Board of Directors
Pursuant to our articles of association as currently in effect, our Board of Directors consists of twelve directors, including two external directors in accordance with Israeli law and three independent directors in accordance with the listing requirements of the Nasdaq Stock Market’s Nasdaq National Market.
Pursuant to our articles of association, other than the external directors, for whom special election requirements apply (see “External directors” below), our directors are elected and may in certain circumstances be removed by the majority of our shareholders.
Our articles of association provide for staggered three-year terms for all of our directors.
The directors on our Board (excluding the external directors) are divided into three classes, and each class of directors serves for a term of three years.
This classification of the Board of Directors may delay or prevent a change of control of our company or in our management. The external directors, under Israeli law, serve a three-year term which may be extended for an additional term of three years, at duals companies like us the term maybe extended indefinitely
Our directors may at any time and from time to time appoint any other person as a director to fill a vacancy until the general meeting of shareholders in which the term of service of the replaced director was scheduled to expire.
External directors may be removed from office pursuant to the terms of the Israeli Companies Law, 5759 – 1999, which we refer to as the Israeli Companies Law. See “External directors” below.
Pursuant to the Israeli Companies Law, our chairman convenes and presides over the meetings of the Board.
In addition, any two directors may convene a meeting of the Board of Directors.
A quorum consists of a majority of the members of the Board, and decisions are taken by a vote of the majority of the members present. Our articles of association provide that such quorum will in no event be less than two directors may convene a meeting of the Board of Directors.
A quorum consists of a majority of the members of the Board, and decisions are taken by a vote of the majority of the members present. Our articles of association provide that such quorum will in no event be less than two directors.
Audit committee
Under Israeli law, the board of directors of a public company must appoint an audit committee.
The audit committee must consist of at least three directors, including all of the external directors (additional member (new external director) shall be added in the near future).
The audit committee may not include the chairman of the board, any director who is employed by the company or who regularly provides services to the company (other than as a board member), a controlling shareholder or any relative of such person.
Compensation committee
Our Board of Directors has appointed a Compensation Committee, pursuant to the listing requirements of the Nasdaq National Market.
The members of the Compensation Committee are Messrs.
Israel Baron and Yoav Kahana and Gidon Kotler.
Additional member (new external director) shall be added in the near future The Compensation Committee of our Board of Directors recommends the review and oversees the salaries, benefits and stock option plans for our employees, consultants, directors and other individuals whom we compensate.
The Compensation Committee also administers our compensation plans.
Our Board of Directors has determined that each member of the Compensation Committee is independent.
Internal auditor
The board of directors of an Israeli public company must appoint an internal auditor nominated by the audit Committee.
An internal auditor may not be:
A person (or a relative of a person) who holds more than 5% of the company’s shares
A person (or a relative of a person) who has the power to appoint a director or the general manager of the company
An executive officer, director or other affiliate of the company; or a member of the company’s independent accounting firm
The role of the internal auditor is to examine, among other things, the compliance of the company’s conduct with applicable law and orderly business procedures. Our internal auditor is Simon Yarel, CPA (Israel).
The Sarbanes-Oxley Act of 2002 and the Nasdaq National Market listing standards
The Sarbanes-Oxley Act of 2002, as well as related rules subsequently implemented by the Securities and Exchange Commission, requires foreign private issuers, such as us, to comply with various corporate governance practices.
In addition, Nasdaq has adopted amendments to its requirements for companies that are listed on the Nasdaq National Market.
Nasdaq Marketplace Rule 4350 was amended to permit foreign private issuers, such as us, to follow certain home country corporate governance practices without the need to seek an individual exemption from Nasdaq.
In reliance upon Nasdaq Marketplace Rule 4350(a)(1), as a foreign private issuer we have elected to follow our home country practices, absent home country rules requiring otherwise, in lieu of certain Nasdaq Marketplace Rules.
Specifically, in Israel, it is not required that a public company have (i) a majority of its board of directors be independent, as defined in Marketplace Rule 4350(c), (ii) an audit committee composed solely of members who are able to read and understand fundamental financial statements as required by Nasdaq Marketplace Rule 4350(d)(2) or (iii) a nominating committee as required by Nasdaq Marketplace Rule 4350(c)(4).
As a result, we have elected to follow Israeli law regarding independence requirements of our Board of Directors and the composition of our Board of Directors will remain as is.
See “External directors” above.
Similarly, we have elected to follow Israeli law with regard to the composition of our existing audit committee, which has three independent (as defined in Marketplace Rule 4350(c)) members, two of whom are “external directors” under the Israeli Companies Law and meet the requirements of Nasdaq Marketplace Rule 4350(d)(2) and at least one of whom meets the requirement of the Directive of the Israel Securities Authority that one non-employee member has “financial and accounting skills” to, among other things, understand, on a high level, matters relating to business, accounting, internal auditing and financial statements.
See also “Audit Committee” above.
In addition, our Board of Directors will not appoint a nominating committee as required by Nasdaq Marketplace Rule 4350(c)(4) and, instead, elects to follow Israeli law, which provides that a company may determine its method of nominating its directors.
In our case, Board of Director members (other than the External Directors) are nominated by our Board of Directors, as is the custom in Israel.
By law, shareholders holding at least 1% of a company’s voting rights may nominate directors and our company complies with this law.
External Directors are nominated by the board of directors and must be elected at the shareholders’ general meeting, which must approve them by a majority and in addition, either (i) one third of the non-controlling shareholders participating in such vote have voted for such External Directors; or (ii) the shareholders opposing such nomination who are not controlling shareholders must not represent in excess of 1% of the total voting rights in the company.
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