The ministerial legislative committee today approved the recommendations of the Neeman committee on executive salaries at public companies. In addition to the committee's initial proposals from two years ago to strengthen independent directors and corporate governance, the committee has added a third recommendation for setting compensation policies for company officers and a special approval process for approving the salaries of CEOs. The recommendations apply to companies with shares and/or bonds listed on the Tel Aviv Stock Exchange (TASE).
Labor Party chairwoman MK Shelly Yacimovich and Knesset Labor, Welfare and Health Committee chairman MK Haim Katz (Likud) said in response that the committee was an exercise in deception. For the past two years, they have been trying to promote a private member's bill to cap executive salaries at a company to 50 times the salary of the company's lowest paid employee.
In a statement, they said, "We regret that this logical and easy to implement bill, which we submitted two years ago, to cap executives salaries at 50 times the lowest salary, has been stymied for two years by the Neeman committee, which has offered today's pitiful proposal." They announced that they will resubmit their bill, and fight for it.
The Neeman committee proposes that executives' compensation will be set by a special salaries committee appointed by a company's board of directors. This committee will have a majority of external directors and the rest will be independent directors. The salaries committee will submit its recommendations to the board of directors and then to the general shareholders meeting.
Approval of the compensation policy by the general shareholders meeting of a public company will require both a simple majority of shareholders and a majority of minority shareholders who have no personal stake in the decision. In the case of a bonds company, a majority of ordinary shareholders must approve the compensation policy. A special arrangement is proposed for public sub-subsidiaries controlled by a controlling shareholder through at least two public companies or bond companies.
Published by Globes [online], Israel business news - www.globes-online.com - on March 4, 2012
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