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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended 31 March 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from to

Commission file number 1-15240

JAMES HARDIE INDUSTRIES plc

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Ireland

(Jurisdiction of incorporation or organization)

Europa House, Second Floor

Harcourt Centre

Harcourt Street, Dublin 2, D02, WR20, Ireland

(Address of principal executive offices)

Natasha Mercer

Corporate Secretary

(Contact name)

353 1411 6924 (Telephone) 353 1479 1128 (Facsimile)

Securities registered or to be registered pursuant to Section 12(b) of the Act:



Title of each class:	Trading Symbol:	Name of each exchange on which registered:
Common stock, represented by CHESS Units of Foreign Securities	JHX	New York Stock Exchange*
CHESS Units of Foreign Securities	JHX	New York Stock Exchange*
American Depositary Shares, each representing one unit of CHESS Units of Foreign Securities	JHX	New York Stock Exchange
* Listed, not for trading, but only in connection with the registered American Depositary Shares, pursuant to the requirements of the U.S. Securities and Exchange Commission

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Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report:

442,269,905 shares of common stock at 31 March 2019

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No

Note — Checking the box will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer		☒
Accelerated filer		☐
Non-accelerated filer		☐
Emerging growth company		☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after 5 April 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



US GAAP		☒



International Financial Reporting Standards as issued by the International Accounting Standards Board		☐



Other		☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

☐ Item 17 ☐ Item 18

If this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

2019

ANNUAL REPORT

ON FORM 20-F

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James Hardie 2019 Annual Report on Form 20-F	i

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	Page(s)
Form 20-F Cross-Reference Index	ii

Section 1	1
Introduction	1
Selected Financial Data	2
Information on the Company	4
History and Development of the Company	4
Business Overview	6
Organizational Structure	14
Property, Plants and Equipment	15
Directors, Senior Management and Employees	19
James Hardie Executive Team	19
Board of Directors	24
Remuneration Report	30
Corporate Governance Report	69
Section 2	89
Reading this Report	89
Management's Discussion and Analysis	90
Consolidated Financial Statements	117
Notes to Consolidated Financial Statements	123
Remuneration of Independent Registered Public Accounting Firm	170
Section 3	171
Risk Factors	171
Legal Proceedings	189
Controls and Procedures	191
Employees	193
Listing Details	193
Constitution	197
Material Contracts	204
Exchange Controls	204
Taxation	205
Quantitative and Qualitative Disclosures About Market Risk	213
Section 4	216
SHARE/CHESS Units of Foreign Securities Information	216
Glossary of Abbreviations and Definitions	219
Exhibit List	223
Signatures	229

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James Hardie 2019 Annual Report on Form 20-F	ii

FORM 20-F CROSS REFERENCE



	Page(s)
PART 1
Item 1. Identity of Directors, Senior Management and Advisers	Not applicable
Item 2. Offer Statistics and Expected Timetable	Not applicable
Item 3. Key Information
A. Selected Financial Data	2-3
B. Capitalization and Indebtedness	Not applicable
C. Reasons for the Offer and Use of Proceeds	Not applicable
D. Risk Factors	171-188
Item 4. Information on the Company
A. History and Development of the Company	4-5; 17-18; 212
B. Business Overview	6-13
C. Organizational Structure	5; 14
D. Property, Plants and Equipment	15-18; 114
Item 4A. Unresolved Staff Comments	None
Item 5. Operating and Financial Review and Prospects
A. Operating Results	95-110
B. Liquidity and Capital Resources	111-115
C. Research and Development, Patents and Licenses, etc.	12
D. Trend Information	115
E. Off-Balance Sheet Arrangements	115-116
F. Tabular Disclosure of Contractual Obligations	116
G. Safe Harbor	89-90
Item 6. Directors, Senior Management and Employees
A. Directors and Senior Management	19-29
B. Compensation	30-68
C. Board Practices	24-29; 69-88
D. Employees	193
E. Share Ownership	58-61; 64-68
Item 7. Major Shareholders and Related Party Transactions
A. Major Shareholders	216-218
B. Related Party Transactions	80
C. Interests of Experts and Counsel	Not Applicable
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information	117-169; 201-202
B. Significant Changes	None
Item 9. The Offer and Listing
A. Offer and Listing Details	193-196
B. Plan of Distribution	Not Applicable
C. Markets	194-195
D. Selling Shareholders	Not Applicable

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James Hardie 2019 Annual Report on Form 20-F	iii



PART 1 (continued)
E. Dilution	Not Applicable
F. Expenses of the Issue	Not Applicable
Item 10. Additional Information
A. Share Capital	Not Applicable
B. Memorandum and Articles of Association	197-204
C. Material Contracts	204
D. Exchange Controls	204-205
E. Taxation	205-211
F. Dividends and Paying Agents	Not Applicable
G. Statement by Experts	Not Applicable
H. Documents on Display	212
I. Subsidiary Information	Not Applicable
Item 11. Quantitative and Qualitative Disclosures About Market Risk	213-215
Item 12. Description of Securities Other Than Equity Securities
A. Debt Securities	Not Applicable
B. Warrants and Rights	Not Applicable
C. Other Securities	Not Applicable
D. American Depositary Shares	195-196
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies	None
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds	None
Item 15. Controls and Procedures	191-192
Item 16A. Audit Committee Financial Expert	83
Item 16B. Code of Ethics	81-82
Item 16C. Principal Accountant Fees and Services	170
Item 16D. Exemptions from the Listing Standards for Audit Committees	None
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers	None
Item 16F. Change in Registrant’s Certifying Accountant	None
Item 16G. Corporate Governance	69-88
Item 16H. Mine Safety Disclosures	16-17
PART III
Item 17. Financial Statements	Not Applicable
Item 18. Financial Statements	117-169
Item 19. Exhibits	223-228

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James Hardie 2019 Annual Report on Form 20-F	1

SECTION 1

INTRODUCTION

James Hardie Industries plc is a world leader in the manufacture of fiber cement siding and backerboard and a market leader in Europe for fiber gypsum products. Our products are used in a number of markets, including new residential construction (single and multi-family housing), manufactured housing, repair and remodeling and a variety of commercial and industrial applications. We manufacture numerous types of fiber cement products with a variety of patterned profiles and surface finishes for a range of applications, including external siding and trim and soffit lining, internal linings, facades and floor and tile underlay. We also manufacture fiber gypsum products that are used in a variety of applications such as dry lining walls, timber frame walls and flooring applications. Our current primary geographic markets include the United States of America (“US,” “USA” or the “United States”), Canada, Australia, New Zealand, the Philippines and Europe.

James Hardie Industries plc is a “public limited company,” incorporated and existing under the laws of Ireland. Except as the context otherwise may require, references in this Annual Report on Form 20-F (this “Annual Report”) to “James Hardie,” the “James Hardie Group,” the “Company,” “JHI plc,” “we,” “our” or “us” refer to James Hardie Industries plc, together with its direct and indirect wholly owned subsidiaries as of the time relevant to the applicable reference.

For certain information about the basis of preparing the financial information in this Annual Report, see “Section 2 – Reading this Report.” In addition, this Annual Report contains statements that constitute “forward-looking statements.” For an explanation of forward-looking statements and the risks, uncertainties and assumptions to which they are subject, see “Section 2 – Reading this Report.” Further, a “Glossary of Abbreviations and Definitions” has also been included under Section 4 of this Annual Report.

The term “fiscal year” refers to our fiscal year ended 31 March of such year; the term “dollars,” “US$” or “$” refers to US dollars; the term “A$” refers to Australian dollars; and the term "EUR" or “€” refers to Euro.

On 3 April 2018, the Company completed the acquisition of German-based XI (DL) Holdings GmbH (n/k/a James Hardie Europe Holdings 2 GmbH) and its subsidiaries (including, but not limited to, Fermacell GmbH (n/k/a James Hardie Europe GmbH)) (collectively, "Fermacell") and began consolidating the results of Fermacell as of and from that date. As a result, the James Hardie Group's historical financial information does not include any results of Fermacell and is not directly comparable to fiscal year 2019. Readers are referred to Note 20 to our consolidated financial statements for further information on the Fermacell acquisition.

During the first quarter of fiscal year 2019, the Company changed its reportable operating segments. Previously, the Company maintained four operating segments: (i) North America Fiber Cement; (ii) International Fiber Cement; (iii) Other Businesses; and (iv) Research and Development. Beginning in the first quarter of fiscal year 2019, the Company replaced the International Fiber Cement segment with two new segments: (i) Asia Pacific Fiber Cement; and (ii) Europe Building Products. There were no changes to the North America Fiber Cement; Other Businesses; and Research and Development segments. The Company has provided its historical segment information to be consistent with the new reportable segment structure. The change in reportable segments had no effect on the Company’s financial position, results of operations or cash flows for the periods presented. Readers are referred to Note 18 of our consolidated financial statements in Section 2 for further information on our segments.

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James Hardie 2019 Annual Report on Form 20-F	2

Information contained in or accessible through the websites mentioned in this Annual Report does not form a part of this Annual Report unless we specifically state that it is incorporated by reference herein. All references in this Annual Report to websites are inactive textual references and are for information only.

SELECTED FINANCIAL DATA

We have included in this Annual Report the audited consolidated financial statements of the Company, consisting of our consolidated balance sheets as of 31 March 2019 and 2018, and our consolidated statements of operations and comprehensive income, cash flows and changes in shareholders’ equity (deficit) for each of the years ended 31 March 2019, 2018 and 2017, together with the related notes thereto. The consolidated financial statements included in this Annual Report have been prepared in accordance with accounting principles generally accepted in the US (“US GAAP”).

The selected consolidated financial information, summarized below, for the five most recent fiscal years has been derived in part from the Company’s consolidated financial statements. You should read the selected consolidated financial information in conjunction with the Company’s consolidated financial statements and related notes contained in “Section 2 – Consolidated Financial Statements” and with the information provided in “Section 2 – Management’s Discussion and Analysis.” Historic financial data is not necessarily indicative of our future results and you should not unduly rely on it.



	(Millions of US dollars)
Consolidated Statement of Operations Data	2019		2018			2017			2016			2015
Net sales	$	2,506.6	$	2,054.5		$	1,921.6		$	1,728.2		$	1,656.9
Income from operations¹	228.8		146.1			276.5			244.4			291.3
Net income¹	$	228.8	$	146.1		$	276.5		$	244.4		$	291.3

	(Millions of US dollars)
Consolidated Balance Sheet Data	2019		2018			2017			2016			2015
Total assets	$	4,032.6	$	2,351.0		$	2,012.7		$	2,029.4		$	2,036.4
Net assets	974.4		(221.5		)	(212.2		)	(225.2		)	(202.6		)
Common stock	$	230.0	$	229.5		$	229.1		$	231.4		$	231.2

	(Millions)
Shares	2019		2018			2017			2016			2015
Basic weighted average number of common shares	441.9		441.2			442.7			445.3			445.0
Diluted weighted average number of common shares	443.0		442.3			443.9			447.2			446.4


	(US dollar)
Earnings Per Share	2019		2018			2017			2016			2015
Income from operations per common share – basic	$	0.52	$	0.33		$	0.62		$	0.55		$	0.65
Net income per common share – basic	0.52		0.33			0.62			0.55			0.65
Income from operations per common share – diluted	0.52		0.33			0.62			0.55			0.65
Net income per common share – diluted	0.52		0.33			0.62			0.55			0.65
Dividends declared per share	0.40		0.38			0.39			0.58			0.60
Dividends paid per share	$	0.40	$	0.38		$	0.39		$	0.58		$	0.88

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James Hardie 2019 Annual Report on Form 20-F	3



Other Financial Data	2019			2018			2017			2016			2015
Cash Flow (Millions of US dollars)
Net cash provided by operating activities²	$	287.6		$	302.0		$	382.5		$	222.9		$	186.3
Net cash used in investing activities²	(848.0		)	(239.0		)	(109.0		)	(66.6		)	(277.7		)
Net cash provided by (used in) financing activities²	$	364.2		$	60.6		$	(210.0	)	$	(121.2	)	$	(39.0	)
Volume (million square feet)
North America Fiber Cement	2,308.1			2,238.8			2,215.4			1,969.2			1,821.5
Asia Pacific Fiber Cement³	546.1			494.7			448.2			449.6			456.2
Asia Pacific Fiber Cement excluding⁴	546.1			494.7			448.2			439.8			414.6
Europe Building Products⁵	815.8			34.0			39.0			31.3			28.2
Net Sales (Millions of US dollars)
North America Fiber Cement	$	1,676.9		$	1,578.1		$	1,493.4		$	1,335.0		$	1,224.7
Asia Pacific Fiber Cement³	446.8			425.4			370.6			341.9			380.4
Asia Pacific Fiber Cement excluding⁴	446.8			425.4			370.6			336.8			354.3
Europe Building Products ⁵	368.3			36.3			41.2			37.5			38.0
Other Businesses	$	14.6		$	14.7		$	16.4		$	13.8		$	13.8



	2019		2018		2017		2016		2015
Average sales price per unit (per thousand square feet)
North America Fiber Cement	$	718	$	698	$	665	$	669	$	666
Asia Pacific Fiber Cement ³	724		762		758		709		788
Asia Pacific Fiber Cement excluding ⁴	724		762		758		713		804
Europe Building Products ⁵	$	354	$	950	$	977	$	986	$	1,163

____________

Income from operations and net income include the following: asbestos adjustments, Asbestos Injuries Compensation Fund (“AICF”) selling, general and administrative (“SG&A”) expenses, AICF interest income (expense), loss on early debt extinguishment, Fermacell acquisition costs, product line discontinuation, non-recurring stamp duty, New Zealand weathertightness claims and related tax adjustments.



	(Millions of US dollars)
Other Financial Data	2019			2018			2017			2016			2015
Asbestos adjustments (expense) benefit	$	(22.0	)	$	(156.4	)	$	40.4		$	5.5		$	33.4
AICF SG&A expenses	(1.5		)	(1.9		)	(1.5		)	(1.7		)	(2.5		)
AICF interest income (expense)	2.0			1.9			(1.1		)	(0.3		)	1.4
Loss on early debt extinguishment	(1.0		)	(26.1		)	—			—			—
Fermacell acquisition costs	—			(10.0		)	—			—			—
Product line discontinuation	(29.5		)	—			—			—			—
Non-recurring stamp duty	—			—			—			—			(4.2		)
New Zealand weathertightness claims	—			—			—			(0.5		)	4.3
Tax adjustments	$	(19.7	)	$	47.3		$	(9.9	)	$	(1.5	)	$	37.5

For additional information on asbestos adjustments, AICF SG&A expenses, AICF interest income (expense), loss on early debt extinguishment, Fermacell acquisition costs (related to professional, legal and other fees incurred in conjunction with the acquisition of Fermacell and its subsidiaries), product line discontinuation and New Zealand weathertightness, see “Section 2 – Management’s Discussion and Analysis” and Notes 2, 7, 8, 10, 12 and 20 to our consolidated financial statements in Section 2.


2	Net cash provided by operating activities, net cash used in investing activities and net cash provided by (used in) financing activities have been revised for fiscal years 2015, 2016, 2017 and 2018 to reflect the impact of Accounting Standards Update ("ASU") 2016-18. See Note 2 to our consolidated financial statements in Section 2 for details on ASU 2016-18.


3	Asia Pacific Fiber Cement segment includes all fiber cement products manufactured in Australia, New Zealand and the Philippines and sold in Australia, New Zealand, Asia, the Middle East and various Pacific Islands.


4	Excludes the Australian Pipes business which we sold in the first quarter of fiscal year 2016.


5	Europe Building Products segment includes the newly acquired Fermacell business and fiber cement products manufactured in the United States that are sold in Europe.

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James Hardie 2019 Annual Report on Form 20-F	4

INFORMATION ON THE COMPANY

History and Development of the Company

About James Hardie

James Hardie Industries plc is incorporated and existing under the laws of Ireland. As an Irish plc, we are governed by the Irish Companies Act 2014 and we operate under the regulatory requirements of numerous jurisdictions and organizations, including the Australian Securities Exchange ("ASX"), Australian Securities and Investments Commission ("ASIC"), the New York Stock Exchange (“NYSE”), the United States Securities and Exchange Commission (“SEC”), the Irish Takeover Panel and various other rulemaking bodies.

