Armstrong World Industries Inc DEF 14A, filed Apr 30, 2026
Armstrong World Industries Inc (AWI)
About this DEF 14A
Armstrong World Industries Inc filed this DEF 14A on April 30, 2026.
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Preliminary Proxy Statement | |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
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Definitive Proxy Statement | |
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Definitive Additional Materials | |
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Soliciting Material Pursuant to §240.14a-12 | |
| ☒ | No fee required. | |
| ☐ | Fee paid previously with preliminary materials. | |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. | |
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ARMSTRONG WORLD INDUSTRIES, INC. 2500 COLUMBIA AVE., LANCASTER, PA 17603
www.armstrong.com
April 30, 2026 |
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2026 ANNUAL MEETING OF SHAREHOLDERS
ARMSTRONG WORLD INDUSTRIES, INC.
Dear Fellow Shareholders:
We look forward to your attendance virtually via the internet or by proxy at the 2026 Armstrong World Industries, Inc. Annual Shareholders’ Meeting. We will hold the meeting at 11:00 a.m. Eastern Time on Thursday, June 11, 2026. To provide a consistent and convenient experience for all shareholders regardless of location, we are holding this Annual Shareholders’ Meeting in an entirely virtual format.
At the 2026 Annual Shareholders’ Meeting, we will vote: (i) on the election of directors; (ii) on the ratification of KPMG LLP as our independent registered public accounting firm; (iii) on the 2026 Directors Stock Unit Plan; and (iv) on a non-binding advisory basis, on the compensation of our named executive officers. Please refer to the proxy statement for detailed information on each of the matters to be acted on at the meeting virtually via the internet.
Your vote is important, and we strongly urge you to cast your vote. For most items, including the election of directors, your shares will not be voted if you do not provide voting instructions via the internet, by telephone, or by returning a proxy or voting instruction card. We encourage you to vote promptly, even if you plan to attend the meeting virtually via the internet.
Our Board of Directors and management team are proud of the performance Armstrong achieved in the past year. We acquired additional capabilities to grow our Architectural Specialties business segment, refreshed our Board of Directors with two outstanding new non-employee directors, and delivered another year of outstanding financial results, extending our multi-year track record of profitable growth. In addition, in January 2026, the Board of Directors announced the selection of Mark A. Hershey to succeed Victor D. Grizzle as President and Chief Executive Officer, effective April 1, 2026, after a thorough succession planning process. Also effective April 1, 2026, Mr. Grizzle became the Executive Chair of the Board, a position in which he is expected to continue to serve until December 31, 2026, and Roy W. Templin became Lead Independent Director of the Board of Directors. Subject to his reelection as a director at the 2026 Annual Shareholders’ Meeting, Mr. Templin is expected to continue to serve as Lead Independent Director until December 31, 2026, and to be reappointed Chair of the Board of Directors effective January 1, 2027. We look forward to continuing our work in 2026 to deliver value for our shareholders.
On behalf of your Board of Directors, thank you for your continued support.
| Very truly yours, | ||
| Victor D. Grizzle | Roy W. Templin | |
| Executive Chair of the Board | Lead Independent Director of the Board | |
NOTICE OF 2026 ANNUAL MEETING OF SHAREHOLDERS
| Time and Date | 11:00 a.m. Eastern Time on Thursday, June 11, 2026 | |
| Attendance | Online at www.virtualshareholdermeeting.com/AWI2026 | |
| Record Date | April 16, 2026 | |
| Agenda | Items of Business |
Board Recommendation | ||
| 1. Elect as directors the nine (9) nominees named in the attached proxy statement |
FOR EACH DIRECTOR NOMINEE | |||
| 2. Ratify the selection of KPMG LLP as our independent registered public accounting firm for 2026 |
FOR | |||
| 3. Approve the 2026 Directors Stock Unit Plan |
FOR | |||
| 4. Approve, on an advisory basis, our executive compensation program |
FOR | |||
| How To Vote |
• Please act as soon as possible to vote your shares, even if you plan to attend the annual meeting via the internet. | |
• Your broker will not be able to vote your shares with respect to the election of directors, approval of the 2026 Directors Stock Unit Plan, or advisory approval of our executive compensation program unless you have given your broker specific instructions to do so. We strongly encourage you to vote. | ||
• You may vote via the internet, by telephone, or, if you have received a printed version of these proxy materials, by mail. | ||
• See “ADDITIONAL MEETING INFORMATION” beginning on page 75 of this proxy statement for further information. | ||
| Attending the Meeting via the Internet: |
Instructions on how to attend and participate via the internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/AWI2026.
Shareholders may vote and submit questions while attending the meeting on the internet. |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE ANNUAL MEETING
TO BE HELD ON JUNE 11, 2026:
The Notice of Annual Meeting, this Proxy Statement and
the Company’s 2025 Annual Report are available at www.proxyvote.com.
TABLE OF CONTENTS
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| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS |
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| ITEM 2 – RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
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| SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS |
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PROXY STATEMENT
This proxy statement was prepared under the direction of our Board of Directors (“Board”) to solicit your proxy for use at the 2026 Armstrong World Industries, Inc. Annual Shareholders’ Meeting (the “Annual Meeting”). This proxy statement and the related materials are first being distributed to shareholders on or about April 30, 2026. The terms “we”, “our”, “us”, “Armstrong”, “AWI”, and “Company” used in this proxy statement refer to Armstrong World Industries, Inc.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS. Certain statements in this proxy statement may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements are subject to various risks and uncertainties and include all statements that are not historical statements of fact and those regarding our intent, belief or expectations. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “outlook,” “target,” “predict,” “may,” “will,” “would,” “could,” “should,” “seek,” and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors that could have a material adverse effect on our financial condition, liquidity, results of operations or future prospects or which could cause actual results to differ materially from our expectations are described more fully in our most recently filed Annual Report on Form 10-K and subsequent filings with the U.S. Securities and Exchange Commission (“SEC”). Such forward-looking statements speak only as of the date they are made. We expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
ITEM 1 – ELECTION OF DIRECTORS
At the 2025 Annual Meeting of Shareholders (the “2025 Annual Meeting”), which was held on June 12, 2025, our shareholders reelected Victor D. Grizzle, Barbara L. Loughran, Richard D. Holder, William H. Osborne, Wayne R. Shurts, and Roy W. Templin to the Board. Kathleen E. Pitre was also elected to the Board for the first time. Effective immediately upon his reelection as a director at the 2025 Annual Meeting, Mr. Templin was reelected as Chair of the Board. On October 22, 2025, the Board appointed Kevin P. Holleran as a director, expanding the Board size to eight members. Mr. Holleran was identified and recommended to the Nominating, Governance and Social Responsibility Committee (“Governance Committee”) by a third-party search firm retained by the Governance Committee to identify qualified potential director candidates.
On January 13, 2026, the Board expanded the size of the Board to nine members and announced a leadership transition that became effective April 1, 2026 pursuant to which:
(a) Victor D. Grizzle transitioned from his position as the Company’s President and Chief Executive
Officer (“CEO”) to become Executive Chair of the Board (“Executive Chair”);
(b) Mark A. Hershey succeeded Mr. Grizzle as President and CEO of the Company and became a director of the Board; and
(c) Roy W. Templin became lead independent director of the Board (“Lead Independent Director”).
On the recommendation of the Governance Committee, our Board has nominated the nine persons listed below for election at the Annual Meeting, including Messrs. Holleran and Hershey who were appointed since the 2025 Annual Meeting. All nominees are current directors of the Company. Subject to his reelection as a director at the Annual Meeting, Mr. Grizzle is expected to continue to serve as Executive Chair of the Board until December 31, 2026, at which time he is expected to resign as a director with the size of the Board reduced to eight members. Subject to his reelection as a director at the Annual Meeting, Mr. Templin is expected to continue to serve as Lead Independent Director until December 31, 2026 and to be reappointed to serve as Chair of the Board, effective January 1, 2027.
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AWI 2026 Proxy Statement | 1 | ||||||
ITEM 1 – ELECTION OF DIRECTORS (CONTINUED)
All nominees, with the exception of our President and CEO, Mark A. Hershey, and our Executive Chair, Victor D. Grizzle, have been determined by the Board to be independent under the guidelines of the listing standards of the New York Stock Exchange (“NYSE”) and our Corporate Governance Principles. Each nominee’s term would, if elected, run from the date of such nominee’s election until the election at our next annual meeting of shareholders and qualification of such individual’s successor, or until earlier disqualification, resignation, removal, death or incapacity. We have no reason to believe that any of the nominees will be unwilling or unable to serve if elected.
The Governance Committee believes that aligning director qualifications, experience and skill sets with our business, strategy, risks and opportunities in addition to the functional responsibilities of the Board is necessary to maintaining a Board of Directors that remains capable of effectively performing its oversight and decision-making responsibilities on behalf of the Company and its shareholders in a dynamic environment. As part of its annual Board evaluation process, the Governance Committee solicits the view of the entire Board regarding Board performance, composition, skills and leadership abilities and factors the responses received into its Board succession planning and refreshment processes. This evaluation will generally involve assessment at multiple levels, including individual director performance, the functioning of the Board’s standing committees and the operation of the Board as a collective whole. As needed, an outside advisor may be retained to assist the Board as part of its annual evaluation process.
