Special Reprint of Three recent exame covers stories on the brazilian economy

AmBev's bold remuneration packages are already part of the mythology of Brazilian business. Since the former bank Garantia took over Brahma, in 1989, those willing to sacrifice their personal lives to meet bold goals can pocket an annual bonus of up to 18 extra salaries. This is because this huge sum, believe it, will increase. since 2006, a group of 200 managers and directors were given the opportunity to change part of their annual bonuses for stock options at a prefixed price. For each real they invested, AmBev put 2 more reais. The executives only had one choice: to receive a small annual fortune or wait for five years to receive a much bigger amount - if the papers were valued, of course. The wait ends in the beginning of 2011 and the chances of profit look promising - the company's stocks went from 80 reais in April 2006 to 180 reais in August this year, in a valuation of 120%. Those who prefer can wait until 2016 and, who knows, profit even more. "Our history shows that it is worth waiting", says Carolina Guerra, remuneration manager from AmBev.
The long-term incentives, with return in periods that vary from two to five years, are already in the majority of companies in the country. According to the survey conducted by the Hay Group with 256 large companies set up in Brazil, from 2009 to 2010, the number of companies that offer this type of remuneration went from 40% to 60% of the total. It is a considerable progress in such a short time. In some sectors, long-term incentives already represent 25% of the remuneration paid to directors (see table). The biggest reason for this increase is quite clear: nobody wants to lose talented and experienced professionals exactly in a period of great perspectives of the economy's growth. For this, as companies are placing the carrot further ahead. "It does not suffice to keep the professional for one year", says the headhunter Luiz Carlos Cabrera, partner of Amrop PMC. "Companies are starting ambitious growth plans and cannot afford to lose good people in the middle of the process."
Even traditionally conservative companies are realizing that a long-term incentive program must be outlined. It is the case of the logistics company from Sao Paulo, Júlio Simoes, which raked in 1.5 billion reais in 2009. Since 2001, the company has had an average annual growth of 20%, paying bonuses equivalent to five salaries to its executives each year. After opening capital, in April, its controlling companies noticed the need to study a long-term plan. "We entered the showcase and our professionals became more sought after", says the president Fernando Simoes. To raise the transfer fee of these executives, an unprecedented stock option program will begin this year and should contemplate 95 employees, ranging from directors to managers. Up to 2013, the variable remuneration portion of this group might even double.

Although stock options like those distributed by AmBev are still the modality preferred by Brazilian companies (present in 55% of those that have long-term incentive), other formats are gaining ground - especially after the crisis that set in during 2008. "Before, people looked at the option package and saw a great valuation ahead. Now, nobody is very sure", says Darcio Crespi, partner of the recruitment consulting firm Heidrick & Struggles. An alternative that is beginning to become popular are restricted stocks. In this case, executives receive a batch of stocks - provided they remain in the company for a pre-established period (usually three years). Thus, even if the papers do not rise as much as expected, the executive can sell them and pocket something. It is a model that the surviving corporation Gafisa adopted two years ago, together with its options program, started in 2002. With the maturing of the market, the trend is for more companies to follow a mixed model, common in the United States and used by some of its subsidiaries in the country. Since 2004, executives from home appliance manufacturer Whirlpool in Brazil have received a mix of stock options, restricted stocks and deferred bonus (usually paid after three years). Regardless of the model, a trend seems to be taking shape: from here on, bonuses should become even bigger - and farther away.