UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
OR
For the fiscal year ended 31 March 2023
OR
OR
Date of event requiring this shell company report
For the transition period from to
Commission file number 1-15240
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Company Secretary
(Contact name)
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* | ||||||
* 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 | ||||||||
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: 442,056,296 shares of common stock at 31 March 2023
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):
| ☒ | ||||||||
| 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 whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report | |||||
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| ☒ | ||||||||
| 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
2023
ANNUAL REPORT
ON FORM 20-F
TABLE OF CONTENTS
| Page(s) | |||||
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. [Reserved] | Not applicable | ||||
| B. Capitalization and Indebtedness | Not applicable | ||||
| C. Reasons for the Offer and Use of Proceeds | Not applicable | ||||
| D. Risk Factors | 148-159 | ||||
| Item 4. Information on the Company | |||||
| A. History and Development of the Company | 2-3; 12-13; 175 | ||||
| B. Business Overview | 3-9 | ||||
| C. Organizational Structure | 3; 10 | ||||
| D. Property, Plants and Equipment | 11-13; 105 | ||||
Item 4A. Unresolved Staff Comments | None | ||||
| Item 5. Operating and Financial Review and Prospects | |||||
| A. Operating Results | 97-103 | ||||
| B. Liquidity and Capital Resources | 103-106 | ||||
| C. Research and Development, Patents and Licenses, etc. | 8 | ||||
| D. Trend Information | 106 | ||||
| E. Critical Accounting Estimates | 94-97 | ||||
| Item 6. Directors, Senior Management and Employees | |||||
| A. Directors and Senior Management | 14-29 | ||||
| B. Compensation | 30-68 | ||||
| C. Board Practices | 22-29; 69-91 | ||||
| D. Employees | 164 | ||||
| E. Share Ownership | 56-59; 64-68 | ||||
| F. Disclosure of a Registrant's action to Recover Erroneously Awarded Compensation | None | ||||
| Item 7. Major Shareholders and Related Party Transactions | |||||
| A. Major Shareholders | 178-179 | ||||
| B. Related Party Transactions | 82 | ||||
| C. Interests of Experts and Counsel | Not Applicable | ||||
| Item 8. Financial Information | |||||
| A. Consolidated Statements and Other Financial Information | 107-146; 167 | ||||
| B. Significant Changes | None | ||||
| Item 9. The Offer and Listing | |||||
| A. Offer and Listing Details | 164-166 | ||||
| B. Plan of Distribution | Not Applicable | ||||
| C. Markets | 164-165 | ||||
| D. Selling Shareholders | Not Applicable | ||||
| E. Dilution | Not Applicable | ||||
| F. Expenses of the Issue | Not Applicable | ||||
| PART 1 (continued) | Page(s) | ||||
| Item 10. Additional Information | |||||
| A. Share Capital | Not Applicable | ||||
| B. Memorandum and Articles of Association | 167 | ||||
| C. Material Contracts | 167 | ||||
| D. Exchange Controls | 167 | ||||
| E. Taxation | 168-175 | ||||
| F. Dividends and Paying Agents | Not Applicable | ||||
| G. Statement by Experts | Not Applicable | ||||
| H. Documents on Display | 175 | ||||
| I. Subsidiary Information | Not Applicable | ||||
| J. Annual Report to Security Holders | 175 | ||||
| Item 11. Quantitative and Qualitative Disclosures About Market Risk | 176-177 | ||||
| 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 | 165-166 | ||||
| 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 | 162-163 | ||||
| Item 16. [Reserved] | Not Applicable | ||||
| Item 16A. Audit Committee Financial Expert | 86 | ||||
| Item 16B. Code of Ethics | 83-85 | ||||
| Item 16C. Principal Accountant Fees and Services | 147 | ||||
| Item 16D. Exemptions from the Listing Standards for Audit Committees | None | ||||
| Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers | 166 | ||||
| Item 16F. Change in Registrant’s Certifying Accountant | None | ||||
| Item 16G. Corporate Governance | 69-91 | ||||
| Item 16H. Mine Safety Disclosure | 12 | ||||
| Item 16I. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections | Not Applicable | ||||
| Item 16J. Insider Trading Policies | 84 | ||||
| PART III | |||||
| Item 17. Financial Statements | Not Applicable | ||||
| Item 18. Financial Statements | 107-146 | ||||
| Item 19. Exhibits | 186-190 | ||||
SECTION 1
INTRODUCTION
James Hardie Industries plc is a world leader in the manufacturing of fiber cement building solutions, and a market leader in Europe for fiber gypsum products. Our current primary geographic markets include the United States of America (“US,” “USA” or the “United States”), Australia, Europe, New Zealand and the Philippines.
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 as well as 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 Euros.
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.
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, 2nd Floor, Harcourt Centre, Harcourt Street, Dublin 2, D02 WR20, Ireland. The telephone number is +353 1411 9929. Our corporate website is www.jameshardie.com. 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 17, 60 Castlereagh Street, Sydney NSW 2000 and the telephone number is +61 13 11 03. 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, 1 Columbus Circle Floor 17S, New York, New York 10019, 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 benefit 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. Since then, we have expanded our product portfolio and global footprint, with fiber cement manufacturing plants across the United States, Australia and the Philippines. In April 2018, we completed the acquisition of Fermacell, a market leader in fiber gypsum and cement-bonded boards, which has plants in Germany, the Netherlands and Spain.
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 Asbestos Injuries Compensation Fund ("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, 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 1 to our consolidated financial statements in Section 2.
Corporate Structure
The following diagram summarizes our corporate structure at 31 March 2023:
Business Overview
General Overview of Our Business
James Hardie Industries plc is the world's #1 producer and marketer of high-performance fiber cement and fiber gypsum building solutions. We market our fiber cement products and systems under the HardieTM brand, such as Hardie® Plank, Hardie® Panel, Hardie® Trim, Hardie® Backer, Hardie® Artisan Siding HardieTM Architectural Collection, and other brand names such as Cemboard®, Prevail®, Scyon®, Linea® and Hardie™ Oblique™ cladding. We are also a market leader in the European premium timber frame and dry lining business, especially in Germany, Switzerland and Denmark. We market our fiber gypsum and cement-bonded boards under the Fermacell® brand and our fire-protection boards under the AESTUVER® brand.
The Company has three operating segments: North America Fiber Cement, Asia Pacific Fiber Cement and Europe Building Products. See Notes 2 and 18 to our consolidated financial statements in Section 2 for a description of our operating segments and a breakdown of our net sales by operating segment and geographic market for each of our last three fiscal years.
Products
We manufacture fiber cement, fiber gypsum and cement bonded boards. Our fiber cement building materials includes a wide-range of products for both external and internal use across a broad range of applications, including external applications: siding, cladding, trim, soffit; and internal applications: walls, floors, ceilings. While there are some market specific products, our core fiber cement products, planks and flat panels, are sold across all of the markets in which we operate. Our fiber gypsum and cement-bonded boards 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 fiber cement products provide certain durability and performance advantages leading to improved maintenance, while offering comparable aesthetics to competing products, such as wood and stucco, 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;
•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;
•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.
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 engineered wood 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 engineered wood 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 North America, new products released over the last three years include, an expanded ColorPlus® Technology offering through the Magnolia Home | James Hardie Collection and the HardieTM Architectural Collection.
In Asia Pacific, we continue to expand our addressable market by extending our product portfolio in both wood look and non-wood look exteriors. In 2021, we launched HardieTM Fine Texture Cladding in Australia to deliver the modern render look followed by HardieTM Brushed Concrete Cladding in April 2023, which are now both marketed under the Hardie™ Architectural Collection. Building on the success of LineaTM ObliqueTM Weatherboard in New Zealand, we also introduced the product in Australia in 2022 as HardieTM ObliqueTM Cladding to increase design versatility in line with modern design trends.
In Europe, new fiber cement products released over the past three years include HardieTM VL Plank, a solution that provides interlocking looks for facades of single family and multi-family homes as well as the Hardie Architectural Collection for multi-family homes and commercial buildings, and Fermacell® Therm25TM dry screed elements.
Principal Markets for Our Products
Fiber Cement
In the US and Canada, the largest application for fiber cement building products is in external siding for the residential building industry.
Competition in this market comes primarily from substitute products, such as natural wood or engineered wood, 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 distributors, builders, contractors, installers and homeowners on our brand and the performance, design and cost advantages of our products.
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 applications: siding, cladding, trim, soffit; and internal applications: walls, floors, ceilings.
In Australia, competition from imports and the locally based fiber cement manufacturer continues to be strong. Additionally, we have competition from natural and engineered wood, wallboard, masonry and brick products. In New Zealand and the Philippines, competitor fiber cement imports continue as manufacturers look to supplement their primary operating environments with additional markets.
In Europe, our fiber cement building products are used in both residential and commercial building applications in the form of external siding, soffits and internal tile underlayment for walls and floors. Competition includes timber based products as well as other manufacturers of fiber cement.
Fiber Gypsum and Cement-Bonded Boards
Our European Fermacell brand products are sold into the residential repair and remodel, commercial and residential new construction markets. The Fermacell brand of products comprise fiber gypsum and cement-bonded boards, two complementary products in the high performance board space, mainly used in timber frame construction, commercial dry lining projects and repair and remodel. Cement bonded boards are also used for several fire protection projects including tunnels.
Our key markets for Fermacell brand products 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 and remodel. In addition, our fire protection AESTUVER® boards are sold to projects worldwide.
Seasonality
We do not have significant seasonality, however our businesses typically follow activity levels in the building and construction industry.
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 have supply agreements and plans in place to navigate challenges in the supply environment. 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.
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 products are natural and synthetic gypsum. Natural gypsum is extracted and processed in Germany and Spain. Synthetic gypsum is obtained from power plants in Germany and Poland. While synthetic gypsum will be phased out due to the coal power plant phase-out in the European Union, we are well positioned for the future with natural gypsum sources.