Coordinated by the Chair of the Governance Committee, our 2025 Board evaluation process included both a confidential peer review of individual directors and assessments of the effectiveness of each of our standing Board committees and the full Board. The Board discussed and evaluated the output of this evaluation process, in addition to input provided by an outside advisor retained to assist the Board in conducting its 2024 Board evaluation process, and used the same to inform the Board’s refreshment and succession planning processes.
Our Board does not have term limits or a mandatory retirement age. The Board believes that instituting fixed limits on the tenure of directors could deprive the Company of important experience and knowledge. While Board refreshment is an important consideration in the assessment of the Board’s composition, the Board believes that the interests of the Company are best served by being able to take advantage of all available talent, and that the Board should not make determinations with regard to its membership solely on the basis of age and tenure.
Performance concerns or changes in the skill sets or experience appropriate to meet the needs of the Company, the Board and its committees are addressed directly through the Board’s evaluation, succession planning and refreshment processes.
Our Board believes that a board of directors composed of individuals with diverse attributes and backgrounds enhances the quality of our Board’s deliberations and decisions. Our Board has an expansive view of diversity, going beyond the traditional concepts of race, gender and national origin, and we seek to ensure that our Board is composed of directors with diverse viewpoints, educational backgrounds and professional experience and expertise. Our Board recognizes that this diversity, coupled with strong personal and professional ethics, integrity and values, results in a board of directors that is well-qualified to guide the Company with good business judgment.
The Governance Committee expects each of the Company’s directors to have proven leadership qualities, sound judgment, integrity and a commitment to the success of the Company. In evaluating director candidates and considering incumbent directors for nomination to the Board, the Governance Committee evaluates a variety of factors. These include each nominee’s independence, financial literacy, personal and professional accomplishments, and experience in light of the needs of the Company. For incumbent directors, the factors also include past performance on our Board and contributions to their respective committees. Our Board is also particularly interested in maintaining a mix of skills and qualifications that include the following:
| Public Company CEO or COO (past 5 years) |
| Senior Executive Leadership |
| Manufacturing and Distribution Operations |
| Financial Literacy |
| Cybersecurity |
| Capital Markets Transactions |
| Technology |
| Mergers & Acquisitions |
| Risk Management |
| Corporate Governance |
| 2 | AWI 2026 Proxy Statement |
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ITEM 1 – ELECTION OF DIRECTORS (CONTINUED)
Additionally, the Governance Committee may also establish additional specific skills and qualifications when recruiting potential Board candidates based upon an assessment by the Board of the current and future needs of the Company, the Board or its committees as part of the Board’s evaluation, succession planning, and refreshment processes.
Each director nominee’s biography in the pages that follow includes notable skills and qualifications that contributed to the individual’s selection as a nominee. A summary of particular director skills and qualifications is also featured in the chart immediately following the director biographies.
DIRECTOR NOMINEES
Composition of Board Nominees:
• 78% Independent
• 22% Black
• 22% Women |
• 4.9 years average tenure
• 60.9 years average age |
OUR BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE FOLLOWING NOMINEES:
| Name | Age* | Director Since | Current Committee(s)† | Independent^ | ||||||||
| Victor D. Grizzle |
64 | 2016 | — |
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| Mark A. Hershey |
56 | 2026 | — |
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| Richard D. Holder |
63 | 2022 | AC, FC, NGSRC‡ | ✓ | ||||||||
| Kevin P. Holleran |
57 | 2025 | MDCC, NGSRC | ✓ | ||||||||
| Barbara L. Loughran |
62 | 2019 | AC‡, FC, NGSRC | ✓ | ||||||||
| William H. Osborne |
66 | 2022 | MDCC, NGSRC | ✓ | ||||||||
| Kathleen E. Pitre |
49 | 2025 | AC, MDCC | ✓ | ||||||||
| Wayne R. Shurts |
66 | 2019 | AC, MDCC‡ | ✓ | ||||||||
| Roy W. Templin |
65 | 2016 | FC‡ | ✓ | ||||||||
| * | As of March 31, 2026 |
| † | Committees: AC (Audit); FC (Finance); MDCC (Management Development & Compensation); NGSRC (Nominating, Governance & Social Responsibility) |
| ^ | As defined in NYSE listing standards and our Corporate Governance Principles |
| ‡ | Denotes committee chair |
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AWI 2026 Proxy Statement | 3 | ||||||
ITEM 1 – ELECTION OF DIRECTORS (CONTINUED)
Information concerning the nominees is provided below:
| VICTOR D. GRIZZLE
Director since: 2016 Age: 64
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Mr. Grizzle was appointed as our Executive Chair on April 1, 2026. Previously, he served as our President and CEO since March 2016, and, immediately prior to that, as Executive Vice President and Chief Executive Officer of Armstrong Building Products, a business unit of Armstrong, since January 2011. Prior to joining Armstrong, Mr. Grizzle served as Group President of Global Engineered Support Structures Coatings & Tubing and President of International Division for Omaha at Valmont Industries, Inc., an infrastructure and agricultural equipment manufacturer, since January 2006. Prior to Valmont, he served as President of the Commercial Power Division of EaglePicher Corporation, a manufacturing and resource extractive company. Before that, Mr. Grizzle spent 16 years at General Electric Corporation, where he served as an American business leader for General Electric’s Silicones Division. Mr. Grizzle also serves on the board of directors of Franklin Electric, a global leader in the production and marketing of systems and components for water and automotive fuels. As the former President and CEO of AWI, Mr. Grizzle provides our Board with significant insight regarding our operations, strategic planning and operational design. In addition, Mr. Grizzle brings to our Board broad leadership and business expertise, as well as comprehensive experience in global operations and manufacturing matters.
| MARK A. HERSHEY
Director since: 2026 Age: 56
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Mark Hershey was appointed as our President and Chief Executive Officer effective April 1, 2026. Previously, he served as Senior Vice President and Chief Operating Officer since April 2025, and as Senior Vice President, Americas, since January 2022. In these positions, Mr. Hershey was responsible for the business strategy and operations of both company segments, Mineral Fiber and Architectural Specialties, along with business development, research and development, and enterprise-wide strategic planning. Mr. Hershey joined Armstrong in 2011 as general counsel and secretary and subsequently served as chief compliance officer and leader of Armstrong’s sustainability program. During his tenure at Armstrong, Mr. Hershey has played a key leadership role in a wide range of commercial transactions and strategic initiatives, including the separation of the flooring business in 2016, the sale of our European and Asian businesses in 2019, and multiple acquisitions to grow Armstrong’s Architectural Specialties portfolio. Mr. Hershey is a performance-driven business leader who provides our Board with significant insight regarding our operations and strategic planning. He brings to our Board deep leadership skills, along with comprehensive expertise in manufacturing and distribution operations, mergers and acquisitions, corporate governance, and risk management.
| 4 | AWI 2026 Proxy Statement |
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ITEM 1 – ELECTION OF DIRECTORS (CONTINUED)
| RICHARD D. HOLDER Director since: 2022 Age: 63
Independent
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Mr. Holder is currently the Chief Executive Officer of Loparex, Inc., a leading supplier of engineered release liner solutions, a position he has held since January 2024. With a strong focus on material science expertise and industry-leading technology, Loparex, Inc. enables sustainable performance for customers worldwide. Prior to his role at Loparex, Inc., Mr. Holder served as the President and CEO of HZO, Inc., a provider of thin-film nanocoatings for electronics, from January 2021 to January 2024. Before that, he held the position of President and CEO at NN, Inc., a publicly-traded diversified industrial manufacturing company, from June 2013 to September 2019. Mr. Holder’s professional journey also includes significant leadership roles at Eaton Corporation, where he served for over a decade. His experience extends to the aerospace industry, and he is a veteran of the U.S. Marine Corps. In addition to his current position, Mr. Holder serves on the board of Enerpac Tool Group Corp., a publicly-traded industrial tools and services company, where he is a member of the Audit Committee. He also holds positions on several private company boards. With extensive operating experience, senior executive leadership, and a background in manufacturing, Mr. Holder brings valuable insights to our Board. His expertise as a former public company CEO further enhances his contributions to our organization.
| KEVIN P. HOLLERAN Director since: 2025 Age: 57
Independent
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Mr. Holleran has served as President, Chief Executive Officer, and Director of Hayward Holdings, Inc. since August 2019. Hayward is a leading designer, manufacturer, and marketer of innovative pool equipment and advanced automation systems. Prior to joining Hayward, Mr. Holleran was President and Chief Executive Officer of the Industrial Segment at Textron, beginning in 2017. He previously led Textron Specialized Vehicles as President and Chief Executive Officer for a decade, driving substantial growth in both revenue and profitability through strategic acquisitions and organic expansion. Earlier in his career, Mr. Holleran held key management roles at Ingersoll Rand and Terex Corporation. He brings senior executive leadership to our Board along with expertise in strategic planning, sales, marketing, and manufacturing operations.
