By Brian Kesten
Earlier last week, Israel’s legislature unanimously approved a limit on executive pay at banks, insurance companies and investment groups. The law creates a fixed ratio for executive salary at no more than 44 times the earnings of the lowest paid employee, which would work out to about $650,000 per year for executives.
In the U.S., no ratio is required by law, but the Dodd-Frank Act does require that banks publish the ratio. In Europe, the EU applied a cap on bonuses for “material risk takers” at banks, setting the limit at 100% of salary. In the Netherlands, bankers can only receive a 20% bonus, or no bonus at all if the bank has not repaid government bailout loans.