Teva will disclose the salaries and compensation of its top executives on an individual basis, not as an aggregate amount.
Israeli generics giant Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) will disclose the salaries and compensation of its top executives on an individual basis, and not as an aggregate amount as it has reported until now. The change will start to be implemented in its financial report for 2013. This comes after approval of the settlement in the class-action suit against Teva over the way it reports executive compensation. Tel Aviv District Court Judge Danya Kareth-Meyer approved the settlement on Sunday, saying, “The disclosure that Teva has promised in the context of the settlement unequivocally creates a benefit for Teva’s shareholders.”
Until now, the salary cost of the executives of Teva, the company with the highest weighting on the Tel Aviv 25 Index, has been confidential. The background to the class-action suit against Teva is the fact that, 13 years ago, Teva began operating under dual-listing rules of the Tel Aviv Stock Exchange (TASE) (as soon as they came into effect), and switched to US reporting rules, which include the filing of reports and documents required of a foreign company listed on Wall Street, rather than as an Israeli company listed on the TASE.
As a result, Teva ceased disclosing the salary cost of its top five executives (Regulation 21 in periodic financial reports), and for 13 years (2000-12) it has not been possible to know the salaries that the company paid its executives. The request to recognize the class-action suit against Teva, filed by Prof. Sharon Hannes and Prof. Ehud Kamar of Tel Aviv University, claims that, since 2000, Teva has been in breach of its duty to disclose the compensation of its executives and directives in its periodic financial reports.
Teva claimed, and still claims, that it is acting legitimately and legally, but it nonetheless decided to settle the case on the condition that it could cease publishing salaries on an individual basis at any time.
Even though the approved settlement is only binding on Teva, the decision of the Israeli giant to disclose the details could have a major effect on other dual-listed Israeli companies listed on the TASE and in New York, and this effect is also what the petitioners are hoping for.
There are currently 50 dual-listed companies, 30 of which have chosen, like Teva, to cease disclosing executive compensation on an individual basis. Among them are: Perrigo Company (NYSE:PRGO; TASE:PRGO), Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), Protalix Biotherapeutics Inc. (AMEX:PLX; TASE: PLX), NICE Systems Ltd. (Nasdaq: NICE; TASE: NICE), Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM), and Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT).