Bank Leumi (TASE: LUMI) is preparing for the comming into force of the salary cap law. Today, the bank, managed by CEO Rakefet Russak-Aminoach, published its new pay plan, according to which the salaries of chairman David Brodet and CEO Aminoach will fall to NIS 2.5 million each in 2017.
Aminoach's monthly salary will be NIS 195,400, and will be linked to the rise in the lowest salary paid in the bank, in accordance with the maximum salary gap allowed by the new law. Brodet will receive a salary of NIS 168,200, also linked to the lowest pay. Neither the CEO nor the chairman will receive bonuses, and the full NIS 2.5 million compensation will be paid as fixed salary.
For 2016, when the law has not yet come into effect, Brodet is expected to receive a NIS 2.67 million salary; however, the salary might be higher, since Brodet is still eligible for a bonus in respect of at least part of 2016. His compensation for 2017 will already be adjusted to the NIS 2.5 million restriction imposed by the law, NIS 2.33 million of it in salary.
Russak-Aminoach's salary for 2016 will be NIS 3.75 million, not including as yet undetermined bonuses.
The salary cap law limits the salary of the highest paid employees in financial companies to 35 times that of the lowest paid in the company. Moreover, a salary higher than NIS 2.5 million will not be recognized for tax purposes.
Bank Leumi's pay plan also covers the compensation of bank officials and the bonus they will be entitled to. The bonus will comprise up to seven monthly salaries (excluding the chairman and CEO).
The relevant employees will be entitled to a bonus of up to three salaries, contingent on reaching desired capital adequacy and weighted return on equity levels. The weighted return on equity is composed of return on equity in the past three years and totals 6-11%. A weighted return on equity of less than 6% willl not entitle employees to a bonus, but the chances that the return on equity will be so low in three consecutive years are not high. The potential bonus on the basis of this criterion will be 1-2.1 salaries.
Another criterion for bonuses will be the return on the bank's share in comparison with the bank share index. A share return which is higher by even 1% will result in entitlement to a further 0.9 salary bonus.
Moreover, the bank's board of directors will be able to decide on a bonus of up to one additional salary at its own discretion. This is described as a bonus for special events, such as the completion of a project or a large deal.
Published by Globes [online], Israel business news - www.globes-online.com - on September 26, 2016
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