Mizrahi Co-owner Calls for Banking CEO Pay Cuts

Banking executive salaries are bloated, says Mozi Wertheim, co-owner of United Mizrahi Bank, and he admits that he shares in the blame.

Banking executive salaries are bloated, says Mozi Wertheim, co-owner of United Mizrahi Bank, and he admits that he shares in the blame.

In an interview with Hebrew-language monthly "The Marker," Wertheim nonetheless calls for reform. "The compensation package of Mizrahi President and CEO Eli Yones as well as other bank managers is not OK," Wertheim said. "Salary reduction should be coordinated with the executives, and I have no doubt that Yones will cooperate in this process."

Wertheim acknowledged that the Yones deal was one of the more generous - he will earn NIS 192,000 per month, bonuses up to half a million dollars per year, options to acquire 2.5 percent of bank stock, and substantial retirement compensation. His monthly salary would match predecessor Victor Medina's NIS 400,000 should the bank maintain high returns.

Wertheim claims that despite his involvement in agreeing to Yones' package, he concurs with criticism that the salaries are inflated: "If I could enact comprehensive salary reform of senior banking salaries, I would bring it in line with industrial workers. I am not satisfied with NIS 400,000 salaries. Yones is a talented CEO, and I am not sure that he would refuse to participate in a joint and genuine process of banking sector directors to reduce administrative salaries. I stand justly accused. However, if we must choose between two evils - excessive salaries for suitable CEOs or suitable salaries for less successful CEOs - I pick the first. Yones is 100 percent qualified."

Wertheim believes that greed did not drive Yones' salary demands: "What motivated him to take such a contract was comparing himself to other CEOs."

Wertheim added that he pays Yones' incomparably more than he does Coca-Cola Israel managing director Ron Kabrovsky: "The Coca Cola director's salary is nowhere near a bank CEO. Kabrovsky has nothing to complain about because he earns performance based bonuses, but these figures are on a different scale."

Relating for the first time to Medina's departure after nine years at Mizrahi, Wertheim said that he was not fired but rather opted to retire: "At the time I was furious with Victor for wrangling CEO Haim Freilichman of Mizrahi's subsidiary Bank Tefahot. Freilichman is one of the best directors in the sector and he was on the verge of leaving. I told Victor, `You are driving away a first class asset.'"

Regarding the possibility that Coca Cola would go pubic, Wertheim said that he does not rule out the possibility. However, no moves have been made in that direction. He noted that should the company go public, he would take care to implement the process in a manner offering value to investors.

"A high IPO price is like peeing in one's pants," said Wertheim. "At first it is warm and pleasant, but after a while it gets cold and uncomfortable."