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The Ofer family, partners in the controlling stake in United Mizrahi Bank, wants to grant CEO Victor Medina a three-year contract worth $4 million. The other controlling shareholders in the bank, the Wertheim family, object.

The dispute between the shareholders over Medina's new contract is also delaying former Cellcom CEO Jacob Perry's appointment as chairman of the board.

Mosie Wertheim and nephew Avi are at odds with Medina and do not wish to continue the relationship with him. In contrast, Idan Ofer is satisfied with Medina's performance.

The dispute began a year ago, when the families quarrelled over the appointment of the chair. The Wertheims felt Medina took the Ofers' side in the dispute and their relationship with him deteriorated.

Idan Ofer resigned the chairmanship last week, in the wake of a Bank of Israel demand, and the shareholders agreed he would be replaced by Perry. However, the Ofer family sought to link the appointment to Medina's contract, which the Wertheims oppose. The official line is that a substantial pay rise sends the wrong message to workers and the public during a recession.

Sources close to the shareholders said the new agreement included a basic wage, bonuses and options that could cost the bank $4-7 million, making Medina the most expensive CEO in the banking sector. Other sources close to the bank say such numbers are baseless. They say the new deal is an Ofer initiative after Medina helped to make Mizrahi the most profitable member of the banking sector.