CRH PUBLIC LTD CO | CIK:0000849395 | 3

  • Filed: 3/9/2018
  • Entity registrant name: CRH PUBLIC LTD CO (CIK: 0000849395)
  • Generator: Donnelley Financial Solutions
  • SEC filing page: http://www.sec.gov/Archives/edgar/data/849395/000119312518076345/0001193125-18-076345-index.htm
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    • ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory

    8.  Share-based Payment Expense     

     

               Continuing Operations

     

     

        

    2017

    €m

    		     

    2016

    €m

    		     

    2015

    €m

    		  

    Performance Share Plans and Restricted Share Plan expense

    		      57        38        25  

    Share option expense

    		      3        6        1  

    Total share-based payment expense

    		      60        44        26  

     

    Share-based payment expense relates primarily to awards granted under the 2014 Performance Share Plan and the Group’s share option schemes. The expense, which also includes charges in relation to the 2013 Restricted Share Plan, is reflected in operating costs in the Consolidated Income Statement.

     

    2014 Performance Share Plan

     

    The structure of the 2014 Performance Share Plan is set out in the Directors’ Remuneration Report on page 84. An expense of €56 million was recognised in 2017 (2016: €37 million; 2015: €19 million).

     

    Details of awards granted under the 2014 Performance Share Plan

     

                       Number of shares
    		  
        

    Share price at
    date of award

    		   

    Period to earliest
    release date

    		       

    Initial
    award*

    		     

    Net outstanding at
    31 December 2017

    		  

    Granted in 2017

    		    €33.21      3 years          3,342,900        3,156,995  

    Granted in 2016

    		    €24.87      3 years          3,879,901        3,437,098  

    Granted in 2015

    		    €24.84      3 years          2,989,371        2,644,593  

     

    * Numbers represent the initial awards including those granted to employees of Allied Building Products. The Remuneration Committee has determined that dividend equivalents will accrue on awards under the 2014 Performance Share Plan. Subject to satisfaction of the applicable performance criteria, such dividend equivalents will be released to participants in the form of additional shares on vesting.  

     

    50% of each award made in 2017 and 2016 is subject to a TSR measure, with 25% being measured against a tailored sector peer group and 25% against the FTSE All-World Construction & Materials index. The other 50% of each award made in 2017 and 2016 is subject to a cumulative cash flow metric. The awards made in 2015 are subject to TSR (75% of each award) and cumulative cash flow (25% of each award) metrics. Further details are set out on page 84 in the Directors’ Remuneration Report.

     

    The fair values assigned to the portion of awards which are subject to TSR performance against peers and the index were €17.43 and €14.99 respectively (2016: €11.94 and €10.52 respectively; 2015: €13.99 subject to TSR performance against peers only). The fair value of these awards was calculated using a TSR pricing model taking account of peer group TSR, volatilities and correlations together with the following assumptions:

     

         2017      2016      2015  

    Risk-free interest rate (%)

    		      (0.40)        (0.53)        0.25  

    Expected volatility (%)

    		      30.1        21.7        21.4  

     

    The expected volatility was determined using a historical sample of daily CRH share prices.

     

    The fair value of (i) the portion of awards subject to cash flow performance and (ii) the awards with no performance conditions (which are subject to a one or three-year service period) was €33.21 (2016: €24.87; 2015: €24.84). The fair value was calculated using the closing CRH share price at the date the award was granted.

     

       

     

     

     

    Share Option Schemes

     

    The 2010 Share Option Scheme was replaced in 2014 by the 2014 Performance Share Plan, and accordingly no options have been granted since 2013.

     

    Details of movement and options outstanding under Share Option Schemes (excluding Savings-related Share Option Schemes)

     

         Weighted average
    exercise price    		    Number of
    options    		            Weighted average
    exercise price    		    Number of
    options    		            Weighted average
    exercise price    		      Number of
    options    		  
              2017                 2016                   2015  

    Outstanding at beginning of year

    		    €21.51      2,997,495              €21.14      8,620,690                €19.58        15,481,191  

    Exercised (i)

    		    €24.85      (1,462,863)              €22.04      (2,102,332)                €19.35        (2,544,141)  

    Lapsed

    		    €24.14      (92,853)              €20.27      (3,520,863)                €16.64        (4,316,360)  

    Outstanding at end of year (ii)

    		    €17.96      1,441,779              €21.51      2,997,495                €21.14        8,620,690  

    Exercisable at end of year

    		    €17.96      1,441,779              €21.51      2,997,495                €24.18        5,335,290  

     

    (i) The weighted average share price at the date of exercise of these options was €32.24 (2016: €29.70; 2015: €25.51).

     

    (ii) All options granted have a life of ten years.

