Panel proposes executive pay limits

The proposal includes guidelines for boards of directors and participants in general shareholder meetings of companies.

By ADRIAN FILUT
November 11, 2010 11:30
1 minute read.

 
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The executive salaries committee chaired by Justice Minister Yaakov Ne’eman has agreed on the formulation of a draft bill to place limitations on executive salaries.

The proposal includes guidelines for boards of directors and participants in general shareholder meetings of companies.

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Some of the proposed guidelines will be mandatory and others will be voluntary. The mandatory guidelines include requiring companies to cap variable components of executives salaries so that “unreasonable salary is not created.”

The mandatory proposals also require companies to cap the ratio between executive compensation and the salaries of other employees, including the average salary at the company.

The ratio was not explicitly spelled out, but will have to be set by the companies.

The Ne’eman committee adopted some of the proposals of MK Shelly Yacimovich (Labor) and MK Haim Katz (Likud), who sought to link executive salaries to the salaries of low-level employees at a company, so that any pay hike for executives would automatically trickle down to other employees.

Sources inform Globes that the Ne’eman committee’s conclusions were received broad consensus, with only National Economics Council chairman Eugene Kandel objecting to the mandatory clauses of the bill.

The draft bill will now be sent through the regular legislative process. Both the Justice Ministry and the Israel Securities Authority accept the proposals.

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