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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of: August 2024 (Report No. 2)
Commission file number: 001-38094
FORESIGHT AUTONOMOUS HOLDINGS LTD.
(Translation of registrant’s name into English)
7 Golda Meir
Ness Ziona 7403650 Israel
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
CONTENTS
On August 26, 2024, Foresight Autonomous Holdings Ltd. (the “Company”) convened an Annual and Extraordinary General Meeting of Shareholders (the “Meeting”).
At the Meeting, a quorum was present and the shareholders of the Company voted upon and approved, by the applicable required majority, all agenda items that were described in the Company’s amended and restated notice and proxy statement for the Meeting, which were included in Exhibit 99.1 to the Company’s Report of Foreign Private Issuer on Form 6-K that the Company furnished to the Securities and Exchange Commission (the “SEC”) on July 19, 2024, and as amended on July 22, 2024 (the “Original Form 6-K”).
Attached hereto as Exhibit 99.1 is the Company’s approved Amended and Restated Compensation Policy, as described in Proposal No. 4 in the Original Form 6-K.
This Report on Form 6-K is incorporated by reference into the Company’s Registration Statements on Form F-3 (File No. 333-276709) and Form S-8 (Registration No. 333-229716, 333-239474, 333-268653 and 333-280778), filed with the SEC, to be a part thereof from the date on which this Report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
EXHIBIT INDEX
| Exhibit No. | ||
| 99.1 | Amended and Restated Compensation Policy |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Foresight Autonomous Holdings Ltd. | ||
| (Registrant) | ||
| Date: August 26, 2024 | By: | /s/ Eli Yoresh |
| Name: | Eli Yoresh | |
| Title: | Chief Financial Officer | |
Exhibit 99.1
Exhibit A
Amended and Restated Compensation Policy
Foresight Autonomous Holdings Ltd.
(the “Company”)
Remuneration Policy for Company’s Office Holders
| 1. | Introduction |
| 1.1 | Pursuant to the provisions of the Companies Law, 1999 (hereafter – “the Companies Law”), on May 27 and July 8, 2024, the Company’s Board of Directors approved a remuneration policy (hereafter – “the remuneration policy”) with respect to the terms of service and employment of Company’s office holders1 (hereafter – “the office holders”), after discussing and considering the recommendations of the Company’s Remuneration Committee regarding this matter. |
| 1.2 | The provisions of the remuneration policy shall be subject to the provisions of any cogent law applicable to the Company and its office holders in any territory. |
| 1.3 | The underlying principles and purposes of the Remuneration Policy are as follows: (a) promoting the Company’s goals, its work plan and its policy for the long-term; (b) remunerating and providing incentives to office holders, while considering the risks that the Company’s activities involve; (c) adjusting the remuneration package to the size of the Company and the nature and scope of its activities; (d) creating incentives that are suitable to Company’s office holders by remunerating those entitled for remuneration under the Remuneration Policy in accordance with their positions, areas of responsibility and contribution to the development of the Company’s business, the promotion of its targets and the maximization of profits in the short and long-term, taking into account, among other things, the need to recruit and retain qualified, highly-skilled officers in a global and competitive market; and (e) adjusting the remuneration of office holders to the contribution of the office holder to the achievement of the Company’s goals and maximization of its profits. |
| 1.4 | This Remuneration Policy is a multi-annual policy that will be effective for a period of three years from the date of its approval, in accordance with Section 267A(c) of the Companies Law. This policy shall be brought forward for re-approval by the Company’s Board of Directors and the general meeting of its shareholders (at the recommendation of the Company’s Remuneration Committee) after three years have elapsed since the date of approval thereof and so forth, unless any changes need to be made to the remuneration policy in accordance with the law and/or in accordance with the Company’s needs. |
| 1.5 | Without derogating from the provisions set out in Section 1.4 above, the Company’s Remuneration Committee and Board of Directors shall check, from time to time, whether the remuneration that is granted under this policy, does, indeed, comply with the terms of this policy and the parameters set therein for each Company office holder. |
| 1.6 | This remuneration policy is based, among other things, on the Company’s assessments as to the competitive environment in which it operates and the challenge it faces in recruiting and retaining high-quality officers in such an environment; it is also based on employment terms generally accepted in public companies operating in the Company’s area of activity and on existing employment agreements between the Company and its office holder, which – in order to remove any doubt – this policy cannot change. |
| 2. | The remuneration policy |
| 2.1 | Components of the remuneration policy |
In accordance with the Company’s remuneration policy, the remuneration of the Company’s office holders shall be based on all or some of the following components:
| 2.1.1 | Basic salary component 2– basic salary/monthly consultation fees; |
| 2.1.2 | Social and related benefits - social benefits as prescribed by law (pension savings, contributions towards severance pay, contributions towards training fund, vacation pay, sick leave, recreation pay, etc.) and related benefits, such as company vehicle/vehicle maintenance, telephone expenses, meals at the workplace, gifts on public holidays, etc. |
1 The meaning of the term “office holder” is as defined in the Companies Law, i.e., general manager, chief business manager, deputy general manager, vice-general manager, any person filling any of these positions in the Company even if he holds a different title, and any other manager directly subordinate to the general manager.
