Form 4: AZEK Co. CHRO Disposes of Shares and Equity Awards Following James Hardie Merger Completion

AZEK Co. Chief Human Resources Officer Sandra Lamartine disposed of significant equity holdings, including common stock, restricted stock units, and stock options, as part of the company's merger with James Hardie Industries plc.

Summary

• Sandra Lamartine, CHRO of The AZEK Company Inc., reported the disposal of her beneficial ownership in AZEK securities on July 1, 2025.
• This disposal was a direct result of the closing of the merger transactions between AZEK and James Hardie Industries plc (JHX), as outlined in the Merger Agreement dated March 23, 2025.
• Each outstanding share of AZEK common stock was converted into the right to receive $26.45 in cash and 1.0340 JHX ordinary shares.
• The JHX ordinary share price used for calculation was $26.053018, based on the five-trading day volume-weighted average price ending June 30, 2025.
• Ms. Lamartine disposed of 21,015 shares of Class A Common Stock.
• Her Performance-Based Restricted Stock Units (PSUs) totaling 42,262 units were converted into JHX time-based restricted stock units and a cash award, with performance conditions for future fiscal years (2026 and 2027) being based on target performance and no longer applying after the merger.
• Her Non-qualified stock options, totaling 33,339 units across various exercise prices and expiration dates, were converted into options to purchase JHX ordinary shares with adjusted exercise prices.
• All converted JHX equity awards (RSUs, PSUs, and stock options) are subject to the same terms and vesting schedules as their original AZEK counterparts.

Sentiment

Score: 7

Explanation: The document reports the successful completion of a merger, which is generally a positive event for the acquiring company and provides a defined outcome for the acquired company's shareholders and equity holders. The terms of the equity award conversions appear fair and standard for such transactions, ensuring continuity for the reporting person's incentives.

Positives

• The completion of the merger with James Hardie Industries plc provides a clear path for AZEK shareholders, converting their holdings into a combination of cash and JHX shares.
• Equity awards held by the CHRO were assumed and converted by JHX, maintaining their value and vesting schedules, ensuring continuity for executive compensation.
• Performance-based vesting conditions for PSUs for fiscal years 2026 and 2027 were fixed at target performance and removed post-merger, providing certainty for the award holders.

Negatives

• The filing indicates a complete disposal of AZEK securities by the reporting person, reflecting the cessation of AZEK as an independent entity following the merger.

Future Outlook

The document primarily reports a completed transaction (merger) and the resulting changes in beneficial ownership. It does not provide forward-looking statements or guidance for the combined entity, James Hardie Industries plc, beyond the conversion terms of equity awards.

Management Comments

• Represents shares (including in respect of shares underlying, as applicable, Company RSU Awards, Company PSU Awards and Company Stock Options (each as defined in the Agreement and Plan of Merger, dated as of March 23, 2025 (as amended, the "Merger Agreement"), by and among The AZEK Company Inc. ("AZEK"), James Hardie Industries plc ("JHX") and Juno Merger Sub Inc.)) disposed of pursuant to the closing of the transactions contemplated by the Merger Agreement.
• In accordance with the Merger Agreement, upon the Effective Time (as defined in the Merger Agreement), each share of Company Common Stock (as defined in the Merger Agreement) that was issued and outstanding immediately prior to the Effective Time (subject to certain exceptions) was converted into the right to receive $26.45 in cash, without interest (the "Cash Consideration"), and 1.0340 (the "Exchange Ratio") JHX ordinary shares, with cash in lieu of fractional JHX ordinary shares...
• Upon the Effective Time, each then-outstanding Company RSU Award held by the reporting person was assumed by JHX and converted into (A) a time-based restricted stock unit award of JHX covering a number of JHX ordinary shares... and (B) a cash award...
• Upon the Effective Time, each then-outstanding Company PSU Award was assumed by JHX and converted into (A) a time-based restricted stock unit award of JHX covering a number of JHX ordinary shares... and (B) a cash award...
• For purposes of the foregoing calculations, the number of shares of Company Common Stock subject to the Company PSU Award was determined based on (i) for fiscal years 2024 and 2025, actual performance and (ii) for fiscal years 2026 and 2027, target performance.
• Each time-based restricted stock unit award of JHX and each cash award is subject to the same terms and conditions as were applicable to such Company PSU Award immediately prior to the Effective Time, including the vesting schedule (except that the performance-based vesting conditions do not apply from and after the Effective Time).
• Upon the Effective Time, each then-outstanding Company Stock Option held by the reporting person was assumed by JHX and converted into an option to purchase a number of JHX ordinary shares...

Industry Context

This Form 4 filing reflects the finalization of a significant M&A transaction in the building materials or manufacturing sector, where AZEK, known for its sustainable building products, is acquired by James Hardie Industries, a global leader in fiber cement building materials. Such mergers typically aim to achieve synergies, expand market reach, and consolidate industry positions. The conversion of AZEK equity into a mix of cash and JHX shares is a standard mechanism for integrating compensation structures post-acquisition.

Comparison to Industry Standards

• The merger consideration of cash and stock is a common structure in large-scale acquisitions, balancing immediate liquidity for shareholders with continued participation in the combined entity's future performance.
• The assumption and conversion of equity awards (RSUs, PSUs, stock options) by the acquiring company (JHX) is standard practice to retain key talent and ensure continuity of incentive programs post-merger.
• The adjustment of performance-based vesting conditions for PSUs to target performance and their subsequent removal post-merger is a typical approach to simplify and finalize executive compensation in an acquisition context, providing certainty to award holders.

Corporate Governance

Stakeholder Impact

• Shareholders (AZEK): Received a combination of cash and JHX shares, providing liquidity and continued exposure to the combined entity.
• Employees (AZEK, particularly those with equity awards): Equity awards were assumed and converted by JHX, maintaining their value and vesting schedules, which is positive for retention and morale. Performance-based conditions for PSUs were simplified.
• Management (AZEK, specifically Sandra Lamartine): Her AZEK equity holdings were converted into JHX equity and cash, aligning her incentives with the new parent company.

Next Steps

• Integration of AZEK's operations and personnel into James Hardie Industries plc.
• Continued reporting of beneficial ownership changes by insiders of James Hardie Industries plc.

Key Dates

Keywords

SEC Form 4, AZEK Company Inc., James Hardie Industries plc, Merger Agreement, Beneficial Ownership, Insider Transaction, Equity Awards, Restricted Stock Units, Stock Options, Corporate Governance, Sandra Lamartine, CHRO, Acquisition, Share Conversion, Cash Consideration