Shekel money bills.
(photo credit: REUTERS)
Board members of financial institutions will no longer be able to be compensated with stock options and bonuses, the Finance Ministry decided Wednesday.
"The decision puts and end to the built-in conflict of interest that exists in the the director's position. Creating conditions for a board's efficient and responsible supervision over the functioning of management is a prerequisite for maintaining savers' money," said Finance Minister Moshe Kahlon.
Finance Ministry Supervisor of Capital Markets Dorit Salinger decided that board member compensation should be fixed instead of being linked with the financial performance of the institution. The idea behind the move was to boost the board's independence.
"The provisions will strengthen the corporate governance in financial institutions that manage the public's money, and will contribute to the existence of adequate compensation packages for central players that are consistent with their roles," Salinger said.
The director of the board will have their salary linked to that of an external director, and an outside compensation committee will set the level by choosing a multiplier for the salary, which will be public.
Furthermore, the rules instruct that a financial institution or its controlling shareholder will not be allowed to pay a salary to someone employed based on their role in another corporation, which could have served as a loophole.
The rule also bolstered clawback provisions for bonuses, including situations in which people were responsible for the imposition of fines or sanctions. Such clawbacks will be adjudicated through the supervisor of capital markets.