2 Whenever the term “basic salary” is used in this remuneration policy, it refers to the “gross” monthly salary of that office holder, excluding any social benefits and related benefits). Whenever the term “annual basis salary” is used, it means the basic salary for the month of December in the relevant year times 12 (the components in sections 2.1.3 and 2.1.4 above shall be called hereafter: “the variable components”).
| 2.1.3 | Variable cash remuneration (bonus) – short and medium-term remuneration, which includes annual bonuses, which are based on results and achievement of targets. The Company may also determine that a certain office holder will be paid discretionary annual bonuses, taking into account his/her contribution to the Company and the restrictions placed under this policy. |
| 2.1.4 | Variable equity-based remuneration – share-based payment or another long-term remuneration (subject to the existence of valid long-term remuneration plans and provided that the Company decides to award such remuneration). |
At the time of approval of the remuneration package of an office holder, the Remuneration Committee and Board of Directors of the Company shall assess the compliance of each of those components and of the total cost of employment with the criteria set out in this plan.
| 2.2 | Parameters for reviewing remuneration terms |
As a general rule, some or all of the following parameters will be taken into account when reviewing the remuneration terms of a Company office holder.
| 2.2.1 | Education, skills, expertise, tenure (specifically in the Company and in the office holder’s field of expertise in general), professional experience and achievements of the office holder; |
| 2.2.2 | The role of the office holder, his areas of responsibility and his employment terms under previous wage agreements entered into with this office holder; |
| 2.2.3 | The office holder’s contribution to the Company’s business, the achievement of its strategic goals and implementation of its work plans, the maximization of its profits and the enhancement of its strength and stability. |
| 2.2.4 | The extent of responsibility delegated to the office holder. |
| 2.2.5 | The Company’s need to recruit or retain an office holder with unique skills, knowledge or expertise. |
| 2.2.6 | Whether a material change has been made to the role or function of the office holder, or to the Company’s requirements from this office holder. |
| 2.2.7 | The size of the Company and the nature of its activities. |
| 2.2.8 | As to service and employment terms that include retirement grants – the term of service or employment of the office holder, the terms of his service and employment over the course of this period, the Company’s performances in the said period, the office holder’s contribution to the achievement of the Company’s goals, the maximization of its profits and the circumstances of the retirement. |
| 2.2.9 | (a) The market conditions of the industry in which the Company operates at any relevant time, including the office holder’s salary compared to the salaries of other office holders working in similar positions (or in position of comparable level) in companies whose characteristics are similar to those of the Company in terms of its activity (as described in section 2.3.1 below; (b) the availability of suitable candidates that can serve as office holders in the Company, the recruitment and retainment of the office holders and the need to offer an attractive remuneration package in a global competitive market; and (c) changes in the Company’s area of activity and in the scope and complexity of its activities. |
| 2.3 | Payroll review |
| 2.3.1 | For the purpose of determining the payroll that can be offered to an office holder upon recruitment, the Company will review from time to time the payroll generally accepted in the relevant markets for similar positions in companies, which are similar to the Company in terms of its area of activity/scope of activity/complexity of activity/market value/ revenues and other relevant parameters (if such companies exist). The Company will strive that the number of companies in such comparison will be not less than five. |
| 2.3.2 | The payroll review will be conducted by the Company itself, or by an external advisor, at the Company’s discretion. |
| 2.4 | Remuneration terms to new office holders |
As a general rule, the remuneration terms of new office holders shall be approved before they start working for the Company and not in retrospect, except in exceptional circumstances.
| 2.5 | The ratio between the remuneration of office holders and the remuneration of all other Company employees |
The ratio between the cost of terms of service and employment of Company’s office holders 3 and the cost of payroll4 of all other Company employees (on a full-time basis):
| The ratio between the average cost of salary of office holders and the average cost of salary of all other Company employees shall not exceed: |
Active Chairman of the Board of Directors: up to 4 times CEO: up to 4 times VPs (and other office holders who report to the CEO): up to 2.5 times |
|
| The ratio between the cost of median payroll of office holders to cost of median payroll of of all other Company employees shall not exceed: |
Active Chairman of the Board of Directors: up to 4 times CEO: up to 4 times VPs (and other office holders who report to the CEO): up to 2.5 times |
In the opinion of the Company’s Remuneration Committee and Board of Directors, the said ratio is reasonable and appropriate and does not have an adverse effect on work relations in the Company, taking into account the nature of the Company, its size, the manpower mix employed therein, its area of activity and the areas of responsibility of each office holder.
| 2.6 | Basic salary, benefits and other related benefits |
| 2.6.1 | The basic salary of a new Company office holder shall be determined taking into accounts the parameters described in section 2.2 above and the conclusions of the payroll review described in section 2.3 above (should such a review be conducted). |
| 2.6.2 | The basic salary shall be in absolute numbers. The Company may determine that an office holder’s salary shall be linked to a certain currency or index. |
| 2.6.3 | In any case, the monthly cost of payroll4 shall not exceed the maximum amount set out below in respect of full-time position (linked to the Consumer Price Index commencing December 2018): |
3 Cost of terms of service and employment of Company office holders for the purpose of this analysis include the existing remuneration of the office holders and an amount that reflects the annual bonus ceiling (as defined below) that is set by the remuneration policy set forth below.
