Israeli-Canadian Shopping Mall Developer David Azrieli Tops Executive-compensation List

At NIS 23 million, he returns to the top spot among executives at Tel Aviv-traded companies after briefly slipping in 2011.

The Israeli-Canadian shopping mall developer David Azrieli returned to the No. 1 spot for executive compensation among Israel’s publicly traded companies last year, after being briefly toppled in 2011.

Making NIS 23 million in 2012 as chairman of the Azrieli Group, he significantly bested the second-most-highly compensated executive − Jeffrey Olson, the U.S.-based CEO of property investor Equity One, whose salary and related costs reached NIS 14.3 million last year.

Not far behind was David Aviezer, the president and CEO of the biotechnology company Protalix, whose compensation costs reached NIS 12.2 million.

Azrieli Group, which owns and operates malls across Israel, boosted its net profit last year to just under NIS 1.1 billion. But its chairman’s compensation was high the previous year as well, despite the fact that its net was 40% lower; Azrieli made no less than NIS 21.1 million as chairman in 2011.

Azrieli, age 91, owns 71% of his namesake company. As such, he also received dividends totaling NIS 180 million in 2012, out of NIS 260 million paid out.

Azrieli’s compensation comes not only at the expense of shareholders, but of the consumer who shops at his malls. His dominant position in the sector enables the company to charge what tenants say are excessively high rents. Five years ago, after his company bought the Givatayim Mall, Azrieli Group controlled 40% of the country’s big malls.

By another measure − total non-food turnover − he had a 50% share, according to the market research firm Czamanski Ben Shahar & Co.

Equity One − a part of the Gazit Globe group − compensated its six top executives a total of nearly NIS 50 million. The company, which owns and manages real estate in the United States, Canada and Europe, had excellent results in 2012, overcoming negative market trends.

Protalix unproven

By contrast, Aviezer’s Protalix has yet to prove that its technology for treating genetic disorders, such as Gaucher’s disease and Fabry disease, will meet high expectations. Aviezer is taking his compensation in the form of salary rather than share options. He owns 1.8% of the company.

Raviv Zoller, the CEO of Direct Insurance, occupied the No. 4 spot for top earners among Tel Aviv Stock Exchange-traded companies. He received a salary costing the company NIS 2.4 million last year, but his total compensation package was lifted to NIS 11.6 million as a bonus for his role in selling a stake in Direct Insurances to the Boston-based Battery Venture fund.

In industries in which the competition is minimal, not a few executives found themselves at the top of the compensation tables. For instance, Joel Feldschuh, who was the CEO of Nesher Cement until he stepped down last November, cost his company NIS 7.5 million in compensation in 2012. Nesher controls 90% of the domestic cement market, a fact that contributes to higher construction costs.

Another example is Dov Kotler, CEO of the credit card issuer Isracard, whose salary cost the company NIS 5 million in 2012. The credit card industry has been cited by the antitrust authorities as having too few players.

Compensation is also high in banking, where the top two lenders, Bank Hapoalim and Bank Leumi, control 70% of the industry. Hapoalim alone has five executives among the top 100 highest-compensated executives. Chairman Yair Seroussi and CEO Zion Kenan each cost their employers NIS 8 million last year. Hannah Pri-Zan, a former deputy CEO, cost Hapoalim NIS 6.5 million. At Leumi, four executives are among the top 100.

Going overseas brings more pay

Generous compensation is usually given to Israeli bankers who go abroad for their employers. The assumption is that, when in Switzerland or Britain for example, they must live as well as their peers in finance. Thus the CEOs of Hapoalim and Leumi in Switzerland each have compensation costs that reached NIS 5 million last year. For Leumi’s executive there the cost was equal to that of his boss, the bank’s CEO, Rakefet Russak-Aminoach.

Another CEO who gets compensated well in an industry where competition is less than intense in Pinhas Buchris, who is stepping down as CEO of Oil Refineries Ltd. ‏(Bazan‏). His compensation in 2012 cost NIS 8.2 million, even as the company lost $90 million from its ordinary operations.

Idan Ofer’s holding company, the Israel Corporation − Oil Refineries’ controlling shareholder − also traditionally awards high salaries to its top executives. Israel Chemicals, another of its group companies that holds monopoly rights to extract minerals from the Dead Sea, has paid high salaries to its top managers as well. Akiva Moses, who stepped down as CEO last summer, had compensation costs totaling NIS 10 million last year. Asher Grinbaum, executive vice president and chief operating officer, cost the company ICL NIS 5 million in 2012.

Nir Gilad, Israel Corp.’s CEO, enjoyed compensation costs of NIS 10 million last year − despite problems across its empire, including the electric car refueling company Better Place, Zim Integrated Shipping Services, semiconductor maker TowerJazz and its Chinese auto-making venture. Gilad’s compensation sparked a class action suit against its board of directors.

Meanwhile Israel Corp. chairman Amir Elstein cost the company more than NIS 7 million last year in compensation.

Another top-paid executive at Israel Corp. is Yom-Tov Samia, a reserves general in charge of the group’s energy businesses, whose compensation costs reached NIS 7.4 million in 2012. Samia, who led a unit that was hit by friendly fire in the first Lebanon war, led a highly profitable segment of Israel Corp.’s business last year.