The Commissioner of Capital Markets and the Supervisor of Banks announce their intention to set compensation policy for the chairman of the board of directors at a supervised entity and additional remuneration arrangements

The Commissioner of Capital Markets, Insurance and Savings at the Ministry of Finance, Dorit Salinger, and the Supervisor of Banks, David Zaken are of the opinion that institutions managing the public’s money are required to meet high standards of appropriate corporate governance. Accordingly, supervised entities are subject to a strict and tight regulatory framework of corporate governance. Therefore, the supervisors intend to soon publish guidelines regarding compensation policy for the chairman of the board of directors as well as additional remuneration arrangements. The guidelines will be incorporated in regulation after completing the discussions about them. The main points are:

v  The remuneration of the chairman of the board of directors at a banking corporation or institutional entity (hereinafter, "supervised entity") shall be fixed compensation, and will not be performance based, in order to enhance the chairman’s supervisory ability and to bolster the independence of the board of directors. Accordingly, the compensation of the chairman of the board will be based on the compensation mechanism of external directors.

v  In extraordinary circumstances, key employees at a supervised entity will be required to pay back variable compensation that was paid to them—for example, if the supervised entity incurred significant losses due to fines or sanctions imposed on it.

v  The issue of an office holder at a supervised entity serving in another position in the group will be regulated. This includes determining that an office holder will not serve in an investee company as well, unless there is a relevant justification for it, and that a supervised entity will not bear the employment costs of its office holder in respect of his or her position in another company in the group. Furthermore, an officer holder in the supervised entity group will be prohibited from receiving remuneration from the holder of the control permit of the supervised entity.

The Commissioner of Capital Markets, Insurance and Savings, Dorit Salinger, said, "The directives will strengthen the board of directors' independence and improve the quality of corporate governance of institutional entities".

Supervisor of Banks David Zaken said, "Banking corporations, as managers of the public’s money, must maintain high standards of appropriate corporate governance, and these guidelines will contribute to it".