Eltek Ltd.
20 Ben Zion Gelis Street, Petach Tikva, Israel
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held on September 12, 2023
To our shareholders:
You are invited to attend the annual general meeting of the shareholders of Eltek Ltd. (“Eltek” or the “Company”) to be held at the Company’s offices, at 20 Ben
Zion Gelis Street, Petach Tikva, Israel, on September 12, 2023 at 10:00 A.M. local time, and thereafter as it may be adjourned from time to time (the “Meeting”) for the following purposes:
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1. |
To re-elect Messrs. Yitzhak Nissan, Mordechai Marmorstein, David Rubner and Erez Meltzer to the Company’s Board of Directors (the “Board”) and to elect Ms. Revital Cohen-Tzemach to the Board, to serve until the next annual general
meeting of the shareholders and until their successors have been duly elected and qualified;
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2. |
To re-elect Mr. Gad Dovev for a fourth term as an external director, to hold office for three (3) years, as of October 6, 2023;
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3. |
To approve the Company’s Second Amended and Restated Compensation Policy, as described in the Proxy Statement;
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4. |
To approve the grant of an annual bonus for the year 2022 to Ms. Revital Cohen-Tzemach, special project manager and daughter of our Controlling shareholder, as described in the Proxy Statement;
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5. |
To ratify and approve the extension of the Company’s employment of Ms. Revital Cohen-Tzemach, daughter of our Controlling shareholder, in the position of special project manager;
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To approve the grant of options to the Company’s directors (including the external directors, but excluding our Controlling shareholder and Chairman of the Board, Mr. Yitzhak Nissan, and his daughter, Ms. Revital Cohen-Tzemach), as
described in the Proxy Statement;
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To approve the grant of options to Mr. Eli Yaffe, the Company’s Chief Executive Officer (the “CEO”), as described in the Proxy Statement;
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8. |
To approve the grant of options to Ms. Revital Cohen-Tzemach, special project manager and daughter of our Controlling shareholder, as described in the Proxy Statement;
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9. |
To approve the issuance of an exculpation letter to Ms. Revital Cohen-Tzemach, as described in the Proxy Statement;
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10. |
To approve the issuance of an indemnification letter to Ms. Revital Cohen-Tzemach, as described in the Proxy Statement;
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11. |
To approve a determination regarding the vesting and exercisability of options granted to Ms. Revital Cohen-Tzemach, as described in the Proxy Statement;
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12. |
To re-appoint Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network, as the Company’s independent auditors for the year ending December 31, 2023 and for such additional period until the next annual general meeting of
shareholders, and to authorize the Board to approve their compensation; and
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To review the Auditor’s Report and the Company’s Consolidated Financial Statements for the fiscal year ended December 31, 2022.
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The Board has fixed the close of business on August 10, 2023, as the date for determining the holders of record of the Company’s ordinary shares, nominal value NIS 3.00 per
share, (the “Ordinary Shares”) entitled to notice of and to vote at the Meeting and any adjournments thereof.
Holders of record at the close of business on August 10, 2023 (the “Record Date”) are entitled to notice of and to vote at the Meeting and any adjournments thereof. You
can vote either by mailing in your proxy or in person by attending the Meeting. Only proxies that are received at the Company’s offices at 20 Ben Zion Gelis Street, Petach Tikva, Israel, or by its transfer agent, by September 10, 2023 at 10:00 A.M.
local time, will be deemed received in a timely fashion and the votes therein recorded. If you attend the Meeting, you can revoke your proxy and vote your shares in person. Detailed proxy voting instructions are provided both in the proxy statement
and on the enclosed proxy card.
If and to the extent we become aware of any COVID-19 restrictions likely to materially affect the Meeting, the Company reserves the option to convert the
Meeting to a virtual setting only at the same date or a later date. In such event, the Company will issue a press release and furnish a Form 6-K or other document to the SEC prior to the date of the Meeting outlining the manner in which
shareholders may attend the virtual meeting.
Pursuant to the Company’s Amended and Restated Articles of Association (the “Articles”), the quorum required for the Meeting consists of at least two
shareholders present, in person or by proxy, who hold or represent between them at least thirty-three percent (33%) of the total voting power attached to the Ordinary Shares then outstanding.
Items 1, 6 and 12 are ordinary resolutions, which require the affirmative vote of a majority of the Ordinary Shares present and voting on the proposed resolution, in person or
by proxy. The votes of all shareholders voting on the matter will be counted.
Item 2 is a special resolution, which is submitted for our shareholders’ approval, following approval of each of (i) the Company’s Audit Committee, and (ii) the Board, and which
requires the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that either (i) at least a majority of the Ordinary Shares voted by
shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the proposed resolution; or (ii) the total number of the Ordinary Shares voted against the proposed resolution by
shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of the outstanding voting power in the Company. For the purposes of the vote on Item 2, an interest not
resulting from ties to the Controlling shareholders is not considered a Personal Interest.
Items 3 to 5 and 7 to 11 are special resolutions, which are submitted for our shareholders’ approval, following approval of each of (i) the Company’s Audit Committee or
Compensation Committee, as applicable, and (ii) the Board, and which requires the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that
either (i) at least a majority of the Ordinary Shares voted by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the proposed resolution; or (ii) the total number of the
Ordinary Shares voted against the proposed resolution by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of the outstanding voting power in the Company.
Generally, an act or transaction with a Controlling shareholder or in which a Controlling shareholder has a Personal Interest requires our shareholders’ approval every three (3)
years.
Each shareholder voting at the Meeting or prior thereto by means of the enclosed proxy card is required to indicate if he, she or it has a Personal Interest in connection with
certain proposals. If any shareholder casting a vote in connection with such a proposal does not explicitly indicate on the proxy card that he, she or it has, or does not have, a Personal Interest with respect to the proposal, then their vote on
the applicable item will not be counted.
The review of our audited Consolidated Financial Statements for the fiscal year ended December 31, 2022 described in Item 13 does not involve a vote of our shareholders.
Further details of these matters to be considered at the Meeting are contained in the Company’s Proxy Statement furnished herewith. Copies of the resolutions to be adopted at the
Meeting will be available to any shareholder entitled to vote at the meeting for review at the Company’s offices during regular business hours.
The Board believes that our shareholders should be represented as fully as possible at the Meeting and encourages your vote. Whether or not you plan to be present, kindly
complete, date and sign the enclosed proxy card exactly as your name appears on the envelope containing this Notice and mail it promptly so that your votes can be recorded. No postage is required if mailed in
the United States. Return of your proxy does not deprive you of your right to attend the Meeting, to revoke the proxy or to vote your shares in person. All proxy instruments and powers of attorney must be received by the Company or its transfer
agent no later than 48 hours prior to the Meeting. The Company’s Proxy Statement is furnished herewith.
Joint holders of Ordinary Shares should take note that, pursuant to Article 25(e) of the Articles, the vote of the senior of joint holders of any share who tenders a vote,
whether in person or by proxy, will be accepted to the exclusion of the vote(s) of the other joint holder(s) of the share, and for this purpose seniority will be determined by the order in which the names stand in the shareholders’ register.
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By Order of the Board of Directors,
Yitzhak Nissan
Chairman of the Board of Directors
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YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE DATE AND SIGN THE PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE FOR WHICH NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES. YOU CAN LATER REVOKE YOUR PROXY, ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON. ALL PROXY INSTRUMENTS AND POWERS OF ATTORNEY MUST BE DELIVERED TO THE COMPANY OR ITS TRANSFER AGENT NO LATER THAN 48
HOURS PRIOR TO THE MEETING.
Eltek Ltd.
20 Ben Zion Gelis Street
Petach Tikva, Israel
ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held on September 12, 2023
PROXY STATEMENT
This Proxy Statement is furnished to the holders of Ordinary Shares, NIS 3.0 nominal value (the “Ordinary Shares”), of Eltek Ltd. (“Eltek” or the “Company”)
in connection with the solicitation of proxies to be voted at the annual general meeting of the Company’s shareholders to be held at the Company’s offices at 20 Ben Zion Gelis Street, Petach Tikva, Israel, on September 12, 2023 at 10:00 A.M. local
time, and thereafter as it may be adjourned from time to time (the “Meeting”). Our shareholders will be asked to vote upon the following matters:
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1. |
To re-elect Messrs. Yitzhak Nissan, Mordechai Marmorstein, David Rubner and Erez Meltzer to the Company’s Board of Directors (the “Board”) and to elect Ms. Revital Cohen-Tzemach to the Board, to serve until the next annual general
meeting of shareholders and until their successors have been duly elected and qualified;
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2. |
To re-elect Mr. Gad Dovev for a fourth term as an external director, to hold office for three (3) years, as of October 6, 2023;
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3. |
To approve the Company’s Second Amended and Restated Compensation Policy, as described in the Proxy Statement;
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4. |
To approve the grant of an annual bonus for the year 2022 to Ms. Revital Cohen-Tzemach, special project manager and daughter of our Controlling shareholder, as described in the Proxy Statement;
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5. |
To ratify and approve the extension of the Company’s employment of Ms. Revital Cohen-Tzemach, daughter of our Controlling shareholder, in the position of special project manager;
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6. |
To approve the grant of options to the Company’s directors (including the external directors, but excluding our Controlling shareholder and Chairman of the Board, Mr. Yitzhak Nissan, and his daughter, Ms. Revital Cohen-Tzemach), as
described in the Proxy Statement;
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7. |
To approve the grant of options to Mr. Eli Yaffe, the Company’s Chief Executive Officer (the “CEO”), as described in the Proxy Statement;
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8. |
To approve the grant of options to Ms. Revital Cohen-Tzemach, special project manager and daughter of our Controlling shareholder, as described in the Proxy Statement;
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9. |
To approve the issuance of an exculpation letter to Ms. Revital Cohen-Tzemach, as described in the Proxy Statement;
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10. |
To approve the issuance of an indemnification letter to Ms. Revital Cohen-Tzemach, as described in the Proxy Statement;
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11. |
To approve a determination regarding the vesting and exercisability of options granted to Ms. Revital Cohen-Tzemach, as described in the Proxy Statement;
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12. |
To re-appoint Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network, as the Company’s independent auditors for the year ending December 31, 2022 and for such additional period until the next annual general meeting of
shareholders, and to authorize the Board to approve their compensation; and
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13. |
To review the Auditor’s Report and the Company’s Consolidated Financial Statements for the fiscal year ended December 31 , 2022.
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A proxy card for use at the Meeting and a return envelope for the proxy card are enclosed. By signing the proxy card, shareholders may vote their shares at the Meeting whether or
not they attend. Upon the receipt of a properly signed and dated proxy card in the form enclosed, the shares represented thereby will be voted in accordance with the instructions of the shareholder indicated thereon. The Company knows of no other
matters to be submitted at the Meeting other than as specified in the Notice enclosed with this Proxy Statement. Shares represented by executed and unrevoked proxies will be voted. On all matters considered at the Meeting, abstentions and broker
non-votes will not be treated as either a vote “for” or “against” the matter, although they will be counted to determine if a quorum is present.
The proxy solicited hereby may be revoked at any time prior to its exercise, by the substitution with a new proxy bearing a later date or by a request for the return of the proxy
at the Meeting. All proxy instruments and powers of attorney must be delivered to the Company or its transfer agent no later than 48 hours prior to the Meeting.
The Company expects to mail this Proxy Statement and the proxy card to shareholders on or about August 15, 2023. All expenses of this solicitation will be borne by the Company.
In addition to the solicitation of proxies by mail, directors, officers and employees of the Company, without receiving additional compensation therefore, may solicit proxies by telephone, facsimile, in person or by other means. Brokerage firms,
nominees, fiduciaries and other custodians have been requested to forward proxy solicitation materials to the beneficial owners of shares of the Company held of record by such persons, and the Company will reimburse such brokerage firms, nominees,
fiduciaries and other custodians for reasonable out-of-pocket expenses incurred by them in connection therewith.
Shareholders Entitled to Vote.
Only holders of record of Ordinary Shares at the close of business on August 10, 2023 are entitled to notice of and to vote at the Meeting. The Company had 5,913,965 Ordinary
Shares issued and outstanding on August 3, 2023, each of which is entitled to one vote on each matter to be voted on at the Meeting. The Company’s Amended and Restated Articles of Association (the “Articles”) do not provide for cumulative
voting for the election of the directors or for any other purpose. The presence, in person or by proxy, of at least two shareholders of record holding at least thirty-three percent (33%) of the total voting
power attached to the Ordinary Shares then outstanding, will constitute a quorum at the Meeting.
