Appointment and Compensation Policy for Members of the Company’s Corporate Governance Bodies

Record of Reviews

Version: Review Date: Record:
1 10/28/2019 Preparing the Document.

 


I. Purpose

Consolidating the guidelines, criteria and the process to appoint and select members to work in the Governance Bodies of Cielo S.A. (“Company”) and its Subsidiaries and Affiliated Companies, ensuring the appropriate composition of these bodies and alignment with best practices governance, as well as establishing guidelines to be observed and applied to set the compensation and the respective benefits for the members of the said bodies, focusing on attracting, encouraging, recognizing and retaining qualified professionals, according to its strategic interests and best market practices.

II. Scope

This policy of appointment and compensation policy for members of the company’s corporate governance bodies (“Policy”) applies to all Governance Agents involved in the Company’s Corporate Governance System.
All of the Company’s Subsidiaries must establish their directives based on the guidance provided in this Policy, considering the specific needs and legal and regulatory aspects to which they are subject.
Regarding the Affiliated Companies, the Company’s representatives working in the management of such companies should make efforts to set their directives based on the guidance provided for in this Policy, considering the specific needs and legal and regulatory aspects to which they are subject.

III. Guidelines

1. General Criteria to Appoint Members for the Company’s Governance Bodies

1.1 The appointment of members for the Company’s Governance Bodies must comply with the provisions of this Policy, the Bylaws, the Shareholders’ Agreement , the Charter of corresponding Governance Bodies and corresponding Listing Regulations of Novo Mercado of B3 S.A. – Brasil, Bolsa, Balcão (“Novo Mercado Regulations”), the Brazilian Code of Corporate Governance for Publicly Held Companies (“CBGC”), Law 6404/1976, as amended (“Brazilian Corporation Law”), Official Letter 3885/2018 of the Brazilian Central Bank (“Bacen”), as applicable, as well as other laws and regulations applicable to the Company.

1.1.1 In addition to observing the provisions of item 1.1. above, the professionals to be appointed to the Governance Bodies must (a) be highly qualified, with outstanding experience (technical, professional and academic) compatible with the position for which he/she was appointed, (b) have an unblemished reputation, (c) have moral integrity, (d) have the time available to properly devote himself/herself to the position, (e) be in line with the Company’s values and culture and its Code of Ethical Conduct, (f) be exempt from conflict of interest with the Company or have a transferable conflict of interest with the Company, waived pursuant to Item 2.4.1 below, (g) not hold office in a company or entity that may be considered a competitor of the Company, (h) not be prevented by law, or convicted of bankruptcy, prevarication, active or passive corruption, concussion, embezzlement, against the popular economy, the public faith, property or the national financial system, or criminal penalty that prohibits his/her access to a public office and (i) not be subject to an unappealable decision suspending or disqualifying him/her by the Brazilian Securities and Exchange Commission (“CVM”), which rendered them ineligible for positions in the management of publicly held companies.

1.1.2. The appointments should also consider professionals with different characteristics and profiles, focusing on the complementarity of skills, such as social and environmental aspects, and diversity, such as criteria of gender, age, ethnicity, among others, allowing the effective debate of ideas and the technical, impartial and informed decision-making process.

1.1.3. Additionally, to appoint members for the Corporate Governance Bodies, the legal impediments and prohibitions provided for in the Brazilian Corporation Law, CVM regulation, Novo Mercado Regulations, Brazilian Code of Corporate Governance for Publicly Held Companies and Bacen’s Official Letter 3885/2018 must be considered, as applicable.

1.1.4 The process to appoint members to the Corporate Governance Bodies will be carried out once every two years, as provided in the Bylaws and Charters of the respective Corporate Governance Bodies or, extraordinarily, as needed.

2. Criteria and Process to Appoint the Members for the Company’s Board of Directors

2.1 Breakdown. The Board of Directors of the Company will have least 7 (seven) and at most 11 (eleven) members, elected at the Shareholders’ Meeting, with a unified term of office of two (2). The reelection is allowed. At least 2 (two) members, or twenty percent (20%) of the total number of Board members, whichever number is higher, shall be Independent Board Members, as set in the Novo Mercado Regulations. The members elected through the option provided for in Article 141, Paragraphs 4 and 5 and Article 239 of the Brazilian Corporation Law will also be considered Independent Board Members. When, as a result of this percentage, a fractional number of Board Members results, the Company must round the number to the next higher whole number.

