Apple for Avigdor

Batucha backed pay package of parent Clal Insurance's CEO

Apple for teacher is one thing. Approving a fat pay package for the boss, who manages money is made from other people's money, is another thing entirely.

The vote of the fund managers at Clal Finance Batucha, which owns some shares in its own parent company Clal Insurance (TASE: CLIS), in favor of a generous pay package for Avigdor Kaplan, the CEO of Clal Insurance, is interesting.

Clal Finance Batucha owns a small proportion of Clal Insurance's shares, and Clal Insurance is Clal Finance's parent company. In keeping with the rules, its representatives showed up at the general assembly of shareholders that Clal Insurance convened last week.

 The assembly approved a very lavish pay package for Clal Insurance CEO Avigdor Kaplan: it starts with NIS 19.6 million - plus salary and bonuses.

Not everybody agreed: 21.2 percent of the participants voted against the pay package. But Shuky Abramowitz, Clal Finance Batucha CEO, and Adi Guberman, were not among the nay-sayers.

In an odd move that was not free of conflict of interest, Abramowitz voted for Kaplan's pay package: base pay of NIS 130,000 a month, and a bonus that will be the higher of two alternatives: NIS 1.5 million, or an amount between 1 percent and 1.5 percent of net profit, starting from a return on equity of 15 percent.

Kaplan also gets NIS 3 million as a one-time bonus in May 2007, to commemorate his ten years at the company. Clal Insurance will also allocate to Kaplan, free of charge, 600,000 stock options worth NIS 19.6 million.

Why was the Clal Finance Batucha "decidedly odd"? Because if anything - it is not a serial supporter of plush pay packages for managers.

Recently Clal Finance Batucha opposed the pay and bonuses that brothers Dori and Gadi Dankner set up for themselves at their company Elran Investments (TASE: ELIN), after it floated its subsidiary Atlas in London. Batucha also objected to granting them indemnification as Elran officers.

Batucha also objected to the bonus and options that Elbit Medical Imaging decided to lavish on its controlling shareholder, Moti Zisser. It also abstained in the insider transaction between the Ofer Brothers and Zim, which belongs to the Ofers' company The Israel Corporation (TASE: ILCO).

Yet this same investor, Clal Finance Batucha, supported the pay package for Avigdor Kaplan, who runs its own parent company.

This week Clal Finance Batucha completed the acquisition of Ilanot Discount, which abstained in the vote.

Who else supported Kaplan's pay? Mercantile Discount (Discount is trying to cobble together gigantic pay packages for its own top talent); DS and Apex (which are controlled by people who pay well, and who boast gargantuan pay themselves, such as Chaim Katzman and Mozi Wertheim); Tamir Fishman, Gaon, Rothschild, IBI, Harel (another insurance company that knows what a fat pay check looks like), and Models.

The opponents may be people you want to manage your money: Leumi Pia (Mickey Civier), Meitav (Zvi Stepak), Psagot (Ro'i Vermos), Ramco (Rami Rahimi), U-Bank (Yanov Raz), Compass (Doron Tsur), Analyst (Shmuel Lev and Ehud Shiloni), Altshuler-Shaham (Gilad Altshuler), Yashir, and Excellence-Nessuah.

An Ilanot Discount spokesperson commented that the vote had been made by the issues. Clal Finance Batucha said its vote does not affect the decision,  and that Kaplan is a CEO who leads the company forward.