The CEOs of Israel’s top financial institutions are angry and concerned following the approval of a new law setting a cap on their salaries. Army Radio reported Sunday that bank CEOs are planning to meet on Tuesday at the offices of the Association of Banks to discuss the implications of the new law. There is a rumor that they plan to petition the Supreme Court, but that rumor is yet to be confirmed.
The salary cap law determines that the maximum annual pay for the CEO of a financial corporation will not exceed 2.5 million shekels, or roughly $660,000. Of course the banks are welcome to pay their chiefs more but then said chiefs would be taxed at double the normal rate. Also, the CEO salary cannot be more than 35 times the pay for the lowest earning employee at the same corporation, including contract workers.
One issue that’s troubling Israel’s captains of finance is whether the same cap also pertains to their accumulated severance package. Three days ago the bank CEOs met with Hedva Bar, Israel’s Supervisor of Banks, who followed the meeting with a letter to Israel’s banks asking for an estimate of how many captains of finance were planning to jump ship, should the law be applied retroactively.
Most of the men and women at the helm at Israel’s banks today have already accumulated well over 2.5 million shekels in their severance package, which may lead them to leave their posts before the new law takes effect in a couple of months.
The Supervisor of Capital Markets Dorit Selinger voiced her objection to the new bill, saying the 2.5 million shekel ceiling is too low, and would inevitably be transgressed by the financial institutions, one way or another. Selinger favors the 3.5 million shekel ceiling ($910 thousand).
The top ten earners in Israel’s financial sector currently make between 4.8 million shekel ($1.25 million – Raviv Zoller, CEO IDI Insurance) and 8.1 million shekel ($2.10 million – Rakefet Russak-Aminoach, CEO Bank Leumi).