The address of our registered office in Ireland is Europa House, Second Floor, Harcourt Centre, Harcourt Street, Dublin 2, D02 WR20, Ireland. The telephone number is +353 1411 6924. Our agent in the United States is CT Corporation. Its office is located at 28 Liberty Street - 42nd Floor, New York, New York 10005. The address of our registered office in Australia is Level 3, 22 Pitt Street, Sydney NSW 2000 and the telephone number is +61 2 8845 3360. Our share registry is maintained by Computershare Investor Services Pty Ltd. All inquiries and correspondence regarding holdings should be directed to: Computershare Investor Services Pty Ltd, Level 5, 115 Grenfell Street, Adelaide, SA 5000; telephone: +61 3 9415 4000 or toll free within Australia: 1300 855 080. Our American Depositary Receipt ("ADR") register is maintained by Deutsche Bank. All inquiries and correspondence regarding American Depositary Shares ("ADSs") should be directed to Deutsche Bank, 60 Wall Street, New York, New York 10005, United States; telephone 1-212-250-9100.

Our History

James Hardie was established in 1888 as an import business, listing on the ASX in 1951 to become a publicly owned company in Australia. After becoming a listed company, we built a diverse portfolio of building and industrial products. In the late-1970s, we pioneered the development of asbestos-free fiber cement technology and in the early-1980’s began designing and manufacturing a wide range of fiber cement building products that made use of the benefits that came from the products’ durability, versatility and strength. Using the technical and manufacturing expertise developed in Australia, we expanded into the United States, opening our first fiber cement plant in Fontana, California in February 1990. Today, James Hardie is a leading global manufacturer of a wide range of fiber cement and fiber gypsum building products in each of the United States, Australia, Europe, New Zealand and the Philippines.

Fermacell Acquisition

On 3 April 2018, we completed the acquisition of Fermacell for an aggregate purchase price of €516.4 million. Headquartered in Düsseldorf, Germany, Fermacell operates six manufacturing plants across Germany, the Netherlands and Spain, with a sales force in 13 countries and revenues generated primarily from countries in Western Europe. Fermacell is a provider of innovative building solutions, producing and distributing high-quality fiber gypsum boards and cement-bonded boards, which are two complementary products in the high performance board space. Fermacell focuses on selling full system solutions into four main segments: (1) timber frame construction; (2) dry lining applications; (3) Do-it-Yourself ("DIY"); and (4) structural fire protection. Fermacell’s products are sold into the residential repair and remodel, as well as commercial and residential new construction markets.

See Note 20 to our consolidated financial statements in Section 2 for additional information about our Fermacell acquisition.

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James Hardie 2019 Annual Report on Form 20-F	5

Our Agreement with Asbestos Injuries Compensation Fund

Prior to 1987, ABN 60 Pty Limited (formerly James Hardie Industries Limited, then the ultimate parent company of the James Hardie Group) (“ABN 60”) and two of its former subsidiaries, Amaca Pty Limited (“Amaca”) and Amaba Pty Limited (“Amaba”) (collectively, the “Former James Hardie Companies”), manufactured products in Australia that contained asbestos. The manufacture and sale of these products has resulted in liabilities for the Former James Hardie Companies in Australia.

In February 2007, our shareholders approved the Amended and Restated Final Funding Agreement (“AFFA”) entered into on 21 November 2006 to provide long-term funding to AICF for the compensation of proven Australian-related personal injuries for which the Former James Hardie Companies are found liable. AICF, an independent trust, subsequently assumed ownership of the Former James Hardie Companies. We do not own AICF, however, we are entitled to appoint three directors, including the Chairman, and the New South Wales (“NSW”) Government is entitled to appoint two directors.

Under the terms of the AFFA, subject to the operation of an annual cash flow cap, James Hardie 117 Pty Ltd (the “Performing Subsidiary”) will make annual payments to AICF. The amount of these annual payments is dependent on several factors, including our free cash flow (as defined in the AFFA), actuarial estimations, actual claims paid, operating expenses of AICF, changes in the AUD/USD exchange rate and the annual cash flow cap. JHI plc owns 100% of the Performing Subsidiary and guarantees the Performing Subsidiary’s obligation. As a result, for US GAAP purposes, we consider JHI plc to be the primary beneficiary of AICF.

Although we have no legal ownership in AICF, for financial reporting purposes, our interest in AICF is considered variable and we consolidate AICF due to our pecuniary and contractual interests in AICF as a result of the funding arrangements outlined in the AFFA. For additional information on our consolidation of AICF and asbestos-related assets and liabilities, see Note 2 to our consolidated financial statements.

Corporate Structure

The following diagram summarizes our corporate structure at 31 March 2019:

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James Hardie 2019 Annual Report on Form 20-F	6

Business Overview

General Overview of Our Business

We are a world leader in the manufacture of fiber cement building materials. Based on net sales, we believe we are the largest manufacturer of fiber cement products and systems for internal and external building construction applications in the United States, Australia, New Zealand, and the Philippines. We market our fiber cement products and systems under various brand names, such as HardiePlank^®, HardiePanel^®, HardieTrim^® and HardieBacker^® boards, and other brand names such as Aspyre Collection by James Hardie™, Artisan^®, Reveal^®, Cemplank^®, Scyon^®, Ritek^® and Linea^®. Following the acquisition of Fermacell, we are now also a market leader in the European dry lining business, especially in Germany. We market our gypsum and cement-bonded boards under the Fermacell^® brand and our fire-protection boards under the AESTUVER^® brand.

The breakdown of our net sales by operating segment for each of our last three fiscal years is as follows:



	(Millions of US dollars)
	2019		2018		2017
North America Fiber Cement	$	1,676.9	$	1,578.1	$	1,493.4
Asia Pacific Fiber Cement	446.8		425.4		370.6
Europe Building Products	368.3		36.3		41.2
Other Businesses	14.6		14.7		16.4
Total Net Sales	$	2,506.6	$	2,054.5	$	1,921.6

Products

We manufacture a wide-range of fiber cement building materials for both internal and external use across a broad range of applications, including: external siding, internal walls, floors, ceilings, soffits, trim, fencing, decking and facades. While there are some market specific products, our core products, planks, which are used for external siding, flat panels, which are used for internal and external wall linings, and floor underlayments, are sold across all of the markets in which we operate. We also manufacture fiber gypsum and cement-bonded boards which are used mainly for interior applications such as dry lining walls, walls in timber frame buildings and flooring solutions. In addition, our cement-bonded boards are used in exterior and industrial applications as well as for fire protection.

Products Used in External Applications

We developed a proprietary technology platform that enables us to produce thicker yet lighter-weight fiber cement products that are generally easier to handle than most traditional building products. Further, we believe that our products provide certain durability and performance advantages leading to improved maintenance, while offering comparable aesthetics to competing products, such as wood, and superior aesthetics when compared to vinyl siding.

Performance and design advantages:


•	Our fiber cement products exhibit resistance to the damaging effects of moisture, fire, impact and termites compared to natural and engineered wood and wood-based products;


•	Competing products do not duplicate fiber cement aesthetics and the characteristics necessary for effectively accepting paint applications;


•	Our fiber cement products provide the ability to imprint designs that closely resemble the patterns and profiles of traditional building materials such as wood and stucco;

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James Hardie 2019 Annual Report on Form 20-F	7


•	The surface properties of our products provide an effective paint-holding finish, especially when compared to natural and engineered wood products, allowing for greater periods of time between necessary maintenance and repainting; and


•	Compared to masonry construction, fiber cement is lightweight, physically flexible and can be cut using readily available tools, making our products more appealing across a broad range of architectural styles, be it of timber or steel-framed construction.

We believe the benefits associated with our fiber cement products have enabled us to gain a competitive advantage over competing products.

Products Used in Internal Applications

Compared to natural and oriented strand board ("OSB") and wood-based products, we believe our product range for internal applications provide the same general advantages provided by our products for external applications. In addition, our fiber cement products for internal applications exhibit less movement in response to exposure to moisture and impact damage than many competing products, providing a more consistent and durable substrate on which to install tiles. Further, we believe our ceramic tile underlayment products exhibit better handling and installation characteristics compared to fiberglass mesh cement boards. We believe our fiber gypsum products offer superior stability, fire safety and sound insulation properties compared to OSB and gypsum plaster boards. Furthermore, we believe our fiber gypsum flooring solutions offer superior handling properties, especially in the modernization of existing buildings, compared to wet screed solutions.

Significant New Products

In the United States, new products released over the last three years include HardieTrim^® NT3^® Roughsawn board, custom colors using our ColorPlus^® Technology, and an improved touch-up accessory to support ColorPlus^® products. In addition, we also launched the Aspyre Collection by James Hardie™, which brings together the modernity of our Reveal^® Panel System (now available with color matching Reveal Surround Trim and Exposed Fasteners in 24 colors) with the traditional profiles of our Artisan^® siding products (in addition to V-Groove and lap siding, the range has been expanded to include Bevel Channel, Square channel, Shiplap and Beaded lap).

In Australia and New Zealand, extensions to the existing Stria^® cladding products have been launched to provide additional cladding profile offerings of Splayed 255mm and Stria^® Stonelook cladding. Similarly, Axon^® cladding has now been extended to provide Axon^® Smooth 133mm, and Axon^® Grained 133mm cladding. The new ExoTec^®Raw façade panel provides an “industrial look” aesthetic for consumers, and the ExoTec^® façade system offers a new lightweight framing member that provides installation improvements for builders. The ease of installation of core product Villaboard^® lining has been enhanced with the launch of the Villaboard^TM knife.

In Australia, HardieEdge^® trim for covering slab edges provides an easy to install solution to unfinished, rough concrete slab edges that would otherwise detract from the appearance of a wall clad with James Hardie products. The formation of the James Hardie Systems business unit has provided the Australian business with a new product category, the Ritek^® permanent formwork walling system, a quality durable wall solution, which expands our product and systems offering into the growing medium to high density construction segment. Additions to the range of building science offerings include HardieFire^® Insulation, HardieBreak^® Thermal Strip, as well as the HardieSmart^® Boundary, Aged Care, Intertenancy and ZeroLot^® Wall Systems. The launch of new wall systems are also supported by the Compliant System^® trademark. The performance of the ZeroLot^® wall system is supported by the new Coreshield^®protective sealer technology. An improved ZeroLot^® wall system, incorporating a thinner 60mm HardieFire^®insulation layer and also providing a cavity for running services, while maintaining necessary fire rating performance, has also been launched.

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James Hardie 2019 Annual Report on Form 20-F	8

In New Zealand, over the same timeframe, Secura^® Interior Flooring, Secura^® Exterior Flooring, Axent^® Fascia, HomeRAB^® 4.5mm Pre Cladding, Stria^® Cladding, and Axon^® 133 Grained Cladding have been launched.

In the Philippines, new products released over the past three years include the Hardieflex^® Filled Wall System (a permanent formwork wall system tailored for the Philippines market), Hardieflex^® Wet Area Walls lining and Hardieflex^® Vented Eaves. An improved version of their wall jointing compound has been launched under the HardieFlex^® putty trademark.

The European business continues to provide HardieBacker^®, HardiePlank^®, HardiePanel^® and HardieTrim^® fiber cement products. In addition, Fermacell continues to provide its products and systems under the key brand names, Fermacell^® and AESTUVER^®. The successful market introduction of the AESTUVER^® Tx board in the past three years was a key milestone for our fire protection boards offering.

Principal Markets for Our Products

United States and Canada

In the US and Canada, the largest application for fiber cement building products is in external siding for the residential building industry. The external siding market includes various cladding types, including fiber cement, vinyl, natural wood, OSB, hardboard, brick, stucco and stone. Based on industry estimates, vinyl has the largest share of the US and Canadian siding markets. External siding typically occupies a significant square footage component of the outside of every building. Selection of siding material is based on installed cost, durability, aesthetic appeal, strength, weather resistance, maintenance requirements and cost, insulating properties and other features. Different regions of the US and Canada show a preference amongst siding materials according to economic conditions, weather, materials availability and local preference.

Demand for siding in the US and Canada fluctuates based on the level of new residential housing starts and the repair and remodeling activity of existing homes. The level of activity is generally a function of interest rates and the availability of financing to homeowners to purchase a new home or make improvements to their existing homes, inflation, household income and wage growth, unemployment levels, demographic trends, gross domestic product growth and consumer confidence. The sale of fiber cement products in North America accounts for the largest portion of our net sales, accounting for 67%, 77% and 78% of our total net sales in fiscal years 2019, 2018 and 2017, respectively. The year-over-year change in the percentage of net sales attributable to our North America sales is primarily a result of our Fermacell acquisition.

In the US and Canada, competition in the external siding market comes primarily from substitute products, such as natural wood or OSB, vinyl, stucco and brick. We believe we can continue to increase our market share from these competing products through targeted marketing programs designed to educate customers on our brand and the performance, design and cost advantages of our products.

Asia Pacific

In the Asia Pacific region, we principally sell into the Australian, New Zealand and Philippines markets, with the residential building industry representing the principal market for fiber cement products. The largest applications of fiber cement across our three primary markets are in external cladding, internal walls, ceilings, floors, soffits, fences and facades. We believe the level of activity in this industry is generally a function of interest rates, inflation, household income and wage growth, unemployment levels, demographic trends, gross domestic product growth and consumer confidence. Demand for fiber cement building products is also affected by the level of new housing starts and renovation activity.

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James Hardie 2019 Annual Report on Form 20-F	9

In Australia, competition from imports and two locally based fiber cement manufacturers, has intensified over the past decade. Additionally, we continue to see competition from natural and engineered wood, wallboard, masonry and brick products.

In New Zealand, we continue to see competition intensifying as fiber cement imports have become more cost competitive and overseas manufacturers look to supplement their primary operating environments with additional markets.

In the Philippines, we have seen fiber cement gain broader acceptance across a range of product applications in the last decade, leading to additional fiber cement products entering the market. We see fiber cement having long-term growth potential not only in the Philippines, but across Asia and the Middle East, as the benefits of its light-weight and durability become more widely recognized.

Europe

In April 2018, we completed the acquisition of Fermacell, a market leader in fiber gypsum and cement-bonded boards in Europe. Similar to James Hardie’s fiber cement products, we believe Fermacell’s fiber gypsum boards deliver superior performance relative to competitive products, such as gypsum plaster and OSB boards.

Fermacell’s products comprise fiber gypsum and cement-bonded boards, two complementary products in the high performance board space, mainly used in: (1) timber frame construction; (2) dry lining applications; (3) DIY; and (4) structural fire protection. Fermacell’s products are sold into the residential repair and remodel, commercial and residential new construction markets.

Fermacell’s key markets in Europe include Germany, Switzerland, UK, Denmark, France, Belgium, Netherlands and Luxembourg, where we sell our products to residential and commercial new-build as well as to repair. In addition, our fire protection AESTUVER^® boards are sold to projects worldwide.

In Europe, our fiber cement building products are used in both residential and commercial building applications in external siding, internal walls, floors, soffits and roofing. We compete in most segments, except roofing, and promote the use of fiber cement products against traditional masonry and wood-based products. Since we commenced selling our products in Europe in fiscal year 2004, we have continued to work to grow demand for our products by building awareness among distributors, builders and contractors.

Seasonality

Our businesses are seasonal and typically follow activity levels in the building and construction industry. In the United States, the calendar quarters ending in December and March generally reflect reduced levels of building activity depending on weather conditions. In Australia and New Zealand, the calendar quarter ending in March is usually the quarter most affected by a slowdown due to summer holidays. In the Philippines, construction activity diminishes during the wet season from June through September and during the last half of December due to the slowdown in business activity over the holiday period. In Europe, the quarter ending September is affected by summer holidays and the quarter ending December is affected by a slow-down in construction activities around calendar year-end holidays. Also, general industry patterns can be affected by weather, economic conditions, industrial disputes and other factors. See “Section 3 – Risk Factors.”

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James Hardie 2019 Annual Report on Form 20-F	10

Raw Materials

The principal raw materials used in the manufacture of our fiber cement products are cellulose fiber (wood-based pulp), silica (sand), Portland cement and water. The key raw materials used in the manufacture of our fiber gypsum products are gypsum, recycled paper and water. We have established supplier relationships for all of our raw materials across the various markets in which we operate, and we do not anticipate having difficulty in obtaining our required raw materials from these suppliers. The purchase price of these raw materials and other materials can fluctuate depending on the supply-demand situation at any given point in time.

We work hard to reduce the effect of both price fluctuations and supply interruptions by entering into contracts with qualified suppliers and through continuous internal improvements in both our products and manufacturing processes.

Cellulose Fiber

Reliable access to specialized and consistent quality pulp is critical to the production of fiber cement building materials. As a result of our many years of experience and expertise in the industry, we share our internal expertise with pulp producers in New Zealand, the United States, Canada and Chile to ensure they are able to provide us with a highly specialized and proprietary formula crucial to the reinforcing cement matrix of our fiber cement products. We have confidentiality agreements with our pulp producers, and we have obtained patents in the United States and in certain other countries covering certain unique aspects of our pulping formulas and processes that we believe cannot adequately be protected through confidentiality agreements. However, we cannot be assured that our intellectual property and other proprietary information will be protected in all cases. See “Section 3 – Risk Factors.”

