Exhibit 99.1
MIND
C.T.I. LTD.
NOTICE
OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
Notice
is hereby given that an Annual General Meeting of Shareholders (the "Meeting") of MIND C.T.I. Ltd. (the "Company")
will be held on August 11, 2016, at 10:00 A.M. (Israel time), at the offices of the Company, Industrial Park, Building 7, second
floor, Yoqneam 2069202, Israel, for the following purposes:
| (i) | to
re-appoint Brightman Almagor Zohar (member of Deloitte Touche Tohmatsu), as the Company’s
independent auditor until the close of the following Company’s Annual General Meeting
and to authorize the Board of Directors of the Company to determine its remuneration
or to delegate the Audit Committee thereof to do so; |
| | |
| (ii) | to
re-elect Ms. Monica Iancu, as a Class I director of the Company until the 2019 Annual
General Meeting of Shareholders of the Company; |
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| (iii) | to
approve amendments to the Company's Articles of Association; |
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| (iv) | to
re-approve the existing Compensation Policy for the Company’s officers and directors;
and |
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| (v) | to
discuss the Company’s audited financial statements for the year ended December
31, 2015. |
Shareholders
of record at the close of business on July 8, 2016 are entitled to notice of, and to vote at, the Meeting. All shareholders are
cordially invited to attend the Meeting in person.
Shareholders
who are unable to attend the Meeting in person are requested to complete, date and sign the enclosed form of proxy and to return
it promptly in the pre-addressed envelope provided. No postage is required if mailed in the United States. Shareholders who attend
the Meeting may revoke their proxies and vote their shares in person. All proxies must be received at least 72 hours prior to
time fixed for the Meeting.
Joint
holders of shares should take note that, pursuant to Article 32(d) of the Articles of Association of the Company, the vote of
the senior of the joint shares who tenders a vote, in person or by proxy, will be accepted to the exclusion of the vote(s) of
the other joint holder(s). For this purpose seniority will be determined by the order in which the names stand in the Company’s
Register of Shareholders.
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By
Order of the Board of Directors, |
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|
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|
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Monica
Iancu |
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CEO |
Dated:
June 28, 2016
MIND
C.T.I. LTD.
Industrial
Park, Building 7
Yoqneam
2069202, Israel
PROXY
STATEMENT
This
Proxy Statement is furnished to the holders of ordinary shares, par value NIS 0.01 per share (the "Ordinary Shares"),
of Mind C.T.I. Ltd. (the "Company") in connection with the solicitation by the Board of Directors of proxies
for use at the 2016 Annual General Meeting of Shareholders (the "Meeting"), or at any adjournment or postponements
thereof, pursuant to the accompanying Notice of Annual General Meeting of Shareholders. The Meeting will be held on August 11,
2016, at 10:00 A.M. (Israel time), at the offices of the Company, Industrial Park, Building 7, Yoqneam 2069202, Israel.
The
agenda of the Meeting shall be as follows:
| (i) | to
re-appoint Brightman Almagor Zohar (member of Deloitte Touche Tohmatsu), as the Company’s
independent auditor until the close of the following Company’s Annual General Meeting
and to authorize the Board of Directors of the Company to determine its remuneration
or to delegate the Audit Committee thereof to do so; |
| | |
| (ii) | to
re-elect Ms. Monica Iancu, as a Class I director of the Company until the 2019 Annual
General Meeting of Shareholders of the Company; |
| | |
| (iii) | to
approve amendments to the Company's Articles of Association; |
| | |
| (iv) | to
re-approve the existing Compensation Policy for the Company’s officers and directors;
and |
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| (v) | to
discuss the Company’s audited financial statements for the year ended December
31, 2015. |
The
Company currently is not aware of any other matters that will come before the Meeting. If any other matters properly come before
the Meeting, the persons designated as proxies intend to vote in accordance with their judgment on such matters.
A
form of proxy for use at the Meeting and a return envelope for the proxy are enclosed. Shareholders may revoke the authority granted
by their execution of proxies at any time before the exercise thereof by filing with the Company a written notice of revocation
or duly executed proxy bearing a later date, or by voting in person at the Meeting. Unless otherwise indicated on the form of
proxy, shares represented by any proxy in the enclosed form, if the proxy is properly executed and timely delivered, will be voted
in favor of all the matters to be presented to the Meeting, as described above. All proxies must be received at least 72 hours
prior to time fixed for the Meeting.
