Signs of an economic slowdown and the less than encouraging economic indicators in the domestic market in 2014, combined with increasing regulation of compensation for executives at Tel Aviv Stock Exchange (TASE)-listed companies, could help explain the slight drop in their salaries last year. At the same time, the level of compensation for executives at leading Israeli companies remained extremely high. In many cases, it is difficult to find any connection between executives' salaries and the performance of the companies they lead.
Figures from the BDO Ziv Haft consultant firm, which examined the salary of 350 senior officeholders at companies listed on the Tel Aviv 100 Index, show that the average compensation of an executive in 2014 was NIS 3.2 million, down 4% compared with 2013, and almost 30% compared with NIS 4.5 million in the peak salary year of 2010. The aggregate compensation of the 350 executives in the survey totaled NIS 1.12 billion. NIS 600 million of this, more than half, was in the form of salary and management fees, NIS 270 million consisted of bonuses, and NIS 170 million was in share-based compensation.
BDO Ziv Haft said, "The average variable elements (bonuses and share-related payments) were lower in 2014 than in 2013 in comparison with the other element, which includes salary-related terms." It also emerged that at companies with over 100 employees, the salary cost of the highest-paid officeholder was 40 times the average salary cost per employee, compared with 43 times in 2013. The salary of the highest-paid person in those companies was 95 times the minimum wage, compared with a ratio of 110 in 2013. BDO Ziv Haft explains that this decline "corresponds to the fact that the variable component is more significant at the highest levels, and the variable component fell in tandem with the companies' performances and the effect of regulation and public criticism."
Published by Globes [online], Israel business news - www.globes-online.com - on April 2, 2015
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