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In 2008, the total remuneration paid to the CRH Chairman was €450,000. The then Chairman, Kieran McGowan, elected to take a voluntary 10% reduction in his fees to €405,000 in 2009. The Remuneration Committee  acceded to this request at the time and the reduced annual fee was paid until Mr. McGowan retired from the Board in May 2012. Nicky Hartery’s fee level on his appointment was the same as that of the out-going Chairman. The Remuneration Committee re-considered the level of the Chairman’s remuneration during 2012 and requested analysis and advice from its remuneration consultant, Mercer. The Remuneration Committee  considered the outcome of Mercer’s review in the context of CRH’s inclusion in the FTSE100 Index and concluded that the 2008 fee level should be restored. 

The Committee has also agreed with the Board that, going forward, the Chairman’s fees should be reviewed every three years. 

The salary increases for executive Directors, which for Irish-based executives have remained unchanged since 2009¹, are in line with general trends in CRH operations around the world. The members of the Remuneration Committee  believe that the executive Directors’ salary increases are appropriate and measured. Nicky Hartery and Myles Lee were not present when their respective remuneration was discussed. 

We also determined the 2012 payment for each executive Director under the annual incentive plan; the structure of the plan is set out on page 58 of this report. The bonus levels for 2012 reflect for Maeve Carton, Myles Lee and Albert Manifold the achievement of individual strategic and personal goals and the continuing good performance in terms of Group cashflow generation, an important metric of the annual incentive plan since 2009. Mark Towe’s bonus similarly reflects the achievement of individual and strategic goals and a good cashflow generation performance, and also resulted from the improvement in the performance of the Americas Divisions, which led to a payout under the profit and return on net assets metrics. 

## Key areas of focus for 2013/2014 

New regulations will come into force in the UK in 2013 in relation to remuneration, which will result in revised disclosure requirements for UK incorporated companies, a new requirement for a binding vote on remuneration policy and an advisory vote on the implementation of remuneration policy at annual general meetings. While CRH, as an Irish incorporated company, will not be subject to the new requirements, the Remuneration Committee  is committed to ensuring that CRH’s remuneration structures and procedures remain at the forefront of best practice in this area and intends to implement the changes to the extent that they are not inconsistent with Irish company law. 

In the light of these changes, we have determined that it is an opportune time to undertake a review of CRH’s remuneration policy and, in particular, the Group’s share incentive plan arrangements to ensure they reflect current FTSE100 best practice in terms of structure and adaptability. As the outcome of the review is likely to result in either proposed amendments to the existing long-term share incentive plans or a new plan(s), a shareholder consultation process will be undertaken in the fourth quarter of 2013 in order that proposals can be submitted to shareholders for approval at the 2014 Annual General Meeting. 

## Dan O’Connor 

Remuneration Committee Chairman 

February 2013 

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