The 15 directors of Bank Leumi (TASE: LUMI) will meet tomorrow at 08:30 am to elect a new chairman to replace Eitan Raff. The two leading candidates are Ehud Shapira, formerly chairman of Israel Phoenix Assurance Ltd. (TASE: PHOE1;PHOE5), and senior deputy CEO and head of the Corporate Division at Bank Leumi; and David Brodet, a former director general of the Ministry of Finance, and briefly chairman of Mizrahi Tefahot Bank (TASE:MZTF) in the 1990s.
In addition to these two, Moshe Dovrat, a director of long standing, has also put his name forward. Longstanding director Yaakov Mashaal, a former CFO of Shufersal Ltd. (TASE:SAE), withdrew his candidacy yesterday, which in any case was considered unrealistic.
Only 12 directors will vote, as the candidates may not do so. If no candidate wins a majority in the first round, the top two candidates will go to a second round of voting. This probably means Brodet and Shapira.
After the board of directors elects the new chairman, Bank Leumi appointments committee chairwoman Margalit Nof will submit the candidate to the Bank of Israel for approval. She must also consult Minister of Finance Yuval Steinitz and Supervisor of Banks Rony Hizkiyahu. Since both Brodet and Shapira are acceptable to Jerusalem, no problem is expected for their approval.
Both candidates have organized lobbies to persuade the directors to vote for them. Bank Leumi CEO Galia Maor, who has considerable influence on the directors, is not involved in the election, and so far as is known is scrupulously keeping neutral. She knows Shapira well, as he was her deputy for 11 years.
The new chairman who will be elected tomorrow is due to serve a three-year term, the norm at Bank Leumi. However, in view of the pending sale of the government's shares in the bank, the new chairman may end his term sooner. One possibility is the entry of a new controlling shareholder instead of the government. In this case, the new controlling shareholder may wish to appoint as chairman a person of his choosing. The Ministry of Finance has said that it will sell the government's 10.46% stake in the bank by the end of the year.
A second possibility is that Maor may want the chairmanship. So long as Bank Leumi is controlled by the government, the law prevents her from becoming chairwoman without a cooling-off period. After the government sells its stake, this restriction will be lifted, and she can run for the position at the bank's next general shareholders meeting, scheduled for June 2011. That meeting, as it does every year, will elect five new directors. Maor will probably be easily elected to the board, and the bank's new chairman may find himself facing a challenge from her.
New Bank of Israel guidelines stipulate that the new chairman will be employed in a full-time position, cannot have another job outside the bank, and may not serve as chairman of the bank's subsidiaries. The new chairman will probably get Raff's salary terms, including a base monthly salary of NIS 133,000. He will also receive an annual bonus, based on the bank's performance, up to a maximum of NIS 6 million.
However, it is possible that since the new chairman will be full-time (compared with Raff's 75% position), his salary terms will be improved. In any event, up to now, Bank Leumi's chairman has had the lowest salary terms among the chairmen of Israel's top three banks. The basic salary of former Israel Discount Bank (TASE: DSCT) chairman was NIS 198,000 a month, and the base salary of Bank Hapoalim (TASE: POLI) chairman Yair Seroussi is NIS 150,000. In addition, and in contrast to Bank Hapoalim and Discount Bank, Bank Leumi has no options plan for its senior managers.
Published by Globes [online], Israel business news - www.globes-online.com - on July 21, 2010
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