Recycled Paper
Recycled paper, utilized in the production of our fiber gypsum products in Europe, is generally sourced locally by the various production plants in Europe.
Sales, Marketing and Distribution
Our brand names, customer education in comparative product advantages, differentiated product range and customer service, including technical advice and assistance, provide the basis for our marketing strategy. In May 2021, the Company launched It's Possible™, a global integrated marketing campaign that seeks to empower homeowners to realize their dream home. The campaign is inclusive of television commercials, programmatic digital, social media, public relations, influencer and dynamic media partnerships, and more.
We offer our customers support through a specialized sales force and customer service infrastructure in North America, 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 who maintain 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 North America, we sell our exterior fiber cement products for repair and remodel and new residential construction through a combination of distributors, dealers and lumber yards. Where sales are to distributors, they then sell these products to dealers or lumber yards. Our interior fiber cement products in North America are typically sold through the large home center retailers and specialist distributors or dealers. Our products are distributed across North America primarily by road and, to a lesser extent, by rail.
In Australia and New Zealand, both new construction and repair and remodel products are sold through a combination of distributors, dealers and lumber yards. 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 and DIY type stores. The physical distribution of our product in each country is primarily by road, rail or 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.
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. With the exception of our current major markets, as well as Japan and certain rural areas in Asia, 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 unique 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.
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.”
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, regulated material, including wastewater and air emissions, may be produced at some of our manufacturing plants. The wastewater produced from our 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, 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 minor associated 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.
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 2023.
| Name of Company | Jurisdiction of Establishment | Jurisdiction of Tax Residence | ||||||||||||
| 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 GmbH | Germany | Germany | ||||||||||||
| James Hardie Europe Holdings 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 NL1 B.V. | Netherlands | Netherlands | ||||||||||||
| James Hardie NL2 B.V. | Netherlands | Netherlands | ||||||||||||
| James Hardie North America, Inc | 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 | ||||||||||||
Property, Plants and Equipment
We believe we have some of the largest and lowest cost fiber cement manufacturing plants across the United States, Australia 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
We own all the manufacturing facilities listed below.
| Plant Location | 31 March 2023 Nameplate Capacity (mmsf)1 | Planned Future Nameplate Capacity (mmsf)1 | ||||||||||||
| United States fiber cement | ||||||||||||||
| Cleburne, Texas | 666 | 666 | ||||||||||||
| Peru, Illinois | 560 | 560 | ||||||||||||
| Plant City, Florida | 600 | 600 | ||||||||||||
| Pulaski, Virginia | 600 | 600 | ||||||||||||
| Reno, Nevada | 300 | 300 | ||||||||||||
| Tacoma, Washington | 500 | 500 | ||||||||||||
| Waxahachie, Texas | 413 | 413 | ||||||||||||
| Fontana, California | 250 | 250 | ||||||||||||
| Summerville, South Carolina | 190 | 190 | ||||||||||||
| Prattville, Alabama | 600 | 1,200 | ||||||||||||
Westfield, Massachusetts2 | N/A | N/A | ||||||||||||
| Greenfield - Crystal City, Missouri | — | 600 | ||||||||||||
| Total United States fiber cement | 4,679 | 5,879 | ||||||||||||
| Asia Pacific fiber cement | ||||||||||||||
| Rosehill, New South Wales, Australia | 180 | 180 | ||||||||||||
| Carole Park, Queensland, Australia | 317 | 317 | ||||||||||||
| Greenfield - Melbourne, Victoria, Australia | — | 240 | ||||||||||||
Cabuyao City, Philippines | 172 | 172 | ||||||||||||
| Total Asia Pacific fiber cement | 669 | 909 | ||||||||||||
| Europe fiber gypsum | ||||||||||||||
| Münchehof, Germany | 441 | 441 | ||||||||||||
| Orejo, Spain | 275 | 527 | ||||||||||||
| Wijchen, the Netherlands | 273 | 273 | ||||||||||||
| Siglingen, Germany | 154 | 154 | ||||||||||||
| Total Europe fiber gypsum | 1,143 | 1,395 | ||||||||||||
| Total Europe fiber cement greenfield plant | — | 300 | ||||||||||||
| Europe Other | ||||||||||||||
Calbe, Germany 3 | 41 | 41 | ||||||||||||
Schraplau, Germany 2 | N/A | N/A | ||||||||||||
____________
1The calculated annual nameplate capacity 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.
2Our Westfield, Massachusetts plant will be a finishing facility for fiber cement substrate made at other locations. Our Schraplau, Germany facility is a raw materials processing facility for our fiber gypsum plants. As a result, no annual nameplate capacity is available for either of these facilities.
3Our Calbe, Germany plant produces cement bonded boards.
For fiscal year 2023, actual capacity utilization across our fiber cement and fiber gypsum plants was an average of 89%, 81% and 95% in the United States, Europe and Asia Pacific, respectively. For fiscal year 2022, we operated all of our manufacturing facilities 24/7 year round, with the exception of our Siglingen plant which had a capacity utilization of 85%.
Mines
In North America, we lease silica quartz mine sites in Tacoma, Washington and Reno, Nevada. The lease for our quartz mine in Tacoma, Washington expires in February 2027, with additional options to renew. 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 2023, we have not begun to mine this site and have no immediate plans to do so.
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 2023, 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.
In Europe, we have a license to make use of a mining facility in Schraplau, Germany as a storage site. No active mining is being undertaken. We also have an investment in a natural gypsum mine in Spain.
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:
| (US$ Millions) | 2023 | 2022 | 2021 | ||||||||||||||||||||
| North America Fiber Cement | $ | 392.0 | $ | 188.4 | $ | 76.8 | |||||||||||||||||
| Asia Pacific Fiber Cement | 136.2 | 46.9 | 18.3 | ||||||||||||||||||||
| Europe Building Products | 57.8 | 18.7 | 13.5 | ||||||||||||||||||||
| R&D and Corporate | 5.3 | 3.8 | 2.1 | ||||||||||||||||||||
| Total Capital Expenditures | $ | 591.3 | $ | 257.8 | $ | 110.7 | |||||||||||||||||
Significant active capital expenditures
At 31 March 2023, the following significant capital expenditures remain in progress:
| Project Description | Approximate Investment (In millions) | Investment to date (In millions) | Project Start Date | Expected Completion Date | Expected Nameplate Capacity Increase (mmsf) | |||||||||||||||||||||||||||
Massachusetts ColorPlus® finishing capacity | US$ | 58.2 | US$ | 48.5 | Q1 FY22 | FY24 | N/A | |||||||||||||||||||||||||
| Prattville Greenfield expansion (sheet machines #3 and #4) | US$ | 439.0 | US$ | 193.7 | Q3 FY22 | FY25 | 600 | |||||||||||||||||||||||||
Prattville ColorPlus® finishing capacity | US$ | 83.8 | US$ | 6.6 | Q2 FY23 | FY25 | N/A | |||||||||||||||||||||||||
| Melbourne Greenfield expansion | TBD | US$ | 82.4 | Q4 FY22 | FY27 | 240 | ||||||||||||||||||||||||||
| Orejo Brownfield expansion | € | 144.4 | US$ | 37.1 | Q3 FY22 | FY25 | 252 | |||||||||||||||||||||||||
Significant completed capital expenditure projects
The following is a list of significant capital expenditure projects completed in the three most recent fiscal years:
| Project Description | Total Investment (US Millions) | Fiscal Year of Expenditure | ||||||||||||
| Prattville Trim finishing capacity | $ | 55.1 | FY21 - FY23 | |||||||||||
| Carole Park Brownfield expansion | 36.8 | FY19 - FY23 | ||||||||||||
| Prattville Greenfield expansion (sheet machines #1 and #2) | 241.2 | FY18 - FY22 | ||||||||||||
| Summerville restart | $ | 11.1 | FY21 - FY22 | |||||||||||
Capital Divestitures
During the three most recent fiscal years, we did not make any material capital divestitures.
