NICE CEO's $8 million exit bonus blocked by shareholders, but board overrules decision
NICE CEO's $8 million exit bonus blocked by shareholders, but board overrules decision
The shareholders of the Israeli technology company did not approve the request to grant retiring CEO Barak Eilam a package of blocked shares worth over $8 million. However, the board stated that it plans to still award Eilam the bonus after making certain changes to the terms of the bonus
The NICE board of directors has announced it will not give up on the multi-million bonus to retiring CEO Barak Eilam, despite opposition from shareholders. The Israeli software company announced that the retiring CEO will still receive the bonus of 50,000 blocked shares, despite the decision at the shareholders' meeting last Wednesday not to approve the bonus. In a document submitted to the American Securities and Exchange Commission (SEC), NICE stated that it plans to award Eilam the bonus after making certain changes to the terms of the bonus, in accordance with the comments received following the shareholders' meeting.
The Israeli Companies Law allows NICE to give the bonus to Eilam despite the opposition of the shareholders, provided it receives the board of directors' approval again. According to NICE’s current share price, which has plunged sharply since Eilam announced his departure, the value of the restricted shares (RSU) that will be given to him as part of the bonus is about NIS 30 million ($8M). Last May, Eilam surprisingly announced that he would retire from his position as CEO of NICE after 25 years with the company, ten of which were as CEO. Throughout the decade, Eilam was rewarded with a cumulative compensation of $125 million, and for 2023 alone he received compensation of $24.5 million.
In the original summons to the meeting, the board approved wording stating that 60% of the RSU bonus would be time-dependent and 40% performance-dependent. The rationale for the bonus is Eilam's agreement to remain at NICE during the first half of 2025 to ensure a proper process of locating and integrating his future replacement. Eilam will continue to serve as CEO of NICE until the end of 2024 and will then remain full-time with the company for two additional months until the end of February. From March to the end of June, he will serve as a consultant, and accordingly, the vesting will only begin in July 2025.
The shareholders of NICE expressed their dissatisfaction with Eilam's departure from the very first moment. The company's stock, which enjoyed highs throughout his tenure and was, for a certain period, the Israeli company with the highest market value, began to plunge immediately upon the announcement of his departure. In the two months that have passed since the announcement, the stock has fallen by 25%, so that today the company, which developed software for managing service centers and customer support, is trading at a value of $10 billion.
First published: 10:59, 08.07.24