2.2 Chairman and Vice-Chairman of the Board of Directors. The Board of Directors will have 1 (one) Chairman and 1 (one) Vice-Chairman elected by the Board of Directors. The Vice-Chairman performs the duties of the Chairman in his absences and temporary impediments, regardless of any formality. In case of absence or temporary impairment of the Chairman and Vice-Chairman, the duties of the Chairman will be assumed by another member of the Board of Directors designated by the majority of the other members, pursuant to Paragraph 3, Article 15 of the Company’s Bylaws.

2.3. Prohibition Regarding the Accumulation of Positions – Chairman of the Board of Directors and Chief Executive Officer. The positions of Chairman of the Board of Directors and of Chief Executive Officer or main executive of the Company may not be accumulated by the same person, except in the event of vacancy, in which case the Company must (a) disclose the accumulation of positions due to the vacancy until the next business day after the occurrence; (b) disclose, within 60 (sixty) days after the vacancy, the measures taken to cease the accumulation of positions; and (c) cease accumulation within one (1) year, pursuant to Paragraph 5, Article 15 of the Company’s Bylaws.

2.4. Criteria to Appoint the Members for the Board of Directors. To appoint the members for the Board of Directors, the general criteria set forth in Item 1 above must be considered.

2.4.1. Regarding Item 1.1.1, Sub-items (f) and (g), the person under these conditions may be elected as a member of the Company’s Board of Directors if waived by the Shareholders’ Meeting, pursuant to Paragraph 6, Article 15 of the Company’s Bylaws.

2.4.2. Additionally, to appoint members for the Board of Directors, the Company must comply with the legal requirements set forth in Articles 140 and 141 of the Brazilian Corporation Law, with CVM regulations, with Articles 14 to 18 of the Novo Mercado Regulations and with Articles 20 and 21 of Bacen’s Official Letter 3885/2018.

2.4.3. The Company may not elect Board Members who (a) have seventy (70) years old on the date of their first election and (b) are a member of more than five (05) Boards of Directors of publicly held companies.

2.4.4. The reelection of members of the Board of Directors must consider (a) their attendance at meetings during their last term of office, recommending the re-election of the person appointed who attended at least seventy-five percent (75%) of the meetings in their last term of office; (b) good performance of their position during their last term of office; (c) maximum number of ten (10) consecutive re-elections; (d) evaluation of the benefit of their replacement and renewal of the members of the Board of Directors when compared to their permanence and reelection.

2.5. Process to Appoint the Members for the Board of Directors. The appointment of members for the Board of Directors can be done by the Management or by any of the Company’s shareholders. The process to appoint members for the Company’s Board of Directors must be based on a prior analysis (prepared as a report or matrix) of the skills of the members of the Board of Directors, to verify the efficiency of the board and the complementarity of skills, as well as to point out any gaps in the Board breakdown, ensuring the proper composition. The appointment process must ensure that the Board of Directors will have (a) mostly external members, with at least 2 (two) members, or twenty percent (20%) of the total number of Board members, whichever number is higher, shall be Independent Board Members, as set in the Novo Mercado Regulations; and (b) considering the availability of time for the members to exercise their duties and the diversity of knowledge, experience, behavior, cultural aspects, age, and gender, in accordance with CBGC’s Recommended Practice 2.2.

2.5.1 Appointment of Board Members pursuant to the Shareholders’ Agreement. Regarding the appointments made pursuant to the Shareholders’ Agreement, the shareholder entitled to appoint candidates to the Board of Directors must notify the Corporate Governance Office, in writing, informing the full name and qualification of the candidates. When appointing the member for the Board of Directors, the shareholder shall submit a statement certifying that all legal criteria and those provided for in this Policy have been duly observed in the appointment.

2.5.1.1 In addition, the shareholder must submit a specific form (“Form”) to be made available by the Corporate Governance Office, which will consolidate the information of the professional and the compliance with the criteria set forth in this Policy for the position. The said Form must be completed and signed by the person appointed and forwarded to the Corporate Governance Office with the respective supporting documents mentioned in the Form.

2.5.1.2. The Board of Directors, after the recommendation of the Corporate Governance Committee, will include in the management’s proposal for the shareholders’ meeting that will elect the Board Members, a statement indicating the compliance with this Policy of each candidate to the position of member of the Board of Directors.

2.5.2. Appointments of Independent Board Members. The appointment of Independent Board Members may be made by the Management, Controlling Shareholders or Minority Shareholders.

2.5.2.1. The Board of Directors, after the recommendation of the Corporate Governance Committee, will include in the management’s proposal for the shareholders’ meeting that will elect the board members, a statement indicating: (a) the compliance with this Policy of each candidate to the position of member of the Board of Directors and (b) the reasons, given the provisions of this Policy, in the situations provided for in Article 16 of the Novo Mercado Regulations and in the statement mentioned in Article 17 of the Novo Mercado Regulations, why each candidate is classified as Independent Board Member.

