CEO Eli Yones won't be getting the same bonus component in his new 5-year employment contract with Bank Mizrahi-Tefahot. But the new agreement approved yesterday by the bank's board of directors doesn't ruin Yones either: he gets a stock options package, convertible into 2.5% of the bank's shares.
Mizrahi-Tefahot begs to note that unlike the options plan included in Yones's earlier contract, the current provision will be taxable as salary.
The contract was supported by all the directors but one, an external director, who abstained. The deal comes into effect today and expires in April 2014.
Since being appointed to manage Mizrahi-Tefahot in April 2004, Yones - who beforehand had been CEO of Bank Hapoalim - took home about NIS 8 million in bonuses. This money was derived from the bank's reported return on equity. That had been high in recent years but is likely to slump badly as recession, or at least slower economic growth, takes hold.
The cost for Yones to exercise his options, turning them into stock, is now NIS 21.80 per share. Mizrahi-Tefahot shares closed yesterday at NIS 19.80. The bank's stock has lost 33% of its value this year. Most analysts think its' trading at an unjustifiably low capital multiple of 0.75 times shareholders equity.
Want to enjoy 'Zen' reading - with no ads and just the article? Subscribe todaySubscribe now