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 management executive team at 30 April 2023 are:
Aaron Erter, BS, MBA Chief Executive Officer Age 49 | |||||
 | Aaron Erter was appointed as Chief Executive Officer (“CEO”) in September 2022. Mr Erter is a highly experienced executive, with deep experience in leading large enterprises in the consumer and industrial sectors. Mr Erter most recently served as served as Chief Executive Officer of PLZ Corp, a leader of specialty liquid and aerosol manufacturing. Headquartered outside of Chicago, Illinois, USA, with over 2,500 employees throughout North America. Mr Erter was CEO from November 2020 to August 2022. From 2017 to 2020, Mr Erter held multiple executive leadership roles at Sherwin | ||||
Williams, the world leader in paints and coatings. While at Sherwin Williams, Mr Erter was Global President of the Consumer Brands Group and Global President of the Performance Coatings Group. Before joining Sherwin Williams, Mr Erter held various leadership roles at Valspar, including SVP and General Manager of the North America Consumer Division. Prior to Valspar, Mr Erter held various leadership roles at Stanley Black and Decker. Mr Erter earned a Bachelor of Economics from The Wharton School at The University of Pennsylvania and an MBA at The University of Notre Dame – Mendoza College of Business. | |||||
Jason Miele, BA Chief Financial Officer Age 46 | |||||
 | Jason Miele was appointed as Chief Financial Officer (“CFO”) in February 2020. As CFO he oversees the Company’s overall financial activities, including accounting, tax, treasury, performance and competitor analysis, internal audit, financial operations, and investor relations. Mr Miele has over 15 years of experience with James Hardie and has served in a number of important roles during his tenure, including Vice President – Investor and Media Relations, a position he held from February 2017. In that role, Mr Miele had responsibility for overseeing James Hardie’s investor relations strategy and communicating James Hardie’s business strategy and its financial performance to various stakeholders including shareholders, investment analysts, and the financial media. | ||||
Prior to that, Mr Miele served in a variety of roles of increasing responsibility, in finance functions such as Treasury, Controllership and Operational Finance, including reporting to the CFO as the Global Treasurer and later the Global Controller. Mr Miele has supported the James Hardie business during his tenure, working in multiple geographies including Dublin, Ireland, Amsterdam, Netherlands, Mission Viejo, California, Sydney, Australia and Chicago, Illinois in the United States. Mr Miele has a Bachelor’s Degree from the University of California at Santa Barbara, where he graduated with a degree in Business Economics. | |||||
Farhaj Majeed, MBA Chief Human Resources Officer Age 45 | |||||
 | Farhaj Majeed joined James Hardie as Chief Human Resources Officer ("CHRO") in February 2023. Mr Majeed joins James Hardie with a tremendous career spanning over 20 years in a variety of global and regional HR experiences with top tier companies such as Kraft Foods, Mondelez International, Abbott Laboratories and, most recently with Whirlpool Corporation where he led the Europe and MEA region as VP & CHRO, EMEA. Mr Majeed has held several leadership roles and led HR teams in North America, Europe, Asia and the Middle East. | ||||
Mr Majeed holds a Master of Business Administration from the Institute of Business Management with an emphasis on Human Resources and Marketing. | |||||
Tim Beastrom, BA, JD Chief Legal Counsel and Chief Compliance Officer Age 56 | |||||
 | Tim Beastrom joined James Hardie in January 2023 as Chief Legal Counsel and Chief Compliance Officer. Mr Beastrom joins James Hardie as Legal Counsel from a successful career in corporate governance, securities law, Environmental, Social & Governance ("ESG") risk oversight, M&A, and commercial law. He has 30 years of legal experience, most recently with Ecolab Inc. where he was Chief Securities Counsel and Assistant Secretary and then Sector General Counsel for corporate functions. Mr Beastrom completed his Juris Doctor at the University of Minnesota Law School and received his undergraduate degree from Gustavus Adolphus College. | ||||
Sean Gadd, BEng, MBA President, North America Age 50 | |||||
 | 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 and 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. In January 2022, Mr Gadd was appointed President, North America, with responsibility for running the companies’ North America activities. Mr Gadd has a Bachelor of Engineering in Manufacturing Management and an executive MBA from the Australian Graduate School of Management, Australia. | |||||
Joe Liu, BS, PhD Chief Technology Officer Age 60 | |||||
 | Dr Joe Liu joined James Hardie as Senior Vice President and General Manager, Asia Pacific, in December 2021 and was appointed Chief Technology Officer in January 2022. Before joining James Hardie, Dr Liu concluded an impressive 26-year career with 3M Company, where he held a variety of R&D, Commercial and International Management roles of increasing responsibility over the course of his career. Early assignments in technical roles across multiple 3M product lines led to progression to Vice President R&D of 3M International Operations, Vice President & Managing Director of 3M Southeast Asia Region, to Dr Liu's most recent role of Senior Vice President, R&D and Commercialization of 3M Global Consumer Business Group. | ||||
| Dr Liu utilizes his vast and deep experiences across R&D, Commercial and General Management to help drive the commercialization of innovative new products. Dr Liu has a Bachelor of Science and a PhD in Thermal Energy and Power Engineering from Xi’an Jiaotong University in China as well as an additional PhD in Mechanics from the University of Minnesota. | |||||
James Johnson II, BA, MBA Chief Information Officer Age 51 | |||||
 | James Johnson II joined James Hardie as Chief Information Officer (“CIO”) in December 2021. Mr Johnson is responsible for all aspects of information technology and cyber security globally. Mr Johnson and his team will drive a focused Information Technology vision and strategy which integrates with, and helps enable, the JHX global strategic plan. Mr Johnson brings over 25 years of relevant and progressive IT experience, including 15 years as CIO for businesses in a variety of industries, including chemicals and metals industries. Most recently, Mr Johnson held the role of CIO at Carpenter Technology since 2013. Prior to joining Carpenter Technology, Mr Johnson held previous IT roles with Honeywell International, Performance Fibers | ||||
| and Trinseo. Mr Johnson has a proven track record of developing effective, leading-edge technology solutions that create business value. Mr Johnson holds a Bachelor of Arts degree in Economics from the University of Virginia and a Master of Business Administration degree with an emphasis in Marketing and Strategic Management from the University of Maryland. | |||||
Ryan Kilcullen, BSc, MS Executive Vice President, Global Operations Age 42 | |||||
 | Ryan Kilcullen joined James Hardie in 2007 as a PcI/PdI Engineer. Since then, Mr Kilcullen has worked for the Company in various manufacturing and supply chain roles including Process Engineer, Production Manager, and Supply Chain Engineer. In 2012, Mr Kilcullen 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, Mr Kilcullen 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, Mr Kilcullen was appointed Vice President – Central Operations, responsible for the Company’s Supply Chain Operations and Centralized Manufacturing functions. | ||||
In August 2016, Mr Kilcullen was appointed Executive Vice President – North America Operations, responsible for the Company's Supply chain, Manufacturing Engineering and Environmental, Health & Safety Operations. In November 2020, Mr Kilcullen was appointed Senior Vice President – North America Supply Chain Operations with responsibility for the Company’s production planning, procurement and logistics operations. In January 2022, he was appointed Executive Vice President, Global Operations in this newly developed role. Mr Kilcullen's experience in the areas of supply chain operations, including engineering, construction and lean/HMOS will transition regional functions into world class, seamlessly integrated and globally focused functions. 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. | |||||
John Arneil, BBUS, MBA President, Asia Pacific Age 43 | |||||
 | John Arneil joined James Hardie as a graduate in 2002 and has gained extensive business and leadership experience having worked across James Hardie’s European, North American and Asia Pacific businesses in a variety of commercial and operational roles. This has included time as Country Manager UK and Ireland, Country Manager Canada, Sales and Marketing Director for Australia and most recently Country Manager for Australia and New Zealand where Mr Arneil was responsible for all manufacturing and market activities in this region. This experience has given Mr Arneil exposure to multiple markets in different phases | ||||
of business maturity and complexity enabling him to fully understand value creation from a consumer and customer perspective and how this translates end-to-end through Innovation, manufacturing, commercialization and supply chain. This coupled with deep industry relationships has enabled Mr Arneil to deliver record results for the Australian and New Zealand businesses year-over-year while running these business units. Mr Arneil was appointed to General Manger, Asia Pacific in January 2022 and more recently President, Asia Pacific in January 2023 where he is responsible for running the company’s Asia Pacific activities which are headquartered in Sydney, Australia. Mr Arneil has a Bachelor of Business Management from The University of Queensland in Australia and a Masters of Business Administration from The University of Leicester in the UK. | |||||
Christian Claus, MBA President, Europe Age 40 | |||||
 | Christian Claus joined James Hardie as President, Europe in January 2023 and is responsible for running the companies’ European activities. Mr Claus most recently served as Vice President for West Europe, South Europe and Africa of Tarkett, a global leader of floor and wall coverings headquartered in Paris, France, with over 12,500 employees. Mr Claus was operating in a variety of Vice President roles at Tarkett since January 2018. Prior to joining Tarkett, Mr Claus held multiple commercial leadership roles at Air Liquide, the world leader of industrial gases. Before joining Air Liquide, Mr Claus held various commercial and international management roles of increasing responsibility over the course of his career at 3M. | ||||
Mr Claus is a graduate of the Heinrich Heine University in Duesseldorf, holds a Masters degree in Business Administration and has completed multiple Executive Education courses at MIT Sloan, Harvard Business School and the London Business School. | |||||
Jill Kolling, BME, MS Chief Sustainability Officer Age 57 | |||||
 | Jill Kolling joined James Hardie as Vice President, ESG & Chief Sustainability Officer in March 2022. Ms Kolling and her team are responsible for development and execution of James Hardie’s global ESG strategy, ensuring integration with the company’s overall business strategy and ensuring the ESG strategy is an enabler of future growth. Ms Kolling began her career as a new product engineer with Hewlett-Packard, then transitioned into management consulting where she provided advisory services in the areas of technology, Sarbanes-Oxley, and ESG to companies in a variety of industries. Most recently, Ms Kolling held the role of Vice President, Global Sustainability at Cargill where she built the first-ever global sustainability function for | ||||
the corporation. Ms Kolling has a proven track record of applying strategic insights and systems thinking to optimize for shareholder value, positive environmental outcome, and social good. Ms Kolling holds a Bachelor of Mechanical Engineering degree and a Master of Science in Computer Science degree, both from the University of Minnesota. | |||||
Stephen Balsavich, BS, MBA Global Head of Transformation Age 42 | |||||
 | Stephen Balsavich was named Global Head of Transformation at James Hardie in November 2020. In this capacity, he and his team lead the coordination and execution of strategic initiatives. Mr Balsavich originally started his career at James Hardie in April of 2016 and served in both Finance and IT disciplines. Mr Balsavich served as the PMO and IT lead for the Fermacell acquisition in Europe which included integration efforts post deal closing. Mr Balsavich has spent most of his 20+ year career in Merger and Acquisition and Business Transformation related work across several industries. Prior to rejoining James Hardie in November 2020, he led the PMO and integration efforts for a $25 billion M&A deal spanning over 100 countries for PricewaterhouseCoopers (PwC). | ||||
