James Hardie Industries plc Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Stock-Based Compensation

Stock-Based Compensation

12 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Total stock-based compensation expense consists of the following:


	Years Ended 31 March
(Millions of US dollars)	2024		2023		2022
Liability Awards	$	17.3	$	2.7	$	3.2
Equity Awards	28.2		15.7		9.0
Total stock-based compensation expense	$	45.5	$	18.4	$	12.2

As of 31 March 2024, the unrecorded future stock-based compensation expense related to outstanding equity awards was US$39.6 million and will be recognized over an estimated weighted average amortization period of 1.9 years.

2001 Equity Incentive Plan

Under the Company’s 2001 Equity Incentive Plan (the “2001 Plan”), which was amended and restated in August 2021 and approved by shareholders, the Company can grant equity awards in the form of nonqualified stock options, performance awards, restricted stock grants, stock appreciation rights, dividend equivalent rights, phantom stock or other stock-based benefits such as restricted stock units.

Long-Term Incentive Plan 2006

The Company’s shareholders approved the establishment of a Long-Term Incentive Plan in 2006 (the “LTIP”) to provide incentives to certain members of senior management (“Executives”). The Company determines the conditions or restrictions of any awards, which may include requirements of continued employment, individual performance or the Company’s financial performance or other criteria. Currently, the plan only allows for RSUs to be granted under the LTIP.

The following table summarizes the Company’s shares available for grant as options, RSUs or other equity instruments under the LTIP and 2001 Plan:


			Shares Available for Grant
Balance at 31 March 2022			21,489,696
Granted			(2,540,893)
Balance at 31 March 2023			18,948,803
Granted			(1,169,733)
Balance at 31 March 2024			17,779,070

Stock Options

The following table summarizes the Company’s stock options activity during the noted period:


	Outstanding Options
	Number of Options	Weighted Average Exercise Price (A$)
Balance at 31 March 2022	—	—
Granted	269,221	33.05
Balance at 31 March 2023	269,221	33.05
Granted	—	—
Balance at 31 March 2024	269,221	33.05
Options exercisable at 31 March 2024	—	—

Stock options vest on the third anniversary of the date of grant provided continuous employment at the applicable vesting date. Vested stock options can be exercised for shares for the exercise price at any time up to the end of the contractual term. As of 31 March 2024, the weighted-average remaining contractual term is 3.6 years and the aggregate intrinsic value is A$7.7 million.

RSUs

The Company estimates the fair value of RSUs on the date of grant and recognizes this estimated fair value as compensation expense over the periods in which the RSU vests.

The following table summarizes the Company’s RSU activity:


(Units)	Service Vesting (2001 Plan)	Performance Vesting (LTIP)	Market Conditions (LTIP)	Total	Weighted Average Fair Value at Grant Date (A$)
Outstanding at 31 March 2022	414,675	291,704	494,033	1,200,412	27.83
Granted	1,279,127	268,009	724,536	2,271,672	26.12
Vested	(449,458)	(87,307)	(256,787)	(793,552)	25.17
Forfeited	(107,818)	(100,377)	(91,738)	(299,933)	28.46
Outstanding at 31 March 2023	1,136,526	372,029	870,044	2,378,599	26.97
Granted	533,278	176,624	459,831	1,169,733	43.20
Vested	(373,440)	(90,452)	(42,581)	(506,473)	30.88
Forfeited	(68,712)	(13,299)	(173,643)	(255,654)	25.63
Outstanding at 31 March 2024	1,227,652	444,902	1,113,651	2,786,205	33.36

The following table includes the assumptions used to fair value the RSU grants (market condition):


Vesting Condition:	Market		Market		Market		Market		Market		Market		Market		Market
	FY24		FY24		FY23		FY23		FY23		FY23		FY23		FY23
Date of grant	1-Sep-23		1-Sep-23		13-Mar-23		3-Nov-22		3-Nov-22		3-Nov-22		31-Aug-22		31-Aug-22
Dividend yield (per annum)	—	%	—	%	—	%	—	%	—	%	—	%	1.5	%	1.5	%
Expected volatility	35.4	%	38.7	%	36.3	%	42.5	%	35.1	%	43.8	%	41.9	%	33.4	%
Risk free interest rate	4.6	%	4.9	%	4.0	%	4.7	%	4.7	%	4.7	%	3.5	%	3.5	%
Expected life in years	3.0		2.0		2.4		0.8		1.8		2.8		3.0		2.0
JHX stock price at grant date (A$)	46.72		46.72		30.98		33.05		33.05		33.05		33.51		33.51
Number of restricted stock units	451,945		7,886		41,401		38,387		39,450		115,688		387,360		102,250

The following table presents the total fair value of all of our restricted stock units vested:


	Years ended 31 March
(Millions of US dollars)	2024		2023		2022
Total fair value vested	$	16.1	$	18.4	$	42.6

Scorecard LTI – CSUs

Under the terms of the LTIP, the Company grants scorecard LTI CSUs to executives and the vesting of awards is based on the individual’s performance measured over a three year period against certain performance targets. These awards provide recipients a cash incentive based on an average 20 trading-day closing price of JHI plc’s common stock price and each executive’s scorecard rating.

The following represents the activity related to the CSUs:


	FY24	FY23
Granted	529,875	751,569
Vested	177,955	237,600
Cancelled	125,144	325,459

For the fiscal years ending 31 March 2024, 2023 and 2022, US$5.1 million, US$5.9 million and US$15.2 million, respectively, was paid in cash upon vesting of CSU units.