Bank Leumi Cancels CEO Hanan Friedman's Stock Option Plan Following Banking Regulator Intervention

Three months after shareholder approval, Bank Leumi has withdrawn its plan to grant stock options to CEO Hanan Friedman. The original plan aimed to link Friedman's compensation to the performance of Leumi Partners, a subsidiary managed by Victor Wert, rather than to the bank's own stock price. The options were valued based on an annual external appraisal of Leumi Partners, with a maximum valuation cap of 3 billion shekels.

This reversal follows a directive from the Banking Supervision Department, led by Danny Hachiaushvili, which clarified that equity-based compensation cannot be tied disproportionately to the performance of a single business unit. The regulator warned that such compensation structures could undermine an employee's overall responsibilities and encourage excessive risk-taking or decisions aimed solely at boosting that unit's profits.

Despite canceling the option plan, Friedman's salary is not expected to be affected, as the options were to be allocated within the limits of his existing compensation package, which is subject to regulatory caps on bank executives' pay. The decision comes amid Bank Leumi reporting its highest-ever quarterly profit for an Israeli bank, at 2.83 billion shekels.

Other major Israeli banks also reported results: Bank Hapoalim posted a quarterly profit of 2.5 billion shekels despite taxes and lower interest rates, and Bank Leumi's competitor, Bank HaBeinleumi, saw a profit decline but plans to distribute 96% of it as dividends.