On
all matters to be considered at the Meeting, abstentions and broker non-votes will be treated as neither a vote "for"
nor "against" the matter, although they will be counted in determining whether a quorum is present. “Broker non-votes”
are shares held by brokers or other nominees which are present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the beneficial owner. Brokers and other nominees have discretionary
voting authority under the applicable rules of the New York Stock Exchange to vote on "routine" matters. This means
that if a brokerage firm holds your shares on your behalf, those shares will not be voted with respect to non-routine matters
on the agenda of the Meeting, unless you provide voting instructions by way of your proxy card.
Proxies
for use at the Meeting are being solicited by the Board of Directors of the Company. Only shareholders of record at the close
of business on July 8, 2016 will be entitled to vote at the Meeting. Proxies are being mailed to shareholders on or about July
14, 2016 and will be solicited chiefly by mail. However, certain officers, directors, employees and agents of the Company, none
of whom will receive additional compensation therefore, may solicit proxies by telephone, telegram or other personal contact.
The Company will bear the cost for the solicitation of the proxies, including postage, printing and handling, and will reimburse
the reasonable expenses of brokerage firms and others for forwarding material to beneficial owners of shares. The deadline for
the submission of position statements is August 1, 2016.
On
April 1, 2016, the Company had 19,233,418 outstanding Ordinary Shares, each of which is entitled to one vote upon each of the
matters to be presented at the Meeting. Two or more shareholders holding the Ordinary Shares conferring in the aggregate at least
25% of the outstanding Ordinary Shares, present in person or by proxy or written ballot, will constitute a quorum at the Meeting.
If within an hour from the time appointed for the Meeting a quorum is not present, the Meeting shall stand adjourned to the same
day in the next week, at the same time and place. At such adjourned meeting, any two shareholders shall constitute a quorum.
PRINICIPAL
SHAREHOLDERS
The
following table sets forth certain information regarding the beneficial ownership of our ordinary shares as of April 1, 2016,
unless otherwise specified, by each person who is known to own beneficially more than 5% of the outstanding ordinary shares.
Name
of Beneficial Owners | |
Total Shares Beneficially Owned | | |
Percentage of Ordinary Shares (1) | |
Monica Iancu
| |
| 3,316,265 | (2) | |
| 17.25 | % |
(1) Based on 19,233,418 ordinary shares outstanding on April 1, 2016.
(2) Based on a Schedule 13G/A filed with the SEC on March 5, 2015.
EXECUTIVE
COMPENSATION
For
information relating to the compensation of our five most highly compensated officers with respect to the year ended December
31, 2015, please see "Item 6. Directors, Senior Management and Employees – B. Compensation of Directors and Executive
Officers – Summary Compensation Table" in our annual report on Form 20-F for the year ended December 31, 2015.
ITEM
1 – APPOINTMENT OF INDEPENDENT AUDITORS
The
Company’s auditor is Brightman Almagor Zohar & Co., certified public
accountants in Israel and a member of Deloitte Touche Tohmatsu (the "Auditor"). At the Meeting, the shareholders
will be asked to approve the re-appointment of the Auditor as the Company’s independent auditors until the Company’s
next Annual General Meeting, and to authorize the Board of Directors of the Company to determine its remuneration or to delegate
the Audit Committee thereof to do so. The remuneration paid to the Auditor for audit and non-audit services provided to the Company
in the year 2015 was set forth in the Company's annual report on Form 20-F and will be presented at the Meeting.
Under
the Israeli Companies Law, 5759–1999 (the “Companies Law”), the shareholders of the Company are authorized
to appoint the Company’s auditor and to authorize the Board of Directors to determine its remuneration. The Company’s
Board of Directors has authorized its Audit Committee to determine the Auditor’s remuneration for audit and non-audit services,
as contemplated by the Sarbanes-Oxley Act of 2002.
It
is proposed that at the Meeting the following resolution be adopted:
“RESOLVED,
that the Company’s Auditor, Brightman Almagor Zohar & Co. (the “Auditor”), be, and it hereby is, re-appointed
as the independent auditors of the Company until the close of the Company’s next Annual General Meeting, and that the
Board of Directors of the Company be authorized to determine the Auditor’s remuneration
or to delegate the Audit Committee thereof to do so.”
