Corporate governance

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Corporate governance

The companies of the Itaúsa Conglomerate operate in different sectors and have own governance structures for strategically carrying out their activities and expanding their business on an independent basis. Notwithstanding, all of them share the same view of the holding company to manage their assets and relationships in accordance with principles of valuation of human capital, ethics and continuous and sustainable generation of value for stockholders.

This alignment is provided by Itaúsa’s sound corporate governance structure, which

strengthens the management of the subsidiaries. The holding company monitors the management of the Conglomerate companies and the development of the business through the participation of its representatives in the Boards of Directors, who are representatives appointed to the boards of the companies.

With this operational model, Itaúsa ensures the dissemination of its values and good governance practices in its investees, while ensuring strategic alignment and creation of value for stockholders.

OWNERSHIP STRUCTURE - ITAÚSA

GOVERNANCE STRUCTURE

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The Board of Directors of the holding company, among other duties, is responsible for establishing the overall direction of the business. Its work is governed by its own internal regulation and supported by the Ethics, Disclosure and Trading Committee.

The members of the Board of Directors are nominated by the stockholders, at the Annual General Stockholders’ Meeting, for a one-year term of office and are eligible for reelection. The selection of the members of the Board is made based on their professional experience and proven skills required to perform their functions. G4-40

The Board of Directors is composed of a minimum of three and a maximum of 12 effective members. In the end of 2016, the Board of Directors of Itaúsa had six effective members and three alternate members, of whom two members (one effective and one alternate) are independent. The Chairman of the Board of Directors does not perform executive functions in the holding company. G4-39

The Executive Board is composed of a Chief Executive Officer and two Managing Vice-Presidents. The Executive Board is responsible for carrying out the strategy established by the Board of Directors, aiming at optimizing the allocation of funds and investments to ensure generation of value and return for stockholders.

Since 2015, the holding company has three committees to support the Executive Board and the Board of Directors: Personnel Committee; Sustainability and Risk Committee; and Strategy and Investment Committee. The committees are composed of members of the Board of Directors and Executive Board, who may invite representatives of the subsidiaries to the meetings. G4-35 | G4-36

The members of the Board of Directors, Executive Board and Fiscal Council are compensated with monthly fixed fees, resolved upon at the Annual General Stockholders’ Meeting. Members of the Board of Directors and Executive Board also receive short-term variable compensation (profit sharing), which is semiannual. G4-51 | G4-52

The development of governance members regarding sustainability aspects takes place through resolutions in meetings about trends and development opportunities for the company. Among the resolutions in the last year within the scope of the Ethics, Disclosure and Trading Committee the highlights were the analysis of the main provisions of the Brazilian Code of Corporate Governance and the internal event on preventing and fighting insider trading targeted at executives. G4-43

GOVERNANCE COMPOSITION AT ITAÚSA


Composition of the board of director’s1

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FISCAL COUNCIL

The Fiscal Council of Itaúsa is a non-permanent body, but it has been established and operating on a non-stop basis since 1995. The Fiscal Council is composed of five effective members and an equal number of alternates, and plays a relevant role in inspecting and evaluating the financial statements of the holding company.


RISK MANAGEMENT

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As a holding company, Itaúsa monitors the risks associated with the markets and sectors in which it operates together with its subsidiaries. In 2016, improving its management model, the organization started to study mechanisms to identify potential risks of the holding company, considering business, management and information technology aspects, supported by a consulting company specialized in corporate risk projects.

Itaúsa’s purpose with this work is to create an overall map of the risks and establish an internal audit plan, with a review of the risk management practices and the preparation of internal policies, rules and procedures, including the risk management policy.

Itaúsa’s subsidiaries have their own structures for internal controls, compliance and risk management, which comply with regulation in effect and are in line with the best market practices.

Ethics and compliance


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Itaúsa’s governance and operations are guided by corporate values aimed at maintaining an ethical and transparent relationship with all stakeholders of the holding company and its subsidiaries. These guidelines are described and presented in detail in the Code of Ethics and Conduct of Itaúsa, approved in 2011, and applicable to all the companies of the Conglomerate, and are followed by the management members of the subsidiaries. G4-56

Among the aspects governed by the Code of Ethics are the fights against corruption, discrimination and degrading work, such as the use of child labor and workers in conditions similar to slave labor. This document was prepared taking into consideration international treaties, such as conventions of the United Nations (UN) and the International Labor Organization (ILO), which address topics related to human rights and working conditions. G4-56

The Ethics, Disclosure and Trading Committee is composed of four members and was established in 2006 through the combination of the Disclosure and the Trading Committees, created in 2002. It is incumbent on this Committee, among other activities, to evaluate guidelines and procedures for disclosing information to the market, through material acts or facts and other mechanisms, and monitor the official questionings by regulatory and self-regulatory bodies and the related replies.

The Ethics, Disclosure and Trading Committee of Itaúsa, among its functions, has to receive and verify possible facts that do not comply with the Code of Ethics. In these cases, the requests are forwarded to the Board of Directors and verified through internal processes and mechanisms. In 2016, this committee did not receive any such request. Communications can be made by the telephone number (55-11) 3543-4444/4443 or e-mail carlos.zanelato@itausa.com.br. G4-SO5

Additionally, the subsidiaries have their own channels, such as ombudsman’s offices, to receive complaints and questions about ethical issues and social and environmental impacts of the business.

Itaúsa maintains the autonomy of its subsidiaries regarding business management, but shares corporate values and good governance practices