CRH is on track to avert a stand-off over directors' pay policy at its annual general meeting within the next two weeks, even as chief executive Albert Manifold's package almost doubled in 2016 to €10 million.
The Irish corporate giant endured a significant revolt against its directors’ pay policy last year. However, two influential companies that advise large investors on how to vote on resolutions at agms have come out in favour of the 2016 directors’ remuneration report, after the board sought to assuage some shareholder concerns. The report is subject to a non-binding vote at CRH’s agm on April 27th.
About 40 per cent of shareholders who voted on a new policy at the group’s agm last year objected to the building materials giant’s move to raise Mr Manifold’s maximum stock and cash bonus to 590 per cent of his salary, from 400 per cent, previously.
Meanwhile, the company’s latest annual report, published last month, showed that Mr Manifold’s remuneration package surged 85 per cent last year to €10 million, driven by a €4.8 million share bonus payment tied to awards made three years ago.
‘Reasonably satisfied’
Proxy advisory firm Glass Lewis has said in a report for clients invested in CRH that it is “reasonably satisfied” with the company’s response in the past year to concerns raised by investors on future compensation policy.
CRH's remuneration committee said in the annual report that it will further protect shareholders by carefully considering the return on net assets of the business when awarding the stock bonuses. This will particularly be the case when assessing the performance of the group's largest-ever deal, the €6.5 billion purchase in 2015 of assets hived off by European cement giants Lafarge and Holcim to appease competition authorities under their own merger.
“The remuneration report provides reasonable disclosure of the company’s executive compensation policies and structure, which generally appear to satisfy best practice guidelines,” said Glass Lewis. However, it said that the report “failed to fully disclose the specific targets used” for its short-term bonus scheme.
Meanwhile, Institutional Shareholder Services (ISS), which advised shareholders last year to vote against CRH’s remuneration policy, is backing the 2016 remuneration report of Ireland’s largest publicly-quoted company.
Long-term incentive plan
“The company did take steps to identify the reason behind the large adverse vote [last year] by consulting with investors,” it said, noting CRH’s “remedial action” to also assess return on net assets when making awards under the long-term incentive plan.
Mr Manifold’s long-term share incentive award in 2016 was mainly based on shareholder returns over the past three years, as the stock price jumped more than 80 per cent to €32.95, giving the group a market value of €27.4 billion.
The shares surged by 13 per cent in the last seven weeks of 2016 alone, on hopes that CRH’s US unit will be a key beneficiary of US president Donald Trump’s plan to spend $1 trillion (€940 million) on infrastructure. However, they have declined by 3.6 per cent so far this year amid concerns over Mr Trump’s ability to deliver on his key election promises.