Silica

High purity silica is sourced locally by the various production plants. In the majority of locations, we use silica sand as a silica source. In certain other locations, however, we process quartz rock and beneficiate silica sand to ensure the quality and consistency of this key raw material.

Cement

Cement is acquired in bulk from local suppliers. We continue to evaluate options on agreements with suppliers for the purchase of cement that can lock in our cement prices over longer periods of time.

Water

We primarily use local water supplies and process all wastewater to comply with environmental requirements.

Gypsum

The primary types of gypsum used in the production of our fiber gypsum are natural and synthetic gypsum. Natural gypsum is extracted and processed in Germany and Spain. Synthetic gypsum is obtained from coal-fired power plants in Germany and the Netherlands. We currently have long-term contracts in place with our gypsum suppliers. We also have partial ownership of a natural gypsum mine in Spain.

Recycled Paper

Recycled paper is generally acquired from local suppliers and we currently maintain long-term contracts with our key suppliers.

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James Hardie 2019 Annual Report on Form 20-F	11

Sales, Marketing and Distribution

The principal markets for our fiber cement products are the United States, Australia, New Zealand, the Philippines, Canada, and parts of Europe, including the United Kingdom and France. In addition, in the past fiscal year, we have sold fiber cement products in several other markets, including Denmark, Germany, South Korea, the Middle East, various Pacific Islands and Hong Kong. The principal markets for our fiber gypsum products are in Europe, including Germany, Switzerland, Denmark, France, Belgium, Netherlands, Luxembourg and the United Kingdom.

Our brand name, customer education in comparative product advantages, differentiated product range and customer service, including technical advice and assistance, provide the basis for our marketing strategy.

We offer our customers support through a specialized fiber cement sales force and customer service infrastructure in the United States, Australia, New Zealand, the Philippines and Europe.

Our customer service infrastructure includes inbound customer service support coordinated nationally in each country, and is complemented by outbound telemarketing capability. Within each regional market, we provide sales and marketing support to building products dealers and lumber yards and also provide support directly to the customers of these distribution channels, principally homebuilders and building contractors.

We maintain dedicated regional sales management teams in our major sales territories, with our national sales managers and national account managers, together with regional sales managers and sales representatives, maintaining relationships with national and other major accounts. Our various sales forces, which in some instances manage specific product categories, include skilled trades people who provide on-site technical advice and assistance.

In the United States, we sell fiber cement products for new residential construction predominantly to distributors, which then sell these products to dealers or lumber yards. This two-step distribution process is supplemented with direct sales to dealers and lumber yards as a means of accelerating product penetration and sales. Repair and remodel products in the United States are typically sold through the large home center retailers and specialist distributors. Our products are distributed across the United States and Canada primarily by road and, to a lesser extent, by rail.

In Australia and New Zealand, both new construction and repair and remodel products are generally sold directly to distributor/hardware stores and lumber yards rather than through the two-step distribution process. In the Philippines, a network of thousands of small to medium size retail outlets sell our fiber cement products to consumers, builders and real estate developers, although in recent years, do-it-yourself type stores have started to enter the Philippines market. The physical distribution of our product in each country is primarily by road, rail or sea transport. Products manufactured in Australia, New Zealand and the Philippines are also exported to a number of markets in Asia, various Pacific Islands, and the Middle East by sea transport.

In Europe, both new construction and repair and remodel products are primarily sold to builder’s merchants and DIY type stores. These customers then sell the products to applicators such as dry liners, timber frame companies, smaller applicators and end consumers. Our products are distributed across Europe primarily by road and rail and, to a lesser extent, by sea transport.

Despite the fact that distributors and dealers are generally our direct customers, we also aim to increase primary demand for our products by marketing our products directly to homeowners, architects and builders. We encourage them to specify and install our products because of the quality and craftsmanship of our products. This “pull through” strategy, in turn, assists us in expanding sales for our distribution network as distributors benefit from the increasing demand for our products.

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James Hardie 2019 Annual Report on Form 20-F	12

Geographic expansion of our fiber cement business has occurred in markets where framed construction is prevalent for residential applications or where there are opportunities to change building practices from masonry to framed construction. Expansion is also possible where there are direct substitution opportunities irrespective of the methods of construction. Our entry into the Philippines is an example of the ability to substitute fiber cement for an alternative product (in this case plywood). With the exception of our current major markets, as well as Japan and certain rural areas in Asia, Scandinavia, and Eastern Europe, most markets in the world principally utilize masonry construction for external walls in residential construction. Accordingly, further geographic expansion depends substantially on our ability to provide alternative construction solutions and for those solutions to be accepted in those markets.

Dependence on Trade Secrets and Research and Development (“R&D”)

We pioneered the successful development of cellulose reinforced fiber cement and, since the early-1980s, have progressively introduced products developed as a result of our proprietary product formulation and process technology. The introduction of differentiated products is one of the core components of our global business strategy. This product differentiation strategy is supported by our significant investment in R&D activities.

We view spending on R&D as the key to sustaining our existing product leadership position, by providing a continuous pipeline of innovative new products and technologies with sustainable performance and design advantages over our competitors. Further, through our investments in new process technology or by modifying existing process technology, we aim to keep reducing our capital and operating costs and to find new ways to make existing and new products. As such, we expect to continue allocating significant funding to these endeavors. For fiscal years 2019, 2018 and 2017, our expenses for R&D were US$37.9 million, US$33.3 million and US$30.3 million, respectively.

Our current patent portfolio is based mainly on fiber cement compositions, associated manufacturing processes and the resulting products. Our non-patented technical intellectual property consists primarily of our operating and manufacturing know-how and raw material and operating equipment specifications, all of which are maintained as trade secret information. We have enhanced our abilities to effectively create, manage and utilize our intellectual property and have implemented a strategy that increasingly uses patenting and trade secret protection to protect and increase our competitive advantage.

In addition, we have a variety of industrial, commercial and financial contracts relating to our proprietary manufacturing processes. While we are dependent on the competitive advantage that these items provide as a whole, we are not dependent on any one of them individually and do not consider any one of them individually to be material. We do not materially rely on intellectual property licensed from any outside third parties. However, we cannot assure that our intellectual property and other proprietary information will be protected in all cases. In addition, if our R&D efforts fail to generate new, innovative products or processes, our overall profit margins may decrease and demand for our products may fall. See “Section 3 – Risk Factors.”

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James Hardie 2019 Annual Report on Form 20-F	13

Governmental Regulation

As an Irish plc, we are governed by the Irish Companies Act 2014 and are also subject to all applicable European Union level legislation. We also operate under the regulatory requirements of numerous jurisdictions and organizations, including the ASX, ASIC, the NYSE, the SEC, the Irish Takeover Panel and various other federal, state, local and foreign rulemaking bodies. See “Section 3 – Constitution” for additional information regarding the Irish Companies Act 2014 and regulations to which we are subject.

Environmental, Health and Safety Regulation

Our operations and properties are subject to extensive federal, state, local and foreign environmental protection, health and safety laws, regulations and ordinances governing activities and operations that may have adverse environmental effects. As it relates to our operations, some of our manufacturing plants produce regulated materials, including wastewater and air emissions. The wastewater produced from our fiber cement manufacturing plants is internally recycled and reused before eventually being discharged to publicly owned treatment works, a process which is monitored by us, as well as by regulators. In addition, we actively monitor air emissions and other regulated materials produced by our plants so as to ensure compliance with the various environmental regulations under which we operate.

Some environmental laws provide that a current or previous owner or operator of real property may be liable for the costs of investigation, removal or remediation of certain regulated materials on, under, or in that property or other impacted properties. In addition, persons who arrange, or are deemed to have arranged, for the disposal or treatment of certain regulated materials may also be liable for the costs of investigation, removal or remediation of the regulated materials at the disposal or treatment site, regardless of whether the affected site is owned or operated by such person. Environmental laws often impose liability whether or not the owner, operator, transporter or arranger knew of, or was responsible for, the presence of such regulated materials. Also, third parties may make claims against owners or operators of properties for personal injuries, property damage and/or for clean-up associated with releases of certain regulated materials pursuant to applicable environmental laws and common law tort theories, including strict liability.

In the past, from time to time, we have received notices of alleged discharges in excess of our water and air permit limits. In each case, and in compliance with our Environmental Policy, we have addressed the concerns raised in those notices, in part, through enhanced administrative controls and/or capital expenditures intended to prevent future discharges in excess of permitted levels and, on occasion, the payment of associated minor fines.

Environmental compliance costs in the future will depend, in part, on continued oversight of operations, expansion of operations and manufacturing activities, regulatory developments and future requirements that cannot presently be predicted.

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James Hardie 2019 Annual Report on Form 20-F	14

Organizational Structure

JHI plc is incorporated and domiciled in Ireland and the table below sets forth our significant subsidiaries, all of which are wholly-owned by JHI plc, either directly or indirectly, as of 30 April 2019.



Name of Company	Jurisdiction of Establishment	Jurisdiction of Tax Residence
Fermacell B.V.	Netherlands	Netherlands
James Hardie Spain S.L.U.	Spain	Spain
Fermacell Schraplau GmbH	Germany	Germany
James Hardie 117 Pty Ltd	Australia	Australia
James Hardie Australia Pty Ltd	Australia	Australia
James Hardie Building Products Inc.	United States	United States
James Hardie Europe B.V.	Netherlands	Netherlands
James Hardie Europe GmbH	Germany	Germany
James Hardie Finance Holdings 1 Limited	Bermuda	Ireland
James Hardie Europe Holdings 1 GmbH	Germany	Germany
James Hardie Europe Holdings 2 GmbH	Germany	Germany
James Hardie Holdings Limited	Ireland	Ireland
James Hardie International Finance Designated Activity Company	Ireland	Ireland
James Hardie International Group Limited	Ireland	Ireland
James Hardie International Holdings Limited	Ireland	Ireland
James Hardie New Zealand Limited	New Zealand	New Zealand
James Hardie NL1 B.V.	Netherlands	Netherlands
James Hardie NL2 B.V.	Netherlands	Netherlands
James Hardie NZ Holdings Limited	New Zealand	New Zealand
James Hardie North America, Inc	United States	United States
James Hardie NV	Netherlands	Netherlands
James Hardie Philippines Inc	Philippines	Philippines
James Hardie Research (Holdings) Pty Ltd	Australia	Australia
James Hardie Research Pty Ltd	Australia	Australia
JH Research USA, LLC	United States	United States
James Hardie Technology Holdings 1 Limited	Ireland	Ireland
James Hardie Technology Holdings 2 Limited	Ireland	Ireland
James Hardie Technology Limited	Bermuda	Ireland
James Hardie U.S. Investments Sierra Inc.	United States	United States
RCI Holdings Pty Ltd	Australia	Australia

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James Hardie 2019 Annual Report on Form 20-F	15

Property, Plants and Equipment

We believe we have some of the largest and lowest cost fiber cement manufacturing plants across the United States, Australia, New Zealand and the Philippines, with our plants servicing both domestic and export markets. We also have six manufacturing plants in Europe. Our plants are ideally located to take advantage of established transportation networks, allowing us to distribute our products into key markets, while also providing easy access to key raw materials.

Manufacturing Capacity

At 31 March 2019, we had manufacturing facilities at the following locations:



Plant Location	Owned / Leased		Nameplate Capacity (mmsf)¹
United States fiber cement ²
Cleburne, Texas	Owned		666
Peru, Illinois	Owned		560
Plant City, Florida	Owned		600
Pulaski, Virginia	Owned		600
Reno, Nevada	Owned		300
Tacoma, Washington	Owned		500
Waxahachie, Texas	Owned		360
Fontana, California	Owned		250
Summerville, South Carolina	Owned		190
Asia Pacific fiber cement
Australia
Rosehill, New South Wales	Owned		180
Carole Park, Queensland	Owned	³	160
New Zealand
Auckland	Leased	⁴	75
Philippines
Cabuyao City	Owned	⁵	172
Europe fiber gypsum
Münchehof, Germany	Owned		441
Orejo, Spain	Owned		275
Wijchen, the Netherlands	Owned		273
Siglingen, Germany	Owned		154
Other
Calbe, Germany	Owned	⁶	41
Schraplau, Germany	Owned	⁷	N/A

____________

The calculated annual nameplate capacity in the United States, Europe and Asia Pacific is based on management’s historical experience with our production process and is calculated assuming continuous operation, 24 hours per day, seven days per week, producing 5/16” medium density product at a targeted operating speed. No accepted industry standard exists for the calculation of our fiber cement, fiber gypsum and cement bonded board manufacturing facility nameplate, design and utilization capacities.


2	In the fourth quarter of fiscal year 2018, we announced a Greenfield capacity project in Prattville, Alabama with an expected completion date in the first half of fiscal year 2021. This project will add an additional nameplate 600 mmsf to our manufacturing capacity. This incremental capacity is not included in the table above.


3	In the fourth quarter of fiscal year 2018, we announced an A$28.5 million (US$22.8 million) Brownfield expansion project at our Carole Park, Queensland facility with an expected commissioning date in the first quarter of fiscal year 2021. This incremental capacity is not included in the table above.

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James Hardie 2019 Annual Report on Form 20-F	16


4	We exercised our option to renew the Auckland leases for a further term of 10 years prior to the leases’ expiry on 22 March 2016. The Auckland leases now expire on 22 March 2026, at which time we have an option to renew them for a further term of 10 years expiring in March 2036. There is no option to purchase at the expiration of the leases.


5	The land on which our Philippines fiber cement plant is located is owned by Ajempa Holding Inc. (“Ajempa”), a related party. Ajempa is 40% owned by our operating entity, James Hardie Philippines Inc., and 60% owned by the James Hardie Philippines Retirement Fund. James Hardie Philippines Inc. owns 100% of the fixed assets on the land owned by Ajempa.


6	Our Calbe, Germany plant produces cement bonded boards.


7	Our Schraplau, Germany facility is a raw materials processing facility for our fiber gypsum plants. As a result, no annual nameplate capacity is available.

We continually evaluate the capacity required to service the housing markets in which we operate, and as a result, to ensure we meet demand and achieve our market penetration objectives, we have completed and continue to start-up and commission several lines across our manufacturing network. For a discussion of significant active and recently completed capacity expansion projects, see “Capital Expenditures” below.

Management has determined that for measuring the annual design capacity of the fiber cement and fiber gypsum network, the calculation should incorporate our expected production based upon our historical experience with certain factors such as demand, product mix of varying thickness and density, batch size, plant availability, differing production speeds and downtime expectations.

Based on the methodology noted above, for the year ended 31 March 2019 and 2018, we had an annual flat sheet design capacity of 4,060 mmsf and 3,744 in the United States, respectively, and 707 mmsf and 600 mmsf in Asia Pacific, respectively. For the year ended 31 March 2019, we had an annual design capacity of 816 mmsf for our European fiber gypsum plants. It is important to note that annual design capacity does not necessarily reflect the actual capacity utilization rates of our manufacturing facilities. Actual utilization is calculated using actual production, which is affected by factors such as demand, product mix, batch size, plant availability and production speeds. For fiscal year 2019, actual capacity utilization across our plants was an average of 84%, 75% and 95% in the United States, Europe and Asia Pacific, respectively. For fiscal year 2018, actual capacity utilization across our plants was an average of 90% and 92% in the United States and Asia Pacific, respectively.

Mines

We lease silica quartz mine sites in Tacoma, Washington and Reno, Nevada. The lease for our quartz mine in Tacoma, Washington was renewed per the lease for another four year renewal term through February 2022 (with additional options to renew at that time). The lease for our silica quartz mine site in Reno, Nevada expires in January 2024. We also own property in Victorville, California which could be mined for silica. As of 30 April 2019, however, we have not begun to mine this site and have no immediate plans to do so. We continue to lease a parcel of land in Victorville, California adjacent to and for access to our owned property, as well as providing an equipment area for mining operations.

As a mine operator in the US, we are required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and rules promulgated by the SEC implementing that section of the Dodd-Frank Act, to provide certain information concerning mine safety violations and other regulatory matters concerning the operation of our mines. During fiscal year 2019, we did not receive any notices, citations, orders, legal action or other communication from the US Department of Labor’s Mine Safety and Health Administration that would necessitate additional disclosure under Section 1503(a) of the Dodd-Frank Act. Similarly, we have not experienced any mining-related fatalities in our mining operations. There are currently no pending legal actions before the Federal Mine Safety and Health Review Commission related to our mining operations.