The
affirmative vote of the holders of a majority of the Ordinary Shares present, in person or by proxy, and voting on the matter
is required for the approval of this matter.
The
Board of Directors recommends a vote FOR approval of the proposed resolution.
ITEM
2 – TO RE-ELECT MS. MONICA IANCU, AS A CLASS I DIRECTOR OF THE COMPANY UNTIL THE 2019 ANNUAL GENERAL MEETING OF SHAREHOLDERS
OF THE COMPANY
Under
the Company’s Articles of Association, our Board of Directors (excluding our External Directors) is divided into three classes
of directors designated as Class I, Class II and Class III, which are differentiated by the dates of expiration of the terms of
office of their respective directors.
Ms.
Monica Iancu is a member of Class I of the Board of Directors, and her term of office will expire at the Meeting. If Ms. Monica
Iancu is re-elected, her term of office will expire at the Company’s 2019 Annual General Meeting of shareholders.
Ms.
Iancu founded the Company in 1995 and has served as its President and Chief Executive Officer since inception and, until April
6, 2012, also served as the Chairperson. Ms. Iancu holds a B.Sc. degree in Computer Science and a Master of Sciences Degree
in Computer Sciences (Telecommunications) from the Technion, Israel Institute of Technology.
On
May 5, 2016, the Company’s Audit Committee (acting in its capacity as our Nominating Committee) and Board of Directors resolved
to recommend that our shareholders re-elect Ms. Monica Iancu as a Class I Director for an additional term of approximately three
years. The reasons underlying this resolution include Monica's leadership towards sustained profitability over the past two decades,
her intimate knowledge of the Company and its industry, her understanding of both the business and financial aspects of the Company
and her expertise with Board practices and corporate governance. The Company’s Audit Committee and Board of Directors believe
that Ms. Iancu's re-election as a Director is in the best interest of the Company.
It
is proposed that at the Meeting the following resolution be adopted:
“RESOLVED,
to re-elect Ms. Iancu as a Class I director of the Company to serve until the Annual General Meeting to be convened in 2019.”
The
affirmative vote of the holders of a majority of the Ordinary Shares present, in person or by proxy, and voting on the matter
is required for the approval of this matter.
The
Board of Directors recommends a vote FOR approval of this proposed resolution.
ITEM
3 - TO APPROVE AMENDMENTS TO THE COMPANY'S ARTICLES OF ASSOCIATION
At
the Meeting, the Company will propose two amendments to its Articles of Association, as described below. If any of the proposed
amendments are approved, the Company will restate its Articles of Association and refer to them thereafter as its "Seventh
Amended and Restated Articles of Association."
Recent
regulations promulgated under the Companies Law permit Nasdaq-listed companies without controlling shareholders, like the Company,
to opt out of the requirements of the Companies Law regarding external directors, provided that they comply with board composition
requirements in the Nasdaq listing requirements that apply to U.S. companies. The regulations acknowledge the adequacy of the
U.S. corporate governance regime for non-controlled companies and completely do away with the Israeli independent director requirements
that apply to them.
Our
Articles of Association make specific reference to external directors. Accordingly, in order to accommodate these regulations,
the Company proposes to delete the references to external directors by amending Articles 38 and 39(d) of its Articles of Association
as set forth below. The words proposed to be deleted are indicated by strike-through text, and the words proposed to be added
are indicated by bold and underlined text. Our Board of Directors has determined that it is in the best interests of the Company
to opt out of the foregoing requirements of the Companies Law, subject to the approval of these amendments to our Articles of
Association.
We
currently have three external directors: Rimon Ben-Shaoul, whose current term is scheduled to expire on June 23, 2016; Mr. Meir
Nissensohn, whose current term is scheduled to expire on August 3, 2017; and Mr. Joseph Tenne, whose current term is scheduled
to expire on August 3, 2017. According to the regulations, external directors appointed prior to our decision to opt out of the
requirements regarding external directors will continue to serve until the earlier of (i) the end of their respective terms and
(ii) the Annual General Meeting to be convened in 2017.
The
affirmative vote of the holders of a majority of the Ordinary Shares present, in person or by proxy, and voting on the matter
is required for the approval of this matter.
