Comparison of Vale’s corporate governance practices with NYSE corporate governance requirements applicable to U.S. companies Under the rules of the New York Stock Exchange (“NYSE”), foreign private issuers are subject to a more limited set of corporate governance requirements than U.S. domestic issuers. As a foreign private issuer, Companhia Vale do Rio Doce (“Vale”) must comply with four principal NYSE corporate governance rules: (1) Vale must satisfy the requirements of Exchange Act Rule 10A-3; (2) Vale’s Chief Executive Officer must promptly notify the NYSE in writing after any executive officer becomes aware of any material non-compliance with the applicable NYSE corporate governance rules; (3) Vale must provide the NYSE with annual and interim written affirmations as required under the NYSE corporate governance rules; and (4) Vale must provide a brief description of any significant differences between its corporate governance practices and those followed by U.S. companies under NYSE listing standards. The table below briefly describes the significant differences between Vale’s domestic practice and the NYSE corporate governance rules. NYSE Corporate Governance Rule for Section U.S. Domestic Issuers Vale’s Approach 303A.01 A listed company must have a majority of Vale is a controlled company because more independent directors. than a majority of its voting power is controlled by Valepar S.A. (“Valepar”). As a “Controlled companies” are not required to controlled company, Vale would not be comply with this requirement. required to comply with the majority of independent directors requirement if it were a U.S. domestic issuer. There is no legal provision or policy that requires Vale to have independent directors. 303A.03 The non-management directors of a listed The non-management directors of Vale do not company must meet at regularly scheduled meet at regularly scheduled executive sessions executive sessions without management. without management. 303A.04 A listed company must have a Vale does not have a nominating committee. Nominating/Corporate Governance All but two of the members of the board of Committee composed entirely of independent directors are nominated by Valepar. As a directors, with a written charter that covers controlled company, Vale would not be certain minimum specified duties. required to comply with the nominating/corporate governance committee “Controlled companies” are not required to requirements if it were a U.S. domestic issuer. comply with this requirement. However, Vale does have a Governance and Sustainability Committee, which is an advisory committee to the board of directors. It has three members, two of whom are directors. According to its charter, this committee is responsible for: • evaluating and recommending NYSE Corporate Governance Rule for Section U.S. Domestic Issuers Vale’s Approach improvements to the effectiveness of Vale’s corporate governance practices and the functioning of the board of directors; • recommending improvements to Vale’s code of ethical conduct and Vale’s management system in order to avoid conflicts of interest between the company and its shareholders or management; • issuing reports on potential conflicts of interest between Vale and its shareholders or management; and • reporting on policies relating to corporate responsibility, such as environmental and social responsibility. Moreover, the committee’s charter requires at least one of its members to be independent. For this purpose, an independent member is a person who: • does not have any current relationship with Vale other than being part of a committee, or being a shareholder of the Company; • does not participate, directly or indirectly, in the sales efforts or provision of services by Vale; • is not a representative of the controlling shareholders; • has not been an employee of the controlling shareholder or of entities affiliated with a controlling shareholder; • has not been an executive officer of the controlling shareholder. 303A.05 A listed company must have a compensation As a controlled company, Vale would not be committee composed entirely of independent required to comply with the compensation directors, with a written charter that covers committee requirements if it were a U.S. certain minimum specified duties. domestic issuer. “Controlled companies” are not required to However, Vale has an Executive Development comply with this requirement. Committee, which is an advisory committee to the board of directors. This committee has three members, all of whom are directors. According to its charter, at least one of its members is required to be independent (as defined above). This committee is responsible for: • reporting on general human resources policies; • analyzing and reporting on the adequacy of compensation levels for Vale’s executive officers; • proposing and updating guidelines for evaluating the performance of Vale’s NYSE Corporate Governance Rule for Section U.S. Domestic Issuers Vale’s Approach executive officers; and • reporting on policies relating to health and safety. NYSE Corporate Governance Rule for Section U.S. Domestic Issuers Vale’s Approach 303A.06 A listed company must have an audit In lieu of appointing an audit committee committee with a minimum of three composed of independent members of the 303A.07 independent directors who satisfy the board of directors, Vale has established a independence requirements of Rule 10A-3 permanent conselho fiscal, or fiscal council, in under the Exchange Act, with a written accordance with the applicable provisions of charter that covers certain minimum the Brazilian Corporation Law, and provided specified duties. the fiscal council with additional powers to permit it to meet the requirements of Exchange Act Rule 10A-3(c)(3). The fiscal council currently has four members. Under the Brazilian Corporation Law, which provides standards for the independence of the fiscal council from Vale and its management, none of the members of the fiscal council may be a member of the board of directors or an executive officer. Management does not elect any fiscal council member. One of the members of our fiscal council meets the New York Stock Exchange independence requirements that would apply to audit committee members in the absence of our reliance on Exchange Act Rule 10A-3(c)(3). The responsibilities of the fiscal council are set forth in its charter. Vale’s bylaws require the charter to give the fiscal council, at a minimum, responsibility for the matters required under the Brazilian Corporation Law, as well as responsibility for: • establishing procedures for the receipt, retention and treatment of complaints related to accounting, controls and audit issues, as well as procedures for the confidential, anonymous submission of concerns regarding such matters; • recommending and assisting the board of directors in the appointment, establishment of compensation and dismissal of independent auditors; • pre-approving services to be rendered by the independent auditors; • overseeing the work performed by the independent auditors, with powers to suspend the payment of compensation to the independent auditors; and • resolving disagreements between management and the independent auditors regarding financial reporting. 303A.08 Shareholders must be given the opportunity Under the Brazilian Corporation Law, to vote on all equity-compensation plans and shareholder pre-approval is required for the material revisions thereto, with limited adoption of any equity compensation plans. exemptions set forth in the NYSE rules. NYSE Corporate Governance Rule for Section U.S. Domestic Issuers Vale’s Approach 303A.09 A listed company must adopt and disclose Vale does not have formal corporate corporate governance guidelines that cover governance guidelines that address all of the certain minimum specified subjects. matters specified in the NYSE rules. 303A.10 A listed company must adopt and disclose a Vale has adopted a formal code of ethical code of business conduct and ethics for conduct, which applies to its directors, officers directors, officers and employees, and and employees. promptly disclose any waivers of the code for Vale reports each year under Item 16B of its directors or executive officers. annual report on Form 20-F any waivers of the code of ethical conduct granted for directors and executive officers. Vale’s code of ethical conduct has a scope that is similar, but not identical, to that required for a U.S. domestic company under the NYSE rules. Vale also has a code of ethics that applies specifically to employees in the corporate finance, investor relations and accounting departments. 303A.12 Each listed company CEO must certify to the Vale’s CEO will promptly notify the NYSE in NYSE each year that he or she is not aware writing if any executive officer of Vale of any violation by the company of NYSE becomes aware of any material non- corporate governance listing standards. compliance with any applicable provisions of the NYSE corporate governance rules.
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