Maala 2010 Corporate Responsibility Conference 311.
(photo credit: Israel Hadari)
Only 26 percent of the public companies listed on the TA-100 Index have
appointed a committee for the approval process of executive compensation,
according to research published by PricewaterhouseCoopers Israel on
RELATED:US Chamber of Commerce looks to boost business with IsraelPolice raid offices of Tadiran Telecommunications Services
“The global financial crisis has put a renewed emphasis on proper
risk-taking on the one hand, and corporate governance and the importance of the
role of board of directors on the other hand,” Bank of Israel Supervisor of
Banks Rony Hizkiyahu said Sunday at the Maala 2010 Corporate Responsibility
Conference in Tel Aviv.
“One of the most important tasks of the board of
directors is to appoint the most suitable CEO for the strategy of a corporation
and to link compensation policy to the corporation’s strategy and risk policy,”
The PricewaterhouseCoopers Israel survey, which was presented at
the conference, was carried out among 73 public companies listed on the TA-100
Index. It found that most of the firms do not comply with the recommendations of
the Goshen Committee for setting proper corporate governance and standards
adopted in leading Western economies. For example, in the committee’s opinion,
the board of directors’ independence is one of the cardinal principles of good
“One of the yardsticks of quality corporate
governance is the way executive compensation and remuneration is being
determined and approved by corporations,” Heelee Kriesler, head of
PricewaterhouseCoopers Israel’s compensation and governance division, said at
the conference. “The most common practice in the world today is to appoint a
compensation committee in the form of a board of directors, which has the task
of building compensation and remuneration packages for members of the company’s
management and supervises those packages from time to time.”
which was prepared in cooperation with Maala, showed that 39% of the companies
said they had a structured framework for executive compensation packages for
general managers that are linked to performance.
The research revealed
that 71% of the surveyed public companies have not adopted the recommendations
of proper corporate governance regarding the appointment of the number of
external directors sitting on the board of directors.
The average number
of members sitting on a company board of directors was 9.2, similar to what is
accepted in the world, according to the report. The Companies Law requires the
corporate board to include a minimum of two external directorates.
Goshen Committee emphasized the importance of having independent directors
sitting on a company’s board of directors, and even be the majority if the
company has no controlling shareholders, or at least one third of the board
members if the company does have a controlling shareholder.
the survey, 12% of the companies have more external directors than the two that
are legally mandated to sit on their board of directors, and 32% of the firms do
not have a majority of external directors sitting on the audit committee
responsible for the approval process of executive compensation.