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AWI 2026 Proxy Statement | 5 | ||||||
ITEM 1 – ELECTION OF DIRECTORS (CONTINUED)
| BARBARA L. LOUGHRAN Director since: 2019 Age: 62
Independent
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Ms. Loughran served as a partner with PricewaterhouseCoopers LLP (PwC) from 1998 until her retirement in June 2018. Ms. Loughran has held various positions at PwC, including serving in its National Office from 2016 to 2018 and from 2000 to 2003, as Industrial Products Business Unit Leader of PwC’s New York Metro market from 2013 to 2015, and as Retail & Consumer Business Development Leader of PwC’s New York Metro market from 2010 to 2012. As a client service partner, Ms. Loughran led the global relationship and audit of numerous large, publicly-traded companies across a broad range of industries, and led the National Office effort on leveraging new and innovative technologies. Ms. Loughran also serves on the board of directors of Amentum Holdings, Inc., a publicly-traded advanced engineering and technology solutions company, where she serves as chair of the Nominating and Corporate Governance Committee and as a member of the Audit Committee. Ms. Loughran previously served on the board of directors of Jacobs Solutions, Inc., a publicly-traded engineering company, until the spin-off of Jacobs’ Critical Mission Solutions and Cyber & Intelligence government services businesses and merger with Amentum Parent Holdings LLC to form Amentum Holdings, Inc. Ms. Loughran also serves as an advisory board member for ConquerAI, an AI technology consulting firm. Ms. Loughran brings to our Board an extensive public accounting background, international experience, financial and capital markets expertise, and experience in mergers and acquisitions, risk management, and financial oversight and reporting.
| WILLIAM H. OSBORNE Director since: 2022 Age: 66
Independent
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Mr. Osborne served as Senior Vice President of Total Quality and Operations for Boeing Defense, Space & Security, one of The Boeing Company’s three business units from May 2020 until October 2022. He was part of Boeing’s Executive Council and became the chair of Boeing’s Manufacturing Operations Council. Boeing is the world’s largest aerospace company and leading manufacturer of commercial jetliners and defense systems. In his role, Mr. Osborne maintained oversight for Environment, Health & Safety and was responsible for Boeing’s factory operations. Previously, he was Boeing’s Senior Vice President, Enterprise Operations from May 2018 until April 2020. Before joining Boeing, Mr. Osborne served as Senior Vice President of Global Manufacturing and Quality at Navistar International Corporation, a holding company whose subsidiaries and affiliates produce International® brand commercial and military trucks, from August 2013 to May 2018. He was also Senior Vice President of Custom Products at Navistar from May 2011 to August 2013. Before joining Navistar, he served as President and Chief Executive Officer of Federal Signal Corporation, a designer and manufacturer of a suite of products and integrated solutions for municipal, governmental, industrial and airport customers, from September 2008 to October 2010. Mr. Osborne began his career at Ford Motor Company. He currently serves on the board of directors of Quaker Houghton, a publicly traded global manufacturer of industrial process fluids. Mr. Osborne brings to our Board deep manufacturing, quality control, and executive leadership proficiencies, combined with valuable experience from his time as a public company chief executive officer and board member.
| 6 | AWI 2026 Proxy Statement |
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ITEM 1 – ELECTION OF DIRECTORS (CONTINUED)
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KATHLEEN E. PITRE Director since: 2025 Age: 49
Independent
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Ms. Pitre is Senior Vice President & President, Beverage Packaging, North and Central America at the Ball Corporation, a position she has held since 2024. Her career at Ball has spanned more than twenty years and includes previous roles as the Company’s President, Beverage Packaging, North and Central America from 2021 to 2024 and as the company’s Chief Commercial and Sustainability Officer from 2019 to 2021. Prior to that, she also served as Vice President of Sustainability & Public Affairs, Vice President of Communications and Corporate Relations, and Executive Director of the Ball Foundation. Before her executive leadership roles in Ball’s corporate and packaging business, she had an 11-year career with Ball in its aerospace business where she held various leadership roles in marketing and communications. In addition to her role at Ball, Ms. Pitre serves on the Global Leadership Council of the Colorado State University College of Business. She provides our Board with broad expertise in manufacturing, sustainability, marketing, communications and senior executive leadership.
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WAYNE R. SHURTS Director since: 2019 Age: 66
Independent |
Mr. Shurts served as the Executive Vice President and Chief Technology Officer at Sysco Corporation, a publicly-traded global leader in food service distribution, from 2012 until February 2019. Prior to this, Mr. Shurts served as Executive Vice President and Chief Information Officer at SUPERVALU, a publicly traded U.S. grocery retailer and wholesaler, from 2010 to 2012, and Chief Information Officer at Cadbury PLC, a British multinational confectionary company, from 2008 to 2010. Prior to this, Mr. Shurts has held various roles at Nabisco, including in finance, sales, supply chain, marketing, and technology. Mr. Shurts served on the board of directors of Con-Way Incorporated in 2015 until its acquisition by XPO Logistics Inc., where he served as a technology expert and a member of its Audit Committee and Nominating and Governance Committee. Mr. Shurts also serves on the board of directors of Stater Bros. Markets, a privately held grocery retailer, where he serves on the audit committee. Mr. Shurts brings to our Board extensive technology experience as a former Chief Information Officer, and in applying technology to improve and successfully transform business processes.
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AWI 2026 Proxy Statement | 7 | ||||||
ITEM 1 – ELECTION OF DIRECTORS (CONTINUED)
| ROY W. TEMPLIN Director since: 2016 Age: 65
Independent |
Mr. Templin served as Chair of the Board of Directors of Con-Way Incorporated, a multinational freight transportation and logistics company, from January 2014 until its acquisition by XPO Logistics Inc. in 2015. He previously served as Executive Vice President and Chief Financial Officer of Whirlpool Corporation, a multinational manufacturer and marketer of home appliances, from 2004 to 2012, and as Vice President and Controller of Whirlpool Corporation from 2003 to 2004. Prior, he served as Vice President, Finance and Chief Accounting Officer of Kimball International, Inc. He also previously served on the Board of Trustees of the Goldman Sachs Mutual Funds from 2013 to 2022. Mr. Templin brings to our Board extensive experience as a senior executive, public company board member and executive of manufacturing industries, as well as experience in risk management, strategic planning, finance, and mergers and acquisitions.
| 8 | AWI 2026 Proxy Statement |
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ITEM 1 – ELECTION OF DIRECTORS (CONTINUED)
Skills and Qualifications of Board of Directors
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AWI 2026 Proxy Statement | 9 | ||||||
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE PRINCIPLES AND OTHER CORPORATE GOVERNANCE DOCUMENTS
Our Corporate Governance Principles include guidelines regarding the responsibilities, duties, service and qualifications of our Board, the determination of a director’s independence and any conflict of interests, Board access to management and independent advisors, director compensation and stock ownership requirements, Board committees and other matters relating to corporate governance. Our Corporate Governance Principles are available on our website under “Investors” – “Governance” – “Governance Documents” or at https://investors.armstrongworldindustries.com/governance/governance-documents/default.aspx. Also available on our website under “Investors” – “Governance” – “Governance Documents” are the charters of the Audit Committee, the Finance Committee, the Management Development and Compensation Committee (“Compensation Committee”), and the Governance Committee of the Board, along with the Armstrong Code of Business Conduct and the Armstrong Code of Ethics for Financial Professionals. Our website is not part of this proxy statement and references to our website address in this proxy statement are intended to be inactive textual references only.
DIRECTOR INDEPENDENCE
It is the policy of the Company that our Board consist of a majority of directors who are not employees and are independent under all applicable legal and regulatory requirements, including the independence requirements of the NYSE and the SEC. For purposes of evaluating the independence of directors, in accordance with our Corporate Governance Principles, our Board will consider all relevant facts and circumstances from the standpoint of the director, and also from that of persons or organizations with which the director has affiliations. Consistent with our Corporate Governance Principles, to be considered “independent,” a director must meet qualifications established by the Governance Committee to assist in the determination, which qualifications either meet or exceed the independence requirements of the NYSE and the SEC. Each of our standing Board committees must be composed entirely of independent directors and comply with all applicable rules and requirements of the NYSE and the SEC.
Our Board has determined that all of our director nominees, with the exceptions of Mr. Hershey, our President and CEO, and Mr. Grizzle, our Executive Chair, are independent under NYSE listing standards and our Corporate Governance Principles. In addition, our Board has further determined that each of the members of the Audit Committee, the Compensation Committee, the Finance Committee and the Governance Committee are independent within the meaning of the NYSE listing standards, any applicable minimum standards required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and enhanced standards required for membership on such committees by our Bylaws, namely that directors serving on such committees meet the independence criteria under both NYSE rules and Rule 10A-3(b)(1) under the Exchange Act.
BOARD’S ROLE IN RISK MANAGEMENT OVERSIGHT
Our Board oversees the Company’s management processes for assessing and managing risk, both as a full Board and through its committees, which meet regularly and report to the full Board. Management is charged with managing risk through robust internal policies and controls.
Enterprise Risk Management The Company actively maintains an enterprise risk management program. Risk management is an integral part of the Company’s culture. Management’s role is to identify, mitigate, guide and review the efforts of our business units, consider whether the residual risks are acceptable, and approve plans to deal with serious risks. Our Board’s role in risk management is to review and assess the performance and functioning of the Company’s overall risk management efforts and management’s establishment of appropriate systems and controls for managing risk. Specifically, our Board reviews our:
| • | identification of macro-, industry- and company-level developments and considerations in risk identification, assessment and mitigation; |
| • | processes to identify matters that create or reveal inappropriate risk to achieving our business plans; |
| • | processes to assess the likelihood and impact of such risks in order to prioritize them; |
| 10 | AWI 2026 Proxy Statement |
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CORPORATE GOVERNANCE (CONTINUED)
| • | identification of major risks, how we define them, and our formulation of mitigation strategies; |
| • | identification of individuals responsible for mitigating major risks; and |
| • | monitoring of major risks and evolving risk landscape. |
Pursuant to its charter, the Audit Committee has primary oversight responsibility with respect to the design of our enterprise risk management program, including for periodically reviewing the process, methodology, and tools used by management to identify, evaluate, organize, assess and mitigate significant risks.