4 “Cost of payroll” – basic salary + benefits in terms of cost to the employer.
| Position | Maximum monthly cost of payroll in ILS* | |
| Active chairman of the Board of Directors | 85,000 | |
| Company’s CEO | 140,000 | |
| Vice Presidents and other office holders who report to the CEO | 75,000 |
| * | The amounts presented above are in respect of a full-time position; those amounts shall change in proportion to the scope of position of the office holder. |
| 2.6.4 | Social benefits5, related benefits, reimbursement of expenses |
The remuneration package may include benefits that are generally acceptable in the market, such as vacation pay6, contributions towards pension, life insurance, training fund saving, health insurance, social rights and benefits, mobile phone (including grossing up of the taxable value of the phone), internet and landline, gifts on public holidays, recreation, medical tests, medical insurance and/or undertaking such an insurance policy and other expenses, all as approved by the Remuneration Committee and the Company’s Board of Directors, at their discretion and in accordance with the applicable Company policy.
| 2.6.5 | Vehicle |
Company office holders shall be entitled to receive participation in vehicle expenses or a Company vehicle (including by way of leasing) in accordance with acceptable standards for office holders holding similar positions in companies operating in the Company’s area of activity, or in companies, whose scope of activities is similar to that of the Company, including grossing up the taxable value of this benefit, fuel expenses, licensing, insurance and other related expenses.
| 2.6.6 | Insurance, indemnification and exemption |
| 2.6.6.1 | Company’s office holders shall be entitled to insurance coverage to be provided by a liability insurance policy of directors and office holders, which the Company will purchase from time to time, subject to the approvals required by law. |
| 2.6.6.2 | Subject to the provisions of the law, as amended from time to time, and without detracting from the provisions of section 2.6.6.1 above, the Company’s office holders shall be entitled to benefit from coverage provided by a liability insurance of directors and office holders, which the Company will purchase from time to time, subject to the approval of the Remuneration Committee alone (and the approval of the Board of Directors, if required by law), provided that the insurance policy meets the following criteria and provided that the engagement with the insurer is entered into under market conditions and will not have a material effect on the Company’s profitability, its assets or liabilities: |
Directors and office holders in the Company shall be entitled to benefit from coverage provided by a liability insurance of directors and office holders, in a limit of $ 50 million per claim and over the insurance period covered by that policy (plus $ 3 million litigation expenses in excess of the abovementioned limit) (the “policy”). Total annual premium that the Company will pay to an insurance company for the policy and the deductible amount shall be in accordance with market conditions at the date of acquiring the policy, provided that such amounts are not substantial to the Company. The policy will renew each year, in similar conditions and subject to the approvals required by law, for additional periods of 18 months each.
5 As to an office holder that has entered into engagement with the Company whereby no employer-employee relationship exists, the Company may pay the social benefits described above on top of his salary in lieu of the said expenses.
6 An office holder shall be entitled to annual leave as prescribed by law, but the Company grant him further paid leave up to a ceiling of 24 working days per year. The Company may allow the office holder to accumulate vacation days over his term of office in accordance with Company’s procedures.
In the event of a material change in the risks applicable to the Company or if the policy is not renewed, the Company will be entitled to purchase a Run-Off coverage for a period of up to 7 years (the “Run-Off Period”), at a premium to the Run-Off Period which is in accordance with market conditions, provided that such amount is not substantial to the Company.
In addition, the Company shall be entitled to purchase a POSI insurance policy (Public Offering of Securities Insurance) that will supplement the insurance coverage for events that were not taken into account at the time of purchasing the insurance policy (such as a share offering, share offering in a foreign stock exchange, financing, or publication of a prospectus, etc. in limit and the maximal coverage that shall not exceed $ 15 million. The premium and the deductible amount shall be in accordance with market conditions at the date of acquiring such policy, provided that such amounts are not substantial to the Company.
The Purpose of the abovementioned insurance policies is to entitle the Company’s directors and office holders a defense against lawsuits, while the conditions of the insurance policies are determined in negotiations between the Company and the insurance companies, taking under account the Company’s size and fields of activities, the geographical spread of the Company’s operations, the risk management policy of the Company, the number of office holders insured by the policies, and customary and acceptable conditions in the market in such field.
| 2.6.6.3 | The Company’s office holders may be entitled to an indemnification arrangement in accordance with arrangements that are normally acceptable and subject to the provisions of the law and the Company’s articles of association. The overall amount of indemnification per event to all office holders shall not exceed 25% of the effective shareholders’ equity of the Company (the maximum indemnification amount). For that purpose, the “effective shareholders’ equity of the Company” means the amount of the Company’s shareholders’ equity in accordance with the last consolidated audited or reviewed financial statements of the Company (as applicable) at the time of actual payment of the indemnification. It is hereby clarified, that the indemnification shall be paid in excess of any amount paid under the liability insurance of directors and office holders, which the Company has purchased or will purchase from time to time. |
| 2.6.6.4 | Company office holders may be entitled to an exemption arrangement in accordance with arrangements that are normally acceptable and subject to the provisions of the law and the Company’s articles of association. |
| 2.7 | Remuneration in connection with termination of employment |
| 2.7.1 | Advance notice period |
| 2.7.1.1 | An office holder may be entitled to advance notice period or payment in lieu of advance notice period. The advance notice period shall be determined for each and every office holder, taking into account the parameters listed in section 2.2 above. |
| 2.7.1.2 | As a general rule, the advance notice period of an office holder shall not exceed 3 months for an office holder who was employed in the Company for less than 3 years, and shall not exceed 6 months for an office holder who was employed in the Company more than 3 years. The Remuneration Committee and Board of Directors of the Company, and where required – the General Meeting of the Company’s shareholders, may, at their discretion, taking into account the position of the office holder, his area of responsibility and his other remuneration components, approve an advance notice period that is different than the one specified above. |
| 2.7.1.3 | Over the course of the advance notice period, the office holder shall continue to do his job in the Company at the request of the Company, unless the Company decides that he will not do so, in which case the office holder may be entitled to continue and receive over the advance notice period all employment and service terms, which were agreed upon in his employment agreement. |
| 2.7.1.4 | The service and employment terms of the office holders may include a provision whereby the Company may terminate the employment of the office holder without an advance notice period in cases which deny eligibility for severance pay according to the law, including the following cases: (a) conviction of an offence involving moral turpitude; (b) an office holder who will conduct himself in a disloyal and/or unreliable and/or dishonest manner in his relations with the Company and/or while carrying out actions on its behalf and/or will harm the Company’s reputation; (c) in case the office holder will breach the confidentiality duty towards the Company and/or his duty to protect the Company rights which were developed due to or as part of his work at the Company; (d) Any other case in which the Company is legally entitled to refrain from payment of severance pay. |
| 2.7.2 | Severance pay |
The scope of severance pay will be determined immediately prior to the employment of the office holder, or during his employment, to the extent such employment is not expecting to terminate soon. Severance pay shall not be increased immediately prior to termination of employment. In general, an office holder who are a Company employee, will be entitled to Severance pay constituting 100% of his law monthly salary. The Company will strive that new employment agreements with office holders will include provisions in accordance with Section 14 to the Israeli Severance Pay Law, 5723-1963. Notwithstanding the foregoing, in the event that the employment of a certain office holder will terminate under circumstances which allow to deny eligibility for severance pay by law, in whole or in part, the Company will release to such office holder only his payment to the manager’s insurance/pension plan and education fund.
