Supervisor of the Capital Markets, Insurance, and Savings at the Ministry of Finance Dorit Salinger spoke today at the 2014 "Globes"-BDO Ziv Haft Capital Market Conference with "Globes" news editor Eli Tsipori about executive salaries in the insurance sector. She also spoke about the high management fees paid by non-unionized employees and the collapse of the Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) sale.
Tsipori began by citing data on insurance company executive salaries, which has now surpassed those of the banks. Over the past five years alone dozens of executives at five companies have raked in NIS 1.1 billion and lately there has been the story of the The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), which has insisted on paying its CEO Eyal Lapidot about NIS 10 million annually after he earned NIS 50 million in his previous term.
Salinger said, "I don't want to relate to this specific case. I'm not the one to reprimand people. But I think that salaries in the financial sector are not commensurate. The government's policy has set up a pensions system worthy of praise and a model to be emulated. People from around the world come to study it. Laws were enacted making it mandatory to set aside pension insurance. At the same time permits were given to a small number of bodies to manage pension funds. So there is demand, there is supply that the government provided according to its considerations and so in my eyes they are public bodies in every sense so they need to have public salaries."
She continued, "the size of the assets has grown today to NIS 1.1 trillion and it will reach NIS 2 trillion by 2020. A lot of money under management and a lot of profit, and the good of the public must be considered. There is great importance to this and I don't see this reflected in the salaries of supervised bodies."
"I think executive salaries in supervised bodies should be subject to corporate governance and shouldn't be seen as the top group in Israel's salary table, and I certainly expect to see them at a more public level and show social responsibility. We set out remuneration policies that the Supervisor of Banks adopted - very clear policies on how to pay executives with changing factors and we expect them to stick to this."
"At the same time," she added, "in the coming weeks, I think even next week, a draft bill will be put out by the Ministry of Finance in which salary expenses above NIS 3.5 million will not be recognized as an expense for tax purposes. I expect directors to take into account public considerations in their considerations about the company."
Published by Globes [online], Israel business news - www.globes-online.com - on June 2, 2014
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