Bill to curb financial executive pay in Israel advances [Jerusalem Post (Israel)]
(Jerusalem Post (Israel) Via Acquire Media NewsEdge)
The Ministerial Committee on Legislation on Sunday approved a bill to curb high levels of executive pay in financial institutions, stipulating that payment above the threshold of NIS 3.5 million (about $1 million) will not be tax deductible.
"This law will curb executive pay in financial bodies and of public fund managers," Finance Minister Yair Lapid said. "The law is an important stage in the path we are leading to reduce the wage gaps in the economy."
Lapid specifically called out Eyal Lapidot, the CEO of Phoenix, for his NIS 10 million compensation. "This is not capitalism and not a free market, but simple unbridled greed," Lapid said.
Financial will be required to report all salaries in excess of NIS 3.5 million, but there will be exceptions. In public companies, a special majority of minority shareholders will be able to approve higher salaries, while in private companies, a majority of outside or independent directors will be able to up the pay.
Meretz Chairwoman Zehava Gal-On said that the bill was a step in the right direction, but did not go far enough, and had too many loopholes, such as excluding bonuses.
The limit was "ineffective because it is an amount that is too high, which lets half of high earners in the financial institutions evade the limitation and continue getting exorbitant salaries at the expense of the public."
She suggested expanding the rule to all publicly traded companies, and setting the limit for benefits on executive pay at 15 times the minimum wage.
When Lapid first unveiled the policy in April, Israel Securities Authority Chairman Shmuel Hauser cast doubts onto its effectiveness, arguing that drawing a line in the sand at NIS 3.5 million would actually encourage those making less to demand salary increases.
The Bank of Israel's Supervisor of Banks David Zaken, on the other hand, said the policy would help shape norms for the better going forward.
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