Big Raises for TASE Officials Approved Without Vote, Objections

As the world struggles with the worst financial crisis in a century, the Tel Aviv Stock Exchange's board of directors convened to deliberate a wage hike for the bourse's officials.

As the world struggles with the worst financial crisis in a century, the Tel Aviv Stock Exchange's board of directors convened to deliberate a wage hike for the bourse's officials. After hearing the reservations of Finance Ministry representative Anat Feuer, the board approved a 6% raise, without even voting.

The lucky officials include CEO Ester Levanon, who will be earning over NIS 100,000 a month; Chairman Saul Bronfeld and senior vice presidents Ronit Harel Ben-Ze'ev, Yossi Treister, Yosi Levi, Hagit Neeman and Yoni Shemesh. The board also approved a bonus for 2007 and perks that will push the annual earnings of the CEO and chairman over the NIS 2 million mark , while the senior vice presidents will each receive around NIS 1.5 million.

No objections were voiced by any of the 16 board members, three of whom did not even attend the meeting. The TASE's board has seven regular members - Eldad Fresher, representing Mizrahi Tefahot Bank, Hanna Pri-Zan, from Bank Hapoalim, Esther Deutsch, from Israel Discount Bank, Zeev Gutman, from First International Bank, Shuky Abramovitz, from Clal Finance Batucha, Daniel Tsiddon (absent), from Bank Leumi, and Arik Steinberg (absent), from Psagot Securities. The board's seven external directors are Barry Topf (absent), from the Bank of Israel, who was absent from the meeting, and Arik Peretz, from Finance Ministry. Yoram Alster, Gil Bianco, Gittit Guberman, Avner Halevy and Shimon Benninga.

"Everyone at the meeting realized this decision would be criticized. We knew it would look bad, but decided not to postpone this matter any longer. This was about salaries for 2007, which was a good year for the bourse, so we approved the raise."

"This was not a big raise," said another board member, "but indicates a lack of sensitivity to the surrounding climate. It is unreasonable that the bourse increase salaries during a period of massive layoffs. It is in poor taste."

Quite strangely, no such sentiments were raised back in September when the board, including Bronfeld and Levanon, approved the near-tripling of the external directors' annual salaries, retroactive to July 2008, giving the five affected board members about NIS 300,000 a year, instead of the NIS 110,000 they had received until now, plus NIS 11,000 per meeting, instead of the previous NIS 6,000.

Labor Knesset member Ophir Pines-Paz lambasted the TASE's decision and last weekend called for the resignation of Bronfeld and the entire board. Pines-Paz said that raising the bourse official's salaries when companies were collapsing and people were losing their savings and investments was contemptible. He opined that the bourse officials should follow the example of the MKs, who have frozen their own wages in light of the economic crisis.

Pines-Paz plans to raise this issue at today's Knesset plenary session, and will demand that Finance Minister Roni Bar-On take steps to have the decision annulled.

"This [raise] should be viewed as a wage supplement for the bourse's management from January 2008, for 2007, that happens to be being published only now, and should be compared to what the rest of the capital market received at the beginning of 2008 for 2007," said the bourse's spokeswoman.

When asked if he would forego this raise, one TASE official said he had not decided yet. "2007 was an excellent year for the bourse," he said. "We worked very hard. It is unreasonable that everyone else - regular employees, for example - received raises for that year, and only the senior executives did not. I have a feeling people are looking for someone to blame for the investors' losses on the bourse."

The TASE netted NIS 73.5 million in 2007 - more than double the figure for 2006. Most of the increased revenues were from trade and clearing commissions, which grew from NIS 112.5 million in 2006 to NIS 150.5 million in 2007. Revenues for 2008 are expected to be lower, as trade volume has shrunk dramatically and there are no new stock issues.

In 2007 the TASE's salary expense for its 188 employees, even before the signing of the wage agreement with the workers, executives and external directors, was NIS 89 million, up from NIS 82 million in 2006, for 173 employees, and NIS 72 million in 2005.

Zvi Zrahiya and Motti Bassok contributed to this article.