The number of directors at each of Israel's banks will be limited to ten, which compares with fifteen currently and thirteen in a previous draft directive from the Bank of Israel. This emerges from the central bank's updated draft directive on improving the effectiveness of bank directors.
Most of Israel's banks currently have thirteen directors on their boards, which means that nearly twenty people currently serving as directors will have to leave the banks over the next three years, which is the period of time the Bank of Israel has allowed for implementation of the directive. The aim of the reduction in director numbers is to facilitate more effective discussions and to raise the level of responsibility of each director.
In addition, the Bank of Israel stipulates that one third of the board of directors of a bank should have banking experience. Currently, the stipulated proportion is one fifth. The aim is to have more professionals on a bank's board who are capable of challenging the bank's CEO and management.
The Bank of Israel further stipulates that at least one director should have experience in information technology, because of the increasing importance to the banks of this field. In addition, bank directors will serve for set terms. Each bank will set its own policy in this respect, but the assumption is that the benchmark will be the rules for the chairman of a bank that does not have a controlling core of shareholders, which set a limit of nine years.
Bank directorships pay well. Compensation, which is made up of a basic salary plus an amount for each board meeting that the director attends, can reach tens of thousands of shekels monthly. Directors' salaries at Israel's five largest banks totaled over NIS 30 million last year.
Published by Globes [online], Israel business news - www.globes-online.com - on June 5, 2017
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