| 2.7.3 | Retirement / Adaptation period |
| 2.7.3.1. | Subject to the approval of Remuneration Committee and Board of Directors of the Company, and where required – the General Meeting of the Company’s shareholders and subject to the provisions of the law, as amended from time to time, the office holder may be entitled to an adaptation period that will not exceed six months, provided he was employed in the Company for at least two years, after the end of the advance notice period. Over the adaptation period, the office holder will receive his salary and other related employment terms as described above. An office holder may be entitled to retirement grants provided that such grant was determined in the engagement agreement with such office holder, provided further that he did not end his service in Company under circumstances which, as determined by the Company’s Board of Directors, deny eligibility for severance pay, in such case will not be entitled to any retirement grant. |
| 2.7.4.3 | When determining the amount of the retirement grant, the Company will take into account, among other things, the period of service or employment of the office holder, the terms of service and employment over the course of this period, his contribution to the achievement of the Company’s goals and maximization of its profits and the circumstances of the retirement. |
| 2.8 | Annual bonus |
In addition to the fixed salary component as determined herein, the remuneration package of Company’s office holders may include eligibility to an annual bonus that is based on measurable targets and to an annual discretionary bonus (hereafter jointly: “the annual bonus”).
| 2.8.1 | Components of the bonus |
| ● | With regard to the Company’s CEO and an active chairman of the Board of Directors (other than CEO or active chairman of the Board of Directors who are the controlling shareholder of the Company or his relative) – most of the annual bonus will be based on measurable targets and an immaterial portion of the annual bonus (for that purpose “immaterial portion” – the higher of (a) a total of 3 (gross) monthly salaries or (b) 25% of the variable components of the bonus (actual bonus and equity-based payment) shall be a discretionary bonus that is based on qualitative criteria. Notwithstanding the above, if in a specific year the Company does not pay the CEO or the active chairman of the Board of Directors (as applicable) an annual bonus that is based on measurable targets (i.e., if the discretionary annual bonus paid to the CEO or the active chairman of the Board of Directors (as applicable) constitutes the total annual bonus paid on that year), then the amount of the discretionary bonus that the Company may pay to the CEO and to the active chairman of the Board of Directors (as applicable and separately) shall not exceed three (3) gross monthly salaries of that office holder. |
| ● | With regard to office holders who report to the Company’s CEO – subject to the provisions of the law, office holders, who report to the CEO, may be eligible to an annual bonus that is based on measurable targets and to a discretionary annual bonus. It should be clarified that the whole amount of annual bonus payable to office holders, who report to the Company’s CEO may be a discretionary bonus (unlike an annual bonus that is based on measurable targets). |
| 2.8.2 | Annual bonus that is based on measurable targets |
The amount of the annual bonus that is based on measurable targets shall be calculated based on measurable criteria, that will be determined (if they are determined) for each and every office holder, as possible, at the time of determining the Company’s budget for the forthcoming year, in accordance with the role of the relevant office holder, by the competent organs of the Company (in accordance with the provisions of the law and the positions of the Securities Authority, as amended from time to time). It is hereby clarified the in regard to office holders, who report to the CEO, such measurable targets may be determined only by the Company’s CEO.
