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Hands off of Vale

By Richard M. Locke

Translation of version published in Folha de Sao Paulo, one of Brazil's leading newspapers, on March 29,2011

In recent days, a number of articles have appeared in the Brazilian press, reporting on government efforts to replace Vale's CEO Roger Agnelli. As someone who has had the privilege of working with Mr. Agnelli for the last seven years and someone who is a political fan of the PT-led governments in Brazil, I find these reports troubling and believe that they are not in the best interest of either Vale or Brazil.

Let me explain. I am a professor at MIT, in both the MIT Sloan School of Management and in the MIT Department of Political Science. Until recently, I was also the Deputy Dean of the MIT Sloan School of Management and now serve as Head of the MIT Political Science Department. As part of my work at MIT, I teach in an executive education program run by MIT for Vale senior executives and managers. Since 2004, I have had the privilege to teach over 400 senior managers at Vale. In addition, I have facilitated several global leadership forums for Vale. Through this work, I have come to know the company and its senior leadership, including Mr. Agnelli, quite well and am very impressed with the professionalism, intelligence and high ethical standards exhibited by this talented group of people.  As part of my work at MIT, I also teach in executive education programs for other leading global companies and as a result, I believe that Vale's senior leadership is second to none in terms of their values, qualifications and professionalism. Mr. Roger Agnelli is one of the most gifted CEO's in today's global economy and replacing him at Vale would be a serious mistake.

When I began my work with Vale in 2004, CVRD (as it was then called) was a much smaller, less dynamic, and much less global company. In 2001, at the time Mr. Agnelli took over as CEO, CVRD employed about 14,000 people and operated in about a dozen countries. The company was viewed as a (primarily) Brazilian-focused exporter of iron ore that continued to operate in many ways like a state-owned enterprise. Over the course of Mr. Agnelli's tenure, Vale modernized and expanded its operations, diversified into other minerals, invested heavily in both new technology and people, and strengthened its commitment to sustainable development in Brazil and abroad. Today Vale is a truly global and diversified leader in the mining sector, operating in 38 countries, and employing over 115,000 people in the world. As a result of the new leadership, the company has generated both wealth and employment for Brazilians and has become a recognized player in sustainable economic development throughout the world. More than simply generate wealth for the company's shareholders, Vale under the current leadership team promoted significant programs in education, community health, and environmental protection both throughout Brazil and elsewhere (e.g., Africa) in the world.

A cursory look at Vale's sales, investment, employment, and profitability figures all reveal how successful Vale has been under Mr. Agnelli's leadership. But perhaps as important as these figures, and often unseen by external observers, is the cultural transformation that the current CEO has lead at Vale. Because of  his leadership style and insistence on distributed leadership, Vale today is a much more professionally managed, transparent, accountable, meritocratic, and socially responsible company than it was before Mr. Agnelli  assumed the position as CEO.  His no-nonsense, fact-based management style may at times rub people the wrong way, but it has also led to the creation of an economically strong and socially engaged global corporation that is recognized and admired throughout the world. In today's uncertain global economy, the world needs more CEOs like Mr. Agnelli.

Yet even beyond the particular case of Vale, the current government's efforts to intervene in the internal governance of a private company is troubling. At a time when the Brazilian economy is growing, when Brazil is becoming an attractive site for foreign direct investment, when millions of Brazilians are emerging from poverty and benefiting from increased access to education, health care, and employment in the private sector, why would the Brazilian government signal to the rest of the world that it is willing dictate who leads the global corporations headquartered within its borders? For a PT government that has done so much to balance progressive social policy with respect for markets, this cannot be a good move and sets a very disturbing precedent, one that will not be well-received by foreign investors, let alone the CEOs of other major corporations domiciled in Brazil. I very much hope that short-term political calculations do not get in the way of the long-term interests of Vale and of Brazil. Keeping Mr. Agnelli as CEO of Vale, and not interfering with the internal matters of well-run private companies like Vale, would be in the very best interests of Brazil.

Download pdf of original in Portuguese.

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