James Hardie, the global building products group, has defended its executive incentive packages ahead of its annual general meeting scheduled for October 30. The company explained its remuneration approach, particularly in the context of the US market, in a statement lodged with the Australian Securities Exchange (ASX) on Thursday. James Hardie is a manufacturer of fibre cement siding and backerboard products, used primarily in residential construction. The company operates in markets around the world.
The defence comes as the company faces scrutiny over its $14 billion acquisition of Azek, which James Hardie acknowledged has a “short-term downward impact” on its return on capital employed (ROCE). The board and remuneration committee are working to align executive pay with US compensation standards, which differ from those in Australia, the company noted.
Citi analyst Samuel Seow highlighted in a note on September 24 that the resolutions ahead of the annual meeting made for “hard reading,” particularly with reduced ROCE targets in incentive plans. This comes as James Hardie chairwoman Anne Lloyd, who assumed her role in late 2022, is up for re-election at the meeting, along with two other directors.
Lloyd and the other directors may face a substantial protest vote from investors concerned about the Azek deal and a subsequent downgrade to the company’s profit outlook. The annual meeting will be a key moment for the company to address shareholder concerns and outline its strategy moving forward.