2.5.2.2. The appointment of the person for the Board of Directors as Independent Board Member must be resolved by the Shareholders’ Meeting, which may base its decision: (a) in the statement, forwarded by the person appointed for the position of Independent Board Member of the Board of Directors, certifying their compliance with the independence criteria set forth in the Novo Mercado Regulations, including the reasoning, if verifying any of the situations provided for in Paragraph 2 of Article 16 of the Novo Mercado Regulations and (b) in the statement of the Company’s Board of Directors, included in the management proposal referred to in Item 2.5.2.1 above.

2.5.2.3. In case of appointment by Minority Shareholders, the Board of Directors, following the recommendation of the Corporate Governance Committee, must forward its statement, pursuant to Item 2.5.2.1., to include the notice from shareholders with the information on the person appointed, at most 48 hours after the delivery of the document by the Minority Shareholder formalizing the appointment, always observing the deadlines provided for in the applicable legislation.

2.5.2.4. The procedure provided for in Item 2.5.2.3. for the election of an independent board member shall not apply to the appointment of candidates who (a) do not meet the deadline to include candidates in the remote voting form and (b) through a separate vote, pursuant to Article 16, Paragraph 3, of the Novo Mercado Regulation.

2.5.2.5. Classification of the Independent Board Member for the Board of Directors. The number of vacancies destined for independent board members is considered to be all members that comply with Article 16 of the Novo Mercado Regulations.

2.5.3. Vacancy in the Board of Directors. In case of vacancy in the Board of Directors, the remaining members must appoint an alternate, subject to this Policy, who shall remain in office until the first Shareholders’ Meeting, when the new member must be elected, who must remain in office until the end of the term of office of the member replaced, pursuant to Paragraph 4, Article 15 of the Bylaws and 2.7 of the Charter of the Company’s Board of Directors.

2.5.3.1. In the above cases, the appointments made will follow the same process indicated in items 2.5.1 and 2.5.2, as applicable. Accordingly, the remaining members will appoint an alternate member who will remain in office until the first Shareholders’ Meeting of the Company, when the new member will be elected, who shall remain in office until the end of the term of office of the replaced member, pursuant to the Charter of the Company’s Board of Directors and Paragraph 4 of Article 15 of the Bylaws.

3. Criteria and Process to Appoint Members for the Company’s Advisory Committees

3.1. Advisory Committees. The Company currently has six (6) Advisory Committees: (a) Audit Committee – statutory and permanent body; (b) Finance Committee; (c) Corporate Governance Committee; (d) People and Compensation Committee; (e) Risk Committee; (f) Sustainability Committee.

3.2. Coordination of Advisory Committees. The Company’s Advisory Committees are coordinated by independent Board Members and the members are preferably part of the Board of Directors.

3.3. Criteria to Appoint Members for the Advisory Committees. To appoint the members for the Advisory Committees, the general criteria set forth in Item 1 above must be considered.

3.3.1. The reelection of members of the Advisory Committees must consider (a) the attendance of the person appointed at meetings during their last term of office, recommending the re-election of the person appointed who attended at least seventy-five percent (75%) of the meetings in their last term of office; (b) good performance of their position during their last term of office; and (c) evaluation of the benefit of their replacement and renewal of the members of the Committee when compared to their permanence and reelection.

3.3.2. Breakdown and Specific Criteria to Appoint Members for the Audit Committee. It will have at least 03 (three) members (a) one of its members, at least, will be an Independent Board Member of the Company; (b) at least one of its members must have recognized experience in corporate accounting matters, pursuant to CVM Instruction 308 of May 14, 1999, as amended, which provides for the registration and exercise of the independent audit activity within the securities market and sets the duties and responsibilities of the management of the audited entities in their relationship with independent auditors; (c) the same member of the Committee may accumulate the two characteristics set forth in Items (a) and (b).

3.3.2.1. Specific Prohibition. The following are prohibited from being a member of the Company’s Audit Committee: (a) the executive officers, (b) the executive officers of Subsidiaries, Controlling Shareholder, Affiliated Companies or companies under joint control.

3.3.3. Breakdown of the Finance Committee. The Committee will have at least 03 (three) members and one of its members, at least, will be an Independent Board Member of the Company.

3.3.4. Breakdown of the Corporate Governance Committee. The Committee will have at least 04 (four) members and one of its members, at least, will be an Independent Board Member or Chief Executive Officer of the Company, as a permanent member of the said Committee.