Management regularly provides input and feedback on business segment risks during periodic business reviews and annual strategic planning discussions. Senior management regularly meets with designated individuals responsible for mitigating risks to review and assess risk mitigation and control measures. In addition, senior management regularly reevaluates the appropriateness of risk assessments and priorities. This process includes identifying risks that could prevent achievement of business goals and strategic plans. Our internal audit team uses the resulting information as a basis for developing its annual internal audit plan.
Cybersecurity Risk Our Board has responsibility for oversight of management’s cybersecurity risk program and receives regular updates from our Chief Information Officer. These updates, provided on a semi-annual basis, cover a range of topics, including the performance of our cybersecurity program against established goals and external standards, insights into the evolving cybersecurity landscape, current events and recent cybersecurity threats, and progress in enhancing the Company’s cybersecurity posture. Pursuant to its charter, the Audit Committee is responsible for reviewing management’s cybersecurity incident reporting process, methodology and tools. In addition, the Audit Committee is responsible for reviewing management’s materiality assessments of cybersecurity incidents identified as significant by management. Additional information about the Company’s cybersecurity risk program is available in Item 1C of the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2026.
Responsibilities of our Board and its Committees In addition to audit and assurance reports provided by our internal audit team, our Board periodically reviews summary reports from senior management that assess the strategic, operational, infrastructure and external risks facing the Company. These reports generally utilize our Enterprise Risk Management framework to identify the likelihood and impact of such risks and identify appropriate mitigation strategies and efforts. Each Board committee, consistent with its charter, reviews and evaluates risks associated with its areas of oversight responsibility, reports on those oversight activities to our Board, and assists our Board in its ongoing monitoring and review of those risks, including as described in “BOARD MEETINGS AND COMMITTEES” below.
BOARD OVERSIGHT OVER SUSTAINABILITY MATTERS
Pursuant to its charter, our Governance Committee is responsible for oversight of our corporate social responsibility program and practices, including its priorities, objectives, strategy and performance, and periodic sustainability reporting and disclosures. The Governance Committee receives updates from management regarding our sustainability program at least quarterly. Other Board committees assist the Governance Committee in fulfilling this responsibility by overseeing related matters in their areas of responsibility, including:
| • | Compensation Committee - Reviews certain Company policies and programs relating to employment practices and diversity and inclusion. |
| • | Audit Committee - Reviews management’s processes for data validation prior to issuing material public disclosures related to the Company’s corporate social responsibility program. |
BOARD’S ROLE IN STRATEGIC PLANNING
Our Board oversees and advises on the Company’s overall strategy and at least annually reviews the strategic priorities and initiatives of each business segment. In evaluating significant investments or capital allocation decisions, the Board generally considers the Company’s strategic plan and the potential impact on long-term shareholder value creation.
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CORPORATE GOVERNANCE (CONTINUED)
BOARD’S ROLE IN SUCCESSION PLANNING
Our Board oversees talent management and actively engages in succession planning. Our Board reviews the Company’s “Organization Vitality” initiatives in support of its business strategy at least annually. This review includes a detailed discussion of the Company’s leadership bench and succession plans with a focus on key positions at the senior officer level, including CEO, and incorporates the CEO’s evaluation of potential internal successors. During 2025, our Board, CEO and the Compensation Committee met in furtherance of these initiatives. The independent members of the Board also met privately in executive session during 2025 to evaluate CEO succession planning.
The Governance Committee periodically reviews the Company’s emergency CEO succession plan, while the Board continually evaluates regular CEO succession plans. The Board engages with potential successors to the CEO through Board and committee presentations and informal events at which the experiences, skills, competencies and leadership abilities of potential CEO successors can be assessed. In addition, the Board uses outside advisors as necessary to augment its evaluation of the Company’s leadership bench and to identify and assess external candidates, as necessary.
Furthermore, Board committees discuss, as needed, the talent pipeline for specific critical roles. High potential leaders are given exposure and visibility to Board members through formal presentations and informal events. More broadly, our Compensation Committee and our Board are regularly updated on key talent indicators for the overall workforce, including retention metrics, recruiting and development programs.
BOARD LEADERSHIP STRUCTURE
Our Bylaws and Corporate Governance Principles provide our Board with the flexibility to determine the leadership structure that best serves the Company and its shareholders, including whether the roles of Chair of the Board and CEO should be held by the same individual. Since 2010, our Board has determined to separate the roles of Chair of the Board and CEO. The separation of these roles allows our CEO to focus on managing the business while our Chair of the Board oversees our Board’s functions.
As part of the leadership transition announced January 13, 2026 and further described on page 1 of this proxy statement, Mr. Hershey became President and CEO of the Company, Mr. Grizzle became Executive Chair, and Mr. Templin became Lead Independent Director, all effective April 1, 2026. Subject to his reelection as a director at the Annual Meeting, Mr. Grizzle is expected to serve as Executive Chair until December 31, 2026, at which time he is expected to resign as a director. Subject to his reelection as a director at the Annual Meeting, Mr. Templin is expected to be reappointed to serve as Chair of the Board, effective January 1, 2027. The Board believes this leadership structure will help facilitate an orderly and efficient transition to Mr. Hershey’s leadership as the Company’s President and CEO with effective and appropriate oversight from the Board.
Responsibilities of the Executive Chair include presiding at all meetings of the Company’s shareholders and all meetings of the Board, being responsible for the orderly conduct by the Board of its oversight of the business of the Company, recruiting new Board members, ensuring an appropriate CEO succession plan in coordination with the Lead Independent Director, coordinating Board meeting schedules and agendas with the Lead Independent Director, and assisting the Lead Independent Director with the annual performance evaluations of the Board, its committees and its individual members coordinated by the Governance Committee. Working with the Lead Independent Director, the Executive Chair ensures that information provided by management to the Board is sufficient for the Board to fulfill its duties and communicates with other directors on key issues and concerns outside regularly scheduled meetings.
Responsibilities of the Lead Independent Director of the Board include presiding at all meetings of the Board at which the Executive Chair is not present, serving as principal liaison between the Independent Directors of the Board and the Executive Chair, working with the Executive Chair to develop and approve Board meeting agendas and schedules, ensuring the appropriateness and timeliness of information provided to the Board in coordination with the Executive Chair, reviewing results of the Board and Committee performance self-evaluations, leading the independent directors’
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CORPORATE GOVERNANCE (CONTINUED)
evaluation of the effectiveness of the Executive Chair, helping coordinate the Board’s CEO succession planning process, meeting periodically with independent directors to discuss Board and committee performance, effectiveness and composition, and facilitating the independent oversight required by our Bylaws and Corporate Governance Principles, including by ensuring that the independent directors meet at regularly scheduled executive sessions outside the presence of management. Our Lead Independent Director presides at these executive sessions of the Board and will communicate any decisions reached, suggestions, views or concerns expressed by the nonemployee directors with the Executive Chair and management, as appropriate. In addition, each of the Board’s four standing committees regularly meet at similar executive sessions, at which the respective committee chairs preside.
Our Board will continue to evaluate its leadership and governance structure within the context of the specific needs of the business, current Board composition, and the best interests of the Company and our shareholders.
BOARD EDUCATION
The Governance Committee oversees the Company’s director education and orientation programs. Director education ordinarily occurs in conjunction with regularly scheduled Board meetings and seeks to address topics important to enhancing the Board’s knowledge of the Company, the industry in which we operate, key regulatory and market developments and emerging areas of opportunity and risk. Director education programming is presented by a mixture of internal and external subject matter experts, as appropriate. Directors are also encouraged to pursue individual educational opportunities throughout the year, for which the Company reimburses reasonable costs.
COMMUNICATION WITH THE BOARD
Any person who wishes to communicate with the Board, independent directors as a group, or
individual directors, including the Executive Chair or the Lead Independent Director, may direct a written communication to the attention of the Corporate Secretary at the Company’s corporate offices at 2500 Columbia Avenue, Lancaster, Pennsylvania 17603. The Corporate Secretary will forward these communications to the intended recipient director(s), as appropriate, depending on the facts and circumstances outlined in the communication. Any person may also send general messages to directors by email to directors@armstrong.com. An individual wishing to send an email message to the Governance Committee, including a recommendation regarding a prospective director, may send the message to CorpGovernance@armstrong.com. The Corporate Secretary will forward these messages, as appropriate.
SHAREHOLDER OUTREACH
The Company’s relationships with its shareholders and other stakeholders are a critical part of our corporate governance profile, and the Board recognizes the value of taking their views into account. Among other things, this engagement helps the Board and management understand the larger context and impact of the Company’s operations, learn about expectations for our performance, assess emerging issues that may affect our business or other aspects of our operations, and shape policy.
We maintain a formal shareholder outreach program to obtain investor perspectives on key topics of interest, such as corporate governance, executive compensation, social responsibility, sustainability and other matters. On an annual basis, we intend to continue to solicit feedback from institutional investors, including asset managers, pension funds and other investors. Shareholder communications and inquiries are shared with Company management, and with the Executive Chair, the Lead Independent Director and the Board committees, as appropriate.