Only holders of record of Ordinary Share as of the close of business on August 10, 2023 are entitled to notice of, and to vote at the Meeting, in person or by proxy:
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Voting in Person. If your shares are registered directly in your name with our transfer agent (i.e., you are a “registered shareholder”), you may attend and vote in person at the Meeting. If you
are a beneficial owner of shares registered in the name of your broker, bank, trustee or nominee (i.e., your shares are held in “street name”), you are also invited to attend the Meeting; however,
in order to vote in person at the Meeting as a beneficial owner, you must first obtain a “legal proxy” from your broker, bank, trustee or nominee, as the case may be, authorizing you to do so.
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Voting by Proxy. You may submit your proxy by mail by completing, signing and mailing the enclosed proxy card in the enclosed, postage-paid envelope, or, for shares held in street name, by
following the voting instructions provided by your broker, bank, trustee or nominee. The proxy must be received by our transfer agent or at our registered office in Israel by no later than 10 A.M. Israel time, on September 10, 2023, to be
validly included in the tally of Ordinary Shares voted at the Meeting. Upon the receipt of a properly signed and dated proxy in the form enclosed, the persons named as proxies therein will vote the Ordinary Shares represented thereby in
accordance with the instructions of the shareholder indicated thereon, or, if no direction is indicated, in accordance with the recommendations of the Board.
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Votes Required.
When voting, Israeli law requires that you indicate whether you are a “Controlling shareholder,” a senior officer of the Company, an Israeli Institutional
Investor or none of the foregoing, otherwise none of your votes will be counted.
There will be a place on the Proxy Card to indicate such.
Items 1, 6 and 12 are ordinary resolutions, which require the affirmative vote of a majority of the Ordinary Shares present and voting on the proposed resolution, in person or
by proxy. The votes of all shareholders voting on the matter will be counted.
Item 2 is a special resolution, which is submitted for our shareholders’ approval, following approval of each of (i) the Company’s Audit Committee, and (ii) the Board, and which
requires the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that either (i) at least a majority of the Ordinary Shares voted by
shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the proposed resolution; or (ii) the total number of the Ordinary Shares voted against the proposed resolution by
shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of the outstanding voting power in the Company. For the purposes of the vote on Item 2, an interest not
resulting from ties to the Controlling shareholders is not considered a Personal Interest.
Items 3 to 5 and 7 to 11 are special resolutions, which are submitted for our shareholders’ approval, following approval of each of (i) the Company’s Audit Committee or
Compensation Committee, as applicable, and (ii) the Board, and which require the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that
either (i) at least a majority of the Ordinary Shares voted by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the proposed resolution; or (ii) the total number of
Ordinary Shares voted against the proposed resolution by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of the outstanding voting power in the Company.
Generally, an act or transaction with a Controlling shareholder or in which a Controlling shareholder has a Personal Interest (as defined below) requires our shareholders’
approval every three (3) years.
For the purposes of this Proxy Statement, “Controlling shareholder” means a person or entity that has the ability to direct the
Company’s actions. For Items 3 and 7, any person holding fifty percent (50%) or more of the outstanding voting power in the Company or of the rights to appoint the Company’s directors or the CEO is considered a Controlling shareholder, and for
Items 4, 5 and 8 to 11, any person holding twenty-five percent (25%) or more of the voting power in the Company, provided that no other person holds fifty percent (50%) or more of the outstanding voting
power in the Company, or of the rights to appoint the Company’s directors or the CEO, is considered a Controlling shareholder.
For the purposes of this Proxy Statement, “Personal Interest” means a shareholder’s personal interest in the approval of an act or
a transaction of the Company, including (i) the personal interest of such shareholder’s relative (which includes any members of his/her (or his/her spouse’s) immediate family or the spouses of any such members of his/her (or his/her spouse’s)
immediate family); and (ii) a personal interest of a body corporate in which a shareholder or any of his/her aforementioned relatives serves as a director or the chief executive officer, owns at least five percent (5%) of its issued and outstanding
share capital or its voting rights, or has the right to appoint directors or the chief executive officer, but excluding a personal interest arising solely from holding of shares in the Company or in a body corporate. In addition, under the
Companies Law, 5759-1999 (the “Companies Law”) in case of a person voting by proxy for another person, Personal Interest includes the personal interest of either the proxy holder or the shareholder granting the proxy, whether the proxy
holder has discretion to vote or not.
Each shareholder voting at the Meeting or prior thereto by means of the enclosed Proxy Card is required to indicate if he, she or it is a Controlling shareholder, has a Personal
Interest, is a senior officer of the Company and/or an Israeli Institutional Investor, in connection with certain proposals. If any shareholder casting a vote in connection hereto does not explicitly indicate on the Proxy Card that he, she or it is
or is not a Controlling shareholder, has, or does not have, a Personal Interest with respect to such a proposal, is or is not a senior officer of the Company and/or an Israeli Institutional Investor, then their vote on the applicable item will not
be counted.
For the purposes of this Proxy Statement, “Institutional Investor” means any Israeli entity that (a) meets the definition set
forth in Section 1 of the Supervision of Financial Services Regulations (Provident Funds) (Participation of a Managing Company at a General Meeting), 5769-2009, or (b) constitutes a “Managing Company”, as defined in Section 1 of the Joint
Investment Trust Law, 5754-1994.
The review of our audited Consolidated Financial Statements for the fiscal year ended December 31, 2022 described under Item 13 does not involve a vote of our shareholders.
Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of August 3, 2023, to the best of the Company’s knowledge, information as to each person known to the Company to be the beneficial owner of
more than five percent (5%) of the outstanding Ordinary Shares. Except where indicated, to the best of the Company’s knowledge, based on information provided by the owners, the beneficial owners of the shares listed below have sole investment and
voting power with respect to those shares. Applicable percentage ownership in the following table is based on 5,913,965 Ordinary Shares outstanding as of August 3, 2023.
The shareholders’ holdings reflect their voting rights. The Company’s principal shareholders do not have different voting rights than other shareholders with respect to their
shares.
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Name
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Number of Ordinary Shares
Beneficially Owned(1)
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Percentage of Ownership (2)
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Yitzhak Nissan(3)
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165,224
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2.79%
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Nistec Golan Ltd. (3)
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3,843,608
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65.00%
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(1)
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Beneficial ownership is determined in accordance with the rules of the U.S.
Securities and Exchange Commission (“SEC”) and generally includes voting or investment power with respect to securities. Ordinary Shares relating to options or convertible notes currently exercisable or exercisable within 60 days
of the date of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them.
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(2)
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The percentages shown are based on 5,913,965 Ordinary Shares issued and outstanding as of August 3, 2023.
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(3)
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Nistec Golan Ltd. is an Israeli private company controlled by Mr. Yitzhak Nissan. Accordingly, Mr. Yitzhak Nissan may be deemed to be the beneficial owner of the Ordinary Shares held
directly by Nistec Ltd.
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Terms of Service and Employment of Executive Officers and Directors.
For information relating to the compensation of our named executive office-holders during or with respect to the year ended December 31, 2022, please see “Item 6. Directors,
Senior Management and Employees — B. Compensation” in our Annual Report on Form 20-F for the year ended December 31, 2022, which was filed with the SEC on March 29, 2023.
1. ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
At the Meeting, our shareholders are requested to re-elect a slate of four (4) directors and to elect one (1) new director, to serve on the Board. Yitzhak Nissan, Mordechai
Marmorstein, David Rubner and Erez Meltzer have been nominated for re-election, and Ms. Revital Cohen-Tzemach has been nominated for election. Pursuant to the Articles, the number of directors in the Company (including the two (2) external
directors) will be no less than three (3) nor more than nine (9), until otherwise prescribed by a resolution of the shareholders. In accordance with the Companies Law, one external director, Ms. Ilana Lurie, will continue in office until the end of
her three (3) year term (on September 6, 2024), and the second external director, Mr. Gad Dovev, is nominated for re-election by our shareholders for a fourth three (3) year term, as described in Item 2 below.
The Companies Law provides that a nominee for a position of a director will have declared to the Company that he or she complies with the qualifications prescribed by the
Companies Law for appointment as a director or as an independent director, if applicable. All of the proposed nominees have declared to the Company that they comply with such applicable qualifications.
The Audit Committee and the Board has determined that Mordechai Marmorstein has the accounting and financial expertise required under the Companies Law necessary to serve as an
independent director, and therefore Mr. Marmorstein is nominated to be elected as an independent director.
The five (5) nominees named in this Item 1, if elected, will each hold office until the next annual general meeting of shareholders and until their respective successors are duly
elected and qualified, unless any office is vacated earlier. The Company is unaware of any reason why any nominee, if elected, should be unable to serve as a director. All nominees listed below have advised the Board that they intend to serve as
directors if elected.
Nominees for the Board of Directors
Set forth below is information about each nominee, including age, position(s) held with the Company, principal occupation, business history and other directorships held.
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Name
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Age
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Position
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Yitzhak Nissan
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74
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Chairman of the Board
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Mordechai Marmorstein
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75
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Director
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David Rubner
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83
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Director
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Erez Meltzer
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66
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Director
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Revital Cohen-Tzemach
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40
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Director-Nominee
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Yitzhak Nissan has served as the Chairman of the Board since November 2013 and is a member of our Banking Committee. He served as our
chief executive officer from October 2014 until July 2018. Mr. Nissan is the founder of Nistec Group and has served as its chief executive officer since 1985. Mr. Nissan served as a Presiding Member of ILTAM (Israeli Users’ Association of Advanced
Technologies in Hi-Tech Integrated Systems) between 2008 and 2009 and as a Presiding Member of the Israeli Association of Electronics and Software Industries since 2012. Mr. Nissan also established the VPs Operations Forum, which brings thought
leadership to 200 VPs of operations from diverse hi-tech companies in Israel. In 2008, Mr. Nissan received the Distinguished Industry Award from the mayor of Petach Tikva Municipality. In 2019 Mr. Nissan was awarded a “notable person” award by the
city of Petach Tikva. Mr. Nissan holds a B.Sc. degree in Electronic Engineering from the University of Buffalo, New York.
Dr. Mordechai Marmorstein has served on the Board since October 2013 and is a member of its Audit and Compensation Committees. From 1992
to 2001, Dr. Marmorstein was the chief financial officer of Pazchim Co. Ltd. Dr. Marmorstein was also an internal auditor and accountant at Negev Phosphate Works. Dr. Marmorstein served as the chairman of Teshet (Tourist Enterprises and Aviation
Services Co. Ltd.), a subsidiary of El-Al, the Israeli national airline, from 1999 to 2000. Dr. Marmorstein holds a B.A. degree in Economics, an M.A. degree in Contemporary Jewry Studies and a Ph.D. in Jewish History Studies, all from Bar-Ilan
University.
David Rubner has served on the Board since October 2013. Mr. Rubner is the chairman and chief executive officer of Rubner Technology
Ventures Ltd. Previously, he was a partner in Hyperion Israel Advisors Ltd., a venture capital firm. During the years 1991 to 2000, Mr. Rubner was the president and chief executive officer of ECI Telecom Ltd. (“ECI”). Prior to that, Mr.
Rubner held several senior positions within ECI. Before joining ECI, Mr. Rubner was a senior engineer in the Westinghouse Research Laboratories in Pittsburgh, Pennsylvania. Mr. Rubner served on the boards of Check Point Software Ltd., Radware Ltd.,
Telemessage International Ltd., Koor Industries Ltd., Lipman industries Ltd. and a number of private companies. He also serves on the boards of trustees and executive council of Shaare Zedek Hospital and Jerusalem College of Technology. Mr. Rubner
holds a B.Sc. (Hons) degree in engineering from Queen Mary College, University of London and an M.S. degree from Carnegie Mellon University. Mr. Rubner was awarded 14 U.S. Patents and was the recipient of the Israeli Industry Prize for 1995.
Erez Meltzer has served on the Board since 2009, including as its Chairman from 2011 to 2013. Mr. Meltzer was the executive chairman of
Hadassah Medical Center until the end of 2020. Mr. Meltzer also serves as a director of Ericom Software Ltd., Hadasit Bio Holding (HBL) Ltd., GEM Pharma Ltd., Nano-x Imaging Ltd., Plantis Pharma Ltd., Supplant Ltd., Tevel Aerobotics Technologies
Ltd., Smart Agro LP. and Rivulis Plastro Ltd. From 2008 to 2013, Mr. Meltzer served as the chief executive officer of Gadot Chemical Tankers & Terminals Ltd.; from 2006 to 2007, as the chief executive officer of Africa Israel Group; from 2002
to 2006, as the president and chief executive officer of Netafim Ltd.; and from 1999 to 2001, as the president and chief executive officer of CreoScitex Ltd. Mr. Meltzer served as a colonel (reserve) in the Armored Corps of the Israeli Defense
Forces. Mr. Meltzer has served as the Chairman of the Lowenstein Hospital Friends Association since 1999 and is the honorary chairman of the Israeli Chapter of YPO (the Young Presidents Organization). Mr. Meltzer studied Economics and Business at
the Hebrew University of Jerusalem and Boston University and is a graduate of the Advanced Management Program at Harvard Business School.
