Shufersal Ltd. (TASE:SAE) chairman Israel Berman has quit following pressure from Eduardo Elsztain, the controlling shareholder in Discount Investment Corporation Ltd. (TASE:DISI), which until a month ago, was the official controlling shareholder in Shufersal.
Last month, Discount Investment sold 16.56% of the shares in Shufersal for NIS 854 million, reducing its stake to 33.56%, and announced that it was no longer the controlling shareholder.
Discount Investment directors waiting
Following Discount Investment's sale of shares, Shufersal itself announced that it had become a company with no controlling core, thereby ceasing to be a second layer company under the Promotion of Competition and Reduction of Concentration Law. According to Discount Investment's representatives, this change in status requires a comprehensive discussion by the Shufersal board about the company's new situation and how it is to be managed.
Such a discussion was not conducted by Berman for a full month, however. Furthermore, Berman also refrained from convening the company's regular work forum, which included himself, the directors representing Discount Investment, and Shufersal's management. Instead, Berman cut off contact with Discount Investment's representatives; according to associates, he has been to his offices in the Azrieli Towers only once since Discount Investment's sale of shares in Shufersal and then only to return the parking sticker for the Azrieli parking lot that he had previously received from Discount Investment.
Commenting on the involvement of Elsztain and his associate, Sholem Lapidot in decisions taken by Shufersal, Berman told "Globes" in early 2018, "A representative of the owner on the board of directors, Mauricio Wior, is my deputy. Every two weeks, we hold a meeting of the board of director's executive committee - Sholem, Mauricio, and I - in which we discuss all the matters of importance to the company. The executive discusses matters and brings its opinion to the board of directors. Eduardo's involvement is sought in strategic matters - large investments such as the investment in the new logistics center in Shoham, the acquisition of New-Pharm, and so on. It's important to emphasize, however, that it's the board of directors that calls the shots in the end, and we have even been praised by Entropy for our corporate governance."
Since then, however, the atmosphere has changed. Berman's latest severing of contact was not received with understanding by Elsztain and his associates, who saw how their power on the board of directors was declining as a result.
Discount Investment decided to ask Berman to remain on the board as an ordinary director. He objected, leading to the convening of a dismissal meeting, which was planned to leave Berman as an ordinary director until the next shareholders' meeting scheduled for six weeks from now.
Discount Investment counted on Berman
Discount Investment could have waited until the shareholders' meeting to vote against Berman and hamper his reelection, but their great anger at him and dissatisfaction with his functioning led them to try to replace him now with a candidate on their behalf, for example, At the same time, it should be emphasized that it is possible that such an appointment will be temporary until a permanent chairperson is found, for example by setting up an appointment committee.
Berman was appointed chairperson by Discount Investment in February 2016 at the recommendation of Meir Shani, who served as a director in IDB Development (then the parent company of Discount Investment) in 2014-2015. Berman came to Shufersal after 12 years as CEO Europe and later CEO of all the developed countries at the Hay Group international consultation firm. As a senior organizational consultant, he was considered by Discount Investment as capable of leading and overseeing the organizational changes taking place in Shufersal, while Discount Investment's representatives help the company in business and financial matters.
From the beginning of his term until the end of 2017, Berman received his salary as chairperson of Shufersal from Discount Investment for 40% of a position. This situation changed only in early 2018, when Berman began to receive the remuneration to which he was entitled - NIS 87,000 a month in terms of cost, plus VAT - directly from Shufersal.
Published by Globes [online], Israel business news - www.globes-online.com - on July 26, 2018
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