Despite years of legislation aimed at reining in executive salaries, they continued rising in 2016, a survey by the accounting and consulting firm Deloitte has found.
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The average cost of salaries for the top five executives at companies traded on the Tel Aviv Stock Exchange climbed 14 percent last year to 1.76 million shekels ($480,000) annually according to the survey, which was released this week. The cost rose by 47 percent compared with 2014. At least part of last year’s increase could be attributed to improved results and rising share prices on the TASE.
CEOs of the companies that make up the stock exchange’s TA-125 index averaged a salary of 4.56 million shekels last year.
To put it in perspective, the average pay of a TA-125 CEO was 80 times the minimum wage in 2016, which was 4,825 shekels a month, or almost 58,000 a year. It was 39 times the average annual wage nationwide, which is 120,000 shekels.
The salaries for the top five CEOs were actually slightly down from the 2015 average of 4.6 million shekels, although this occurred because the Deloitte survey adjusted its count to add 25 smaller companies after the TA-100 became the TA-125 in February. On the other hand, salaries were up from an average of 4.4 million shekels in 2014.
For the same reason, salary costs for TA-125 chairpersons were on average 3.1 million shekels in 2016, down from 4.4 million in 2015 and 4.8 million in 2014.
The higher executive pay comes despite efforts to discourage it going back to 2008, first by requiring compensation figures to be released to the public and four years later by requiring a shareholders’ vote to approve compensation packages. In 2016, the Knesset put a cap of 2.5 million shekels, or 35 times the salary of the lowest paid employee, on pay for CEOs in the financial services sector.
In 2016, before the wage cap law took effect in October, the highest-paying sector for a CEO was still financial services according to the Deloitte figures. The average cost of compensation was 4.4 million shekels in 2016, albeit down from 4.9 million the year before. In insurance, it was 3.7 million, down from 4.1 million. The top five banking executives averaged 3.1 million shekels last year.
“Pay in the financial services sector is perhaps lower than in the past, but it’s still far away from the 2.5 million set by lawmakers, even though the law has gone into effect," explained Irena Ben Yakar, a Deloitte Israel partner. "The reason for this was the exceptions made during the transition period, before the law went fully into effect.”
Women executives in publicly traded companies on the TASE made 55 percent less than men on average last year – 1.78 million shekels versus 1.1 million annually. However, the gap disappeared the higher women climbed the corporate ladder: For CFOs, the gap was 29 percent, for CEOs, pay was virtually the same and chairwomen earned 10 percent more on average than chairmen, Deloitte found.