Former Tel Aviv Stock Exchange CEO Demands Current Chairman Resign

In remarks to TheMarker, former TASE CEO Yossi Beinart accuses Amnon Neubach of 'improper corporate governance.'

Yossi Beinart at the recently opened new Tel Aviv Stock Exchange, September 2014.Bloomberg

The former CEO of the Tel Aviv Stock Exchange, Yossi Beinart, has demanded the resignation of the bourse's chairman, Amnon Neubach, citing "improper corporate governance."

Beinart officially resigned as TASE CEO about a month ago, after going on leave in June for medical reasons, after a growth was discovered in his body. 

Beinart said he was receiving medical treatment and had resigned on the advice of his doctors. 

“When the chairman of the exchange interferes with the CEO’s work, that involves impermissible intervention and improper corporate governance,” Beinart told TheMarker in an interview on Tuesday. 

“My criticism over the work of the chairman relates to the period in which I served as CEO,” said Beinart who assumed the position in 2014, shortly after Neubach was named TASE chairman. 

The stock exchange has been facing declining volumes and, in the face of the crisis, major differences of opinion surfaced between Beinart and Neubach at the beginning of this year. 

In fact, Neubach tried to get Beinart dismissed, an effort that was stopped through the intervention of members of the TASE board. 

Neubach and Beinart agreed on a memorandum of understanding that was to govern the division of responsibility between their posts. 

Beinart claims, however, that Neubach didn’t live up to his end of the agreement and, as Beinart would describe it, continued to undermine the CEO’s authority even after efforts to reconcile the two. 

In response to Beinart’s allegations, associates of Neubach expressed regret at what they said was Beinart’s failure to assume responsibility rather than taking Neubach to task. 

Asked to explain why he thinks Neubach needs to resign, Beinart said that the chairman had tried to take over the operations of the exchange “in violation of rules of proper corporate governance.

Beinart said of Neubach that he had involved himself in areas of responsibility that were the CEO’s and not the chairman’s, as spelled out in the memorandum of understanding. 

Neubach also had contact with stock exchange staff who answered to Beinart, the former TASE CEO said, although Beinart admitted that

Neubach informed him of the contact. 

“But that’s still not proper conduct,” Beinart added.

Beinart said their main points of disagreement related to regulation of the stock exchange on the part of the Finance Ministry and the Israel Securities Authority. 

“As I understood it, these are things that are within the authority of the CEO and for [me] to deal with,” Beinart said. 

But Beinart said Neubach insisted that they were within his own area of responsibility and that that’s how matters had been dealt with in the past at the TASE. 

Neubach also objected to Beinart’s efforts to introduce a Nasdaq trading platform at the Tel Aviv exchange, the former CEO said. 

“I tried to promote efforts to make it possible to trade any share existing anywhere in the world in Tel Aviv, even against the wishes of the companies. The main objective was to register all of the Israeli companies traded abroad for trading in Tel Aviv. 

"In addition, we wanted to register exchange notes traded abroad for trading here. 

"When [the proposal] went to the Finance Ministry and the [Israel Securities] Authority, they limited the move to companies with a market value of more than $50 billion,” Beinart said. 

That, he claimed, undercut the plan because Israeli companies abroad are not worth more than $50 billion.

“The chairman didn’t fight for this. In the end, I was forced to agree to the limitation because I hoped that it would be possible later on to remove or curtail it. 

"We also couldn’t register foreign exchange traded notes due to the limitation.”

Beinart acknowledged, however, that when it came to disputes between management and staff, he and Neubach were on the same page. 

“The workers were demanding a pay increase of 5% to 6% not linked to performance," Beinart said. 

"We thought the raise needed to be smaller and that it needed to be linked to performance.”

Asked why he didn’t resign at the beginning of the year, when it was reported that Neubach tried to have him dismissed over a lack of trust between them, the former CEO said he wanted to stay on the job because he was determined to rehabilitate the TASE. 

“That’s why we drafted the memorandum of understanding. The problem was that the memorandum wasn’t abided by,” Beinart said.

Neubach has also come in for criticism recently from members of the TASE board, and some board members said they share Beinart’s view that Neubach should resign and clear the way for a successor. 

Last Thursday an urgent meeting of the TASE board was convened where it was resolved that Beinart’s temporary successor, his former deputy, Gal Landau Ya’ari, would remain at the helm of the exchange and withdraw a letter of resignation she had submitted to Neubach a few days before. 

Landau Ya’ari had asked to step down at the end of December, but that would have left the exchange without a CEO. 

She and Neubach had had their own disagreements and Neubach himself had not sought to prevent her from resigning. 

One of the directors at last Thursday’s meeting expressed outrage at Neubach’s recent conduct, saying that others in his position would have resigned. 

Another director expressed major concern to TheMarker over the state of the Tel Aviv exchange, but said there was no plan to come to last Thursday’s meeting seeking Neubach’s resignation.