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James Hardie 2019 Annual Report on Form 20-F	17

Our Fermacell business has an operating license for a mining facility in Schraplau, Germany, however no active mining is being undertaken, or allowed with respect to the former owner FELS-WERKE GmbH, and the mine is only being used for storage of material. We also have a partial ownership for a natural gypsum mine in Spain.

Our New Zealand business quarries and removes sand from a site in North Auckland according to rights it has to do so for a period through until 31 March 2021. On 31 January 2019, our New Zealand business acquired ownership of a site in Kaukapakapa, North Auckland having previously obtained planning consent to extract silica from the site.

Capital Expenditures

We utilize a mix of operating cash flow and debt facilities to fund our capital expenditure projects and investments. We continuously invest in safety, equipment maintenance and upgrades, and capacity to ensure continued environmental compliance and operating effectiveness of our plants. The following table sets forth our capital expenditures for the three most recent fiscal years:



	(Millions of US dollars)
	2019		2018		2017
North America Fiber Cement	$	246.8	$	182.5	$	76.1
Asia Pacific Fiber Cement	24.7		18.4		24.2
Europe Building Products	26.0		—		0.2
Other Businesses	1.5		2.0		0.7
R&D and Corporate	2.1		0.8		0.7
Total Capital Expenditures	$	301.1	$	203.7	$	101.9

Significant active capital expenditures

At 31 March 2019, the following significant capital expenditures related to capacity projects remain in progress:

Project Description

Approximate

Investment

(US millions)

Investment

to date

(US millions)

Project

Start Date

Expected

Commission

Date

Expected

Nameplate Capacity

Increase¹(mmsf)

Prattville Greenfield expansion

240.0

149.4

Q4FY18

FY21

600

Tacoma Greenfield expansion²

187.0

149.5

Q4 FY17

FY19

300

Carole Park Brownfield expansion

22.8

13.1

Q4FY18

FY21

North America ColorPlus^®

expansion³

TBD

8.8

TBD

N/A

____________

The expected nameplate capacity increase is based on management’s historical experience with our production process and is calculated assuming continuous operation, 24 hours per day, seven days per week, producing 5/16” medium density product at a targeted operating speed. It does not take into account factors such as product mix with varying thickness and density, batch size, plant availability and production speeds.

In fiscal year 2015, we purchased land and buildings of US$28.3 million on land adjacent to our existing Tacoma facility. In the fourth quarter of fiscal year 2017, we began the planning and design of our Tacoma Greenfield expansion project on this new site. In fiscal year 2019, we completed the construction of a new sheet machine line. The additional nameplate capacity of 300 mmsf has been included in our manufacturing capacity table above. As part of our Tacoma Greenfield expansion project, we are also adding new ColorPlus^® and finishing lines which we expect to complete in the first half of fiscal year 2020.


3	In fiscal year 2019, we purchased land and building for US$8.8 million for the future expansion of our ColorPlus^® products. Further investment amounts will be disclosed when the additional investments required for this project are approved by management.

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James Hardie 2019 Annual Report on Form 20-F	18

Significant completed capital expenditure projects

The following is a list of significant capital expenditure projects we have invested in over the three most recent fiscal years:



Project Description	Total Investment (US Millions)		Fiscal Year of Expenditure
Plant City SM4 - 3rd operating sheet machine	$	71.2	FY14 - FY17
Cleburne - 3rd sheet machine	40.8		FY14 - FY17
Waxahachie lease buyout	16.5		FY17
Summerville recommissioning	15.7		FY17 - FY18
Philippines capacity expansion	$	18.0	FY16 - FY19

Capital Divestitures

During the three most recent fiscal years, we did not make any material capital divestitures. In fiscal year 2019, a US$8.7 million impairment charge was recorded to Property, Plant and Equipment which includes US$6.1 million associated with our decision to cease production of our fiberglass windows business and US$2.6 million related to the discontinuation of our MCT product line. We do not consider the exit from our fiberglass windows business or our MCT product line a material divestiture or strategic shift in the nature of our operations. See Note 8 to our consolidated financial statements in Section 2 for additional information about our impairment charges to Property, Plant and Equipment.

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James Hardie 2019 Annual Report on Form 20-F	19

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

James Hardie Executive Team

Our management is overseen by our executive team, whose members cover the key areas of finance, human resources, investor relations, legal, manufacturing, marketing, operations, production, R&D and sales.

Members of our executive team at 30 April 2019 are:



Jack Truong BS, PhD Chief Executive Officer Age 56
	Dr Jack G. Truong joined James Hardie as President of International Operations in April 2017. Dr Truong was announced CEO successor and appointed President and Chief Operating Officer with the responsibility of running the Company's global business in September 2018. He was officially appointed CEO in January 2019. Dr Truong’s ability to anticipate global market trends and deliver profitable revenue growth is evidenced by his extensive multinational and multisector business experience. Prior to James Hardie, Dr Truong was the President and Chief Executive Officer of leading home appliance manufacturer, Electrolux North America Inc, a $5+ billion revenue and 14,000+ employee business at the time of his leadership.
Before joining Electrolux, Dr Truong enjoyed a successful 22-year career at 3M Company, where he held senior leadership roles throughout the United States, Europe and Asia-Pacific, including Vice President and General Manager of the Global Construction and Home Improvements Division and Global Office Supplies Division. As an engineer and inventor himself – earning his PhD in chemical engineering from the Rensselaer Polytechnic Institute in New York – Dr Truong is the recipient of 11 U.S. patents and several international patents. Dr Truong also enjoys giving time to philanthropic causes and professional industry associations, receiving multiple accolades for his humanitarian work and business accomplishments.

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James Hardie 2019 Annual Report on Form 20-F	20



Matthew Marsh BA, MBA Chief Financial Officer and Executive Vice President – Corporate Age 44
	Matthew Marsh joined James Hardie as Chief Financial Officer (“CFO”) in June 2013. As CFO he oversees the Company’s overall financial activities, including accounting, tax, treasury, performance and competitor analysis, internal audit and financial operations. Effective 16 October 2015, Mr Marsh’s role was expanded to include the role of Executive Vice President – Corporate. In this role, Mr Marsh continues his oversight of the Company’s overall financial management in addition to the oversight of James Hardie’s information systems, legal and compliance, and investor and media relations functions.
After a 16-year career at General Electric Company (“GE”), Mr Marsh brings a strong background in financial management. Before joining James Hardie, Mr Marsh most recently served as CFO of GE Healthcare’s IT business. Prior to being named CFO of GE Healthcare IT, Mr Marsh oversaw the finance operations for GE Healthcare’s US Healthcare Systems and US Diagnostic Imaging businesses. Prior to those appointments, Mr Marsh traveled globally with the GE Internal Audit Staff gaining extensive experience in several industries including appliances, information services, distribution and supply, aviation, plastics, financial services, capital markets and healthcare, across more than twenty countries. Mr Marsh has graduated from GE’s Financial Management Program (FMP). Mr Marsh has a Bachelor of Arts in Economics and Public Affairs from Syracuse University, USA and an MBA from University of Chicago’s Booth School of Business, USA.



Sean Gadd BEng, MBA Executive Vice President, North America Commercial Age 46
	Sean Gadd joined James Hardie in 2004 as a Regional Engineering Manager for the Asia Pacific business, and progressed to Plant Manager for both the Carole Park and Rosehill facilities in Australia. Mr Gadd then moved to the US in 2006 to take the role of Manufacturing Manager for Trim and various manufacturing facilities across the US. In 2009, Mr Gadd ran the US trim business for James Hardie with responsibility for both Manufacturing and Sales, followed by a brief assignment leading Supply Chain. In 2012, Mr Gadd was promoted to the role of Vice President of Sales for Western USA and Canada. Over the next year, his role was expanded to include the Midwest and Northeast of the USA.
Mr Gadd was appointed Executive General Manager in September 2013 with full responsibility for the Northern Division. In October 2015, he was appointed Executive Vice President, Markets and Segments, North America with responsibility for Strategic Marketing and Development. In December 2018, Mr Gadd was appointed Executive Vice President, North America Commercial with responsibility for sales, products, segments and marketing. Mr Gadd has a Bachelor of Engineering in Manufacturing Management and an executive MBA from the Australian Graduate School of Management, Australia.

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James Hardie 2019 Annual Report on Form 20-F	21



Ryan Kilcullen BSc, MS Executive Vice President – Operations Age 38
	Ryan Kilcullen joined James Hardie in 2007 as a PcI/PdI Engineer. Since then, he has worked for the Company in various manufacturing and supply chain roles including Process Engineer, Production Manager, and Supply Chain Engineer. In 2012, he became Supply Chain Manager, ColorPlus^® Business Unit, responsible for the end-to-end design and performance of our ColorPlus^® product line supply chain. In 2013, he became responsible for North American Supply Chain operations, with responsibilities that included Procurement, Network Planning, Production Planning, Transportation, Distribution Management, Customer Service, and Inside Sales. In June 2015, he was appointed Vice President – Central Operations, responsible for the Company’s Supply Chain Operations and Centralized Manufacturing functions.
In August 2016, he was appointed Executive Vice President – Operations, responsible for the Company’s Supply Chain, Manufacturing, Engineering and Environmental, Health & Safety Operations. Mr Kilcullen has a Bachelor of Science in Industrial Engineering from Rensselaer Polytechnic Institute and a Master of Engineering in Logistics from Massachusetts Institute of Technology.



Conrad Groenewald B.Tech, MDP, MBA General Manager, Asia Pacific Age 46
	Conrad Groenewald joined James Hardie in January 2015 as General Manager, Asia Pacific. As General Manager for Asia Pacific based in Sydney, Australia, Mr Groenewald has responsibility for running the Company’s business across Australia, New Zealand, the Philippines and the rest of SE Asia. Before joining James Hardie, Mr Groenewald held senior executive roles with the shared services entity of NSW Health, HealthShare NSW; initially as the Chief Operating Officer and then moving into the role of Chief Executive Officer. During his time in this role, he was responsible for setting the strategic direction of HealthShare NSW, while ensuring that the 7,000 staff provided professional services to the NSW
Health department’s back of the house services. After graduating in 1995, Mr Groenewald started his career as a Process Engineer at Mondi Paper (part of Anglo American Group) in South Africa. There he progressed through the business to Production Manager, and eventually Operations Manager, prior to emigrating to Australia in 2002. In Australia, Mr Groenewald joined Visy Industries where he spent almost 10 years in Senior Operations Management roles across various divisions throughout Australia. Mr Groenewald has an MBA from The Open University UK, an MDP Business Administration and Management from UNISA, and has a Chemical Engineering qualification and Bachelor of Technology in Pulp and Paper from Durban University of Technology.

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James Hardie 2019 Annual Report on Form 20-F	22



Jörg Brinkmann MS, PhD General Manager, Europe Age 40
	Dr Jörg Brinkmann joined James Hardie as General Manager, Europe in April 2018 as part of the Fermacell GmbH acquisition. In this role he is responsible for running the Company’s European activities, which are headquartered in Düsseldorf, Germany. Before joining James Hardie, Dr Brinkmann held several German as well as international leadership roles in Sales and Marketing at the Xella Group (the former owner of the Fermacell business) starting in 2005. In 2014 he was appointed CEO of the former Fermacell Company with responsibility for the entire business. Under his leadership, the company achieved significant profitable growth.
Dr Brinkmann holds a Masters degree (“Diplom-Kaufmann”) from the University of Duisburg-Essen as well as a PhD from the University of Hohenheim, Germany.



Joe Blasko BSFS, JD General Counsel and Chief Compliance Officer Age 52
	Joe Blasko joined James Hardie as General Counsel and Chief Compliance Officer in June 2011. Before joining James Hardie, Mr Blasko was Assistant General Counsel, and later, the General Counsel at Liebert Corporation, an Emerson Network Power Systems company and wholly-owned subsidiary of Emerson Electric Co. In his four years with Liebert/Emerson, Mr Blasko was responsible for establishing the legal department in Columbus, Ohio, managing and overseeing all legal matters and working closely with the executive management team. In this role, Mr Blasko also had global responsibilities which required expertise across multiple jurisdictions.
From 2004 to 2006, Mr Blasko was Associate General Counsel at The Scotts Miracle-Gro Company, serving as the effective “general counsel” to numerous corporate divisions within the organization. From 1997 to 2004, Mr Blasko gained considerable regulatory and litigation expertise working at Vorys, Sater, Seymour and Pease LLP in Ohio. Mr Blasko has a Juris Doctor from Case Western Reserve University in Cleveland, Ohio, USA and a Bachelor of Science in Foreign Service from Georgetown University, USA, with a specialty in International Relations, Law and Organizations.

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James Hardie 2019 Annual Report on Form 20-F	23



Jason Miele BA Vice President, Investor and Media Relations Age 42
	Jason Miele was appointed to the position of Vice President – Investor and Media Relations in February 2017. Mr Miele has responsibility for overseeing the Company’s investor relations strategy and successful interface with external audiences, communicating the Company’s business strategy and its financial performance to various stakeholders including shareholders, investment analysts, and the financial media. Mr Miele has 20 years of relevant professional experience, including 12 years of experience with James Hardie, where he has served in various finance and operational support roles, most recently as James Hardie’s Group Controller, a position he held from 2013 to 2017.
Mr Miele has a Bachelor’s Degree from the University of California at Santa Barbara, where he graduated with a degree in Business Economics with an emphasis in Accounting.

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James Hardie 2019 Annual Report on Form 20-F	24

Board of Directors

James Hardie’s non-executive directors have widespread experience, spanning general management, finance, manufacturing, marketing and accounting. Each non-executive director also brings valuable international experience that assists with James Hardie’s growth. For additional information, see "Section 1 - Corporate Governance Report" of this Annual Report.

Members of the Board of Directors (the “Board”) at 30 April 2019 are:



Michael Hammes BS, MBA Age 77
	Michael Hammes was elected as an independent non-executive director of James Hardie in February 2007. He was appointed Chairman of the Board in January 2008 and is a member of the Remuneration Committee and the Nominating and Governance Committee. Experience: Mr Hammes has extensive commercial experience at a senior executive level. He has held a number of executive positions in the medical products, hardware and home improvement, and automobile sectors, including CEO and Chairman of Sunrise Medical, Inc. (2000-2007), Chairman and CEO of Guide Corporation (1998-2000), Chairman and CEO of Coleman Company, Inc. (1993-1997), Vice Chairman of Black & Decker Corporation (1992-1993) and various senior executive roles with Chrysler Corporation (1986-1990) and Ford Motor Company (1966-1986).
Directorships of listed companies in the past five years: Former – Director of Navistar International Corporation (1996-2017); Director of DynaVox Mayer-Johnson (2010-2016). Other: Resident of the United States. Last elected: August 2018 Term expires: August 2021

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James Hardie 2019 Annual Report on Form 20-F	25



Brian Anderson BS, MBA, CPA Age 68
	Brian Anderson was appointed as an independent non-executive director of James Hardie in December 2006. He is Chairman of the Audit Committee and a member of the Remuneration Committee. Experience: Mr Anderson has extensive financial and business experience at both executive and board levels. He has held a variety of senior positions, with thirteen years at Baxter International, Inc., including Corporate Vice President of Finance, Senior Vice President and CFO (1997-2004) and, more recently, Executive Vice President and CFO of OfficeMax, Inc. (2004-2005). Earlier in his career, Mr Anderson was an Audit Partner of Deloitte & Touche LLP (1986-1991).
Directorships of listed companies in the past five years: Current – Director of Stericycle Inc. (since 2017); Director of PulteGroup (since 2005); Director of W.W. Grainger, Inc. (since 1999). Former – Chairman (2010-2016) and Director (2005-2016) of A.M. Castle & Co.; Lead Director of W.W. Grainger, Inc. (2011-2014). Other: Member of the Governing Board of the Center for Audit Quality (since 2016); resident of the United States. Last elected: August 2017 Term expires: August 2020

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James Hardie 2019 Annual Report on Form 20-F	26



