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Share-based Compensation
 12 Months Ended
Feb. 29, 2024
Share-Based Payment Arrangement, Noncash Expense [Abstract]  
Share-based Compensation
17. Share-based Compensation
AZZ has two share-based compensation plans, the 2014 Long Term Incentive Plan, as amended (the "2014 Plan") and the 2023 Long Term Incentive Plan (the "2023 Plan" and, together with the 2014 Plan, the "LTI Plans"). The 2023 Plan was approved by our shareholders on July 11, 2023, at which time the 2014 Plan was terminated other than with respect to then outstanding awards under the 2014 Plan. No future grants may be made under the 2014 Plan. The LTI Plans provide our directors, officers and certain key employees with stock options, restricted stock units, performance share units, stock appreciation rights and other stock-based awards.
The maximum number of shares that may be issued under the 2023 Plan is 1.45 million shares and, as of February 29, 2024, we have approximately 1.43 million shares reserved for future issuance under the 2023 Plan.
We account for our share-based employee compensation plans in accordance with ASC 718, Compensation—Stock Compensation. Compensation expense is recognized over the requisite service period, which is in line with the applicable vesting period for each share-based award. Forfeitures are recognized when they occur.
Restricted Stock Unit Awards
Restricted stock unit ("RSU") awards are valued at the market price of AZZ's common stock on the grant date. Awards generally vest ratably over a period of three years, but these awards may vest earlier in accordance with the Plan’s accelerated vesting provisions. RSU awards have dividend equivalent rights ("DERs"), which entitle holders of RSUs to the same dividend value per share as holders of common stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid when the awards vest and shares are issued.
A summary of RSU award activity (including DERs) for fiscal years 2024, 2023, and 2022 is as follows:
 
Year Ended February 29/28,
202420232022
Restricted Stock 
Units		Weighted Average Grant Date 
Fair Value		Restricted Stock 
Units		Weighted Average Grant Date 
Fair Value		Restricted Stock 
Units		Weighted Average Grant Date 
Fair Value
Outstanding at beginning of year200,969 $43.50 214,098 $41.24 226,446 $35.66 
Granted132,644 38.41 148,595 44.60 77,787 51.23 
Vested(102,077)41.27 (136,197)41.16 (84,060)35.78 
Forfeited(950)45.69 (25,527)43.72 (6,075)39.02 
Outstanding at end of year230,586 $41.53 200,969 $43.50 214,098 $41.24 
Vested and expected to vest at end of year230,586 $41.53 200,969 $43.50 214,098 $41.24 
The total fair value of RSU awards vested during fiscal years 2024, 2023, and 2022 was $9.9 million, $6.1 million and $4.6 million, respectively.
Performance Share Unit Awards
AZZ grants performance share unit ("PSU") awards to certain employees, which also include DERs as described above. These PSU awards have a three-year performance cycle and will vest and become issuable, if at all, on the third anniversary from the award date. The PSU awards are based on AZZ's total shareholder return during the three-year period, in comparison to a defined specific industry peer group and include certain vesting multipliers. The fair value of PSU awards with performance and service conditions is estimated using the value of AZZ''s common stock on the date of grant. The fair value of PSU awards with market conditions is estimated using a Monte Carlo simulation model on the date of grant.
A summary of PSU award activity (including DERs) for fiscal years 2024, 2023, and 2022 is as follows:
Year Ended February 29/28,
202420232022
 Performance Stock Units  Weighted Average Grant Date Fair Value  Performance Stock Units  Weighted Average Grant Date Fair Value  Performance Stock Units  Weighted Average Grant Date Fair Value
Outstanding at the beginning of year152,546 $48.51 154,455 $44.05 143,584 $39.96 
Granted80,285 42.93 76,020 38.42 55,114 63.39 
Vested(42,868)33.22 (63,021)43.22 (44,243)54.00 
Forfeited(21,985)33.22 (14,908)48.41 — — 
Outstanding at the end of year167,978 $51.64 152,546 $48.51 154,455 $44.05 
Vested and expected to vest at end of year167,978 $51.64 152,546 $48.51 154,455 $44.05 
The PSU awards in the table above are presented at the face value of the respective grants. However, the number of PSU awards that may ultimately vest can vary in a range 0% to 200% of the face amount of such awards, depending on the outcome of the performance or market vesting conditions, as applicable.
Stock Appreciation Rights
Stock appreciation rights ("SARs") are granted with an exercise price equal to the market value of the Company's common stock on the date of grant. These awards generally have a contractual term of seven years and vested ratably over a period of three years, although some vested immediately on issuance. These awards were valued using the Black-Scholes
option pricing model. AZZ did not grant any SARs in fiscal year 2024, 2023 or 2022. As of February 29, 2024, there were no SARs outstanding.
 
A summary of SAR activity for fiscal years 2024, 2023 and 2022 is as follows:
 
Year Ended February 29/28,
202420232022
 SARs  Weighted 
Average Exercise
Price 		 SARs Weighted 
Average Exercise
Price		 SARs Weighted 
Average Exercise
Price
Outstanding at beginning of year— $— — $— 5,435 $45.25 
Granted— — — — — — 
Exercised— — — — (5,435)45.25 
Forfeited— — — — — — 
Outstanding at end of year— $— — $— — $— 
Exercisable at the end of year— $— — $— — $— 
 Directors Grants
AZZ granted each of its independent directors a total of 2,682, 2,619 and 1,976 shares of its common stock during fiscal years 2024, 2023 and 2022, respectively. These common stock grants were valued at $42.87, $40.09 and $53.13 per share for fiscal years 2024, 2023 and 2022, respectively, which was the market price of AZZ's common stock on the respective grant dates.
Employee Stock Purchase Plan
AZZ has an employee stock purchase plan ("ESPP"), which is available to all employees. The ESPP allows employees to purchase AZZ's common stock semi-annually through accumulated payroll deductions. Offerings under this plan have a duration of 24 months (the "Offering Period"). On the first day of an Offering Period (the "Enrollment Date") the participant is granted the option to purchase shares on each exercise date at the lower of 85% of the market value of a share of our common stock on the Enrollment Date or the exercise date. The participant’s right to purchase common stock under the plan is restricted to no more than $25,000 per calendar year, and the participant may not purchase more than 5,000 shares during any Offering Period. Participants may terminate their interest in a given offering or a given exercise period by withdrawing all of their accumulated payroll deductions at any time prior to the end of the Offering Period. An aggregate of 1.5 million shares of common stock are authorized for issuance under the ESPP. Of this amount, 1.1 million shares were available for issuance as of February 29, 2024. We issue new shares upon purchase through the ESPP.
Share-based Compensation Expense
The following table shows share-based compensation expense and the related income tax benefit included in the consolidated statements of income for fiscal years 2024, 2023 and 2022 (in thousands):
 
202420232022
Compensation expense$9,510 $8,382 $9,449 
Income tax benefits$1,969 $1,539 $1,984 
Unrecognized compensation cost related to unvested stock awards at February 29, 2024 was $9.9 million, which is expected to be recognized over a weighted average period of 1.53 years.
The actual tax benefit/(expense) realized from share-based compensation during fiscal years 2024, 2023 and 2022 was $(0.2) million, $(0.1) million and $(0.4) million, respectively.
Our policy is to issue shares under these plans from AZZ’s authorized but unissued shares. We have no formal or informal plan to repurchase shares on the open market to satisfy these requirements.