Revital Cohen-Tzemach has been employed by the Company since 2015, first as a trainee in the office of the CEO and then as an assistant to
the CEO. Since 2019, Ms. Cohen-Tzemach also serves as a special project manager. Since 2022, Ms. Cohen-Tzemach has been attending Board meetings as a non-voting observer. From 2008 until 2014, Ms. Cohen-Tzemach served as a branch manager for
Halperin Optics Ltd., a major Israeli optics supplier. Ms. Cohen-Tzemach holds a B.Sc. degree in Optometry and an Executive M.B.A. degree from Bar-Ilan University.
Each director (excluding Mr. Nissan and Ms. Cohen-Tzemach) is entitled to director’s insurance, an indemnification agreement, and
exculpation letter, as may be approved by the Company from time to time. In addition, each director (excluding Mr. Nissan and Ms. Cohen-Tzemach) is entitled to monetary compensation as provided in the
“Permanent Amount” criteria of the Companies Regulations (Rules Regarding Compensation and Expenses for External Directors), 5760-2000 (the “Compensation Regulations”), as well as to options to purchase 10,000 Ordinary Shares, effective as
of October 6, 2023, subject to our shareholders’ approval of Item 6 below. Each director is otherwise prohibited from receiving any other compensation, directly or indirectly, in connection with his or her services to the Company.
Mr. Nissan is entitled to director’s insurance (as may be approved by the Compensation Committee and the Board from time to time), an indemnification agreement, an exculpation
letter and monetary compensation, all as set forth in the Amended Management Agreement with Nistec Ltd. Ms. Cohen-Tzemach is likewise entitled to director’s insurance (as may be approved by the Compensation Committee and the Board from time to
time), an exculpation letter (subject to our shareholders’ approval of Item 9 below) and an indemnification letter (subject to our shareholders’ approval of Item 10 below).
We are dedicated to ensuring equality and diversity in our Company. Our Board has no specific policy on director diversity, but it reviews a diversity of viewpoints, backgrounds,
experience, accomplishments, education and skills when evaluating nominees. In addition, Nasdaq’s recently adopted Board Diversity Rule is a disclosure standard designed to encourage a minimum board diversity objective for companies and provide
stakeholders with consistent, comparable disclosures concerning a listed company’s current board composition. Since August 2022, the Board Diversity Rule requires a company that is a “foreign private issuer” (as defined in SEC rules) like Eltek to
initially have, or explain why it does not have, at least one diverse director. Our current board composition is in compliance with these requirements. Each term used above and in the matrix below has the meaning given to it in Nasdaq Listing Rule
5605(f). The matrix below provides certain highlights of the composition of our Board members based on self-identification as of August 3, 2023.
Board Diversity Matrix (as of August 3, 2023)
|
Country of Principal Executive Offices
|
Israel
|
|
Foreign Private Issuer
|
Yes
|
|
Disclosure Prohibited under Home Country Law
|
No
|
|
Total Number of Directors
|
6
|
|
Part I: Gender Identity
|
Female
|
Male
|
Non-Binary
|
Did Not Disclose
Gender
|
|
Directors
|
1
|
5
|
0
|
0
|
|
Part II: Demographic Background
|
|
|
Underrepresented Individual in Home Country Jurisdiction
|
0
|
|
LGBTQ+
|
0
|
|
Did Not Disclose Demographic Background
|
6
|
The Board recommends a vote FOR the election of each nominee for director named above to the Company’s Board of Directors, until the next annual general
meeting of shareholders and until his or her successor has been duly elected and qualified, without modification of terms of office.
Vote Required
The affirmative vote of the holders of a majority of the voting power represented at the Meeting, in person or by proxy, is necessary for the re-election or election of each
of the nominees.
2. RE-ELECTION OF EXTERNAL DIRECTOR
(Item 2 on the Proxy Card)
Under the Companies Law, public companies (such as the Company) are required to have at least two (2) external directors. Every external director must either be “professionally
qualified” or have “accounting and financial expertise” (as both such terms are defined in the Companies Regulations (Conditions and Criteria for Having Accounting and Financial Expertise or for Being Professionally Qualified), 5766-2005), and at
least one of the external directors of a company must have “accounting and professional expertise”. All of the external directors of a company must be members of its audit and compensation committees, and any committee of a company’s board of
directors that is authorized to exercise one or more powers of the board of directors must include at least one (1) external director.
The Companies Law provides that a person may not be appointed as an external director if: (i) such person is a relative of a Controlling shareholder; (ii) such person, his or
her relative (as such term is defined in the Companies Law), partner, employer or an entity under that person’s control, has or had during the two (2) years preceding the date of appointment any affiliation with the Company, the Controlling
shareholder or its relative; (iii) in a company that does not have a Controlling shareholder, such person has an affiliation (as such term is defined in the Companies Law), at the time of his or her appointment, to the company’s chairman, chief
executive officer, chief financial officer or a shareholder holding at least five percent (5%) of the company’s share capital; and (iv) such person’s relative, partner, employer, supervisor, or an entity under that person’s control, has other
than negligible business or professional relations with any of the persons with whom that person may not be affiliated. The term “relative” means a person’s spouse, sibling, parent, grandparent and child, as well as a child, sibling or parent of
the person’s spouse, or the spouse of any of the foregoing. The term “affiliation” includes an employment relationship, a business or professional relationship maintained on a regular basis, control and service as an office holder (excluding
service as an external director of a company that is offering its shares to the public for the first time).
In addition, a person may not serve as an external director if his or her position or other activities create or may create a conflict of interest with his or her
responsibilities as director or may otherwise interfere with his or her ability to serve as director. If, at the time an external director is appointed, all members of the board of directors who are not Controlling shareholders or their
relatives, are of the same gender, then that external director must be of the other gender. A director of one company may not be appointed as an external director of another company if he or she is acting as an external director of the first
company at such time. For a period of two (2) years from termination of office, the company or its Controlling shareholder may not give any direct or indirect benefit to the former external director.
External directors are required to be elected by a company’s shareholders. An external director’s term of office is three (3) years and may generally be extended for up to two
(2) additional three (3) year terms. However, under the Companies Regulations (Relaxations for Companies Listed in a Foreign Stock Exchange), 5760-2000 (the “Relaxation Regulations”), a company whose shares are traded on any of the foreign
stock exchanges listed in Section 5A(c) of the Relaxation Regulations, such as the Company, may extend an external director’s term of office for one or more additional three (3) year terms, if: (i) the company’s audit committee and board of
directors confirm that such extension is in the company’s best interest, given the external director’s expertise and special contribution to the work of the board of directors and its committees; (ii) the extension is approved by the special vote
required under the Companies Law; and (iii) the external director’s overall term of office and the reasons of the audit committee and board of directors for extending it are presented to the shareholders prior to their approval of such extension.
Subject to our shareholders’ approval, Mr. Dovev’s fourth term as an external director will commence on October 6, 2023.
The Companies Law provides that a nominee for the position of an external director will have declared to the company that he or she meets the legal requirements for being
appointed as an external director. Mr. Dovev has declared that he meets such legal requirements, and that he is “professionally qualified” and has the requisite “accounting and financial expertise” to serve as an external director. A brief
biography of Mr. Dovev is set forth below:
Gad Dovev has served as an external director since October 2014 and is a member of our Audit, Compensation and Banking Committees. Mr.
Dovev retired from the Israeli Ministry of Defense in August 2012, after heading its Mission to the United States (from August 2008 to August 2011) and its Mission to Germany (from August 2005 to August 2008), as well as serving as its Deputy
General Manager and Head of the Rehabilitation Department (2001 to 2005) and as its Financial Comptroller and Head of the Finance Department (1993 to 2001). Mr. Dovev served as a member of the boards of directors of Bank Otsar Ha-Hayal Ltd.,
IMI-Israel Military Industries Ltd., Shekem Ltd. and Gapim Ltd. Mr. Dovev holds a B.Sc. degree in Financial and Agricultural Administration from the Hebrew University of Jerusalem.
As are all other directors, Mr. Dovev will be entitled to: (i) director’s insurance, provided to all directors and officers, including the external directors, as approved by
the Compensation Committee on August 3, 2023 and as may be amended thereby from time to time, subject to the Company’s Amended and Restated Compensation Policy, as approved by our shareholders on August 31, 2022; (ii) an indemnification
agreement, in the form approved by our shareholders on December 5, 2019; (iii) an exculpation letter, in the form approved by our shareholders on October 17, 2013; (iv) monetary compensation as provided in the “Permanent Amount” criteria of the
Compensation Regulations; (v) options to purchase 20,000 Ordinary Shares, effective as of September 6, 2021, according to the terms approved by our shareholders on June 3, 2021; and (vii) options to purchase 10,000 Ordinary Shares, effective as
of October 6, 2023, subject to our shareholders’ approval of Item 6 below, to grant options to the Company’s directors (including the external directors, but excluding our Controlling shareholder and Chairman of the Board, Mr. Yitzhak Nissan).
Mr. Dovev is otherwise prohibited from receiving any other compensation, directly or indirectly, in connection with his service.
On August 3, 2023, the Audit Committee and the Board determined that Mr. Dovev meets the legal requirements for being appointed as an external director, and that he is
“professionally qualified” and has the requisite “accounting and financial expertise” to serve as such. The Audit Committee and the Board have further confirmed that extending Mr. Dovev’s term of office for an additional, fourth three (3) year
term, is in the best interest of the Company and its shareholders, for the following reasons: Mr. Dovev’s deep knowledge of the Company, gained over his many years of service as an external director, such that he is intimately familiar with both
the Company’s past practices as well as its present strategy and affairs; Mr. Dovev’s extensive prior experience as a senior official of the Israeli Ministry of Defense, specifically in charge of different aspects of procurement, by virtue of
which he offers unique guidance for Board-level decision-making with respect to one of the Company’s main type of clients – the defense sector, in Israel and abroad; and Mr. Dovev’s faithful attendance of meetings of the Audit Committee and the
Compensation Committee and the Board since his appointment as external director.
At the Meeting, the Board proposes that the following resolution be adopted:
“RESOLVED, that Mr. Gad Dovev be and is hereby re-elected for a fourth term as an external director, to hold office for three (3) years,
as of October 6, 2023.”
Vote Required
The approval of this Item 2 requires the affirmative vote of a majority of the shares present and voting on the matter, in person or by proxy, provided that either (i) at least a majority of the shares voted by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the election of the external
director; or (ii) the total number of shares of shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, which are voted against the election of the external director, does not exceed two percent
(2%) of the outstanding voting power in the Company. For the purposes of the vote on this Item 2, a Personal Interest does not include an interest in the proposed resolution that is not by virtue of ties to a Controlling shareholder.
3. SECOND AMENDED AND RESTATED COMPENSATION POLICY
(Item 3 on the Proxy Card)
As required of public companies under the Companies Law, in January 2014, the Company adopted a compensation policy, setting forth the principles that govern the terms of
office and employment of the Company’s “office holders.” as defined in the Companies Law. Under the Companies Law, any amendment to a public company’s compensation policy requires its shareholders’ approval. In December 2016, our shareholders
approved a new compensation policy for the Company, which was amended in September 2018 and in December 2019, and amended and restated in August 2022 (the “Amended and Restated Compensation Policy”).
Section 5.5 of the Amended and Restated Compensation Policy (a) requires each Officer (as defined in the Amended and Restated Compensation Policy) to undertake to return any
overpaid bonus amount (the “Surplus Amount”), including overpayment of any results-based bonus amount by virtue of erroneous data that is subsequently presented anew in the Company’s audited financial statement, provided that the relevant error is discovered within three (3) years from the date on which such Officer receives such bonus, and (b) authorizes the Compensation Committee and the Board to determine the manner in which the
Surplus Amount will be returned to the Company.
Section 10D of the Securities Exchange Act of 1934 (as enacted by Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, “Section 10D”)
requires companies listed on a national securities exchange to implement a written policy for recovering incentive-based compensation paid to its current and former executive officers in the event that the company must prepare an accounting
restatement due to its material noncompliance with any financial reporting requirements under securities laws (a “Clawback Policy”). Under Section 10D, such recovery is required with respect to any incentive-based compensation received by
any executive officer during the three (3) years before such accounting restatement that is in excess of what would have been paid based on the restated financial information, regardless of any misconduct or an executive officer’s responsibility
for the erroneous financial statement. Section 10D also requires the SEC to adopt rules directing the national securities exchanges to prohibit listing any company that does not comply with its requirements.
In October 2022, the SEC adopted final rule 10D-1 (“Rule 10D-1”) to implement Section 10D, and in June 2023 the SEC approved Listing Rule 5608 of the Nasdaq corporate
governance rules (the “Listing Rule”), which mirrors the text of Rule 10D-1 and is currently expected to come into effect on October 2, 2023 (the “Effective Date”). Under the Listing Rule, each listed company is required to adopt a
compliant Clawback Policy no later than 60 days following the Effective Date, comply with such Clawback Policy for all incentive-based compensation received by executive officers on or after the Effective Date, and disclose such Clawback Policy
and its application in the company’s SEC filing on or after the Effective Date.