Russell Chenu BCom, MBA Age 69
	Russell Chenu was appointed as a non-executive director of James Hardie in August 2014. He is a member of the Remuneration Committee and the Nominating and Governance Committee. Experience: Mr Chenu joined James Hardie as Interim CFO in October 2004 and was appointed CFO in February 2005. He was elected to the Company’s Managing Board at the 2005 Annual General Meeting, re-elected in 2008 and continued as a member of the Managing Board until it was dissolved in June 2010. As CFO, he was responsible for accounting, treasury, taxation, corporate finance, information technology and systems, and procurement. Mr Chenu retired as CFO in November 2013.
Mr Chenu is an experienced corporate and finance professional who held senior finance and management positions with a number of Australian publicly-listed companies. In a number of these senior roles, he was engaged in significant strategic business planning and business change, including several turnarounds, new market expansions and management leadership initiatives. Mr Chenu has a Bachelor of Commerce from the University of Melbourne and an MBA from Macquarie Graduate School of Management, Australia. Directorships of listed companies in the past five years: Current – Director of Reliance Worldwide Corporation Limited (since 2016); Director of CIMIC Group Limited (since 2014); Director of Metro Performance Glass Limited (since 2014). Other: Resident of Australia. Last elected: August 2017 Term expires: August 2020



Andrea Gisle Joosen MSc, BSc Age 55
	Andrea Gisle Joosen was appointed as an independent non-executive director of James Hardie in March 2015. She is a member of the Audit Committee. Experience: Ms Gisle Joosen is an experienced former executive with extensive experience in marketing, brand management and business development across a range of different consumer businesses. Her former roles include Chief Executive of Boxer TV Access AB in Sweden and Managing Director (Nordic region) of Panasonic, Chantelle AB and Twentieth Century Fox. Her early career involved several senior marketing roles with Procter & Gamble and Johnson & Johnson.
Directorships of listed companies in the past five years: Current – Director of BillerudKorsnas AB (since 2015); Director of Dixons Carphone plc (since 2014); Director of ICA Gruppen AB (since 2010). Former –Director of Mr Green AB (2015 - 2019); Director of Dixons Retail plc (2013-2014). Other: Director of Acast AB (since June 2018); Director of Neopitch AB (since 2004); resident of Sweden. Last elected: August 2018 Term expires: August 2021

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James Hardie 2019 Annual Report on Form 20-F	27



David D. Harrison BA, MBA, CMA Age 71
	David Harrison was appointed as an independent non-executive director of James Hardie in May 2008. He is Chairman of the Nominating and Governance Committee and a member of the Audit Committee. Experience: Mr Harrison is an experienced company director with a finance background, having served in corporate finance roles, international operations and information technology for 22 years with Borg Warner/General Electric Co. His previous experience includes 10 years at Pentair, Inc., as Executive Vice President and CFO (1994-1996 and 2000-2007) and Vice President and CFO roles at Scotts, Inc. and Coltec Industries, Inc. (1996-2000).
Directorships of listed companies in the past five years: Current – Director of National Oilwell Varco (since 2003). Other: Resident of the United States. Last elected: August 2016 Term expires: August 2019



Persio V. Lisboa BS Age 53
	Persio Lisboa was appointed as an independent non-executive director of James Hardie in February 2018. He is Chairman of the Remuneration Committee. Experience: Mr Lisboa has extensive senior executive experience. He currently serves as Executive Vice President & Chief Operating Officer at Navistar, Inc. (Navistar), a leading manufacturer of commercial trucks, buses, defense vehicles and engines, since March 2017. Prior to holding this position, Mr Lisboa served as President, Operations of Navistar from November 2014 to March 2017. Prior to that, Mr Lisboa served as Senior Vice President, Chief Procurement Officer of Navistar from December 2012 to November 2014, as Vice President, Purchasing and Logistics and Chief Procurement Officer of Navistar from October 2011 to November 2012,
and as Vice President, Purchasing and Logistics of Navistar from August 2008 to October 2011. Prior to these positions, Mr Lisboa held various management positions within Navistar’s North American and South American operations. Mr Lisboa began his career at Maxion International Motores Brasil, followed by a move to International Engines Argentina S.A., and then to MWM-International South America.
Directorships of listed companies in the past five years: Former - Director of Broadwind Energy, Inc. (2016-2018). Other: Resident of the United States. Last elected: August 2018 Term expires: August 2021

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James Hardie 2019 Annual Report on Form 20-F	28



Alison Littley BA, FCIPS Age 56
	Alison Littley was appointed as an independent non-executive director of James Hardie in February 2012. She is a member of the Audit Committee and the Remuneration Committee. Experience: Ms Littley has substantial experience in multinational manufacturing and supply chain operations, and she brings a strong international leadership background building effective management teams and third party relationships. She has held a variety of positions, most recently as Chief Executive of Buying Solutions, a UK Government Agency responsible for procurement of goods and services on behalf of UK government and public sector bodies (2006-2011). She has previously held senior management roles in Diageo plc (1999-2006) and Mars, Inc. (1981-1999).
Directorships of listed companies in the past five years: Current - Norcros plc (since May 2019); Headlam Group plc (since January 2019). Other: Director of Osborne Group Holdings Limited (since September 2018); Director of Rosewood Group Holdings Limited (since September 2018); Director of Weightmans LLP (since 2013); resident of the United Kingdom. Last elected: August 2018 Term expires: August 2019



Anne Lloyd, BS Age 57
	Anne Lloyd was appointed as an independent non-executive director of James Hardie in November 2018. She is a member of the Audit Committee. Experience: Ms Lloyd, an experienced corporate and finance executive, served as Chief Financial Officer of Martin Marietta Materials, Inc. a leading supplier of aggregates and heavy building materials, for over 12 years from June 2005 until her retirement in August 2017. She joined Martin Marietta in 1998 as Vice President and Controller and was promoted to Chief Accounting Officer in 1999. She was subsequently appointed Treasurer (2006-2013) and promoted to Executive Vice President in 2009. Earlier in her career, Ms Lloyd spent 14 years with Ernst & Young LLP (1984-1998), latterly as
a senior manager and client service executive for the natural resources, mining, insurance and healthcare industries. Directorships of listed companies in the past five years: Current - Director of Insteel Industries, Inc (since April 2019); Director of Highwoods Properties, Inc. (since 2018). Former - Director of Terra Nitrogen Company, L.P. (2009-2018). Other: Resident of the United States. Last elected: Ms Lloyd will be standing for election at the August 2019 Annual General Meeting.

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James Hardie 2019 Annual Report on Form 20-F	29



Rada Rodriguez MSc Age 60
	Rada Rodriguez was appointed as an independent non-executive director of James Hardie in November 2018. She is a member of the Nominating and Governance Committee. Experience: Ms Rodriguez has served as Chief Executive Officer of Schneider Electric GmbH, part of Schneider Electric Group, a global energy management and automation company, for 9 years and has been Senior Vice President, Corporate Alliances since 2017. Since joining the company in 1999, she has held a progression of senior roles including Head of International Research and Development for Schneider Electric Sweden, and Senior Vice President and Zone President, Central and Eastern Europe.
Prior to joining Schneider Electric GmbH, she worked at Lexel Group (later acquired by Schneider) and before that she worked for 5 years at Colasit Scandinavia AB, a Swiss industrial machinery manufacturer. She started her career with K-Konsult AB, a Swedish technical consulting firm with a focus on installation technology where she worked for 5 years as a design engineer. Directorships of listed companies in the past five years: Former – Director of Eltel AB (2015-2017). Other: Director of ZVEI (since 2014); resident of Germany. Last elected: Ms Rodriguez will be standing for election at the August 2019 Annual General Meeting.



Rudolf van der Meer M.Ch.Eng Age 74
	Rudy van der Meer was appointed as an independent non-executive director of James Hardie in February 2007. He is a member of the Nominating and Governance Committee. Experience: Mr van der Meer is an experienced former executive, with considerable knowledge of international business and the building and construction sector. During his 32-year association with Akzo Nobel N.V., he held a number of senior positions including CEO of Coatings (2000-2005), CEO of Chemicals (1993-2000), and member of the five person Executive Board (1993-2005).
Directorships of listed companies in the past five years: Current – Director of LyondellBasell Industries N.V. (since 2010). Other: Former Chairman of the Supervisory Board of VGZ Health Insurance (2011-2017); resident of the Netherlands. Last elected: August 2017 Term expires: August 2019

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James Hardie 2019 Annual Report on Form 20-F	30

Remuneration Report

This Remuneration Report describes the executive remuneration philosophy, programs and objectives of the Remuneration Committee and the Board of Directors (the “Board”), as well as the executive remuneration plans and programs implemented by James Hardie.

We are not required to produce a remuneration report under applicable Irish, Australian or US rules or regulations. However, taking into consideration our significant Australian and US shareholder bases and our primary listing on the Australian Securities Exchange (“ASX”), we have voluntarily produced a remuneration report consistent with those provided by similarly situated companies for non-binding shareholder approval since 2005.

This Remuneration Report outlines the key remuneration plans and programs and share ownership information for our Board of Directors and certain of our senior executive officers (Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and the other three highest paid executive officers based on total compensation that was earned or accrued for fiscal year 2019) (“Senior Executive Officers”) in fiscal year 2019, and also includes an outline of the key changes for fiscal year 2020. Further details of these changes are set out in the 2019 Notice of Annual General Meeting (“AGM”).

We first provide a summary of our business performance and the key remuneration considerations and decisions made in fiscal year 2019. We then describe in detail our remuneration philosophy, the individual elements of our remuneration program and the linkage between our remuneration programs and our pay-for-performance philosophy. For fiscal year 2019, our Senior Executive Officers are:


•	Dr Jack Truong, CEO (from 31 January 2019);


•	Louis Gries, Former CEO (through 31 January 2019);


•	Matthew Marsh, CFO and Executive Vice President - Corporate;


•	Sean Gadd, Executive Vice President - North America Commercial;


•	Joseph Blasko, General Counsel and Chief Compliance Officer; and


•	Zean Nielsen, Former Executive Vice President - Sales.

During the course of fiscal year 2019, we completed our previously announced CEO transition process. On 31 January 2019, Dr Jack Truong succeeded Louis Gries as CEO of James Hardie. Prior to being appointed as CEO, Dr Truong served as President, International Operations and Chief Operating Officer of James Hardie. Following the resignation of Mr Gries as CEO in January 2019, Mr Gries assumed the role of Strategic Advisor to James Hardie for the remainder of fiscal year 2019 in order to assist with the CEO transition. Effective 1 April 2019, Mr Gries retired from James Hardie.

In addition to the CEO transition, Sean Gadd, our Executive Vice President - North America Commercial, assumed responsibility for sales and marketing functions in North America, following the departure in December 2018 of Zean Nielsen, our former Executive Vice President - Sales.

This Remuneration Report has been adopted by our Board on the recommendation of the Remuneration Committee.

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James Hardie 2019 Annual Report on Form 20-F	31

EXECUTIVE SUMMARY

Fiscal Year 2019 Business Highlights¹

Our operating results for fiscal year 2019 reflected good and disciplined financial performance in a significant inflationary cost environment, highlighted by adjusted net operating profit of US$300.5 million and adjusted earnings before interest and taxes (“EBIT”) of US$404.6 million, an increase of 3% and 2%, respectively, compared to fiscal year 2018. In addition, we achieved net sales of US$2.5 billion, an increase of 22% compared to fiscal year 2018, and US$0.68 adjusted diluted earnings per share.

The following graphs show our performance for key financial measures during fiscal year 2019, with a comparison to prior corresponding periods:

____________


1	Please see the “Glossary of Abbreviations and Definitions” in Section 4 of this Annual Report for a reconciliation of non-GAAP financial measures used in this Remuneration Report to the most directly comparable US GAAP financial measure.

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James Hardie 2019 Annual Report on Form 20-F	32

Fiscal Year 2019 Compensation Highlights

Our fiscal year 2019 compensation continued to reflect and promote our pay-for-performance philosophy and our stated goal to position Senior Executive Officer fixed base salary and benefits at the median and total target direct remuneration (comprising fixed and target variable remuneration) at the 75th percentile of our Peer Group (defined herein), if stretch short- and long-term target performance goals are met.

The following is a summary of the key aspects and events that occurred relative to the Company’s remuneration policies, programs and arrangements during the course of fiscal year 2019:


•	Dr Truong’s fixed and variable compensation were increased in conjunction with his transition to the role of CEO (see page 52 for further details).


•	A base salary increase for Mr Marsh was made to continue to align his compensation package with our CEO succession plan and our need to retain key senior executives through the CEO transition process.


•	A base salary increase for Mr Gadd was made to properly align his compensation with the increase in his role scope and accountability that occurred during fiscal year 2019.


•	There were no changes to Mr Gries’ fixed or variable compensation. Mr Gries’ base salary, target short-term incentive (“STI”), and target long-term incentive (“LTI”) remained the same in fiscal year 2019 as they were for fiscal year 2018.

•

No changes were made to the operation or components of the company performance plan (“CP Plan”) or individual performance plan (“IP Plan”) for our annual STI program for fiscal year 2019, other than to establish new targets which align with our strategic initiatives as we do every year. A complete description of the performance hurdles applicable for fiscal year 2019 for the CP Plan is set out in the section titled “Incentive Arrangements” later in this Remuneration Report.


•	No changes were made to the design of the LTI Plan for fiscal year 2019. The LTI plan remains similar to the fiscal year 2018 plan with updated financial targets. A complete description of the LTI program, including the applicable performance hurdles is set out in the section titled “Incentive Arrangements” later in this Remuneration Report.

Fiscal Year 2019 Total Target Compensation

Remuneration packages for Senior Executive Officers reflect our remuneration philosophy and comprise a mixture of fixed base salary and benefits and variable performance-based incentives. The Remuneration Committee seeks to appropriately balance fixed and variable remuneration in order to align our total compensation structure with our pay-for-performance philosophy. The following chart summarizes total target compensation awarded to each Senior Executive Officer in fiscal year 2019:



Summary of Fiscal Year 2019 Senior Executive Officer Target Compensation
Senior Executive Officer	FY2019 Annual Base Salary (US$)	FY2019 STI Target Value (US$)	FY2019 LTI Target Value (US$)	FY2019 Total Target Compensation (US$)
J Truong*	678,658	589,767	1,950,000	3,218,425
L Gries	950,000	1,187,500	4,000,000	6,137,500
M Marsh	630,000	472,500	1,200,000	2,302,500
S Gadd	550,000	330,000	800,000	1,680,000
J Blasko	437,750	262,650	500,000	1,200,400
Z Nielsen	525,000	315,000	1,000,000	1,840,000

* Base salary and STI Target is pro-rated based on the time Dr Truong was President - International Operation (5 months), Chief Operating Officer (5 months) and Chief Executive Officer (2 months) during fiscal year 2019.

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James Hardie 2019 Annual Report on Form 20-F	33

Results of 2018 Remuneration Report Vote

In August 2018, our shareholders were asked to cast a non-binding advisory vote on our remuneration report for the fiscal year ended 31 March 2018. Although we are not required under applicable Irish, Australian or US laws or regulations to provide a shareholder vote on our executive remuneration practices, the Board believes that it is important to engage shareholders on this important issue and we have voluntarily submitted our remuneration report for non-binding shareholder approval on an annual basis since 2005 and currently intend to continue to do so.

At our 2018 Annual General Meeting, our shareholders approved our remuneration report, with 89.9% of the votes cast in support of our remuneration program. The Remuneration Committee considered the results of this advisory vote, together with investor feedback and other factors and data associated with strategic priorities discussed in this Remuneration Report, in determining our executive remuneration policies, objectives and decisions and related shareholder engagement efforts for fiscal year 2019.

APPROACH TO SENIOR EXECUTIVE REMUNERATION

Remuneration Philosophy

As our main business and all of our Senior Executive Officers are located in the US, our remuneration philosophy is to provide our Senior Executive Officers with an overall package that is competitive with Peer Group companies exposed to the US housing market. Within this philosophy, the executive remuneration framework emphasizes operational excellence and shareholder value creation through incentives that link executive remuneration with the interests of shareholders. Our remuneration plans and programs are structured to enable us to: (i) attract and retain talented executives; (ii) reward outstanding individual and corporate performance; and (iii) align the interests of our executives to the interests of our shareholders, with the ultimate goal of improving long-term value for our shareholders. This pay-for-performance system continues to serve as the framework for executive remuneration, aligning the remuneration received with the performance achieved.

Composition of Remuneration Packages

In line with our remuneration philosophy, our goal is to position Senior Executive Officer fixed base salary and benefits at the median and total target direct remuneration (comprising fixed and target variable remuneration) at the 75^th percentile of our Peer Group, if stretch short- and long-term target performance goals are met. Performance goals for target variable performance-based incentive remuneration are set with the expectation that we will deliver results in the top quartile of our Peer Group. Performance below this level will result in variable remuneration payments below target (and potentially zero for poor performance). Performance above this level will result in variable remuneration payments above target.

