The Ministerial Law Committee on Sunday authorized for legislation a law that would limit the salaries of top executives of companies in the private sector.
Executive salaries, under the law, will be limited to NIS 3.5 million ($1 million) a year. Any sum beyond that will not be considered income, and will be taxed at a higher rate.
Exceptions will be made only if approved by a special panel of MKs, who will hear petitions on why an executive would need to be paid more than the maximum amount. Salaries beyond NIS 3.5 million must also be approved by a company's board of directors, if it is a publicly traded company, along with a relative majority of voting stockholders.
Many of Israel's largest companies, even publicly traded ones, currently do not publish the salaries of top executives. According to the new law, that information would automatically be made public by the Tax Authority. The law will largely apply to executives in the finance industry.
Commenting on the law, Finance Minister Yair Lapid said “the law will bring an element of control to the issue of salaries of executives in the financial sector who are paid from the public's investments."
"It is an important landmark on the path we have set to lessen the salary gaps between high paid executives and workers in Israeli companies," added Lapid.