Stop the options. Why? Seniority.
Israel Discount Bank has an ad campaign that offers perks to customers who stick with the bank 20 years or more. "On what pretext do you get the perk?" presenter Mody Bar On is asked. "Seniority," he answers. The idea is to preserve old customers and give them a taste of the perks available to new customers.
Discount chair CPA Shlomo Zohar wouldn't get the perk in the ad. He hasn't been around long enough. But Zohar gets another perk from controlling shareholder Matthew Bronfman. Zohar hasn't put out pictures of his kids in his new office, and he's already got a dreamy options package of NIS 35 million. CEO Giora Offer got a similar package. In Offer's case, it could be argued that his managerial ability has been proved, he rehabilitated the bank and stabilized it after years of crisis. Zohar has done nothing yet for Discount Bank, but he's received unusual perks at a controversial price (that reflects the increase in share value prior to Zohar's appointment).
Zohar doesn't have seniority, which makes the perk puzzling. He did not, after all, threaten to leave the bank if he didn't get perks. And if he does? Another bank would pay him those perks? Of course, not.
Looking at Discount Bank's performance in recent years, it's tough to get excited. The bank itself, without subsidiaries, has lost money for several years, or made mere pennies. In the past year and a half, it wasn't substantially improved, but has mostly benefited from economic and financial market recovery that benefited the entire sector.
Discount's main problem is low efficiency compared to the rest of the sector. That can be solved, but that means cost cutting, cutbacks and cutting the fat. A chair that gets NIS 35 million in perks before rolling up his sleeves doesn't have the moral authority to lead painful cutbacks. It is hard to imagine him and Discount succeeding with such a problematic start. If the institutionals at Wednesday's shareholders' meeting want Discount Bank to succeed, they must torpedo Zohar's pay package.
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