On August 3, 2023, the Board adopted a Clawback Policy which is intended to comply with Rule 10D-1 and the Listing Rule. It is therefore proposed that Section 5.5 of the
Amended and Restated Compensation Policy will be replaced in its entirety with a new provision (Section 12.5), which will be more consistent with the Company’s recently adopted Clawback Policy, as well as with the Company’s similar obligations
under the Companies Law. Such provision will also provide that in the event of any inconsistency between the Company’s compensation and clawback policies, the Clawback Policy shall prevail. This brief overview of the proposed amendment is
qualified in its entirety by reference to the full text of the proposed second amended and restated Compensation Policy, attached as Exhibit A hereto, in a form marked against the Amended and
Restated Compensation Policy, as approved by our shareholders on August 31, 2022 (the “Second Amended and Restated Compensation Policy”). On August 3, 2023, the Compensation Committee has recommended, and the Board has accordingly
resolved, to approve the Second Amended and Restated Compensation Policy.
At the Meeting, the Board proposes that the following resolution be adopted:
“RESOLVED, that the Second Amended and Restated Compensation Policy, attached to this Proxy Statement as Exhibit A, be and is hereby approved.”
Vote Required
The approval of this Item 3 requires the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that either (i) at least a majority of the Ordinary Shares voted by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the
proposed resolution; or (ii) the total number of Ordinary Shares voted against the proposed resolution by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of
the outstanding voting power in the Company.
4. GRANT OF 2022 ANNUAL BONUS TO MS. REVITAL COHEN-TZEMACH
(Item 4 on the Proxy Card)
Under the terms of the Companies Law, any benefits provided to Ms. Revital Cohen-Tzemach with respect to her employment with the Company must be approved by Eltek’s
shareholders, as she is the daughter of our Chairman of the Board and Controlling shareholder, Mr. Yitzhak Nissan.
On June 3, 2021, our shareholders approved Ms. Cohen-Tzemach’s participation in the Company’s future annual bonus plans for the years 2022 to 2024 (with the application of the
annual bonus plan for the year 2024 being subject to the extension of Ms. Cohen-Tzemach’s employment with the Company, as our shareholders are asked to approve in Item 5 below). Notwithstanding, due to the structure and discretion of the
Compensation Committee and the Board in respect of the actual annual bonus amount, the grant to Ms. Cohen-Tzemach of the applicable amount for the year 2022 is also subject to our shareholders’ approval.
On March 20, 2022, the Compensation Committee and the Board approved the Company’s annual bonus plan for the year 2022 (the “2022 Bonus Plan”), in accordance with
the terms of the Company’s Amended Compensation Policy (as approved by the shareholders on December 5, 2019) then in effect. The aggregate bonus amount that Ms. Cohen-Tzemach was eligible to receive under the 2022 Bonus Plan was limited to four
(4) gross monthly salaries (the “2022 Individual Bonus Ceiling”) – as was the case for another, similarly situated senior employee of the Company, who is not an “Office Holder” (as such term is defined in the Companies Law)
and to whom the 2022 Bonus Plan was also applied; and as with respect to all senior employees (including Office Holders) participating in the 2022 Bonus Plan, such aggregate amount consisted of a performance bonus, determined according to the
Company’s meeting of graded annual targets set with respect to five (5) pre-defined measurable financial criteria of different weights (the “Performance Bonus”), and a personal-assessment bonus, determined by the CEO (the “Personal-Assessment
Bonus,” and together with the Performance Bonus, the “Annual Bonus”). Furthermore, the total amount that could be granted as Annual Bonuses to all such employees under the 2022 Bonus Plan was limited to seven percent (7%) of the
Company’s pre-tax profit in the year 2022 (the “2022 Collective Bonus Ceiling”).
On March 6 and 8, 2023, the Audit Committee and the Board respectively approved the grant of an Annual Bonus in the amount of NIS80,000 (approximately US$21,700) to Ms.
Cohen-Tzemach under the 2022 Bonus Plan (the “2022 Annual Bonus”), consisting of a Performance Bonus in the amount NIS71,600 and a Personal-Assessment Bonus in an amount equal to thirty percent (30%) thereof, the sum of which was then
reduced in accordance with the 2022 Individual Bonus Ceiling (while the total amount of the Annual Bonuses granted under the 2022 Bonus Plan was initially smaller than the 2022 Collective Bonus Ceiling). The shareholders are hereby requested to
approve the grant of the 2022 Annual Bonus to Ms. Cohen-Tzemach.
At the Meeting, the Board proposes that the following resolution be adopted:
“RESOLVED, that the grant of the 2022 Annual Bonus to Ms. Revital Cohen-Tzemach, as described in this Proxy Statement, be and is hereby
ratified and approved.”
The approval of this Item 4 requires the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that either (i) at least a majority of the Ordinary Shares voted by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the
proposed resolution; or (ii) the total number of Ordinary Shares voted against the proposed resolution by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of
the outstanding voting power in the Company.
5. EXTENSION OF MS. REVITAL COHEN-TZEMACH’S EMPLOYMENT
(Item 5 on the Proxy Card)
Under the terms of the Companies Law, Ms. Revital Cohen-Tzemach’s employment with the Company must be approved by Eltek’s shareholders, as she is the daughter of our Chairman and
Controlling shareholder, Mr. Yitzhak Nissan.
Ms. Cohen-Tzemach was first employed by the Company on March 1, 2015, as a trainee in the office of the CEO, and on October 27, 2015, our
shareholders approved her employment as assistant to the CEO for a period of three (3) years, until February 28, 2018. On October 27, 2017, our shareholders approved amendments to the terms of Ms. Cohen-Tzemach’s employment with the Company, and an
extension thereof for an additional three (3) years. Another three (3) year extension of Ms. Cohen-Tzemach’s employment with the Company, now in the position of special project manager, as well as additional amendments to the terms of her
employment, were approved by our shareholders on December 5, 2019, and again on October 29, 2020 (as of August 1, 2020). On August 3, 2023, the Audit Committee and the Board approved the extension of Ms. Cohen-Tzemach’s employment with the Company
for an additional three (3) year period, until July 31, 2026. Our shareholders are requested to ratify and approve said extension, without modification of the terms of Ms. Cohen-Tzemach’s employment with the Company (other than the grant of
options, as described in Item 8 below and subject to our shareholders’ approval thereof), as of August 1, 2023.
Pursuant to the current terms of her employment with the Company, as approved by our shareholders on October 29, 2020, Ms. Cohen-Tzemach receives a gross monthly salary of
NIS20,000, on the basis of which the Company makes standard employer contributions towards severance pay (8.33%), disability insurance (up to 2.5%), and pension (up to 6.5%), as well as towards her “professional advancement” fund (up to the lower
of 7.5% and the maximum permissible amount for tax purposes). Ms. Cohen-Tzemach is also entitled to 23 vacation days per year and a 7-seat company car, valued up to NIS180,000, including all associated operation and maintenance expenses. In
addition, Ms. Cohen-Tzemach is entitled to (i) options to purchase 3,140 Ordinary Shares, effective as of September 3, 2019, according to the terms approved by our shareholders on December 5, 2019; (ii) options to purchase another 10,000 Ordinary
Shares, effective as of March 24, 2021, according to the terms approved by our shareholders on June 3, 2021; and (iii) options to purchase another 8,000 Ordinary Shares, effective as of August 3, 2023, subject to our shareholders’ approval of Item
8 below.
From 2008 until 2014, Ms. Cohen-Tzemach served as a branch manager for Halperin Optics Ltd., a major Israeli optics supplier. Ms. Cohen-Tzemach holds a B.Sc. degree in
Optometry and an Executive M.B.A. degree from Bar-Ilan University.
At the Meeting, the Board proposes that the following resolution be adopted:
“RESOLVED, that the extension of Ms. Revital Cohen-Tzemach’s employment with the Company, as described in this Proxy Statement, be and
is hereby ratified and approved.”
The approval of this Item 5 requires the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that either (i) at least a majority of the Ordinary Shares voted by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the
proposed resolution; or (ii) the total number of Ordinary Shares voted against the proposed resolution by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of
the outstanding voting power in the Company.
6. GRANT OF OPTIONS TO DIRECTORS
(Item 6 on the Proxy Card)
Under the terms of the Companies Law, any benefits provided to the Company’s directors require our shareholders’ approval. Our shareholders are therefore requested to approve
the grant of options as described in this Item 6.
In 2018, the Board approved a share incentive plan, which authorizes the grant of options to purchase shares and of restricted shares units to officers, employees, directors
and consultants of the Company and its subsidiaries (the “Option Plan”). Options granted under the Option Plan are generally exercisable for ten (10) years from the date on which such options are granted.
On June 3, 2021, our shareholders approved the grant of options to purchase 20,000 Ordinary Shares to each of the Company’s directors (and 100,000 in the aggregate), including
the external directors, but excluding our Controlling shareholder and Chairman of the Board, Mr. Yitzhak Nissan, effective as of, and exercisable at a price per share equal to the average daily closing price of the Ordinary Shares during the 30
calendar days prior to, September 6, 2021 (US$6.47, effectively reduced to US$6.30 pursuant to Section 4 of the Option Plan, following the Company’s distribution of a cash dividend in the amount of US$0.17 per Ordinary Share on December 12, 2022
(the “Distribution”)). All such options were granted under the Option Plan and Section 102(b)(2) of the Income Tax Ordinance [New Version], 5721-1961 (the “Capital-Gains Tax Route” and the “Income Tax Ordinance”,
respectively), and in accordance with the terms of the Company’s compensation policy then in effect.
On August 3, 2023, the Compensation Committee recommended, and the Board approved, an additional grant of options to purchase 10,000 Ordinary Shares to each of the Company’s
directors (and 50,000 in the aggregate), including the external directors, but excluding our Controlling shareholder and Chairman of the Board, Mr. Yitzhak Nissan, and his daughter, Ms. Revital Cohen-Tzemach (assuming her election by our
shareholders to serve on the Board under Item 1 above), effective as of October 6, 2023. All such options will (i) be granted under the Option Plan and the Capital-Gains Tax Route, (ii) vest over the following four (4) years, such that 25% of the
options will vest on October 6, 2024, and the remaining options will vest in equal quarterly installments thereafter, and (iii) be exercisable by means of a “cashless exercise” and at a price per share equal to the average daily closing price of
the Ordinary Shares during the 30 calendar days prior to October 6, 2023.
The grant of options to the Company’s directors hereunder, including the external directors, but excluding our Controlling shareholder and Chairman of the Board, Mr. Yitzhak
Nissan, and his daughter, Ms. Revital Cohen-Tzemach, meets the terms of the Amended and Restated Compensation Policy, as approved by the shareholders on August 31, 2022, and of the Second Amended and Restated Compensation Policy, subject to our
shareholders’ approval of Item 3 above.
At the Meeting, the Board proposes that the following resolution be adopted:
“RESOLVED, that the grant of options to the Company’s directors (including the external directors, but excluding the Controlling
shareholder and Chairman of the Board, Mr. Yitzhak Nissan, and his daughter, Ms. Revital Cohen-Tzemach), as described in the Proxy Statement, be and is hereby approved.”
The approval of this Item 6 requires the affirmative vote of the holders of a majority of the voting power represented at the Meeting, in person or by proxy.
7. GRANT OF OPTIONS TO CHIEF EXECUTIVE OFFICER
(Item 7 on the Proxy Card)
Under the terms of the Companies Law, any benefit (other than non-material benefits) provided to the CEO with respect to his employment with the Company, must be approved by
Eltek’s shareholders. Our shareholders are therefore requested to approve the grant of options as described in this Item 7.
On September 6, 2018, our shareholders approved the grant of options to purchase 60,857 Ordinary Shares to the CEO, effective as of, and exercisable at a price per share equal
to the average daily closing price of the Ordinary Shares during the 30 calendar days prior to, July 1, 2018 (US$4.17, effectively reduced to US$4.00 pursuant to Section 4 of the Options Plan, following the Distribution). Following the rights’
offerings issued by the Company in March 2019 and December 2020, and in accordance with Section 4 of the Option Plan, these options are effectively exercisable into 78,580 Ordinary Shares. On June 3, 2021, our shareholders approved an additional
grant of options to purchase 100,000 Ordinary Shares to the CEO, effective as of, and exercisable at a price per share equal to the average daily closing price of the Ordinary Shares during the 30 calendar days prior to, December 29, 2020
(US$4.75, effectively reduced to US$4.58 pursuant to Section 4 of the Option Plan, following the Distribution). All of the foregoing options were granted under the Option Plan and the Capital-Gains Tax Route, and in accordance with the terms of
the Company’s compensation policy then in effect.
