The Gerdau Group started 2007 with a new corporate governance structure

Transcription

1 CORPORATE GOVERNANCE The Group started 2007 with a new corporate governance structure From left: Claudio Johannpeter, COO, and André Johannpeter, CEO The Group started 2007 with a new corporate governance structure. In January, André Johannpeter assumed the position of chief executive officer (CEO) and Claudio Johannpeter, the position of chief operating officer (COO). Jorge Johannpeter, who had occupied the position of CEO, remained the chairman of the Board of Directors. Frederico Johannpeter and Carlos J. Petry, senior vice presidents, also left their positions to dedicate themselves exclusively to the activities of board members.

2 2007 ANNUAL REPORT GERDAU 13 CORPORATE GOVERNANCE The succession was carried out based on a structured process with goals and deadlines that started in 2000 and in which specialized international consultants assisted. During this period, there were significant structural changes in the Group, like the creation of the Executive Committee (GEC) in 2002, the most senior body that coordinates and supervises the Business Operations and the Functional Processes in accordance with the policies established by the Board of Directors. The transition occurred naturally and gradually, allowing the Group to continue growing while remaining profitable, and maintaining experiences, practices, philosophies and consistency. This was because the new generation of executives has the support of the members of the Board of Directors and there is collegiate work among the members of the GEC. SAFETY AND TRANSPARENCY The corporate governance system, in line with the best international practices, is structured to ensure safety and transparency to the investor. In April 2007, independent auditors certified that the Group acts in accordance with the Sarbanes- Oxley Act (SOX act) which must be adhered to by companies with shares traded on the US market. The certification, which evidences good corporate governance practices, was concluded without restrictions. Ameristeel, which is responsible for operations in the United States and Canada, was also certified in To comply with the requirements of SOX, the Group made changes in its structure, improving practices. The Board of Auditors incorporated characteristics of an audit committee, and committees for supporting the Board of Directors and the GEC were created, such as the Strategy, Corporate Governance, Risk Management and Disclosure Committees. This process involved external auditors, the Business Operations and the Functional Processes of the organization. As another part of its strategy to become consolidated in the global scenario, starting this year, the Group adopted the accounting rules established by the International Financial Reporting Standards (IFRS). Investors can now more easily understand the consolidated financial statements of the organization, as these are the most used standards in the world. The company acted ahead of the 2010 deadline granted by the Brazilian Securities and Exchange Commission and became the first in Brazil to follow the system (see Finances). In addition to a solid corporate governance structure and international management standards, investors and shareholders have a disclosure policy which is highly esteemed for its transparency and also for its respect of the rules of confidentiality.

3 CORPORATE GOVERNANCE STRUCTURE Shareholders Meeting Board of Auditors Corporate Governance Committee, Strategy Committee and Compensation and Succession Committee Board of Directors Excellence Committees and Support Committees Officers and Executive Committee Functional Processes Business Operations Long Steel Brazil Specialty Steel Açominas North America Latin America India

