Avi Gabbay has announced that he will step down as CEO of Cellcom (TASE: CEL; OTC: CELJF). Gabbay was appointed in January 2020 after a short political career, in which he led the Labor Party. Gabbay was previously CEO of Bezeq.
It has emerged that the background to the resignation is that brothers Michael and Daniel Salkind brothers and Tzahi Nahmias, the controlling shareholders in Discount Investment, which controls Cellcom, did not like what they saw as Gabbay's excessive independence and the fact that were not as involved in running the company as they expected. The shareholders have apparently not attempted to persuade Gabbay to change his mind.
"Globes" has learned that Gabbay, who knew that the controlling shareholders did not intend to keep their holding in Cellcom for the long term, put together a proposal to buy Cellcom together with a financial institution, but was rebuffed. This seems to have begun the crack in relations between Gabbay and the owners, and it became clear that the relationship could not last long, as Gabbay continued to display independence and to maintain the line he followed since taking up his post, namely that he was the main decision maker at Cellcom.
One thing that is not clear is what will happen to Gabbay's options. Under his employment agreement, he receives a monthly salary of NIS 110,000 and has a package of 4.15 million options worth a total of NIS 12 million. The options will mature in five tranches, and Gabbay can exercise them within three years of the maturity date. He is also entitled to an annual bonus.
In the past few months, particularly since Gabbay completed the agreement for continued network sharing with Xfone, several market sources have said that Gabbay would resign after that after it had become clear that Cellcom had made a turnaround and returned to profitability after three years.
Gabbay's first move at Cellcom after the signing of a new collective agreement with the employees was to buy Golan Telecom, which will be remembered as the deal that saved Cellcom. Thanks to it, the company is now able to meet the repayments of its large debt and to report profits.
During Gabbay's short tenure, Cellcom's share price has risen 34%, and the company's market cap has reached NIS 2.3 billion.
Published by Globes, Israel business news - en.globes.co.il - on November 21, 2021.
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