It
is proposed that at the Meeting the following resolutions be adopted:
RESOLVED,
that Article 38 of the Company’s articles of association be amended with the changes marked below:
38. Number
of Directors
Until
otherwise determined by Shareholders Resolution of the Company, the Board of Directors shall consist of not less than three (3)
nor more than nine (9) Directors, at least two (2) of which shall be External Directors in accordance with the Companies
Law (the "External Directors").
RESOLVED,
that Article 39(d) of the Company’s articles of association be amended with the changes marked below:
39.
(d) Notwithstanding anything to the contrary in the foregoing provisions of Article 39, the foregoing provisions of this Article
39 shall not apply to the Company’s External Directors, if any, who shall not be members of any class and
shall serve pursuant to the provisions of the Companies Law."
The
Board of Directors recommends a vote FOR approval of the proposed resolutions.
ITEM
4 – TO RE-APPROVE THE COMPENSATION POLICY FOR THE COMPANY’S OFFICERS AND DIRECTORS
Background
In
accordance with the Companies Law, the compensation terms of office holders of public companies are required to be determined
in accordance with a compensation policy that is reviewed and approved at least one every three years. Our initial Compensation
Policy was approved at the Annual General Meeting of Shareholders on June 24, 2013.
On
May 5, 2016, the Company’s Board of Directors, following the recommendation of the Compensation Committee, re-approved the
Compensation Policy, for a three-year term, in the form attached as Annex A to this Proxy Statement. The Compensation
Policy will be brought for shareholder approval at the Meeting. The Compensation Policy will continue to apply to compensation
agreements and arrangements that will be approved after the date on which the Compensation Policy is re-approved by the shareholders.
The Compensation Policy shall be reviewed from time to time by the Company’s Compensation Committee and Board of Directors
in order to ensure its adequacy and its fitness to the Company's financial position and results of operations.
It
is proposed that at the Meeting, the following resolution be adopted:
“RESOLVED,
that the Compensation Policy for the Company's office holders, in the form attached hereto as Annex A, be, and the same
hereby is, re-approved, and shall be in effect for a period of three years following this approval.”
Adoption
of this proposal requires the affirmative vote of a majority of Ordinary Shares present at the meeting, in person, by proxy, and
voting on the resolution, provided that (i) the shares voting in favor of such resolution include at least the majority of the
shares voted by shareholders who are not controlling shareholders and who do not have a personal interest in the Compensation
Policy; or (ii) the total number of shares voted against the resolution by shareholders who are not controlling shareholders or
interested parties does not exceed two percent of the total voting rights in the Company.
The
Company does not have a controlling shareholder, but our office holders are deemed to have a personal interest in this matter.
The Companies Law requires that each shareholder voting on this proposal indicate whether or not the shareholder has a personal
interest in the proposal. Otherwise, the shareholder is not eligible to vote on this proposal and his or her vote will not be
counted. Under the Companies Law, a "personal interest" of a shareholder: (i) includes a personal interest of any members
of the shareholder’s family (or spouses thereof) or a personal interest of a company with respect to which the shareholder
(or such family member) serves as a director or the CEO, owns at least 5% of the shares or has the right to appoint a director
or the CEO; and (ii) excludes an interest arising solely from the ownership of the Company's shares. To avoid confusion, in the
enclosed form of proxy card, we refer to such a personal interest as a "personal benefit or other interest". The proxy
card includes a box you can mark to confirm that you are not a "controlling shareholder" and do not have a personal
interest in this matter. If you do not mark this box, your vote will not be counted. If you are unable to make this confirmation,
please contact our Legal Counsel at +972-4-993-6666 for instructions on how to vote your shares and indicate that you have a personal
interest or, if you hold your shares in "street name", you may ask the representative managing your account to contact
us on your behalf.
The
Company’s Board of Directors recommends that the shareholders vote “For” the approval of the Compensation Policy.
ITEM
5 - FINANCIAL STATEMENTS
The
Company has filed its audited financial statements for the year ended December 31, 2015 (the “Financial
Statements”) in its annual report on Form 20-F, which has been filed with the Securities and Exchange Commission on April
11, 2016. You may read and copy this report without charge at the SEC's public reference room at 100 F Street, N.E., Washington,
D.C. 20549. Copies of such material may be obtained by mail from the Public Reference Branch of the SEC at such address, at prescribed
rates. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The Company’s SEC reports
are also available to the public at the SEC's website at http://www.sec.gov. These reports are
not a part of this Proxy Statement.