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CORPORATE GOVERNANCE (CONTINUED)
BOARD MEETINGS AND COMMITTEES
The Board met six times during 2025, one of which was a special meeting.
There are four standing committees of the Board: the Audit Committee, the Compensation Committee, the Finance Committee and the Governance Committee, as described below.
Consistent with our Corporate Governance Principles, each standing committee has a charter and consists solely of directors who meet applicable independence standards required by the NYSE, the SEC, and our Bylaws. Each committee reports to the Board regularly and evaluates the effectiveness of its performance annually. The membership of each committee is determined by the Board on the recommendation of the Governance Committee. The Company’s Corporate Governance Principles provide that (i) directors who are currently fully employed should not serve on more than two other public company boards, and (ii) other directors should not serve on more than four other public company boards.
All director nominees who served on the Board during 2025 participated in over 75% of the meetings of the Board during their tenure and over 75% of the meetings of the Committees on which they served during their tenure. Board members are expected to attend annual meetings in person or virtually, via the internet. All Board members attended the 2025 Annual Meeting.
Audit Committee The Audit Committee met five times during 2025. The members of the Audit Committee are Barbara L. Loughran (Chair), Richard D. Holder, Kathleen E. Pitre, and Wayne R. Shurts. Under its charter, the Audit Committee:
| • | oversees (i) auditing and accounting matters, including the selection, supervision and compensation of the Company’s independent registered public accounting firm and any other registered public accountant engaged in auditing, audit-related, review or attest services, (ii) the scope of the annual audits and non-audit services performed by the Company’s independent registered public accounting firm, and (iii) the Company’s accounting practices and internal accounting controls; |
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CORPORATE GOVERNANCE (CONTINUED)
| • | has sole authority to engage, retain and dismiss the independent registered public accounting firm; |
| • | reviews and discusses with management and our independent registered public accounting firm the annual audited financial statements and quarterly financial statements included in our SEC filings and prior to issuing earnings press releases, reviewing with management the information being communicated to the public in the press release, including the use of any “pro forma” or “adjusted” non-GAAP information; |
| • | assists the Board in monitoring the integrity of the Company’s financial statements and the independent registered public accounting firm’s qualifications, independence and performance; |
| • | considers the integrity of and risks associated with overall financial reporting, legal compliance and disclosure processes; and |
| • | supervises and reviews the effectiveness of the Company’s internal audit and compliance functions, and assists the Board in overseeing the Company’s compliance with applicable legal and regulatory requirements. |
Each member of the Audit Committee meets the NYSE and SEC financial literacy requirements. The Board has determined that Ms. Loughran qualifies as an “Audit Committee Financial Expert” as defined pursuant to the Exchange Act. The Audit Committee regularly meets independently with the Company’s internal and independent auditors, with the leader of the Company’s compliance function, and with various other members of management in furtherance of its responsibilities.
Finance Committee The Finance Committee met four times during 2025, two of which were special meetings. The members of the Finance Committee are Roy W. Templin (Chair), Richard D. Holder and Barbara L. Loughran. Under its charter, the Finance Committee:
| • | assists the Board in its oversight of the financial management of the Company, including material and strategic financial matters; |
| • | reviews the Company’s capital structure, including with respect to its debt and equity securities, financing arrangements and credit facilities; |
| • | reviews the Company’s capital expenditures, dividend policy and other forms of distributions on the Company’s stock, and capital deployment strategies; and |
| • | reviews financial terms of certain proposed mergers, acquisitions, divestitures, strategic investments and joint ventures. |
Management Development and Compensation Committee The Compensation Committee met seven times during 2025, two of which were special meetings. The members of the Compensation Committee are Wayne R. Shurts (Chair), Kevin P. Holleran, William H. Osborne and Kathleen E. Pitre. Under its charter, the Compensation Committee:
| • | establishes our overall philosophy and policies governing compensation programs; |
| • | oversees the design of our executive compensation and benefit programs and certain Company policies and programs relating to employment practices; |
| • | administers and makes recommendations regarding our incentive and equity compensation plans; |
| • | reviews and approves goals and objectives relevant to the compensation of the CEO, evaluates the CEO’s performance relative to those goals and objectives and recommends CEO compensation to the independent directors based on such evaluation; |
| • | oversees employment and compensation actions pertaining to executive officers; |
| • | reviews incentive compensation policies and practices to assess whether such policies and practices encourage unnecessary risk-taking behaviors; and |
| • | reviews executive officer succession plans. |
Nominating, Governance and Social Responsibility Committee The Governance Committee met five times during 2025. The members of the Governance Committee are Richard D. Holder (Chair), Kevin P. Holleran, Barbara L. Loughran, and William H. Osborne. Under its charter, the Governance Committee:
| • | monitors the independence of nonemployee directors; |
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CORPORATE GOVERNANCE (CONTINUED)
| • | reviews and evaluates director candidates, including, without limitation, director candidates recommended by shareholders, in accordance with the Company’s Bylaws and the Corporate Governance Principles, and makes recommendations to the Board concerning nominees for election as Board members; |
| • | assists our Board in defining and assessing criteria and qualifications for the selection of candidates to serve on the Board; |
| • | recommends directors for appointment to Board committees; |
| • | makes recommendations to the Board regarding corporate governance matters; |
| • | reviews and makes recommendations to the Board regarding the compensation of nonemployee directors; |
| • | oversees the Company’s sustainability and corporate social responsibility programs, including reviewing and assessing related strategies, structures, policies, practices and performance; |
| • | reviews and assesses the Company’s key external communications, disclosures and reporting practices under the Company’s corporate social responsibility program; |
| • | reviews and approves all related party transactions involving directors, director nominees, executive officers or other required parties; |
| • | oversees the Company’s director education and orientation programs; and |
| • | engages in succession planning for the Board and coordinates an annual self-evaluation of the performance of the Board, each committee and individual directors. |
Other Committees In addition to the four standing committees described above, members of the Board may meet on an ad hoc basis to discuss, review and, as appropriate, approve matters through other committees established by the Board. These ad hoc committees report to the Board and may review subjects such as succession planning and crisis response.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee has ever been an officer or employee of
the Company or its subsidiaries, or had any relationship with the Company that requires disclosure under applicable SEC regulations.
REVIEW OF RELATED PERSON TRANSACTIONS
We have written policies pertaining to related person transactions. Any related person transaction that may arise is required to be reviewed and approved by the Governance Committee, who must have no connection with the transaction.
Related person transactions would include transactions by the Company or any subsidiary with any director, director nominee, executive officer, shareholders owning more than 5% of the Company’s outstanding common shares, per share par value $0.01 (“Common Stock”), or immediate family member of any of the foregoing, and transactions with businesses affiliated with any director or director nominee that meet the specifications in Item 404 of Regulation S-K.
The Chair of the Governance Committee has authority to approve transactions involving sums less than the disclosure threshold set in Item 404 of Regulation S-K. The material details of any such matters are required to be disclosed to the Governance Committee at its next regular meeting.
There have been no related person transactions since January 1, 2025, nor are any currently proposed, that meet the requirements for disclosure in this proxy statement.
POLICY ON MAJORITY VOTING IN THE ELECTION OF DIRECTORS
Our Board maintains a Policy on Majority Voting as one of our Corporate Governance Principles. The Policy provides that in an uncontested election of directors, any nominee who receives a greater number of votes “withheld” from the nominee’s election than votes “for” the nominee’s election will, within 10 business days following the certification of the shareholder vote, tender written resignation to the Board. Such tendered resignation will be considered by the Governance Committee taking into account any factors or other information it considers appropriate and relevant and, within 60 days following the date of the shareholders’ meeting at which the election occurred, will make a recommendation to the Board concerning the
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CORPORATE GOVERNANCE (CONTINUED)
acceptance or rejection of such resignation. The Board will take formal action on the Governance Committee’s recommendation no later than 90 days following the date of the shareholders’ meeting at which the election occurred. The Board will consider the information, factors and alternatives considered by the Governance Committee and such additional factors, information and alternatives as the Board deems relevant.
Within four business days after the Board’s decision on the Governance Committee’s recommendation, the Company will publicly disclose in a current report on Form 8-K filed with the SEC the Board’s decision, and, if applicable, the Board’s reasons for rejecting the tendered resignation. A director whose resignation is accepted by the Board may not be re-appointed to fill the vacancy created by such director’s resignation.
No director who is required to tender such director’s resignation shall participate in the Governance Committee’s deliberations or recommendation, or in the Board’s deliberations or determination, with respect to accepting or rejecting the resignation as a director. If a majority of the members of the Governance Committee are required to tender their resignations, then the independent directors who are not required to tender their resignations will appoint an ad hoc Board committee from amongst themselves, consisting of such number of independent directors as they may determine to be appropriate, solely for the purpose of considering and making a recommendation to the Board with respect to the tendered resignations. If such ad hoc committee would have been created but fewer than
three directors would be eligible to serve on it, then the entire Board (other than the director whose resignation is being considered) will make the determination to accept or reject the tendered resignation without any recommendation from the Committee and without the creation of an ad hoc committee.
SHAREHOLDER-RECOMMENDED DIRECTOR CANDIDATES
The Governance Committee will consider director candidates nominated by shareholders. The Governance Committee considers all potential candidates in the same manner and by the same standards regardless of the source of the recommendation.
