"The initiative to restrict executive pay is liable to have the opposite result of increase salaries at public companies," Israel Securities Authority chairman Shmuel Hauser warned today, in response to Minister of Finance Yair Lapid's initiative.
Speaking at a press conference to mark the publication of the Security Authority's annual report, Hauser said that regulators should not cap salaries. "For the good of the public, we should create a link between salary and performance. A uniform cap is problematic, because the Tel Aviv Stock Exchange (TASE) has companies of different sizes."
Hauser added that it is premature to determine the results of Amendment 20 of the Companies Law. "At some companies, we see a drop in salaries, and I think that there is room for optimism. In my opinion, the amendment's main purpose is to link salary to performance. An extremely high salary is a stain on the companies," he said.
The Security Authority's annual report states that the number of public companies entering into debt settlements fell 68% to ten companies in 2013 from 31 companies in 2012. The amount of debt involved in the settlements fell 42% to NIS 5.8 billion in 2013 from NIS 10 billion in 2012.
Public companies made 136 extraordinary transactions (which the Securities Authority defines as a transaction outside a company's usual business, a transaction that is not at market terms, or a transaction that may have a material effect on a company's profitability, assets, or liabilities) in 2013, down from 142 extraordinary transactions in 2012. There were also 22 full offers to purchase in 2013, 30% fewer than in 2012.
Hauser's salary cost was NIS 788,000 in 2013, and will be NIS 840,000 in 2014, according to the Securities Authority's budget.
Published by Globes [online], Israel business news - www.globes-online.com - on April 9, 2014
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