3.3.4.1. Breakdown of the Ad Hoc Corporate Governance Committee. In compliance with the parameters set forth in the Policy on Transactions with Related Parties and other Situations Involving Conflict of Interest of the Company, the transactions between the Company and any of its Controlling Shareholders will be evaluated by the Ad Hoc Corporate Governance Committee to recommend the subject to be resolved by the Board of Directors. This Committee, in exceptional nature, will have up to two more Independent Board Members, besides the Coordinator, and the said member will be convened to consider the matter as an ad hoc member of the Committee, replacing the member appointed by the conflicting controlling shareholder.

3.3.5. Breakdown of the People and Compensation Committee. The Committee will have at least 03 (three) members and one of its members, at least, will be an Independent Board Member of the Company.

3.3.6. Breakdown of the Risk Committee. The Committee will have at least 03 (three) members and one of its members, at least, will be an Independent Board Member of the Company.

3.3.6.1. Specific Prohibition. It is prohibited the participation as members of the Risk Committee of professionals who have been or are, over the past six months, employees or members of the Executive Board of the Company or any of its shareholdings, to preserve their autonomy and independence. This is also valid for spouses, or relatives in a straight line, collateral line or affinity line, up to the second degree.

3.3.7. Breakdown of the Sustainability Committee. The Committee will have 03 (three) members of the Company’s Board of Directors, with at least 01 (one) Independent Board Member and the Vice Chairman of Organizational Development.

3.4. Process to Appoint Members for the Advisory Committees. The appointment of members to the Company’s Advisory Committees is made by the Management, as well as by the Controlling Shareholder(s).

3.4.1. The appointments must be forwarded to the Corporate Governance Office, in writing, stating the full name and qualification of the member appointed for the Advisory Committee.

3.4.2. In addition, a Form must be presented, which will be made available by the Corporate Governance Office, which will consolidate the information of the professional and the compliance with the criteria set forth in this Policy for the position. The said Form must be completed and signed by the person appointed and forwarded to the Corporate Governance Office with the respective supporting documents mentioned in the Form.

4. Criteria and Process to Appoint the Members for the Company’s Fiscal Council

4.1. The operation of the Fiscal Council is regulated by the Company’s Bylaws and the Charter of the Fiscal Council, and the appointment criteria set forth in Item 1 above must be observed.

4.1.1. In addition to the requirements set forth in this Policy and applicable regulations, the prohibitions stated in Paragraph 9 of Article 25 of the Company’s Bylaws and Article 162 of the Brazilian Corporation Law must be observed.

5. Criteria and Process to Appoint Members for the Company’s Statutory Executive Board.

5.1. Breakdown. The Statutory Executive Board will have at least 02 (two) members and at most 10 (ten) members, with one Chief Executive Officer, one Investor Relations Officer and up to 8 (eight) officers without specific designation, with a unified term of office of up to 2 (two) years. The reelection is allowed. The members of the Statutory Executive Board may accumulate positions, as decided by the Board of Directors.

5.1.1. Vacancy of the Statutory Officer. The statutory officers are replaced, in cases of absence or temporary impediment, by another statutory officer, chosen by the CEO. In case of a vacancy in the position of statutory officer, the alternate will be elected by the Board of Directors, to fulfill the term of office of the officer replaced, at the first meeting after the vacancy of the position, which must occur within a maximum of thirty (30) days.

5.1.1.1. PFor the purposes above, there is a vacancy with dismissal, death, resignation, evidenced inability to act, disability or unreasonable absence for more than fifteen (15) calendar days.

5.2. Criteria to Appoint Members for the Statutory Executive Board. To appoint members for the Company’s Statutory Executive Board, the general criteria set forth in item 1 above must be considered, as well as a balanced breakdown of professional executives who know how to combine the interests of the Company, its shareholders, members of the management and employees. The process to appoint and elect the members for the positions of the Statutory Executive Board described in this Policy has the purpose to create a group in line with the Company’s principles and ethical values, as well as aspects of diversity, focusing on people with complementary skills and qualified to face the Company’s challenges.

5.2.1. Additionally, to appoint members for the Statutory Executive Board, the Company must comply with the legal requirements set forth in Articles 143 of the Brazilian Corporation Law, with CVM regulations and with Articles 20 and 21 of Bacen’s Official Letter 3885/2018.

5.2.2. 5.2.2. To appoint members for the Statutory Executive Board, the Company’s Succession Plan must be respected, which has the purpose to describe the profiles of key positions and identify potential candidates who have the necessary skills to perform the required duties. If there is no successor mapped internally, the recruitment and external selection process will be carried out.

5.2.3. The person who has completed 65 (sixty-five) years old on the date of the election may not be elected as a member of the Statutory Executive Board.

