The affair of the dismissal of Israel Discount Bank (TASE: DSCT) chairman Shlomo Zohar is over. Zohar and members of the Bronfman family have reached an agreement under which the chairman will step down at the beginning of January and will receive extra compensation amounting to $1 million, to be paid by the Bronfman family and not the bank. After a long negotiating session last night, the two sides agreed that Zohar would step down as chairman within a few weeks.
Altogether, Zohar's severance package will be worth NIS 11.2-13.6 million. He will be replaced by Joseph (Yossi) Bachar, formerly director general of the Ministry of Finance.
A source close to the Bronfman family said that he was satisfied by the compromise which was "honorable for both sides".
Banking industry sources expressed admiration for the "elegant and honorable" way that Zohar ended the affair. He had managed to muster a majority on the Discount Bank board against his dismissal, so that the Bronfman family would have had to dismiss him through a shareholders' meeting, a long process that would have caused damage to the bank. His voluntary exit puts an end to the affair for all parties.
On January 1, Zohar will step down from all his positions at the Discount Bank group: chairman of Israel Discount Bank and a director of the bank; chairman of Israel Credit Cards-Cal Ltd., and chairman of Mercantile Discount Bank. The Bronfman group will hire Zohar as a consultant for two years. A group spokesperson said that Zohar will "provide business and financial consulting services in Israel to companies in the Bronfman group." His salary in that capacity will be NIS 160,000 monthly.
The controlling shareholders in Israel Discount Bank, the Bronfman-Schron consortium, said in a statement, "The replacement of the chairman of the board at Discount Bank is being carried out because of internal structural changes in the group. Under Zohar's leadership, the bank negotiated the global economic crisis with great success, and the Bronfman-Schron consortium thanks him for that." Zohar insisted on this statement since in the past couple of weeks it had been hinted by more than one source close to the controlling shareholders that they were dissatisfied with the bank's performance.
Published by Globes [online], Israel business news - www.globes-online.com - on November 11, 2009
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