Ministers to Vote on Exec Salary Caps

The Ministerial Committee on Legislation will discuss a bill to limit executive salaries in public companies on Sunday, at which time the proposal should come up for voting. It has already garnered some support, though hardly wall to wall.

The bill would limit the maximum salary of a company CEO to 50 times the pay of the lowest paid worker at the company, unless the firm receives an exemption from the minister of industry, trade and labor. The limit would be implemented by setting the ceiling for recognizing salaries as a business expense for tax purposes at 50 times the lowest wage in the company.

The sponsors of the bill, MKs Shelly Yachimovich (Labor) and Haim Katz (Likud), say it would reduce wage inequality.

It remains far from clear whether the ministerial committee will approve the bill, and even if it does, whether the Knesset will actually pass it.

Similar bills have been submitted three times to previous Knessets, though with lower salary caps, but none even reached a preliminary reading in the Knesset.

Bank of Israel Governor Stanley Fischer said yesterday that there is a serious problem with wage levels in Israel, and the central bank will have to formulate a strategy for dealing with the issue. But Finance Minister Yuval Steinitz recently voiced opposition to government intervention in executive salary levels.

The committee has 19 members, but rarely do all the ministers attend the meetings. So far, three have come out against the law and seven have expressed support. The rest are as yet undecided.

Lobbyists are expected to exert enormous pressure over this issue, and many senior treasury and central bank officials may also express their objections - which, some critics charge, stem from the fact that many such officials are later hired for those very same high-paying executive jobs.