5.2.4. There will be no reservation of positions in the Statutory Executive Board or any management positions in the Company appointed directly by shareholders.

5.3. Process to Appoint Members for the Statutory Executive Board. OThe members of the Statutory Executive Board, with the exception of the Chief Executive Officer, who will be appointed by the Board of Directors, will be appointed by the Chief Executive Officer and elected by the Board of Directors.

6. Criteria and Process to Appoint Members for the Company’s Advisory Forums

6.1. The operation of the Advisory Forums is regulated by the Charter of the corresponding Advisory Forum, and the appointment criteria set forth in Item 1 above must be observed.

6.2. The appointment of members for the Company’s Advisory Forums, when applicable, will be carried out through a joint appointment of the Corporate Governance Office and the Company’s technical area, observing the general criteria set in Item 1 of this Policy, and the Company’s employees should preferably be appointed for such positions.

6.3. The Statutory Executive Board is the body responsible for approving the members appointed for the Advisory Forums by the Corporate Governance Office and by the Company’s technical area, which is responsible for analyzing the compliance of the appointments in relation to this Policy (especially the criteria set forth in Item 1 above).

7. Appointment of Representatives in Subsidiaries and Affiliated Companies of the Company

7.1. The appointment of members for the Board of Directors and/or Statutory Executive Board of the Subsidiaries and Affiliated Companies of the Company will be carried out through a joint appointment of the Affiliated Companies’ Management, the Corporate Governance Office and the Company’s technical area, observing the general criteria set in Item 1 of this Policy.

7.2. The Company’s Board of Directors, upon proposal by its Statutory Executive Board, is responsible for choosing the Company’s representatives for the Board of Directors or similar body, Fiscal Council and Statutory Executive Board of the Company’s Subsidiaries and Affiliated Companies, except when the person appointed for the positions is a member of the Company’s Statutory Executive Board.

7.3. For the aforementioned positions, the employees of the Company, its Subsidiaries, and its Affiliated Companies must be preferably appointed.

8. Compensation of the Members of the Company’s Governance Bodies

8.1. The Company adopts the following principles to compensate the members of its Governance Bodies: (a) the Company’s compensation program is an instrument for attracting, recognizing, encouraging and retaining talent, based on meritocracy; (b) the Company’s compensation program considers the individual performance, organizational performance, as well as sustainable growth indicators and viability based on financial results; (c) the Company’s compensation program must be unique and competitive compared to companies operating in the same segment in which the Company operates and always in line with the best market practices; (d) fixed and variable compensation will be defined considering the attributions, responsibilities, experience of the members of the Governance Bodies and the labor market, as well as to encourage the achievement of results, being compatible with the Management Policy of the Company’s Risks and formulated to not encourage behaviors that raise the risk exposure above the levels approved by the Company’s Board of Directors in its Risk Appetite Statement in the short-, medium- and long-term strategies adopted by the Company and to encourage the diligent decision-making process by the members of the Governance Bodies; (e) the compensation program must consider the alignment with the interests of shareholders, focused on longevity and long-term sustainable value creation, as well as the purpose, mission, and values of the Company.

9. Power to Approve the Compensation for the Management

9.1. Annually, the Shareholders’ Meeting will set the overall compensation for the management, as provided for in the Management’s Proposal. The Board of Directors will distribute the amount among the members of the Company’s Management, as recommended by the People and Compensation Committee, pursuant to Article 152 of the Brazilian Corporation Law and Bacen Resolution 3921/2010.

9.2. The compensation of the members of the Fiscal Council will be set by the Shareholders’ Meeting that elects them, observing Paragraph 3 of Article 162 of the Brazilian Corporation Law.

10. Compensation Applicable to the Members of the Board of Directors

10.1. The members of the Board of Directors are entitled to a fixed monthly compensation, not linked to their attendance to the meetings held by the said body, with the purpose of compensating them for the services rendered in a manner compatible with their duties, responsibilities and time dedicated to the position. Such compensation must be in line with the Company’s strategic goals, focusing on its longevity and long-term value creation.

10.2. The compensation of the members of the Board of Directors must be proportional to their duties, responsibilities and time dedicated. Therefore, the compensation of each Board Member may be different due to additional responsibilities assumed, for example, participation in Advisory Committees.

10.3. The compensation of the members of the Board of Directors reflects market practices, verified through periodic compensation surveys conducted by specialized consultants, to align the compensation paid to the members of the Board of Directors with the best market practices and to keep the competitiveness of the Company’s compensation strategy.