The procedures for recommending candidates are posted at https://investors.armstrongworldindustries.com/governance/contact-the-board/default.aspx. Shareholders who wish to suggest individuals for service on the Board are requested to review Article II, Section 4 of our Bylaws and supply the information required in (a) through (l) of that Section in a written request to the Corporate Secretary at the Company’s corporate offices at 2500 Columbia Avenue, Lancaster, Pennsylvania 17603.
When evaluating the candidacy of nominees proposed by shareholders, the Governance Committee may request additional information as it may consider reasonable to determine the proposed nominee’s qualifications to serve as a member of the Board.
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CORPORATE GOVERNANCE (CONTINUED)
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SUSTAINABILITY
Sustainability is an important part of our approach to doing business. We aim to continually improve the environmental sustainability of our products and operating processes, promote and maintain an inclusive workplace through our merit-based hiring processes and provide meaningful support for our communities.
Our sustainability program is organized around three functional “pillars”: Healthy and Circular Products, Healthy Planet, and Thriving People and Communities. Our sustainability program includes specific 2030 goals and key performance targets for each pillar.
Our program pillars are focused on these key priorities and objectives:
Healthy and Circular Products We intend to create products and solutions from healthy, sustainably sourced materials by eliminating chemicals of concern through sustainable supply chains. We aim to design our products to be recycled, reused or repurposed and drive circularity in our operations, with customers, and throughout our value chain. We aim to make a positive contribution to spaces and the environment by decreasing our products’ water intensity and carbon footprint, and continuing to invest in solutions that meet customer demand for building products that align with their sustainability goals.
Healthy Planet We intend to reduce our greenhouse gas emissions and increase our reliance on renewable energy using climate science-based targets that include, among other things, a reduction of total Scope 1 and Scope 2 greenhouse gas (GHG) emissions by 30% from the 2019 baseline. We aim to be stewards of natural resources with our water management practices and efforts reducing waste through innovative manufacturing processes.
Thriving People and Communities We intend to continue engaging in communities where we operate to contribute to the vibrant places to live and work by strengthening and supporting local programs and fostering impactful relationships. We value an inclusive culture and aim to continue to cultivate a culture at all our locations that leads to safe, healthy and fulfilled employees.
SUSTAINABILITY REPORT
In May 2025, we published our fifth Sustainability Report (“2025 Sustainability Report”), in which we discussed the progress made in 2024 towards our 2030 goals and targets for each of our pillars.
We prepared our 2025 Sustainability Report using the frameworks of the Sustainability Accounting Standards Board (SASB) Building Products & Furnishings standards, the Global Reporting Initiative (GRI), and the Task Force on Climate-Related Financial Disclosures (TCFD).
GOVERNANCE, CORPORATE LEADERSHIP AND MANAGEMENT
The Governance Committee has responsibility for overseeing our sustainability program and practices. The Audit Committee maintains responsibility for overseeing management’s processes for validating data prior to management issuing material public disclosures related to the Company’s sustainability program. Additional information regarding the Governance Committee’s oversight responsibilities and the involvement of other Committees of the Board can be found in the “BOARD OVERSIGHT OVER SUSTAINABILITY MATTERS” Section on page 11.
Our sustainability program is led by our Director of Sustainability and Government Relations, who reports to our Senior Vice President, General Counsel, Chief Compliance Officer & Secretary. Our Director of Sustainability and Government Relations is responsible for designing and implementing action plans towards our enterprise-wide goals.
Our Sustainability Council, comprising senior leaders from various functions within the organization, is responsible for embedding and implementing our sustainability goals and initiatives throughout the organization.
In support of these goals and initiatives, cross-functional employee pillar teams – for each of the Healthy and Circular Products, Healthy Planet and Thriving People and Communities pillars – help assess our current state and develop action plans and interim targets intended to further our progress towards those goals.
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SUSTAINABILITY (CONTINUED)
THE ARMSTRONG WORLD INDUSTRIES FOUNDATION
We created the Armstrong World Industries Foundation as our philanthropic arm in 1985. The Foundation’s strategy is primarily focused on making a positive difference in the lives of people where they live, work, learn, heal and play, through awarding grants to qualified charitable organizations that meet at least two of the following criteria:
| • | Operate in communities where our employees live and work. |
| • | Commit to elevating the importance of design and buildings in people’s lives. |
| • | Renovate the buildings where they operate to improve their spaces and therefore the quality of service they provide to the people they benefit. |
| • | Focus on those who are most in need, particularly underserved children and early childhood education. |
The Foundation also provides support to: (a) current and future employees and retirees through gift matching programs, hardship support, and emergency/disaster relief support;
(b) communities in which we operate; and (c) the qualified charitable efforts of architects, designers, contractors and others in the building and construction community who are dedicated to elevating the importance of healthy and sustainable spaces for people’s lives.
MORE INFORMATION
More information about our sustainability program and practices, including the 2025 Sustainability Report, is available in the “Sustainability” section of our website at https://www.armstrong.com. The 2025 Sustainability Report and other information available on our website are not part of, nor are they incorporated by reference into, this proxy statement, and references to our website address in this proxy statement are intended to be inactive textual references only. Additionally, the sustainability data, statistics and metrics included herein, unless otherwise specifically indicated, are non-audited estimates, were not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), have not been externally assured, continue to evolve and may be based on assumptions believed to be reasonable at the time of preparation, but should not be considered guarantees.
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MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth information regarding individuals who serve as our executive officers as of April 1, 2026.
| Name | Age | Present Position and Business Experience During the Last Five Years* | ||||
| Victor D. Grizzle |
64 | Armstrong World Industries, Inc. Executive Chair since April 2026 Director since April 2016 President & CEO (April 2016 - March 2026) | ||||
| Mark A. Hershey |
56 | Armstrong World Industries, Inc. President & CEO, Director since April 2026 Senior Vice President & Chief Operating Officer (April 2025 to March 2026) Senior Vice President, Americas (January 2022 to March 2025) Senior Vice President, General Counsel and Business Development (January 2020 to January 2022) Senior Vice President, General Counsel (July 2011 to January 2022) Chief Compliance Officer (February 2012 to January 2022) Secretary (April 2016 to January 2022) | ||||
| Christopher P. Calzaretta |
49 | Armstrong World Industries, Inc. Senior Vice President & Chief Financial Officer since August 2022 Vice President, Finance (January 2018 to August 2022) | ||||
| Jessica M. Cicali |
45 | Armstrong World Industries, Inc. Senior Vice President, General Counsel, Chief Compliance Officer & Secretary since April 2026 Thrive Advisory Services, LLC Executive in Residence for Brookfield Capital Partners Ltd. / Brookfield’s Private Equity Group (January 2024 to March 2026) Shikun & Binui - America, Inc. EVP, Chief Legal Officer, Chief Compliance Officer and Corporate Secretary - S&B USA (U.S. operations of Shikun & Binui Ltd.) (September 2024 to February 2026) Cardone Industries, Inc. Chief Administrative Officer (January 2023 to July 2023) VP, General Counsel & Corporate Secretary (May 2021 to December 2022) Ricoh USA, Inc. Vice President, Assistant General Counsel (March 2019 to May 2021) | ||||
| Jill A. Crager |
62 | Armstrong World Industries, Inc. Senior Vice President, Sales & Digital Marketing since January 2025 Senior Vice President, Sales Operations (January 2022 to December 2024) Vice President, Digitalization (December 2019 to December 2022) | ||||
| Michael C. Winters |
53 | Armstrong World Industries, Inc. Senior Vice President, Architectural Specialties & Corporate Development since April 2026 Vice President, Architectural Specialties (February 2020 to March 2026) | ||||
| James T. Burge |
50 | Armstrong World Industries, Inc. Vice President, Controller since April 2021 Americas Controller (December 2017 to April 2021) | ||||
| * | Information in parentheses regarding previously held positions indicates the duration the Executive Officer held the position. |
All executive officers are appointed by the Board to serve in their respective capacities until their successors are selected and qualified or until their earlier death, resignation or removal by the Board.
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COMPENSATION OF DIRECTORS
In establishing compensation for our nonemployee directors, including the overall value of compensation and the mix of cash and equity, the Board analyzes competitive market data and any underlying director compensation trends generally, and compares our program to those of similarly sized companies in comparable industries. The Board is compensated through a combination of cash and equity annual retainers. Nonemployee directors receive more than half of their annual retainer in equity to align their compensation with shareholders’ interests. Directors do not receive meeting fees or perquisites. The Board believes that this level of compensation supports the Company’s ability to attract directors with suitable
backgrounds and experiences. A director who is an officer or employee of the Company or its subsidiaries is not compensated for service on the Board or on any Board committee.
The Governance Committee is responsible to evaluate the compensation program for nonemployee directors, which program includes the 2016 Directors Stock Unit Plan, (the “2016 Directors Stock Unit Plan”) and, if approved by the shareholders, the 2026 Directors Stock Unit Plan. This evaluation may include an analysis of competitive market data and any underlying director compensation trends with assistance from an independent compensation consultant, as required.