He also spent 8 years in Banking where he started his career and 5 years in Financial Services. Mr Balsavich has a Bachelor of Science in Finance from the University of Illinois and a Master in Business Administration from Dominican University. | |||||
Joel Wasserman, BS Vice President, Corporate Communications and Global Brand Management Age 61 | |||||
 | Joel Wasserman joined James Hardie in January 2023 as Vice President, Corporate Communications and Global Brand Management. Mr Wasserman joins James Hardie as Vice President, Corporate Communications and Global Brand Management from Sherwin-Williams where he was responsible for strategic planning and brand management for all brands in the consumer brands group. He has more than 35 years of progressive communications and marketing experience that includes work at various agencies and consumer products companies. | ||||
Mr Wasserman holds a Bachelor of Science degree in economics from Northern Illinois University. | |||||
Board of Directors
James Hardie’s Board of Directors (the "Board") 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 2023 are:
Anne Lloyd, BS, CPA Age 61 | |||||
 | Anne Lloyd was appointed as an independent non-executive director of James Hardie in November 2018. Ms Lloyd served as a member of the Audit Committee from the date of her appointment during her entire tenure as a Board member, with the exception of the period from 26 August 2019 through 25 February 2020, during which time she served as Interim CFO. She was appointed Chair of the Audit Committee effective 8 August 2020 and Deputy Chairperson effective 10 August 2022. She also served as Lead Independent Director from 6 January 2022 to 1 September 2022. Ms Lloyd was appointed Chair of the Board effective 3 November 2022 at which time she stepped down as Chair 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 2019); Director of Highwoods Properties, Inc. (since 2018). Former - Director of Terra Nitrogen Company, L.P. (2009-2018). Other: Director of New Frontier Materials LLC (since November 2021); resident of the United States. Last elected: November 2022 Term expires: November 2025 | |||||
Peter-John Davis Age 64 | |||||
 | Peter John Davis (PJ) was appointed as an independent non-executive director of James Hardie in August 2022. He is a member of the Remuneration Committee. Experience: Mr Davis previously served as Chief Operating Officer (COO) of Bunnings Australia & New Zealand. During his 15-year tenure as COO, the division was one of the most profitable of the Wesfarmers Group. With over 40 years’ experience in various retail and trade formats and home improvement industries, Mr Davis commenced his career on the sales floor and held senior roles in operations, marketing, advertising and merchandising before moving | ||||
into general management and leading the development of the highly successful Bunnings Warehouse concept. Mr Davis was responsible for the development, strategic direction, and operational management of the Bunnings businesses and its employees. His main objectives were to ensure growth in revenues and profitability and provide satisfactory returns for shareholders. Mr Davis completed the Advanced Management Program at Harvard Business School in Boston, USA and is the Founding Director ANRA (Australian National Retailers Association) and Foundation Member of the Australian Institute of Company Directors. Directorships of listed companies in the past five years: Former – Director of Bunnings Homebase BUKI (2016-2018). Other: Resident of Australia. Last elected: November 2022 Term expires: November 2025 | |||||
Persio V. Lisboa, BS Age 57 | ||||||||||||||
 | Persio Lisboa was appointed as an independent non-executive director of James Hardie in February 2018. He is Chairman of the Remuneration Committee and a member of the Nominating and Governance Committee. Experience: Mr Lisboa has extensive senior executive experience. He recently served as President and Chief Executive Officer of Navistar, Inc. (Navistar), a leading manufacturer of commercial trucks, buses, defense vehicles and engines, a position he held from July 2020 to September 2021, when he decided to retire. Prior to that position, Mr Lisboa served as the Executive Vice President and Chief Operating Officer of Navistar from March 2017 to July 2020. Prior to that, 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: None Other: Resident of the United States. Last elected: August 2021 Term expires: August 2024 | ||||||||||||||
Renee J. Peterson, BS, MBA Age 62 | |||||
 | Renee Peterson was appointed as an independent non-executive director of James Hardie in November 2022. She is a member of the Audit Committee. Experience: Ms Peterson served as CFO for The Toro Company, a leading worldwide provider of innovative solutions for the outdoor environment with responsibility for all aspects of finance, information technology and investor relations, until March 2023. She continues to serve as Vice President until July 2023. She previously served as Eaton Corporation’s Vice President of Finance and Planning for the company’s truck and automotive segments. | ||||
Prior to joining Eaton, Ms Peterson served in various financial leadership positions of increasing responsibility at Honeywell International over 25 years. Ms Peterson’s career has spanned several different areas within the industrial sector, including aerospace, automotive, construction and consumer products. She earned her Bachelor of Science degree in accounting from St. Cloud State University Herberger Business School and an MBA from the University of Minnesota. She is a certified public accountant (inactive) and holds a six-sigma green belt certification. Ms Peterson is an independent director for Franklin Electric (FELE), a global leader in the manufacturing and distribution of water and fueling products and solutions, and is currently Audit Committee Chair. She is a member of The Toro Company Foundation and the St. Cloud State University Herberger Business School Advisory Council. She previously served on the Board of the Greater Twin Cities United Way (GTCUW) as the Treasurer and Finance & Human Capital Committee Chair and was also a member of the GTCUW Executive Committee. Ms Peterson is also a member of the MN Women’s Economic Roundtable (MWER), a forum for Twin Cities women leaders to gather insights on broad economic issues, examine their implications, and take action in their individual communities and personal lives. Directorships of listed companies in the past five years: Current – Director of Franklin Electric Co., Inc (since 2015). Other: Resident of the United States. Last elected: Ms Peterson will be standing for election at the August 2023 Annual General Meeting. | |||||
Rada Rodriguez, MSc Age 64 | |||||
 | Rada Rodriguez was appointed as an independent non-executive director of James Hardie in November 2018. She is Chair of the Nominating and Governance Committee and a member of the Remuneration Committee. Experience: Ms Rodriguez serves as Chief Executive Officer of Signify DACH, part of the Signify Group, a world leader in connected LED lighting systems, software and services, since May 2021. She previously served as Chief Executive Officer of Schneider Electric GmbH, part of Schneider Electric Group, a global energy management and automation company and served as Senior Vice President, Corporate Alliances until 2021. On joining the company in 1999, she 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: None. Other: Resident of Germany. Last elected: November 2022 Term expires: November 2025 | |||||
Suzanne B Rowland, MS, BS Age 61 | |||||
 | Suzanne B Rowland was appointed as an independent non-executive director of James Hardie in February 2021. She is a member of the Audit Committee and the Remuneration Committee. Experience: Ms Rowland has extensive senior executive experience leading complex global materials and industrial businesses. She most recently served as Group Vice President of the Industrial Specialties business at Ashland Global Holdings Inc. from 2016 to 2019 where she aligned commercial and asset strategies driving focused profitable growth. | ||||
Prior to this, Ms Rowland served in separate Vice President and General Manager roles in Tyco International plc between 2009 and 2015 where she led significant improvement in customer relationships, market position, and operational execution. Before joining Tyco, Ms Rowland worked for Rohm and Haas Company for over twenty years, where she held multiple senior executive roles including leading the global Adhesives division and Procurement & Logistics for the company. Directorships of listed companies in the past five years: Current – Director of Sealed Air Corporation (since 2020). Former - Director of L.B. Foster Co. (2008-2022); Director of SPX Flow, Inc. (2018-2022). Other: Resident of the United States. Last elected: August 2021 Term expires: August 2024 | |||||
Nigel Stein, CA, BSc Age 67 | |||||
 | Nigel Stein was appointed as an independent non-executive director of James Hardie in May 2020. He is the Chairman of the Audit Committee and is a member of the Nominating and Governance Committee. Experience: Mr Stein has extensive experience in the global automotive and manufacturing sectors. He currently serves as Chairman of Inchcape plc (Inchcape), an automotive distribution, retail and financing company, a position he has held since May 2018. Mr Stein joined Inchcape as a non-executive director in October 2015. Prior to holding this position, Mr Stein served as Chief Executive Officer of GKN Ltd | ||||
(GKN) (formerly GKN plc) from January 2012 to December 2017. He joined the automotive and aerospace components supplier in 1994 and during his time with GKN held various senior positions in general management and finance including six years as Group Chief Financial Officer. Earlier in his career, Mr Stein held senior finance positions with Laird plc and Hestair plc. From 2003 until 2011, he served as an independent non-executive director on the Board of Ferguson (formerly Wolseley) plc, the leading specialist distributor of plumbing and heating products in North America. Mr Stein is a member of the Institute of Chartered Accountants of Scotland. Directorships of listed companies in the past five years: Current – Director of Inchcape plc (since 2015). Other: Resident of the United Kingdom. Last elected: November 2020 Term expires: August 2023 | |||||
Harold Wiens, BS Age 76 | |||||
 | Harold Wiens was appointed as an independent non-executive director of James Hardie in May 2020. In January 2020, Mr Wiens was appointed Interim CEO of James Hardie until September 2022. Experience: Mr Wiens worked at 3M Company (3M) for thirty-eight years. He served as Executive Vice President, Industrial Business and Transportation Business from 1998 until his retirement from 3M in 2006. It is 3M’s largest and most diverse business serving many different end markets ranging from electronic to automotive and aerospace manufacturing. During this time, Mr Wiens restructured the business, leading a global implementation of Six Sigma that drove significant international growth. | ||||
Prior to holding this position, Mr Wiens served as Executive Vice President, Sumitomo 3M, 3M’s largest subsidiary, headquartered in Tokyo, Japan, from 1995 to 1998 and served as Data Storage Business Leader and Vice President from 1988 to 1995 and as Memory Technologies Group Manufacturing Manager from 1983 to 1988. Mr Wiens began his career with 3M in 1968 and held many positions of increasing responsibility over his first fifteen years with 3M. Directorships of listed companies in the past five years: Former – Director of Bio-Techne Corporation (2014-2020). Other: Resident of the United States. Last elected: November 2020 Term expires: August 2023 | |||||
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 2023) (“Senior Executive Officers”) in fiscal year 2023, and also includes an outline of the key changes for fiscal year 2024. Further details of these changes are set out in the 2023 Notice of Annual General Meeting (“AGM”).
For fiscal year 2023, our senior executive officers are:
•Aaron Erter, Chief Executive Officer (effective 1 September 2022);
•Jason Miele, Chief Financial Officer;
•Sean Gadd, President, North America;
•Ryan Kilcullen, Executive Vice President, Global Operations; and
•Joe Liu, Chief Technology Officer.
As previously announced, Mr Harold Wiens was appointed as interim CEO, which ended on 31 August 2022. As compensation for his service as interim CEO, Mr Wiens received a temporary exertion fee of US$130,000 per month for the period he was in the interim CEO role. The exertion fee is in addition to his regular board fees as a director. Reasonable expenses associated with relocation and other costs incurred during this period because of undertaking this role were also compensated. The compensation Mr Wiens received for his service as our interim CEO does not reflect our normal remuneration practices with respect to our executive compensation program due to his service as CEO being interim in nature. As such, Mr Wiens did not participate in the Short-Term Incentive ("STI") and Long-Term Incentive ("LTI") plans and programs that are discussed throughout the remainder of this Remuneration Report.
