James Hardie Industries plcJHX
James Hardie Industries plc Stock Compensation Disclosure
Share-Based Compensation
Total share-based compensation expense consists of the following:
Years Ended March 31 | |||||||||||||||||
| (Millions of US dollars) | 2026 | 2025 | 2024 | ||||||||||||||
| Liability Awards | $ | 9.2 | $ | 2.7 | $ | 17.3 | |||||||||||
| Equity Awards | 38.0 | 23.0 | 28.2 | ||||||||||||||
| Total share-based compensation expense | $ | 47.2 | $ | 25.7 | $ | 45.5 | |||||||||||
Total share-based compensation expense for the fiscal year ended March 31, 2026 includes replacement awards issued in connection with the AZEK acquisition.
As of March 31, 2026, the unrecorded future share-based compensation expense related to outstanding equity awards was $58.3 million and will be recognized over an estimated weighted average amortization period of 1.9 years.
2020 Omnibus Incentive Compensation Plan
In connection with the AZEK acquisition, the Company assumed the 2020 Omnibus Incentive Compensation Plan and assumed and replaced certain outstanding stock options and RSUs under that plan. The terms of the replacement awards were unchanged from the original awards. As of the acquisition date, the estimated fair value of the assumed equity awards was $182.1 million, of which $160.0 million was recognized as goodwill and the balance of $22.1 million will be recognized as share-based compensation expense over the remaining term of the replacement awards. The fair value of the replacement awards for services rendered through the acquisition date was recognized as a component of the purchase consideration, with the remaining fair value related to the post-combination services to be recorded as share-based compensation over the remaining vesting period.
The Company used the Black-Scholes pricing model to estimate the fair value of replacement service-based stock option awards. The significant assumptions used for the stock option valuation include a risk free interest rate of 3.75% - 3.88%, expected volatility of 35.0% - 40.0%, expected terms of 2.47 - 5.60 years, and an expected dividend yield of 0.0%. The fair value of the replacement RSUs was based on the closing price on the acquisition date.
The following summarizes the Company’s activity related to stock options assumed and replaced in the acquisition during the year ended March 31, 2026:
| Outstanding Options | ||||||||||||||
| Number of Options | Weighted Average Exercise Price (US$) | |||||||||||||
| Acquisition replacement awards | 5,838,003 | 12.80 | ||||||||||||
| Exercised | (140,105) | 12.43 | ||||||||||||
| Forfeited | — | — | ||||||||||||
Balance at March 31, 2026 | 5,697,898 | 12.81 | ||||||||||||
Options exercisable at March 31, 2026 | 5,641,523 | 12.71 | ||||||||||||
The weighted-average remaining contractual term of options outstanding at March 31, 2026 was 4.4 years, and the aggregate intrinsic value was $37.0 million.
The following summarizes the Company’s activity related to RSUs assumed and replaced in the acquisition during the year ended March 31, 2026:
| (Units) | 2020 Omnibus Incentive Compensation Plan | Weighted Average Fair Value at Grant Date (US$) | |||||||||
| Acquisition replacement awards | 1,502,529 | 26.82 | |||||||||
| Vested | (1,173,547) | 26.82 | |||||||||
| Forfeited | (23,524) | 26.82 | |||||||||
Outstanding at March 31, 2026 | 305,458 | 26.82 | |||||||||
The weighted-average grant-date fair value of the RSUs replacement awards was $26.82 per unit.
The following summarizes the Company’s activity related to CSUs assumed and replaced in the acquisition during the year ended March 31, 2026:
| (Units) | 2020 Omnibus Incentive Compensation Plan | ||||
| Acquisition replacement awards | 1,453,047 | ||||
| Vested | (1,134,920) | ||||
| Forfeited | (22,748) | ||||
Outstanding at March 31, 2026 | 295,379 | ||||
For the fiscal year ending March 31, 2026, $30.0 million was paid in cash upon vesting of CSU units.
2001 Equity Incentive Plan
Under the Company’s 2001 Equity Incentive Plan (the “2001 Plan”), which was amended and restated in November 2025 and approved by shareholders, the Company can grant equity awards in the form of nonqualified stock options, performance awards, restricted stock grants, stock appreciation rights, dividend equivalent rights, phantom stock or other share-based benefits such as restricted stock units.
Long-Term Incentive Plan 2006
The Company’s shareholders approved the establishment of a Long-Term Incentive Plan in 2006 (the “LTIP”) to provide incentives to certain members of senior management (“Executives”). The Company determines the conditions or restrictions of any awards, which may include requirements of continued employment, individual performance or the Company’s financial performance or other criteria. Currently, the plan only allows for RSUs to be granted under the LTIP.