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James Hardie 2019 Annual Report on Form 20-F	34

Relative Weightings of Fixed and Variable Remuneration

The charts below detail the relative weightings of fixed versus variable remuneration for the CEO and other Senior Executive Officers for fiscal years 2019 and 2018. Fixed remuneration includes base salary and other fixed benefits. Variable remuneration is comprised of STI awards and the following three LTI components: (i) Relative Total Shareholder Return ("TSR") Restricted Stock Units ("RSUs"); (ii) Return Capital Employed ("ROCE") RSUs; and (iii) Scorecard LTI, each of which are discussed in more detail in this Remuneration Report. STI awards include amounts earned under the CP and IP plans for each fiscal year, paid in June of the following fiscal year, and LTI components are shown at total maximum grant value.

¹Fiscal year 2019 reflects remuneration for Mr Gries in his roles as CEO and Strategic Adviser. Fiscal year 2018 reflects remuneration for Mr Gries in his role as CEO.

²Fiscal year 2019 reflects remuneration for Dr Truong in his roles as President - International Operations, COO and CEO. Fiscal year 2018 reflects Dr Truong's remuneration in his role as President - International Operations.

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James Hardie 2019 Annual Report on Form 20-F	35

Setting Remuneration Packages

Remuneration decisions are based on the executive remuneration philosophy and framework described in this Remuneration Report. The Remuneration Committee reviews and the Board approves this framework each year.

Remuneration packages for Senior Executive Officers are evaluated each year to make sure that they continue to align with our compensation philosophy, are competitive with our Peer Group and developments in the market, and continue to support our business structure and objectives. In making decisions regarding individual Senior Executive Officers, the Remuneration Committee takes into account both the results of an annual remuneration positioning review provided by the Remuneration Committee’s independent advisers and the Senior Executive Officer’s responsibilities and performance.

All aspects of the remuneration package for our CEO and CFO are determined by the Remuneration Committee and ratified by the Board. All aspects of the remuneration package for the remaining Senior Executive Officers are determined by the Remuneration Committee on the recommendation of the CEO.

Remuneration Committee Governance

The remuneration program for our Senior Executive Officers is overseen by our Remuneration Committee, the members of which are appointed by the Board. As prescribed by the Remuneration Committee Charter, the duties of the Remuneration Committee include, among other things: (i) administering and making recommendations on our incentive compensation and equity-based remuneration plans; (ii) reviewing the remuneration of directors; (iii) reviewing the remuneration framework for the Company; and (iv) making recommendations to the Board on our recruitment, retention and termination policies and procedures for senior management. The current members of the Remuneration Committee are Persio Lisboa (Chairman), Brian Anderson, Russell Chenu, Michael Hammes and Alison Littley, all of whom are independent non-executive directors. A more complete description of these and other Remuneration Committee functions is contained in the Remuneration Committee’s Charter, a copy of which is available in the Corporate Governance section of the Investor Relations page on our website (www.ir.jameshardie.com.au).

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James Hardie 2019 Annual Report on Form 20-F	36

Summary of Executive Compensation Practices

The following table summarizes certain of the key governance practices employed by the Remuneration Committee relative to our executive compensation practices, including those practices which we believe are important drivers of both short- and long-term corporate performance and those practices which we believe are not aligned with the long-term interests of our shareholders:



Compensation Practices We Employ
ü	Retain independent compensation advisers reporting directly to the Remuneration Committee	û	Prohibition on hedging of stock held by executives and directors
ü	Pay for performance model, with approximately 85% of our CEO’s total target compensation being performance-based “at risk” compensation and an average of approximately 70% total target compensation being performance-based “at risk” compensation for our other Senior Executive Officers	û	Limited employment agreements and severance arrangements
ü	Circuit breaker on annual STI awards to ensure that no annual incentive awards are paid unless minimum US growth and corporate performance levels are achieved	û	Limited change-in-control benefits
ü	Set robust share ownership requirements for all directors and Senior Executive Officers	û	No dividends paid on unvested equity awards
ü	Broad clawback policy on performance-based compensation	û	Limited perquisites and other benefits
ü	Set performance-based vesting conditions for all equity grants to Senior Executive Officers	û	No annual time-based LTI equity grants to Senior Executive Officers
ü	Provide the Remuneration Committee with ability to exercise “negative” discretion when determining the vesting and payout of our LTI programs	û	No excessive retirement or deferred compensation arrangements

Remuneration Advisers

As permitted by the Remuneration Committee Charter, the Remuneration Committee retained Aon Hewitt (in the US) and Guerdon Associates (in Australia) as its independent advisers for matters regarding remuneration for fiscal year 2019. The Remuneration Committee reviews the appointment of its advisers each year. Both Aon Hewitt and Guerdon Associates provided the Remuneration Committee with written certification during fiscal year 2019 to support their re-appointment. In those certifications, the advisers: (i) confirmed that their pay recommendations were made without undue influence from any member of our management; and (ii) provided detailed responses to the six independence factors a Remuneration Committee should consider under relevant NYSE rules, and confirmed their independence based on these factors.

The Remuneration Committee reviewed these certifications before re-appointing each adviser for fiscal year 2020.

Benchmarking Analysis

To assist the Remuneration Committee in making remuneration decisions, the Remuneration Committee evaluates the remuneration of our Senior Executive Officers against a designated set of companies (the “Peer Group”). The Peer Group, which is reviewed by the Remuneration Committee on an annual basis, consists of companies that are similar to us in terms of certain factors, including size, industry, and exposure to the US housing market. The Remuneration Committee believes that US market focused companies are

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James Hardie 2019 Annual Report on Form 20-F	37

a more appropriate peer group than ASX-listed companies, as they are exposed to the same macroeconomic factors in the US housing market as those we face. For fiscal year 2019, Valspar and Sherwin-Williams were removed from the Peer Group. Sherwin-Williams acquired Valspar and, as a consequence, the resulting organization no longer met our Peer Group criteria. Set forth below are the names of the 21 companies comprising the Peer Group, which was used to benchmark the remuneration of our Senior Executive Officers in fiscal year 2019.



Acuity Brands, Inc	Louisiana-Pacific Corp	Quanex Building Products Corp
American Woodmark Corp	Martin Marietta Materials, Inc	Simpson Manufacturing Co., Inc
Apogee Enterprises, Inc	Masco Corporation	Trex Co., Inc
Armstrong World Industries, Inc	Mohawk Industries, Inc	USG Corp
Eagle Materials, Inc	Mueller Water Products, Inc	Valmont Industries, Inc
Fortune Brands Home & Security	NCI Building Systems, Inc	Vulcan Materials Co
Lennox International, Inc	Owens Corning	Watsco, Inc

Performance Linkage with Remuneration Policy

During its annual review, the Remuneration Committee assessed our performance in fiscal year 2019 against:


•	our historical performance;


•	our Peer Group;


•	the goals in our STI and LTI variable remuneration plans; and


•	the key objectives and measures the Board expects to see achieved, which are set forth in what is referred to as the “Scorecard” and further discussed later in this Remuneration Report.

Based on that review, the Board and the Remuneration Committee concluded that management’s performance in fiscal year 2019 was, on the whole: (i) below target on growth measures and above target on returns measures, resulting in STI variable remuneration outcomes slightly above target for fiscal year 2019; and (ii) when taken together with performance in fiscal years 2017 and 2018, below our Peer Group on TSR performance, above expectations on ROCE performance, and on average, met expectations on long-term strategic measures included in the Scorecard, resulting in LTI variable remuneration being approximately at target for fiscal years 2017-2019.

More details about this assessment is set out on pages 40-41 and 43-48 of this Remuneration Report.

DESCRIPTION OF 2019 REMUNERATION ELEMENTS

Base Salaries and Other Fixed Remuneration Benefits

Base salary provides a guaranteed level of income that recognizes the market value of the position and internal equities between roles, as well as the individual’s capability, experience and performance. Annual base salary increases are not automatic. Base salaries for Senior Executive Officers are positioned around the market median for positions of similar responsibility and are reviewed by the Remuneration Committee each year.

In addition, Senior Executive Officers may receive certain other limited fixed benefits, such as medical and life insurance benefits, car allowances, participation in executive wellness programs and an annual financial planning allowance. For fiscal year 2019, the base salary and value of other fixed benefits for each of our Senior Executive Officers is provided in the Base Pay and Other Benefits columns of the remuneration table in the section titled “Remuneration Paid to Senior Executive Officers”.

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James Hardie 2019 Annual Report on Form 20-F	38

Retirement Plan

In every country in which we operate, we offer employees access to pension, superannuation or individual retirement savings plans consistent with the laws of the respective country.

In the US, we sponsor a defined contribution plan, the James Hardie Retirement and Profit Sharing Plan (the “401(k) Plan”). The 401(k) Plan is a tax-qualified retirement and savings plan covering all US employees, including our Senior Executive Officers, subject to certain eligibility requirements. Participating employees were able to elect to reduce their current annual compensation by up to US$19,000 in calendar year 2018 and have the amount of such reduction contributed to the 401(k) Plan, with a maximum eligible compensation limit of US$280,000. In addition, we match employee contributions dollar for dollar up to a maximum of the first 6% of an employee’s eligible compensation.

Incentive Arrangements

In addition to the base salary and other fixed benefits provided to our Senior Executive Officers, the Remuneration Committee reviews and approves a combination of both short-term and long-term variable incentive programs on an annual basis. For fiscal year 2019, our variable incentive plans for Senior Executive Officers were as follows:



Duration	Plan Name	Amount	Form Incentive Paid
STI (1 year)	IP Plan	20% of STI Target	Cash
	CP Plan	80% of STI Target	Cash
LTI (3 years)	Long Term Incentive Plan 2006 (“LTIP”)	25% of LTI Target	ROCE RSUs
		25% of LTI Target	TSR RSUs
		50% of LTI Target	Cash (Scorecard LTI)

STI Plans

On an annual basis, the Remuneration Committee approves an STI target for all Senior Executive Officers, expressed as a percentage of base salary, which is allocated between individual goals and Company goals under the IP and CP Plans, respectively. For fiscal year 2019, the STI target percentage for Mr Gries was 125% of base salary, for Dr Truong a pro-rated target of 86% based on the various positions he held during the year, 75% of base salary for Mr Marsh and 60% of base salary for Messrs Gadd, Blasko and Nielsen, with 80% allocated to the CP Plan and 20% allocated to the IP Plan for all Senior Executive Officers.

Since fiscal year 2014, the Remuneration Committee has applied a ‘circuit breaker’ to the STI plans, which for Senior Executive Officers will prevent payment of any STI under the CP Plan unless our performance exceeds a level approved by the Remuneration Committee each year. For fiscal year 2019, the ‘circuit breaker’ for participants tied to the US plan was set at Primary Demand Growth ("PDG") achievement of greater than -2%. In the event the US business did not achieve PDG greater than -2% for fiscal year 2019, the US Achieved Multiple used in the calculation of any composite multiple would also be zero.

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CP Plan

The CP Plan is based on a series of payout matrices for the US and Asia Pacific businesses, which provide a range of possible payouts depending on our performance against hurdles which assess volume growth relative to, and above, market (“Growth Measure”), earnings (“Return Measure”), and for the US business, performance of the interiors business and performance against certain “wood-look” competitors. Given the acquisition of Fermacell in April 2018, a CP Plan for James Hardie Europe ("JHEU") was developed based on revenue and returns similar in nature to the US and Asia Pacific plans. Each Senior Executive Officer can receive between 0.0x and 3.0x of their STI target allocated to the CP Plan based on the results of the plan the Senior Executive Officer is tied to. All Senior Executive Officers are tied to either the US multiple (Messrs Gadd and Nielsen) or a composite multiple derived from the metrics for the US, Asia Pacific and Europe businesses combined (75% US, 15% Asia Pacific and 10% Europe for Messrs Gries, Marsh and Blasko). Dr Truong had pro-rata percentages due to his various roles during fiscal year 2019.

Payout Matrices

We use both performance measures (Growth Measure and Return Measure) in the payout matrices for our US and Asia Pacific businesses in order to ensure that as management increases its top line market growth focus, it does not do so at the expense of short- to medium-term earnings. Management is encouraged to balance market growth and earnings returns since achievement of a higher reward requires management to generate both strong earnings and growth relative to and above market. Higher returns on one measure at the expense of the other measure may result in a lower reward or no reward at all.

To ensure that the payout matrices represent genuinely challenging targets aligned with our executive remuneration philosophy, the Growth Measure is indexed to take into account changes in new housing starts in both the US and Asia Pacific and the US repair and remodel market, while the Return Measure is indexed to take into account changes in pulp prices. The targets for the Return Measure exclude costs related to legacy issues.

For our business in Europe, our performance matrices use Revenues and a Return Measure. The plan for Europe is based on three components - Fiber Gypsum, Fiber Cement and integration.

The Remuneration Committee has reserved for itself discretion to change the STI paid. Examples of instances when the Remuneration Committee would consider exercising this discretion include external factors outside of management’s control, and for the US CP Plan only, if the general shift toward smaller homes at each segment of the US market is considered sufficiently material. The Remuneration Committee will disclose the reasons for any such exercise of its discretion.

The Remuneration Committee believes that the payout matrices are appropriate because they provide management with an incentive to achieve overall corporate goals, balance growth with returns in our primary markets, recognize the need to flexibly respond to strategic opportunities, incorporate indexing relative to market growth to account for factors beyond management’s control, and incorporate Remuneration Committee discretion to ensure appropriate outcomes. Payouts under the US matrix may range from 0% to 200% of target, while payouts under the Asia Pacific matrix may range from 0 to 300% of target.

We do not disclose the volume Growth Measure and earnings Return Measure targets for our US or Asia Pacific businesses since these are commercial-in-confidence. However, achieving a target payment for the Return Measure under either the US or Asia Pacific payout matrix for fiscal year 2019 would have required performance equal to the average of performance for the previous three years and the fiscal year 2019 plan. Achieving a target payout for the Growth Measure requires growth substantially above market growth.

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Additional US Performance Metrics

In order to align and focus management’s performance on initiatives that are key to the success of the US business, the US payout multiple for fiscal year 2019 is determined by performance against the matrix multiple (Growth and Return Measures for 70% of STI opportunity), the interiors product business multiple (for 10% of STI opportunity), and the “Wood-look” multiple (for 20% of STI opportunity). The overarching formula for the US payout multiple is:

For fiscal year 2019, each payout factor (Matrix Factor, Interiors Factor, and “Wood-look” Factor) is capped as follows to properly balance management’s focus across volume growth, returns and key initiatives:


•	Matrix Factor = capped at 2.0x


•	Matrix Factor plus Interiors Factor = capped at 2.3x


•	“Wood-look” Factor = capped at 1.25x

The Interiors Multiple is measured as a function of the revenue growth of our interiors business in fiscal year 2019. The “Wood-look” Multiple is measured as our growth against key “wood-look” competition.

We do not disclose the interiors volume growth or “wood-look” targets since these are commercial-in-confidence. However, achieving a target payment for fiscal year 2019 requires interior volume performance above fiscal year 2018 interiors volume and substantial growth against key “wood-look” competition.

IP Plan

Under the IP Plan, the Remuneration Committee approves a series of one-year individual performance goals which, along with goals on our core organizational values, are used to assess the performance of our Senior Executive Officers. The IP Plan links financial rewards to the Senior Executive Officer’s achievement of specific objectives that have benefited us and contributed to shareholder value, but are not captured directly by financial measures in the CP Plan. Each Senior Executive Officer can receive between 0% and 150% of their STI target allocated to the IP Plan based on achievement of individual performance and core organizational values goals.

STI Plan Performance for Fiscal Year 2019

Our CP Plan results and the subsequent STI payouts for fiscal year 2019 were slightly above target as a result of:


•	the US business performing well above target on the Return Measure;


•	the US business performing below target on the Growth Measure;


•	the US business performing below target on the Interiors Factor and “Wood-look” Factor;


•	Asia Pacific performing above target on the Growth Measure;


•	Asia Pacific performing above target on the Return Measure due to higher returns in Australia, partially offset by below target returns in New Zealand and the Philippines; and


•	Europe performing at target with a successful integration and retaining key business leaders with no business interruption.

In regards to the IP Plan, the Senior Executive Officers’ performance and the subsequent STI payouts for fiscal year 2019 were at or above target based on each Senior Executive Officer’s achievement of fiscal year 2019 one-year individual performance and core organizational values goals.

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For fiscal year 2019, the amount to be paid to each of our Senior Executive Officers under the STI Plans is provided in the STI Award column of the remuneration table, in the section titled “Remuneration Paid to Senior Executive Officers”. In addition, Mr Gadd also received a one-time discretionary bonus of US$100,000 to recognize the additional responsibilities undertaken during fiscal year 2019 for the sales organization.