On August 3, 2023, the Compensation Committee recommended, and the Board approved, an additional grant of options to purchase 25,000 Ordinary Shares to the CEO, effective as of
August 3, 2023. All such options will (i) be granted under the Option Plan and the Capital-Gains Tax Route, (ii) vest over the following four (4) years, such that 25% of the options will vest on August 3, 2024, and the remaining options will vest
in equal quarterly installments thereafter, and (iii) be exercisable by means of a “cashless exercise” and at a price per share equal to the average daily closing price of the Ordinary Shares during the 30 calendar days prior to August 3, 2023.
The grant of options to the CEO hereunder meets the terms of the Amended and Restated Compensation Policy, as approved by our shareholders on August 31, 2022, and of the
Second Amended and Restated Compensation Policy, subject to our shareholders’ approval of Item 3 above.
At the Meeting, the Board proposes that the following resolution be adopted:
“RESOLVED, that the grant of options to Mr. Eli Yaffe, as described in the Proxy Statement, be and is hereby approved.”
The approval of this Item 7 requires the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that either (i) at least a majority of the Ordinary Shares voted by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the
proposed resolution; or (ii) the total number of Ordinary Shares voted against the proposed resolution by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of
the outstanding voting power in the Company.
8. GRANT OF OPTIONS TO MS. REVITAL COHEN-TZEMACH
(Item 8 on the Proxy Card)
As explained in Item 4 above, any benefits provided to Ms. Revital Cohen-Tzemach with respect to her employment with the Company must be approved by Eltek’s shareholders, as
she is the daughter of our Chairman and Controlling shareholder, Mr. Yitzhak Nissan. Our shareholders are therefore requested to approve the grant of options as described in this Item 8.
On December 5, 2019, our shareholders approved the grant of options to purchase 3,000 Ordinary Shares to Ms. Cohen-Tzemach, effective as of, and exercisable at a price per
share equal to the average daily closing price of the Ordinary Shares during the 30 calendar days prior to, September 3, 2019 (US$6.38, effectively reduced to US$6.21 pursuant to Section 4 of the Option Plan, following the Distribution).
Following the rights’ offering issued by the Company in December 2020, and in accordance with Section 4 of the Option Plan, these options may be effectively exercised into 3,140 Ordinary Shares. On June 3, 2021, our shareholders approved the
additional grant of options to purchase 10,000 Ordinary Shares to Ms. Cohen-Tzemach, effective as of, and exercisable at a price per share equal to the average daily closing price of the Ordinary Shares during the 30 calendar days prior to, March
24, 2021 (US$5.52, effectively reduced to US$5.38 pursuant to Section 4 of the Option Plan, following the Distribution). All of the foregoing options were granted under the Option Plan and Section 3(i) of the Income Tax Ordinance, and in
accordance with the terms of the Company’s compensation policy then in effect.
On August 3, 2023, the Audit Committee recommended, and the Board approved, an additional grant of options to purchase 8,000 Ordinary Shares to Ms. Cohen-Tzemach, effective as
of August 3, 2023. All such options will (i) be granted under the Option Plan and Section 3(i) of the Income Tax Ordinance, (ii) vest over the following four (4) years, such that 25% of the options will vest on August 3, 2024, and the remaining
options will vest in equal quarterly installments thereafter, and (iii) be exercisable by means of a “cashless exercise” and at a price per share equal to the average daily closing price of the Ordinary Shares during the 30 calendar days prior to
August 3, 2023.
At the Meeting, the Board proposes that the following resolution be adopted:
“RESOLVED, that the grant of options to Ms. Revital Cohen-Tzemach, as described in the Proxy Statement, be and is hereby approved.”
Vote Required
The approval of this Item 8 requires the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that either (i) at least a majority of the Ordinary Shares voted by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the
proposed resolution; or (ii) the total number of Ordinary Shares voted against the proposed resolution by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of
the outstanding voting power in the Company.
9. GRANT OF EXCULPATION LETTER TO MS. REVITAL COHEN-TZEMACH
(Item 9 on the Proxy Card)
In October 2013, our shareholders approved the Company’s undertaking to exculpate, in advance, its directors and officers from liability for damages caused as a result of a
breach of such director’s or officer’s duty of care towards the Company (the “Exculpation Letter”). Under the Exculpation Letter, the Company exempts such director or officer, to the fullest extent permitted by applicable law, from any
liability for damages caused as a result of a breach of such director’s or officer’s duty of care towards the Company, resulting from any action taken by such director or officer in good faith in his or her capacity as director or officer, as
applicable.
Subject to her election by our shareholders to serve on the Board under Item 1 above, Ms. Cohen-Tzemach may also be granted an Exculpation Letter. However, as explained in Item
4 above with respect to benefits provided to Ms. Cohen-Tzemach as part of her employment with the Company, any benefit provided to her as a director must also be approved by Eltek’s shareholders, as she is the daughter of our Chairman and
Controlling shareholder, Mr. Yitzhak Nissan. In accordance with the provisions of the Companies Law, an Exculpation Letter to Ms. Cohen-Tzemach, as daughter of our Controlling shareholder, may be in force and effect for a maximum period of three
(3) years. Therefore, our shareholders are hereby requested to approve the grant of an Exculpation Letter to Ms. Cohen-Tzemach for a three (3) year period, ending on September 11, 2026.
On August 3, 2023, the Compensation Committee and the Board approved the grant of an Exculpation Letter to Ms. Cohen-Tzemach, subject to her election to serve on the Board.
At the Meeting, the Board proposes that the following resolution be adopted:
“RESOLVED, that the grant of an exculpation letter to Ms. Revital Cohen-Tzemach, as described in the Proxy Statement, be and is hereby
approved.”
Vote Required
The approval of this Item 9 requires the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that either (i) at least a majority of the Ordinary Shares voted by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the
proposed resolution; or (ii) the total number of Ordinary Shares voted against the proposed resolution by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of
the outstanding voting power in the Company.
10. GRANT OF INDEMNIFICATION LETTER TO MS. REVITAL COHEN-TZEMACH
(Item 10 on the Proxy Card)
The Companies Law and the Articles authorize us, subject to the receipt of requisite corporate approvals, to agree in advance to indemnify the Company’s directors and officers,
subject to certain conditions and limitations. In December 2019, our shareholders approved an amended indemnity agreement (the “Indemnification Letter”) granted to the Company’s directors and officers serving from time to time in such
capacity, such that the Indemnification Letter shall comply with the requirements of the Companies Law.
Subject to her election by our shareholders to serve on the Board under Item 1 above, Ms. Cohen-Tzemach may also be granted an Indemnification Letter. However, as explained
above, any benefit provided to Ms. Cohen-Tzemach as a director must also be approved by Eltek’s shareholders, as she is the daughter of our Chairman and Controlling shareholder, Mr. Yitzhak Nissan. In accordance with the provisions of the
Companies Law, an Indemnification Letter to Ms. Cohen-Tzemach, as daughter of our Controlling shareholder, may be in force and effect for a maximum period of three (3) years. Therefore, our shareholders are hereby requested to approve the grant
of an Indemnification Letter to Ms. Cohen-Tzemach for a three (3) year period, ending on September 11, 2026.
On August 3, 2023, the Compensation Committee and the Board approved the grant of an Indemnification Letter to Ms. Cohen-Tzemach, subject to her election to serve on the Board.
At the Meeting, the Board proposes that the following resolution be adopted:
“RESOLVED, that the grant of an indemnification letter to Ms. Revital Cohen-Tzemach, as described in the Proxy Statement, be and is
hereby approved.”
Vote Required
The approval of this Item 10 requires the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that either (i) at least a majority of the Ordinary Shares voted by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the
proposed resolution; or (ii) the total number of Ordinary Shares voted against the proposed resolution by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of
the outstanding voting power in the Company.
11. DETERMINATION REGARDING VESTING AND EXERCISABILITY OF OPTIONS GRANTED
TO MS. REVITAL COHEN-TZEMACH
(Item 11 on the Proxy Card)
As described in Item 8 above, Ms. Revital Cohen-Tzemach, special projects manager and daughter of our Controlling shareholder, Mr. Yitzhak Nissan, has so far been granted a total
of 21,140 options to purchase Ordinary Shares (including those granted subject to our shareholders’ approval of Item 8 above), of which 8,568 options have vested and become exercisable as of August 3, 2023. Pursuant to Section 10.1 of the Option
Plan, if Ms. Cohen-Tzemach ceases to be an employee of the Company for any reason other than death, Retirement, Disability or Cause (as all such terms are defined in the Option Plan), then any vested but unexercised options as of such time could be
exercised, if not previously expired, no later than 90 days thereafter, and all other options would expire immediately thereupon. Such would be the case even if Ms. Cohen-Tzemach is still serving on the Board (assuming her election by the
shareholders under Item 1 above) at such time that she ceases to be an employee of the Company – all, unless otherwise determined by the Board pursuant to Section 10.4 of the Option Plan.
On August 3, 2023, the Audit Committee recommended, and the Board approved, that the following determination be made with respect to any and all options granted to Ms.
Cohen-Tzemach’s on or before August 3, 2023 (including, for the avoidance of doubt, such options that the granting of which remains subject to our shareholders’ approval) (the “Existing Options”): so long as
Ms. Cohen-Tzemach is continuously engaged by the Company as a member of the Board, and notwithstanding whether or not she is also employed by the Company, (a) any and all unvested Existing Options shall continue to vest according to their
respective vesting schedules, as set forth in the applicable award letters; and (b) any and all vested Existing Options that have not been previously exercised or expired, shall remain exercisable until such time that Ms. Cohen-Tzemach ceases to
serve on the Board, and for a period of 90 days thereafter (or any other period as may be determined by the Board in accordance with the Option Plan and subject to our shareholders’ approval).
The foregoing determination, if made, would benefit Mr. Cohen-Tzemach, daughter of our Controlling shareholder, Mr. Yitzhak Nissan, in connection with her employment with the
Company. Hence, under the Companies Law, making such determination requires the approval of Eltek’s shareholders. Our shareholders are therefore requested to approve making the determination described in this Item 11.
At the Meeting, the Board proposes that the following resolution be adopted:
“RESOLVED, that the making of a determination regarding the vesting and exercisability of options granted to Ms. Revital Cohen-Tzemach,
as described in the Proxy Statement, be and is hereby approved.”
Vote Required
The approval of this Item 11 requires the affirmative vote of a majority of the Ordinary Shares present and voting on the matter, in person or by proxy, provided that either (i) at least a majority of the Ordinary Shares voted by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, are voted in favor of the
proposed resolution; or (ii) the total number of Ordinary Shares voted against the proposed resolution by shareholders who are not Controlling shareholders and who do not have a Personal Interest in the matter, does not exceed two percent (2%) of
the outstanding voting power in the Company.
12. APPOINTMENT OF INDEPENDENT AUDITORS
(Item 12 on the Proxy Card)
The Board recommends that our shareholders approve the reappointment of Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network, as the Company’s independent
auditors for the year ending December 31, 2023, and for such additional period, until the next annual general meeting of the shareholders.
The following table sets forth, for each of the years indicated, the fees paid to our independent registered public accountants. Brightman Almagor Zohar & Co., a firm in
the Deloitte Global Network, has served as our principal independent registered public accounting firm since December 2020.
| |
|
Year Ended December 31, 2022
|
|
|
Year Ended December 31, 2021
|
|
| |
|
Amount
|
|
|
Percentage
|
|
|
Amount
|
|
|
Percentage
|
|
|
Audit Fees (1)
|
|
$
|
98,000
|
|
|
|
94
|
%
|
|
$
|
75,800
|
|
|
|
74
|
%
|
|
Audit-related fees(2)
|
|
$
|
0
|
|
|
|
0
|
%
|
|
$
|
21,700
|
|
|
|
21
|
%
|
|
All other fees(2)
|
|
$
|
6,000
|
|
|
|
6
|
%
|
|
$
|
5,500
|
|
|
|
5
|
%
|
|
Total
|
|
$
|
104,000
|
|
|
|
100
|
%
|
|
$
|
103,000
|
|
|
|
100
|
%
|
|
(1)
|
Audit fees relate to audit services provided for each of the years shown in the table, including fees associated with the annual audit, consultations on various accounting issues and audit
services provided in connection with statutory or regulatory filings
|
|
(2)
|
All of such fees were pre-approved by our Audit Committee.
|
Audit Committee’s pre-approval policies and procedures:
Our Audit Committee has adopted a policy and procedures for the pre-approval of audit and non-audit services rendered by our independent auditors. Pre-approval of an audit or
non-audit service may be given as a general pre-approval, as part of the Audit Committee’s approval of the scope of the engagement of our independent auditor, or on an individual basis. Any proposed services exceeding general pre-approved levels
also require specific pre-approval by our Audit Committee. If needed, the Audit Committee’s Chairman may pre-approve services up to a limit of $10,000, in anticipation of approval of the Audit Committee, at the first meeting following the
Chairman’s approval. The policy prohibits retention of the independent registered public accounting firm to perform the prohibited non-audit functions defined in Section 201 of the Sarbanes-Oxley Act or the rules of the SEC, and also requires the
Audit Committee to consider whether proposed services are compatible with the independence of the registered public accountants.
