{"url_path":"/sec/forty/10-k/2026/item-6","section_key":"item-6","section_title":"Item 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1045986/0001213900-26-055948-index.html","accession_number":"0001213900-26-055948","cik":"0001045986","ticker":"FORTY","issuer_name":"FORMULA SYSTEMS (1985) LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1045986/0001213900-26-055948-index.html","primary_entity_key":"0001045986","primary_entity_name":"FORMULA SYSTEMS (1985) LTD"},"word_count":6077,"has_tables":true,"body_markdown":"**ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**\n\n \n\n**A.**\n**Directors and Senior Management**\n\n \n\nThe following table sets forth\ninformation about our senior management and directors as of May 14, 2026.\n\n \n\n**Name**\n \n**Age**\n \n**Position**\n \n**Expiration of Current Term of\nDirectorship/Office**\n\nGuy Bernstein\n \n58\n \nChief Executive Officer\n \nNo formal arrangement regarding expiration of term of office\n\nAsaf Berenstein\n \n48\n \nChief Financial Officer\n \nNo formal arrangement regarding expiration of term of office\n\nMaya Solomon-Ella\n \n48\n \nChief Operational Officer\n \nNo formal arrangement regarding expiration of term of office\n\nMarek Panek\n \n56\n \nChairman of the Board of Directors\n \n2025 annual shareholders meeting\n\nRafal Kozlowski\n \n52\n \nDirector\n \n2025 annual shareholders meeting\n\nIlan Regev(1) (2) (3)\n \n58\n \nExternal director\n \nAugust 27, 2028\n\nAmir Hillman (1) (2) (3)\n \n55\n \nExternal director\n \nAugust 27, 2028\n\nKarolina Rzonca-Bajorek\n \n40\n \nDirector\n \n2025 annual shareholders meeting\n\nGabriela Zukowicz\n \n51\n \nDirector\n \n2025 annual shareholders meeting\n\nItay Meroz(1)(3)\n \n56\n \nDirector\n \n2025 annual shareholders meeting\n\n  \n\n(1)\nServes on the audit committee of our board of directors.\n\n \n\n(2)\nServes as an external director under the Companies Law. See “*Item 6. Directors, Senior Management and Employees—Board Practices—External Directors under the Companies Law; Audit Committee; Internal Auditor; Approval of Certain Transactions under the Companies Law*,” below.\n\n \n\n(3)\nServes on the compensation committee of our board of directors.\n\n \n\n125\n\n \n\n \n\n**Senior Management**\n\n \n\n**Guy Bernstein** has served\nas our Chief Executive Officer since January 2008. Mr. Bernstein served as a member of our board of directors from November 2006 to December\n2008. Mr. Bernstein served as a director of Emblaze Ltd., or Emblaze, our former controlling shareholder and a publicly traded company\nlisted on the London Stock Exchange, from April 2004 until February 2011. From December 2006 to November 2010, Mr. Bernstein also served\nas chief executive officer of Emblaze, and, prior thereto, from April 2004 to December 2006, as the chief financial officer of Emblaze.\nMr. Bernstein serves as the chairman of the board of directors of Matrix and also served as the chairman of the board of Sapiens until\nits acquisition by Advent in December 2025, and served as the chief executive officer and director of Magic Software until February 2026,\nwhen it merged with Matrix. Mr. Bernstein also served as the chief financial and operations officer of Magic Software from 1999 until\n2004, when he joined Emblaze. He joined Magic Software from Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, where\nhe served as senior manager from 1994 to 1997. Mr. Bernstein also serves as a director of Michpal Micro Computers (1983) Ltd., a director\nat TSG IT Advanced Systems Ltd., and is a director at InSync staffing, all of them are subsidiaries of Formula Systems Mr. Bernstein holds\na B.A. degree in accounting and economics from the College of Management Academic Studies and is a certified public accountant in Israel.\n\n \n\n**Asaf Berenstin** has\nserved as our Chief Financial Officer since November 2011. Mr. Berenstin has also served as the Chief Financial Officer of our subsidiary,\nMagic Software, since April 2010. Prior to such time, beginning in August 2008, Mr. Berenstin served as Magic Software’s corporate\ncontroller. Mr. Berenstin also serves as a director of Michpal Micro Computers (1983) Ltd., a director at TSG IT Advanced Systems Ltd.,\nand is a director at InSync staffing, all of them are subsidiaries of Formula Systems. Prior to joining our Company, Mr. Berenstin served\nas a controller at Gilat Satellite Networks Ltd. (Nasdaq: GILT), commencing in July 2007. From October 2003 to July 2007, Mr. Berenstin\npracticed as a certified public accountant at Kesselman & Kesselman, a member of PriceWaterhouseCoopers. Mr. Berenstin holds a B.A.\ndegree in accounting and economics and an M.B.A. degree, both from Tel-Aviv University, and is a certified public accountant (CPA) in\nIsrael.