Business Irish

Friday 28 July 2017

CRH's Manifold tops table again as Corcoran also breaks €10m barrier

Executive earnings are rising at the largest Irish plcs our survey, compiled by Gavin McLoughlin

CRH chief executive Albert Manifold
CRH chief executive Albert Manifold
Gavin McLoughlin

Gavin McLoughlin

CRH boss Albert Manifold has topped the Sunday Independent's survey of top Irish bosses' pay for the second year in a row. The leader of Ireland's biggest company earned more than €11m in 2016, a year in which he continued to drive forward an ambitious, acquisition-heavy growth strategy.

Manifold is the best-paid boss in our list, which is compiled from a survey of annual reports of ISEQ 20 companies. Remuneration packages as broken down by the company were added to shares that became, to use the corporate jargon, "vested" in 2016 based on past performance (meaning they become an unconditional entitlement of the chief executive). We also include paper profits made from turning share options from incentive plans into actual shares.

This year's results show substantial rises at many companies at a time of growing shareholder revolt against executive pay. Credit Suisse, BP, and closer to home Kingspan and Greencore have experienced some dissatisfaction with their remuneration offerings. CRH too - some 40pc of shareholder votes went against the company's plans for Manifold's pay at the last CRH AGM.

The figures are calculated before tax and are based on each company's 2016 financial year - which is not the calendar year of 2016 in all cases. Rounding occurs to two decimal places.

Green REIT and Hibernia REIT do not break out chief executives' full pay separately in annual reports, so were not included. Total Produce had not published its 2016 annual report at the time of going to press.

CRH

Pre-tax profit was up 69pc to €1.7bn in the year that saw the first annual set of results from the assets bought on foot of the merger of Lafarge and Holcim, two European rivals of CRH who were forced to sell to appease the competition regulators. Also included for the first time in a full-year was Los Angeles-based CR Laurence, which has long been a target for the Irish cement maker.

This year all eyes are on the US, where the election of Donald Trump has sparked expectations of a splurge on infrastructure - including the infamous border wall with Mexico.

Manifold's 2016 package of €11.57m contained, among other things, a salary of €1.4m and a cash bonus of €2.1m. CRH put his 2016 package at €9.98m, and we've added in incentive-plan shares that vested in 2016 on foot of the company's performance in previous years, to which the company attributes a value of €1.59m. It's a big sum in total, but based on the results Manifold has delivered it's hard to argue he isn't worth a decent chunk.

Paddy Power Betfair

Breon Corcoran has come full circle. The Mullingar man rose to the rank of chief operating officer at Paddy Power - essentially number two to erstwhile boss Patrick Kennedy. Together the pair were seen as one of Ireland's hottest young executive combos.

Corcoran left Paddy Power in 2011 to take over Betfair and he was an instrumental figure in the mega merger that saw the online betting exchange combine itself with the Irish bookie.

And it's thanks to his days at Betfair that Corcoran finds himself at number two on our list.

Paddy Power Betfair's inaugural annual report puts his compensation at £1.557m. But carried over from his Betfair days was a huge chunk of share options that became vested in July 2016, which the company said were worth £6.997m.

Combine those figures and apply the sterling-euro exchange rate as of the end of 2016, and you get the €10.01m figure which we attribute to Corcoran here.

Irish Continental

Long-serving Irish Continental Group (ICG) boss Eamonn Rothwell made most of his €6.76m package from exercising options over a million of the company's shares in June of last year.

The transaction netted him a paper profit of €4.43m and combined with his basic package of €2.33m that was enough to earn him the bronze medal on our list. ICG - the parent company of Irish Ferries - was feared by some to be vulnerable to Brexit but its results for 2016 were creditable, with revenue up 1.5pc and operating profit up 9.4pc.

Announcing the results last month, the company said it was as yet "too difficult" to evaluate what the effect of Brexit would be on the business. Rothwell's years of experience should help cushion any blow that comes.

Kerry Group

Fourth on our list is outgoing Kerry Group chief executive Stan McCarthy.

