Bank Hapoalim chair's salary to jump to NIS 2.94 million a year

Yair Avidan stipulated that a bank's chairman's salary shouldn’t exceed the average salary of the directors plus a certain percentage.

 The logo of Bank Hapoalim, Israel's biggest bank, is seen at their main branch in Tel Aviv (photo credit: BANK HAPOALIM)
The logo of Bank Hapoalim, Israel's biggest bank, is seen at their main branch in Tel Aviv
(photo credit: BANK HAPOALIM)

Limitations imposed by the supervisor of banks Yair Avidan on the salary of the chairmen of the board of directors in banks without central control created the opposite effect of what was intended. 

The guidelines stipulate that the chairman's salary shouldn’t exceed the average salary of the directors plus a certain percentage according to the actual work of the chairman. 

In addition, it was determined that the chairman won’t be entitled to a six-month grant for early retirement notice.

The 2022 salary of Reuven Krupik, the chairman of the board of directors of Bank Hapoalim was set at NIS 2.4 million per year, but following the decision of the audit committee and the board of directors to adopt the supervisor's decision, his salary has been retroactively updated by NIS 540,000, and it will be NIS 2.94 million per year starting this year until the end of his term in October 2025. 

This will be subject to the approval of the general meeting of the bank's shareholders which will be convened on August 11.

 Israeli money bills. (credit: PIXABAY) Israeli money bills. (credit: PIXABAY)

Interesting accounting question

At the board meeting, an interesting question regarding the accounting firms for Hapoalim will be discussed.  

Shareholders, consisting mainly of Israeli institutional entities as well as foreign investors, will be forced to decide on the issue, with the bank's board of directors recommending that Somekh Chaikin KPMG and BDO Ziv Haft remain as the bank’s accountants.

The recommendation to re-designate Somech Chaikin was accepted even though the firm is the accounting office of most of the banking system: Leumi, Discount and International.

Two of the largest firms in Israel competed for the position of accountants in the country's largest bank where the three biggest are Kost, Forer, Gabbay & Kasierer (Ernst & Young), Kesselman and Kesselman PWC and Deloitte Brightman Almagor Zohar (which serves as Bank Mizrahi Tefahot's accounting firm). Despite the great reputation of each of these offices, they were left out of the picture.

The audit committee rejected the position of one of the board members, who claimed that it was necessary to hire new accountants, and he remained in a minority position. 

The director claimed that replacing one office would pave the way in the future for the possibility that the bank wouldn’t have to be satisfied with the audit of only one office, but as mentioned his position wasn’t accepted.

The committee preferred to accept, among other things, the recommendation of CEO Dov Kotler, and determined that the advantage of appointing new accountants is of limited importance and that the new candidates don’t have a distinct advantage over the current accounting firms.

At the same time, the Bank Hapoalim board of directors backed up the bank's auditors and released them from responsibility regarding the bank's involvement in a US tax evasion case. The board determined that no negligence or violation of the duty of care was proven, and therefore the bank rejected the claims against them in this lawsuit.