The
Financial Statements were approved by the Board of Directors as required by the Companies Law. The Company will hold a discussion
with respect to the Financial Statements at the Meeting. This item will not involve a vote of the shareholders.
OTHER
BUSINESS
Management
knows of no other business to be transacted at the Meeting. If any other matters are properly presented to the Meeting, the persons
named in the enclosed form of proxy will vote upon such matters in accordance with their best judgment.
Dated:
June 28, 2016
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By
Order of the Board of Directors, |
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|
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|
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Monica
Iancu |
| |
CEO |
Annex
A
MIND
CTI Ltd.
Form
of Compensation Policy
| 1.1. | Pursuant
to the provisions of the Companies Law 5759– 1999 (the “Companies Law”),
the Board of Directors of the Company approved on May 8, 2013 and re-approved on May
5, 2016 a compensation policy (the “Compensation Policy”) with regard
to the terms of service and employment of officers1 of MIND CTI Ltd. (the
“Company”), following the recommendation of the Company’s Compensation
Committee who discussed and considered the Compensation Policy. The Compensation Policy
was approved by the General Meeting of shareholders on June 24, 2013 and August 11, 2016. |
| 1.2. | The
Compensation Policy shall be subject to all mandatory provisions of any applicable law
which apply to the Company and its officers, and to the Company's Articles of Association. |
Several
main principles and objectives form the basis of the Compensation Policy: (a) To promote the Company's goals and targets and its
long term policy; (b) To create appropriate incentives for the Company’s officers, considering, among others, the Company’s
risk management policy; (c) To adopt a compensation package combination that matches the size of the Company and the nature of
its activities; and (d) To comply with the provisions of the law by compensating those eligible pursuant to the Compensation Policy,
based on their contribution and their efforts to the development of the Company’s business and promotion of its goals, in
the short and long term.
| 1.3. | The
Compensation Policy is a multi-year policy which shall be in effect for a period of three
years from the date of its approval. The Compensation Committee and the Board of Directors
shall review the Compensation Policy from time to time, as required by the Companies
Law. The Compensation Policy shall be re-approved as required by the Companies Law, every
three years. |
| 2. | The
Compensation Policy |
| 2.1. | Parameters
for Examining the Compensation Terms |
In
general, the compensation terms for officers shall be examined while taking into consideration, inter alia, the following
parameters:
| 2.1.1. | The
education, qualifications, expertise, seniority (in the Company in particular, and in
the officer's profession in general), professional experience and achievements of the
officer1; |
| 2.1.2. | The
officer’s position, the scope of his responsibility and previous wage agreements
that were signed with him; |
| 2.1.3. | The
officer’s contribution to the Company’s business, profits and stability; |
| 2.1.4. | The
degree of responsibility imposed on the officer; |
1The term “officer” in this policy will be interpreted in accordance
with the definition set out in the Companies Law, from time to time.
| 2.1.5. | The
Company’s need to retain officers who have skills, know-how or unique expertise; |
| 2.1.6. | The
Company has examined the relationship between the terms of service and employment of
its officers, which will result from the implementation of this Policy, and the wage
of the other employees of the Company (including contractor employees employed at the
Company, if employed at the time of approval of the compensation), and, in particular,
the relationship to the average wage and median wage of such employment. However, in
light of the Company's global nature and the fact that its employees are employed in
various countries worldwide, under different terms of employment, the Company believes
that in determining compensation for its officers it should make such examination on
territorial basis (namely, examining the relationship of the compensation terms of the
Company's officers together with the employment terms of its employees/contractor employees
on the relevant territory). |
Taking
the above into consideration, the Compensation committee reviewed separately the average and median wage of the Company's employees
in each territory in which the Company operates together with the employment terms of the relevant officers which will result
from the implementation of this Policy, and decided that the levels of compensation of the officers are within reason and that
they will not harm the working relationships in the Company.
