A relatively quiet six months passed for the top management of the insurance company tower . It is true that the sharp falls in the capital markets hurt its profits as in the entire insurance industry, but in the management sector, the controlling owner of the company, Shlomo Eliyahu, allows the management and the board of directors to steer Migdal, at least outwardly.
This silence may be broken now when it becomes clear that Eliyahu is considering moving aside the chairman of the insurance company, Yeftah Ron-Tal, and not renewing his term at the upcoming shareholder meeting of Migdal Ahezkot (the parent company), which is expected to take place in the coming months (an official date has not yet been determined ).
Yeftah Ron-Tal / Photo: Yossi Weiss Electric Company
When it comes to the shareholders’ meeting of Migdal Ahezkot, it is actually a decision of Eliyahu himself, who owns about 64.3% of the company’s shares. Among the options Eliyahu is considering if he succeeds in showing Ron-Tal the way out, is the appointment of the current chairman of Migdal Ahezkot, retired Supreme Court Justice Hanan Meltzer, to also serve as chairman of the insurance company.
However, sources familiar with what is happening at Migdal point out that Melzer will flatly refuse to take on the role that Ron-Tal holds, even if the controlling owner of the company demands it. The main reason for the apparent refusal is the difference between the scope of activity required in fulfilling the role of chairman of the insurance company and chairman of the holding company.
will have to work much harder
Unlike some of Migdal’s competitors in the insurance industry, which have additional activities beyond the one carried out in the insurance company, Migdal has no other legs besides the insurance company (with the exception of the investment house Migdal Shuki Hon, whose chairman is Israel Eliyahu, the controlling owner’s son).
Therefore, while with the more diverse competitors the chairman of the holding company is forced to engage and specialize in other fields, and to be present at discussions about them, at Migdal, the chairman of the board of the holding company is obliged to participate in a very small number of meetings, some say only four meetings a year, before the approval of the financial statements the quarterly For this position, a waiter is currently paid about 160 thousand a month for 66% of the position, which gives him an annual salary at a cost of about NIS 2.26 million.
In contrast, the chairman of an insurance company is an almost full-time position, which includes 70-90 board meetings per year. Therefore, in some companies, the knowledge of the chairman of the insurance company is utilized by appointing him at the same time as the CEO of the parent company. This, by the way, was in Migdal Even at the beginning of Ron-Tal’s tenure, until the conflict with Eliyahu last December, at the end of which Ron-Tal resigned from the position of CEO of the holding company.
This happened after the controlling owner decided not to approve Ron-Tal’s increased salary, after it opposed the appointment of the candidate on Eliyahu’s behalf to the position of CEO of the insurance company, Ronen Agassi. Ron-Tal himself then preferred to appoint Yadin Entavi, formerly the insurance supervisor, to the position and is currently a senior member of Bank Hapoalim, and finally a compromise was reached between the parties, and Sagi Yogev was appointed to the position.
A way may be paved for Eliyahu’s return to office
If Ron-Tal does end his short term soon (appointed in July 2021), he will join a long line of CEOs and chairmen who have left the company since Eliyahu acquired control of the company in late 2012 from the Italian insurance giant Generali.
The move is expected to save Elihu Ron-Tal’s salary at the insurance company (a cost of about NIS 3 million per year) and also give him better control over the company. Meltzer replaced Eliyahu as chairman of the board of the holding company, and it is possible that if he eventually agrees to be appointed to the position in Ron-Tal’s place, this may pave the way for Eliyahu himself to become chairman of the holding company. It is also possible that a refusal on the part of Melzer will result in his being moved aside and Eliyahu’s return to the position.
In such a case, it will be interesting to see how the Commissioner of the Capital Market, Dr. Moshe Barkat, will react. Barkat has expressed many times in the past two years his concern about Eliyahu’s interference in what is going on at the insurance company, and even demanded that he decide which company he wants to be involved in – the insurance company or the holding company. Eliyahu He chose the holding company, and after he left any official position in the insurance company, and even appointed Meltzer in his place, the Capital Market Authority announced that it is removing the restrictions it imposed on the insurance company in October 2020, which kept the company’s shareholders, led by Eliyahu, from receiving dividends.
As mentioned, this fine was removed when Eliyahu left all his positions in the insurance company (the notice of the removal of the factor was received on the day he gave up being the chairman of the parent company). Therefore, the Capital Market Authority is not expected to return the limit, but they will undoubtedly not like the renewed intervention of Eliyahu in the conduct of the insurance company.