| 2.8.2.1 | Subject to the provisions of the law and the positions of the Securities Authority (as amended from time to time): |
| a. | The Remuneration Committee and Board of Directors alone will be allowed to determine the measurable targets applicable to active directors, if one of the following is fulfilled: |
| (1) | All of the following conditions are met: (a) the resolution is in line with the remuneration policy; (b) the grant in question is based only on measurable targets; (c) the amount of the potential grant is immaterial (up to three salaries); and (d) the targets were pre-determined by the Remuneration Committee and Board of Directors. |
| (2) | All of the following conditions are met: (a) the resolution is in line with the remuneration policy; (b) the office holder in question serves both as a director and in an operational role in the Company; (c) The Remuneration Committee and Board of Directors approved the targets, but the directors, who receive from the Company a bonus based on measurable targets, did not take part in the approval of those targets (whether in their capacity as directors or in their capacity as other office holders in the Company). |
| b. | The Remuneration Committee and Board of Directors alone will be allowed to determine the measurable targets applicable to an office holder, who is a controlling shareholder or a relative thereof (as these terms are defined in the Companies Law), if one of the following is fulfilled: |
| (1) | All of the following conditions are met: (a) the resolution is in line with the remuneration policy; (b) the grant in question is based only on measurable targets; (c) the amount of the potential grant is immaterial (up to three salaries); and (d) the targets were pre-determined by the Remuneration Committee and Board of Directors. |
| (2) | Measurable targets based on financial statements data and which applies in the same manner to the controlling shareholder and his relative and to every other office holders, provided that all of the following conditions are met: (a) the number of the other office holders which such targets apply, is significantly higher than the number of office holder which is the controlling shareholder or his relative; (b) the potential grant to the other office holder is significantly higher than the potential grant to the office holder which is the controlling shareholder or his relative (in absolute numbers); (c) the cost of the grants attributed to the controlling shareholder, taking into account his holdings in the Company, will be significantly higher than the total grant he will be entitled to in the event of meeting the targets, so it is clear that the controlling shareholder has a slight and negligible interest in determining the targets. |
Set forth below are some suggested criteria for the annual bonus that is based on measurable targets. It should be clarified that this list is not a closed and binding list. The Remuneration Committee and the Board of Directors may consider adding or removing some of those criteria, taking into account the role of each office holder, this areas of responsibility and the Company’s activity.
| 1. | Bonus that is based on financial targets – a bonus that is based on meeting principal and personal performance metrics that are quantified and set out in the Company’s work plan and attributed to the relevant office holder. These performance metrics may include, among other things: sales and marketing targets. |
| (a) | Engagement in products distribution contracts. | |
| (b) | Engagement in collaboration contracts. | |
| (c) | Achievement of product development milestones. | |
| (d) | Completion of development of new technologies. | |
| (e) | Production and growth metrics relating to scope of activity. | |
| (f) | Recruitment and retainment of customers. | |
| (g) | Reducing costs. | |
| (h) | Implementation, promotion and completion of planned projects. | |
| (i) | Achievement of targets/milestones relating to implementation of principal projects and processes of the Company. | |
| (j) | Promotion of strategic plans and targets, including targets which were set for the office holder, and which are relevant to the relevant office holder’s area of activity. | |
| (k) | Achievement of financial targets: raising loans, bonds, public offering of shares, etc. |
At the end of each year, the Remuneration Committee and Board of Directors, or the Company’s CEO, as applicable, will review the office holders’ meeting their measurable targets in order to determine that component of the annual bonus, which is based on measurable targets. The Remuneration Committee and Board of Directors, or the Company’s CEO, as applicable, may determine to pay only part of the component of the annual bonus, which is based on measurable targets, if the office holder meets only some of the targets.
| 2.8.2.2 | Neutralization of one-off events |
As part of the calculation of the eligibility to annual bonus that is based measurable targets on the basis of financial statements data (if such targets are set) the Board of Directors or the Remuneration Committee will be authorized to neutralize the effect of “one-off events”, or alternatively to decide that such events should not be neutralized in a certain year, as applicable.
| 2.8.3 | Annual discretionary bonus |
Subject to the recommendation of the Company’s CEO in connection with office holders who report to him, and in respect of the CEO and the active directors – subject to the recommendation of the Board of Directors, the Company’s competent organs shall be allowed (subject to the provisions of the law and the positions of the Securities Authority (as amended from time to time)), to award a discretionary bonus to Company’s office holders, based, among other things, on the following qualitative criteria (hereafter – “annual discretionary bonus”).
| 1. | The office holder’s contribution to the Company’s business, the maximization of its profits and the enhancement of its strength and stability. |
| 2. | The Company’s need to recruit or retain an office holder with unique skills, knowledge or expertise. |
| 3. | The extent of responsibility delegated to the office holder. |
| 4. | Changes that have taken place over the last year with regards to the areas of responsibility of the office holder. |
| 5. | Satisfaction from the performance and functioning of the office holder. |
| 6. | Appreciation to the office holder’s ability to work in collaboration and coordination with the team. |
| 7. | The office holder’s contribution to corporate governance and to proper control environment and ethics. |
| 8. | The office holder’s contribution to the promotion and development of employees and managers, insofar as this is relevant to his role. |
The Company’s competent organs shall approve this component based, among other things, on data presented by the Company’s management and based on personal assessment and recommendation issued by the Company’s CEO (with regard to office holders who report to him) and by the Company’s Board of Directors with regard to active directors and the CEO, while listing the underlying reasons for their recommendation.
| 2.8.4 | The annual bonus ceiling of office holders as of date of payment thereof (both in respect of discretionary bonus and in respect of bonus based on measurable targets: |
| Role | Maximum annual bonus7 as of date of payment thereof (in terms of cost of payroll4) | |
| Active chairman of the Board of Directors | Up to 6 salaries (subject to the provisions of section 2.8.1 above) | |
| CEO | Up to 6 salaries (subject to the provisions of section 2.8.1 above) | |
| VPs and other office holders who report to the CEO | Up to 4 salaries |
| 2.8.5 | The Remuneration Committee and Board of Directors may decide to postpone the payment of the annual bonus or reduce the amount of the annual bonus to which the office holder is entitled, at their own discretion. |
7 The ceiling is in respect of the whole annual bonus – bonus based on measurable targets + discretionary bonus.
| 2.8.6 | The Company may pay an office holder, who has not completed a full year of employment, a proportionate share of the bonus according to the period of employment of the office holder. |
| 2.9 | Clawback Policy |
The Company has adopted a Clawback Policy intended to comply with the requirements of the Companies Law, Section 10D of the Securities Exchange Act of 1934 and clawback-related listing standards of the Nasdaq Stock Market, that shall apply to its Executive Officers and Directors, as attached hereto as Exhibit A.
