Electra Board Seeks Institutional Investor Deal on CEO's $33 Million Pay Package

Electra's board is attempting to negotiate a new compensation package for CEO Itamar Deutscher with the company's institutional shareholders, aiming to avoid another "overruling" of shareholder decisions. Representatives from Electra have been in discussions with institutional investors to reach an agreement on the terms of the package, which Deutscher is seeking at an annual rate of 17-18 million shekels ($4.6-4.8 million), including salary, bonuses, and other components. The controlling Zalkind brothers of Elco, Electra's parent company, support this salary, reportedly conveying that Deutscher might leave if it is not approved. Miki Zalkind, Electra's chairman, is leading the negotiations and is trying to secure a seven-year contract until Deutscher turns 70 to ensure his continued employment. A significant portion of the total package, estimated at 126 million shekels ($33 million), is intended to be paid as a large lump sum of equity-based compensation at the end of the term to incentivize him to stay.

Electra is known for its high executive compensation, having overridden shareholder votes against compensation plans five times since 2015. The company's infrastructure sector is complex, and finding CEOs with Deutscher's expertise is difficult, though some question if this justifies such an exceptional salary. Recent legal challenges and shareholder actions, including the removal of independent directors who supported previous overruling decisions, have prompted Electra to seek consensus with institutional investors before bringing the matter to a general assembly.

Institutional investors have internal rules for approving compensation policies, with maximum thresholds that are rarely exceeded. While some are open to annual packages between 10-11 million shekels ($2.7-2.9 million), others might consider 14-15 million shekels ($3.8-4 million). One institutional source noted the complexity of managing infrastructure companies and the potential for significant losses from minor pricing errors in large tenders, acknowledging Deutscher's talent. This source also suggested that savings from the chairman's relatively lower salary might be redirected to the CEO.

Deutscher has managed Electra for 21 years, overseeing its growth from a 300 million shekel ($81 million) company to its current valuation of approximately 8.5 billion shekels ($2.2 billion). During his tenure, the company has distributed 1.3 billion shekels ($350 million) in dividends. However, recent years have shown a less impressive financial performance, with net profit attributable to shareholders declining by 25% in 2025 compared to 2024, and operating profit also decreasing significantly. The company's stock performance has also lagged behind market indices over the past two years.

Despite these recent results, Deutscher remains one of the highest-paid executives in Israel, with his 2025 compensation costing 15.2 million shekels ($4.1 million). He has also realized nearly 180 million shekels ($48 million) from options since 2015, generating a pre-tax profit of about 65 million shekels ($17.5 million). The board approved a recent option grant worth approximately 24 million shekels ($6.5 million) despite 93% of public shareholders opposing it.

Electra and Deutscher are reportedly trying to avoid another overruling this time, but the path is challenging. Institutional investors are hesitant to approve packages at the level Deutscher is seeking, with some rejecting offers at half that amount even with better stock performance. If Electra genuinely intends to avoid overruling, shareholder agreement becomes a prerequisite, weakening the veteran CEO's bargaining power.