Israel Securities Authority chairman Zohar Goshen is beginning to take action on executive salaries. "The Securities Authority has prepared an initiative to require the submission of compensation packages for the five highest paid executives to the general shareholders meeting, which must pass them by majority vote," he said at the opening of the "Globes" Capital Markets Conference, held in conjunction with BDO Ziv Haft, in Tel Aviv today.
Goshen outlined his concept of executive pay, saying that the issue raised both moral as well as economic questions.
"As for the structure of salary packages, it's necessary to examine a package's mix and create the right blend of dependent and fixed component, so that the package is balanced, and won't create the wrong incentives," Goshen said.
"Failures in the process of setting the salary package structure and its approval sometimes result in salary packages that are not for the good of shareholders and include exorbitant salaries and inefficient incentives."
Goshen believes that in view of the conflict of interests in companies' boards of directors, the salaries of a company's five highest paid executives should be submitted to a general shareholders meeting, after the board approves them.
Published by Globes [online], Israel business news - www.globes-online.com - on May 5, 2010
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