Leumi opposes Israel Corp exec salaries

Bank Leumi is uncomfortable with the executive compensation at the company, even though the bank's two directors on Israel Corp's board joined in the unanimous vote in favor of it.

Bank Leumi (TASE: LUMI), which owns a minority 18% stake in Israel Corporation (TASE: ILCO) is uncomfortable with the executive compensation at the company, even though the bank's two directors on Israel Corp's board (Zeev Nahari and Eitan Raff) joined in the unanimous vote in favor of it.

In line with Amendment 20 of the Companies Law, which requires approval of a public company's executive compensation policy by at least 50% of the minority shareholders, the approval of Bank Leumi, Israel Corp.'s largest minority shareholder, will decide the fate of the policy.

Bank Leumi is itself being sharply criticized by Minister of Finance Yair Lapid over its executive compensation policy. Lapid said that he hoped that the bank's board would not approve the policy, and that the state, which owns 6% of the bank, would vote against the plan.

Israel Corp's other minority shareholders, which include some of Israel's largest investment institutions - Psagot Investment House Ltd., Menorah Mivtachim Holdings Ltd. (TASE: MORA), The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), Ayalon Holding Ltd. (TASE: AYAL), and Amitim Senior Pension Funds - which are expected to vote against Israel Corp's compensation policy in line with the negative recommendation by Entropy Consultants Ltd.

In view of the sweeping opposition to the executive compensation policy, and the sharp criticism against it in the media, Israel Corp. has apparently realized that there is little chance that the general shareholders meeting will approve it in its present format. Israel Corp. has rejected Entropy's recommendation, and has a counter-recommendation in favor of the policy by ISS Proxy Advisory Services of the US.

Last Thursday, a few hours after Israel Corp. published its financial report for the second quarter, it announced that it was postponing the general shareholders meeting, scheduled for Tuesday. In the notice to the TASE, Israel Corp. said that it was postponing the meeting to "complete discussions with the shareholders and/or consultants to investment institutions." In other words, the company's general executive compensation plan, including for CEO Nir Gilad, is about to get reduced.

Published by Globes [online], Israel business news - www.globes-online.com - on September 1, 2013

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

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