Executives leave Apex with NIS 140M
Dash Apex owner puts kibosh on exorbitant executive salaries, offers to extend agreement of Co-CEOs Neuberger and Shimrich under more modest terms; two deny retirement connected to offer
Neuberger led the move having decided to pursue an independent career, with Shimrich following suit. Neuberger has been deliberating for a while what professional path to pursue and even shared his uncertainty with Barkat.
At the same time, talks were being held on the extension of the CEOs contract that was due to end this February.
Irregular wage costs
During the period the two managed the investment house, Neuberger and Shimrich enjoyed salaries that were precipitous and even unusual on the local market.
Their contract awarded each of them a monthly management fee of NIS 108,000 (about $29,000, index linked) with an automatic 5% annual adjustment (under the condition that the investment house's annual profit before taxes is higher than NIS 10 million).
Furthermore, once their contract ends they are entitled to a four-month accommodation payment (equivalent to their gross wage plus benefits).
It should be noted that the new draft agreement placed before Neuberger and Shimrich was fundamentally different than their previous contract and included mainly compensation in options.
The two, however, deny any connection between their decision to leave and the more modest compensation mechanism they were offered.
In fact, when Barkat acquired the investment house's controlling interest two years ago, it was only natural that the co-CEOs end their role; however, in light of his inexperience in the financial market, Barkat asked them to stay on at least until the end of their current contract
Tip-off realization
In any event, Barkat realized that he would have to do something about the lavish salaries enjoyed over the years by the investment house's extended management tier which included, other than the two CEOs, the head of the company's subsidiary Dash, Yacob Levinson who unexpectedly left the company at the end of 2010.
His replacement, Yadin Entebi, stepped into office on a much lower salary which did not include a cut of the company's profits. Barkat's recent appointment as well – Dan Pinhasi, who replaced CEO of DS Mutual Funds Management Oren Hanuka, was awarded a much more modest salary than his predecessor's.
A clear tip-off of Shimrich and Neuberger's intention of leaving the company emerged two weeks ago when the two realized the remainder of their holdings in the investment house (2%) by exercising the put option given to them by Barkat when he acquired the company's controlling interest.
The two raked in NIS 18 million ($5 million) when they sold their shares to Barkat at a value which was 47% higher than the market value. Two years earlier, when Barkat gained complete control over the investment house, the two sold him another 6% of their holdings and pocketed a whopping NIS 56 million ($15 million).
During their eight-year tenure, Shimrich and Neuberger's salary cost the investment house a total of NIS 66.7 million ($18 million).
Dash Apex ended the first half of 2011 with a NIS 55 million ($15 million) profit, stemming mainly from an accounting profit from the acquisition of Index's entire holdings and to the acquisition of Tachlit Investment.
If the second half of the year records a weak bottom line as well and even leads to losses, the two may take home a salary costing over NIS 3 million (810,000).
Their aggregated compensation is NIS 144 million ($39 million), not including the dividends the two received. Altogether, the two pocketed about NIS 200 million ($54 million).
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