| 2.10 | Long-term remuneration |
| 2.10.1 | Subject to the approval of a long-term remuneration plan by the Company in accordance with the provisions of the law, the Company may allocate to office holders and from time to time options and/or restricted shares (“share-based payment”) and/or another long-term remuneration, including a remuneration that is based on the performance of the Company’s share (such as phantom options), as part of the remuneration package. |
| 2.10.2 | The annual value8 of the share-based payment paid to each office holder, as of the date of grant thereof, shall not exceed 200% of the cost of payroll4 of such office holder. Such value will be determined in accordance with acceptable valuations methods at the date of grant thereof. |
| 2.10.3 | Should the Company decide to award share-based payment: |
| 2.10.3.1 | The Company will maintain securities-based remuneration plan in accordance with Section 102 to the Income Tax Ordinance or other tax provisions that apply to the Company and/or its employees in accordance with the territory in which they operate. However, the Company’s Remuneration Committee and Board of Directors will be entitled to grant share-based payment in the absence of such plan. |
| 2.10.3.2 | In the event that the share-based payment shall be award of options, the exercise price of the awarded options will not be less than the average share price on the Tel Aviv Stock Exchange over the last 30 trading days preceding the date on which the Board of Directors of the Company decided to award the of the share-based payment. In the event of award of options, each of the options that the Company will award will be exercisable into one ordinary Company ordinary share. |
| 2.10.3.3 | The vesting period of the share-based payment to be awarded by the Company will be at least 3 years until vesting of all of the share-based payment that were allocated, when every quarter (or a longer period of time as determined by the Company’s Board of Directors) a proportionate share of the amount of the share-based payment will vest. Nevertheless, the Remuneration Committee and the Company’s Board of Directors are authorized to determine that despite the above vesting provisions, the share-based payment shall be exercisable upon the achievement of targets that they will set close before the award of the share-based payment. |
| 2.10.3.4 | The vesting period may be accelerated upon the occurrence of special events, such as change of control in the Company and/or sale of operations and/or the end of the tenure of an office holder under special circumstances (such as death of illness). |
| 2.10.3.5 | The share-based payment shall expire no later than 10 years following the vesting date of the respective installment of the share-based payment. |
| 2.10.3.6 | The maximum aggregate dilution for all of the share-based payment awarded to the Company’s officers and employees shall not exceed 18% of the Company’s outstanding share capital on a fully diluted basis. |
8 The value of share-based compensation that vested in a period of 12 months from the grant date.
| 2.10.4 | As part of the discussion on the award of share-based payment to a Company office holder, the Remuneration Committee and the Company’s Board of Directors, and where required – the general meeting of the Company’s shareholders, will assess whether the said award constitutes an appropriate incentive that will contribute to the maximization of the Company’s value in the long-term. |
| 2.10.5 | Share-based payment shall be awarded after the assessment of the economic value of the said award, the exercise prices and the exercise periods. |
| 2.11 | The ratio between the fixed salary component and the variable components9 |
| Role | The ratio between the variable components and the fixed components | |
| Active chairman of the Board of Directors | Up to 2.5 | |
| CEO | Up to 2.5 | |
| VPs and other office holders who report directly to the CEO | Up to 2 |
| 2.12 | Extending the term of existing agreements with Company office holders and making amendments to those agreements |
| 2.12.1 | Prior to extending the term of the employment agreement with a Company office holder (whether this involves changes to the terms of employment or not), the office holder’s existing remuneration package will be assessed in relation to the parameters set out in section 2.2 above and bearing in mind the payroll review, which was conducted by the Company as per section 2.3 above. |
| 2.12.2 | Subject to the provisions of the law and the positions of the Securities Authority, as amended from time to time, immaterial changes made to the service terms of the Company’s CEO will need to be approved by the Remuneration Committee alone, if the latter approved that the changes are, indeed, immaterial and the change complies with the provisions of this remuneration policy. |
| 2.12.3 | Subject to the provisions of the law and the positions of the Securities Authority, as amended from time to time, immaterial changes made to the service and employment terms of the office holders who report to the Company’s CEO shall be approved by the Company’s CEO alone and the approval of the Remuneration Committee will not be required, provided that the service and employment terms of that office holder comply with the provisions of this remuneration policy. |
In sections 2.12.2 and 2.12.3 above, “immaterial changes to the service and employment terms” are changes, the aggregate value of which does not exceed 10% of the overall annual cost of remuneration of the office holder.
