Securities watchdog in talks with Hapoalim over sky-high executive pay
Bank argues that its pay practices are legal, but it's aware of the public aspect
The Israel Securities Authority has broached the subject of exorbitant executive pay in talks with Bank Hapoalim. The watchdog wants to discuss the possibility of the bank's top executives giving up part of their salaries, which have outraged the public.
Said executives would include chairman Shlomo Nehama, whose 2005 salary was NIS 23 million, and his deputy, Danny Dankner, whose grossed NIS 15 million.
In addition, the ISA is likely to demand that Hapoalim CEO, Zvi Ziv, also give up part of his NIS 33 million gross wage for the year.
An ISA spokesman said: "The principles of the senior executives' salaries at the Israel Discount Bank are guiding us at Bank Hapoalim, too. The authority is in talks with the bank, and a decision on the matter will be reached by the end of next week."
Bank Hapoalim sources said that the bank is convinced its actions were legal, however, there is also a public aspect to the issue of high salaries, to which "at least some of the people at the bank are attentive. And they are certainly taking the issue seriously."
It is estimated that at least Nehama will consider complying with the ISA's request and voluntarily give up some of his salary.
A week ago, the ISA, headed by Moshe Terry, said that Discount chairman Shlomo Zohar must forego the salary he was offered, which included options worth NIS 34 million. Zohar had in fact given up the salary before the ISA decision.
The ISA laid down principles in its decision determining when a conflict of interest exists: when the salary of a bank's chairman is considered to be a transaction by interested parties that requires approval of the full general assembly of the bank's shareholders.
This was necessary because of Zohar's connections with Matthew Bronfman, the bank's controlling shareholder, before he purchased the bank, and the concern that these previous connections entailed a conflict of interest.
The ISA's decision determined principles for a conflict of interest, including the type of connection between the chairman and controlling shareholder, and whether the salary is extraordinarily high.
These principles could be valid in the case of Hapoalim too, since the salaries paid to senior executives are considered to be extraordinarily high, and the connections between the chairman and the controlling shareholder are close - Nehama was Shari Arison's partner at Arison Investments, which owns Hapoalim. Dankner's salary is linked to that of Nehama, and therefore, any ruling of a conflict of interest on Nehama would automatically be valid for Dankner, too.
Unlike at Discount, where the salaries of the chairman and CEO were frozen before they were paid, Hapoalim's senior executives already have received their pay. ISA intervention at this stage is much more complicated, and would require agreement by the executives to return the money.
It is unclear whether the ISA has the authority to demand this, which is one of the subjects being discussed in talks between the bank and the ISA.
The ISA is also considering intervention in the case of Ziv's salary, even though there is no suspicion of a conflict of interest in his case. But the ISA has apparently found problems in the approval process of the CEO's pay.
Like us on Facebook and get articles directly in your news feed