Ruth Dahan-Portnoy: ... And we asked Liora to speak with a number of representatives of the opponents and understand from them why they are actually opposed.
Adv. Kashi: Didn't you summon any of the shareholders either?
A: No, when do you know it's done?
Q: And didn't you think you should do it?
A: That's not our job unequivocally. We sent a representative of the company to do this."
It is necessary to examine the merits of the position of the opposing institutional investors, and as stated, to address it in the framework of the reasons for the over-ruling. As I mentioned in the Matrix case, behind the position of the institutional investors can be an economic opinion of analysts or experts that may require consideration or at least an explanation of why it is not relevant to the specific case in which a grant was received in an over-ruling – a general attitude that the objection stems from a purely lateral position is insufficient and does not meet the requirement of reasoning in the law (the Matrix case)., paragraph 74). In our case, there was also no such reference in the over-ruling reasoning. To be precise, the duty of reasoning and consideration by the remuneration committee and the board of directors does not negate the need for the opposing shareholders to explain their objection so that it will be possible to address it and consider it seriously (ibid.; the Electra case, para. 72). However, the absence of reasoning on the part of the opponents does not exempt the remuneration committee and the board of directors from re-examining and detailing the reasoning. This may have an impact on the depth of the new reasoning, but they must prove the existence of a substantive and new examination of the reward.
- As to the alleged damage caused to the company - According to the deliberative stage of the application, this is NIS 2.6 million that came out of the company's coffers into the CEO's pocket. If a request to certify a derivative claim is filed, without Fixed Rivets on the merits of the matter – the applicants will have the burden of proving that the investigation of the claim as a derivative It is indeed for the benefit of society. At this point quite with the initial concern of damage to the company's coffers in order to approve the disclosure request.
- In light of the above, I found that the applicants met the burden of proof and the initial evidentiary burden imposed on them at this stage of the proceeding for the purpose of partial acceptance of the request for discovery.
Relevance of the requested documents
- I found that the request should be granted in part and that the documents listed in Applications 1, 4 and 5 should be disclosed. In its summaries, the respondent referred in general terms to the fact that all of the requested documents are not relevant to the application and some of them include trade secrets. In its response to the application, the respondent specifically referred to requests that seek to disclose the the company's business objectives; Engagement agreements with the CEO; and the procedures of the committees and the board of directors intended to prevent deviation from the remuneration policy.
- With regard to Request 1, I have found it appropriate to disclose all the minutes of the meetings of the Remuneration Committee and the Board of Directors of the Company that are on the agenda of the discussion and/or approval of the grant of the grant, as they are relevant for the purpose of examining the process of the over-rolling. Requests 4 and 5 include disclosure of procedures to prevent violations of the remuneration policy and external documents for the approval of the grant, which can also assist in the examination of the procedure And the foundation on which a decision was made The over-rolling. As far as the documents that they have confidential private or trade secrets, the applicant must undertake for their confidentiality and that the documents will not be used beyond the examination of the application for a derivative claim.
- I reject requests 2-3 requesting the engagement agreements with the CEO and the company's business objectives, as they contain trade secrets and their disclosure may violate the privacy of the individual, without attacking the remuneration decision itself – so that these documents are irrelevant in relation to the other documents requested. As for Motion 6, I found that it should be rejected because the General Meeting discussion was made public and there are no minutes in which the shareholders express their position.
Summary
- In light of the above The request is accepted in part as detailed below:
The Respondent shall provide the Applicant with the following documents within 30 days:
- All the minutes of the meetings of the Company's Remuneration Committee and the Board of Directors on the agenda of the discussion and/or the approval of the granting of a special grant in the amount of NIS 2.6 million to the Company's CEO, without derogating from the aforesaid, from March 27, 2022, March 29, 2022, May 22, 2022 and May 24, 2022, together with all their appendices;
- Procedures established by the Board of Directors or determined by any committee of the Board of Directors intended to prevent a violation of the Company's remuneration policy;
- Any document prepared by an external consultant and presented to the Remuneration Committee and the Company's Board of Directors in the framework of the meetings as stated in Section A above, including the document mentioned in Section 2.3.2. (5) to the report of the meeting summons;
- Any information contained in the documents that will be revealed to be a trade or business secret will remain confidential as I have instructed, will not be disclosed to third parties without the approval of the court and will not be used except for the purpose of this request without prejudice to its confidentiality.
- The Respondent will bear the Applicant's expenses, including the Applicant's attorney's fees in the amount of NIS 35,000 and the amount of the fee owed by the Applicant that was paid by him.
The court's secretariat will provide the decision to the parties' counsel.