| 2.13 | Remuneration of directors |
| 2.13.1 | Company’s directors will be eligible to remuneration in accordance with the Companies Regulations (Rules Regarding Remuneration and Expenses to External Director), 2000 (hereafter – “the remuneration regulations”) and which will not exceed the maximum remuneration set in the remuneration regulations (including the maximum remuneration to an external expert director, which is set in the remuneration regulations). This section will not apply to directors, who will serve as active directors and who will be eligible to remuneration in accordance with other provisions of this remuneration policy. |
9 For that purpose, the “variable components” include the annual value of the share-based payment.
| 2.13.2 | Notwithstanding the provisions of section 2.13.1, directors, who serve in other positions in the Company in addition to their service as directors, shall be eligible to salary as paid in the Company for similar positions. |
| 2.13.3 | The directors, who serve in the Company, may be eligible to reimbursement of reasonable expenses; they will also be eligible to insurance, indemnification and exemption arrangements as described in section 2.6.6 above, all in accordance with the provisions of the Company’s articles of association and the provisions of this remuneration policy. |
| 3. | The powers of the Remuneration Committee and the Company’s Board of Directors with regard to the remuneration policy |
| 3.1 | The Company’s Board of Directors is charged with the management of the remuneration policy and all actions required for management thereof, including the power to interpret the provisions of the remuneration policy where doubts arise as to the manner of its implementation. |
| 3.2 | The Company’s Remuneration Committee and Board of Directors will assess, from time to time, the remuneration policy and the need to adjust it, inter alia, in accordance with the considerations and principles set out in this policy, while taking into account the changes in the Company’s goals, market conditions, Company’s profits and revenues in previous periods in in real time and any other relevant information. |
| 3.3 | In order to assess the Company’s remuneration policy, the Company’s Remuneration Committee and its Board of Directors will monitor the implementation of the remuneration policy in the Company. |
Exhibit A
Clawback Policy
Effective as of October 2, 2023
Background
The Board of Directors of the Company (the “Board”) believes that it is in the best interests of the Company and its shareholders to create and maintain a culture that emphasizes integrity and accountability and that reinforces the Company’s pay-for-performance compensation philosophy. The Financial Statements Review, Audit and Compensation Committee of the Board (the “Committee”) and the Board have therefore adopted this policy, which provides for the recoupment (or clawback) of certain executive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws of the United States (the “Policy”). This Policy is designed to comply with Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rule 10D-1 promulgated under the Exchange Act (“Rule 10D-1”) and the listing standards of the Nasdaq Stock Market (“Nasdaq”) under Nasdaq Listing Rule 5608. In addition, this Policy is designed to comply with the requirements under the Israeli Companies Law 5759-1999 (the “Companies Law”) with respect to clawback provisions to be included in the Company’s Compensation Policy, as may be amended from time to time.
Administration
This Policy shall be administered by the the Board. Any determinations made by the Board, after taking into consideration the recommendations of the Committee, shall be final and binding on all affected individuals. Subject to any limitation under applicable law, the Board, after taking into consideration the recommendations of the Committee, may authorize and empower any officer or employee of the Company to take any and all actions necessary or appropriate to carry out the purpose and intent of this Policy (the “Authorized Officers”) (other than with respect to any recovery under this Policy involving such officer or employee).
Covered Executives
This Policy applies to the Company’s current and former executive officers, as determined by the Board in accordance with Section 10D of the Exchange Act and the listing standards of the Nasdaq (“Covered Executives”).
Recoupment; Accounting Restatement
In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any financial reporting requirement under the applicable securities laws, the Board, after taking into consideration the recommendations of the Committee, will require prompt reimbursement or forfeiture of any excess Incentive Compensation (as defined below) received by any Covered Executive during the three completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement. For the sake of clarity, recoupment is required in the event of any restatement that either: (a) corrects an error in previously issued financial statements that is material to the previously issued financial statements; or (b) corrects an error not material to previously issued financial statements, but that would result in a material misstatement if (i) the error was left uncorrected in the then current period; or (ii) the error correction was recognized in the then current period. The Company’s obligation to recover erroneously awarded compensation is not dependent on if or when the restated financial statements are filed. For purposes of determining the relevant recovery period, the date that the Company is required to prepare an accounting restatement as described above is the earlier to occur of: (A) the date the Board, a committee of the Board, the Authorized Officers, or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an accounting restatement as described above; or (B) the date a court, regulator, or other legally authorized body directs the Company to prepare an accounting restatement as described above. In accordance with Nasdaq Rule 5608(e), this Policy is applicable to Incentive Compensation (as described below) received on or after October 2, 2023.
Incentive Compensation
For purposes of this Policy, “Incentive Compensation” means any of the following, provided that such compensation is granted, earned or vested based wholly or in part on the attainment of a financial reporting measure affected by the restated financial statements:
| ● | Annual bonuses and other short- and long-term cash incentives. | |
| ● | Share options. | |
| ● | Share appreciation rights. | |
| ● | Restricted shares. | |
| ● | Restricted share units. | |
| ● | Performance shares. | |
| ● | Performance units. |
Financial reporting measures are measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from such measures. Share price and total shareholder return are also financial reporting measures. A financial reporting measure need not be presented within the financial statements or included in a filing with the Securities and Exchange Commission. The Company’s financial reporting measures may include, but are not limited to, the following:
| ● | Company stock price. | |
| ● | Total shareholder return. | |
| ● | Revenues. | |
| ● | Net income. | |
| ● | Earnings before interest, taxes, depreciation and amortization (EBITDA). | |
| ● | Funds from operations. | |
| ● | Liquidity measures such as working capital, operating cash flow or Free Cash Flow. | |
| ● | Return measures such as return on invested capital or return on assets. | |
| ● | Earnings measures such as earnings per share. |
This Policy applies to all Incentive Compensation received by a Covered Executive:
| ● | After beginning service as an executive officer; | |
| ● | Who served as an executive officer at any time during the performance period for that Incentive Compensation; | |
| ● | While the Company has a class of securities listed on a national securities exchange or a national securities association; and | |
| ● | During the three completed fiscal years immediately preceding the date that the Company is required to prepare an accounting restatement as described in this Policy. In addition to these last three completed fiscal years, this Policy applies to any transition period (that results from a change in the Company’s fiscal year) within or immediately following those three completed fiscal years. However, a transition period between the last day of the Company’s previous fiscal year end and the first day of its new fiscal year that comprises a period of nine to 12 months would be deemed a completed fiscal year. |
Incentive Compensation is deemed received in the Company’s fiscal period during which the financial reporting measure specified in the Incentive Compensation award is attained, even if the payment or grant of the Incentive Compensation occurs after the end of that period.
