James Hardie Industries (ASX:JHX) urged shareholders to vote in favor of a CEO equity grant proposal at an Aug. 21 annual meeting, pushing back against a recommendation made by the Australian Council of Superannuation Investors (ACSI), according to a Tuesday filing with the Australian bourse.
Despite its recommendation to vote against the proposal, the ACSI acknowledged positive changes the company has made to its long-term incentive (LTI) structure, including a substantial reduction in LTI opportunity and the removal of a cash-settled component, James Hardie said.
However, the company disagrees with ACSI's assertion that the average annual adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth targets create the potential for significant payouts for odd outcomes, or that adjusted EBITDA is an unsatisfactory LTI measure.
The EBITDA measure aims to reward the consistent delivery of annual operating performance and year-on-year growth throughout the three-year performance period rather than focusing only on the cumulative outcome at the end of fiscal 2029, James Hardie said.
It added that the board "deliberately adopted this approach in light of the heightened uncertainty currently affecting the North American housing market."