In 2013, Hermes EOS and a group of international investors were successful in seeing their two genuinely independent director nominees elected to the board of the oil company. Since then minority shareholders have been able to nominate and elect independent directors at each AGM. By 2015, at the height of the Car Wash scandal, the Brazilian government itself put forward independent board directors in lieu of the traditional state appointees. In addition, the company's new corporate strategy, revealed in September 2016, emphasises debt reduction and focuses on reducing leverage, selling assets, pursuing partnerships and joint ventures, increasing cash flow and reducing accident rates. This has resulted in a decline in leverage, free cash flow being generated for several consecutive quarters and Moody’s upgrading the company's debt with positive outlook.
These case studies are examples of companies we have either held or engaged with.
Source: Hermes Investment Management