10.4. The members of the Board of Directors are not entitled to any variable compensation.

10.5. The members of the Board of Directors will be reimbursed by the Company for all travel, accommodation, food allowance and other expenses that may be incurred to carry out their duties.

11. Compensation Applicable to Members of the Advisory Committees

11.1. The Independent Board Members that are part of the Company’s Advisory Committees are entitled to a fixed monthly compensation for each Advisory Committee, unrelated to their attendance at meetings of such advisory bodies, to compensate them for services rendered in a manner consistent with their duties, responsibilities and time devoted.

11.2. The other members of the Advisory Committees are not entitled to any renumbering, except for the members of the Audit Committee due to their duties, responsibilities and time devoted to the Audit Committee.

11.3. The members of the Advisory Committees will be reimbursed by the Company for all travel, accommodation, food allowance and other expenses that may be incurred to carry out their duties.

12. Compensation Applicable to the Members of the Fiscal Council

12.1. The members of the Fiscal Council are entitled to a fixed monthly compensation, to be attributed by the Shareholders’ Meeting that elects them, in accordance with applicable law.

12.2. The members of the Fiscal Council will be reimbursed by the Company for all travel, accommodation, food allowance and other expenses that may be incurred to carry out their duties.

13. Compensation Applicable to the Members of the Statutory Executive Board

13.1. Fixed Compensation. The members of the Statutory Executive Board are entitled to a fixed monthly compensation, set by the Board of Directors, the value of which is set, among other factors, by their individual qualifications, experience, training, level of complexity and responsibility inherent to the duties carried out in comparison with the market practices. Such compensation must be in line with the Company’s strategic goals, focusing on its longevity and long-term value creation.

13.2. Variable Compensation. The Statutory Executive Board is also entitled to receive short- and long-term variable compensation, namely:

13.2.1. Short-Term Variable Compensation materialized by the Annual Bonus. This compensation has the purpose to reward the achievement and over-achievement of individual goals and Company goals by the members of the Statutory Executive Board, as well as to promote the interest and alignment of the members of the Statutory Board with the strategic plan, results and short- and medium-term goals of the Company.

13.2.2. Long-Term Variable Compensation materialized by the Restricted Shares Plan. The purpose of this compensation is to strengthen and renew the long-term commitment of the members of the Statutory Executive Board focusing on business sustainability. The Restricted Shares Plan is granted considering the individual performance, fostering the Company’s value proposition based on meritocracy. The said plan is based on the Company’s restricted shares, which are distributed over a four-year period, with 1/4 each year, provided that the rules set forth in the plan are met.

13.2.3. Long-Term Variable Compensation materialized by the Cielo Partner Program. This compensation is intended to ensure the Company’s competitiveness in the market and to strengthen its long-term retention strategy for members of the Statutory Executive Board, perceived as special professionals for the business. The Cielo Partner Program links the use of part of the short-term variable compensation of the members of the Statutory Executive Board for the acquisition of restricted shares of the Company, with the corresponding compensation by the Company, whose distribution occurs during the four-year period, with 1/4 each year, by maintaining their own shares and respecting the rules of the program.

13.3. Power to Approve the Criteria for the Variable Compensation. Regarding the long-term variable compensation, annually or when deemed appropriate, the Board of Directors, based on the recommendation of the Company’s People and Compensation Committee, will set the number of restricted shares to be granted, the price of each share granted, as well as the terms and any other conditions related to such shares, pursuant to the Restricted Share Plan.

13.3.1. The variable compensation of the Statutory Executive Board will be in line with the risk limits set by the Board of Directors. It is expressly forbidden for the same person to control the decision-making process and its respective supervision; therefore, no one will resolve on their own compensation.

13.4. Methodology to Calculate the Variable Compensation. The variable compensation must comply with the principles set forth in Item 8 and be calculated considering the expected results of the Company’s strategic and business plans, as approved by the Board of Directors.

13.5. Benefits. The members of the Statutory Executive Board are entitled to the following benefits: health and dental care, health check-up, social security, health insurance, life insurance, meal allowance, vehicle, parking, and mobile phone.

14. Review of Elements of the Compensation for the Management.

14.1. The Company seeks to keep its compensation practice of the members of its Corporate Governance Bodies up to date and competitive. To this end, it periodically has a market survey, supported by specialized consultancies, comparing its practices to those of other leading companies in the market. Eventually, job-specific surveys are carried out to obtain an even more accurate analysis.

15. Compensation Applicable to Members of the Advisory Forums

15.1. Members of the Advisory Forums are not entitled to compensation for their work as members in such forums.

15.2. The members of the Advisory Forums will be reimbursed by the Company for all travel, accommodation, food allowance and other expenses that may be incurred to carry out their duties.

