CRH shareholders urged to vote against executive pay

An influential shareholder advisory group has called on investors not to back CRH executives' €10 million pay at the cement giant's annual general meeting this month.

CRH, which grew profits by 15 per cent to €2 billion last year, will ask shareholders at the meeting to vote for its remuneration report.

This details the €8.66 million paid to chief executive Albert Manifold and the €1.9 million received by finance director, Senan Murphy, last year.

Institutional Shareholder Services (ISS) recommends that shareholders vote against the report on several grounds, including CRH’s failure to set out targets for bonuses paid to both managers, and the group’s proposal to give Mr Murphy a 10 per cent raise this year.

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In 2017, CRH paid Mr Manifold a €3.12 million bonus, €2.15 million salary and pension and €3.4 million under various share option schemes to reward executives. His pay was 13 per cent less than in 2016.

Mr Murphy's salary and pension was €907,000 while he received a €1 million bonus. Maeve Carton, who stepped down as group transformation director in August, was paid €2.67 million in total.

Targets

ISS says CRH will not reveal the targets that both men have to hit to qualify for their bonuses until it publishes its 2018 annual report next year.

“CRH lags the market in this respect: only a minority of companies do not disclose targets on the grounds of commercial sensitivity, and it is not clear why the company should be any exception,” ISS says.

The Irish group’s remuneration report says the annual bonus payments are based on a combination of financial targets and “personal strategic goals”.

CRH pledges to reveal details of this next year subject to it no longer being commercially sensitive.

The company details the basis on which it awards share options under schemes designed to retain its executives. Those are tied to shareholder returns and the cash that the company generates.

CRH will increase Mr Murphy’s pay by 10 per cent this year, and boost his bonus and share option rights.

The group says it is doing this because it paid him less than the market rate when he became financial director in 2016, his performance has been exceptionally good and he took on extra responsibilities following Ms Carton’s departure.

ISS describes the increase as contentious because CRH boosted executive pay and incentives in 2016.

“Although the policy was approved at the 2016 AGM, there was sizeable opposition to the proposals,” the group says.

Public companies do not have to change executive pay policies should shareholders oppose the remuneration report.

They are obliged only to reveal executives’ pay and to allow investors their say at the vote, which is not binding.

Almost 18 per cent of shareholders voted against CRH’s remuneration report at last year’s AGM, with 82.3 per cent giving their support.

Most resolutions pass with the support of far more than 90 per cent of the company’s shareholders.

Firms such as ISS, which frequently vote as proxies for shareholders, are becoming increasingly vocal on issues such as executive pay and potential conflicts of interest faced by independent directors.