Israel’s insurance companies buckled under pressure from the treasury to reduce the compensation of their top executives, but many of them stopped short of meeting the proposed ceiling of 3.5 million shekels ($1.02 million) a year.
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The last of the insurers reported on Tuesday how they were adjusting their compensation policies in time for the July 1 deadline set by Dorit Salingar, the commissioner for capital markets, insurance and savings.
Migdal Insurance said it would observe the 3.5 million-shekel limit and, to reduce top executive’s willingness to take on excessive risk, limit the performance-based component of compensation.
Migdal said the CEO of its holding company, Anat Levine, would get a base salary of 170,000 shekels a month, or 2.4 million shekels a year, its chairman would get 160,00 a month and senior executives would get no more than 70,000 shekels a month.
On top of that, they could receive performance-based pay equal to as much as 66.6 percent of their base salary in some cases, which would bring their total package to just under the treasury ceiling. Levine had been due to receive as much as 8 million shekels this year.
Clal Insurance set top base pay at 195,000 shekels a month for CEO Izzy Cohen, 155,000 for Chairman Danny Naveh, 96,000 for deputy CEOs and 72,000 for other senior executives. Bonuses will not be allowed to exceed three months' salary, the company said. Cohen’s 2013 compensation was 18.1 million shekels.
At Harel Insurance, the company said that the approximately 9.3 million-shekel compensation packages for each of its co-CEOs, Michel Siboni and Shimon Elkabetz, would remain in force until July 2015 or a proposed on compensation caps goes into effect.
Insurance companies and institutional investors have come under fire for excessive compensation, prompting Salingar to issue her directive and Finance Minister Yair Lapid to propose legislation that would bar financial service companies from deducting the cost of compensation in excess of 4.5 million shekels from their taxable income.
“I’m not the one to reprimand people. But I think that salaries in the financial sector are not commensurate,” Salingar told a conference sponsored by the Globes financial daily last month. “Executive salaries in supervised bodies should be subject to corporate governance and shouldn’t be seen as the top group in Israel’s salary table.”
Finance Ministry officials said they were on the whole satisfied with the insurers’ plans, even if they all didn’t meet the exact guidelines.
Menorah Insurance said the top salary would be 195,000 shekels a month, or 2.3 million shekels annually, for CEO Ori Kelman and Chairman Gedalia Doron. Performance-based compensation won’t exceed 50% of their base pay, it said.
Menorah said that while it was adjusting its compensation package to meet Salingar’s guidelines, it was also acting to ensure that the reductions would not come at the expense of the company, its long-term strategy or management flexibility.
Two weeks before the deadline, Direct Insurance announced that the compensation package for its CEO, Raviv Zoller would be exactly 3.5 million shekels a year, down from an approximately 12 million-shekel package approved by the board two months earlier.
But Direct Insurance said the new ceiling was conditional on the Knesset approving the compensation-cap law. The legislation was approved by the ministerial legislative committee on Sunday and now goes to the Knesset.
Earlier in the week Phoenix, a unit of Yitzhak Tshuva’s Delek Group, said CEO Eyal Lapidot would take a 50% pay cut but nevertheless would be getting 5.2 million shekels annually.