Prof. Jacob Frenkel, Israel Prize laureate, reentered the media spotlight a few days ago and will apparently remain there for the little while, and not for his own benefit. The state comptroller¿s report published Monday levels harsh criticism at the former governor of the Bank of Israel, who enjoyed special financial arrangements for which he was not eligible, to the tune of some NIS 230,000.
The report reveals that at the end of his tenure at the bank, in January 2000, Frenkel was paid about NIS 107,000 in lieu of 101.4 sick days that he didn¿t utilize, even though the remuneration laws regarding employees of government authorities make not mention of eligibility for compensation for unused sick days. The decision to pay Frenkel for the sick days, as well as the decisions regarding the other payments mentioned in the report, were made by a senior executive at the bank who was answerable to Frenkel. Previous governors did not receive compensation for unused sick days.
When Frenkel left the bank he also received about NIS 20,000 for the reimbursement of expenses during the 623 days he spent abroad over the course of his seven years in office.
In the middle of 1998 that bank checked the number of vacation days Frenkel had not used during his first term as governor (1991-1996). At that time 25 days were deducted from the vacation days due Frenkel, in keeping with the directives that apply to government ministers. In April 1999 the same senior executive ordered the cancellation of the deduction, on the grounds that Frenkel couldn¿t go on vacation because no deputy had been appointed to replace him. Frenkel was paid NIS 30,000 for those unused vacation days.
The governor earns less that the bank¿s senior executives
The state comptroller¿s report reveals that one of the main explanations for justifying the payments to Frenkel was that his salary, which is on par with that of government ministers, is NIS 33,000 per month ¿ less that that of other senior executives at the bank. The comptroller noted that even if Frenkel were frustrated by this fact, the only way to correct it is via an official application to the cabinet to change its decision regarding the parity of the governor¿s salary with that of ministers.
But NIS 230,000, a sizeable sum by any account, is small change to Frenkel these days. Since leaving the bank in January 2000 he has been earning much more substantial salaries.
Even before his retirement Frenkel made plans to ensure his rise up the wage ladder. Very shortly after leaving the bank Frenkel joined Merrill Lynch as president of Merrill Lynch International, and last April he was promoted to chairman of the board of managers at Merrill Lynch International. Sources close to Frenkel say he earns close to $1 million a year.
Options and ¿consulting fees¿ from Lumenis
Frenkel¿s income does not end there ¿ last year he received $120,000 as president of Lumenis, for services described as ¿consulting fees.¿ Although Lumenis¿ share price has not risen much in the past few months, the options Frenkel received in addition to his high fee are still valuable. In 2000 he received 500,000 options at an exercise price of $5.06 per share. These options were worth over $16 million when Frenkel received them (back then the share was breathing mountain air at a height of $32), and their current value is about $4 million ¿ for a profit, ¿on paper¿ of $1.5 million.
Last year Frenkel received an additional generous allocation of 300,000 options ¿ this time at an exercise price of $10.9 per share. Frenkel has so far sold only 22,500 shares, probably due to tax considerations. In the last quarter of 2001 Frenkel came to Lumenis¿ aid and in addition to actively handling the first part of a conference call between the company, analysts and investors, he purchased 2,500 shares. Small change.
Frenkel is also on the board of directors of Emblaze Systems, a position he has held since 2000. The company was unwilling to provide details regarding Frenkel¿s remuneration and the options he has received in the past two years, but it is unlikely that he has been working pro bono and Emblaze is probably compensating him handsomely for his efforts.
Frenkel is being criticized right and left. Knesset Member Ophir Pinas (Labor), who heads the Knesset¿s Constitution, Justice and Law Committee, filed a complaint with the police commissioner against Frenkel on Monday, following the comptroller¿s findings. Finance Minister Silvan Shalom said yesterday that he plans to demand that Frenkel return the monies paid to him unlawfully, and opposition leader MK Yossi Sarid (Meretz) called on the Israel Prize Committee to reconsider the granting of the prize to Frenkel.
Frenkel will have no difficulty returning the money he received from the bank, if he is asked to do so. The rescinding of the Israel Prize, which Frenkel received recently for his contributions to the Israeli economy, will hurt a bit more.