Channel 2 News reported on Sunday that Minister of Finance Yair Lapid opposes the executive compensation policy of Bank Leumi (TASE: LUMI), run by CEO Rakefet Russak-Aminoach. Investment institutions are expected to approve the bank's executive compensation policy, but the state has a stake in the bank. Lapid says, "Such bonuses are unacceptable during a time of austerity."
Lapid hopes that Bank Leumi's board of directors will not approve the executive compensation policy, but if it approves the policy, the state will apparently vote against it. In a post on his Facebook page, Lapid wrote, "On September 12, Bank Leumi will convene a special general shareholders meeting. According to the agenda, the shareholders will be asked to approve salary terms and bonuses totaling tens of millions of shekels for 15 executives, including the CEO and chairman. In ordinary times, I strongly oppose all attempts to persecute the business community. Without a successful and profitable private sector, Israel would have no jobs and no growth. On the other hand, this is too much. At a time when most Israelis cannot make ends meet, bank executives (and not just at Bank Leumi) cannot behave as if the party is still going on.
"Since the State of Israel owns 6% of Bank Leumi, I have ordered the Ministry of Finance Accountant General to make our objections clear to the bank's management. If that does not help, we will vote against the compensation plan, and I assume that the Bank of Israel will also have something to say on the matter. I greatly hope that in the time remaining until the general meeting, they will understand at Bank Leumi that they must rethink this matter."
On Sunday evening, Bank Leumi said, "The principle guiding the bank's board of directors is that the salary policy should reflect the average salary in the banking system. That is how it has been in the past, and how it will be in the future. We are confident that the shareholders will take this into account when they vote."
Published by Globes [online], Israel business news - www.globes-online.com - on August 26, 2013
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