RIO DE JANEIRO, (Reuters) – Shareholders in Petrobras Brazil voted yesterday to remove Roberto Castello Branco as CEO, and elect his chosen government successor to the board of directors, but resentment among some investors threatens to drag out the transition process.
The dismissal of Castello Branco, though widely expected, is an important step in the government’s plan to place Joaquim Silva e Luna, a retired army general with no oil and gas experience, in charge of the oil producer controlled by the state.
Shareholders also elected eight individuals to the board of directors, one of whom will be representing non-governmental shareholders. The renamed board has seven members representing the government – the company’s majority shareholder -, three representing market investors and one representing Petrobras employees, the same configuration as the company’s previous board.
Three members were not up for re-election and were automatically retained, bringing the total number of board members to 11.
Castello Branco became CEO in January 2019 and drew market acclaim for selling billions of dollars of non-core assets and sharpening Petrobras’s focus on deepwater oil production.
Brazilian President Jair Bolsonaro said in February that he was releasing a University of Chicago-educated executive amid a dispute over fuel prices. Castello Branco remained in the role of caretaker until Monday afternoon.
Bolsonaro chose Luna to take the helm from Petroleo Brasileiro SA, as the company is formally known. The career soldier is expected to be elected chief executive by the new board of directors.
In a securities filing released after the meeting, Petrobras said Board Chairman Eduardo Leal Ferreira has appointed Carlos Alberto Pereira de Oliveira, head of the company’s upstream division, as interim CEO until Luna’s appointment has been formalize.
The night was not without drama.
At the outset of the case, Marcelo Gasparino, who was elected to the board as the non-governmental representative later in the evening, called for the meeting to be postponed due to alleged irregularities in separate preliminary vote counts published by the company prior to the meeting. .
In a LinkedIn post, he said that if elected he would resign later, a move that could trigger another shareholder meeting under Brazilian securities law, effectively starting the board’s election process from scratch.
The rules governing shareholder meetings in Brazil can be Byzantine, even when held in person. Multiple investor groups had complained about the complicated rules governing Petrobras shareholders meeting.
The company did not immediately respond to a request for comment Monday night.
In his post, Gasparino, the newly elected board member, said he would not resign until after the board elected a new CEO, which means Luna’s formal appointment to the top seat is still likely of occurring promptly.
In addition, one of the government-appointed board members, Marcio Weber, was elected even after the Petrobras committee recommended on Friday that he not be given a seat on the board for reasons of conflict of interest as he is an executive until 2020 company . that provided services to Petrobras.
Weber could not be contacted immediately Monday night.