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EMBRAER

Corporate Governance

Introduction to Embraer Motivation Challenges and Solution Devising their Corporate Governance Rewards Embraer Today

INTRODUCTION
Embraer is an aircraft manufacturer based in Sao Jose dos Campos, Brazil.

It was founded in 1969 as a stateowned company.


On December 7, 1994, it was privatized.

INTRODUCTION
Since privatization, it has become one of the largest aircraft manufacturers in the world. It provides a superior product package and after-sales support for parts, services, and technical assistance. It has 5 plants in Brazil. Distribution centers are in China, Singapore, United States, France, and Portugal.

MOTIVATION
Privatization

Development of new products and future growth


Commitment to the executive fuel market

Endeavor to understand and respond to market and customer needs


Goal to create a basis for sustainability, growth and continuity of business and activities

CHALLENGES AND SOLUTIONS


Main Challenge:
Cultural Transformation process from being state-owned to being a private company.

Main Solution:
Making its own corporate governance, rules, and practices.

Challenge:

CHALLENGES AND SOLUTIONS


Solution: Capital restructuring. Embraers shareholders approved a proposal providing a simplified capital structure composed of a single class of shares-common shares.

Embraers capital structure was limited by the Brazilian Corporate Law in terms of the distribution between the common and preferred shares -It limited the access to the capital markets -It restrained the liquidity of the companys shares

CHALLENGES AND SOLUTIONS


Challenge: Controlling the ownership structure Solution: Approved new by-laws. Protective mechanisms were created to ensure the dilution of the shareholding control. They also made sure that the decisionmaking power is held by Brazilian individuals (40% restrictive condition).

DEVICING EMBRAERS CORPORATE GOVERNANCE


Capital restructuring Adopting a model of corporate governance Clear distinction of responsibilities among the Board of Directors, the Executive officers and the Fiscal Board. Implemented employees profit sharing plan to dividend payments. Defining the companys reporting line.

DEVICING EMBRAERS CORPORATE GOVERNANCE


Objectivity Independence Transparency

REWARDS FOR PUTTING IN PLACE BETTER CORPORATE GOVERNANCE, RULES, AND PRACTICE
Net sales increased by 11.3% from 2004 to 2005 reaching US$ 3.829 billion- the highest ever recorded in companys history. Net income increased by 17.2% from 2004 to 2005 reaching US$ 445.7 million. Generated significant wealth to investors. Embraer became the first place in the Best Buy-Side Investor relations Survey in 2005, awarded by the Institutional Investor Research Group.

REWARDS FOR PUTTING IN PLACE BETTER CORPORATE GOVERNANCE, RULES, AND PRACTICE

Market has recognized Embraers transparency standards as exceptional. Recognized for having emphasis on high social and environmental standards.

EMBRAER TODAY
Embraer believes that having high levels of corporate governance is a journey, not a destination. Embraer is currently undergoing a transition period from being a company with defined ownership to having dispersed shareholding. The company is committed to making the necessary adjustments to meet the new market demands. With the highest standards of corporate governance and transparency, Embraer hopes to stay an investor-friendly company for years to come.

By: Marnelle Rose Lopez Rizalino Difuntorum Kim Mikah Go Jelyn Satimbre

BSAcc 4-1

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