\n\n \n\n**Maya Solomon-Ella** has\nserved as our Chief Operational Officer since September 2016. In her last position Maya served as the Transaction Support leader in Ernst&\nYoung Israel (Tel-Aviv branch). Maya served in Ernst & Young 13 years, three of which were with the Assurance Services team (Hi Tech)\nand 10 of which have been spent in the Transaction Advisory Services (TAS) group. Since joining the TAS group at Ernst & Young, Ms.\nSolomon-Ella has been involved in M&A transactions across the globe. Ms. Solomon-Ella holds a B.A. degree in Economics-Accounting\nfrom Bar Ilan University and is a Certified Public Accountant (CPA) in Israel.\n\n \n\n**Directors**\n\n \n\n**Marek Panek**has served\nas one of our directors since November 2010 and as our Chairman of the Board since August 2012. Since January 2007 he has been the Executive\nBoard Member of Asseco Poland S.A. and he is responsible for supervising the Capital Group Development Division and the EU Projects Office.\nMr. Panek also holds and has held several other positions at Asseco and its affiliates, including Executive Board Member in Asseco International,\na.s. (since October 2017), Supervisory Board Member of Asseco Central Europe, a.s. (since September 2011), Supervisory Board Member of\nAsseco Lietuva UAB (since June 2011), Chairman of GSTN Consulting Sp. Z o.o. (since November 2017), Supervisory Board Member of Asseco\nInnovation Fund Sp. Z o.o. (since December 2018), Chairman of the Supervisory Board of Nextbank Software (since March 2019) and Supervisory\nBoard Member of adesso banking solutions GMBH (since September 2020). Mr. Panek first joined Asseco in 1995, having served in the following\npositions for the following periods of time: Marketing Specialist (from September 1995 to September 1996), Marketing Director (from October\n1996 to March 2003), Sales and Marketing Director (from April 2003 to March 2004) and Member of the Board, Sales and Marketing Director\n(from March 2004 to January 2007). Prior to joining Asseco, Mr. Panek was employed at the ZE Gantel Sp. Z o.o. from 1993 to 1995. Mr.\nPanek graduated from the Faculty of Mechanical Engineering and Aeronautics of the Rzeszów University of Technology in 1994, having\nbeen awarded a master’s degree in engineering.\n\n** **\n\n126\n\n \n\n** **\n\n**Amir Hillman **was\nelected to our board of directors as an external director under the Companies Law in August 2025. Mr. Hilman is an experienced finance\nand real estate professional with a strong background in investments and capital markets. Mr. Hillman is the Co-Founder and Partner of\nAlexa Finance and Investments Ltd., an investment company specializing in capital markets and real estate development, a position he has\nheld since 2009. From 2003 to 2007, Mr. Hillman served as an Analyst and Business Development Manager at Forum Technologies Venture Capital\nFund, focusing on start-ups and early-stage investments. From 1999 to 2002, he worked as an Analyst at Dan Tahori Investment House, where\nhe performed valuations and financial analyses for M&A activities, primarily for leading Israeli capital market entities. Earlier\nin his career, from 1997 to 1998, Mr. Hillman was an Analyst at Paz Economics and Engineering, providing financial oversight for real\nestate projects. Mr. Hillman holds a B.A. in Economics and Sociology and an MBA from the Recanati Business School, Tel Aviv University.\n\n** **\n\n**Rafal\nKozlowski** has served as one of our directors since August 2012. From December 2020 Mr. Kozlowski has served as the President of the\nManagement Board of Asseco Enterprise Solutions. From June 2012 to March 2021, Mr. Kozlowski has served as Vice President of the Management\nBoard and Chief Financial Officer of Asseco Poland. From May 2008 to May 2012, Mr. Kozlowski served as Vice President of Asseco South\nEastern Europe S.A. responsible for the company’s financial management. Mr. Kozlowski was directly involved in the acquisitions\nof companies incorporated within the holding of Asseco South Eastern Europe, as well as in the holding’s IPO process at the Warsaw\nStock Exchange From 1996 to 1998, he served as Financial Director at Delta Software, and subsequently, from 1998 to 2003 as Senior Manager\nat Veraudyt. In the years 2004-2006, he was Head of Treasury Department at Softbank S.A. where he was delegated to act as Vice President\nof Finance at the company’s subsidiary Sawan S.A. From 2007 through June 2009, he served as Director of Controlling and Investment\nDivision at Asseco Poland S.A. Mr. Kozlowski graduated of the University of Warsaw, obtaining Master’s degree at the Faculty of\nOrganization and Management in 1998. He completed the Project Management Program organized by PMI in 2004, the International Accounting\nStandards Program organized by Ernst & Young Academy of Business in the years 2005-2006 and the Emerging CFO: Strategic Financial\nLeadership Program by Stanford GSB in 2019.\n\n** **\n\n**Itay\nMeroz**was originally appointed as a director by our board of directors in May 2024 and was reelected by our shareholders at our 2025\nannual general meeting of shareholders. Mr. Meroz is an experienced executive manager with a significant financial background., Mr. Meroz\nhas served as the Chief Executive Officer of Skyter Technologies, an online media company since 2021. From 2012 to 2021, Mr. Meroz served\nas the Chief Executive Officer of WhiteSmoke Software, an ad-tech company listed on the Tel Aviv Stock Exchange, after having served as\nits Chief Financial Officer from 2009 through 2012. Earlier in his career, he served as the Controller of Versaware Tech from 2001 to\n2002. Mr. Meroz started his professional career in 1997 at Ernst & Young Israel, where he managed an audit team that audited corporate\nclients listed on the TASE, including in respect of U.S. GAAP-based financial statements. Mr. Meroz holds a B.A. in Business and Accounting\nfrom College of Management and was a certified public accountant (CPA).\n\n** **\n\n**Ilan Regev **was\nelected to our board of directors as an external director under the Companies Law in August 2025. Mr. Regev is a seasoned executive with\na strong financial background. Since 1995, he has served as a Senior Manager at ERB Financial Group Ltd., a firm providing outsourced\nCFO services primarily to startup companies. Since 2016, Mr. Regev has also been a director at ERB London Limited, a wholly owned UK subsidiary\nof ERB Financial Group Ltd. Between 2004 and 2018, he founded and directed ESOP Trustee and Management Services Ltd., a subsidiary of\nPhoenix Insurance Ltd. From 2008 to 2011, he served as an independent director at Matrix IT Ltd., a publicly traded company on the Tel\nAviv Stock Exchange. Earlier in his career, from 1992 to 1995, Mr. Regev was a senior manager at Ernst & Young Israel, overseeing\naudit teams focused mainly on venture capital funds. He holds a B.A. in Economics and Accountancy from Tel Aviv University and is a Certified\nPublic Accountant (CPA).\n\n** **\n\n127\n\n \n\n** **\n\n**Karolina\nRzonca-Bajorek** was elected to our board of directors in August 2022. Ms. Rzonca-Bajorek has served in various financial managerial\ncapacities within the Asseco Group since 2015, and during the period from 2012 to 2014. Since April 2021, Ms. Rzonca-Bajorek has served\nas Vice President of Finance, and a member of the Management Board, of Asseco. Prior to that period, from 2019 through March 2021, Ms.\nRzonca-Bajorek served as the Director of the Finance Division of the Asseco Group. Before that,\nfrom 2015 until 2019, Ms. Rzonca-Bajorek served as the Director of the Reporting Department\nof the Asseco Group. From 2014 to 2015, Ms. Rzonca-Bajorek was the Stock Exchange Reporting\nExpert at PHZ Baltona S.A. From 2012 to 2014 Ms. Rzonca-Bajorek worked at Asseco Poland\nS.A. as the Finance Specialist in the Reporting Department of the Asseco Group. She started her professional career in 2009 at Ernst &\nYoung Audit Sp. Z o.o. in the audit department, where she participated in audits of large corporate clients. Ms. Rzonca-Bajorek\nis a graduate of the Warsaw School of Economics, the faculty of finance and accounting (specialization:\ncorporate finance and accounting). Ms. Rzonca-Bajorek holds the FCCA title and a Certificate\nof the Minister of Finance of Poland authorizing her to provide accounting services, and is in the process of becoming a certified auditor.\n\n \n\n**Gabriela\nZukowicz**has served since October 1, 2017 as Vice President of the Management Board of Asseco Poland S.A. responsible for the Legal\nOffice and the Management Office, as well as the Human Resources Division, the Personnel Administration Division, the Compliance Division,\nthe Maintenance and Development of Internal Systems Division, the Administration Division and the Purchasing Division of Asseco. Also,\nsince March 2023 she acts as Chief ESG Officer. Ms. Zukowicz has been working at Asseco Poland since 1998, serving as the Director of\nthe Management Board Office (October 2004 - December 2009) and as the Director of the Legal and Organizational Department (January 2010\n- October 2017). In addition, from August 2012 to September 2017, Ms. Zukowicz held the position of Asseco’s Proxy. She is the Chairman\nof the Supervisory Board of Park Wodny Sopot, the Vice Chairman of the Supervisory Board in Asseco Innovation Fund and the Member of the\nSupervisory Boards in the companies Asseco Western Europe and Asseco Lietuva. In 1998, Ms. Żukowicz graduated from the Faculty\nof Law of the Jagiellonian University in Kraków and completed her legal adviser’s training in 2002.\n\n \n\n**Arrangements for the Election of Directors;\nFamily Relationships**\n\n \n\nAsseco has significant influence\nover the election of the members of our board of directors (other than our external directors). Other than that, there are no arrangements\nor understandings with major shareholders, customers, suppliers or others pursuant to which any of our directors or members of senior\nmanagement were selected as such.\n\n \n\nMr. Guy Bernstein and Mr.