Sustainability Report 2004

Sustainability

Governance | Corporate governance

Aracruz acts in a responsible manner and complies fully with Brazilian corporate law, with the requirements of foreign legislation applicable to companies whose shares are listed on stock exchanges in the United States and Spain, and with the rules of the São Paulo (Bovespa), New York (NYSE) and Latibex (Madrid) stock exchanges.

The Company’s Corporate Governance model follows the guidelines established by the Board of Directors and also respects the Company's by-laws. The principles that direct this model are transparency; the clear definition of functions; management independence; equitable treatment of all shareholders and accountability.

The Board of Directors is made up of ten members and an equal number of alternates, all elected to three-year terms of office by the shareholders at a General Meeting. They do not hold executive positions. The Board of Directors meets a minimum of four times per year and, among others duties, is responsible for the following:

  • Establishing general guidance for the Company's operations and determining related financial and economic policies.
  • Supervising the operation and management of the Company, deciding significant matters concerning strategy, investments, organization, and finance.
  • Electing the Chairman and the Vice-Chairman from among its members.
  • Appointing the Board of Officers.
  • Approving the organizational structure of the Company.
  • Guiding and advising the Board of Officers in all matters of interest to the Company.
  • Appointing internal committees with the role of analyzing and presenting recommendations to the Board of Directors on specific matters. Currently there are seven committees:
    • Strategic Committee
    • Sustainability Committee
    • Audit Committee
    • Finance Committee
    • Tax Planning Committee
    • Compensation Committee
    • Disclosure Committee

The Aracruz Fiscal Council is composed of three members and an equal number of alternates elected by a General Shareholders Meeting, of which one of its members and respective alternate are separately elected by holders of preferred shares.

The Board of Officers is composed of four members, including the Company's Chief Executive Officer, and is responsible for the study and development of strategic projects, subject to final approval by the Board of Directors, and for managing of all operational matters. The Board of Officers meets twice a month or whenever needed.

The statutory Board of Officers is supported by three Associate Officers and a managerial group, presently composed of 15 Interface Managers appointed by and reporting to the Board of Officers. The Associate Officers and the Interface Managers are in charge of the day-to-day running of the Company’s main activities:

  • Associate Officers
    • Engineering
    • Legal Matters
    • Corporate Relations and Environmental Affairs
  • Interface Managers
    • Industrial Operations
    • Forestry Operations
    • Pulp Marketing, Sales and Logistics Coordination
    • Pulp Sales – USA and Asia
    • Pulp Sales – Europe
    • Wood Products Operations
    • Port Operations
    • Treasury
    • Controllership
    • Investor Relations
    • Information Technology
    • Corporate Planning
    • Research & Development
    • Human Resources
    • Purchasing & Materials Warehousing

Aracruz has policies regarding the environment, health and safety, political contributions, antitrust practices and supplier relationships, as well as rules about managers, controlling shareholders, members of the Fiscal Council and others who have access to privileged information trading the Company’s shares, in full compliance with the conditions of CVM Instruction No. 358/02.

Aracruz’s voluntarily adopted corporate governance practices have ensured classification of the Company in Bovespa Level 1 since April 2002. Notable among the practices adopted by Aracruz is the maintenance in circulation of 45% of the shares it has issued; the commitment to hold public offers for the placement of shares through mechanisms that favor a dispersion of capital; the consistent improvement in information provided each quarter, which is consolidated and submitted to special review; the wide-ranging disclosure of operations involving Company shares by controlling shareholders or managers of the Company, as well as shareholder agreements and eventual stock option programs and, finally, the disclosure of an annual calendar of corporate events.

Aracruz has a Disclosure and Use of Information Policy regarding all material information, approved by the Board of Directors and in compliance with CVM Instruction No. 358/02.

In 2003, the independent auditors’ evaluation of Aracruz’s compliance with the Sarbanes-Oxley Act (SOX) – which went into effect in 2002, and is applicable to foreign companies listed on the New York Stock Exchange and also recommended for Bovespa Corporate Governance Level 1 companies – stated that the Company already fulfills nearly all of the requirements of the Act. Aracruz’s level of compliance was thus classified as ‘trustworthy’.

During 2004, action was initiated to satisfy the SOX requirements that will go into effect as of 2005, including certification by outside auditors of the effectiveness of internal controls certified by the Company’s management.