugal Yes Yes Yes Yes Estoril Sol - SGPS, SA No NA NA No Finibanco - Holding, SGPS S.A. Yes Yes Yes Yes Fisipe - Fibras Sintéticas de Portugal, SA No NA NA No Futebol Clube do Porto - Futebol SAD No NA NA No Galp Energia No NA NA No Grupo Media Capital, SGPS, SA No No Yes No Grupo Soares da Costa, SGPS, SA. Yes Yes Yes Yes Ibersol - SGPS, SA No No No No Imobiliária Construtora Grão Pará, SA No No No No Impresa - SGPS, SA Yes Yes Yes Yes Inapa - Investimentos, Participações e Gestão, SA No No No No Jerónimo Martins - SGPS, SA Yes Yes Yes Yes Lisgráfica - Impressão e Artes Gráficas, SA No No No No Martifer - SGPS, SA No No No No Mota-Engil, SGPS, SA No No No No Novabase - SGPS, SA Yes Yes Yes Yes Papelaria Fernandes - Indústria e Comércio, SA No No No No Pararede - SGPS, SA No No No No Portucel - Empresa Produtora de Pasta e Papel, S.A. Yes Yes Yes Yes Portugal Telecom, SGPS, SA Yes Yes Yes Yes Reditus - SGPS, SA Yes Yes Yes Yes REN - Redes Energéticas Nacionais, SGPS, SA Yes Yes Yes Yes SAG Gest - Soluções Automóvel Globais, SGPS, SA No Yes Yes No Semapa - Sociedade Investimento e Gestão, SGPS, SA Yes Yes Yes Yes Sociedade Comercial Orey Antunes, SA No NA NA No Sonae - SGPS, SA Yes Yes Yes Yes Sonae Indústria, SGPS, SA No NA NA No SONAECOM - SGPS, SA Yes Yes Yes Yes Sport Lisboa e Benfica - Futebol SAD No NA NA No Sporting - Sociedade Desportiva de Futebol, SAD No NA NA No Sumolis - Comp. Ind.de Frutas e Bebidas, SA Yes Yes Yes Yes Teixeira Duarte - Engenharia e Construções, SA Yes Yes No Yes Toyota Caetano Portugal, SA No NA NA No VAA - Vista Alegre Atlantis, SGPS, SA No NA NA No Zon Multimédia - Serv. Tel. Multimédia, SGPS, SA Yes Yes Yes Yes
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