At the Meeting, the Board proposes that the following resolution be adopted:
“RESOLVED, to reappoint Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network, as the Company’s independent auditors
for the fiscal year ending December 31, 2023, and for such additional period, until the next annual general meeting of shareholders, and to authorize the Company’s Board of Directors to approve their compensation.”
Vote Required
The approval of this Item 12 requires the affirmative vote of the holders of a majority of the voting power represented at the Meeting, in person or by proxy.
13. REVIEW OF AUDITOR’S REPORT AND FINANCIAL STATEMENTS
At the Meeting, the Auditor’s Report and the Consolidated Financial Statements of the Company for the fiscal year ended December 31, 2022 will be presented for review. On March
23, 2023, the Company’s Audited Consolidated Financial Statements were filed with the SEC under Form 20-F and appear on its website: www.sec.gov, as well as on the Company’s website: www.nisteceltek.com. These financial statements are not a part of this Proxy Statement. This Item 13 does not involve a vote of our shareholders.
OTHER BUSINESS
The Meeting is called for the purposes set forth in the Notice accompanying this Proxy Statement. As of the date of the Notice, the Board knows of no business which will be
presented for consideration at the Meeting other than the foregoing matters.
|
|
By Order of the Board of Directors,
Yitzhak Nissan
Chairman of the Board of Directors
|
August 3, 2023
Exhibit A
Amended and Restated Compensation Policy
Eltek Ltd.
Directors and Officers Compensation Policy
The meaning of the definitions and terms in the Compensation Policy will be as set down in the Companies Law, 5759-1999 (the “Companies Law”), unless
otherwise defined in the framework of the Compensation Policy.
Chapter 1: General Background
|
1.1. |
The following document presents Eltek Ltd.’s (the “Company”) Compensation Policy regarding the Company’s Officers (the “Compensation
Policy”) as determined by the Compensation Committee and the Company’s Board of Directors (the “BOD”).
|
|
1.2. |
The Compensation Policy is intended to increase the transparency of the Company’s activities regarding all aspects of its Officers’ compensation and to enhance the shareholders' ability to express their opinion and influence the
Compensation Policy.
|
|
1.3. |
The principles of the Compensation Policy were formulated following internal discussions held by the Compensation Committee and the BOD, which considered, among other things, the changes in the provisions of the law since the adoption
of the previous Compensation Policy; the experience and the lessons accumulated in the company during the period of the implementation of the previous compensation policy; and the changes in the company and its needs. The policy’s
principles are designed for determining reasonable, appropriate and fair compensation for the Company’s Officers, that will ensure that the Officers’ compensation will be compatible with the good of the company and its long-term and
short-term organizational strategy, considering the Company’s risk management policy while increasing the Officers’ sense of solidarity with the company and its activities, increasing their satisfaction and motivation and enabling the
company to both retain its high quality Officers for the long term and to hire new good quality officers.
|
|
1.4. |
The considerations taken into account during the setting of the Compensation Policy principles:
|
|
a. |
Promoting the Company’s goals, work plan and long-term policies.
|
|
b. |
Creating appropriate incentives for the Company’s Officers while keeping in mind the Company’s risk management.
|
|
c. |
The size of the Company and the nature of its activities.
|
|
d. |
With regard to variable components of the Officers terms of service and employment - the Officer’s contribution to achieving the Company’s goals and maximizing profits; all with a long-term view and considering the position of each
Officer.
|
|
1.5. |
Objectives of the Compensation Policy
|
|
a. |
Encouraging the maximization of the Company’s profits via compensation incentives.
|
|
b. |
Maximizing the Company’s performance without the Company’s Officers taking unreasonable risks.
|
|
c. |
Supporting the implementation of the Company’s business strategy.
|
|
d. |
Promoting the alignment of the Officers’ interests with those of the Company’s shareholders.
|
|
e. |
Increasing the Company’s ability to recruit and retain Officers who can lead the Company and meet the market’s challenges.
|
|
f. |
Creating a balance between the various types of compensation components.
|
|
1.6. |
Measures for setting the Compensation Policy
|
The Compensation Policy is based among other things, on the following measures:
|
a. |
Each Officer’s education, skills, expertise and achievements.
|
|
b. |
The positions, areas of responsibility and previous wage agreements signed with the Officers.
|
|
c. |
The relationship between the fixed compensation components and the variable compensation components.
|
|
d. |
An examination of the average terms of service and employment for the Officers in accordance with the Compensation Policy relative to the average and mean wage conditions of the Company’s employees and contract workers, and the
influence of the gaps between these conditions on the labor relations at the Company.
|
|
1.7. |
The Compensation Policy determination and approval process
|
The BOD approved the Compensation Policy on November 11, 2019, following the adoption of the recommendations of the Compensation Committee concerning the Compensation
Policy. The Compensation Policy is subject to the approval of the General Assembly of the Company’s shareholders, in accordance with the provisions of Section 267A(b) of the Companies Law. The above notwithstanding, the BOD may even set the
Compensation Policy in the absence of the approval of the said General Assembly, in accordance with the provisions of Section 267A(c) of the Companies Law.
|
1.8.1. |
The Compensation Policy will be valid for a period of three years, effective from September 1, 2022, following the approval of all the required organizations, in accordance with the provisions of Section 267A of the Companies Law (the
“Applicable Date”).
|
|
1.8.2. |
The Compensation Policy will apply to the Company’s Officers in accordance with the definition of the term “officers” in the Companies Law.
|
|
1.8.3. |
Accordingly, this Compensation Policy is intended to set the compensation terms of the Officers serving in the Company as of the Applicable Date, and as such as will be from time to time, including:
|
|
c. |
The deputy CEO, vice presidents (chief officers) and/or other Company Officers.
|
(collectively the “Company’s Officers” or the “Officers”)
|
1.9. |
The Compensation Policy, its principles and parameters shall not be construed as establishing any right for Company Officers and/or any other third party with respect to the Company. The Company Officers’ rights with respect to the
Company will be determined and defined only in accordance with the provisions of the law, the employment agreements, the compensation plans and other agreements that will be signed, as such will be signed, with the Company Officers.
|
Chapter 2: The Compensation Components
| 2. |
The components of the Compensation Policy
|
|
2.1. |
The Compensation Policy for the Officers is composed of several components that combined to form an overall compensation appropriate for the Officers, in accordance with their duties and their contributions to the Company.
|
|
2.2. |
The Compensation Policy includes the following components:
|
|
a. |
Base Salary – this component consists of a monthly salary (in gross terms) or fixed monthly management fees, which correlates to the Officer’s education, skills, expertise, professional experience and takes into consideration
his achievements, jobs, areas of responsibility and previous wage agreements.
|
|
b. |
Social and Fringe Benefits – including pension savings, severance pay, disability insurance, vacation, sick leave, recreation pay, continuing education savings, reimbursement of expenses, use of a company car, mobile phone, etc.
|
|
c. |
Variable Rewards in cash (Bonus) – designed as in incentive for Officers to promote and achieve the Company’s goals in the medium and long term.
|
|
d. |
Equity-Based Compensation – designed to create a link between actions that lead to maximizing the value of the Company’s shares over time and the reward given to the Officers for this maximizing, such that the link aligns the
Officers’ interests with the interests of the Company’s shareholders and contributes to the Officers’ motivation and the Company’s ability to retain quality Officers.
|
|
e. |
End of service terms – designed to arrange the terms at the end of the Officers’ service at the Company, including in order to anchor the rights and obligations of the Company and the Officers toward one another.
|
|
f. |
Provisions to protect Officers – include exemption, indemnification and responsibility insurance for Officers, and are designed to enable the Company to retain and recruit Officers suitable for serving in the Company, in light
of the Officers’ personal exposure to the consequences of actions undertaken in the framework of their jobs at the Company.
|
|
2.3. |
Unless otherwise noted, the parameters for the fixed components1 in the compensation relate to an Officer employed in a fulltime position. If the relevant Officer is not a salaried employee and/or
is not employed fulltime, the requisite adjustments must be made.2 Thus for example, if an Officer is an independent contractor who provides the Company with services and is paid based on a tax
receipt, the requisite adjustments will be made such that the cost to the Company will not be higher than the cost if the worker were a salaried employee.
|
|
2.4. |
The following policy rules concerning each of the Officers’ compensation components set an upper or lower limit in certain instance, for the compensation component, based on certain criteria. It is important to note that the Company is
not obligated to grant the Officer all the components detailed in this Compensation Policy and is not obligated to grant the maximum or minimum rate set for each of the components, as relevant.
|
|
2.5. |
The Compensation rules do not relate to various benefits whose value is not significant and which the Company grants to its workers. These benefits include: parking, newspaper subscriptions, Internet access, clothing, holiday gifts,
etc., and the Company will not be restricted in this regard.
|
|
3.1. |
Directors’ compensation
|
The Company’s serving Directors, who are not employed by the Company and do not receive a salary as employees will be eligible for annual compensation, compensation for
participating in board meetings (including in decisions in writing or via telephone) and reimbursement of expenses, all in accordance with the provisions of the Companies Law Regulations (Rules Regarding Compensation and Expenses for External
Directors), 5760-2000, and as such will be amended from time to time (the “Compensation Laws”). The sum of the compensation, in accordance with the Compensation Laws, will be in keeping with the level of
the Company’s equity (whatever this will be from time to time).
1
|
The fixed components in the Compensation Policy refer to the Base Salary and to the Social and Fringe Benefits.
|
| 2 |
The above notwithstanding, the value of car use, mobile phone use and the advance notice period to which the Officer is eligible will not be adjusted to the actual scope of the Officer’s position.
|
3
|
The base salary is in terms of gross salary and does not include social and fringe benefits
|
|
3.2. |
Maximum monthly base salary
|
|
Officer
|
Maximum monthly base
salary (gross) in NIS
|
Scope of position4
|
|
Active Chairman of the Board5
|
100,000
|
As may be Required
|
|
CEO
|
95,0006
|
100%
|
|
Deputy CEO, vice presidents and other Officers7
|
55,000
|
100%
|
|
3.3. |
Linkage to the index
|
The ceiling of the base salary will be linked to the increase in the cost-of-living index that is published every month by the Central Bureau of Statistics.8
|
3.4. |
Comparison to the market - benchmark
|
In order to set the base salary when a new Officer is hired for the Company (“a new Officer”), or upon the approval of new terms of
service and/or employment for an existing Officer, the BOD will, if necessary and in accordance with the BOD’s discretion, refer to the existing salary structure at the Company and, if the BOD considers it appropriate, to a survey of comparative
data on the accepted salary for similar positions (as much as possible) (“salary survey”).
If the BOD decides to conduct a salary survey, the characteristics of the companies in the salary survey for the purpose of conducting the said comparison will be: a)
technology companies, with a preference for those involved in the electronics industry; or b) public companies with a market value similar to that of the Company; or c) companies with revenues similar to those of the Company (severally and
separately: the “sample companies”). In the event that the sample companies do not have a position identical to that of the Officer, the Company may conduct the comparative data survey of the employment
terms of officers with similar seniority and/or a similar position (as much as possible) among other public companies (whose characteristics are not necessarily consistent with a), b) and c) above in this paragraph).
