Taking Stock / For We Are Jolly Good Fellows

It might seem bizarre at first glance.

Mozi Wertheim, whose business interests encompass United Mizrahi Bank, Coca Cola Israel, Keshet television broadcasting company, in short, one of Israel's leading tycoons, told TheMarker Magazine this month that bankers earn too much. That their salaries are bloated and disproportional to the banks' actual performance, and that the whole vicious circle was created by their envious peeks at each others' paychecks.

And we'd thought that none of the bank owners had an interest in breaking silence over those elephantine salaries. Why should one of the fat cats suddenly whip the mask off the bluff? Why should he admit that at the banks, salaries and performance are hopelessly unrelated? That it's all just a contest to see who has the biggest?

Wonder not. Stop rubbing your eyes with disbelief. Mozi Wertheim has a few thousand reasons, a few million reasons really, to set off a public debate over bankers' pay. Every shekel they take home is another reason in his books.

This bird's in the hand

Know ye this: that not all Israel's tycoons were cut from the same cloth. In fact, they were cut from at least two bolts.

The first group consists of people like Wertheim. They hold large equity chunks of the companies they control and are highly sensitive to the profitability of their businesses and their return on equity.

They hate the tremendous salaries the CEOs are getting, because when the alpha dog is getting overpaid, so are his deputy dogs, and in fact the fat-cat culture infects the entire zoo. The more the workers get, the less the owner does.

This group of tycoons hates the inflated salaries at the banks, because they spur bloat at other big companies. The infection spreads outward.

The second group consists of people like the Dankners, both the ones at Bank Hapoalim and the ones at IDB Holding Corporation. They hold shares in the companies, but not many.

The Dankners and Wertheims generally get cobbled together by the press under the heading "tycoons", but their interests diverge. Unlike Mozi, the Dankners made salaries. Big ones. They live on the money they get paid by Bank Hapoalim and IDB.

So they have no problem with the norms of inflated wages. One day they might make money from selling their shares, but that's a bird in the bush, deep in the bush, and it could flop over and die if the businesses falter. But the money they get through their enormous salaries is a golden goose in the hand.

Trickle, trickle

There's a third group, of course, comprised of people like Galia Maor, Eitan Raff, Arie Mientkavich and Giora Offer. The companies they run have no real owner, if we leave the general public out of it. They didn't create the norm of salary bloat, but they hasten to justify it - "That's the accepted procedure".

And then there are the bureaucrats at the Finance Ministry and Bank of Israel, who have the ability to influence salaries at the banks and at all the companies affiliated in some way or other with the government.

But their interest lies in the other direction. What they really have in mind, at the end of the day, isn't their current job, it's the next one. At a bank, an insurance company or just some government company. Then it will be their turn to compensate themselves for all those years spent serving the public.

We cannot wrap this up without mentioning the rubber stamps - the directors at the banks and at the big companies who approve the salaries. They are generally pleased as punch to okay the massive outlay, golden parachutes and bonuses.

After all, what were they made directors for? Exactly for that! They give the managers their sweet salaries et cetera, and in turn, the managers will return the favor through jobs, projects and various indirect benefits, if not today then tomorrow, or a few years down the line.

After all, at the end of the day, they're just one big jolly family, whose members highly appreciate one another. Only one thing gives them pause - now how could it possibly be that characters like Mozi, or the general public, seem unable to grasp the value of their contribution.