\nAsaf Berenstin are first cousins. Other than such relationship, there are no family relationships among our executive officers and directors.\n\n \n\n**B.**\n**Compensation**\n\n \n\n*Aggregate Compensation Paid to Directors and\nExecutive Officers*\n\n \n\nFormula paid to its directors\nand executive officers, consisting of the individuals listed above in the table under “—*Directors and Senior Management*”,\nas well as Mr. Tomer Jacob and Ms. Relly Danon (our former external directors who served until May 2025), direct remuneration and provided\nrelated benefits of approximately $34.4 million, in the aggregate, with respect to 2025. This aggregate compensation amount includes amounts\nset aside or accrued to provide pension, retirement or similar post-employment benefits, which themselves totaled $0.1 million in 2025.\nThis aggregate compensation amount furthermore includes expenses recorded with respect to share-based compensation in a total amount of\n$7.4 million for 2025.\n\n \n\n128\n\n \n\n \n\nThe above aggregate compensation\namount does not, however, include the following:\n\n \n\n \n●\nexpenses, including business travel, professional and business association dues and expenses, for which Formula reimburses its officers; and\n\n \n\n \n●\nother fringe benefits that companies in Israel commonly reimburse or pay to their officers,\n\n \n\nas amounts incurred for such\nexpenses and benefits in 2025 were paid in reimbursement of activities carried out by our directors and executive officers for strict\nbusiness purposes in carrying out their duties on behalf of Formula and were therefore not compensatory in nature.\n\n \n\nThe above aggregate compensation\namount includes payment of directors’ fees. Formula compensates its external directors and other directors in accordance with the\nregulations promulgated under the Companies Law.\n\n \n\n*Summary Compensation Table*\n\n \n\nFor so long as we qualify\nas a foreign private issuer, we are not required to comply with the executive compensation disclosure requirements applicable to U.S.\ndomestic companies, including the requirement to disclose information concerning the amount and type of compensation paid to our chief\nexecutive officer, chief financial officer and the three other most highly compensated executive officers on an individual basis. Nevertheless,\nregulations promulgated under the Companies Law require us to disclose the annual compensation of our five most highly compensated office\nholders (as defined in the Companies Law) on an individual basis. Under the Companies Law regulations, this disclosure is required to\nbe included in the annual proxy statement for our annual meeting of shareholders, which we furnish to the SEC under cover of a Report\nof Foreign Private Issuer on Form 6-K. Because of that disclosure requirement under Israeli law, we are also including that information\nin this annual report, pursuant to the disclosure requirements of Form 20-F.\n\n \n\nThe table below reflects the\ncompensation paid to our five most highly compensated office holders (each of whom is a member of our management) during or with respect\nto the year ended December 31, 2025. All amounts reported in the table reflect the cost to the Company, as recognized in our financial\nstatements for the year ended December 31, 2025.\n\n \n\n*Compensation of Management*(1)\n\n \n\n**Name and Position(1) (2)** \nSalary\n($)  \n**Benefits And Perquisites ($)(3)**  \nVariable\nCompensation\n($)(4)  \n**Equity Based Compensation ($) (5)** \n\nGuy Bernstein - CEO **(6)** \n 626,000  \n -  \n 22,200,000 \n 7,033,000 \n\nAsaf Berenstin - CFO **(7)** \n 232,600  \n 61,200  \n 1,884,400 \n 167,800 \n\nMaya Solomon-Ella - COO \n 187,200  \n 42,650  \n 72,500  \n 195,000 \n\n \n\n(1)\nAll amounts reported in the table are in terms of cost to Formula, as recorded in Formula’s financial statements. We have three office holders who are members of management who are compensated by Formula (CEO, CFO and COO). For disclosure concerning compensation paid by us to our remaining four most highly compensated office holders (all of whom are directors), please see the table under “*Compensation of Directors*” below.\n\n \n\n129\n\n \n\n \n\n(2)\nThe executive officers listed in the table serve as employees or consultants of Formula. Cash compensation amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for 2025.\n\n \n\n(3)\nAmounts reported in this column include benefits and perquisites, including\nthose mandated by applicable law. Such benefits and perquisites may include, to the extent applicable to the executive officer, payments,\ncontributions and/or allocations for savings funds, pension, severance, vacation, car or car allowance, medical insurances and benefits,\nrisk insurances (e.g., life, disability, accident), convalescence pay, payments for social security, tax gross-up payments and other benefits\nand perquisites consistent with our guidelines.