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Netanyahu orders review of salary limit legislation

April 25, 2010. Globes: Lilach Weissman

The government will apparently formulate a bill to limit executive salaries. At a meeting today, Prime Minister Benjamin Netanyahu instructed Likud ministers to postpone for two weeks a vote on a private member's bill proposed by MKs Shelly Yacimovich (Labor) and Haim Katz (Likud) on this issue at this afternoon's meeting by the ministerial legislative committee, in order to give the government time to prepare its own bill.

The team that within 60 days will present its recommendations on "how to solve the problem of excessive executive salaries in the Israeli economy" will be headed by Minister of Justice Yaakov Neeman, and will also include Minister of Finance Yuval Steinitz, Minister of Industry, Trade and Labor Binyamin Ben-Eliezer, Minister of Welfare Isaac Herzog, head of the National Economic Council Eugene Kandel, and Prime Minister's Office director general Eyal Gabai. Katz and Yacimovich will be invited to the committee's sessions to present their views.

Yacimovich and Katz said today that if the committee's findings were not to their satisfaction, they would raise their own proposal again at the end of the 60 days.

At his meeting with Neeman today after the cabinet meting, Netanyahu said, "The problem of excessive pay needs correcting. We have to act to ensure that there is no abuse of the free market and free competition to obtain unjustified salaries. But the correction must be carried out responsibly, so that it will not cause foreign investors to leave the country or Israeli companies to shift investments and activities overseas, as that will cause a loss of jobs in Israel and higher unemployment. It is therefore important that the matter should be dealt with at government level, with a full perspective."

Yacimovich told “IDF Radio" (Galei Zahal) this morning that she anticipated a battle in the ministerial legislative committee over her private member's bill to restrict executive salaries. She said that ministers oppose the bill because of intense lobbying by executives. The committee was due to vote on the bill today.

"The battle is close, and it's hard for us to know whether we'll succeed in passing this important bill," Yacimovich said. "There's a very thin layer of a few rich CEOs who get huge salaries. These people don’t need to demonstrate and carry signs outside the Prime Minister's Office. They meet ministers at social functions, and a little small talk is enough for them to explain why this is a stupid bill that will drive CEOs abroad, and all kinds of such drivel."

Yacimovich proposes to limit the highest salary in a company (usually earned by the CEO) to 50 times the lowest salary at that company. For example, if the lowest salary at a company is the minimum wage of NIS 3,850 a month, the CEO's salary will be capped at NIS 192,000 a month, or NIS 2.3 million a year. The bill will apply to all companies, both private and public, in Israel.

Prime Minister Benjamin Netanyahu, Minister of Finance Yuval Steinitz and ministry officials oppose the bill. Sources believe that even if the ministerial legislative committee passes the bill today, Steinitz will appeal the decision to torpedo it.

In response to a question why she capped CEOs salaries at 50 times the lowest paid salary, Yacimovich said, "So that they won't claim that the restriction is too severe. The cap will be 50-fold. How big a pig do you have to be to say that even that is not enough? Just look at the scorched earth campaign the CEOs are waging."

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