Incredimail 2011 Annual Report Download - page 53

A person may not serve as an external director if that person’s position or other activities create, or may create, a conflict of interest with the person’
s service
as a director or may otherwise interfere with the person’
s ability to serve as a director. Additionally, no person may serve as an external director if the person, the
person’
s relative, spouse, employer or any entity controlling or controlled by the person, has a business or professional relationship with someone with whom
affiliation is prohibited, even if such relationship is not maintained on a regular basis, excepting negligible relationships, or if such person received from the company
any compensation as an external director in excess of what is permitted by the Israeli Companies Law. If at the time any external director is appointed, all members of
the board are the same gender, then the external director to be appointed must be of the other gender.
External directors are elected by a majority vote at a shareholders’ meeting, as long as either:
The Israeli Companies Law provides for an initial three-year term for an external director, which may be extended for two additional three-
year terms.
Thereafter (with respect to companies whose securities are listed on certain designated stock exchange, including the Nasdaq Global Market), he or she may be
reelected by our shareholders for additional periods of up to three years each, in each case provided that the audit committee and the board of directors confirm that, in
light of the external director’
s expertise and special contribution to the work of the board of directors and its committees, the reelection for such additional period(s) is
beneficial to the company. External directors may be removed only:
In the event of a vacancy created by an external director, our board of directors is required under the Companies Law to call a shareholders’
meeting to
appoint a new external director as soon as practicable.
External directors may be compensated only in accordance with regulations adopted under the Israeli Companies Law, and is otherwise prohibited from
receiving any other compensation, directly or indirectly, in connection with service provided as an external director. The regulations provide three alternatives for cash
compensation to external directors: a fixed amount determined by the regulations, an amount within a range set in the regulations, or an amount that shall not be lower
than the compensation received by another director nor higher than the average compensation to other directors. "Another" or "other" directors are defined in the
applicable regulations as directors of the company that are not external directors and who are not (1) controlling shareholders of the company or (2) employees or
service providers of the company on a regular basis or (3) serving at, or providing services on a regular basis, to a company that controls the company or to a company
that is under common control with the company or (4) directors who do not receive compensation from the company. A company also may issue shares or options to
an external director at an amount not lower than that received by another director (as defined in the applicable regulations) nor higher than the average amount granted
to other directors (as defined in the applicable regulations). Cash compensation at the fixed amount determined by the regulations does not require shareholder
approval. Compensation determined in any other manner requires the approval of the company’
s audit committee, board of directors and shareholders, in that order.
Compensation of external directors must be determined prior to their consent to serve as external directors.
• the majority of shares voted for the election includes at least majority of the shares held by non-
controlling shareholders voted at the meeting, and
excluding shares held by a person with a personal interest in the approval of the election, excluding a personal interest which is not as a result of his
connection with the controlling shareholder (excluding abstaining votes); or
•
the total number of shares of non
-
controlling shareholders voted against the election of the external director does not exceed two percent of the
aggregate voting rights in the company.
• by a court, and then only if:
-
the external directors cease to meet the statutory qualifications for their appointment;
-
they violate their duty of loyalty to the company;
-
the director is unable to perform his or her post on a regular basis; or
-
during his or her tenure, the director was convicted in a court outside of the State of Israel on accounts of bribery, deceit, offenses by managers
of a corporate body or offenses involving misuse of inside information; or
•
if the board of directors determines that the external director has ceased to meet the statutory qualification for appointment or that the external director
has violated his or her duty of loyalty to the company, the board shall call a general meeting of the shareholders and any such external director may be
removed for such reason(s) by a resolution of the general meeting approved by the same special majority as required for such external director’
s
election.
50