Senior Jurist Blasts Executive Salary Recommendations

Committee scheduled to submit recommendations to cabinet today, stating that government should not intervene in setting wages directly.

"The recommendations of the committee addressing executive salaries are scandalous," said Prof. Uriel Procaccia, one of Israel's leading jurists.

The committee, headed by Justice Minister Yaakov Neeman, is scheduled to submit its recommendations to the cabinet today.

Uriel Procaccia
Eyal Toueg

The panel published its recommendations last week, stating that the government should not intervene in setting wages directly but should merely seek to strengthen corporate governance. The recommendations specifically target so-called pyramid companies, where a large number of subsidiaries are held by a single company and controlled by a small group of people or a single individual.

"Executive salaries doubled between 2003 and 2009, and they were already too high in 2003. The committee had this data," said Procaccia, a professor at the Interdisciplinary Center in Herzliya.

"The committee also heard testimony that there's no connection between executives' salaries and companies' performance," he said. "Yet the committee chose to issue only weak recommendations."

The report has already stirred an outcry, and MK Haim Katz has said he will reintroduce his bill to cap executive salaries. That bill, which he submitted with MK Shelly Yachimovich, had significant support in the Knesset, and it spurred the government to form the Neeman committee in March.

"If a minority [of shareholders] at a pyramid company objects, the wage policy will be overturned," Neeman said over the weekend.

The committee's recommendations are expected to draw support from Likud, Israel Beiteinu and Atzmaut ministers. Shas is expected to vote against.