Controlling shareholder of Rimon is worth 720 million shekels and requests a retention bonus of 1.3 million

Since its IPO on the Tel Aviv Stock Exchange in July 2021, the shares of the infrastructure company Rimon have jumped by more than 300% and climbed to a market capitalization of 5.3 billion shekels. The person who has led the company since its inception 24 years ago is Yossi Almalem, who holds 13.6% of its shares and is considered its controlling shareholder alongside Granot, an agricultural organization owned by 43 kibbutzim and moshavim.

Almalem (60) is considered a successful manager, and the company's surge in recent years is attributed to his leadership. By virtue of his holdings, he is also a major beneficiary of this success: the value of his shares already reaches 719.5 million shekels "on paper," and his vested options from 2021 are worth 56.6 million shekels (before tax).

Next month, the Rimon shareholders' meeting will convene to approve updated compensation terms for Almalem. Two clauses in particular raise questions. Alongside a monthly management fee of 126.5 thousand shekels (35% higher than the 2021 rate) and a bonus capped at nine monthly management fees, Rimon is asking shareholders to approve a retention bonus accumulating to at least 1.26 million shekels over three years.

The company justifies these terms by the need to retain Almalem given his contribution to growth. However, unlike previous terms, eligibility for this retention bonus is not conditional on him serving specifically as CEO, but on holding any role at Rimon, even a non-executive one. Furthermore, critics question why a special retention bonus is needed for a controlling shareholder who already has a direct interest in the company's continued growth.

Additionally, Rimon is seeking approval for an allocation of 196,000 options valued at 7.5 million shekels, which would increase Almalem's stake to 15.1%. While institutional bodies were once cold to such allocations for controlling CEOs, they have softened their stance. However, critics argue that exercising these options will dilute other shareholders.

The exercise mechanism is tied to the share price reaching 179 shekels (on a 30-day average). Since this is 25% higher than the exercise price—which is close to the current market price—it serves as an incentive for share price growth. Yet, a loophole exists: the target price only needs to be reached once between August 2027 and August 2032 for Almalem to exercise the options at any time, even if the share price drops significantly thereafter.

The annual cost of Almalem's salary is expected to reach 5.5 million shekels if approved. Over the five years since the IPO, his cumulative salary costs have reached 17.5 million shekels, and his share of dividends distributed between 2022 and 2024 totaled 13.8 million shekels before tax.