LTI Plans

Each year, the Remuneration Committee approves an LTI target for all Senior Executive Officers. The approved target is allocated between three separate components to ensure that each Senior Executive Officer’s performance is assessed across factors considered important for sustainable long-term value creation:


•	ROCE RSUs are used as they are an indicator of high capital efficiency required over time;


•	Relative TSR RSUs are used as they are an indicator of our performance relative to our US peer companies; and


•	Scorecard LTI is an indicator of each Senior Executive Officer’s contribution to achieving our long-term strategic goals.

Awards issued under the LTI are issued pursuant to the terms of the LTIP. During fiscal year 2019, our Senior Executive Officers were granted the following awards under the LTIP:



	ROCE RSUs	TSR RSUs	Scorecard LTI Units
L Gries	122,211	226,709	366,634
J Truong	55,938	106,058	196,372
M Marsh	36,663	68,013	109,990
S Gadd	24,442	45,342	73,327
J Blasko	15,276	28,339	45,829
Z Nielsen	30,553	56,677	91,659

RSUs issued under our LTI programs will be settled upon vesting in CHESS Units of Foreign Securities ("CUFS") on a 1-to-1 basis. Unless the context indicates otherwise, when we refer to our common stock, we are referring to the shares of our common stock that are represented by CUFS.

ROCE RSUs (25% of target LTI for Fiscal Years 2019-2021)

The Remuneration Committee introduced ROCE RSUs in fiscal year 2013 because the US housing market had stabilized to an extent which permitted the setting of multi-year financial metrics. The Remuneration Committee believes ROCE RSUs remain an appropriate component of the LTI Plan because they:


•	tie the reward’s value to share price which provides alignment with shareholder interests;


•	promote that we earn appropriate returns on capital invested;


•	reward performance that is under management’s direct influence and control; and


•	focus management on capital efficiency as the necessary precondition for the creation of additional shareholder value.

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James Hardie 2019 Annual Report on Form 20-F	42

Consistent with recent prior years, the maximum payout for the ROCE RSUs is 2.0x target LTI. ROCE is determined by dividing Adjusted EBIT by Adjusted Capital Employed². The ROCE hurdles will be indexed for changes to US and Asia Pacific addressable housing starts. The resulting Adjusted Capital Employed for each quarter of any fiscal year will be averaged to better reflect Capital Employed through a year rather than at a single point in time.

ROCE hurdles for the ROCE RSUs are based on historical results and take into account the recovering US housing market and better optimization of our manufacturing plants. The three-year average ROCE for fiscal years 2016, 2017 and 2018 was 31%.

The hurdles for ROCE RSUs granted in fiscal year 2019 (for performance in fiscal years 2019 to 2021) were changed from those granted in fiscal year 2017 and 2018 as follows:



Fiscal Years 2017-2019 ROCE	Fiscal Years 2018-2020 ROCE	Fiscal Years 2019-2021 ROCE	Amount of Target to Vest
< 24.0%	< 25.0%	< 24.0%	0.0x
≥ 24.0%, but < 26.0%	≥ 25.0%, but < 27.0%	≥ 24.0%, but < 26.0%	0.5x
≥ 26.0%, but < 28.5%	≥ 27.0%, but < 29.5%	≥ 26.0%, but < 27.5%	1.0x
≥ 28.5%, but < 29.5%	≥ 29.5%, but < 30.5%	≥ 27.5%, but < 28.5%	1.5x
≥ 29.5%	≥ 30.5%	> 28.5%	2.0x

At the conclusion of this three-year performance period, the Remuneration Committee will review management’s performance based on the quality of the returns balanced against management’s delivery of market share growth and performance against the Scorecard. Following this review, the Remuneration Committee can exercise negative discretion to reduce the number of shares received on vesting of the ROCE RSUs. This discretion can only be applied to reduce the number of shares which will vest.

____________

2 For purposes of ROCE RSU vesting, “Adjusted EBIT” and “Adjusted Capital Employed” will be calculated as follows:

“Adjusted EBIT” will be calculated as (i) EBIT as reported in our financial results; adjusted by (ii) excluding the earnings impact of legacy issues (such as asbestos adjustments); and (iii) adding back asset impairment charges in the relevant period, unless otherwise determined by the Remuneration Committee.

“Adjusted Capital Employed” will be calculated as Total Assets minus Current Liabilities as reported in our financial results; adjusted by: (i) excluding balance sheet items related to legacy issues (such as asbestos adjustments), dividends payable and deferred taxes; (ii) adding back asset impairment charges in the relevant period, unless otherwise determined by the Remuneration Committee; (iii) adding back leasehold assets for manufacturing facilities and other material leased assets; and (iv) deducting all greenfield construction-in-progress, and any brownfield construction-in-progress projects involving capacity expansion that are individually greater than US$20 million, until such assets reach commercial production and are transferred to the fixed asset register.

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ROCE RSUs Vesting in Fiscal Year 2020 (for Fiscal Years 2017-2019)

As a component of the fiscal year 2017 LTI Plan, we granted ROCE RSUs in September 2016. The ROCE RSUs comprised 40% of each Senior Executive Officer’s LTI target and were granted assuming 2.0x target). Vesting of the ROCE RSUs is dependent on the average ROCE performance for fiscal years 2017-2019 and is subject to the Remuneration Committee’s negative discretion based on its judgment regarding the quality of returns balanced against management’s delivery of market share growth. The ROCE performance hurdles for this grant were approved as follows:



ROCE Performance Level	Amount of Target to Vest
< 24.0%	0.0x
≥ 24.0%, but < 26.0%	0.5x
≥ 26.0%, but < 28.5%	1.0x
≥ 28.5%, but < 29.5%	1.5x
≥ 29.5%	2.0x

Based solely on the average ROCE result for fiscal years 2017-2019 of 31.3%, 2.0x target of the ROCE RSUs granted would have vested. However, based on the Remuneration Committee’s assessment of the quality of returns balanced against management’s delivery of market share growth, the Remuneration Committee determined that it would apply negative discretion in the amount of 40%. As such, 1.2x target of the outstanding fiscal year 2017 ROCE RSUs will vest on 16 September 2019. Unvested ROCE RSUs from this grant will be forfeited.

Relative TSR RSUs (25% of target LTI for Fiscal Years 2019-2021)

The Remuneration Committee believes that Relative TSR RSUs continue to be an appropriate component of the LTI Plan because they provide alignment with shareholders. Even if macro-economic conditions create substantial shareholder value, Senior Executive Officers will only receive payouts if the TSR of our shares exceeds a specified percentage of our Peer Group over a performance period.

Relative TSR RSUs have been a component of our LTI since fiscal year 2009. Consistent with recent prior years, the maximum payout for Relative TSR RSUs granted in fiscal year 2019 is 2.0x target LTI.

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Relative TSR measures changes in our share price and the share prices of our Peer Group; and assumes all dividends and capital returns are reinvested when paid. For fiscal year 2019, our relative TSR performance will be measured against the Peer Group over a three-year performance period from grant date, with no re-testing. To eliminate the impact of short-term share price changes, the starting point and test date are measured using a 20 trading-day average closing price. Relative TSR RSUs will vest based on the following straight-line schedule:



Performance against Peer Group	Amount of Target to Vest
< 40^th Percentile	0.0x
40^th Percentile	0.5x
> 40^th, but < 60^th Percentile	Sliding Scale
60^th Percentile	1.0x
> 60^th, but < 80^th Percentile	Sliding Scale
≥ 80^th Percentile	2.0x

No re-testing of fiscal years 2019-2021 Relative TSR RSUs is permitted.

The Remuneration Committee will continue to monitor the design of the Relative TSR RSU component of the LTI Plan for Senior Executive Officers with the aim of balancing investor preferences with the ability to motivate and retain Senior Executive Officers.

TSR RSUs Vested in Fiscal Year 2019

TSR RSUs Vested for Fiscal Years 2016-2019

As part of the fiscal year 2016 LTI Plan, in September 2015 we granted four and a half year Relative TSR RSUs to senior executives. Vesting of these Relative TSR RSUs was dependent on our TSR performance relative to the peer group in place at that time, based on the following schedule:



Performance against Peer Group	Amount of Target to Vest
< 40^th Percentile	0.0x
40^th Percentile	0.5x
> 40^th, but < 60^th Percentile	Sliding Scale
60^th Percentile	1.0x
> 60^th, but < 80^thPercentile	Sliding Scale
≥ 80^th Percentile	2.0x

In September 2018, the first test of Relative TSR performance was completed, resulting in our TSR performance at the 40.9th percentile of the peer group in place at that time. As a result, 0.52x of target outstanding Relative TSR RSUs vested.

TSR RSUs Vested for Fiscal Years 2015-2018

In addition, on 16 September 2018, the second test of the fiscal year 2015 Relative TSR RSUs was completed, resulting in our TSR performance at the 63.6th percentile of the peer group. As a result, an additional 0.43x

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target of the outstanding TSR RSUs vested. The third test of this award was on 16 March 2019. The results were at the 59th percentile of the peer group; therefore, no further Relative TSR RSUs vested and the unvested balances were cancelled.

Scorecard LTI (50% of target LTI for Fiscal Years 2019-2021)

Scorecard LTI have been a component of our LTI Plan since fiscal year 2010. Each year, the Remuneration Committee approves a number of key management objectives and the results it expects to see achieved in relation to these objectives. These objectives are incorporated into that year’s grant of Scorecard LTI. At the end of the three-year performance period, the Remuneration Committee assesses our Senior Executive Officers’ collective performance on each key objective and each individual Senior Executive Officer’s contribution to those achievements and the Board reviews this assessment. Senior Executive Officers may receive different ratings depending on the contribution they have made during the three-year performance period. Although most of the objectives in the Scorecard have quantitative targets, we consider some of the targets to be commercial-in-confidence. Consistent from fiscal year 2010, the maximum payout for Scorecard LTI is 3.0x target LTI.

The Remuneration Committee believes that the Scorecard LTI continues to be an appropriate component of its LTI Plan because it:


•	allows the Remuneration Committee to set targets for and reward executives on a balance of longer-term financial, strategic, business, customer and organizational development goals which it believes are important contributors to long-term creation of shareholder value;


•	ties the reward’s value to our share price over the medium-term; and


•	allows flexibility to apply rewards across different countries, while providing Senior Executive Officers with liquidity to pay tax or other material commitments at a time that coincides with vesting of shares (via the other components of the LTI Plan) as payment is in cash.

No specific weighting is applied to any single objective and the final Scorecard assessment reflects an element of judgment by the Board. The Board may only exercise negative discretion (i.e., to reduce the amount of Scorecard LTI that will ultimately vest). It cannot enhance the maximum reward that can be received.

The amount received by Senior Executive Officers is based on both our share price performance over the three-year performance period and the Senior Executive Officer’s Scorecard rating. At the start of the three-year performance period, we calculate the number of units each Senior Executive Officer could have acquired if they received a maximum payout on the Scorecard LTI at that time (based on a 20 trading-day average closing price). Depending on the Senior Executive Officer’s rating (between 0 and 100), between 0.0x and 3.0x of the Senior Executive Officer’s Scorecard LTI awards will vest at the end of the three-year performance period. Each Senior Executive Officer will receive a cash payment based on our share price at the end of the period (based on a 20 trading-day average closing price) multiplied by the number of units they could have acquired at the start of the performance period, adjusted downward in accordance with their Scorecard rating.

Further details related to the Scorecard for fiscal year 2019, including the method of measurement, historical performance against the proposed measures and the Board of Director’s expectations, were previously set out in our Remuneration Report for fiscal year 2018. An assessment of our Scorecard performance for fiscal years 2017-2019 is set out below. We will provide an explanation of the final assessment of performance under the Scorecard for fiscal years 2019-2021 at the conclusion of fiscal year 2021.

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Scorecard LTI Vesting in Fiscal Year 2020 (for Fiscal Years 2017-2019)

After fiscal year 2019, the Remuneration Committee reviewed our performance over fiscal years 2017-2019 against the Scorecard objectives set forth in fiscal year 2017, and the contribution of individual Senior Executive Officers towards the achievement of such objectives. As a result of this evaluation, the Remuneration Committee determined that Senior Executive Officers would receive a weighted average Scorecard rating of 1.0x target.



Performance Measure/Rationale	Performance Metric/Results	Board Assessment for the Three-year Period
Grow exterior cladding market share and maintain category share in the US business A key strategy for the Company is to maximize its market share growth/retention of the exterior cladding market for new housing starts and for repair & remodel markets.	Goal: PDG above market. Our performance against ‘wood-look’ competition. Result: Average annual PDG performance for the three year period of 2.8% was well below the Board target. Growth above vinyl but below close alternatives also did not meet Board expectations. .	Performance below expectations
Interiors Market Strategy Implementation	Goal: Growth above market of 2% per annum. Result: Interiors volume growth averaged negative 7% per annum during the three year period, not meeting the Board requirement.	Performance below expectations
Build US organizational and leadership capability in support of the 35/90 growth target The amount of growth that 35/90 entails requires lower turnover levels and an increase in management depth and organizational capability.	Goal: Continued focus on turnover, driving the North American turnover to below 15% by the end of the three year period. Execute a successful succession plan. Successful recruitment, hiring and onboarding of business leaders and development of bench strength. Result:Succession plan successfully executed resulting in appointment of Dr Jack Truong as CEO on 31 January 2019. Significant improvements in the hiring of key talent at the executive level and Average annual turnover of 18.9% did not meet the Board target. Demonstrated improvement in the critical areas of leadership development, recruitment and onboarding of bench strength talent and employee engagement.	Performance met expectations

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Performance Measure/Rationale	Performance Metric/Results	Board Assessment for the Three-year Period
Safety The safety of our employees is an essential objective of the Company.	Goal: Incident Rate (“IR”) of 2.0 or below and severity rate (“SR”) of 20.0 or below. Result: The global manufacturing IR and SR decreased from 1.5 & 25.6 during fiscal years 2014-16 to 1.1 & 19.4 during fiscal years 2017-19. Implemented Zero Harm strategy during the three year period and now completed second year of Zero Harm Safety Culture Initiatives. Despite the significant progress noted, management acknowledges the fatality in the Carole Park plant in 2017.	Performance met expectations
Pursue organic growth in all APAC markets and grow Scyon and new products to a greater proportion of APAC business.	Goal: James Hardie Australia ("JHA") annual growth above market of 4% while maintaining category share. James Hardie New Zealand ("JHNZ") annual growth above market of 3% while maintaining category share. Significant growth of Scyon product line. Result: JHA average annual growth above market of 7% and category share expansion significantly beat the Board requirement while expanding category share. JHNZ average annual growth above market of 4% while maintaining category share exceeded the Board requirement. Scyon Revenue Growth of over 50% significantly exceeded Board targets.	Performance exceeded expectations

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Performance Measure/Rationale	Performance Metric/Results	Board Assessment for the Three-year Period
Manufacturing effectiveness and sourcing efficiency The Company operates a national US network of manufacturing facilities.	Goal: Commercial-in-confidence metrics for product efficiency, process efficiency, material yield and service level metric used to assess whether manufacturing and supply chain is effectively supporting our product leadership strategy. Result: Exceeded the process efficiency metric each of the three years. Exceeded the product efficiency target one of the three years and the three year average product efficiency metric met the expectations. Material Yield metric did not meet expectations. Service level metric improved each year during the period after working out of the capacity constrained position of fiscal year 2017. Successfully executed start-up and commissioning of 4 new lines representing 20% additional capacity to support the product leadership strategy. Defined and launched Lean manufacturing initiative in fiscal year 2019.	Performance met expectations
Define a clear vision and strategy for non-fiber cement business.	Goal: Define a clear vision and strategy for non-fiber cement business. Result: Acquisition of Fermacell during the period provides significant growth opportunity leveraging non-fiber cement technology products (fiber gypsum). Further, the acquisition also provides significant growth opportunity for fiber cement in Europe, providing a third region of significance for the Company. Further, the Company made the decision to discontinue its windows operations to ensure proper level of focus on core growth opportunities.	Performance met expectations

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CHANGES TO REMUNERATION FOR FISCAL YEAR 2020

Remuneration for Fiscal Year 2020

During May 2019, the Board, with the assistance of the Remuneration Committee and its independent remuneration advisers, undertook its annual review of our existing remuneration policies, programs and arrangements and determined to implement certain changes for fiscal year 2020.

CEO Compensation

For fiscal year 2020, there will be no changes to the CEO’s base salary and target STI as established upon his promotion to CEO on 31 January 2019.

