Israel Chemicals Ltd. (TASE: ICL) today slammed Entropy Consultants Ltd. over its objections to the company's executive compensation policy. Israel Chemicals says that Entropy's objections show a "lack of understanding" and accuses the firm of "superficiality."
"Your recommendation to oppose approval of Israel Chemicals' executive compensation policy is due to a lack of understanding of the facts of the policy, the principles of the policy, and the extent to which they meet the needs of a global industrial company like Israel Chemicals," the company wrote to Entropy. "The review of the policy that you carried out was very brief and superficial, and we regret that you did not find it proper to recognize the differences between different kinds of companies or the different world views of boards of directors which consider compensation policies as part of a company's strategic business plan and risk management policy."
Entropy, which advises Israeli investment institutions, recommends opposing Israel Chemicals' executive compensation policy. The plan includes a basic salary (before bonuses and options) of $1.24 million for CEO Stefan Borgas, and $794,000 for other officers.
Israel Chemicals writes, "Your review is full of factual errors and has many inaccuracies… For example, as was made clear to you in writing and orally, belying what you state in your review, Israel Chemicals' compensation policy does not set a basic salary of $1.2 million for the company CEO or a basic salary of $749,000 for other company officers.
"The compensation policy states that the basic salary of officers will be examined in comparison with comparable foreign companies, and will not exceed the 75th percentile of the benchmark (which is the amount stated in the plan). In practice, the basic salary of Israel Chemicals' officers is significantly lower than these amounts (as are fully capable of ascertaining since these are public data)."
As for Entropy's claim that it is difficult to assess the strength of the connection between Israel Chemicals' performance and the amount of the compensation because the company does not mention the correlation between its performance and that of the foreign companies, Israel Chemicals says, "The argument is irrelevant, and is indicative of the fundamental misunderstanding of the basic salary component and the factors that should be taken into account in deciding it."
Israel Chemicals also points out that Glass Lewis and ISS Proxy Advisory Services gave opinions in favor of approving the executive compensation policy.
Published by Globes [online], Israel business news - www.globes-online.com - on August 19, 2013
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