Shlomo Nehama also felt a little uneasy with the tens of millions he received from Bank Hapoalim. So he hastily declared at a press conference that some of the money would be used to establish a "family charitable fund." In other words, not only will he continue every year to take tens of millions more from the bank for his "hard work," but he will also begin to play the role of a little god, throwing a gnawed bone to one, a bone with a little flesh on it to another, and, to a third, a real piece of meat. And all these significant acts of charity will be widely publicized in the media, such that he not only enjoys the millions, but also becomes the well-known, modest and social-minded philanthropist.
Officials at the bank say the wages were determined by the board of directors. But the members of the board are the same self-satisfied clique of associates, acquaintances, and professional yes-men, none of whom dares utter a word against the huge payouts. All hope that one day that very same gang will recommend them for a similar position, with the same enormous sums. How did the renowned U.S. investor, Warren Buffet, once put it? "If one of the directors objects, it will look like he is throwing up in the middle of a formal dinner." Not very nice at all.
The banks also want to convey the impression that the entire wages story is of no concern to the public because the bank is a private one, owned by the Arison Group. And if Shari Arison wants to dish out NIS 64,000 a day (in other words, NIS 23.2 million a year) to bank chairman Nehama, and NIS 92,000 a day (or NIS 33.5 million a year) to CEO Zvi Ziv, it's her business, and she should be left in peace to do so.
But it's not that simple. That money is more OURS than Shari Arison's. The Arison Group only holds a minority stake in the bank, just 29 percent, while 71 percent of its shares are held by the public at large through direct investment, mutual funds and pension funds. In other words, instead of the public getting dividends, the money is handed out to Nehama and Ziv.
The institutional bodies, the mutual and pension funds, which should be the watchdogs of the public and vote "against" at the Hapoalim general meeting, will probably vote "for." Because they, too, are a part of that same small group of hedonists who don't want to be the party poopers. What do they care? Is it their father's money?
Of the three who received the millions, two are controlling shareholders in the bank - Nehama and Dan Dankner. For them to get their millions, they also had to pay enormous sums to the hired CEO, who benefited by default. After all, how could the chairman and the director get, but not the CEO? The CEO, in this case, actually serves as a stepladder for the controlling shareholders.
Nehama claims that the idea is to create a link between the bank's performance and executive pay, so that the executives make more of an effort. But the problem is that a large part of the bonus he received (for example, from the sale of Signature Bank) was not determined in advance, but in retrospect, so there was no incentive involved. Furthermore, the threshold (return on equity) according to which the bonuses are distributed was set too low, deliberately, so as to reach the absurd situation in which six executives get salaries and bonuses that add up to NIS 100 million!
There is a way to deal with the problem. The authorities could refuse to recognize the exaggerated payout as business expenses. The board of directors and general meeting could implement a special approval process for such salaries. And the central bank could finally wake up and intervene.
After all, everyone knows that the banking system in Israel is a semi-cartel. The three large banks control the households, and the customers are, in effect, their prisoners. Thus, the banks can exact outrageous fees and interest rates from the private customers, earning huge profits, and then pay insanely high salaries to its top executives. And this is why the governor of the Bank of Israel has all the economic and moral authority required to intervene.
The exaggerated wages are also a bad managerial mistake. If there is NIS 100 million for the six people at the top, why is there any need for streamlining, saving, firing? How can the bank keep its employees happy when there are such huge wage gaps between the rank-and-file clerk and the upper levels of management? What would Ziv, Dankner and Nehama say to wage demands from the union - that there's no money?
And it all comes back to the public - in the form of more bank fees and higher interest.
The supervisor of banks, Yoav Lehman, knows this very well, as does Bank of Israel governor Stanley Fischer. It was very disappointing therefore to hear Fischer say this week that the central bank had no intentions of intervening in the matter.
It is impossible to speak sadly about narrowing the gap between the rich and poor, and to simultaneously ignore the wage gaps in the banking system, which is the governor's responsibility.
But because, as is the norm, the dogs bark and the caravan moves on, there is only one small request to be made of Nehama: Please don't set up that charitable fund. Take all the money home. We don't need handouts. It will only be a demonstration of more contempt for us.
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