This Remuneration Report has been adopted by our Board on the recommendation of the Remuneration Committee.
EXECUTIVE SUMMARY
Fiscal Year 2023 Business Highlights1
Our operating results for fiscal year 2023 reflected solid financial results, highlighted by record net sales of US$3.8 billion, an increase of 4% compared to fiscal year 2022. Adjusted earnings before interest and taxes (“EBIT”) of US$780 million and Adjusted net income of US$606 million in fiscal year 2023 decreased 4% and 2%, respectively, compared to fiscal year 2022. The challenging global macro environment conditions and high input costs that included significant inflationary pressures, impacted all of our segment results for the year.
The following graphs show our performance for key financial measures during fiscal year 2023, with a comparison to prior corresponding periods:
____________
1Please 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.
Fiscal Year 2023 Compensation Highlights
Our fiscal year 2023 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 2023:
•No changes were made to the design of the of our Short-Term Incentive program in fiscal year 2023, which is comprised of both the Company Performance Plan ("CP Plan") and Individual Performance Plan ("IP Plan"). The CP Plan continues to measure both Growth and Returns when assessing Company performance and shareholder value creation. A complete description of the CP Plan for fiscal year 2023 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 2023. The LTI plan remains similar to the fiscal year 2022 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 2023 Total Target Compensation
Remuneration packages for Senior Executive Officers reflect our remuneration philosophy and comprise a mixture of fixed base salary, 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 2023:
| Summary of Fiscal Year 2023 Senior Executive Officer Target Compensation | |||||||||||||||||
| Senior Executive Officer | FY2023 Annual Base Salary (US$) | FY2023 STI Target Value (US$) | FY2023 LTI Target Value (US$) | FY2023 Total Target Compensation (US$) | |||||||||||||
| A Erter | 1,000,000 | 1,200,000 | 5,000,000 | 7,200,000 | |||||||||||||
| J Miele | 550,000 | 385,000 | 865,000 | 1,800,000 | |||||||||||||
| S Gadd | 650,000 | 455,000 | 1,000,000 | 2,105,000 | |||||||||||||
| R Kilcullen | 435,000 | 282,750 | 600,000 | 1,317,750 | |||||||||||||
| J Liu | 375,000 | 225,000 | 350,000 | 950,000 | |||||||||||||
Mr Erter also received a US$2 million stock option award upon hire with three-year cliff vesting and a five-year exercise period.
Results of 2022 Remuneration Report Vote
In August 2022, our shareholders were asked to cast a non-binding advisory vote on our remuneration report for the fiscal year ended 31 March 2022. 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 2022 Annual General Meeting, our shareholders approved our remuneration report, with 96.3% 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 2023.
APPROACH TO SENIOR EXECUTIVE REMUNERATION
Remuneration Philosophy
As our largest operating 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 and consumer durables 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 creating 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 75th 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.
Relative Weightings of Fixed and Variable Remuneration
The charts below detail the relative weightings of fixed versus variable remuneration for our CEO and other Senior Executive Officers for fiscal year 2023. Fixed remuneration includes base salary and variable remuneration is comprised of target STI awards and the following three LTI components: (i) Relative Total Shareholder Return ("TSR") Restricted Stock Units ("RSUs"); (ii) Return on Capital Employed ("ROCE") RSUs; and (iii) Scorecard LTI at target, each of which are discussed in more detail in this Remuneration Report.
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 framework for the Company; and (iii) making recommendations to the Board on recruitment, retention and termination policies and procedures for senior management. The current members of the Remuneration Committee are Persio Lisboa (Chairman), PJ Davis, Rada Rodriguez and Suzanne Rowland, 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 on our Investor Relations website (ir.jameshardie.com.au).
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 86% of our CEO’s total target compensation being performance-based “at risk” compensation and an average of approximately 67% 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 North America growth and corporate performance levels are achieved | û | Limited change-in-control benefits | ||||||||
ü | Set 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 FW Cook (in the US) and Guerdon Associates (in Australia) as its independent advisers for matters regarding remuneration for fiscal year 2023. The Remuneration Committee reviews the appointment of its advisers each year. Both FW Cook and Guerdon Associates provided the Remuneration Committee with written certification during fiscal year 2023 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 advisor for fiscal year 2023
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. The Remuneration Committee believes that US based companies are a more appropriate peer group than Australian based companies, as they are exposed to the same macroeconomic factors in the US housing market as those we face.
For fiscal year 2023, the factors used to review and define the Peer Group included:
•Size (revenue and market cap);
•Industry (builders and suppliers);
•Exposure to the US housing market;
•Operates and services global markets; and
•Focus on innovation and intellectual property as a differentiating factor for the business.
As result, it was decided to retain the peer group as identified for FY2022 except that Cornerstone Building Brands, Inc. (acquired by Clayton, Dubilier & Rice in 2022) is no longer a public company and was removed from the group.
Below are the names of the 22 companies comprising the Peer Group, which was used to benchmark the remuneration of our Senior Executive Officers in fiscal year 2023.
| A.O. Smith Corporation | Louisiana-Pacific Corp | The Toro Company | ||||||||||||
| Acuity Brands, Inc | Martin Marietta Materials, Inc | Toll Brothers, Inc. | ||||||||||||
| American Woodmark Corp | Masco Corporation | Trex Co., Inc | ||||||||||||
| Armstrong World Indus, Inc | Mohawk Industries, Inc | Valmont Industries, Inc | ||||||||||||
| Builders FirstSource, Inc. | NVR, Inc. | Vulcan Materials Co | ||||||||||||
| Carlisle Companies Incorporated | Newell Brands, Inc. | Watsco, Inc | ||||||||||||
| Fortune Brands Home & Security | Owens Corning | |||||||||||||
| Lennox International, Inc | Simpson Manufacturing Co., Inc | |||||||||||||
Performance Linkage with Remuneration Policy
During its annual review, the Remuneration Committee assessed our performance in fiscal year 2023 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 2023, during a change in CEO and other executive leadership roles in addition to facing a downturn in the housing market, was strong. Management continued to drive profitable growth achieving record FY23 Net Sales globally and record EBIT in North America. The long-term incentive plan three-year ROCE performance exceeded expectations and the long-term strategic measures included in the Scorecard resulted in above target payouts.
More details about this assessment are set out below in this Remuneration Report.
DESCRIPTION OF 2023 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 2023, 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”.
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 as defined by the Internal Revenue Service (the "IRS"). In addition, we match employee contributions dollar for dollar up to a maximum of the first 6% of an employee’s eligible compensation.
Non-Qualified Deferred Compensation Plan
As of 1 January 2021, we sponsor a non-qualified deferred compensation plan, the James Hardie Executive Deferred Compensation Plan (the "Deferred Compensation Plan"). Participation in the Deferred Compensation Plan is generally limited to individuals whose annual salary exceeds the IRS limits applicable to our qualified plans or are participants in our Long-Term Incentive Plan (the "LTIP"). The
Deferred Compensation Plan allows participants to elect to defer receipt of some or all of their salary or earned cash incentive to a later date. The Deferred Compensation Plan also restores matching employee contributions up to a maximum of the first 6% of an employee's eligible compensation that would not be eligible in the 401(k) Plan due to IRS contribution limits so long as the participant defers eligible compensation to the Deferred Compensation Plan.
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 2023, 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) | 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 2023, the STI target percentage for Mr Erter was 120% of base salary and 70% for Messrs Miele and Gadd, 65% for Mr Kilcullen and 60% for Mr Liu, with 80% allocated to the CP Plan and 20% allocated to the IP Plan for all Senior Executive Officers.
CP Plan
For fiscal year 2023, the core plan design was the same as prior years. We continue to measure both Growth and Returns when assessing Company performance and shareholder value creation.
For fiscal year 2023, the metrics for all regions (North America, Asia Pacific and Europe) are the same as fiscal year 2022 and are a net revenue measure (Growth) and a profit measure (Returns). The metrics are each set with a threshold, target and maximum payout scale. Similar in concept to the matrices used previously and in order to incentivize exceptional company performance in an uncertain and highly volatile market, both net revenue and profitability must be achieved together to derive a payout within the payout scale, reinforcing shareholder value creation. The maximum payout is 3.0x of target.
All Senior Executive Officers continued to be tied to the NA multiple either in part or in whole. Executives with NA responsibility are linked only to the NA multiple (Mr Gadd). For executives with global responsibility (Messrs Erter, Miele, Kilcullen and Liu), their STI is based on the metrics for North America (80%) and the Global Adjusted Net Income of the Company (20%).
IP Plan
Under the IP Plan, the Remuneration Committee approves a series of one-year individual performance goals which, along with our leadership behaviors, 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 aligned with the strategic plan and contributions 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 with Board discretion to award up to 300% of target for members of the Executive Leadership Team ("ELT").
The Remuneration Committee has reserved for itself discretion to change the STI paid. An example of when the Remuneration Committee would consider exercising this discretion includes external factors outside of management’s control, such as, a general shift in the housing market that is considered to have a sufficiently material impact on results. The Remuneration Committee will disclose the reasons for any such exercise of its discretion.
The Remuneration Committee believes that the payout scales are appropriate because they provide management with an incentive to achieve overall corporate goals, balance growth with returns, recognize the need to flexibly respond to strategic opportunities, and incorporate Remuneration Committee discretion to ensure appropriate outcomes.
STI Plan Performance for Fiscal Year 2023
For the Senior Executive Officers’, our CP Plan results and the subsequent STI payouts for fiscal year 2023 were either between threshold and target or below threshold. The design of the plan states that the company must achieve both goals to receive a payout with the payout being at the level of the lowest achieved. As a result, there are no payouts for the Company Performance portion of the plan:
•The North America business performed between threshold and target for Net Revenue and below threshold for EBIT
•The Adjusted Net Income of the company performed below threshold.