4 2007 ANNUAL REPORT GERDAU 15 CORPORATE GOVERNANCE SHAREHOLDERS MEETING The members of the Board of Directors and the Board of Auditors are elected each year by the ordinary shareholders meeting. The ordinary shareholders meeting also decides whether or not to approve the presentation of the accounts by the directors, the analysis, discussion and voting of the financial statements, the allocation of net profit from the year, the distribution of dividends, and other matters. When approval is needed for topics not within the scope of authority of an ordinary shareholders meeting, special shareholders meetings are called. BOARD OF DIRECTORS The Board of Directors has eight members, who are representatives of the controlling shareholders, the minority shareholders, the management of the company and independent members. This body monitors the implementation of its policies and is responsible for determination of the long-term strategy, choosing the Executive Board and designating the members of the Executive Committee, in addition to deciding matters relevant to the business and to operations. The members of the Board of Directors remain in office for one year, and can be re-elected. The Board holds eight to ten ordinary meetings per year, and special meetings as necessary. The compensation of the Board is determined by a shareholders meeting. BOARD OF AUDITORS The Boards of Auditors of Metalúrgica and, public companies of the Group, have five and three members, respectively. Metalúrgica has three members appointed by the controlling shareholders and two by the minority shareholders; has two appointed by the controlling shareholders and one by the minority shareholders. The Board of Auditors of has an accounting specialist and acts as an audit committee, so as to comply with the recommendations of the SOX act and the modifications suggested by the Brazilian Securities and Exchange Commission. Both boards are responsible for monitoring and examining the directors acts, providing advice and issuing opinions on Management s Report and proposals from members of the Board of Directors, analyzing the financial statements, and other duties. The Boards of Auditors are very close to the Board of Directors and take part in all processes that involve audits and certifications related to Metalúrgica and to Their members remain in office for one year and can be re-elected by the ordinary shareholders meeting, which also establishes the compensation of the members of the boards of auditors. COMMITTEES OF THE BOARD OF DIRECTORS The governance structure of the Board of Directors is supplemented by the following support committees: the Corporate Governance Committee, the Strategy Committee and the Compensation and Succession Committee. The Corporate Governance Committee is mainly responsible for monitoring, improving and recommending to the Board of Directors principles, guidelines and governance practices, thus playing an important role in the evolution of the Group s relations with its various stakeholders. The Strategy Committee is responsible for assessing the political, economic and social environments and recommendations on strategy and information on significant investments. The purpose of the Compensation and Succession Committee is to review and suggest policies on assessment of performance and compensation of the top executives of the Group, and to identify successors.

5 OFFICERS AND EXECUTIVE COMMITTEE The Group is managed by Officers, and its Executive Committee (GEC) coordinates and supervises the Business Operations and Functional Processes, according to policies established by the Board of Directors. The GEC consists of the chief executive officer (CEO), chief operating officer (COO) and six vice presidents. The CEO, André Johannpeter, is responsible for general business operations, the presentation of plans to the Board of Directors and leading the proposal and application of approved strategies. The duty of the COO, Claudio Johannpeter, is to promote synergies and improve results by working directly with the Business Operations and Functional Processes. The Board of Directors elects the Officers and GEC members each year. The GEC meets every two weeks. The responsibilities of its members are divided, with each member being responsible for certain Business Operations and/or Functional Processes. The six Business Operations are defined based on the product line and/or geographic location of the units: Long Steel Brazil, Specialty Steel (Brazil, Spain and the United States), Açominas (Brazil), Latin America (Argentina, Chile, Colombia, Dominican Republic, Mexico, Peru, Uruguay and Venezuela), North America (United States and Canada) and India. The Functional Processes, which provide support for all of the Group s operations, include Occupational Health and Safety, Marketing and Sales, Industrial Processes, Logistics, Raw Material, Procurement, Sales & Operational Planning, Human Resources and Organizational Development, Finance and Investor Relations, Accounting, Auditing, Legal Affairs, Management Systems, Strategy and Business Development, Information Technology, Corporate Communications and Public Affairs, Social Responsibility, and Energy. The Executive Committee also receives help from support committees, created based on specialization criteria. Examples of these committees include those for Disclosure, Risk Management, Human Resources and Environment. There are also excellence committees whose function is to identify the best management practices and stimulate the exchange of knowledge among the plants. INDEPENDENT AUDIT The policy regarding the hiring of external auditors ensures that there is no conflict of interest or loss of objectivity or independence on the part of the auditors in relation to the Group. In 2007, the external auditor was changed, as required by Instruction 308 of the Brazilian Securities and Exchange Commission, which provides for a change every five years. CODE OF ETHICS The Ethical Guidelines are based on seriousness and consistency and define the Group s relations with its employees, customers, shareholders, suppliers, communities, competitors and the environment. The guidelines are public and can be found on the website of the Group ( The organization has other channels that encourage the free expression of opinions, attitudes and concerns of all its stakeholders. For this reason, the Group s website contains a Talk to page, and its Intranet offers an Ethics Channel for direct communication with employees, which ensures anonymity and confidentiality in dealing with the information received.

