Embraer

Based in São José dos Campos, Brazil, Embraer was initially founded in 1969 as a state-
owned company, but was privatized on 7 December 1994. Since its privatization,
Embraer has become one of the largest aircraft manufacturers in the world by focusing
on specific market segments with high growth potential in commercial, defense and
executive aviation. Equally important, Embraer provides a superior product package,
with comprehensive aircraft and after-sales support for parts, services and technical
assistance. Embraer has five plants in Brazil in three different locations, as well as sub-
sidiaries, offices, technical assistance and supply parts distribution centers in China,
Singapore, the United States, France and Portugal, together representing in December
2005 a workforce of more than 16,900 employees.
Embraer’s 1994 privatization meant a deep cultural transformation process, in
which the former engineering and industrially-oriented culture, predominating during
the state-owned years, was merged with a new entrepreneurial and administratively-ori-
ented culture brought by the new controlling shareholders. Evolution of the company’s
governance was an integral part of Embraer’s cultural transformation.
Embraer is regarded by the Brazilian government as a strategic company. This sta-
tus carries with it several implications for the company’s governance:
n Embraer’s privatization notice stipulated that the interest of foreign entities in
Embraer’s voting capital should be limited to 40%.
n There is a special class share or Golden Share held by the Brazilian government.
The Golden Share provides the same voting rights as the holders of common
shares have. However, in addition, the Golden Share carries veto power over,
among other things, changes of control or of corporate purpose and creation
and alteration of defense programs.
As a result of the privatization, the company not only recovered its financial sound-
ness, but was also able to embark on a new expansion process, primarily driven by the
ERJ 145 family project. In the following years, by launching the EMBRAER 170/190
family and the Legacy executive airplane, as well as Intelligence, Surveillance and
Reconnaissance (ISR) products and the ALX/Super Tucano project, Embraer signifi-
cantly increased its aeronautical market share, resulting in growing revenues in diversi-
fied marketplaces.
The development of new products by Embraer, as well as its future growth, depends
on its flexibility to access capital markets. On 21 July 2000, Embraer simultaneously
issued new shares on the New York and São Paulo Stock Exchanges. By extending its

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