Annual Meeting •  Voting Instruction Form

Elect Directors - Company Nominees

The election or re-election of members of the Board of Directors to serve either a term of one year or staggered terms of two or three years.

The company’s proxy statement will provide the nominee’s name, position with the company (if applicable), principal occupation, age, year in which the candidate first became a director of the company, board committees on which he or she serves as well as beneficial share ownership.
In most companies, directors are elected by a plurality of the company’s voting shares In the election of directors, in a single resolution or separate, and assuming a quorum is present at the meeting, shareholders may vote for the nominee or withhold their vote electing nominees by a plurality of the company’s voting shares. . This means that the director nominee with the most affirmative votes for a particular slot is elected for that slot.  Since directors generally run unopposed, the election of the board’s nominees is virtually assured.  In recent years, however, companies have introduced Majority Voting in the election of board members. Shareholders may vote FOR, AGAINST or, ABSTAIN.  
If cumulative voting is permitted, shareholders may cast all of their votes for a single individual. Candidates receiving the greatest number of votes cast by eligible holders will be elected to the board of directors.
In companies that provide for annual election of directors, the incumbent board nominates a slate of directors to serve until the next annual meeting. A classified board structure divides the board into two or three classes with each class to serve a term of two or three years. Under most such arrangements, there are three classes of directors, elected for staggered three-year terms. Thus, in any given year, only one of the three classes of directors must stand for re-election. Proponents of the classified board structure believe that a classified board assures continuity of service on the board and allows directors to acquire in-depth experience in the company’s affairs.
In some jurisdictions other than the United States or Canada, publicly listed companies will have a dual- structured board. This is a corporate system where two separate boards are used to monitor and guide a company. Under a typical dual structure the Supervisory Board, comprised usually of Independent or Outside Directors is responsible for strategy and oversight/supervision of management, while the Management or Executive Board comprised of senior executives usually appointed by the Supervisory Board, is responsible for daily management and tactical issues.

Compensation Policy

The compensation or remuneration policy is usually defined by the board’s compensation committee and outlines how executives are compensated.

When the Combined Code for Best Corporate Governance Practice was introduced in the United Kingdom several years ago, it recommended that resident enterprises present their remuneration policy to shareholders for approval at the annual meeting. While the Code provides that such presentation need not be a standard agenda item, companies are presenting the policy to their shareholders albeit on an infrequent basis.  

The compensation programs, as a general rule, are established for corporate executive directors and senior executives and include base salaries, annual and long-term incentive remuneration. Incentive compensation is designed in large part to be tied to the achievement of specific, quantifiable performance objectives to align executives' financial rewards with those of independent shareholders. While such information is disclosed in the proxy material of North American corporations as required by the SEC regulations, this is a relatively new element introduced in the annual report of UK companies.  

In other jurisdictions, moreover, companies will seek shareholder approval of a proposed compensation system linked to the share value. While common in the United States, stock-based compensation has been introduced by foreign firms only recently. To date, however, few details on the proposed programs are provided in their proxy materials and local law often permits the grant of option awards at less than market value.

The international financial markets, however, are tightening the rules on executive compensation paid by publicly listed companies.

In January of 2011, the Securities and Exchange Commission in Washington, D.C. adopted rules concerning shareholder approval of executive compensation and "golden parachute" compensation arrangements as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act passed by Congress in the previous year. The shareholder vote is on an advisory or non-binding basis.

The SEC's rules specify that say-on-pay votes required under the Dodd-Frank Act must occur at least once every three years beginning with the first annual shareholders' meeting taking place on or after Jan. 21, 2011. Companies also are required to hold a "frequency" vote on an advisory, non-binding basis, at least once every six years in order to allow shareholders to decide how often they would like to be presented with the say-on-pay vote.

Under the SEC's new rules, companies also are required to provide additional disclosure regarding "golden parachute" compensation arrangements with certain executive officers in connection with merger transactions triggered by a change in control proviso. This is submitted as a resolution for which the vote is on an advisory or non-binding basis.

The issue of executive compensation has been on the forefront of corporate governance discussion around the world in the past few years. Israel is no exception. In previous years there was a significant rise of executive compensation in public companies that cannot be explained or linked to the companies’ performance.


The 2012 amendment to the Israeli Companies Law regarding executive compensation in public companies was drafted due to a concern in the ownership structure and the need to safeguard minority rights. The compensation policy recommended by the compensation committee is to be approved by the board and then, before it takes effect, by the general meeting in a non-binding vote. If the majority of the minority shareholders do not approve the policy, the policy will be returned for further deliberation by the board, taking into account the rejection of the policy by the minority shareholders. The board may ultimately approve the policy despite the minority’s disapproval, if it finds that the policy is in the company’s best interest.

Regulatory authorities in Australia have also imposed a requirement for a compensation policy resolution to be approved by shareholders. Although voting on the adoption of the remuneration policy is advisory and non-binding, Australia has introduced a provision that if at least 25% of the votes cast are against the adoption of the Remuneration Report at two consecutive AGMs (each year’s votes being considered a Strike), then at the second consecutive AGM at which a Strike occurs (Second Strike), a resolution must be put to Shareholders calling for an additional general meeting (Further Meeting) where each Director (excluding the Managing Director) is nominated for reelection, yclept a Spill Resolution which if passed means the company must convene a Further Meeting within 90 days of the Split Resolution.

Ratify Appointment of Independent Auditors

Ratification of the appointment of the company’s independent auditors endorses the Audit Committee’s selection of the firm that will audit the company’s financials for the fiscal year.

The federal securities laws require that the annual financial statements of all public companies be audited by an independent auditor.  Generally, the independent auditor is selected by the board of directors.  Although most states do not require that the board’s choice be ratified by shareholders, many companies ask their shareholders to do so.  

Stock-Based Compensation

Stock-based compensation is compensation paid to employees or directors of a company either in the form of stock, or based on the value of stock.

Most companies seek the approval of shareholders when instituting stock-based compensation programs.  

The annual retainers of corporate directors are sometimes paid in the form of company stock.  However, stock compensation to corporate officers and other employees is usually in the form of a bonus, above and beyond the employees base cash compensation.  In many cases, there are restrictions on stock awards that bar the recipient from selling the shares until the restrictions lapse.  Lapse of the restrictions may be conditioned on the company’s achieving specified financial goals; or on the employee’s remaining with the company for a specified period.  Other stock-based compensation is not paid in the form of stock, but is based on the value of stock. The most common example is a stock option, that allows the employee to purchase common stock at a specified price.  The employee benefits if the market price of the stock exceeds the option price.  Another stock-based vehicle is the stock appreciation right.  Unlike a stock option, the employee need not purchase any shares.  Rather, he or she receives cash compensation equivalent to increase in the price of the company’s shares above a specified level.  

Proponents of stock-based compensation argue that those receiving that compensation cannot benefit unless public shareholders also benefit.  As a result, this form of compensation aligns the interests of company officers and employees with the interests of public shareholders.