Excess Incentive Compensation: Amount Subject to Recovery
The amount to be recovered will be the excess of the Incentive Compensation paid to the Covered Executive based on the erroneous data over the Incentive Compensation that would have been paid to the Covered Executive had it been based on the restated results, as determined by the Board, after taking into consideration the recommendations of the Committee, and without regard to any taxes paid by or withheld from the Covered Executive. If the Board, after taking into consideration the recommendations of the Committee, cannot determine the amount of excess Incentive Compensation received by the Covered Executive directly from the information in the accounting restatement, then it will make its determination based on a reasonable estimate of the effect of the accounting restatement. For Incentive Compensation based on share price or total shareholder return, where the amount of erroneously awarded compensation is not subject to mathematical recalculation directly from the information in an accounting restatement, the amount will be based on a reasonable estimate of the effect of the accounting restatement on the share price or total shareholder return upon which the Incentive Compensation was received. In such case, the Company shall maintain documentation of the determination of that reasonable estimate and provide such documentation to Nasdaq.
Method of Recoupment
The Board, after taking into consideration the recommendations of the Committee, will determine, in its sole discretion, the method for recouping Incentive Compensation hereunder which may include, without limitation:
| ● | Requiring reimbursement of cash Incentive Compensation previously paid; | |
| ● | Seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards; | |
| ● | Offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive in accordance with applicable law; | |
| ● | Cancelling outstanding vested or unvested equity awards; and/or | |
| ● | Taking any other remedial and recovery action permitted by law, as determined by the Board, after taking into consideration the recommendations of the Committee. |
No Indemnification
The Company shall not indemnify any Covered Executives against the loss of any Incentive Compensation recovered under this Policy or from any consequence arising therefrom.
Interpretation
The Board, after taking into consideration the recommendations of the Committee, is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate or advisable for the administration of this Policy. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of Section 10D of the Exchange Act, Rule 10D-1, any applicable rules or standards adopted by the Securities and Exchange Commission or Nasdaq, and the Companies Law.
Effective Date
This Policy shall be effective as of the date it is adopted by the Board (the “Effective Date”) and, in accordance with Nasdaq Rule 5608(e), shall apply to Incentive Compensation that is received by Covered Executives on or after October 2, 2023.
Amendment; Termination
The Board, after taking into consideration the recommendations of the Committee, may amend this Policy from time to time in its discretion and shall amend this Policy as it deems necessary to reflect regulations adopted by the Securities and Exchange Commission under Section 10D of the Exchange Act and to comply with any rules or standards adopted by Nasdaq. The Board, after taking into consideration the recommendations of the Committee, may terminate this Policy at any time.
Other Recoupment Rights
The Board intends that this Policy will be applied to the fullest extent of applicable law. The Board and/or Committee may require that any employment agreement, equity award agreement, or similar agreement entered into or amended on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require a Covered Executive to agree to abide by the terms of this Policy. Any right of recoupment under this Policy is in addition to, and not in lieu of: (a) any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any similar policy in any employment agreement, equity award agreement or similar agreement and any other legal remedies available to the Company, including termination of employment or institution of legal proceedings; and (b) any statutory recoupment requirement, including Section 304 of the Sarbanes-Oxley Act of 2022. For the avoidance of doubt, any amounts paid to the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2022 shall be considered (and may be credited) in determining any amounts recovered under this Policy.
Impracticability
The Board, after taking into consideration the recommendations of the Committee, shall recover any excess Incentive Compensation in accordance with this Policy unless such recovery would be impracticable, as determined in accordance with Rule 10D-1(b)(1)(iv) under the Exchange Act and the listing standards of Nasdaq. In order for the Company to determine that recovery would be impracticable, the Board, after taking into consideration the recommendations of the Committee, must conclude the following:
| a) | The direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered after making a reasonable attempt to recover such Incentive Compensation. Note that the attempt(s) to recover must be documented by the Company and such documentation provided to Nasdaq; | |
| b) | Recovery would violate home country law where that law was adopted prior to November 28, 2022. Note that the Company must obtain a legal opinion of home country counsel that such recovery would result in a violation of local law and provide such opinion to Nasdaq; or | |
| c) | Recovery would likely cause an otherwise tax-qualified retirement plan under which benefits are broadly available to Company employees to fail to meet the requirements for qualified pension, profit-sharing and stock bonus plans under Section 401(a)(13) of the U.S. Internal Revenue Code or the minimum vesting standards under Section 411(a) of the U.S. Internal Revenue Code. |
Successors
This Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators or other legal representatives.
Exhibit Filing
A copy of this Policy shall be filed as an exhibit to the Company’s annual report on Form 20-F.