EXHIBIT 3
[TRANSLATION]
INDUSTRIAL DEVELOPMENT BANK OF ISRAEL LTD.
May 27, 2008
TEL AVIV STOCK EXCHANGE SECURITIES AUTHORITY
www.tase.co.il www.isa.gov.il
IMMEDIATE REPORT OF AN EVENT OR MATTER DEVIATING FROM THE
COMPANY'S REGULAR COURSE OF BUSINESS
Subject of the Event: Update of Retirement Agreement
1. A collective agreement is in force in the Bank which was signed at the end
of the year 2002 regarding the dismissal of workers and setting forth
special retirement arrangements for the retiring workers. This agreement,
which was approved at the time by the Director of Wages and Labor
Agreements in the Ministry of Finance (:the Director of Wages"), is
comprised of two retirement plans, one plan which primarily provides for
the purchase of pension rights for the retiring worker ("the Pension Plan")
and the other plan which primarily provides for the payment of additional
severance pay to the retiring worker ("the Severance Plan"). The agreement
applies to the workers employed within the framework of collective
agreements, but its terms were made applicable, with the approval of the
Director of Wages, also to other workers in the Bank, including the veteran
officers of the Bank (excluding the Chairman of the Board, the General
Manager and the Deputy General Manager). The above collective agreement was
extended several times and it is in effect until July 31, 2008. In
connection with the plan to privatize the Bank, on May 26, 2008, the Board
of Directors of the Bank approved certain changes to the above retirement
arrangements. Pursuant to the Board's resolution, these changes shall apply
both on the workers employed within the framework of the collective
agreements and, as was the case until now, on all the other workers in the
Bank. The total direct cost to the Bank of these changes, regarding all the
workers, amounts to approximately NIS 10 million and they include, among
other things, the increase of the pension (calculated on the basis of the
"average method") in the amount of 10% to the workers in the Pension Plan,
and the increase of the additional severance pay and the number of
adaptation months to the workers in the Severance Plan, and the payment of
a bonus to the workers in both plans. Within this framework, the Board of
Directors also resolved that the retirement payments for the workers shall
be deposited with a trustee (a trustee company) which will execute the
purchase the pension rights, or accordingly, the payment of the severance
pay and the remainder of the one-time payments, for the retiring workers.
Upon the completion of the wording of the new agreement, which will include
the above changes, it shall be presented for the approval of the Director
of Wages.
At their meetings on May 26, 2008, the Audit Committee and the Board of
Directors approved, in connection with the privatization plan of the Bank,
that the Chairman of the Board, Dr. R. Cohen, the General Manager, Mr. U.
Galili, and the Deputy General Manager, Mr. A. Savir, shall be entitled at
the termination of their service for whatever reason, to the redemption of
3 months' prior notice, in lieu of the actual three months' prior notice
set forth today in their employment contracts, and to 3 months' paid
adaptation. The redemption of 3 months' prior notice and the payment of 3
months' adaptation shall be made according to the monthly salary of the
Chairman of the Board, the General Manager and the Deputy General Manager,
at the rate at the time of the termination of their service. This
resolution is also subject to the approval of the Director of Wages and
with regard to the Chairman of the Board it also requires the approval of
the General Meeting. The Chairman of the Board has served at the Bank
beginning on August 15, 2002, he is employed on the basis of an 85%
position and his salary as of May 2008 stood at NIS 51,775. The General
Manager of the Bank has served at the Bank beginning on July 15, 2002, he
is employed on the basis of a 100% position and his salary as of May 2008
stood at NIS 60,912. The Deputy General Manager has served at the Bank
beginning on September 1, 2002, he is employed on the basis of a 100%
position and his salary as of May 2008 stood at NIS 51, 640. The Chairman
of the Board, the General Manager and the Deputy General Manager are
employed within the framework of contracts for the period ending on
December 31, 2009 or upon the privatization of the Bank or its entering
liquidation proceedings, WHICHEVER IS FIRST.
The Audit Committee and the Board of Directors based their above
resolutions, among other things, on the following grounds:
A. The Chairman of the Board, the General Manager and the Deputy
General Manager were requested by the Bank to consent to extend
their service for an additional period, which will not
necessarily be a fixed period since it shall cease, among other
things, upon the privatization of the Bank or its entering
liquidation proceedings. Under these circumstances, the
redemption of the prior notice months and the payment of
adaptation months, as approved, serve as a balance for the
uncertainty entailed in the continuation of the service.
B. The redemption of the prior notice months and the payment of
adaptation months represent an appropriate remuneration to the
Chairman of the Board, the General Manager and the Deputy General
Manager for their contribution to the advancement of the
privatization of the Bank.
C. The redemption of the prior notice months and the payment of
adaptation months also represent an appropriate remuneration to
the Chairman of the Board, the General Manager and the Deputy
General Manager for the successful management of the Bank and for
the accomplishments achieved by the Bank under their leadership.
D. In light of the term of service of the Chairman of the Board, the
General Manager and the Deputy General Manager to date (beginning
from the third quarter of 2002) and the expected continuation of
their service, the redemption of 3 months' prior notice and the
payment of 3 months' adaptation are certainly reasonable.
The Audit Committee and the Board of Directors were of the opinion that the
redemption of 3 months' prior notice and the payment of 3 months'
adaptation were reasonable and accepted terms for officers in the positions
of chairman of the board, general manager and deputy general manager,
serving in public companies and/or in the banking system. The resolution of
the Audit Committee and the Board of Directors was unanimous with no one
opposed.
2. The date and time when the Company was first made aware of the event or
matter:
May 26, 2008 at 12:00 P.M.