The board of directors of real estate company Israel Land Development (TASE: ILDC) has decided to circumvent the decision of the company’s shareholders meeting and to raise the salary of its CEO and controlling shareholder Ofer Nimrodi. The board invoked the overruling clause in the Companies Law and approved a new compensation policy that could lift Nimrodi’s pay to as much as NIS 8 million annually. Nimrodi originally requested NIS 14 million. This comes against a background of a 50% drop in Israel Land Development’s share price in the past year.
At the beginning of last month, a special shareholders meeting was held to discuss Nimrodi’s pay, but since no agreement was reached between the company and the public shareholders, a further meeting was convened last week.
Two financial institutions with substantial stakes in Israel Land Development are insurance companies Menorah Mivtachim and Harel, and as far as is known negotiations with them and with other institutions, and with the consultants advising them, did not result in agreement.
In order to obtain approval for the new compensation policy, Israel Land Development required a majority in favor among the minority shareholders with no interest in the proposal, but at last week’s meeting 75% of these shareholders opposed it.
The company’s board held a further discussion of the matter and decided unilaterally to approve a smaller compensation package than Nimrodi had requested: a monthly salary of NIS 300,000 (instead of the NIS 310,000 Nimrodi asked for); a maximum bonus of NIS 4 million (instead of NIS 5 million); no special bonus (Nimrodi requested NIS 1.25 million); and stock-based compensation of up to NIS 400,000 (instead of NIS 3.4 million).
Nimrodi’s maximum annual compensation will thus be NIS 8 million, but this is still more than the NIS 6.43 million he received last year, which mainly consisted of NIS 3.19 million in management fees and a bonus of NIS 3 million.
Sources inform "Globes" that some of the compensation elements that the board eventually decided upon had to some extent been agreed by those who opposed the package. In its statement on the decision, Israel Land Development stressed the importance of dialogue with its shareholders and their support for its actions, but said, "The Companies Law allows the compensation committee and the board of directors the possibility of approving the compensation policy for company officers despite the opposition of the shareholders meeting."
Published by Globes, Israel business news - en.globes.co.il - on June 5, 2023.
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