     

         2017      2016      2015  
    Weighted average remaining contractual life for the share options outstanding at 31 December (years)      2.53        2.46        3.86  

    euro-denominated options outstanding at end of year (number)

    		      1,436,115        2,991,831        8,604,776  

    Range of exercise prices (€)

    		      16.19-21.52        16.19-29.86        16.19-29.86  

    Pound Sterling-denominated options outstanding at end of year (number)

    		      5,664        5,664        15,914  

    Range of exercise prices (Stg£)

    		      15.30-17.19        15.30-17.19        13.64-18.02  

     

    2010 Savings-related Share Option Schemes

     

    The Group operates Savings-related Share Option Schemes. Participants may save up to €500/ Stg£500 per month from their net salaries for a fixed term of three or five years and at the end of the savings period they have the option to buy CRH shares at a discount of up to 15% of the market price on the date of invitation of each savings contract.

     

    Details of options granted under the Savings-related Share Option Schemes

     

         Weighted average
    exercise price    		      Number of
    options    		            Weighted average
    exercise price    		      Number of
    options    		            Weighted average
    exercise price    		      Number of
    options    		  
                2017                   2016                   2015  

    Outstanding at beginning of year

    		      €18.63/Stg£15.92        1,402,174                €16.96/Stg£14.27        593,177                €14.84/Stg£12.80        894,548  

    Exercised (i)

    		      €15.73/Stg£14.27        (126,472)                €13.66/Stg£11.95        (121,242)                €13.42/Stg£12.07        (331,925)  

    Lapsed

    		      €21.42/Stg£18.22        (123,455)                €17.55/Stg£15.68        (81,628)                €13.52/Stg£13.63        (187,892)  

    Granted (ii)

    		      €27.86/Stg£24.51        404,052                €20.83/Stg£16.16        1,011,867                €21.12/Stg£15.54        218,446  

    Outstanding at end of year

    		      €21.50/Stg£18.05        1,556,299                €18.63/Stg£15.92        1,402,174                €16.96/Stg£14.27        593,177  

    Exercisable at end of year

    		      €15.89/n/a        15,890                €13.45/Stg£12.22        23,897                €13.72/n/a        15,165  

     

    (i) The weighted average share price at the date of exercise of these options was €31.14 (2016: €27.90; 2015: €25.77).

     

    (ii) Pursuant to the 2010 Savings-related Share Option Schemes operated by the Group, employees were granted options over 404,052 of CRH plc’s Ordinary Shares in March 2017 (2016: 1,011,867 share options in March 2016; 2015: 218,446 share options in March 2015). This figure comprises options over 304,492 (2016: 692,334; 2015: 152,312) shares and 99,560 (2016: 319,533; 2015: 66,134) shares which are normally exercisable within a period of six months after the third or the fifth anniversary of the contract, whichever is applicable, and are not subject to specified EPS growth targets being achieved. The exercise price at which the options are granted under the scheme represents a discount of 15% to the market price on the date of invitation of each savings contract.

     

     

           
         2017      2016      2015  
    Weighted average remaining contractual life for the share options outstanding at 31 December (years)      1.90        2.41        1.96  

    euro-denominated options outstanding at end of year (number)

    		      304,963        320,362        321,059  

    Range of exercise prices (€)

    		      13.64-27.86        12.82-21.12        12.82-21.12  

    Pound Sterling-denominated options outstanding at end of year (number)

    		      1,251,336        1,081,812        272,118  

    Range of exercise prices (Stg£)

    		      12.22-24.51        11.55-16.16        11.19-15.54  

     

    The weighted fair values assigned to options issued under the Savings-related Share Option Schemes, which were computed in accordance with the trinomial valuation methodology, were as follows:

     

         3-year    5-year  

    Granted in 2017

    		    €5.97    € 6.49  

    Granted in 2016

    		    €5.01      €5.57  

    Granted in 2015

    		    €4.59    € 6.08  

     

    The fair value of these options were determined using the following assumptions:

     

               2017                2016                2015  
         3-year      5-year          3-year      5-year          3-year      5-year  

    Weighted average exercise price (€)

    		      27.86        27.86            20.83        20.83            21.12        21.12  

    Risk-free interest rate (%)

    		      (0.72)        (0.45)            (0.48)        (0.33)            (0.22)        (0.09)  

    Expected dividend payments over the expected life (€)

    		      2.07        3.55            1.95        3.32            1.91        3.25  

    Expected volatility (%)

    		      20.9        20.6            21.8        22.9            21.6        27.8  

    Expected life in years

    		      3        5            3        5            3        5  

     

    The expected volatility was determined using a historical sample of 37 month-end CRH share prices in respect of the three-year savings-related share options and 61 month-end share prices in respect of the five-year savings-related share options. The expected lives of the options are based on historical data and are therefore not necessarily indicative of exercise patterns that may materialise.

     

    Other than the assumptions listed above, no other features of options grants were factored into the determination of fair value.

     

    The terms of the options issued under the savings-related share option schemes do not contain any market conditions within the meaning of IFRS 2 Share-based Payment.