The Remuneration Committee decided to exercise discretion with regard to the payouts upon review of the company's achievements in FY23 and the executive’s performance, noting:
•FY23 Adjusted Net Income of US$606 million was 98% of prior year
•FY23 North America Net Sales was an all-time record at US$2.8 billion
•FY23 North America EBIT was an all-time record at US$652 million
The Committee also recognizes the macroeconomic global events that were out of management's control, including: rising interest rates, inflation, high energy costs in Europe due to the war in Ukraine, a significant decline in the housing markets we participate in and a leadership transition.
•Single family US housing starts declined for the 12-month period ended 31 March 2023 of 18% in total increase of inflation globally of US$170 million
Taking the above items into account, along with the FY23 results noted above, the Committee decided to use discretion to award a payout multiple of 0.25x (50% of the threshold) for the Senior Executive Officers. Total payout including CP and IP is 0.40x of target when rating is Fully Performing.
Regarding the IP Plan, the Senior Executive Officers’ performance and the subsequent STI payouts for fiscal year 2023 were at or above target based on each Senior Executive Officer’s achievement of fiscal year 2023 one-year individual performance and core organizational values and leadership behavior goals.
For fiscal year 2023, the amount to be paid to each of our Senior Executive Officers under the STI Plans, inclusive of the CP portion and IP portion, is provided in the STI Award column of the remuneration table, in the section titled “Remuneration Paid to Senior Executive Officers."
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 Group; 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.
In addition to the regular annual awards, Messrs Miele, Gadd and Kilcullen each received Leadership Team Transition and Alignment grants to ensure full support, alignment, and engagement in a smooth and successful transition of the company’s new CEO. The grant also recognized the increased workload during the transition period. These awards align with the annual fiscal year 2023 - 2025 ROCE RSUs, TSR RSUs and Scorecard LTI Units and are included in the table.
Mr Erter was issued a one-time award of nonqualified stock options upon hire as a "Buy Out" award for the forfeiture of his awards from his prior employer. The stock options are under the Equity Incentive Plan.
During fiscal year 2023, our Senior Executive Officers were granted the following awards:
| ROCE RSUs | TSR RSUs | Scorecard LTI Units | Stock options | |||||||||||
| A Erter | 119,174 | 193,525 | 305,048 | 269,221 | ||||||||||
| J Miele | 34,243 | 62,820 | 102,732 | — | ||||||||||
| S Gadd | 40,018 | 73,511 | 120,057 | — | ||||||||||
| J Kilcullen | 25,378 | 46,920 | 76,137 | — | ||||||||||
| J Liu | 7,092 | 11,501 | 21,276 | — | ||||||||||
RSUs and stock options issued/exercised 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 2023-2025)
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;
Per the plan, the maximum payout for the ROCE RSUs is 2.0x target LTI. ROCE is determined by dividing Adjusted EBIT by Adjusted Capital Employed1. 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 US housing market and better optimization of our manufacturing plants.
The hurdles for ROCE RSUs granted in fiscal year 2023 (for performance in fiscal years 2023 to 2025) remained the same as fiscal year 2022 as shown in the table below:
| Fiscal Years 2023-2025 ROCE | Amount of Target to Vest | ||||||||||
| < 35.0% | 0.0x | ||||||||||
| ≥ 35.0%, but < 37.0% | 0.5x | ||||||||||
| ≥ 37.0%, but < 38.5% | 1.0x | ||||||||||
| ≥ 38.5%, but < 40.0% | 1.5x | ||||||||||
| > 40.0% | 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.
____________
1 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.
ROCE RSUs Vesting in Fiscal Year 2023 (for Fiscal Years 2021-2023)
As a component of the fiscal year 2021 LTI Plan, we granted ROCE RSUs in August 2020. The ROCE RSUs comprised 25% 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 2021-2023 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 < 27.5% | 1.0x | ||||||||||
| ≥ 27.5%, but < 28.5% | 1.5x | ||||||||||
| ≥ 28.5% | 2.0x | ||||||||||
Based on the average ROCE result for fiscal years 2021-2023 of 46.4%, a 2.0x target of the ROCE RSUs granted will vest on 17 August 2023.
Relative TSR RSUs (25% of target LTI for Fiscal Years 2023-2025)
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 2023 is 2.0x target LTI.
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 2023, our relative TSR performance will be measured against the Peer Group over a three-year performance period from grant date. 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 | ||||||||||
| < 40th Percentile | 0.0x | ||||||||||
| 40th Percentile | 0.5x | ||||||||||
| > 40th, but < 60th Percentile | Sliding Scale | ||||||||||
| 60th Percentile | 1.0x | ||||||||||
| > 60th, but < 80th Percentile | Sliding Scale | ||||||||||
| ≥ 80th Percentile | 2.0x | ||||||||||
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 for Fiscal Years 2020-2022
As part of the fiscal year 2020 LTI Plan, in August 2019 we granted three-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 | ||||||||||
| < 40th Percentile | 0.0x | ||||||||||
| 40th Percentile | 0.5x | ||||||||||
| > 40th, but < 60th Percentile | Sliding Scale | ||||||||||
| 60th Percentile | 1.0x | ||||||||||
| > 60th, but < 80th Percentile | Sliding Scale | ||||||||||
| ≥ 80th Percentile | 2.0x | ||||||||||
In August 2022, the only test of Relative TSR performance was completed, resulting in our TSR performance at the 84.2 percentile of the Peer Group in place at that time. As a result, 2.0x of target outstanding Relative TSR RSUs vested.
Scorecard LTI (50% of target LTI for Fiscal Years 2023-2025)
Scorecard LTI has 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 since 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 performance, 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 2023, 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 included in our Annual Report filed in May 2022. An assessment of our Scorecard performance for fiscal years 2021-2023 is set out below. We will provide an explanation of the final assessment of performance under the Scorecard for fiscal years 2023-2025 at the conclusion of fiscal year 2025.
Scorecard LTI Vesting in Fiscal Year 2023 (for Fiscal Years 2021-2023)
After fiscal year 2023, the Remuneration Committee reviewed our performance over fiscal years 2021-2023 against the Scorecard objectives set forth in fiscal year 2021, 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 between 1.5x and 2.5x of target with an average weighted target of 2.0x.
| Performance Measure/Rationale | Performance Metric/Results | Board Assessment for the Three-year Period | ||||||
| PDG (Primary Demand Growth) | Goal: APAC: 3% - 6%; NA: 6% -8 % Result: APAC: 0.9%; NA: 3.8% | Below expectations | ||||||
Organic Revenue Growth | Goal: Europe: 5% - 12% Result: 9% | Meets expectations | ||||||
| EBIT Margin | Goal: APAC: 20% - 25%; Europe: 10% - 15%; NA 22% - 27% Result: APAC: 27.8%; Europe: 9.6% NA: 28.2% | Exceeds expectations | ||||||
| Lean - Cumulative over 3 years | Goal: APAC: US$19 million; Europe: US$20 million; NA: US$100 million Result: APAC: US$54 million; Europe US$48 million; NA: US$203 million | Exceeds expectations | ||||||
Zero Harm ("ZH") The safety of our employees is an essential objective of the Company | Goal: APAC: Safe Start Implementation DART rate: 0.20 Europe: Replicate systems from NA and APAC; Safe Start Implementation DART rate: 0.36 NA: 5S World Class Facilities DART rate: 0.36 Result: APAC and Europe completed their Safe Start and Driver/Fleet Safety programs. APAC DART rate is 0.0. EU achieved 30% reduction in DART rate from FY21-23. Moved from a 3.2 DART rate from time of acquisition to 0.54. NA completed their 5S program Implemented ZH critical priorities. NA DART rate was at 0.83 | APAC Exceeded expectations; EU and NA were below expectations; However, EU significantly improved DART rate since acquisition in 2018 | ||||||
| Performance Measure/Rationale | Performance Metric/Results | Board Assessment for the Three-year Period | ||||||
| Innovation | Commercial-in-confidence metrics for products and process efficiencies | Meets expectations | ||||||
| Environmental, Social & Governance | Goal: Continue to globally drive ESG reporting improvement; strengthen CDP disclosures with TCFD recommendations; receive zero negative shareholder votes across any resolution due to lack of clarity, FY23 ESG report to show improvement across areas reported on Result: Achieved all ESG deliverables and received significant positive feedback from proxy firms and investors. CDP score increased from B- to B during FY23 as a result of expanded reporting. FY22 report showed all key targets have been met or exceeded | Meets expectations | ||||||
| People and Culture | Goal: 3-Year average turnover: APAC: 13%; Europe 7%; NA: 13% Enhance leadership capabilities in key area, Diversity & Inclusion Result: Turnover: APAC: 8.9%; Europe: 7%; NA: 11% Hired Diversity & Inclusion Director, Achieved Gender diversity in management of 20%; launched Employee Resource Groups; APAC delivered engagement survey showing 90% employee engagement | Meets expectations | ||||||
CHANGES TO REMUNERATION FOR FISCAL YEAR 2024
Remuneration for Fiscal Year 2024
During our May 2023 meeting, 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 2024.
