Court Orders Disclosure in Challenge to NewMed CEO Exit Pay
The economic department of the Tel Aviv District Court, led by Judge Magen Altovia, partially accepted a document-disclosure request filed by shareholder Dr. Harel Primak against NewMed Energy, Delek Group’s subsidiary, over the approval of outgoing CEO Yossi Abu’s compensation package.
The case concerns a new three-year package for Abu, which reportedly included an annual salary of 2.4 million shekels, an annual bonus of up to 15 months’ salary, additional bonuses, and equity compensation in the form of about 3.3 million non-tradable options. Their total annual value was estimated at about 5.7 million shekels, and the package was said to reach about 17.1 million shekels over three years, excluding variable bonus components.
In September 2022, the public shareholders rejected the proposal by a landslide, with 91.98% of uninvolved shareholders, including institutional investors, voting against it. Despite that, the compensation committee and the board used the “overruling” mechanism, which in special cases can override a general meeting’s opposition. In the renewed review, the annual bonus cap was cut from 15 months’ salary to 12 months, a 20% reduction, and the company said Abu’s maximum annual employment cost was then about 10.66 million shekels, roughly 13% above his previous terms.
Judge Altovia said the petitioner had shown an initial basis for concern that no genuine “special case” justified the overruling process. He added that there was a prima facie concern that the board’s reconsideration had been predetermined, that the comparative material presented to the compensation committee and the board was not reexamined, and that no new information was gathered after the shareholders’ objections. He also said the size of the reduction could indicate the original package was not properly tested, and that a material change in employment terms could justify returning the proposal for fresh approval. Abu is expected to leave the company at the end of this year.
The court ordered disclosure of documents related to the approval process so the possibility of a derivative lawsuit can be examined, with the goal of returning the approved compensation to the company. NewMed said it is studying the ruling and is considering its options, especially filing an appeal.