6 2007 ANNUAL REPORT GERDAU 17 CORPORATE GOVERNANCE CORPORATE STRUCTURE 99.0% Metalúrgica Banco 44.8% Ameristeel Corp. 66.5% 94.2% 93.0% 93.0% 93.0% 93.0% América Latina Participações Açominas Aços Longos Aços Especiais Comercial de Aços 50.0% 40.0% Gallatin Steel Corporación Sidenor, 49.0% 83.3% 57.1% 100.0% Industrias Nacionales C. por A. Empresa Siderúrgica del Perú A. Diaco Siderúrgica Zuliana, C. A. 92.8% 100.0% 100.0% 100.0% Sipar Aceros Laisa AZA Siderúrgica Tultitlán, de CV

7 BOARD OF DIRECTORS At the beginning of 2008, André Johannpeter, chief executive officer (CEO) of the Group, became a member of the Board of Directors, replacing Carlos J. Petry, as a result of the succession process. The Board will propose to the shareholders, in the meeting to be held in April 2008, that Claudio Johannpeter, chief operating officer (COO), also become a member of the Board. 1. Jorge Johannpeter Chairman Born in 1936, Jorge Johannpeter graduated in Legal and Social Sciences from the Federal University of Rio Grande do Sul (UFRGS). From 1983 until 2006, he was chief executive officer (CEO) of the Group. He has been a member of the Board of Directors since He is a member of the Executive Committee of the International Iron and Steel Institute (IISI), of the Board of Directors and Human Resources Committee of Petrobras and the Council of Economic and Social Development of the Federal Government. 2. Germano H. Johannpeter Vice chairman Born in 1932, he studied Business Administration at the Getulio Vargas Foundation (FGV). He became executive director in 1971, and has been a member of the Board of Directors since Klaus Johannpeter Vice chairman Born in 1935, he graduated in Civil, Electric and Mechanical Engineering from the Federal University of Rio Grande do Sul (UFRGS). He has been a member of the Board of Directors since 1973 and is also the president of the Institute Board. 4. Frederico C. Johannpeter Vice chairman Born in 1942, he graduated in Business Administration from the Federal University of Rio Grande do Sul (UFRGS) and has a Master s

8 2007 ANNUAL REPORT GERDAU 19 CORPORATE GOVERNANCE degree in Business, Finance, Costs and Investments from the University of Cologne, Germany. He has been a member of the Board of Directors since 1973, and until 2006 he was senior executive vice chairman of GEC. 5. Carlos J. Petry Vice chairman Born in 1941, Petry graduated in Philosophy from the Federal University of Rio Grande do Sul (UFRGS). He became a member of the Board in Until 2006, he was senior executive vice chairman of the GEC. 6. Affonso Celso Pastore Board member since 2002 Born in 1939, he graduated in Economics from the University of São Paulo (USP), where he also completed his doctorate. He is a professor at the Getulio Vargas Foundation (FGV) and provides economic consulting services. He was formerly treasury secretary for the State of São Paulo and President of the Brazilian Central Bank. 7. André Pinheiro de Lara Resende Board member since 2002 Born in 1951, he graduated in Economics from the Pontifical Catholic University of Rio de Janeiro (PUC RJ), completed a Master s through the Getulio Vargas Foundation (FGV) and holds a PhD from the Massachusetts Institute of Technology (MIT), in the United States. He was formerly president of the Brazilian Development Bank (BNDES), a special advisor to the president of Brazil, chief negotiator of the country s foreign debt, chief executive officer of the steel maker Companhia Siderúrgica Tubarão, executive vice president of Unibanco, executive partner of Banco Garantia and director of the Public Debt and Open Market division of the Brazilian Central Bank, among other positions. 8. Oscar de Paula Bernardes Neto Board member since 2002 Born in 1946, he graduated in Chemical Engineering and Business Administration from the Federal University of Rio de Janeiro (UFRJ). He is president and director of the Latin America Internet Development Group and executive partner of Íntegra Associados, Reestruturação Empresarial Ltda. He is also a member of the boards of several companies in Brazil and abroad, including Suzano BahiaSul, Satipel Industrial, Grupo RBS, São Paulo Alpargatas, Delphi Corporation (United States) and Johnson Electric (Hong Kong). He is a member of the Consultative Councils of Bunge Brasil, Alcoa Brasil and Veirano.