\n\n \n\n(4)\nBecause our prior compensation policy expired in January 2026 and has\nnot yet been renewed, the payment of a portion of the variable compensation to certain of our officers, as reflected in this table, requires\nthe prior approval of a new compensation policy by our compensation committee and board of directors, and by our shareholders, at our\nannual or special general meeting of shareholders to be held in 2026.\n\n \n\n(5)\nAmounts reported in this column represent the expense recorded in our\nfinancial statements for the year ended December 31, 2025 with respect to share-based compensation. Assumptions and key variables used\nin the calculation of such amounts are described in Note 20(b) to our consolidated financial statements, contained elsewhere in this annual\nreport.\n\n \n\n(6)\nUnder his service agreement with us, Guy Bernstein, our Chief Executive\nOfficer, is entitled to an annual bonus in an amount equal to 3.3% of our net profit (including capital gains) after tax. Additionally,\nMr. Bernstein’s variable compensation includes payments due with respect to 611,771 RSUs granted to him by Formula in consideration\nof dividends that Formula distributes to its shareholders in an amount equal to the pro-rata portion of the overall dividend amount that\nthe RSUs constitute out of the issued and outstanding share capital of the Company as of the date of the distribution. For the purpose\nof payment of the dividend amounts, the portion of the dividend amount to be released to Mr. Bernstein, will in each case be based on\nthe proportion of the number of fiscal quarters that have lapsed at the time of distribution of the dividend from January 1, 2020 until\nDecember 31, 2027. An advance of 70% of the estimated annual bonus with respect to each year is paid over the course of the year, divided\ninto quarterly installments, which is estimated based on our quarterly financial statements and is subject to final adjustment at the\nend of the year.\n\n \n \n\n(7)\nOur Chief Financial Officer, Asaf Berenstin, has served as our Chief\nFinancial Officer since November 2011 and as the Chief Financial Officer of our subsidiary, Magic Software Enterprises Ltd., since April\n2010 (which merged with one of our other subsidiaries, Matrix IT Ltd., in February 2026). During 2025, Mr. Berenstin held both positions.\nPursuant to an agreement between Magic Software and the Company, Mr. Berenstin allocated approximately 40%–50% of his time to the\nCompany. The compensation presented in this table with respect to Mr. Berenstin reflects his total remuneration for his services as Chief\nFinancial Officer of both the Company and Magic Software. As of January 1, 2021, for his role as Chief Financial Officer of the Company\nand of Magic Software (through 2025), Mr. Berenstin has been entitled to an annual bonus equal to 0.3% of the Company’s net profit\n(including capital gains).\n\n \n\n130\n\n \n\n \n\n*Compensation of Directors*\n\n \n\nThe following table sets forth\ninformation with respect to compensation of our directors (none of whom served as an employee of our company) during fiscal year 2025.\nThe fees to the directors were paid by Formula.\n\n \n\nName and Position \n**Total Fees Earned or Paid in Cash ($)(1)** \n\nMarek Panek - Chairman \n 42,950 \n\nRafal Kozlowski - Director \n 42,950 \n\nKarolina Rzonca-Bajorek- Director \n 42,950 \n\nGabriela Zukowicz- Director \n 42,950 \n\nTomer Jacob – Former External Director(1) \n 22,460 \n\nRelly Danon – Former External Director(1) \n 15,200 \n\nAmir Hilman- External Director(2) \n 15,150 \n\nIlan Regev- External Director(2) \n 22,400 \n\nItay Meroz- Director \n 44,150 \n\n \n\n(1)\nAll amounts reported in the table are in terms of cost to Formula, as recorded in Formula’s financial statements.\n\n \n\n(2)\nMr. Jacob and Ms. Danon served as our external directors from the start of 2025 until our annual general meeting of shareholders that took place on May 27, 2025, at which time they were not re-elected. The total fees earned by them as shown in the table reflect that partial-year period.\n\n \n\n(3)\nMessrs. Danon and Hilman were first elected to fill the roles of our external directors under the Companies Law at a special general meeting of shareholders held on August 27, 2025. The total fees earned by them as shown in the table reflect the partial-year period from that date through the end of 2025.\n\n \n\n*Service Agreement with, and Equity\nGrant to, Chief Executive Officer*\n\n \n\nUnder his service agreement\nwith us, Mr. Guy Bernstein, as our chief executive officer, or CEO, is entitled to a monthly salary, as well as an annual bonus in an\namount equal to 3.3% of our net profit (including capital gains). An advance of 70% of the estimated bonus with respect to each year is\npaid over the course of the year, divided into quarterly installments, which is estimated based on our quarterly financial statements\nand is subject to final adjustment at the end of the year.