The following table describes the elements of the compensation program for nonemployee directors in 2025:
Director Compensation Program
| Element | Amount | Terms | ||
| Annual Retainer (Cash) |
$90,000 $145,000 (Chair) |
paid in quarterly installments, in arrears | ||
| Annual Retainer (Equity) |
$125,000 $170,000 (Chair) |
annual (or pro-rated) grant of Director RSUs • issued under the 2016 Directors Stock Unit Plan • vest at one year anniversary or earlier change in control if serving on such date • deliverable within sixty days of vesting unless director elected to defer payment (and except removal for cause) • one share per one unit upon delivery • no voting power until delivered • dividend equivalent rights | ||
| Committee Chair Fees* |
$20,000 (AC; MDCC) $15,000 (FC; NGSRC) |
paid in quarterly installments, in arrears | ||
| Special Assignment Fees |
$2,500 per diem ($1,250 for less than four hours) |
may be paid in connection with: • one-on-one meetings with the CEO • plant visits • other approved, non-scheduled significant activities | ||
| * | Committees: AC (Audit); FC (Finance); MDCC (Management Development & Compensation); NGSRC (Nominating, Governance & Social Responsibility) |
Effective as of the date of the 2026 Annual Shareholders’ Meeting, the annual equity retainer for nonemployee directors will be increased from $125,000 to $135,000, and the annual retainer for the Chair of the Board will be increased from $100,000 to $125,000, of which $65,000 is payable in cash and $60,000 is payable in equity. The
Board has determined that Mr. Templin will receive compensation for his role as Lead Independent Director equivalent to the compensation he would receive for service as Chair of the Board. As non-independent members of the Board, neither Mr. Hershey nor Mr. Grizzle receive compensation as directors.
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COMPENSATION OF DIRECTORS (CONTINUED)
Annual grants for the equity portion of the retainer are effective as of the first business day following the date of the Annual Meeting, and the amount of
each grant is determined by the NYSE closing price of our shares of Common Stock on that date.
Director Compensation Table – 2025
| Name | Fees Earned or Paid in Cash ($) |
Stock Awards ($)(1) |
Option Awards ($)(2) |
Non-Equity Incentive Plan Compensation ($) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) |
All Other Compensation ($)(4) |
Total ($) | |||||||||||||||||||||
| Richard D. Holder |
105,000 | 125,100 | — | — | — | 6,360 | 236,460 | |||||||||||||||||||||
| Kevin P. Holleran(5) |
22,500 | 83,516 | — | — | — | — | 106,016 | |||||||||||||||||||||
| Barbara L. Loughran |
110,000 | 125,100 | — | — | — | 10,807 | 245,907 | |||||||||||||||||||||
| William H. Osborne |
90,000 | 125,100 | — | — | — | 1,333 | 216,433 | |||||||||||||||||||||
| Kathleen E. Pitre |
45,000 | 125,100 | — | — | — | — | 170,100 | |||||||||||||||||||||
| Wayne R. Shurts |
110,000 | 125,100 | — | — | — | 1,333 | 236,433 | |||||||||||||||||||||
| Roy W. Templin |
160,000 | 170,027 | — | — | — | 1,813 | 331,840 | |||||||||||||||||||||
| (1) | Represents amounts that are in units of our shares of Common Stock. The amounts reported represent the aggregate grant date fair value for Director RSUs granted during the fiscal year, as calculated under the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 718. Under ASC Topic 718, the grant date fair value is calculated using the closing market price of our shares of Common Stock on the date of the grant. Grant date fair values differ from approved amounts due to rounding up fractional shares to the nearest whole share. For the number of Director RSUs credited to each director’s account as of March 31, 2026, see SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS, pages 24-27. |
| (2) | Directors do not receive stock options as part of their compensation for service on our Board. |
| (3) | Under the 2016 Directors Stock Unit Plan, directors may elect to defer the equity compensation that they receive as part of their compensation for service on our Board. |
| (4) | Represents cash dividend equivalent on vested undistributed shares and vested distributed shares, excluding any dividends payable for shares of Common Stock held individually by a director. |
| (5) | Mr. Holleran, who joined the Board in October 2025, was granted an award equal to two-thirds of the approved annual equity retainer for his service until the Annual Meeting. |
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AWI 2026 Proxy Statement | 23 | ||||||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS
Certain Beneficial Owners
The following table sets forth information regarding persons or groups known to us to be beneficial owners of more than 5% of our outstanding shares of Common Stock as of March 31, 2026 or the most recent date of any applicable reports filed by such persons or groups prior to that date. Beneficial ownership is determined in accordance with applicable rules of the SEC.
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership |
Percent of Class Outstanding(1)(2) | ||
| BlackRock, Inc. 50 Hudson Yards New York, NY 10001 |
5,562,424(3) | 13.1% | ||
| Capital International Investors 333 South Hope Street, 55th Fl Los Angeles, CA 90071 |
2,619,024(4) | 6.1% | ||
| (1) | Based on 42,612,212 shares of the Company’s Common Stock outstanding as of March 31, 2026, as reported to the NYSE (63,336,313 shares reported, less 20,724,101 shares held in treasury). |
| (2) | Prior versions of this table included The Vanguard Group, Inc. (“Vanguard”). On a Schedule 13G Amendment No. 9 filed with the SEC on January 10, 2024, Vanguard reported, as of December 31, 2023, that it had shared voting power with respect to 15,179 shares of Common Stock of the Company, sole dispositive power with respect to 4,700,871 shares of Common Stock of the Company and shared dispositive power with respect to 62,296 shares of Common Stock of the Company. Vanguard’s Schedule 13G was further amended on March 26, 2026 to report that (i) due to an internal realignment, certain subsidiaries or business divisions of subsidiaries of Vanguard that formerly had, or were deemed to have, beneficial ownership with Vanguard will report beneficial ownership separately (on a disaggregated basis) from Vanguard; (ii) Vanguard no longer has, or is deemed to have, beneficial ownership over securities beneficially owned by such subsidiaries and/or business divisions; and (iii) Vanguard beneficially owns no shares of the Company’s Common Stock. As of March 31, 2026, no subsidiaries or business divisions of subsidiaries of Vanguard filed a Schedule 13D or Schedule 13G with respect to ownership of our Common Stock. |
| (3) | On a Schedule 13G Amendment No. 1 filed with the SEC on July 18, 2025, BlackRock, Inc. reported, as of June 30, 2025, that it had sole voting power with respect to 4,926,494 shares of Common Stock of the Company and sole dispositive power with respect to 5,010,325 shares of Common Stock of the Company. |
| (4) | On a Schedule 13G Amendment No. 6 filed with the SEC on May 10, 2024, Capital International Investors reported, as of April 30, 2024, that it had sole voting power with respect to 2,616,152 shares of Common Stock of the Company and sole dispositive power with respect to 2,619,024 shares of Common Stock of the Company. |
| 24 | AWI 2026 Proxy Statement |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS (CONTINUED)
Management, Directors and Director Nominees
The following table sets forth, as of March 31, 2026, the number of shares of Common Stock beneficially owned by all directors and nominees, the Company’s named executive officers (“NEOs”) as identified in the “COMPENSATION DISCUSSION AND ANALYSIS” section on page 38 and all directors and executive officers as a group in accordance with applicable SEC rules.
| Name | Number of Common Shares Beneficially Owned |
Number of Shares Subject to Options(1) Exercisable or Which Become Exercisable Within 60 Days |
Total Number of Shares Beneficially Owned(2) |
Restricted Stock Units(3) / Unvested Options |
Total Common Shares Beneficially Owned Plus Restricted Stock Units and Unvested Options |
|||||||||||||||
| Christopher P. Calzaretta |
6,022 | — | 6,022 | 14,797 | 20,819 | |||||||||||||||
| Jill A. Crager |
4,328 | — | 4,328 | 9,011 | 13,339 | |||||||||||||||
| Victor D. Grizzle |
409,385 | — | 409,385 | 169,334 | 578,719 | |||||||||||||||
| Mark A. Hershey |
57,193 | — | 57,193 | 30,585 | 87,778 | |||||||||||||||
| Richard D. Holder |
— | — | — | 5,347 | 5,347 | |||||||||||||||
| Kevin P. Holleran |
— | — | — | 435 | 435 | |||||||||||||||
| Barbara L. Loughran |
— | — | — | 8,868 | 8,868 | |||||||||||||||
| William H. Osborne |
3,114 | — | 3,114 | 827 | 3,941 | |||||||||||||||
| Kathleen E. Pitre |
— | — | — | 827 | 827 | |||||||||||||||
| Wayne R. Shurts |
8,052 | — | 8,052 | 827 | 8,879 | |||||||||||||||
| Austin K. So(5) |
8,968 | — | 8,968 | 8,583 | 17,551 | |||||||||||||||
| Roy W. Templin |
18,327 | — | 18,327 | 1,124 | 19,451 | |||||||||||||||
| Directors, Director Nominees and Executive Officers as a Group (13 persons)(4) |
517,447 | — | 517,447 | 254,151 | 771,598 | |||||||||||||||
| (1) | Directors and NEOs do not receive stock option grants as part of the compensation programs for directors or NEOs, respectively. |
| (2) | No individual director or executive officer beneficially owns 1% of the shares of Common Stock outstanding as of March 31, 2026. The directors and executive officers as a group beneficially own approximately 1.2% of the shares of Common Stock outstanding as of March 31, 2026. |
| (3) | Represents, in the case of NEOs, unvested restricted stock units, unvested performance stock units at target, and vested but undistributed performance restricted stock units at target (“NEO RSUs”) granted to them under the 2016 Long-Term Incentive Plan and under the Equity and Cash Incentive Plan adopted in 2022, and, in the case of nonemployee directors, vested and unvested stock units (“Director RSUs”) granted to them as part of their annual retainer for Board service that are not acquirable by the director within 60 days of March 31, 2026 (in the case of vested Director RSUs due to deferral) under the terms of the 2016 Directors Stock Unit Plan. See Directors Aggregate Ownership table below for further information. None of these unvested NEO RSUs or Director RSUs have voting power. |
| (4) | Includes amounts for James T. Burge, Vice President, Controller. |
| (5) | Mr. So left the organization on April 1, 2026. |
|
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AWI 2026 Proxy Statement | 25 | ||||||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS (CONTINUED)
Directors – Aggregate Ownership
The table below sets forth, as of March 31, 2026, additional detail as to each nonemployee director’s ownership and rights to ownership in the Company’s equity.