| 2.2.1. | Prior
to approval of a compensation package for an officer, the Company will be entitled to
conduct a wage survey that compares and analyses the level of the overall compensation
package offered to an officer of the Company with the compensation package for officers
in similar positions to that of the relevant officer in other companies of the same type
as the Company, which operate on the global market. |
| 2.2.2. | In
the event that the Company decides to conduct a wage survey, it will be conducted internally
or through an external consultant, according to the discretion of the Board of Directors,
after receiving a recommendation of the Compensation Committee in this regard. |
| 2.2.3. | Prior
to approval of a compensation package for an officer, the Company will compare the average
and median wage of the Company's employees in each territory in which the Company operates
to the proposed employment terms of such officer and determine whether the proposed level
of compensation is within reason and will not harm the working relationships in the Company. |
| 2.3. | Compensation
Terms of Officers |
| 2.3.1. | The
Company will do its utmost to approve the compensation terms of new officers prior to
the date of commencement of their employment in the Company and not retroactively. |
The
Company shall be entitled to grant to officers (to all or part of them) a compensation package which may include a base salary,
commissions, annual cash bonus and share-based compensation, or any combination thereof.
| 2.3.2. | Base
Salary
The base salary of a new officer in the Company shall be determined based on the parameters
specified in Section 2.1 above and similar to other officers already serving in the Company.
The CEO’s base salary will not exceed $240,000 per annum and the other officers’
base salary will not exceed $150,000 per annum. |
| 2.3.3. | Commissions
In addition to the Base Salary and any other compensation element, the Company shall
be entitled to pay to its officers that are involved in the sales process, commissions
based on a pre-determined commission plan. The Company believes that in light of the
Company's global nature and the fact that its employees that are paid commissions (among
them officers) are employed in various countries worldwide, there should be different
commission plans where there are common criteria – commissions are paid only upon
receipt of funds from the customer and commissions are limited (per annum) to 5 (five)
times annual base salary. The VP of Sales and additional officers that are paid commissions
will not receive any annual bonuses. |
| 2.3.4. | Additional
Terms of Compensation Package
The compensation package may include additional standard benefits such as social benefits,
car allowance, mobile allowance, reimbursement of expenses, advanced notice for termination
of employment, medical insurance, etc. |
| 2.3.5. | Insurance,
Exculpation and Indemnification |
The
officers of the Company shall be entitled to benefit from the insurance, exculpation and indemnification arrangements, to be approved
from time to time by the Company, pursuant to the provisions of the Articles of Association of the Company and applicable law.
The
advance notice period shall be limited to sixty days.
| 2.3.7.1. | The
retirement terms will be the minimum terms as per applicable law. |
| 2.3.7.2. | In
the event that the terms of service of the officer include retirement grants, the amount
or value of a retirement grant shall not exceed 6 times such officer’s monthly
base salary. The payment and amount of such retirement grant shall be subject to the
relevant officer's period of employment, his term of employment during such period, the
Company's performance during such period, said officers' contribution to the obtaining
of the Company's goals and revenues during said period, and the circumstances of retirement. |
The
compensation package of officers may include an annual cash bonus based on measurable and non-measurable criteria as set forth
hereunder (the “Bonus”) and as customary in the industry on which companies having similar characteristics
to those of the Company operate.
In
the event that officers are eligible for a Bonus, pursuant to the terms of employment, the Bonus shall be subject to the following:
| 2.3.8.1. | The
Bonus will be based mainly (at least 80%) on measurable criteria, and, with respect to
its less significant part (up to 20%), at the Board of Directors' and Compensation Committee's
discretion based on non-measurable criteria, all as set forth hereunder. |
| 2.3.8.2. | Measurable
Criteria for the Bonus, may include, among others |
| ● | Financial
targets – bonus based on the Company's net profit |
| ● | Compliance
with milestones (as relevant for each officer) |
| ● | Productivity
indices and growth in the volume of activity |
| ● | Implementation
and promotion of planned projects |
| ● | Promoting
strategic targets that will benefit the Company in the future |
At
the beginning of each year, the Compensation Committee and the Board of directors shall adopt a specific bonus plan for the coming
year, based on the foregoing criteria. Such a plan shall include, inter alia, the chosen measurable criteria for the coming year,
the targets that need to be obtained with respect to said criteria, thresholds under which no bonuses shall be paid, bonuses budget
and the amount of bonuses to be paid in relation to attainment of targets, etc.