4
|
If the Officer is employed less than fulltime, the ceiling for the monthly salary will be adjusted in accordance with the actual scope of the position.
|
5
|
An active chairman of the board is a chairman of the board who proves services to the Company that are supplementary to the services he grants the Company in his capacity as a member of the BOD (including his position as chairman of
the board).
|
6
|
An incremental allowance (“Tosefet Yoker”) shall be included in the CEO's Salary in accordance with provisions of the general collective agreements, and the expansion orders dealing with
incremental allowances, and as shall be updated from time to time.
|
7
|
Officers, if and inasmuch as these will be in the future, who are not chairman of the board, CEO, deputy CEO or vice president (“other officers”).
|
| 8 |
The base index for calculating the linkage of the compensation elements in accordance with this Compensation Policy will be the index published at the time of the approval of the Compensation Policy by the BOD.
|
|
3.5. |
Updating the base salary
|
From time to time the Compensation Committee and the BOD may update the base salary paid to an Officer of the Company, in accordance with the parameters set by this
Compensation Policy, including in consideration of his education, skills, expertise and professional experience, as well as the Officer’s achievements, his position, areas of responsibility and previous wage agreements that have been signed with
him.
|
3.6. |
The Company’s Officers (apart from the Directors who are not employed by the Company in additional positions) will be eligible for social and fringe benefits as detailed in Clause 4 below.
|
| 4. |
Social and fringe benefits
|
|
4.1. |
Pension contributions
|
The Company will contribute each month to a life insurance and long-term disability insurance plan, a pension fund or a provident pension fund, or to a combined life
insurance, disability and provident pension fund (the “Plan”) in accordance with the relevant Officer’s choice, and will undertake the contributions to the
compensation, severance pay and disability funds in accordance with the plan chosen, in compliance with the law and considering the custom in the market sector of the Company’s operations and the Company’s policy in this matter. The contributions
will be subject to Section 14 of the Severance Pay Act. The basis for the contributions will be up to 100% of the base salary.
|
4.2. |
Contributions to continuing education funds
|
To the extent that the Officer’s terms of employment include contributions to a continuing education fund, the Company will undertake the contributions to the continuing
education fund, in accordance with the Officer’s choice, in compliance with the law and considering the custom in the market sector of the Company’s operations and the Company’s policy in this matter. The basis for the contributions to a
continuing education fund may be the full base salary.
|
4.3. |
Sick leave and sick pay
|
The Company’s Officers will be eligible for full pay for sick days starting from the first day.
The Company’s Officers will be eligible for recreation pay at the maximum rate, in accordance with the law.
|
4.5.1. |
Each of the Company’s Officers will be eligible for annual vacation9 amounting to no less than the minimum number of days established by the Annual Vacation Law 5711-1951 (the “Annual Vacation Law”) and the extension order for the metals, electricity and electronics industry and will not exceed the total maximum days specified in the table below for each work-year, as defined
in the Annual Vacation Law, in the year he serves in his position:
|
|
Officer
|
Maximum total number of days*
(in terms of work days)
|
|
Active Chairman of the Board, CEO
|
24
|
|
Deputy CEO, vice presidents and other Officers
|
24
|
* Including the right to be absent for “optional days”
9 Vacation days are calculated based on a 5-day work week.
|
4.5.2. |
If the Officer does not serve in his position for a full work-year, the maximum number of vacation days for which he is eligible (in terms of work days) will be adjusted in accordance with the law.
|
|
4.5.3. |
An Officer at the Company may accrue vacation days that he is not obligated to use under the Annual Vacation Law up to the limit set by the law (the “cumulative
ceiling”).
|
|
4.5.4. |
Throughout the duration of the Officer’s service and subject to the Company’s approval or to the provisions of the Officer’s employment agreement and subject to the law, the Officer may redeem the vacation days that he has accrued.
|
|
4.5.5. |
Upon the completion of his service at the Company, an Officer may redeem the vacation days he has accrued.
|
The Company may provide a car for the personal use of an Officer and cover the costs of the use and maintenance of the car. The Company will not gross up the value of this
benefit and the Officer will bear the cost of the income tax. The type of car provided to an Officer will be in keeping with his position, as follows:
|
Officer
|
Car price ceiling (NIS10)
|
|
Active Chairman of the Board
|
Up to NIS 300,000
|
|
CEO
|
Up to NIS 300,000
|
|
Deputy CEO, vice presidents and other Officers
|
Up to NIS 220,000
|
The Company may provide Officers, excluding Directors, with a mobile phone and bear all the accompanying costs. The Company will not gross up the value of this benefit and
the Officer will bear the cost of the income tax.
10 The car price ceiling will be linked to the Cost of Living Index.
|
4.8. |
Reimbursement of expenses
|
|
4.8.1. |
An Officer at the Company is eligible for the reimbursement of the customary and accepted types of expenses in the Company’s business sphere, including the cost of hosting guests in Israel and abroad, travel and parking expenses, etc.
that are reasonable in the relevant circumstances, considering the Officer’s position, the scope of each expense and its necessity, and the provisions of the Company’s reimbursement of expenses procedures (including obtaining approval in
advance, if required); subject to the said expenses being incurred in the framework of the Officer’s fulfilling his duties in connection with the Company’s operations and for the purpose of promoting its interests.
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4.8.2. |
In accordance with the Company’s petty cash procedure and reimbursement of expenses procedure, every Officer is obligated to submit original receipts to the Company’s accountant in order to receive reimbursement for expenses incurred
on the job.
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4.9. |
If the Officer provides services to the Company as an independent contractor, or via a management company he controls, the BOD has the authority to grant the Officer the fringe benefits detailed in Clauses 4.3 to 4.8 above (as relevant
in each case), which will be added to the management fees.
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5.1. |
The Company may grant the Officers bonuses based on financial results or based on other measurable parameters, as well as other bonuses in accordance with the Company’s discretion (and subject to the provisions of the law and the
obtaining of the requisite approvals). Such bonuses will be in accordance with the Company’s bonuses policy, which reflects the Company’s risk management policy and whose objectives are: to promote the improvement of the Company’s
business conduct and profitability; to achieve the Company’s long-term goals; to increase the Officers’ satisfaction and motivation; to increase each Officer’s contribution to achieving the Company’s goals and maximizing its profits, all
with a long-term view and considering the Officer’s position; and the correlation of some of the Company’s compensation costs to its financial performance.
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5.2.1. |
Each year, after receiving a recommendation from the Compensation Committee, the BOD may approve an Annual Bonus Plan for the Company’s Officers (the “Annual Bonus Plan”);
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5.2.2. |
The Annual Bonus Plan will be based upon at least one pre-defined measurable criteria such as: pre-tax profit, net profit, gross profit, operating profit, EBITDA, sales, (positive) cash flow,
capital raising for the company, or any other measurable financial criteria, amount of work accidents, yield, time compliance (customer order execution) (collectively, the “Criteria”).
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5.2.4. |
With respect to the Criteria, as applicable, the Company will set the targets for that year (the “Targets”), such that a minimum target for the Criteria shall be set, as applicable, under which
the officer will not be eligible for a bonus for such Criteria (the “Threshold Conditions”). The CEO of the Company may determine the Targets of the officers reporting to the CEO, while the CEO’s or
the (active) Chairman's Targets shall be determined by the Compensation Committee and the BOD.
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5.2.5. |
Personal Assessment – the Company may add to the yearly bonus for which an officer is entitled (in accordance with meeting the Targets as set in each of the Criteria) an amount of up to 30% of the bonus, at the discretion of the CEO
(with respect to the officers reporting to the CEO, except for the CFO); subject to the discretion of the CEO and the Chairman of the Audit Committee (with respect to the CFO); and subject to the discretion of the Compensation Committee
and the BOD (with respect to the CEO), provided, that the total amount of the annual bonus granted under the Annual Bonus Plan does not exceed the annual bonus cap. Notwithstanding the above, to
the extent that the CEO is paid a Discretionary Bonus in accordance with Clause 5.3 below, the amount of the Discretionary Bonus, shall not exceed 3 monthly salaries.
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5.2.6. |
The date of the Annual Bonus will be shortly after the approval of the Company’s Consolidated Financial Statements for the end of the calendar year for which the bonus is being granted.
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The annual limit for the amount of the grant, based on the Annual Bonus Plan( (the “Bonus Ceiling”), shall be for each of the
officers as follows:
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CEO and Active Chairman of the Board
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Company’s Officers
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Grant Ceiling
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Up to 9 Salaries
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Up to 6 Salaries
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5.2.8. |
Eligibility for a results-based bonus for partial employment period
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5.2.8.1. |
If any of the Officers ceases to serve in his position before the end of the calendar year, the ratio of the Officer’s eligibility for the Annual Bonus will be adjusted for the number of months in which he served as an Officer in the
Company, relative to a full calendar year (“Partial Annual Bonus”). Note: The ceiling for the Partial Annual Bonus will likewise be adjusted (linearly, based on the number of full months).
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5.2.8.2. |
The payment of the Partial Annual Bonus will be made only after the approval of the Company’s Consolidated Financial Statements for the calendar year for which the Annual Bonus is being granted.
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5.2.8.3. |
All of the above notwithstanding, if the Officer ceases to serve in his position for reasons that render him ineligible for severance pay – he will lose his eligibility for a Partial Annual Bonus and any sum not yet paid to him in
respect of the bonus will be forfeited by the Company.
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5.3. |
Discretionary Bonus to the CEO
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5.3.1. |
Once a year the Company may grant the CEO a bonus that will not exceed the sum of three (3) monthly salaries, in gross terms, based on approval by the Compensation Committee and the BOD, which will relate, inter alia, to criteria that
are not financial and are not measurable; to the Officer’s long-term contribution and his performance in the year for which the bonus is being granted.11
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5.3.2. |
The CEO will be eligible for a Discretionary Bonus only if he has served in this position for at least two (2) full quarters in the calendar year for which the bonus is being granted.
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5.3.3. |
The payment of the Discretionary Bonus only after the approval of the Company’s periodic report for the end of the calendar year for which the Discretionary Bonus is being granted.
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5.3.4. |
If the CEO received an Annual Bonus and a Discretionary Bonus in a single calendar year, the sum of the Discretionary Bonus will be adjusted such that the combined total of the two grants paid to the CEO will not exceed the Bonus
Ceiling set for Officers in Clause 5.2.7. above.
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5.4. |
Bonuses for Officers subordinate to the CEO
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5.4.1. |
Without detracting from the Company’s right to grant results-based bonuses, as detailed in Clause 5.2 above, note that, subject to obtaining approval from the Compensation Committee and the BOD, the Company will have the right to grant
bonuses of any type to Officers subordinate to the CEO, including financial results-based bonuses (including such as are not in accordance with the provisions of Clause 5.2 above); bonuses based on other measurable parameters; and other
bonuses in accordance with the Company’s discretion that are not based on measurable criteria, up to the Bonus Ceiling set in Clause 5.2.7. above.
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5.4.2. |
These bonuses will be granted to the Officers subordinate to the CEO based on the considerations specified in this Compensation Policy above.
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5.4.3. |
If an Officer subordinate to the CEO received an Annual Bonus and a Discretionary Bonus in a single calendar year, the sum of the Discretionary Bonus will be adjusted such that the combined total of the two grants paid to the Officer
will not exceed the Bonus Ceiling set for Officers in Clause 5.2.7, above.
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11 If the CEO is a controlling shareholder or his relative, additional approvals will be
required in accordance with applicable law.
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5.5. |
Recovery of sums paid in error[Reserved]
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Officers will sign a commitment according to which if it turns out that one of them received an overpay of any of the grants detailed above or received a
results-based bonus based on data that turn out to be erroneous and were presented anew in the Company’s audited financial statement (the “surplus amount”), the Officer
will return the surplus amount, on the condition that the error is discovered within three (3) years from the date the Officer received the bonus. The manner in which the surplus amount will be returned to the Company, including payment in
installments, the dates of such installments, linkage, etc. will be determined by the Company’s Compensation Committee and the BOD.
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5.6. |
BOD discretion in reducing a bonus
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The BOD will have the right to reduce any of the bonuses for which an Officer is eligible, subsequent to a substantial deterioration in the Company’s financial situation or
subsequent to substantive dissatisfaction with the functioning of the relevant Officer who is eligible for any of the said bonuses, up to a ratio of 25% of the bonus.
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5.7. |
Officers will not be eligible for any social benefits in respect of any bonus they receive.
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| 6. |
Equity Based Compensation
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6.1. |
The Company may grant Directors and Officers serving at the Company compensation based on securities in order to promote improvement in commercial processes and the Company’s long-term profitability, to increase the Officers’ sense of
solidarity with the Company and with its operations, in increase the Officers’ satisfaction and motivation and retain the high quality Officers at the Company in the long term.
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6.2. |
Accordingly, the Company can offer Officers to participate in a plan for the allocation of options for shares in the Company (the “Options Plan” and “Equity Grant”), considering, among other things, their education, skills, expertise, professional experience, positions and areas of responsibility of each of the said Officers. The Options Plan will be
defined and implemented such that it will comply, as much as possible, with the provisions of Section 102 of the Income Tax Ordinance (New Version) 5721-1961 (as much as possible and subject to the Company’s discretion, in the capital
gains track).
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6.3. |
The maximum dilution with respect of the securities granted under the Option Plan, during the period of this Compensation Policy, shall not exceed 10% of the fully diluted basis share capital of the Company at the Equity Grant , taking
such Equity Grant into account.
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6.4. |
The Options Plan will include the following terms:
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6.4.1. |
The vesting period for the Equity Grant will be spread over at least three years, in keeping with a division into tranches: The first tranche of the Equity Grant will vest and be exercisable after at least 12 months from the date of
its granting, and the final tranche of the Equity Grant will vest and be exercisable after at least 36 months from the date of its granting.
