Deputy AG: Leumi's exec compensation partly illegal

Avi Licht: The bank's methodology does not allow the shareholders to review the policy pursuant to Amendment 20.

"Some items in Bank Leumi's (TASE: LUMI) executive compensation policy do not comply with Amendment 20 of the Companies Law," states Deputy Attorney General Avi Licht in a legal opinion for Accountant General Michal Abadi-Boiangiu. He concludes that the bank's compensation policy is not just problematic from an ethical and moral standpoint, but is partly illegal.

In the opinion, a copy of which "Globes" obtained, Licht says that he spoke with Bank Leumi legal adviser Dalia Tal, whom he said was "forthright". >PLicht also says that Bank Leumi's variable salary component - bonuses and stock option grants - is problematic, especially retention bonuses and non-competition agreements. He also says that the "special personal bonus", the NIS 1 million bonus for an executive other than the CEO and chairman, is illegal, because it is awarded on the basis of criteria which cannot be measured. Amendment 20 stipulates that bonus criteria must be measurable.

Licht adds that parts of Bank Leumi's compensation policy, do not relate to all officers, as defined by the Companies Law.

Bank Leumi's executive compensation policy has caused a public furor, and Minister of Finance Yair Lapid has openly come out against it, ordering Abadi-Boiangiu to obtain clarifications about the policy from the bank. On Tuesday, the Bank of Israel issued a directive capping bank executives' compensation.

Published by Globes [online], Israel business news - www.globes-online.com - on August 28, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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