The Illinois-based Kerryman is stepping down in October in favour of Edmond Scanlon, promoted from chief executive of Kerry's Asia-Pacific business, who will take over the food giant at the beginning of October.

Kerry is a long way from its roots in the Irish dairy sector and has become a serious global player in the area of foodtech. Its taste and nutrition division - the science-oriented one - far outstrips its consumer foods division (responsible for well-known brands like Denny and Cheestrings).

McCarthy has been looking to do more business in developing markets and with Scanlon coming from Asia-Pacific, it looks like that strategy will continue. McCarthy's been a fine servant to the company and we put his 2016 package at €5.53m.

That reflects a basic package of €3.73m at end-year exchange rates, plus share awards under two different long-term incentive plans that vested during the year, assigned the value of the Kerry share at year-end.

Smurfit Kappa

Tony Smurfit is now well bedded in atop the company that bears his family name.

He took the reins from Gary McGann, previously a table topper in this exercise, but has not been able to claim the crown. Perhaps the most notable move that's been made in his time is switching the cardboard box company's primary listing to London, and last December the company made it into the FTSE 100.

Financial performance has been solid with EBITDA reaching a record in 2016. The company has been seeing positive momentum in prices and has been looking towards the Americas for growth. We put Smurfit's package for 2016 at €4.64m, comprising a basic remuneration package of €2.41m, with share awards that vested in February 2016 accounting for the balance.

Kingspan

The Cavan-based insulation firm had its shares absolutely pummelled after the Brexit referendum, but its performance in 2016 was nothing short of extraordinary.

Revenue was up 12pc, trading profit up by a third to €340.9m, and margin rose by 1.8 percentage points.

Tesla-driving chief executive Gene Murtagh Jr is the man behind what was a record year for the company. He took sixth place on our list with a package of €4.63m, with €1.92m of that in his basic package and the rest from a variety of share options awards, some of which were vested and some were exercised during the year.

Ryanair

Another year, another strong performance from the carrier led by Michael O'Leary. Despite having locked in its fuel costs at well above the market rate, the airline posted 43pc growth in profits. Passenger numbers were up 18pc, with the airline citing its 'Always Getting Better' strategy - "being nice to customers" as O'Leary calls it - as a key factor behind that.

The Mullingar man is excellent value for money when you consider that Ryanair's market cap outstrips that of many of the companies that rank above Ryanair on this list.

Glanbia

Siobhan Talbot is the only woman on this list and one of only two female chief executives on the ISEQ 20 (Fiona Muldoon at FBD being the other). Like its peer Kerry, Glanbia has been moving away from its roots in the dairy sector and is now focusing heavily on what it calls performance nutrition - protein shakes and the like.

We put Talbot's package at €2.77m. On top of a basic package of €2.03m, we include vested share options valued by the company at almost €730,000, and a further 700 shares that date back to an incentive scheme from 2002.

Origin Enterprises

In ninth place on our list is Tom O'Mahony of Origin Enterprises, one of the surprise performers of last year. This year saw over 180,000 shares vest to O'Mahony, which we calculate as worth just over €980,000 as of the end of Origin's financial year. Add that to his basic package of €701,000 and you get his figure of €1.68m. It wasn't a great year for Origin, which according to O'Mahony was due in part to "highly adverse and unseasonal weather conditions, combined with weak farm sentiment". Operating profits were down 14.7pc.

The company's financial year ends in July and so it had half-year results for 2017 last month, which showed an improvement in profits. Will O'Mahony's pay show an improvement next year?

Dalata

Pat McCann rounds out the top 10 in this year's pay table, on foot of the first long-term incentive payment deemed paid by the recently-listed hotels group. The hospitality industry veteran has done a canny job in assembling a large portfolio of hotels - it's focused on adding to its UK presence now.

Tourism has been booming over the last few years but Dalata could be vulnerable to a hit from all the recent geopolitical turmoil. McCann has said the company is seeing increased corporate business due to a 'Google effect' - increasing employment in tech and financial services.

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