| 2.3.8.3. | Non-Measurable
Criteria for the Bonus |
The
Company is entitled to determine, in its sole discretion, that an insignificant component, which does not exceed 20% of the Bonus,
will be determined according to non-measurable criteria, as set forth below:
| ● | The
contribution of the officer to the Company’s business, its profitability and stability; |
| ● | The
need for the Company to retain an officer with skills, know-how, or unique expertise; |
| ● | The
responsibility imposed on the officer; |
| ● | Changes
that occurred in the responsibility imposed on the officer during the year; |
| ● | Satisfaction
with the officer’s performance (including assessing the degree of involvement of
the officer and devotion of efforts in the performance of his duties); |
The
Compensation Committee and the Board of Directors will consider and approve this component, based, inter alia, on the recommendation
and personal assessment given by the official who is in charge of the officer, specifying the relevant reasons underlying the
recommendation.
| 2.3.8.4. | The
CEO annual bonus will be 5% of the Company’s net profit if the annual net profit
is over 70% of the one defined in the previously approved budget. In addition, the Compensation
Committee and Board may grant an annual bonus of up to 2 monthly base salaries, based
on their discretion, subject to the limitations in 2.3.9.4. |
| 2.3.8.5. | The
Board of Directors shall have discretion to reduce the amount of Annual Bonus to officers. |
| 2.3.9. | Share
Based Compensation |
| 2.3.9.1. | The
Company shall be entitled to grant to officers options or any other share-based compensation
("Share-based Compensation"), pursuant to an equity plan as adopted
or shall be adopted, from time to time and subject to any applicable law. |
| 2.3.9.2. | At
the time of the grant, the value of a Share-based Compensation shall be calculated (“Grant
Value”), in accordance with the accumulated cost that will be recorded in its
respect in the Company's books. |
| 2.3.9.3. | In
any event, the aggregate Annual Cash Bonus and the Grant Value for all of the officers
of the Company as a group shall not exceed 10% of the annual net profit. |
| 2.3.9.4. | The
ratio between the aggregate Annual Cash Bonus and Grant Value, for each officer of the
Company and the Base Salary of each officer (including the CEO and an active chairman
of the board of directors) shall not exceed 12 times such officer’s monthly base
salary. |
| 2.3.9.5. | Any
award granted under a share incentive plan will have a four-year vesting schedule, such
that 50% of the award will vest on the second anniversary of the grant date and 25% of
the award will vest on each of the third and fourth anniversaries of the grant date. |
| 2.3.9.6. | When
discussing the grant of a Share-based Compensation to an officer of the Company, the
Compensation Committee and the Board of Directors shall consider whether the aforesaid
grant is a suitable incentive for increasing the Company's value in the long term, the
economic value of the grant, the exercise price and the other terms. |
| 2.3.10. | Term
of Employment Agreements
An employment agreement of an officer will be either ongoing with a notice period or
will be for a fixed term that does not exceed 3 (three) years. Upon the expiry of an
employment agreement, the agreement may be extended subject to the provisions of Section
2.4 below. |
| 2.3.11. | Claw
Back
Officers shall be required to repay the Company any excess payments made to them which
were based on the Company’s performance if such payments were paid based on false
and restated financial statements of the Company, provided that such restatement to the
Company's financial statements was made within two years following such falsely based
payment. |
| 2.4. | Extension
of Existing Agreements with Officers |
| 2.4.1. | Prior
to approval of the extension of an employment agreement of an officer, the officer’s
existing compensation package shall be reviewed and considered based on the parameters
set forth in Section 2.1 above. |
| 2.4.2. | In
the event that an extension of an employment agreement with an officer involves a change
in his or her employment terms, the Compensation Committee will examine whether: (a)
the change is considered a "material change" compared to current employment
terms; and whether (b) such change is in compliance with the Company's Compensation Policy,
for the purpose of identifying the Company's organs required to approve such change. |
| 2.5. | Compensation
of Directors |
| 2.5.1. | The
compensation of the Company's directors (including outside directors and independent
directors) shall be within the permitted payment ranges stipulated under the Companies
Regulations (Rules Regarding the Compensation and Expenses of an External Director),
5760-2000 (“Compensation of Directors Regulations”), as they shall
be from time to time. |
The
Compensation Committee and the Board of Directors shall, from time to time, review the Compensation Policy as well as the need
to adjust it, based, inter alia, on the considerations and guidelines set forth in this policy. In so doing, they will
conduct an examination of changes in the Company’s goals, market conditions, the Company’s profits and revenues in
previous periods and in real time, and any other relevant factors.
Annex
A-5
1.1
Please
detach along perforated line and mail in the envelope provided. 