9 GERDAU EXECUTIVE COMMITTEE André Johannpeter Chief executive officer (CEO) and president of the Executive Committee (GEC) Born in 1963, he graduated in Business Administration from the Pontifical Catholic University of Rio Grande do Sul (PUC RS). He studied General Business Administration at the University of Toronto (Canada), Marketing at the Ashridge Business School (UK), and Advanced Management at the Wharton School, University of Pennsylvania (United States). He has worked for the group since Claudio Johannpeter Chief operating officer (COO) Born in 1963, he graduated in Metallurgical Engineering from the Federal University of Rio Grande do Sul (UFRGS) and studied

10 2007 ANNUAL REPORT GERDAU 21 CORPORATE GOVERNANCE Operations Management at the University of London (Canada), Executive Development at Penn State (United States), and in the Advanced Management Program at Harvard (United States). He has worked for the Group since Alfredo Huallem Executive vice president of the Long Steel Brazil Business Operation Born in 1946, he was trained in Metallurgical Engineering (Fluminense Federal University) and Economic Engineering (PUC RJ). He has also studied Strategic Marketing at Stanford University (United States). In 1974, started his career at Siderúrgica Hime, a plant that was incorporated into the Group in Manoel Vitor de Mendonça Filho Executive vice president of the Açominas Business Operation Born in 1957, he is a Metallurgical Engineer from the Federal University of Minas Gerais, and has an MBA in Business Management from the Getulio Vargas Foundation. He started in the Group in 1983 and has already worked in plants in the Northeast, Southeast and South of Brazil. 5. Márcio Pinto Ramos Executive vice president of the Latin America Business Operation Born in 1960, he graduated in Mechanical Engineering from the Federal University of Rio Grande do Sul (UFRGS) and has an MBA from Purdue University in the United States. He started at the Group in 1982 and later worked at Esso, Pepsico, Effem do Brasil (Mars Inc.) and Claro. He joined the Group again in Mario Longhi Filho Executive vice president of the North America Business Operation and CEO of Ameristeel Born in 1954, he graduated in Metallurgical Engineering from the Mauá Technology Institute (IMT), in São Paulo. Before joining the Group, he was vice president of Alcoa, where he worked for 23 years. At Alcoa, he is the leader of global operations and a member of the Executive Committee. Longhi Filho has worked for the Group since Osvaldo Burgos Schirmer Executive vice president of Finance and Investor Relations Born in 1950, he graduated in Business Administration from the Federal University of Rio Grande do Sul (UFRGS) and has an MBA from Southern Illinois University in the United States. He completed a specialization at the Harvard Business School. Schirmer worked at Grupo Ioschpe, was a professor at the Federal University of Rio Grande do Sul (UFRGS) and the president of the Capital Market Commission of the Brazilian Association of Public Companies (Abrasca). He joined the Group in Paulo Fernando Bins de Vasconcellos Executive vice president of the Specialty Steel Business Operations Born in 1945, he graduated in Metallurgical Engineering from the Federal University of Rio Grande do Sul (UFRGS), where he also worked as a professor. With almost 40 years of experience at the Group, he has worked as vice president of the Açominas Business Operation and of Ameristeel. He has also been in charge of the Business System.