The following summarizes the Company’s shares available for grant as options, RSUs or other equity instruments under the LTIP and 2001 Plan:
| Shares Available for Grant | |||||
Balance at March 31, 2024 | 17,779,070 | ||||
| Granted | (1,175,352) | ||||
Balance at March 31, 2025 | 16,603,718 | ||||
| Granted | (4,031,233) | ||||
Balance at March 31, 2026 | 12,572,485 | ||||
Stock Options
The following summarizes the Company’s stock options activity during the noted period:
| Outstanding Options | ||||||||||||||
| Number of Options | Weighted Average Exercise Price (A$) | |||||||||||||
Balance at March 31, 2024 | 269,221 | 33.05 | ||||||||||||
| Granted | — | — | ||||||||||||
Balance at March 31, 2025 | 269,221 | 33.05 | ||||||||||||
| Granted | — | — | ||||||||||||
Balance at March 31, 2026 | 269,221 | 33.05 | ||||||||||||
Options exercisable at March 31, 2026 | 269,221 | 33.05 | ||||||||||||
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 March 31, 2026, the weighted-average remaining contractual term is 1.6 years and the aggregate intrinsic value is nil.
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 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$) | ||||||||||||||||||||||||
Outstanding at March 31, 2024 | 1,227,652 | 444,902 | 1,113,651 | 2,786,205 | 33.36 | ||||||||||||||||||||||||
| Granted | 527,577 | 250,826 | 396,949 | 1,175,352 | 45.57 | ||||||||||||||||||||||||
| Vested | (532,445) | (104,434) | (1,490) | (638,369) | 35.86 | ||||||||||||||||||||||||
| Forfeited | (121,585) | (5,609) | (322,022) | (449,216) | 28.64 | ||||||||||||||||||||||||
Outstanding at March 31, 2025 | 1,101,199 | 585,685 | 1,187,088 | 2,873,972 | 38.64 | ||||||||||||||||||||||||
| Granted | 1,719,029 | 1,010,080 | 1,302,124 | 4,031,233 | 27.04 | ||||||||||||||||||||||||
| Vested | (529,383) | (186,024) | — | (715,407) | 38.50 | ||||||||||||||||||||||||
| Forfeited | (163,203) | (371,156) | (642,485) | (1,176,844) | 29.57 | ||||||||||||||||||||||||
Outstanding at March 31, 2026 | 2,127,642 | 1,038,585 | 1,846,727 | 5,012,954 | 31.46 | ||||||||||||||||||||||||
The following includes the assumptions used to fair value the RSU grants (market condition):
| Vesting Condition: | Market | Market | Market | Market | ||||||||||||||||||||||
| FY26 | FY26 | FY26 | FY25 | |||||||||||||||||||||||
| Date of grant | 12/18/2025 | 10/30/2025 | 9/2/2025 | 8/17/2024 | ||||||||||||||||||||||
| Dividend yield (per annum) | — | % | — | % | — | % | — | % | ||||||||||||||||||
| Expected volatility | 45.9 | % | 44.0 | % | 44.6 | % | 37.9 | % | ||||||||||||||||||
| Risk free interest rate | 3.5 | % | 3.6 | % | 3.6 | % | 3.9 | % | ||||||||||||||||||
| Expected life in years | 2.7 | 2.8 | 3.0 | 3.0 | ||||||||||||||||||||||
| JHX stock price at grant date (A$) | 29.95 | 32.83 | 30.13 | 51.99 | ||||||||||||||||||||||
| Number of restricted stock units | 654,899 | 219,775 | 427,450 | 396,949 | ||||||||||||||||||||||
The following presents the total fair value of all of our restricted stock units vested:
Years ended March 31 | ||||||||||||||||||||
| (Millions of US dollars) | 2026 | 2025 | 2024 | |||||||||||||||||
| Total fair value vested | $ | 15.6 | $ | 22.3 | $ | 16.1 | ||||||||||||||
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:
| FY26 | FY25 | |||||||||||||
| Granted | 542,427 | 500,610 | ||||||||||||
| Vested | 229,066 | 232,420 | ||||||||||||
| Cancelled | 471,357 | 88,382 | ||||||||||||
For the fiscal years ending March 31, 2026, 2025 and 2024, $6.3 million, $7.9 million and $5.1 million, respectively, was paid in cash upon vesting of CSU units.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.