Bank Hapoalim Bows to Pressure: Executive Bonuses Slashed

Bank Hapoalim chairman Shlomo Nehama and CEO Zvi Ziv informed the bank's board on Thursday that executive bonuses would be cut by one-third. The pair said the bank would calculate 2006 bonuses without the huge gains it posted on the Bachar reform-mandated sale of its provident and mutual funds.

Nehama and Ziv made the announcement during a comprehensive discussion that directors held Thursday on executive compensation.

The banking sector has faced a great deal of criticism in the past month for the huge bonuses distributed in 2005. Ziv pocketed NIS 33.5 million, and Nehama walked away with NIS 23 million. On Tuesday, Israel Discount Bank canceled a shareholders meeting slated to approve tens of millions of shekels in bonuses for senior executives.

Bank Hapoalim and Discount Bank were motivated by a public outcry and pressure from government institutions. Yesterday, Hapoalim filed a series of documents with the Israel Securities Authority, detailing the executive bonus approval processes. The bank also established a directors committee to examine the legality of those processes starting in 1998.

According to the bank, "In light of the bank's unique public position, in light of the feelings of the general public, and considering various petitions to the bank, including by the ISA, the board has decided to establish a committee."

The bank also stated it had complete faith that the compensation principles implemented since 1998 had been properly approved