If anyone thought that the coronavirus pandemic and its negative effects on the economy would lead to a decline in the compensation cost of senior managers of companies on the Tel Aviv Stock Exchange, the financial statements released in the past few weeks for 2020 show otherwise. The trend in the cost of employing the highest-paid managers in public companies is one-way - upwards.
One of the main reasons for this is a far greater element of stock-based compensation than in the past, much of which was paid to senior managers of newly listed companies.
Furthermore, most of the high earners are at large, well-established companies that even last year reported growth in their businesses, and their share prices rose despite the challenges of the pandemic. Technology companies such as Nice Systems, Elbit Systems, Hilan and Matrix are examples, as are real estate and infrastructure companies such as Electra, the Mivne group, Shikun & Binui, and Ashtrom.
Some of the highest paid executives are, however, in companies that failed to deliver the goods last year but still rewarded their top management as usual. Examples are real estate company Gazit Globe, the mobile telecommunications companies, and cannabis companies.
Unlike in previous years, the executives who pulled the pay figures upwards last year were from Israeli companies and not dual-listed companies. There are some new names at the top, some of them not well known to investors until now, and some still obscure.
The new faces stormed to the upper reaches of the pay table following IPOs by their companies that promised them especially fat compensation packages, mainly consisting of stock-based compensation, even before stock market investors could benefit from the performance of their companies.
This group is headed by three executives from green energy company Nofar Energy, who thanks to the award of extremely indulgent stock-based compensation packages before the IPO broke records for executive pay in Tel Aviv, with aggregate compensation of NIS 290 million, NIS 230 million of which was in shares.
The aggregate cost of employing the 100 highest paid executives in Tel Aviv Stock Exchange listed companies rose 16% in 2020. This does not include Teva, and is after discounting Nice Systems, whose figures did not appear in the 2019 numbers because they were published late.
Excluding the employment cost of the senior managers of these two companies, who are always in the top part of the table, the aggregate compensation of the 100 highest paid executives in 2020 was NIS 1.04 billion, which compares with NIS 900 billion in 2019.
The aggregate compensation cost of the 100 highest paid executives in 2020 including those of Nice Systems was NIS 1.1 billion. Three senior managers at Nofar Energy - CEO Nadav Tene, CFO Noam Fisher, and VP business development Shahar Gershon - account for about a quarter of this sum (NIS 268 million).
The aggregate employment cost of the ten highest paid executives was NIS 464 million, or more than NIS 46 million each, nearly NIS 4 million a month.
The only overseas manager among the top ten is Perrigo CEO Murray Kessler. Israelis in the top ten in 2019 who remained there in 2020 are Nice Systems CEO Barak Eilam, former Shikun & Binui CEP Eyal Lapidot, Summit Real Estate chairperson Zohar Levy, and Mivne CEO David Zvida. Electra CEO Itamar Deutscher has kept his place in the top ten since 2017.
Of the top 100 earners, 31 are from the real estate industry. The industry accounts for 4 of the top ten.
Just two women make the top 100 earners list. The representation of women in the list has been in the single figures for years, but 2020 saw a new low. Only one of the two is Israeli: Ofra Strauss, chairperson of food company Strauss Group. Ahead of her is Beth Gaspich, CFO of Nice Systems, who, with compensation worth over NIS 10 million, is among the 25 highest earners for 2020.
Published by Globes, Israel business news - en.globes.co.il - on April 11, 2021
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