Strauss Group to lay off 150 in restructuring program

Last week, the board of directors of food company Strauss Group (TASE: STRS), chaired by Ofra Strauss, approved a streamlining plan for the group involving the dismissal of 150 employees, mostly head office and administrative staff rather than in production.

The program, headlined StraussONE, sets out the group’s restructuring plan, which is estimated will save NIS 65-80 million annually before tax.

The plan involves “flattening the organization and reducing management layers to strengthen organizational flexibility, streamlining and effectiveness.” Some services that up to now were provided on a divisional basis will become cross-organizational. Employees will be concentrated in larger groups under fewer managers.

The group’s investments will be focused on four regions: Israel, Brazil, the US, and China. The program also calls for “Continuously developing growth capabilities and infrastructure through both acquisitions and ventures with new business models.”

“As we draft our multi-year strategy plan, we are carrying out organizational and operating model changes that will help implement the strategy we have already announced,” said outgoing Strauss Group CEO Giora Bardea. “The plan includes steps to advance sustainable growth that will be achieved by focusing investments in selected geographies in which we will continue to develop a competitive advantage, launching new business models, expanding current partnerships, continuing to invest in foodtech, and building excellence in our core areas.

“The plan also includes adapting the operating model and reorganizing in accordance with the changing reality and the challenges in our economic environment. We are earmarking resources in growth areas, while streamlining in places where it is suitable to create synergies in Israel that will support strengthening organizational effectiveness and excellence,” Bardea concluded.

The plan was approved two weeks after the confirmation of the appointment of former Ministry of Finance director general Shai Babad as Bardea’s replacement in the CEO position. Even before Babad’s appointment, Strauss Group set average annual growth of 5% as a main strategic goal, and Babad, who will take up the post in December, will begin implementation of the plan in a challenging period of rising prices and after a difficult year in which the company had to recall product when salmonella was discovered at a confectionary factory.

Babad’s compensation will cost NIS 6.87 million annually, and he will be awarded options on 0.4% of the company’s share capital, worth NIS 9 million. The options will become exercisable in two tranches: after two years and after three years. Assuming that Babad meets the conditions for options and bonuses, his cumulative compensation cost over three years will be NIS 20 million.

Babad’s compensation terms are similar to those of Bardea, whose salary cost in 2021 was NIS 7.1 million.

Published by Globes, Israel business news – – on November 13, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

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