Foreword
The issue of executive compensation has been on the forefront of corporate governance discussion around the world in the past few years. Israel is no different. In previous years there was a significant rise of executive compensation in public companies that cannot be explained or linked to the companies’ performance.
Like many capital markets in continental Europe and other countries around the world, [1] most of the companies traded on the Tel-Aviv Stock Exchange have a controlling shareholder. A significant portion of these companies are controlled by a limited number of business groups, the majority of which are characterized by pyramid control structures.
Concentrated ownership and dominance of company groups raise a key agency problem: the relationship between controlling shareholder and the minority shareholders. The issue of protection of minority shareholder rights and the prevention of abuse of the controlling power is therefore a subject of main consideration in Israel.
