Finance Minister Moshe Kahlon (Kulanu) on Tuesday night sent Chairman of the Knesset Finance Committee MK Moshe Gafni (UTJ) a letter saying that he favors setting an annual cap of 2.5 million shekel (about $650 thousand) on the salaries of senior officers of financial institutions — 1 million shekel less than the amount proposed by his predecessor, Yair Lapid. The bill submitted by Kahlon sets a normative ceiling on annual salaries — with a proviso that corporations wishing to pay their senior employees more can do so, but they would be taxed at a higher bracket for the additional amount. The new bill also establishes a more complex salary approval process, requiring the approval of the corporation’s remuneration Committee or the internal audit committee, as well as the approval of the board of directors and the stockholders.
On Wednesday evening the Knesset Finance Committee approved the bill unanimously, setting the limit on the salaries of CEOs and other senior officers of banks and insurance companies at $650 thousand, which is 44 times the lowest salary in these institutions.
The unanimous decision was received with applause by all the MKs present — a rare feat in a house that’s split down the middle. It is estimated that the Knesset will vote on the before the spring break.
Chairman Gafni said, before the committee vote, that the bill constitutes a historic move and the decision would lead to narrowing the economic gaps in Israel’s society.
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).