Israel’s Lapid Objects to Bank Leumi’s Executive Salaries
Finance Minister Yair Lapid said Bank Leumi Le-Israel Ltd. (LUMI) should curb salaries and bonuses for its most senior managers as industry executives “cannot behave as if the party goes on” when most Israelis can’t make ends meet.
The government, which has a six percent stake in the bank, will vote against the proposed benefits if necessary, Lapid said on his a Facebook page yesterday. He said he’d instructed the accountant general to make his position clear to the bank.
Lapid, who took office in March as a champion of middle-class interests, has seen his popularity drop as he has to cut government spending to rein in a budget deficit. About 60 percent of operational expenses at Israeli banks stem from salaries, the most of any country in the Organization for Economic Cooperation and Development after Denmark and compared with an average of 47 percent, Bank of Israel data show. The nation’s lenders have struggled to spur profit growth as the central bank cut its base lending rate by two percentage points since 2011 to 1.25 percent to support economic growth.
“The board of directors salaries policy is dictated by the average remuneration in the banking system,” Bank Leumi said today in a text message to Bloomberg News. “This has been the policy in the past and will continue to be in the future.”
Shareholders are scheduled to meet on Sept. 12 to consider the bank’s compensation policy. On Aug. 22 the Leumi said in a filing that its net return on equity must be at least 7.5 percent for workers to get bonuses. Net return on equity in the first quarter of 2013 was 9.4 percent, and in 2012 it was 3.8 percent, according to data provided by the bank.
Leumi shares were down 0.9 percent at 1:08 p.m. in Tel Aviv as the TA-25 Index of equities dropped 0.8 percent.
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