The company has the following committees:
This committee is responsible for managing the Company’s Stock Option Plan while observing the basic terms and conditions of the Stock Option Plan and following the guidelines established by the Company’s Board of Directors. It was created on May 23rd, 2007 at a Board of Directors’ Meeting. It has three members: Eduardo Silva Logemann, Chairman of the Board of Directors, Jorge Luiz Silva Logemann, Vice Chairman of the Board of Directors, and Aurélio Pavinato, the Company’s CEO.
The Company’s Information Disclosure Policy Committee was created on July 25th, 2007, with the election of new members on May 12th, 2010. This committee is responsible for the spreading and the quality of the information disclosed to the market, as well as for the disclosure processes and controls. Currently, it is composed of five members: Eduardo Silva Logemann, Chairman of the Board of Directors, Jorge Luiz Silva Logemann, Vice Chairman of the Board of Directors, Aurélio Pavinato, the Company’s CEO, Ivo Marcon Brum, Chief Financial and Investor Relations Officer, and Frederico Logemann, Investor Relations Manager.
This committee was created to manage and implement the market risk management policy within the scope of EBITDA margin control. It has two members: Aurélio Pavinato, the Company’s CEO, and Ivo Marcon Brum, Chief Financial and Investor Relations Officer. This committee was created by the Board of Directors at a meeting held on July 30th, 2008 and on May 12th, 2010.
|03/31/2020||Occupational, Social and Environmental Policy||(154 Kb)|
The Committee was created at a meeting of the Board of Directors held on 03/17/2021, and is a collegiate body for advisory and instruction, directly linked to the Company’s Board of Directors. Among its functions are formal recommendations and monitoring the implementation of policies, strategies, investments and actions that relate to the management of the Company’s ESG. The committee is composed of Jorge Silva Logemann, André Souto Maior Pessoa, Fernando de Castro Reinach, Aurélio Pavinato and Álvaro Luiz Dilli Gonçalves.
The market risks that we seek to protect against
The scope of the Market Risk Management Policy is to control Operating Margin, for which purpose analyses are conducted of the effects from the market variables that affect the company’s results, such as:
- foreign exchange rate (Brazilian real vs. U.S. dollar)
- prices of the commodities produced (Cotton Lint, Soybean, Corn and/or others);
The Risk Management Operating Committee must comply with the Market Risk Management Policy to ensure that the company does not assume any future commitments in hedge operations that it cannot fulfill.
To achieve this objective, control variables and regular reports are created by the Financial and Sales departments to guarantee compliance with the established limits.
In addition, the Risk Management Policy makes inferences in its monitoring of the exposure to foreign currency (USD) of the Company’s cash flow and accounting positions.
The hedge strategy establishes limits and Controls. The limits defined and practiced in the hedge policy must seek to control the market variables that impact the Company’s results and in turn keep Operating Margin at the adequate levels defined by the Board of Directors.
Hedge instruments used
The derivative instruments eligible for use in hedge operations are:
- Swap contracts (BM&F and CETIP);
- Forward currency contracts (NDF);
- Currency futures (BM&F);
- Soybean futures (CBOT);
- Cotton lint futures (NYBOT – ICE);
- Corn futures (CBOT and BM&F);
- Plain vanilla options (stock exchange and OTC market);
- Debt contracts in USD.
Any operations not listed above must be approved by the Risk Management Operating Committee, which should observe the following items:
- Method for calculating the market value (replacement value) of the operation;
- Cash flow from the operation;
- Impact on limits;
- Financial spread (margin) charged by the financial institutions for contracting the operation;
- Possibility of pricing by the selling financial institution on a daily basis;
- Method of taxation and accounting of the operation;
- Analysis of credit risk /limits (counterparty rating);
- Term and maturity of the operation.
Parameters used to manage these risks
After building a net exposure map for each market variable in accordance with the above definitions, minimum and/or maximum exposure limits for three (3) fiscal years are defined with the aim of ensuring the established level of Operating Margin.
Maximum and minimum values are defined to maintain the level of hedge that must be observed and maintained by the Risk Management Operating Committee. The Finance and Sales departments must carry out operations, whether via derivative or commercial instruments, to maintain the hedge percentages, always observing the time horizon of three (3) fiscal years. The percentages established are applicable at the start of each quarter of the analysis, in accordance with the following table.
|Variables||Quarter Analyzed||1ºQ (%)||2ºQ (%)||3ºQ(%)||4ºQ (%)|
At the start of each quarter of the analysis, the Risk Management Operating Committee must observe simultaneously the hedge percentages for the current fiscal year (1st fiscal year) and the subsequent fiscal years (2nd and 3rd fiscal years).
Calculations of whether a value is within the proposed limits are based on the exposures accumulated over the course of the calendar year.
For commodities, sales using derivative instruments with exclusively financial settlement may not surpass the maximum limit of 35%, considering the leverage (multiplier) risk and net positions of option structures of the total production to be realized in the period.
Note that for the variable foreign exchange rate, operations to hedge against currency (USD) exposure must be carried out as soon as the prices of the commodities that generate this exposure are known, respecting the maximum limit of 80% prior to harvest.
Organizational structure for controlling the management of market risks
Operating structure and internal controls for verifying the effectiveness of the policy adopted