Israeli fertilizer company Israel Chemicals Ltd. (TASE: ICL), a subsidiary of Israel Corporation (TASE: ILCO), has announced a shareholders' meeting in late October for the purpose of approving changes in the company's executive remuneration plan. The proposed plan is an annual one that will apply from 2015.
The plan involves three principal items. The first is a NIS 5 million allocation of options to president and CEO Stefan Borgas and 450 other senior company employees, in addition to the estimated $17.5 million remuneration plan for the company's 11,800 employees.
Borgas's salary cost last year was NIS 20 million: NIS 5.2 million in base salary, a NIS 6 million bonus, and share-based compensation amounting to NIS 8.1 million. In addition to Borgas, the other four leading executives in the company received compensation costing from NIS 6 million to NIS 8 million.
The second item is a special bonus, in addition to the annual bonus. This bonus will be determined according to still undisclosed quantitative and qualitative criteria. Together with the annual bonus, this bonus will amount to six months' salary. The company said that the bonuswas designed to reward officeholders for special achievement not necessarily reflected in the criteria used to determine the annual bonus. In other words, the company is leaving a lot of room for judgment in giving bonuses to its executives.
Another change in policy concerns the composition of the salaries of chairman Nir Gilad and Borgas. At the maximum level, the fixed element (base salary and accompanying benefits) is increasing by 10%, while the variable element (bonuses and options) is decreasing by 10%.
These changes in salary policy require a recommendation by the Entropy, the firm that advises financial institutions on salaries at shareholders' meetings. The preceding revision of salary policy at Israel Chemicals was accompanied by considerable drama, following opposition by Entropy, which claimed that it was difficult to assess the link between the company's performance and the extent of remuneration. Entropy also recommended opposing the bonus and capital remuneration for Borgas. On that occasion, however, the shareholders' meeting eventually approved the change, despite Entropy's opposition.
Published by Globes [online], Israel business news - www.globes-online.com - on August 21, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014