A parliamentary committee on Wednesday approved a limit on annual compensation for Israel’s top financial executives, in what could be the first step to curb pay at the country’s biggest companies.

Salaries at banks and insurance companies will be capped at 2.5 million shekels ($649,000), according to a statement published on the website of Israel’s Knesset, the country’s parliament. The draft legislation must still pass a second and third reading.

“We broke the barrier to reducing wage disparities,” Moshe Gafni, chairman of the Knesset finance committee, said in the statement. “In the future, we will consider limiting wages for all public companies, including non-financial companies, but as of now we are starting in the right place -- companies that manage public money.”

Banks can still pay their executives more than the limit but will be forced to pay higher tax rates on any sum above that amount.

The capped salary would be a decrease of some 70 percent from the amount earned in 2015 by the heads of Israel’s two biggest banks, Bank Hapoalim Ltd. and Bank Leumi Le-Israel Ltd.

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