11 VICE PRESIDENTS AND OFFICERS VICE PRESIDENTS AND CORPORATE OFFICERS* André Pires de Oliveira Dias Director, Investments Antônio Marques de Almeida Director, Shared Services Breno Lucki Director, Strategy and Business Development Carlos Alberto Varela da Silva Director, Information Technology Cláudio Mattos Zambrano Director, Industry and Management Systems Enio Viterbo Junior Director, Workplace Health and Safety Érico Teodoro Sommer Director, Energy, Environment and Engineering Expedito Luz Vice president, Legal Affairs; general counsel, Executive Committee and Board of Directors Francisco Deppermann Fortes Director, Human Resources Geraldo Toffanello Director, Accounting Harley Lorentz Scardoelli Director, Finance João Aparecido de Lima Vice president, Organizational Development Joaquim de Souza Gomes Director, Metallics and Logistics José Paulo Soares Martins Executive director, Institute Mario Santanna Junior Executive director, Florestal Osvaldo Burgos Schirmer Executive vice president, Finance and Investor Relations Paulo Perlott Ramos Director, Marketing and Sales Renato Gasparetto Jr. Director, Corporate Communications and Public Affairs Ruy Lopes Filho Vice president, Strategic Projects Tadeu Petterle Director, Procurement VICE PRESIDENTS AND OFFICERS, BUSINESS OPERATIONS* LONG STEEL BRAZIL Alfredo Huallem Executive vice president André Felipe Gueiros Reinaux Director, Marketing Dirceu Tarcisio Togni Executive director of Industrial Plants Fernando José Dutra Parreira Executive director, Sul Fladimir Batista Lopes Gauto Executive director, Comercial Heitor L. Beninca Bergamini Director, Metallics Procurement Hermenio Pinto Gonçalves Director, General Procurement Julio Carlos Lhamby Prato Executive director, Nordeste Nestor Mundstock Executive director, Cosigua Ney Mauro Simone da Silva Director, Human Resources Renato Silva Bernardes Director, Sales and Distribution Ricardo Giuzeppe Mascheroni Executive director, Marketing

12 2007 ANNUAL REPORT GERDAU 23 CORPORATE GOVERNANCE SPECIALTY STEEL Paulo Fernando Bins de Vasconcellos Executive vice president Joaquim Guilherme Bauer Executive director, Aços Especiais Piratini Jose Jainaga Gomez General manager, Sidenor Jose Joaquin Salazar Paternain President, Villares Marcos Eduardo Faraco Wahrhaftig Director, Marketing Rodrigo Belloc Soares Director, Technology Wang Chia Yuan Executive director, China Project AÇOMINAS Manoel Vitor de Mendonça Filho Executive vice president Carmine Sarao Neto Director, Human Resources Daniel Antonio M. de Mesquita Director, Industrial José Carlos de Matos Silva Director, Sales Marcus Rocha Duarte Director, Mining and By-Products Omar de Oliveira Fantoni Director, Planning and Administration LATIN AMERICA Márcio Pinto Ramos Executive vice president Eduardo Ermida Moretti Executive director, Diaco Hermann Von Mühlenbrock Sotto General manager, AZA João Carlos Salin Gonçalves Director, Raw Materials José Pedro Sintas Executive director, Laisa Luís Daniel Pécora Nova Executive director, Sipar Luiz Augusto Polacchini Executive director, Siderperu Paulo Ricardo Tomazelli Executive director, Sizuca Samuel Nanes Venguer Executive director, Sidertul NORTH AMERICA Mario Longhi Filho President and CEO, Ameristeel Terry Sutter Vice president and COO Barbara Smith Vice president and CFO Guilherme G. Johannpeter Vice president, Special Sections and Drawn Bars Jack C. Peterson Vice president, Management Systems James Kerkvliet Vice president, Sales and Marketing James N. McCullohs Vice president, Downstream Operations Matthew C. Yeatman Vice president, Raw Materials and Recycling Michael P. Mueller Vice president, Steel Mills Robert E. Lewis Vice president and general counsel Terry K. Danahy Vice president and CHRO INDIA André Beaudry Executive vice president *Updated in February 2008