Other Senior Executive Officer Compensation
Base pay, target STI and LTI increases in fiscal year 2023 and 2024 for the CFO and other Senior Executive Officers are as follows:
| Base Salary | Target STI | LTI Target | ||||||||||||||||||
| Name | Fiscal Year 2023 (US$) | Fiscal Year 2024 (US$) | Fiscal Year 2023 (US$) | Fiscal Year 2024 (US$) | Fiscal Year 2023 (US$) | Fiscal Year 2024 (US$) | ||||||||||||||
| A Erter | 1,000,000 | 1,038,000 | 120 | % | 120 | % | 5,000,000 | 5,320,000 | ||||||||||||
| J Miele | 550,000 | 570,900 | 70 | % | 70 | % | 865,000 | 865,000 | ||||||||||||
| S Gadd | 650,000 | 672,750 | 70 | % | 70 | % | 1,000,000 | 1,000,000 | ||||||||||||
| R Kilcullen | 435,000 | 480,000 | 65 | % | 65 | % | 600,000 | 650,000 | ||||||||||||
| J Liu | 375,000 | 391,125 | 60 | % | 60 | % | 350,000 | 350,000 | ||||||||||||
Mr Erter's FY24 LTI target is being increased by 6.4% and Mr Kilcullen's base salary is being increased 10% and LTI target 8.3% to align his pay closer to the market median for his role; otherwise, there are no other target STI or LTI changes for the Senior Executive Officers for fiscal year 2024. Base salary increases are 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 2024, the core plan design will continue to be the same as fiscal year 2023. However, we changed our metrics to align with our strategic direction. We will continue to measure profitable growth primarily by using share gain metrics and profitability metrics when assessing Company performance and shareholder value creation. These metrics will continue to strengthen the connection between consistent growth and strong returns. The metrics for North America and Asia Pacific will be Primary Demand Growth ("PDG") and EBIT margin. Europe will be measured against three metrics - High Value Product Volume Growth, Total Net Sales and EBIT margin. The metrics are each set with a threshold, target and maximum payout scale. The metrics and scales will incentivize outstanding company performance in a unpredictable market; both driving profitable share gain to derive a payout within the payout scale reinforcing shareholder value creation. The maximum payout will be 3.0x of target. For fiscal year 2024, Mr Gadd will continue to be tied to the North America STI plan.
For executives with global responsibility (Messrs Erter, Miele, Kilcullen and Liu), their bonus will be based on global metrics of Adjusted Net Income, Return on Capital Employed ("ROCE") and Hardie Operating Systems ("HOS") cost savings. We believe these metrics properly align executives with global responsibility to be focused on profitable share gain in all three regions.
There will be no material change to the operation of the IP or CP Plans ("STI Plans") for fiscal year 2024.
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 2024 LTI Plan is consistent with the plan for fiscal year 2023 with updates to measures based on company strategy and financial targets.
The 2023 Notice of AGM will contain further details on the Relative TSR RSU and ROCE RSU grants for fiscal year 2024.
For fiscal year 2024, the Remuneration Committee has set the following seven Scorecard goals for each region (for the performance period in fiscal years 2024 to 2026) to ensure alignment with our strategic priorities:
| APAC | Europe | North America | |||||||||
| Zero Harm | •Empower all employees to be Zero Harm Leaders •Machine guarding •DART rate: •FY24= 0.08; FY25=0.07, FY26=0.07 | •Empower all employees to be Zero Harm Leaders •Machine guarding •DART Rate: . • FY24= 0.45; FY25=0.43, FY26=.41 | •Empower all employees to be Zero Harm Leaders •Machine guarding •DART rate: •FY24= 0.76; FY25=0.73, FY26=.70 | ||||||||
| Profitable Share Gain | 4% | High Value Product Growth: 25% CAGR | 4% | ||||||||
| EBIT Margin | >25% | 7% - 10% | >25% | ||||||||
| Hardie Operating System ("HOS") | •GTMO Projects: Deliver projects on time and on budget •HMOS Savings: Continued year over year savings in all regions totaling more than US$100 million globally across the three-year period versus FY23 baseline •Working Capital ◦FY24 – improvement of 50 million from 31 March 2023 baseline ◦FY25 – improvement of 75 million from 31 March 2023 baseline ◦FY26 – improvement of 100 million from 31 March 2023 baseline •Procurement and R&D Value Improvement savings of more than US$60 million across the three-year period versus FY23 baseline •Capacity Expansion: Deliver projects on time and on budget | ||||||||||
| Innovation | •Commercial-in-confidence metrics for products and process efficiencies | •Commercial-in-confidence metrics for products and process efficiencies | •Commercial-in-confidence metrics for products and process efficiencies | ||||||||
| People & Culture | •Embed our Purpose, Vision, Mission and Values •Establish Baseline of Net Promoter Score via Employee Engagement Survey (FY24); FY25-FY26 Increase/maintain Net Promoter Score •Align organization design with company strategy •Inclusion & Diversity strategy: Drive improvement against strategy •Voluntary employee turnover by region (management and above) improvement | ||||||||||
| Environmental, Social & Governance ("ESG") | FY24: •Cross functional collaboration and HMOS integration to deliver progress towards goals •Expanded Task Force for Climate Change Disclosure ("TFCD") reporting •Develop strategy to evolve external and internal ESG reporting FY25: •Evolve social impact strategy and goals. •Develop strategy for reduction of Scope 3 (value chain) greenhouse gas emissions and set interim goal for landfill waste •ESG efforts support consumer brand strategy FY26: •Develop strategy for improved circularity and set interim goal for landfill waste •Global adoption of responsible sourcing program •Develop ESG advocacy strategy •Greenhouse gas; zero to landfill •Be on track with goals published in July 2023 sustainability 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 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 2023, LTI grants made to Senior Executive Officers 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 2024, 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. In February 2023, we reviewed our guidelines and increased the multiple of base salary. For the CEO and other Senior Executive Officers, respectively, our increased guidelines require them to accumulate holdings of five times and two times their base salary, respectively, in our stock over a period of five years. New ELT will have five years from the date the Senior Executive Officer first becomes subject to the applicable guideline. In addition, an estimated after-tax amount of time-based restricted stock units will be counted toward the guidelines. All other features of the stock ownership guidelines remain the same.
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 2023, all Senior Executive Officers have either achieved the minimum share ownership threshold or are within the initial five year accumulation period.
Equity Award Practices
The fiscal year 2024 annual equity awards under the LTI Plan were approved by the Remuneration Committee in May 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.
Loans
We did not grant loans to Senior Executive Officers during fiscal year 2023. There are no loans outstanding to Senior Executive Officers.
Employment and Severance Arrangements
During fiscal year 2023, we maintained employment or severance agreements with Mr Erter and the Senior Executive Officers. 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 Aaron Erter
Below is a summary of the key terms of Mr Erter’s employment agreement:
•The Employment Agreement is effective 1 September 2022 providing for service as CEO.
•Mr Erter is an employee-at-will and either he or the Company may terminate his employment at any time or for any reason.
•Base salary at an initial annual rate of US$1,000,000, 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 120% 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 Mr Erter’s employment is terminated by the Company for any reason other than for “Cause”, or if Mr Erter 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) Mr Erter will be entitled to receive the following benefits:
◦An aggregate amount equal to the sum of: (i) two times Mr Erter’s base salary plus (ii) two times Mr Erter’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 the nonqualified stock options shall vest in full and become exercisable (to the extent then unvested);
◦Monthly payments for a period of up to 24 months following the date of termination equal to the premium Mr Erter would be required to pay for continuing coverage under the Company’s health benefit plans; and
◦Reasonable professional outplacement services for a period of up to 24 months following the date of termination.
Severance Agreements with Messrs Jason Miele, Sean Gadd and Joe Liu
During fiscal year 2023, we entered into a severance agreement with Messrs Miele, Gadd, Kilcullen and Liu in order to provide them with certain severance benefits under various termination scenarios. In the event of termination by the Company without cause or by the executive for good reason or death and disability, these benefits would be in addition to what would be considered standard for any employee at termination (i.e., lump sum unpaid base salary, accrued vacation, unreimbursed business expenses and the payment of any earned but unpaid annual incentive award) and would include:
•In the event that Messrs Miele, Gadd, Kilcullen and Liu are terminated by the Company without "Cause" or terminated by the executive 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) Messrs Miele, Gadd, Kilcullen and Liu will be entitled to receive the following benefits:
◦Salary continuation for the 1.5 year period following the date of termination, provided the aggregate amount of such continuation payments shall be equal to the sum of (i) 1.5 times the base salary plus (ii) 1.5 times the annual incentive award opportunity, as then in-effect;
◦All outstanding equity awards under the Company's equity incentive plans will be subject to the terms and conditions of the applicable plan and any corresponding award agreement(s); except that performance-based awards will fully accelerate vesting at target upon termination due to death or disability and the LTI Scorecard would pay out at 1.0x of target
◦Monthly payments for a period of 1.5 years following the date of termination equal to the premium the executive would be required to pay for continuing coverage under the Company’s health benefit plans; and
◦Reasonable professional outplacement services for a period of up to 12 months following the date of termination.
