Israel Discount Bank (TASE: DSCT) Chairman Yossi Bachar is waiving a NIS 1.5 million bonus. Sources inform "Globes" that Bachar has sent the bank's remuneration committee a letter explaining that he has decided to forego the bonus. He attributed his decision to emerging changes in remuneration in the financial system and the challenges Discount Bank is expected to face in the near future.
Bachar's bonus aroused considerable controversy as soon as it was learned that Entropy, a consultant company for investment institutions, planned to oppose the distribution of a NIS 2.16 million bonus. Entropy decided to oppose the bonus because the bank had not fully achieved its targets for 2013. Following Entropy's decision, Discount Bank held talks with it and the investment institutions, and the parties agreed that the bonus would be set at NIS 1.5 million.
Because of Discount Bank's poor performance in comparison with the banking sector average, however, featuring the banking system's worst efficiency ratio, the bonus still drew criticism. Despite Entropy's recommendation to vote in favor of the bonus, it was by no means certain that the bank's shareholders' meeting would have approved the bonus, due to anxiety about the response from the Ministry of Finance and the public to approval of the bonus.
Bachar took note of this criticism and Minister of Finance Yair Lapid's determination to lower executive salaries in the banking system. Discount Bank is slated to publish a new streamlining plan at the end of the next month. Bachar realized that it was best to waive the bonus in these circumstances, and today notified the committee of his final decision in the matter.
Published by Globes [online], Israel business news - www.globes-online.com - on June 24, 2014
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