EL AL Executive Costs and Structure Are too High
Dec 12, 2012, 9:57 am
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EL AL Executive Costs and Structure Are too High
I found an interesting article today which points out how ridiculous and inefficient EL AL's executive compensation and managerial structure are. The article discusses some propositions made in a report that was commissioned by the employees union and written by Prof. Yoram Zelekha, who was a former Finance Ministry top accountant. The article can be found here: http://www.haaretz.com/business/as-e...emium-1.482629
(Btw, nice pic of 4X-ELD)
On a side note, I largely agree with Prof. Zelekha's report and many of the criticisms towards management found therein. I voiced many of those same criticisms in my business plan which was submitted well before the release of Zelekha's report.
Two areas of contention I have with Zelekha's findings are that I believe the number of VP's in the company can be reduced to a number well below 11. I think the company can get away with 6-8 VP's who have 3 people reporting under them. That would save the company in excess of $12 million per year.
The second item of contention I have with Zelekha's report, which is not mentioned in the article and I know about because I was given a copy of the entire report, is his proposition that the owners of EL AL unilaterally give up a specific percentage of their holdings in the company and sell those shares at a discount to employees to compensate them for the past cutbacks they endured. First, I don't think EL AL's owners would even consider giving up any amount of their shares and offering them at a discount to employees. Even if they would do something like that, I don't believe such a move would serve to motivate employees to perform better. What I proposed in my business plan was a profit sharing scheme with employees. I believe that profit sharing is perhaps the best way to motivate employees while giving all of them a true stake in the financial performance of the company.
(Btw, nice pic of 4X-ELD)
On a side note, I largely agree with Prof. Zelekha's report and many of the criticisms towards management found therein. I voiced many of those same criticisms in my business plan which was submitted well before the release of Zelekha's report.
Two areas of contention I have with Zelekha's findings are that I believe the number of VP's in the company can be reduced to a number well below 11. I think the company can get away with 6-8 VP's who have 3 people reporting under them. That would save the company in excess of $12 million per year.
The second item of contention I have with Zelekha's report, which is not mentioned in the article and I know about because I was given a copy of the entire report, is his proposition that the owners of EL AL unilaterally give up a specific percentage of their holdings in the company and sell those shares at a discount to employees to compensate them for the past cutbacks they endured. First, I don't think EL AL's owners would even consider giving up any amount of their shares and offering them at a discount to employees. Even if they would do something like that, I don't believe such a move would serve to motivate employees to perform better. What I proposed in my business plan was a profit sharing scheme with employees. I believe that profit sharing is perhaps the best way to motivate employees while giving all of them a true stake in the financial performance of the company.
