Lapid did not consult ISA chief on executive pay

Lapid unveiled a proposal last week to limit executive pay at financial institutions and institutions that manage public money.

Yesh Atid leader Yair Lapid 370 (photo credit: Efrat Sa'ar)
Yesh Atid leader Yair Lapid 370
(photo credit: Efrat Sa'ar)
Finance Minister Yair Lapid did not consult Israel Securities Authority Chairman Shmuel Hauser on plans to limit executive pay, Hauser said Wednesday.
A week earlier, Lapid unveiled his proposal to limit executive pay at financial institutions and institutions that manage public money, many of which fall under Hauser’s regulatory authority. Lapid’s plan was to limit tax benefits on executive salaries to the first NIS 3.5 million.
Speaking to reporters on Wednesday, Hauser said he believed something needed to be done about excessive executive compensation, but cast doubt on Lapid’s approach.
“It’s hard for all of us to see a salary that is not related to performance, that is exaggerated,” he said. But he warned that “the moment the regulator intervenes and sets a certain price, everyone converges on the price, and the ones that are below will come up.”
The linkage of salary to performance was a subtle nod to an alternative plan that Labor MK Shelly Yacimovich presented. Her plan would fix a maximum ratio between worker salaries and executive salaries within a company.
Hauser said he would wait to pass final judgment on Lapid’s plan until the final legislative details came through.
Hauser made the comments at the presentation of the ISA’s annual report, in which he noted an improving outlook for Initial Public Offerings in Israel.
Since a steep drop-off in 2008, only a handful of companies have debuted their stock on the Tel Aviv Stock Exchange. But in the first months of 2014, two companies completed IPOs and another 12 submitted paperwork.
The authority’s annual report stated that the number of public companies entering into debt settlements fell 68 percent to 10 companies in 2013 from 31 companies in 2012. The amount of debt involved in the settlements fell 42% to NIS 5.8 billion in 2013 from NIS 10b. in 2012.
Public companies made 136 extraordinary transactions (which the ISA defines as a transaction outside a company’s usual business, a transaction that is not at market terms or a transaction that may have a material effect on a company’s profitability, assets or liabilities) in 2013, down from 142 extraordinary transactions in 2012. There were also 22 full offers to purchase in 2013, 30% fewer than in 2012.
Globes contributed to this report.