James Hardie Industries (ASX:JHX) said it incorporated extensive investor feedback to redesign its compensation structure, as it urged shareholders to vote in favor of a CEO equity grant proposal at an Aug. 21 annual meeting, according to a Thursday statement filed with the Australian bourse on Friday.
The company noted that proxy research firm Ownership Matters has recommended a vote against the CEO's equity grant.
James Hardie said it made several key changes to its long-term incentives following "disappointing voting outcomes" at its 2025 annual meeting, including the introduction of a predominantly performance-based structure for the CEO and the alignment of performance goals with externally communicated guidance.
"The board strongly believes that these awards strengthen alignment with long-term shareholder value creation, while adequately reflecting US market practice," the company said. "In particular, the stock options incorporate an inherent share price hurdle and only deliver value if the company's share price exceeds the strike price at vesting."
Additionally, James Hardie disagrees with Ownership Matters' assertion that the average annual adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth targets create a risk of perverse outcomes.
It said the purpose of the EBITDA measure is to reward the consistent delivery of annual operating results across the three-year performance period rather than focusing only on the cumulative outcome at the end of fiscal year 2029.
The company's shares gained 5% in recent Friday trade.