XML 40 R25.htm IDEA: XBRL DOCUMENT v3.26.1
Share-based Compensation
 12 Months Ended
Feb. 28, 2026
Share-Based Payment Arrangement, Noncash Expense [Abstract]  
Share-based Compensation
16. 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 28, 2026, we have approximately 1.17 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 2026, 2025, and 2024 is as follows:
 
Year Ended
February 28, 2026February 28, 2025February 29, 2024
Restricted Stock UnitsWeighted Average
Grant Date
Fair Value		Restricted Stock UnitsWeighted Average
Grant Date
Fair Value		Restricted Stock UnitsWeighted Average
Grant Date
Fair Value
Outstanding at beginning of year185,425 $58.12 230,586 $41.53 200,969 $43.50 
Granted74,435 84.90 104,030 76.14 132,644 38.41 
Vested(96,513)55.78 (141,800)45.03 (102,077)41.27 
Forfeited(6,345)76.70 (7,391)45.37 (950)45.69 
Outstanding at end of year157,002 $71.46 185,425 $58.12 230,586 $41.53 
Vested and expected to vest at end of year157,002 $71.46 185,425 $58.12 230,586 $41.53 
The total fair value of RSU awards vested during fiscal years 2026, 2025, and 2024 was $8.6 million, $10.8 million and $3.8 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 fiscal year 2026 and 2025 PSU awards are based on an average of AZZ's return on invested capital ("ROIC") and total shareholder return ("TSR") during the three-year period. The TSR metric is compared to a defined specific industry peer group. The awards include certain vesting multipliers. The fiscal year 2024 PSU awards are based on AZZ's TSR 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 2026, 2025, and 2024 is as follows:
Year Ended
February 28, 2026February 28, 2025February 29, 2024
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 beginning of year161,114 $56.79 167,978 $51.64 152,546 $48.51 
Granted55,707 80.85 60,007 82.25 80,285 42.93 
Vested(61,917)53.99 (54,500)66.12 (42,868)33.22 
Forfeited(5,625)79.07 (12,371)51.19 (21,985)33.22 
Outstanding at end of year149,279 $65.97 161,114 $56.79 167,978 $51.64 
Vested and expected to vest at end of year149,279 $65.97 161,114 $56.79 167,978 $51.64 
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.
The following table summarizes the assumptions used to calculate the fair value of the PSU awards:
Year Ended
February 28, 2026February 28, 2025February 29, 2024
Performance based awards
Expected term (in years)333
Expected volatility34.4 %29.6 %32.2 %
Risk-free interest rate3.80 %4.87 %3.80 %
 Directors Grants
AZZ granted each of its independent directors a total of 1,265, 1,666 and 2,682 shares of its common stock during fiscal years 2026, 2025 and 2024, respectively. These common stock grants were valued at $98.81, $74.99 and $42.87 per share for fiscal years 2026, 2025 and 2024, 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, 0.9 million shares were available for issuance as of February 28, 2026. 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 2026, 2025 and 2024 (in thousands):
Year Ended
February 28, 2026February 28, 2025February 29, 2024
Compensation expense$14,832 $13,261 $9,510 
Income tax benefits3,115 2,785 1,969 
Unrecognized compensation cost related to unvested stock awards at February 28, 2026 was $10.6 million, which is expected to be recognized over a weighted average period of 1.28 years.
The actual tax benefit/(expense) realized from share-based compensation during fiscal years 2026, 2025 and 2024 was $1.4 million, $1.3 million and $(0.2) 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.
Executive Retiree LTI Program
Effective April 18, 2025, the Compensation Committee of the Board of Directors (the "Compensation Committee") adopted the Executive Retiree LTI Program (the "ERP") to continue the vesting of annual equity awards to certain executive officers and other senior members of the management team as designated by the Compensation Committee, including the Company's named executive officers (a "Covered Executive" or collectively, the "Covered Executives"), upon qualified Retirement (as such term is defined in the Company's 2023 Long-Term Incentive Plan). The ERP is applicable to both annual restricted share unit awards and annual performance share unit awards granted to the Covered Executives pursuant to newly adopted Restricted Share Unit ("RSU") Award Agreements and Performance Share Unit ("PSU") Award Agreements for the Covered Executives (collectively, the "Award Agreements") containing such provisions for the fiscal year 2026 long-term incentive equity awards. To be eligible for continued vesting of these annual equity awards upon a qualified Retirement, the ERP requires that Covered Executives:
i.be at least 65 years of age or 55 years of age and have at least 10 years of service with AZZ;
ii.not receive any severance payments or be subject to any severance or employment agreements containing other retirement provisions;
iii.provide sufficient advance notice of their intent to retire prior to the planned retirement date;
iv.ensure adequate succession or continuity planning is in place for such Covered Executive's position;
v.be compliant with AZZ’s executive stock ownership requirements on their respective retirement date; and
vi.execute and deliver a waiver and release agreement. Additionally, a period of one year must have elapsed between the grant date of the applicable awards and the Covered Executive's retirement date. The ERP also provides that fiscal year 2023, fiscal year 2024 and fiscal year 2025 RSU and PSU award agreements will be amended for the Covered Executives to allow vesting subsequent to a qualified Retirement at the Compensation Committee's discretion.
Upon adoption of the ERP, the service requirement for executives that are currently eligible for retirement has been met. As a result, we recognized additional stock-based compensation for the year ended February 28, 2026, of $2.2 million upon the adoption of the ERP related to the RSUs for Covered Executives that have achieved qualified retirement status.