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6.4.2. |
The exercise price of the options will be set in accordance with the decision of the Compensation Committee and the BOD. Note: Exercise prices shall not reflect a discount relative to the share price (as defined below) close to the
date of the granting of the options. Accordingly, the exercise price will be calculated on the basis of the average share price on the stock exchange as of the date of the BOD’s decision on the matter and shall not be less than such
average calculation in the period of 30 days prior to the date of grant of the said options (the “Share Price").
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6.4.3. |
The Options Plan may allow for the exercising of the options on the basis of the benefit element (cashless exercise).
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6.4.4. |
The Company may include mechanisms in the Options Plan, including commonly accepted adjustments in the event of the distribution of benefit shares, a rights issue, the disbursement of dividends, changes in the Company’s capital,
structural changes in the Company, etc.
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6.4.5. |
The value of the options benefit on the date of their granting for each year of vesting (based on annual average over the vesting period) will not exceed 30% of the relevant Officer’s annual base salary (as defined in Clause 2.2
above).
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6.5. |
Ceiling on the value of the exercising of the options
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Following consideration of this matter, the Compensation Committee and the BOD have decided not to set a ceiling on the value for the exercising of the options, since the
Company believes that the said ceiling does not serve the Company’s objectives and does not enable the Company to maximize the advantages inherent in the use of the shares-based equity compensation tool, among other things, as a means to
incentivize Company Officers to maximize the Company’s profits and the value of its shares, by strengthening the alignment of the Officers’ interests and those of the shareholders, with a view to the long term.
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6.6. |
The Company may include “acceleration mechanisms” in the Options Plan, that will facilitate the immediate eligibility to exercise the options, in the event of (1) a change in the control of the Company; (2) a merger, acquisition,
reorganization of the Company with or into another company, when the Company is not the surviving company; (3) the sale of all or a significant part of the Company’s property or shares, apart from in the framework of a public offer. In
addition, the BOD may include “partial acceleration” in the Options Plan, for special circumstances, when an officer who is not a controlling shareholder is dismissed, apart from when the dismissal is based on grounds that disqualify the
said Officer from being eligible for severance pay. In the event that the Company does not include such mechanisms, and an Officer ceased serving the Company before the expiration of the options allocated to him, all the options that have
not yet been exercised will expire will not acquire the Officer any rights.
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| 7. |
Arrangements for the completion of service
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The Company’s Officers, apart from Directors, will be entitled to Advance Notice prior to the termination of their employment at the Company (“Advance Notice Period”). The Advance Notice Period will not exceed the number of months specified below:
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Officer
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Maximum advance notice period
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Active Chairman of the Board, CEO
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Up to 6 months
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other Officers
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Up to 3 months
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During the Advance Notice Period the Officer will be required to continue to fulfill his duties, unless the BOD (with respect to the Chairman of the Board or CEO) or the CEO
(with respect to an Officer who is not a Director or CEO) decides to release him from that obligation, and he will be entitled to the rest of the terms of his service and employment without any changes.
| 8. |
Ratio of fixed elements to variable elements
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The ratio between the annual cost of the fixed elements and the annual cost of the variable elements for the Company’s Officers, as set down in the framework of this
Compensation Policy is as follows:
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Officer
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Ratio of the fixed elements12
to the total Compensation (%)
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Ratio of the variable elements13
to the total Compensation (%)
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Active Chairman of the Board
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45-100
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0-55
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CEO
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45-100
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0-55
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Deputy CEO, Vice Presidents and other Officers
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52-100
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0-48
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The process of the adoption of the Compensation Policy included the examination of the ratio between the fixed elements and the variable elements, as part of the examination
of the proposed structure of the Compensation Policy. After this examination, the Compensation Committee and the BOD are of the opinion that the said ratio is a fair expression of the Company’s concept concerning the necessary balance between
creating appropriate incentives for the Officers, based on their performance, and the Company’s risk management policy as well as aligning the interests and creating an appropriate link between the Officers’ compensation and the yield for the
Company’s shareholders.
12
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The total fixed elements include the base salary, social benefits, fringe benefits and employers National Insurance Institute
payment. The calculation is done on the assumption that for each of the elements the Officer will be paid the maximum sum to which he is entitled in accordance with this Compensation Policy.
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13
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The total variable elements include bonuses (on the assumption that the Officer is granted the overall maximum allowable in
accordance with the Compensation Policy, as detailed in Clause 5.2.7 above) and a capital grant (partial for calendar year). The calculation is done on the assumption that for each of the elements the Officer will be paid the
maximum sum to which he is entitled in accordance with this Compensation Policy.
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| 9. |
Ratio between the Officers’ compensation and the Company employees’ salaries
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9.1. |
The Compensation Committee and the BOD examined the ratio between the terms of service and the employment of the Officers and the salaries of the remainder of the employees, including contract workers employed by the Company, and
specifically the relationship to the average and mean salaries of all these employees, with a focus on the influence of the gap between them on the labor relations at the Company, based on the assumption of the payment of the maximum base
salary, the payment of 100% of the maximum bonuses that can be granted under this Compensation Policy, and assuming maximum Equity Grant value in one vesting year.
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Accordingly, the ratios are as follows:14
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Position
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Relationship to the average
salary of the Company’s employees
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Relationship to the mean
salary of the Company’s employees
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Active Chairman of the Board
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22
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25
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CEO
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22
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25
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Deputy CEO, Vice Presidents and other Officers
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15
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20
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9.2. |
The Compensation Committee and the BOD determined that the relationships are reasonable considering the size of the Company, the nature of its operations, the responsibility borne by each of the Officers at the Company, the mix of
human resources employed by the Company, the number of employees and their occupations, and determined that these relationships will not negatively influence the labor relations at the Company.
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14
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In practice, the will likely be a different ratio in the event that one or more of the compensation components is below the maximum.
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| 10. |
Indemnification, Exemption and Insurance of Directors and Officers
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10.1. |
The Directors and Officers may grant the Officers an exemption, indemnification (in advance and/or after the fact) and a Directors and Officers insurance liability policy (respectively “exemption,”
“indemnification” and “liability insurance”), subject to the requisite approvals under the Companies Law.
|
The Company pay purchase insurance policies, including Run Off policies, to cover the liability of the Directors’ and Officers’ serving and who will serve at the Company from
time to time, including Directors and Officers who are controlling shareholders or their relatives, based on the following policy terms:
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10.2.1. |
The coverage that can be granted each Officer under the insurance policy will not exceed a total sum of US$15 million per insurance event and per period.
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10.2.2. |
Each policy that will be purchased can include both insurance for the Company itself (“Entity Coverage”) for suits under the Securities Law, whether such suits are filed against the Company alone or against the Company and against
Directors and Officers.
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10.2.3. |
The annual premiums and deductibles of the Company’s directors and officers liability insurance policy shall be determined according to the conditions of the insurance market at such time, as advised by the Company’s insurance
consultants, provided that such annual premiums and deductibles are not material to the Company.
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10.2.4. |
Each policy that will be purchased can also include liability coverage for the Directors and Officers for issuing new securities. If such supplementary coverage is included, the supplement to the annual premium for that coverage will
not exceed 60% of the cost of the premium for that year.
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10.2.5. |
The amount of the Deductible that will be set in the framework of each policy that is purchased is likely to be zero for the Directors and Officers and a different commonly accepted sum for the Company.
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10.2.6. |
The terms of this insurance policy will be identical for Directors and Officers, including Directors and Officers who are among the controlling shareholders or their relatives, should they be serving at that time, apart from the
commonly accepted exclusions in this type of policy with respect to the controlling shareholders.
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10.2.7. |
In the event of an insurance event, the order of payments under the policy will be as follows: (a) Payment to Directors and Officers; (b) payment to the Company for any sum the Company is required to pay to Directors and Officers in
accordance with the letter of indemnification given to them; (c) payment to the Company.
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10.2.8. |
The Company may bring the specific terms of the insurance policy for the approval of the Compensation Committee alone. Such approval will be subject to compliance with the principles detailed above in this Clause 10.2, with a focus on
the conditions prevalent in the insurance market at the time of the purchase of the policy, as long as such policy is consistent with the market conditions and is not liable to substantively impact the Company’s profitability, property or
obligations.
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10.3.1. |
The indemnification that can be granted to every Officer can be determined in advance or after the fact, for events that will be set interior design the BOD and will be detailed in the letter if indemnification given to the relevant
Officer.
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10.3.2. |
The sum of the indemnification for all Officers will not exceed the (i) the value of 25% of the Company’s net equity according to the audited or reviewed financial statement known at the time the request for indemnification was
submitted; or (ii) $3,000,000, whichever is greater.
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| 11. |
Updating of employment terms
|
Notwithstanding the above Compensation Policy, it is hereby clarified that:
|
11.1. |
Non-substantive change to the employment terms of an Officer subordinate to the CEO15
|
The Company may implement a non-substantive change in the employment terms of an Officer subordinate to the CEO without obtaining the approval of the Compensation Committee,
as long as the following conditions are met (aggregately):
|
11.1.1. |
The change is approved by the CEO.
|
15
|
If an Officer subordinate to the CEO is a controlling shareholder or his relative, the implementation of the non-substantive change in his employment terms will require additional approvals as required by law.
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|
11.1.2. |
The terms of service following the change are consistent with the Compensation Policy.
|
In this Clause 11.1, “non-substantive change” = (a) A change in the compensation whose financial cost to the Company is up to (and
including) 10% of the cost of the employment of the Officer subordinate to the CEO before the change; (b) Grant/s whose total sum does not exceed 2 monthly salaries (in gross terms) annually of the Officer subordinate to the CEO – all subject to
the ceilings set down in the Compensation Policy.
|
11.2. |
Renewal/extension of the contractual agreement with the CEO
|
The Company may renew or extend the contractual agreement with the CEO, with respect to the terms of his service and employment, without obtaining approval from the General
Assembly of the shareholders,16 as long as the following conditions are met (aggregately):
|
11.2.1. |
The renewal or extension of the contractual agreement concern terms of service and employment that are not better than those in the previous contractual agreement, or if there is no real change in the terms and the remainder of the
pertinent circumstances;
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|
11.2.2. |
The terms of service and employment are consistent with the Company’s Compensation Policy and the previous contractual agreement was approved under Section 272(c1) of the Companies Law.
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|
11.3. |
Approval of the contractual agreement with the CEO/Director until the date of the next General Assembly
|
The Company may enter a contractual agreement with the CEO or with a Director, concerning the terms of his service and employment, without the need to obtain the approval of
the General Assembly of the shareholders, concerning the period from the date of the contractual agreement until the closest General Assembly, if all of the following conditions are met:
|
11.3.1. |
The terms of service and employment were approved by the Compensation Committee and the BOD in accordance with Sections 272(c1)(1) and 273(a) of the Companies Law, as relevant;
|
16
|
If a CEO is a controlling shareholder or his relative, the renewal or extension of will require additional approvals as required by law.
|
|
11.3.2. |
The terms of service and employment are consistent with the Compensation Policy;
|
|
11.3.3. |
The terms of service and employment are not better than the terms of service and employment of the previous CEO or no real changes between the two contractual agreements and the remainder of the pertinent circumstances, including the
scope of the employment.
|
|
12.1. |
Subject to the provisions of the law, nothing in this Compensation Policy will detract from the validity, nor add to the provisions of previous agreements between the Company and the Company’s Officers in connection with the principles
or compensation terms that were approved before the approval of this Compensation Policy or any that preceded it.
|
|
12.2. |
It is hereby clarified that nothing in this policy shall be construed as detracting from the directives of the Companies Law and/or the Company’s article of association concerning the manner of the approval of the contractual agreement
with any of the Officers concerning their service and employment.
|
|
12.3. |
If after the approval of the Compensation Policy, the law and/or the regulations and/or court orders and/or guidelines and/or statements by the Israel Securities Authority set lenient terms with respect to the Compensation Policy,
including with respect to the required approvals, the restrictions and/or threshold terms necessary for inclusion in the Compensation Policy as of the date of its approval, such lenient terms will be considered as included, as if they
were stated in the framework of the Compensation Policy from the outset.
|
|
12.4. |
From time to time a Company Director will examine the Compensation Policy and the need for its adjustment, if there are substantive changes in the circumstances that existed when the Compensation Policy was set, or for other reasons as
he sees fit.
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|
12.5. |
The Company has adopted a policy for recovering erroneously awarded compensation intended to comply with the requirements of the Companies Law, Section 10D of the U.S. Securities Exchange Act of 1934, Rule
10D-1 promulgated by the U.S. Securities and Exchange Commission thereunder, and Listing Rule 5608 of the Nasdaq’s corporate governance rules (the “Clawback Policy”). Any provision of the Clawback
Policy shall be deemed to comply with this Compensation Policy. In the event of any inconsistency between this Compensation Policy and the Clawback Policy, the Clawback Policy shall prevail. For the avoidance of doubt, no amendments to,
or further corporate approvals in connection with, this Compensation Policy will be required in connection with the adoption or amendment of the Clawback Policy.
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