On Tuesday, the Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) general shareholders meeting approved the company's executive compensation policy for 2013, in line with Amendment 20 of the Companies Law (on executive salaries), which stipulates that a majority of the minority shareholders at a general meeting must approve a company’s compensation policy.
Teva president and CEO Dr. Jeremy Levin will be eligible for a basic annual salary of $1.5 million and an annual bonus of up to $3 million. 85% of the bonus will be based on meeting the company's targets, and 15% will be based on an assessment of his performance. The general meeting also approved Levin's annual bonus for 2012 of $1.2 million.
In addition to the annual salary and bonus, last year Levin received a grant of options for 450,000 shares at a strike price of $46, 17% above today's share price. The grant was awarded to him when he joined the company. He was also awarded 115,000 vested shares, which will mature in three equal tranches from the second year of their being awarded; a sign-up bonus of $1 million; a refund of his expenses for moving to Israel; and other benefits.
Teva, like other companies in which foreign investment institutions are invested, secured recommendations from leading consultancy firms Glass Lewis and ISS Proxy Advisory Services, which advised voting in favor of the company's compensation policy. Teva also secured a positive recommendation from Entropy Consultants Ltd., which advises Israeli institutions.
A calm general meeting
Teva's general meeting was calm this time, in contrast to the charged meeting last year, before Amendment 20 came into effect. At last year's meeting, the shareholders discussed a pay hike for chairman Dr. Phillip Frost and other directors; scores of shareholders strongly opposed it and voted against.
Teva has published its executives' salaries as part of its new policy to disclose executive compensation data starting from the annual financial report for 2013. The change in policy was in response to a class-action suit filed against the company. However, "Globes" recently reported that the Israel Securities Authority decided to ease up on dual-listed companies, and will not require them to publish the salaries of their executives in their annual financial reports.
Israeli public companies publish their compensation policies in accordance with the requirements of Amendment 20 of the Companies Law. Under the amendment, all public companies, including dual-listed companies and private companies with bonds traded on the TASE, are required to obtain approval of the general meeting, by a majority of minority shareholders, by September 2013.
Some of these companies recently obtained a postponement, but companies on the Tel Aviv 100 Index must still obtain approval of the general meeting by September 12. Over the next two weeks, we will see the convening of many more general meetings to discuss compensation.
Published by Globes [online], Israel business news - www.globes-online.com - on August 28, 2013
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