16. Compensation Applicable to those Appointed by the Company to positions in Governance Bodies in the Company’s Subsidiaries and Affiliated Companies.

16.1. Those nominated by the Company for positions in the Governance Bodies of the Company’s Subsidiaries and Affiliated Companies are not entitled to compensation for their work as a member of such bodies. If the Subsidiaries and Affiliated Companies compensate their members of the Governance Bodies, the members appointed by the Company and who are also employees of the Company must waive such compensation.

17. Power of the Corporate Governance Committee

17.1. The Corporate Governance Committee will be the advisory body of the Board of Directors responsible for: (a) evaluating the report or matrix resulting from the prior analysis provided for in item 2.5. above and issuing any recommendations to be forwarded to those responsible for appointing members to the Board of Directors, pursuant to this Policy; (b) analyzing the compliance with this Policy of the appointments of members for the Company’s Governance Bodies, with the exception of the appointments of members for the Statutory Executive Board, (in particular the criteria set forth in Item 1 above) and making any recommendations regarding the competent body responsible for the approval, including providing support for the Forms provided by the Corporate Governance Office, duly completed and signed by those appointed, as applicable; (c) analyzing, together with the People and Compensation Committee, the market survey provided for in item 14.1. above in relation to the compensation of the members of the Company’s Governance Bodies, except for the compensation of the members of the Company’s Statutory Executive Board, and making any recommendations to be sent to the Board of Directors; (d) reviewing and issuing recommendations, annually, on this Policy, to keep the Policy constantly up to date in accordance with the highest standards of corporate governance and applicable law, always observing the specific characteristics of the Company; and (e) overseeing the implementation and operationalization of this Policy.

17.2. The Corporate Governance Committee may rely on outside consultancy to validate if the candidates for the position of members of the above bodies comply with the conditions set forth in this Policy.

18. People and Compensation Committee

18.1. The People and Compensation Committee will be the advisory body of the Board of Directors responsible for: (a) analyzing the compliance of the appointments of members for the Statutory Executive Board, (in particular the criteria set forth in Item 1 above) and making any recommendations to the Board of Directors, responsible for the approval, including providing support for the Forms provided by the Corporate Governance Office, duly completed and signed by those appointed, as applicable; (b) analyzing the market survey provided for in item 14.1. above in relation to the compensation of the members of the Governance Bodies and making any recommendations to be sent to the Board of Directors; (c) analyzing and issuing recommendations to the Board of Directors regarding the strategy, policies and practices adopted or to be adopted by the Company in relation to the renumbering of the Company’s Governance Bodies; (d) reviewing and issuing recommendations, annually, on this Policy, to keep the Policy constantly up to date in accordance with the highest standards of corporate governance and applicable law, always observing the specific characteristics of the Company; (e) overseeing the implementation and operationalization of this Policy; and (f) preparing, annually, the Report provided for in Article 15 of Bacen Resolution 3921/10.

18.2 The People and Compensation Committee may rely on outside consultancy to validate if the candidates for the Statutory Executive Board comply with the conditions set forth in this Policy, as well as specialized consultancies in the areas of compensation. In such cases, the People and Compensation Committee may have direct access to the consultants hired without the involvement or intermediation of the Statutory Executive Board.

IV. Management of Consequences

Employees, suppliers, clients and other stakeholders who notice any deviation to this Policy’s guidelines, may report the fact to the Ethics Channel (www.canaldeetica.com.br/cielo or 0800 775 0808), anonymously or not. The Company’s Ethics Channel is managed by an independent company to ensure confidentiality and is responsible for forwarding the communications reported to the competent body to be verified.

V. Responsibilities

  • Members of the Management and Employees: Complying and ensuring the compliance with this Policy and, when necessary, engage the Corporate Governance Office and/or Vice-Chairman of Organizational Development to consult or make any questions regarding the content and application of this Policy.
  • Management of Affiliated Companies: Area focused on managing and monitoring Subsidiaries and Affiliated Companies, and responsible for the appointments indicated in Item 7 of this Policy.
  • Corporate Governance Office: Complying with and enforcing the guidelines set forth in this Policy, keep the Policy up to the date in relation to the guidelines, criteria and the process to appoint and select members for the Corporate Governance Bodies of the Company and its Subsidiaries and Affiliated Companies, thus ensuring that any changes to the provisions of this Policy are incorporated into the Policy and solving doubts regarding the Policy’s content and application.
  • Vice-Chairman of Organizational Development: Complying with and enforcing the guidelines set forth in this Policy, keep the Policy up to the date in relation to the provisions on the compensation, thus ensuring that any changes to the provisions of this Policy are incorporated into the Policy and solving doubts regarding the Policy’s content and application.

