Derivative Claim (Tel Aviv) 58205-11-23 Harel Primack v. Delek Group Ltd.

Decision

Before an application (hereinafter: "The Request") for discovery and review of documents prior to filing a derivative claim by virtue of the provisions Section 198A of the Companies Law, 5759-1999 (hereinafter: "Companies Law") on the claim that the CEO of Delek Group was approved in a tax appeal (hereinafter: "Fuel" or "The Respondent"), remuneration in the form of a special grant in an over-rolling in violation of the law (hereinafter: "The Grant").

Background

1. According to the claim, the approval of the special grant to Delek's CEO, Mr. Idan Wells (hereinafter: "The CEO" or "Wells"), which deviates from the company's remuneration policy and was approved through an "over-rolling" decision, is contrary to the law and constitutes a breach of the duties of care and trust that apply to the company's directors.  Therefore, in order to examine the filing of a derivative claim, protocols and procedures were requested that are claimed to be relevant to the examination of the manner in which the remuneration committee and the board of directors conduct themselves in approving the remuneration to the CEO Moving on to the Over-Rolling Decision.
2. The Applicant, Dr. Harel Primack (hereinafter: " Primack") is a shareholder in Delek, which is a public company listed for trading on the Tel Aviv Stock Exchange, and holds one share of the company he purchased on May 17, 2020.  Dr. Primack is one of the founders of Financial Justice (NPO) and serves as Co-Chairman of the Association's Board of Directors.
3. The Applicant and others, jointly and severally (hereinafter: "Applicants in Related Cases"), have filed similar motions against other companies.  Four are before me (the three additional motions below: Derivative Claim 50050-11-23 Kashi v. Electra in a Tax Appeal (Decision given on March 24, 2026) (Hereinafter: "The Electra Matter"); Derivative Claim 60805-11-23 Kashi v. Matrix E.T.  In a Tax Appeal (Decision given on May 19, 2026) (Hereinafter: "The Matrix Matter"); Derivative Claim 3167-12-23 Primac v. NewMed Energy - Limited PartnershipAll of the motions raise a similar legal argument regarding the manner in which the "over-ruling" power is exercised.  For this reason, and in light of the Respondents' objection in all the cases to their consolidation, I ordered that the files be administratively linked for the purpose of obtaining the position of the professional bodies and the friend of the court only, and that each case be heard on its own merits (decision of July 17, 2024; hereinafter: "Related Cases").
4. Following the submission of the requests, the Attorney General announced that she would appear accordingly To Section 1 to the Proceedings Ordinance (Appearance of the Attorney General) [New Version] and later submitted its position (hereinafter: "The Attorney General's Position").  In addition, on December 5, 2024, the Israel Securities Authority published its position (hereinafter: "The Securities Authority's Position") and the Association of Public Companies (hereinafter: "The Association") joined this proceeding and related cases as an amicus curiae, in accordance with my decision of September 17, 2024 (see Position The professional bodies and the Association's position on the matter Electra In paragraphs 34-46 and in the matter Matrix in paragraphs 34-47).

Summary of the facts

5. On March 27, 2022, the Delek Remuneration Committee approved the granting of a special and one-time grant to the CEO in the amount of NIS 2.6 million, which exceeds the company's remuneration policy, after which the Board of Directors approved the grant on March 29, 2022.  Delek summoned the General Meeting to vote on the approval of the grant, inter alia, and published a report on the convening of an annual and special general meeting on March 30, 2022 (hereinafter: "Meeting Summons Report").  In the report of the summons of the meeting, it was stated that the grant was for "The significant and central contribution (of the CEO, M.A.), during the years 2020 and 2021, to the implementation and completion of a long list of important business moves carried out in the company and its subsidiaries, amounting to billions of shekels, as part of the company's coping with the consequences of the COVID-19 crisis and its success in exiting it(Section 2.3.1 of Appendix 2 to the Application).  According to the report, the company's board of directors unanimously decided to grant the grant after the remuneration committee approved.
6. The Ottoman Settlement [Old Version] 1916 The Remuneration Committee and the Board of Directors detailed Wells' contribution to the company during the COVID-19 crisis and the fact that the actions he led as CEO enabled the company to meet the business goals it set for itself and all of its obligations, despite the crisis (section 2.3.2(3) of Appendix 2 to the application). The report noted that Wells did not receive a grant during 2020, with the exception of a special bonus of 3 salaries that was received after the completion of the raising of a series of bonds for H, and as of that date, he did not enjoy option plans in relation to the company's shares, despite the possibility of approving such a remuneration plan in accordance with the company's remuneration policy (clause 2.3.2(4) of Appendix 2 to the application).  Among other things, the business moves that Wells led between 2020 and 2021 were detailed, including of the tools that led to the removal of a going concerning business note from the company's financial statements, and it was noted that these actions resulted in the company's profits: "These successful actions led to a significant strengthening of the Group's capital, an increase in the value of the company by hundreds of percent...  for a significant decline in the yields of the company's bonds...  Thus, significant value is created for all holders of the company's securities".

12-34-56-78 Chekhov v. State of Israel, P.D. 51 (2)

7. In the report summoning the meeting, it was noted that the remuneration committee and the board of directors were assisted by a comparative document made by an external consultant, which included an analysis and review of the nature and nature of the remuneration given to the CEO in connection with special and/or unusual events.  In addition, according to the report, the document reviewed the nature, essence and ranges of remuneration that are routinely accepted for CEOs of public companies with a characteristicSea Similar to the company's and in relation to the CEOs of the subsidiaries of the Delek Group – taking into account Wells' employment conditions.  According to this document, it appears that this one-time grant is proper, fair and appropriate and is intended to reward him for his outstanding achievements and efforts and for the value that his actions have created for the Group's securities holders, taking into account the complexity of his role.  In the report of the summoning of the meeting Anonymous There was a reference to why they chose to reward the CEO in the form of a special and one-time grant that deviates from the company's remuneration policy instead of other options.
8. On May 3, 2022, the company's general meeting convened to approve, among other things, the grant to the CEO.  The general meeting did not approve the grant: 58.76% of the shareholders who do not have a personal interest voted against the grant to the CEO, including institutional entities and entities belonging to institutional entities (Appendix 3 to the application).  7% of the shareholders, which include the personal stakeholders, voted in favor of the grant.
9. On May 22, 2022, the Remuneration Committee reaffirmed the granting of the grant to the CEO, and on May 24, 2022, the Board of Directors approved the grant in an over-rolling, and an immediate report was published regarding the approval of the granting of a special grant to the CEO of the Company (hereinafter: "The Immediate Report").  The immediate report states that as part of this month's discussion, the remuneration committee and the board of directors re-examined the granting of the special grant and its terms, as well as the company's general meeting resolution and the positions of private and institutional shareholders.  It was noted in the immediate report that the Remuneration Committee and the Board of Directors It was unanimously decided to approve the grant in an over-ruling despite the opposition of the General Assembly.
10. Copied from Nevo The immediate report once again detailed the projects and business moves promoted by Wells and detailed, among other things, the following reasons:

"Mr. Wells has served as the Company's Chief Executive Officer effective January 1, 2020.  Shortly before the beginning of his tenure as the Group's CEO,  the COVID-19 pandemic broke out around the world,  leading to a severe crisis in world markets, high volatility and a sharp decline in global energy prices...  Despite the macroeconomic data that prevailed in the markets during the aforementioned period and the complex challenges faced by the company, the actions led by Mr. Wells as the company's CEO, together with the company's management, enabled the company to meet the business goals it set for itself and all of its commitments."