Other Senior Executive Officer Compensation

Base pay and target STI increases in fiscal year 2020 for other Senior Executive Officers are as follows:



	Base Salary		Target STI
Name	Fiscal Year 2019 (US$)	Fiscal Year 2020 (US$)	Fiscal Year 2019 (US$)		Fiscal Year 2020 (US$)
J Truong	800,000	800,000	100	%	No change
M Marsh	630,000	642,600	75	%	No change
S Gadd	550,000	561,000	60	%	No change
J Blasko	437,500	450,883	60	%	No change
Z Nielsen	525,000	N/A	N/A		N/A

There are no changes to target LTI for the Senior Executive Officers for fiscal year 2020. Base salary increases for Messrs Marsh, Gadd, and Blasko were made in line with our annual compensation review guidelines and were adjusted as required to maintain positioning relative to market merit increase levels.

STI Plans

For fiscal year 2020, the STI metrics will continue to be the same as fiscal year 2019 except that the US Payout Multiple growth against the vinyl siding business will be 20% of the total goals replacing the “wood-look” goal in fiscal year 2020. Therefore, 70% will be a matrix of a growth measure and returns measure, 20% growth against vinyl and 10% growth in our interiors business. Additionally, the US Plan will cap the Matrix Factor and Vinyl Factor to 2.5x (for purposes of comparison); the fiscal year 2019 cap for the Matrix Factor and Interiors Factor was set at 2.3x.

The Europe and Asia Pacific plans will remain generally the same as fiscal year 2019.

For fiscal year 2020, all Senior Executive Officers will continue to be tied to either the US multiple (Mr Gadd) or a composite multiple derived from the metrics for the US, Asia Pacific and Europe businesses combined (70% US, 20% Asia Pacific and 10% Europe) for Dr Truong and Messrs Marsh and Blasko.

There will be no material change to the operation of the IP or CP Plans for fiscal year 2020.

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James Hardie 2019 Annual Report on Form 20-F	50

LTI Plan

The Remuneration Committee believes the three components of the LTI Plan continue to (i) align management objectives with shareholder interests (Relative TSR RSU component), (ii) promote the appropriate internal management behaviors related to operating efficiency and the profitability of the Company's assets (ROCE RSU component), and (iii) emphasize strategic long-term priorities (Scorecard LTI component). As such, the fiscal year 2020 LTI Plan is consistent with the plan for fiscal year 2019 with updates to ROCE target measures and the Scorecard objectives.

The 2019 Notice of AGM will contain further details on the Relative TSR RSU and ROCE RSU grants for fiscal year 2020.

For fiscal year 2020, the Remuneration Committee has set the following eight Scorecard goals for each region (for the performance period in fiscal years 2020 to 2022) to ensure alignment with our strategic priorities:



	APAC	Europe	North America
PDG	1% - 6%	N/A	3% - 6%
Organic revenue growth	N/A	5% - 12%	N/A
EBIT Margin	20% - 25%	11% - 15%	21% - 26%
Lean - Cumulative over 3 Years	US$19 million	US$20 million	US$100 million
Zero Harm	- Safe Start Implementation - Driver/Fleet Safety Program - DART rate: 0.20	- Replicate Systems from NA and APAC - Safe Start Implementation	- 5S World Class Facilities - Energy Control Program - DART rate: 0.20
Innovation	Commercial-in-confidence metrics for products and process efficiencies	Deliver a commercially viable portfolio of fiber cement products for the EU market	Commercial-in-confidence metrics for products and process efficiencies
People & Culture	- Turnover: 12% - Talent Management - Leadership Competencies	- Turnover: 8% - Talent Management - Leadership Competencies	- Turnover: 15% - Talent Management - Leadership Competencies
Environment, Social & Governance ("ESG")	Fiscal Year 2020: Establish team to globally drive ESG reporting improvement Fiscal Year 2021: Deliver ESG Report Fiscal Year 2022: ESG Report shows improvement across areas management flagged in Fiscal Year 2021 report

OTHER EXECUTIVE COMPENSATION PRACTICES

Clawback Provisions

The Remuneration Committee has established an executive performance-based compensation clawback policy in connection with performance-based compensation paid or awarded to certain executives. The clawback policy provides that the Board may, in all appropriate circumstances, recover from any current or former executive regardless of fault, that portion of any performance-based compensation erroneously awarded: (i) based on financial information required to be reported under applicable US or Australian securities laws or applicable exchange listing standards that would not have been paid in the three completed fiscal years preceding the year(s) in which an accounting restatement is required to correct a material error; or (ii) during the previous three completed fiscal years as a result of any errors or omissions in objective, calculable performance measures contained in formal papers presented to and relied upon by the Board for purposes of determining compensation to be paid or awarded, where the absence of such errors or

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James Hardie 2019 Annual Report on Form 20-F	51

omissions would have resulted in there being a material negative impact on the amount of performance-based compensation paid or awarded.

The clawback policy applies to any person designated as a participant by the Board in the annual LTI Plan and applies to any compensation that is granted, earned or vested based wholly or in part upon the attainment of any financial or other objective, calculable performance measure under any incentive, bonus, retirement or equity compensation plan maintained by the Company, including, without limitation, the STI Plan and LTI Plan. Salaries, discretionary bonuses, time-based equity awards and bonuses or equity awards based on subjective, non-financial measures, including strategic or personal performance metrics, are excluded.

The excess compensation requiring recovery shall be the amount of performance-based compensation that an executive received, based on the erroneous data, less the amount that would have been paid to the executive based on the restated or corrected data. All recoverable amounts shall be calculated on a pre-tax basis. For equity awards still held at the time of the recovery, the recoverable amount shall be the amount vested in excess of the number that should have vested under the restated or corrected financial reporting measure. For vested equity awards which have already been sold, the recoverable amount shall be the sale proceeds the executive received with respect to the excess number of shares.

In addition, all fiscal year 2019 LTI grants made to Dr Truong and Messrs Gries, Marsh, Gadd and Nielsen, are subject to a specific clawback provision for violation of a limited non-compete provision that specifically prohibits executives from working for designated competitors or for any company that may enter the fiber cement market within two years of departure. For fiscal year 2020, all LTI grants made to Senior Executive Officers will be subject to the clawback provision.

Stock Ownership Guidelines

The Remuneration Committee believes that Senior Executive Officers should hold a meaningful level of our stock to further align their interests with those of our shareholders. We have adopted stock ownership guidelines for the CEO and other Senior Executive Officers, respectively, which require them to accumulate holdings of three times and one times their base salary, respectively, in our stock over a period of five years from the effective date of the guidelines (1 April 2009) or the date the Senior Executive Officer first becomes subject to the applicable guideline.

Until the stock ownership guidelines have been met, Senior Executive Officers are required to retain at least 75% of shares obtained under our LTI Plans (net of taxes and other costs). Once Senior Executive Officers have met or exceeded their stock ownership guidelines, they are required to retain at least 25% of shares issued under our LTI Plans through the vesting of RSUs (net of taxes and other costs) for a period of two years (by way of a holding lock), after which time those shares can be sold (provided the Senior Executive Officer remains at or above the stock ownership guideline).

As of 31 March 2019, all Senior Executive Officers have either achieved the minimum share ownership threshold or are within the initial five year accumulation period.

Equity Award Practices

Annual equity awards under the LTI Plan are generally approved by the Remuneration Committee in May of each year with awards generally issued in August of each year. We do not time the granting of equity awards to the disclosure of material information.

For details of the application of our insider-trading policy for equity award grant participants, including our prohibition on employee hedging transactions, see the “Insider Trading” section of this Annual Report.

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James Hardie 2019 Annual Report on Form 20-F	52

Loans

We did not grant loans to Senior Executive Officers during fiscal year 2019. There are no loans outstanding to Senior Executive Officers.

Employment and Severance Arrangements

During fiscal year 2019, we maintained employment or severance agreements with each of Messrs Gries, Marsh, Nielsen and Dr Truong. In addition, upon appointment to CEO, Dr Truong entered into an employment agreement on 31 January 2019 and Sean Gadd entered into a severance agreement upon his acceptance of additional responsibilities effective 12 December 2018. Other than as provided under the terms of their respective employment agreements, no other termination payments are payable, except as required under the terms of the applicable STI or LTI plans.

Employment Agreement with Jack Truong

Below is a summary of the key terms of Dr Truong’s current employment agreement:


•	The Employment Agreement is effective 31 January 2019 providing for service as CEO.


•	Dr Truong is an employee-at-will and either he or the Company may terminate his employment at any time or any reason.


•	Base salary at an initial annual rate of US$800,000, subject to annual review and approval by the Remuneration Committee.


•	Participation in the Company’s annual STI and LTI Plans, with a minimum STI target of 100% of his annual base salary, as established by the Company’s Board.


•	Participation in the Company’s benefit, health and welfare plans and certain fringe benefits made generally available to Senior Executive Officers in accordance with his agreement and Company policies.

•

In the event that Dr Truong’s employment is terminated by the Company for any reason other than for “Cause”, or if Dr Truong voluntarily terminates his employment for “Good Reason”, in addition to those benefits that would be considered standard for any employee at termination (i.e., unpaid base salary, accrued vacation, unreimbursed business expenses and the payment of any earned but unpaid annual incentive award) Dr Truong will be entitled to receive the following benefits:


◦	An aggregate amount equal to the sum of: (i) two times Dr Truong’s base salary plus (ii) two times Dr Truong’s target annual incentive, payable in substantially equal periodic installments over the two year period following the date of termination;


◦	An amount, if any, with respect to the annual incentive award opportunity for the fiscal year in which termination of employment occurs, as determined under the terms and conditions of annual incentive program(s) then in-effect;

◦

All outstanding equity awards will be subject to the terms and conditions of the applicable equity incentive plan and any corresponding award agreement(s); provided, however, that (i) if the date of termination occurs prior to 21 August 2022, any service-based vesting criteria on the long-term incentive awards granted to Dr Truong on 21 August 2017 that were designated as retention awards will be deemed satisfied in full (but any performance criteria then still applicable to those awards will remain in effect);


◦	Monthly payments for a period of up to 24 months following the date of termination equal to the premium Dr Truong would be required to pay for continuation coverage under the Company’s health benefit plans; and


◦	The Company will provide Dr Truong with reasonable professional outplacement services for a period of up to 24 months following the date of termination.

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James Hardie 2019 Annual Report on Form 20-F	53

Employment Agreement with Louis Gries

Below is a summary of the key terms of Mr Gries’ current employment agreement:


•	Executive Employment Agreement renewed effective as of 14 October 2010 providing for service as Chief Executive Officer.


•	Mr Gries is an employee-at-will and either he or the Company may terminate his employment at any time or any reason.


•	Base salary at an initial annual rate of US$950,000, subject to annual review and approval by the Remuneration Committee.


•	Participation in the Company’s annual STI and LTI Plans, with a minimum STI target of 100% of his annual base salary, as established by the Company’s Board.


•	Participation in the Company’s benefit, health and welfare plans and certain fringe benefits made generally available to Senior Executive Officers in accordance with his agreement and Company policies.


•	Provisions concerning consequences of termination of employment under specified circumstances, including: (i) termination by the Company for cause; (ii) termination by reason of death or disability; (iii) retirement; (iv) termination by the Company without cause or by Mr Gries with good reason; or (v) termination by Mr Gries without good reason.

•

In the event that Mr Gries’ employment is terminated by the Company for any reason other than for cause, or if Mr Gries voluntarily terminates his employment for good reason, the Company shall pay to Mr Gries, in addition to any compensation or reimbursements he would otherwise be entitled to up to the date of termination: (i) an amount equal to 150% of his then current base salary; (ii) an amount equal to 150% of his average annual STI bonus actually paid, calculated based on the three full fiscal years immediately preceding the year of termination; (iii) his prorated bonus; (iv) no pro rata forfeiture of his unvested RSUs/Scorecard LTI grants - these will vest in accordance with the terms and timing of the specific grants; and (v) continuation of health and medical benefits at the Company’s expense for the duration of the consultation agreement referenced below, provided that Mr Gries signs the Company’s release of claims without revocation and has been and continues to remain in compliance with his confidentiality and noncompetition obligations as set forth in this agreement.


•	In the event of Mr Gries’ retirement after the age of 65, or prior to age 65 with the approval of the Board, his then unvested RSUs and awards will not be forfeited and will be held through the applicable testing periods.

•

In the event that Mr Gries’ employment is terminated for any reason other than by the Company for cause or due to his death, in addition to any severance payment he may be entitled to as set forth above, the Company and Mr Gries each agree to enter into a consulting arrangement for a minimum of two years, as long as Mr Gries adheres to certain non-competition and confidentiality provisions and executes a release of claims following the effective date of termination. Under the consulting agreement, Mr Gries will receive his annual target STI bonus and annual base salary in exchange for his consulting services and non-compete.

•

The Company may terminate the consulting arrangement and its obligations to make any further payments to Mr Gries in the event that Mr Gries willfully fails or refuses to carry out any material reasonable directions of the Board or the CEO or commits any willful act, which could include a violation of his covenant not to compete, or is convicted of a crime. In the event that the Company deems such conduct as reason for the Company to terminate Mr Gries for cause, Mr Gries shall not be entitled to payment of any compensation, including the lapse of his unvested RSUs and awards.

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Employment Agreement with Matt Marsh

Below is a summary of the key terms of Mr Marsh’s current employment agreement:

•

Effective 15 May 2016, the Company entered into an employment agreement with Mr Marsh (the “Marsh Agreement”), which has an initial term of three years and automatic one year renewals thereafter unless either Mr Marsh or the Company notifies the other party at least 90 days before the expiration date that the Marsh Agreement is not to be renewed. In the event that the Company is the party that determines not to renew, such non-renewal shall be treated as a termination without “Cause” (as defined in the Marsh Agreement) and subject to the termination without “Cause” provisions of the Marsh Agreement.

•

The Marsh Agreement provides for a base salary of not less than US$560,000, or such greater amount as may be established by the Remuneration Committee, for Mr Marsh. The base salary shall be reviewed annually for increase in the discretion of the Remuneration Committee. Additionally, Mr Marsh shall be eligible for an annual STI award with payout opportunities that are commensurate with his position and duties, with a minimum target annual STI award opportunity of not less than 70% of the current base salary. Mr Marsh shall also be eligible to participate in our annual LTI plan on terms commensurate with his position and duties, with a minimum annual target LTI award opportunity of not less than US$1,200,000.


•	Mr Marsh shall be eligible for participation in our employee benefit, health and welfare plans and certain fringe benefits made generally available to Senior Executive Officers in accordance with Company policies.

•

The Marsh Agreement contains provisions concerning the consequences of termination of employment under specified circumstances, including: (i) termination by the Company for Cause; (ii) termination by reason of death or disability; (iii) termination by the Company without Cause or by Mr Marsh with “Good Reason” (as defined in the Marsh Agreement); or (iv) termination by Mr Marsh without Good Reason. In particular, in the event the Company terminates Mr Marsh without Cause or Mr Marsh voluntarily terminates for Good Reason, Mr Marsh shall be entitled to: (i) a lump-sum amount equal to his unpaid base salary through and including the date of termination, as well as accrued, unused vacation pay and unreimbursed business expenses; (ii) a payment for any earned but unpaid annual incentive award for a completed calendar year prior to the date of termination; (iii) salary continuation for the two year period following the date of termination, provided the aggregate amount of such continuation payments shall be equal to the sum of (A) two times the base salary plus (B) one times the annual incentive award opportunity, as then in effect; (iv) an amount, if any, with respect to the annual incentive award opportunity for the year in which such termination of employment occurs, as determined under the terms and conditions of the Company’s annual incentive program(s); (v) all outstanding equity awards will remain subject to the terms and conditions of the applicable equity incentive plan and any corresponding award agreement(s); (vi) monthly payments for a period of 18 months equal to the premium Mr Marsh would be required to pay for COBRA continuation coverage under James Hardie’s health benefit plans, determined using the COBRA premium rate in effect for the level of coverage that Mr Marsh has in place immediately prior to termination; and (vii) the Company will assist Mr Marsh in finding other employment opportunities by providing to him, at James Hardie’s limited expense, reasonable professional outplacement services through the provider of James Hardie’s choice for a period of up to 24 months.

•

Pursuant to the confidentiality, non-competition and non-solicitation provisions of the Marsh Agreement, for a period of 24 months following any termination of Mr Marsh’s employment, Mr Marsh shall be prohibited from: (i) directly or indirectly acting, engaging in, have a financial or other interest in, or otherwise serving as an employee, agent, partner, shareholder, director, or consultant for certain designated competitors of the Company; and (ii) employing or retaining or soliciting for employment any person who is an employee or consultant of the Company or soliciting suppliers or customers of the Company or inducing any such person to terminate his, her, or its relationship with the Company.

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