VI. Documentação Complementar

  • Shareholders’ Agreement of the Company;
  • Bacen’s Official Letter 3681/2013;
  • Bacen’s Official Letter 3885/2018;
  • Brazilian Code of Corporate Governance for Publicly Held Companies;
  • Code of Best Corporate Governance Practices;
  • Company’s Code of Ethical Conduct;
  • Company’s Bylaws;
  • CVM Instruction 308/1999;
  • Brazilian Corporation Law;
  • Charter of the Company’s Statutory Executive Board;
  • Charter of the Company’s Board of Directors;
  • Charters of the Company’s Advisory Committees;
  • Charter of the Fiscal Council;
  • Charters of the Company’s Advisory Forums;
  • Novo Mercado Regulations;
  • Bacen Resolution 3921/2010;
  • Company’s Risk Management Policy;
  • Policy on Transactions with Related Parties and other situations involving Conflicts of Interest.

VII. Concepts and Acronyms

  • Member of the Management: Member of the Company’s management bodies.
  • Governance Agents: “Individuals and bodies involved in the governance system, such as partners, members of the management, members of the fiscal council, auditors, board of directors, fiscal council, etc.
  • Controlling Shareholder(s): The shareholder or group of shareholders bound by a shareholders’ agreement or under joint control who exercise the direct or indirect control of the Company, pursuant to the Brazilian Corporation Law.
  • Minority Shareholder(s): The shareholder or group of shareholders whose total shares do not exercise direct or indirect control over the Company, pursuant to the Brazilian Corporation Law.
  • Independent Board Member: According to the definition of the Novo Mercado Regulations of B3 – Brasil, Bolsa, Balcão (B3), the board members elected through the option provided for in Article 141, Paragraphs 4 and 5 and Article 239 of the Brazilian Corporation Law will be considered Independent Board Members.
  • Board of Directors: Collegiate deliberation body focused on fulfilling the duties of guiding and supervising the management of the Executive Board and deciding on the main business issues, including making strategic, investment and financing decisions, among other matters set forth in Article 142 of the Brazilian Corporation Law and/or in the Company’s Bylaws.
  • Fiscal Council: Supervisory body, independent of the management, reporting to shareholders, permanent or not, installed by the decision of the Shareholders’ Meeting, whose purpose is to keep the value of the organization. The assignments and powers granted by law to the Fiscal Council cannot be granted to another body of the Company. The members of the fiscal council have individual acting power, despite the collegiate nature of the body.
  • Advisory Committees: Technical advisory bodies of the Board of Directors, which are supporting instruments that increase the quality and efficiency of the Company’s Board of Directors. The Advisory Committees do not have deliberation power and their recommendations do not bind the resolutions of the Board of Directors.
  • People and Compensation Committee: Body that advises the Board of Directors in relation to the provisions of this Policy, as provided for in Item 18.
  • Corporate Governance Committee: Body that advises the Board of Directors in relation to the provisions of this Policy, as provided for in Item 19.
  • Statutory Executive Board: Body responsible for the management of the company’s business, implementing the strategy and general guidelines approved by the Board of Directors. Through formalized processes and policies, the Statutory Executive Board enables and disseminates the purposes, principles, and values of the organization.
  • Advisory Forums: Technical advisory bodies of the Statutory Executive Board, which are supporting instruments that increase the quality and efficiency of the Company’s Statutory Executive Board.
  • Governance Bodies: Bodies that make up the Corporate Governance System of the Company and its Subsidiaries and Affiliated Companies.
  • Corporate Governance System Corporativa: “The system through which companies and other organizations are driven, monitored and encouraged, involving relationships between partners, the board of directors, the executive board, the supervisory and control bodies, and other stakeholders.”
  • Affiliated Companies: Companies in which the Company holds 10% (ten percent) or more of their capital, without, however, having control over them, pursuant to Article 243, Paragraph 1 of the Brazilian Corporation Law.
  • Subsidiaries: Companies in which the Company has significant influence and, pursuant to Article 243, Paragraphs 4 and 5 of the Brazilian Corporation Law, (i) there is a significant influence when the Company holds or exercises the power to participate in the decisions of a company’s financial or operating policies, without, however, controlling it; and (ii) the significant influence will be assumed when the Company owns twenty percent (20%) or more of the voting capital of the said company, without controlling it.

VIII. General Provisions

It shall be incumbent upon the Company’s Board of Directors to amend this Policy whenever necessary.

This Policy takes effect on the date of its approval by the Board of Directors, thus revoking any documents to the contrary.