Investors revolt over CRH bonus hike plans

CRH yesterday faced one of the largest shareholder revolts over executive pay in Irish corporate history, with more than 40% of its shareholders — representing a combined €8.5bn of its €21.4bn market value — opposing a hike in bonuses at its AGM.

The resolution to boost CEO Albert Manifold’s bonus from 150% of salary to 225% and up a share plan from 250% of salary to 365%, was passed by 59% of shareholders and opposed by 41%.

The move could result in the CEO landing an annual bonus of over €8m.

Last year, Mr Manifold received total remuneration of €5.5m and has already seen his basic salary for this year rise by 8.5% to €1.4m.

The Dublin-based building materials giant has spent much of the past 12 months sounding out institutional investors who hold more than 1% of shares, on plans to alter its executive remuneration model to bring it into line with industry peers and other Ftse-50 companies; and to better illustrate the enlarged nature of the group following its €6.5bn takeover of assets from merged European peers Holcim and Lafarge last year.

The company said the new bonus structure is performance based and not linked to acquisitions, adding there is no financial incentive in place for executives to carry out deals.

Speaking after the agm, Mr Manifold defended policy by saying: “I recognise that I am well paid. But, the reality of life at CRH is that it is a Frse-50 company in a highly- competitive sector and there are very demanding criteria for companies that operate in that sector.”

He added that “80% of what I could potentially earn is based on variable performance. If I were to achieve a large portion of that potential compensation it would only be in the case whereby shareholders would, themselves, achieve superior returns on their investment in CRH.”

CRH’s share price was down yesterday by around 1% in Dublin, at just under €26. Shareholder pay revolts remain rare in Ireland, but have been faced in the past by the likes of Michael Smurfit and, more recently, former Aer Lingus chief Christoph Mueller.

CRH also came under fire from the floor yesterday regarding the use of a Luxembourg-based financing firm.

Chairman Nicky Hartery told shareholders the company employs a legitimate tax structure.

He added that CRH last year paid an effective tax rate of around 30% and that its tax structure is entirely legal.

Mr Manifold also stressed that management is focused more on cash generation, earnings growth and debt repayment this year rather than making further sizeable acquisitions.

“If we saw — and it’s a very big if — something of such compelling value as to make it wrong to walk away from, then we’d have a look. But the chances of that are less than 1%,” he told reporters after the meeting.

Smaller bolt-on deals are still expected, however. Indeed, the group spent €85m on acquisitions and investments in the first quarter of this year. Earlier this week, CRH gave an upbeat outlook for the remainder of this year based largely on a 9% year-on-year increase in group revenue for the first quarter, driven by continued strong momentum in its Americas division.

First half earnings are expected to grow to around €1bn, while continued earnings progress is likely in the more significant second half.


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