REMUNERATION PAID TO SENIOR EXECUTIVE OFFICERS
Total Remuneration for Senior Executive Officers
Details of the remuneration for Senior Executive Officers in fiscal years 2023, 2022 and 2021 are set out below:
| (US dollars) | Primary | Post- employment | Equity Awards | Other | TOTAL | ||||||||||||||||||||||||||||||||||||||||||
| Name | Base Pay1 | STI Award2 | Other Benefits3 | 401(k) | Ongoing Vesting 4 | Mark-to Market5 | Relocation Allowances, and Other Nonrecurring6 | ||||||||||||||||||||||||||||||||||||||||
A Erter7 | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal Year 2023 | 556,996 | 278,795 | 29,123 | 12,830 | 2,339,393 | 93,635 | 1,832,434 | 5,143,206 | |||||||||||||||||||||||||||||||||||||||
| J Miele | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal Year 2023 | 550,000 | 154,000 | 36,229 | 18,300 | 2,054,001 | (644,967) | 329,636 | 2,497,199 | |||||||||||||||||||||||||||||||||||||||
| Fiscal Year 2022 | 487,000 | 1,462,785 | 42,480 | 17,400 | 1,291,915 | 148,071 | — | 3,449,651 | |||||||||||||||||||||||||||||||||||||||
| Fiscal year 2021 | 411,692 | 648,960 | 111,469 | 17,100 | 533,914 | 754,806 | 283,744 | 2,761,685 | |||||||||||||||||||||||||||||||||||||||
| S Gadd | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal Year 2023 | 650,000 | 182,000 | 62,333 | 18,300 | 2,758,207 | (1,123,392) | — | 2,547,448 | |||||||||||||||||||||||||||||||||||||||
| Fiscal Year 2022 | 597,487 | 1,403,340 | 62,027 | 17,400 | 2,443,365 | 503,632 | — | 5,027,251 | |||||||||||||||||||||||||||||||||||||||
| Fiscal year 2021 | 573,299 | 901,415 | 38,808 | 17,100 | 1,438,684 | 3,082,202 | — | 6,051,508 | |||||||||||||||||||||||||||||||||||||||
| R Kilcullen | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal Year 2023 | 435,000 | 113,100 | 54,973 | 18,300 | 1,457,435 | (546,586) | — | 1,532,222 | |||||||||||||||||||||||||||||||||||||||
| Fiscal Year 2022 | 398,627 | 650,278 | 45,927 | 18,922 | 1,232,884 | 205,533 | — | 2,552,171 | |||||||||||||||||||||||||||||||||||||||
| Fiscal year 2021 | 379,030 | 593,649 | 33,788 | 12,453 | 635,010 | 1,132,357 | — | 2,786,287 | |||||||||||||||||||||||||||||||||||||||
| J Liu | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal Year 2023 | 375,000 | 102,250 | 57,776 | 18,300 | 197,031 | (2,881) | 37,694 | 785,170 | |||||||||||||||||||||||||||||||||||||||
| TOTAL | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal Year 2023 | 2,566,996 | 830,145 | 240,434 | 86,030 | 8,806,067 | (2,224,191) | 2,199,764 | 12,505,245 | |||||||||||||||||||||||||||||||||||||||
____________
1Base pay for fiscal years 2023, 2022 and 2021 includes salary paid to Senior Executive Officers for the 26 bi-weekly paychecks received during the fiscal years.
2For further details on STI awards payable for fiscal year 2023, see “Incentive Arrangements” above in this Remuneration section. Amounts reflect actual STI awards to be paid in June 2023 and paid in June 2022 and 2021, for fiscal years 2023, 2022 and 2021, respectively. In fiscal year 2022, Messrs Miele and Gadd also receive a bonus due to the additional work from the departure of the CEO.
3Includes the aggregate amount of all other benefits received in the year indicated. Examples of benefits that may be received include medical and life insurance benefits, car allowances, membership in executive wellness programs, and financial planning and tax services.
4Includes equity award expense for grants of Scorecard LTI awards, relative TSR RSUs, ROCE RSUs and Stock Options. Relative TSR RSUs are valued using a Monte Carlo simulation method and stock options are valued using the Black-Scholes option pricing model. ROCE RSUs and Scorecard LTI awards are valued based on the Company’s share price at each balance sheet date adjusted for the fair value of estimated dividends as well as the Remuneration Committee’s current expectation of the amount of the RSUs or awards which will vest. The fair value of equity awards granted are included in compensation over the periods in which the equity awards vest. For ROCE RSUs and Scorecard LTI awards, this amount excludes adjustments to the equity award expense in previous fiscal years resulting from changes in the Company’s share price, which is disclosed separately in the Equity Awards “Mark-to-Market” column.
5The amount included in this column is the equity award expense in relation to ROCE RSUs and Scorecard LTI awards resulting from changes in fair market value of the US dollar share price during the fiscal years 2023, 2022 and 2021 as well as adjustments to performance ratings based on review by Executive Management and the Board of Directors. During fiscal year 2023, there was a 29.7% decrease in our share price from US$30.38 to US$21.36. During fiscal year 2022, there was a 0.3% increase in our share price from US$30.28 to US$30.38.
6Includes the aggregate of non-recurring payments or other benefits received in the year indicated. Examples include one-time signing bonus or other limited payments connected to initial retention, one-time discretionary bonus payments, relocation allowances and costs and severance payments.
7For Mr Erter, amounts reflect compensation received during fiscal year 2023 based on his start date of 1 September 2022. Mr Erter's base pay includes US$123,206 in fiscal year 2023, which a portion is allocated for tax purposes to his services on the Company’s Board.
Additional Summary Remuneration Table
This table shows the compensation provided to the executive that more closely reflects the amount of pay earned during each fiscal year reported. The footnotes below the table define each compensation component. The main difference between the two tables is the equity incentives. This table shows the value of the LTI Scorecard payout (not shown in previous table) in the Non-Equity Incentive Plan Compensation column, which also includes the annual STI payout. The Stock Awards column shows the value of the fiscal years 2023-2025 equity awards that were granted to each executive.
| Name | Base Pay1 | Bonus2 | Stock Awards3 | Options Awards4 | Non-Equity Incentive Plan Compensation5 | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation6 | Total | |||||||||||||||||||||||||||||||||||||||
A Erter7 | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal year 2023 | 556,996 | 2,499,965 | 1,999,996 | 278,795 | — | 1,874,387 | 7,210,139 | ||||||||||||||||||||||||||||||||||||||||
| J Miele | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal year 2023 | 550,000 | — | 844,974 | — | 937,329 | — | 384,165 | 2,716,468 | |||||||||||||||||||||||||||||||||||||||
| Fiscal year 2022 | 487,000 | 600,000 | 300,003 | — | 1,289,402 | — | 59,880 | 2,736,285 | |||||||||||||||||||||||||||||||||||||||
| Fiscal year 2021 | 411,692 | — | 225,005 | — | 795,901 | — | 412,313 | 1,844,911 | |||||||||||||||||||||||||||||||||||||||
| S Gadd | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal year 2023 | 650,000 | — | 987,480 | 2,301,587 | — | 80,633 | 4,019,700 | ||||||||||||||||||||||||||||||||||||||||
| Fiscal year 2022 | 597,487 | 400,000 | 400,003 | — | 2,349,680 | — | 79,427 | 3,826,597 | |||||||||||||||||||||||||||||||||||||||
| Fiscal year 2021 | 573,299 | — | 399,998 | — | 2,095,596 | — | 55,907 | 3,124,800 | |||||||||||||||||||||||||||||||||||||||
| R Kilcullen | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal year 2023 | 435,000 | — | 626,226 | 1,000,727 | — | 73,273 | 2,135,226 | ||||||||||||||||||||||||||||||||||||||||
| Fiscal year 2022 | 398,627 | — | 199,993 | — | 1,076,895 | — | 64,849 | 1,740,364 | |||||||||||||||||||||||||||||||||||||||
| Fiscal year 2021 | 379,030 | — | 199,999 | — | 985,476 | — | 46,241 | 1,610,746 | |||||||||||||||||||||||||||||||||||||||
| J Liu | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal year 2023 | 375,000 | — | 174,997 | — | 101,250 | — | 113,770 | 765,017 | |||||||||||||||||||||||||||||||||||||||
| TOTAL | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal Year 2023 | 2,566,996 | — | 5,133,642 | 1,999,996 | 4,619,688 | — | 2,526,228 | 16,846,550 | |||||||||||||||||||||||||||||||||||||||
____________
1 Base pay for fiscal years 2023, 2022 and 2021 includes salary paid to Senior Executive Officers for the 26 bi-weekly paychecks received during the fiscal years.
2 Includes non-performance bonuses such as a special award for retention or a sign-on bonus for a new hire. Messrs Miele and Gadd received special bonuses for their work in FY22 due to the departure of the CEO in the amounts of US$600,000 and US$400,000 respectively.
3 Shows the value on the date of grant for the TSR RSUs and ROCE RSUs granted to the executive during each fiscal year. Relative TSR RSUs are valued using a Monte Carlo simulation method. ROCE RSUs are valued based on the Company’s share price on the grant date. The TSR RSU valuation for fiscal year 2022 is US$15.22 and ROCE RSU 20-day average share price of US$35.37.
4 Mr Erter was granted an award of nonqualified stock options upon hire. The stock options were granted at an exercise price of AUD33.05 and become exercisable 3 years after the grant date of 3 November 2022 with a 5 year exercise period.
5 For further details on STI awards paid for fiscal year 2023, see “Incentive Arrangements” above in this Remuneration section. Amounts reflect actual STI awards to be paid in June 2023 and paid in June 2022 and 2021, for fiscal years 2023, 2022 and 2021, respectively. In addition, the LTI Scorecard cash payouts are included that were paid in August 2022, 2021 and 2020.
6 Includes the aggregate amount of all other benefits received in the year indicated. Examples of benefits that may be received include medical and life insurance benefits, 401(K) company match, relocation, car allowances, membership in executive wellness programs, and financial planning and tax services.
7 Mr Erter's base pay includes US$120,009.83 in fiscal year 2023 which is allocated for tax purposes to his services on the Company’s Board.
Variable Remuneration Payable in Future Years
Details of the accounting cost of the variable remuneration for fiscal year 2023 that may be paid to Senior Executive Officers in future years are set out below. The minimum amount payable is nil in all cases. The maximum amount payable will depend on the share price at time of vesting, and is therefore not possible to determine. The table below is based on the fair value of the RSUs and Scorecard LTI according to US GAAP and our estimate of the rating to be applied to Scorecard LTI.
Scorecard LTI1 | |||||||||||||||||
| (US dollars) | |||||||||||||||||
| FY2023 | FY2024 | FY2025 | FY2026 | TOTAL | |||||||||||||
| A Erter | 1,200,058 | 1,740,182 | 1,143,187 | 380,127 | 4,463,554 | ||||||||||||
| J Miele | 357,876 | 617,842 | 391,047 | 96,194 | 1,462,959 | ||||||||||||
| S Gadd | 419,168 | 723,659 | 455,645 | 111,208 | 1,709,680 | ||||||||||||
| R Kilcullen | 268,774 | 464,016 | 284,712 | 66,725 | 1,084,227 | ||||||||||||
| J Liu | 59,365 | 102,489 | 102,209 | 38,923 | 302,986 | ||||||||||||
| 2,305,241 | 3,648,188 | 2,376,800 | 693,177 | 9,023,406 | |||||||||||||
ROCE RSUs2 | |||||||||||||||||