\n\n \n\nMr. Guy Bernstein has furthermore\nbeen granted by us 611,771 restricted share units, or RSUs, which may be settled for 611,771 ordinary shares of Formula. The terms of\nthe grant were described in Proposal 2 of the proxy statement for our January 12, 2023 special general meeting of shareholders, which\nserved as Exhibit 99.1 to Formula’s Report of Foreign Private Issuer on Form 6-K furnished to the SEC on December 8, 2022 and viewable\nat the following link: https://www.sec.gov/Archives/edgar/data/1045986/000121390022078501/ea169849ex99-1_formulasys.htm.\n\n \n\nThe subject grant had been\ninitially re-approved by our compensation committee and board of directors, acting in accordance with the Companies Law, in November 2020\nafter Formula’s shareholders did not approve the grant at Formula’s November 2, 2020 annual general meeting of shareholders.\nAs re-approved by the compensation committee and board, the grant reflected a modified composition of time-based-vesting and performance-based-vesting\nRSUs in a ratio of 66.67%-33.33% (as opposed to the initial ratio of time-based-vesting to performance-based-vesting RSUs of 80%-20% that\nwas rejected by Formula’s shareholders at that November 2020 annual general meeting of shareholders). The same modified RSU grant\nwas furthermore re-approved by our compensation committee and board of directors, acting in accordance with the Companies Law, once again\non January 15 and 16, 2023, respectively, after Formula’s January 12, 2023 special general meeting of shareholders did not re-approve\nthe modified RSU grant.\n\n \n\nIn re-considering and re-approving\nthe grant in November 2020 and January 2023, our compensation committee and board of directors acknowledged that the requisite majority\nof our shareholders for the approval of the subject grant had not been achieved at the applicable shareholder meeting. The committee and\nboard nevertheless evaluated our Group’s performance and achievements under the management of our chief executive officer, and in\nview of his expected further contribution to the Group’s success, determined that the proposed grant is strongly linked to the Group’s\nperformance and the resulting increase in shareholders’ value. Consequently, consistent with their authorities under the Companies\nLaw, the compensation committee and board of directors approved the modified award of the RSUs.\n\n \n\n131\n\n \n\n \n\nThe reasons for the re-approval\nof the subject grant in January 2023 (despite it already having been re-approved in November 2020) were two-fold:\n\n \n\n \n●\n*Changed circumstances*. The voting agreement between Asseco and our chief executive officer, which covered 1,797,973 of our ordinary shares owned by the chief executive officer, and by virtue of which Asseco formerly possessed the right to vote those shares-which stood at the heart of an allegation by plaintiffs who challenged the initial re-approval of the grant (as described below)- was cancelled on December 5, 2022; and\n\n  \n\n \n●\n*Certainty*. We believed that it was in the best interest of the Company and its shareholders to provide clarity and certainty regarding the CEO’s compensation and position in the Company by bringing his equity-based grant for re-approval.\n\n \n\nPlease see “*Item\n8.A Legal Proceedings*” below for a description of the legal proceedings that have been brought in respect of our CEO’s\nRSU grant.\n\n \n\nThe award was granted to Emil\nSharvit (2001) Consulting and Project Management Ltd., through which our chief executive officer provides services to us. 66.67% of the\nRSUs (i.e., 407,847 RSUs) are subject to time-based vesting that started as of the grant date and shall end at December 31, 2027, subject\nto the continued engagement of our chief executive officer with us as of that date, which we refer to as the Vesting Period; and up to\n33.33% of the RSUs (i.e., 203,924 RSUs) are subject to performance-based vesting, and shall vest at December 31, 2027 on a pro-rata basis\nwith respect to each fiscal year (starting as of January 1, 2020) during the Vesting Period in which the Target EBITDA (as defined below)\nis achieved, subject to the continued engagement of our chief executive officer with us. At the end of the vesting period, the number\nof performance-based RSUs that vests shall be equal to (i) the number of fiscal years in which the Target EBITDA was achieved multiplied\nby (ii) 25,490.50 RSUs (rounded to the nearest whole number, up to a cap of 203,924 RSUs in total).