Just a year after appointing him to the job, the Israeli-U.S. property investor Naty Saidoff on Tuesday began the process of firing Eyal Lapidot, the CEO of Shikun & Binui Limited, the Israeli building company also known as he acquired in 2018.
In a surprise boardroom drama, Saidoff called Lapidot for a pre-dismissal hearing in front of the board of directors, which is chaired by his representative in the company, Tamir Cohen. That hearing is expected to take place in the next few days.
Sources said the main reason behind the dismissal was Lapidot’s role in the attempted ouster of Yoram Naveh, the CEO of Clal Insurance, last year. The affair was the subject of an investigation headed by former Supreme Court Justice Yoram Danziger ordered by the Israel Capital Market, Insurance and Savings Authority.
Danziger’s report on the affair was allegedly the last straw for Saidoff. It revealed that Lapidot, who owns a 4.99% stake in Clal, pressured its chairman, Dan Naveh, to be named a director, criticized the CEO and pressured Clal’s investment team to invest in Shikun & Binui projects.
The Danziger report deepened suspicion about Lapidot’s conflicts of interest as Shikun & Binui CEO and a major shareholder in Clal, in particular his involvement in managerial appointments at the insurer.
Saidoff acquired Shikun & Binui two years ago from Shari Arison, heiress to the Carnival Cruise fortune and Bank Hapoalim’s largest shareholder. The company, also known by its English translation, Housing & Construction, was sold for 1.1 billion shekels ($320 million at current exchange rates).
Since then, the company’s Tel Aviv Stock Exchange-traded shares have soared, leaving it with a market cap of 6.5 billion shekels. Saidoff’s stake is now worth 3 billion shekels. On Tuesday, Shikun & Binui shares closed 3.15% higher at 16.06 shekels.
As one of Israel’s best-paid CEOs, Lapidot had been expected by Saidoff to change Shikun & Binui’s corporate culture and improves it business performance. Before Saidoff acquired the company, it had been the subject of a probe into accusations that its SBI infrastructure unit had bribed African officials to win contracts.
Lapidot was awarded a 2- million-shekel signing bonus when he joined as CEO and was promised a 4-million-shekel annual bonus, as well as stock options worth 172 million shekels. How many of those stock options he will be able to exercise now that he is leaving is likely to be a key issue between Saidoff and Lapidot.
Ironically, Lapidot’s appointment a year ago was one of the reasons Shikun & Binui shares have performed so well, which caused market sources on Tuesday to wonder why Saidoff was willing to dismiss him.
However, sources said Cohen, Shikun & Binui’s chairman, was dissatisfied with Lapidot’s performance even though he potentially profited immensely from the share runup. Cohen has stock options entitling him to an 11% stake in the company at a 25% discount to their current market price, which adds up to a 180-million-shekel paper profit right now.
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Lapidot has a reputation as a top-flight manager but does less well in interpersonal relations. He reportedly uses blunt language not only with subordinates but with fellow executives and board members. That style is believed to have contributed to Saidoff’s decision to oust him.
Shikun & Binui posted strong first-quarter results, with revenues up 10% from a year earlier to 164 billion shekels, net 52% higher at 113 million and earnings before interest, taxes, depreciation and amortization 76% higher at 311 million.
But Shikun & Binui is an infrastructure development company, where the impact of managerial decisions take time to emerge. The fact that 2019 results were poor, with net profit down 38% and earnings before interest, taxes, depreciation and amortization down more than 4% doesn’t justify dismissing a CEO.