Viewpoint / A Very Costly Car

The list of millionaires the Tel Aviv exchange came out with begs an appendix - a list of the ones who didn't benefit from the boom. Three prominent names on that list are Eliezer Fishman, the Dankner family (the non-Nochi part), and the Nimrodis. By coincidence or otherwise, all three are related in one form or other. In business, that is.

Fishman and the Dankners share the cable business. Specifically, the Dankners and Nimrodis are partners in the Matav cable company: The Dankners own the controlling interest together with Yitzhak Tshuva, and the Nimrodi company, Ma'ariv, owns a minority shareholding. Moreover, the Dankners and Nimrodis share control over Ma'ariv, the Nimrodis via Israel Land Development Corporation and the Dankners through Dankner Investment, which holds a 3.5 percent interest.

By coincidence or otherwise, Dankner and Nimrodi met a year ago at the Ma'ariv general assembly of shareholders. The shareholders were asked to vote on employment terms for young Ofer Nimrodi, who sought to serve as a special aide to the board chairman, Jackob Nimrodi, his father. It was Dankner's support that won the day for Ofer.

Ofer Nimrodi won more than the day. As an external advisor (he may not serve on the board because of his criminal conviction), he won a salary costing Ma'ariv NIS 132,000 a month, for a part-time position. His wage consists of NIS 85,000 gross salary - 3 percent of Ma'ariv's profits - and expenses including hosting and phone.

His terms of employment also cover the purchase of a "license group 6" car, the most expensive, for his personal use.

A wage cost of NIS 1.6 million a year for a part-time external advisor raised eyebrows far and wide. Considering that Ofer Nimrodi tarnished Ma'ariv's good name by his conviction, and that his management is not excellent (the company ended the first nine months of 2003 with an NIS 64 million loss, compared with losing NIS 36 million in 2002), his salary seems excessive.

Anyway, after a year, Ma'ariv evidently elected to exercise the shareholders' okay to buy him a car. It bought the most expensive car in Israel, a Mercedes 600 sedan.

The market's opinion of his wage terms and the general behavior of the Ma'ariv-ILDC group is evident in the pattern of their shares on the Tel Aviv Stock Exchange. ILDC stock rose 30 percent from the start of 2003, while Ma'ariv rose 22 percent. The TA-100 index gained 56 percent in that time.

If ILDC and Ma'ariv shares had tracked the index's performance, their aggregate market value would be $50 million greater than it is today.

The Nimrodis hold a 50 percent stake in ILDC, and indirectly, a 30 percent stake in Ma'ariv. If their holdings had also tracked the index, their assets would have increased $20 million in value. Ergo, the family lost potential gains of almost NIS 90 million in 2003 because of their companies' lag behind the index.

Ofer Nimrodi's Mercedes may have cost a list price of NIS 1.2 million. But to the Nimrodis, its real cost is NIS 90 million. That is what the public thinks, in a nutshell, about people who look after their own interests at the expense of the benefit of the other shareholders.

It is interesting that the only ones to lend support to Nimrodi's terms of employment were the very ones involved in one of the most problematic shareholders' deals ever to be devised.