\n\n \n\nThe “Target EBITDA”\nin a given fiscal year during the Vesting Period shall mean our EBITDA in that certain fiscal year (as reflected in our annual audited\nconsolidated financial statements), excluding the cost attributed to the applicable portion of the RSUs in our annual audited consolidated\nfinancial statements for the applicable fiscal year (as to which the review of performance is made to determine whether one eighth of\nthe Performance Based RSUs (i.e., 25,490.50 RSUs) shall become vested at the end of the Vesting Period). The Target EBITDA shall be not\nless than 105% of 75% of our consolidated EBITDA in the previous fiscal year, excluding the cost attributed to the applicable portion\nof the RSUs in our annual audited consolidated financial statements for such previous fiscal year (the “Previous Year”). Such\nexamination of EBITDA shall be made on the basis of our annual audited consolidated financial statements as reflected in our annual report\non Form 20-F, and in the event that we sells any of our operations, the Target EBITDA shall be adjusted as applicable for future reference\nby removing the results of the operations that were sold.\n\n \n\nIn the event that with respect\nto any specific fiscal year (the “Specific Year”), the Target EBITDA is not achieved, the Target EBITDA with respect to such\nSpecific Year will still be deemed to have been met for the purpose of vesting of RSUs in the event that either: (i) the EBITDA in the\nfiscal year immediately following the Specific Year was at least 110.25% of 75% of our EBITDA in the year preceding the Specific Year,\nor (ii) in case that the condition in the foregoing clause (i) was not met, then the EBITDA in the second fiscal year following the Specific\nYear was at least 115.7625% of 75% of our EBITDA in the year preceding the Specific Year. Accordingly, in case that either clause (i)\nor (ii) was met for a certain Specific Year, then the vesting with respect to such Specific Year shall be deemed to have been achieved,\nand those RSUs shall become vested as of the end of the Vesting Period. In the event that neither of the conditions described in clauses\n(i) or (ii) was met, the portion of RSUs for the applicable Specific Year shall automatically expire and terminate.\n\n \n\n132\n\n \n\n \n\nNotwithstanding the foregoing,\nin case the Target EBITDA is met (in accordance with the above terms) in a certain fiscal year, yet the Target EBITDA is less than 105%\nof 75% of the average EBITDA for the three fiscal years that consist of the subject fiscal year and the two preceding years (excluding\nthe cost attributed to the applicable portion of the RSUs in our annual audited consolidated financial statements for such applicable\nfiscal years), then regardless of meeting the Target EBITDA, the number of performance-based RSUs that vests shall be reduced by 20%.\n\n \n\nIn addition to the RSU grant\nterms described above, our board of directors has approved, following the approval by Formula’s compensation committee, an adjustment\nto the above-described RSU grant based on dividends that we distribute to our shareholders. During the Vesting Period of the RSUs, in\nthe event that any dividend, in cash or in kind, is distributed to our shareholders, then in addition to the distribution to all shareholders,\nthere will be an equivalent payment to our chief executive officer with respect to all RSUs that were not converted into shares (whether\nor not vested) in an amount equal to the pro-rata portion of the overall dividend amount that the RSUs constitute out of our issued and\noutstanding share capital as of the date of the distribution. For those purposes, the RSUs will be counted as if they are already vested\nand converted into shares. These special RSU dividend amounts shall be paid and/or set aside by us for the benefit of our chief executive\nofficer, all as described below.\n\n \n\nFor the purpose of payment\nof the dividend amounts to our chief executive officer, the Vesting Period shall be regarded as if it has commenced on January 1, 2021\n(other than with respect to distributions and any related dividend amount which were made prior to the grant of the RSUs and which are\nexplicitly excluded), and will be divided into 32 fiscal quarters (each referred to as a Fiscal Quarter). The dividend amount within each\ndividend distributed to our shareholders will be released to, or set aside for, our chief executive officer together with the distribution\nof the dividend. The portion of the dividend amount to be released to our chief executive officer will in each case be based on the number\nof Fiscal Quarters that have lapsed at the time of distribution of the dividend. The remainder of the dividend amount will be set aside\nand paid to our chief executive officer on a pro-rata basis upon the expiration of each Fiscal Quarter until the dividend amount is released\nin full at the end of the Vesting Period for the RSUs.\n\n \n\nIn the event of termination\nof our chief executive officer services agreement, by us for Cause (as defined in the services agreement), the RSUs will immediately terminate\nand become null and void, and all interests and rights of our chief executive officer in and to the same will expire. In case of termination\nof our chief executive officer services agreement by us not for Cause, or due to the resignation of our chief executive officer for Good\nReason, all unvested RSUs that could have vested from the grant date until December 31, 2027, assuming all performance and time conditions\nand future targets would have been fulfilled (including all targets that would have resulted in vesting with respect to any Previous Year\nwhich could have still been met in future years), will accelerate and become immediately vested and exercisable, regardless of the actual\noccurrence or failure to occur of any of the future performance targets relating to those RSUs.\n\n \n\nIn the event of resignation\nby our chief executive officer not for Good Reason, our chief executive officer RSUs will vest, in an accelerated manner, in such portion\nequal to the pro-rata portion of the Vesting Period that has already lapsed (based on the full number of Fiscal Quarters that have lapsed\nfrom January 1, 2020, until the actual resignation date, including notice period). However, any performance-based RSUs for which the applicable\ntarget was not achieved up until the resignation date (including the notice period) will expire and terminate.\n\n \n\n*Restricted Share Grants\nto Chief Financial Officer*\n\n \n\nOn March 13 and 14, 2021,\nour compensation committee and board of directors, respectively, acting in accordance with the Companies Law, awarded our chief financial\nofficer, Asaf Berenstin, 21,000 restricted shares under our 2021 Share Incentive Plan (which is described below in Item 6.E in the section\ntitled “*Formula’s 2021 Share Incentive Plan*”). These restricted shares vest on a quarterly basis over approximately\nfive-year period, with 3,750 restricted shares, approximately 18% of the grant, vesting on the grant date with the remaining amount vested\nin 23 quarterly equal amounts of 750 restricted shares per quarter commencing on June 30, 2022 and concluding on December 31, 2027, provided\nthat during such time the chief financial officer continues to serve as (i) an officer of the Company and/or (ii) an officer in one of\nour directly held affiliates. If he fails to meet the service condition due to the request of the board of directors of either Formula\nor any of its directly held affiliates (other than a termination of his provision of services which is based on actions or omissions by\nhim that will constitute “cause” under his grant agreement with Formula); then, the chief financial officer will be deemed\nto have complied with clauses (i) or (ii) above. Notwithstanding the foregoing, if a change of control of Formula occurs, then all unvested\nadditional restricted shares will immediately become vested. As of April 15, 2026, 15,750 out of the 21,000 restricted shares had vested.\n\n \n\n133\n\n \n\n \n\n*Restricted Share Grants\nto Chief Operations Officer*\n\n \n\nOn January 15 and 16, 2023,\nour compensation committee and board of directors, respectively, acting in accordance with the Companies Law, awarded our chief operational\nofficer, Maya Solomon, 15,000 restricted shares under the 2021 Plan. These restricted shares vest at certain points in time over a seven-year\nperiod, which commenced on January 16, 2023 and concluding on December 31, 2029, provided that during such time the chief operational\nofficer continued to serve as (i) an officer of the Company and/or (ii) an officer in one of our directly held affiliates (we refer to\nthis as the Service Condition). As of April 15, 2026, 6,428 of the 15,000 restricted shares had vested.\n\n \n\nFor a description of our 2011\nShare Incentive Plan and our 2021 Share Incentive Plan pursuant to which options or share awards may be granted from time to time to our\ndirectors, executive officers, employees and consultants, see “Item 6.E. Share Ownership**-**Arrangements Involving the Issuance\nor Grant of Equity Awards” below.\n\n \n\n**C.**\n**Board Practices**\n\n \n\nPursuant to our amended and\nrestated articles of association, or our articles, directors are generally elected at the annual general meeting of shareholders by a\nvote of the holders of a majority of the voting power represented at the meeting. Our existing board of directors may also appoint a new\ndirector to the board, assuming that the then-authorized size of the board, as last approved by our shareholders, exceeds the number of\ndirectors then serving on the board, whether due to a resignation or otherwise, in which case the newly appointed director holds office\nuntil the next annual general meeting of shareholders immediately following such appointment.\n\n \n\nOur board is currently comprised\nof seven persons, of which each of Amir Hilman, Ilan Regev, and Itay Meroz has been determined by the board to be independent within the\nmeaning of the Listing Rules of the Nasdaq Stock Market (or the Nasdaq listing rules), on which our ADSs are listed for trading. Concurrently\nwith the initial election of Ms. Karolina Rzonca-Bajorek and Ms. Gabriela Zukowicz to the board in August 2022, we opted, as a foreign\nprivate issuer under SEC rules, to follow Israeli law practice in lieu of the Nasdaq majority board independence requirement. Please see"}