| Name | Common Shares |
Vested Restricted Stock Units(1) |
Unvested Restricted Stock Units(2) |
Total Equity |
Total Value(3) |
|||||||||||||||
| Richard D. Holder |
— | 4,520 | 827 | 5,347 | $ | 881,186 | ||||||||||||||
| Kevin P. Holleran |
— | — | 435 | 435 | $ | 71,688 | ||||||||||||||
| Barbara L. Loughran |
— | 8,041 | 827 | 8,868 | $ | 1,461,446 | ||||||||||||||
| William H. Osborne |
3,114 | — | 827 | 3,941 | $ | 649,477 | ||||||||||||||
| Kathleen E. Pitre |
— | — | 827 | 827 | $ | 136,290 | ||||||||||||||
| Wayne R. Shurts |
8,052 | — | 827 | 8,879 | $ | 1,463,259 | ||||||||||||||
| Roy W. Templin |
18,327 | — | 1,124 | 19,451 | $ | 3,205,525 | ||||||||||||||
| Total |
29,493 | 12,561 | 5,694 | 47,748 | $ | 7,868,870 | ||||||||||||||
| (1) | Under the terms of the 2016 Directors Stock Unit Plan, the vested units will be acquirable by the director, at the election of the director: (i) at the vesting of the units at the one-year anniversary of the grant or (ii) at the time of the director’s termination of service. Represents stock units for which a director elected to defer payment. |
| (2) | Under the terms of the 2016 Directors Stock Unit Plan, the Director RSUs granted to each director as part of his retainer for Board service shall vest (contingent upon the director’s continued service as of such date) on the earlier of (i) the one-year anniversary of the grant; (ii) the death or total and permanent disability of the director; or (iii) the date of any Change in Control Event (as defined in the Plan). All the Director RSUs listed in this column will vest on June 11, 2026 (827 shares for Messrs. Holder, Osborne, Shurts, and Mses. Loughran and Pitre; 435 shares for Mr. Holleran; and 1,124 shares for the Lead Independent Director). |
| (3) | Represents an amount equal to the sum of the number of shares of Common Stock beneficially owned, plus the number of vested and unvested Director RSUs held, as applicable, multiplied by $164.80, which was the closing price of the shares of Common Stock of the Company on the NYSE on March 31, 2026. The amount excludes accrued dividends of $815.42 (non-interest bearing) for Messrs. Holder, Osborne, and Shurts and Mses. Loughran and Pitre; $294.94 (non-interest bearing) for Mr. Holleran; and $1,108.27 (non-interest bearing) for the Lead Independent Director. |
| 26 | AWI 2026 Proxy Statement |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS (CONTINUED)
| Stock Ownership Guidelines
In accordance with our Corporate Governance Principles, each nonemployee director must acquire as reasonably promptly as practicable following such director’s appointment as a director (taking into account, among other things, the applicable director’s individual financial and other circumstances and the then-current price of our securities) and then hold until the end of such director’s service, shares of Common Stock equal in value to five times the director’s annual cash retainer fee at the time such director joined the Board. Once the share ownership requirement is reached by a director, any later fluctuation in stock price is disregarded and no additional stock acquisition is required by such director.
This requirement is waived as to directors designated by shareholders who, while not holding shares individually, nevertheless have an equity interest in Common Stock of the Company by virtue of being a designee of the shareholder. All of the current directors have achieved this ownership requirement except for Ms. Pitre, who joined the Board in June 2025 and Mr. Holleran, who joined the Board in October 2025. For further details regarding stock ownership by nonemployee directors, see page 26 of this proxy statement. As officers of the Company, Messrs. Grizzle and Hershey are not subject to the stock ownership guidelines for nonemployee directors but are subject to separate stock ownership guidelines for executives. |
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AWI 2026 Proxy Statement | 27 | ||||||
ITEM 2 – RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee selected KPMG LLP to audit our consolidated financial statements and our internal control over financial reporting for 2026. In accordance with past practice, this selection will be presented to the shareholders for ratification at the Annual Meeting; however, consistent with the requirements of the Sarbanes-Oxley Act of 2002, the Audit Committee has ultimate authority in respect of the selection of our independent
registered public accounting firm. The Audit Committee may reconsider its selection if the appointment is not ratified by the shareholders.
A representative of KPMG LLP will be in attendance at the Annual Meeting to respond to appropriate questions and will be afforded the opportunity to make a statement at the meeting, if he or she desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP.
| 28 | AWI 2026 Proxy Statement |
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AUDIT COMMITTEE REPORT
The Audit Committee engaged KPMG LLP as the Company’s independent registered public accounting firm for 2026. In making this selection, the Audit Committee considered KPMG LLP’s qualifications, discussed with KPMG LLP its independence, and reviewed the audit and non-audit services provided by KPMG LLP to the Company.
Management of the Company is responsible for the financial reporting process, including preparation of consolidated financial statements, establishing and maintaining an adequate system of internal controls, including internal control over financial reporting, enterprise risk management, and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. KPMG LLP is responsible for auditing those consolidated financial statements, expressing an opinion on the conformity of the Company’s audited financial statements with accounting principles generally accepted in the United States and on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee is responsible to monitor and oversee these processes and procedures. The Audit Committee relies, without independent verification, on the information provided to it and on the representations made by management regarding the effectiveness of internal control over financial reporting, the integrity and objectivity of financial statements provided to it and that such financial statements have been prepared in conformity with accounting principles generally accepted in the United States. The Audit Committee also relies on the opinions of the independent auditors on the consolidated financial statements, conformity of the consolidated financial statements with accounting principles generally accepted in the United States and the effectiveness of the Company’s internal control over financial reporting.
The Audit Committee’s meetings facilitate communication among the members of the Audit Committee, management, the Company’s internal auditors, and the Company’s independent auditors. The Audit Committee reviewed and discussed the audited consolidated financial statements for fiscal year 2025 with the Company’s management and the Company’s independent auditors. The Audit Committee reviewed and discussed with management the critical accounting policies applied by the Company in the preparation of those financial statements. The Audit Committee also discussed with KPMG LLP the matters required to be discussed by applicable standards of the Public Company Accounting Oversight Board (“PCAOB”) and had the opportunity to ask KPMG LLP questions relating to such matters. The discussions included the quality, and not just the acceptability, of the accounting principles utilized, the reasonableness of significant accounting judgments, and the clarity of disclosures in the financial statements.
The Audit Committee regularly considers the independence, qualifications and performance of KPMG LLP. Such consideration includes reviewing the written disclosures and the letter received from KPMG LLP required by applicable requirements of the PCAOB regarding the independent registered public accountants’ communications with the Audit Committee concerning independence.
| Based on the reviews and discussions referenced above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The Audit Committee and the Board believe that the continued retention of KPMG LLP to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders and have recommended that shareholders ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year 2026.
Submitted by the Audit Committee
Barbara L. Loughran (Chair) Richard D. Holder Kathleen E. Pitre Wayne R. Shurts |
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AWI 2026 Proxy Statement | 29 | ||||||
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table presents fees for professional audit services rendered by KPMG LLP for the audit of our annual consolidated financial statements for 2025 and 2024, as well as fees billed for other services rendered by KPMG LLP. All fees in 2025 and 2024 were pre-approved by the Audit Committee.
| (amounts in thousands) | 2025 | 2024 | ||||||
| Audit Fees(1) |
$ | 3,437 | $ | 3,227 | ||||
| Audit Related Fees |
$ | — | $ | — | ||||
| Total audit fees |
$ | 3,437 | $ | 3,227 | ||||
| Tax Fees(2) |
$ | 370 | $ | 402 | ||||
| Other(3) |
$ | 2 | $ | 14 | ||||
| Total other fees |
$ | 372 | $ | 416 | ||||
| Total Fees |
$ | 3,809 | $ | 3,643 | ||||
| (1) | For both years, audit fees are for services rendered in connection with the integrated audit of Armstrong’s consolidated financial statements as of and for the year then ended, for which a portion of billings occurred in the following years. For both years, audit fees were also incurred for reviews of condensed consolidated financial statements included in the Company’s quarterly reports on Form 10-Q. |
| (2) | Tax fees were primarily for tax compliance, tax planning, technical assistance, and consulting on both domestic and international matters. |
| (3) | Fees that do not fall within the categories set forth above. Fees in 2024 primarily relate to participation in executive education programs. |
The Audit Committee has considered whether the provision by KPMG LLP of the non-audit services described above was allowed under Rule 2-01(c)(4) of Regulation S-X and was compatible with maintaining auditor independence and has concluded that KPMG LLP was and is independent of the Company in all respects. KPMG LLP did not provide non-audit services to the Company during 2025 other than those described herein.
Audit Committee Pre-Approval Policy
The Audit Committee adheres to a policy that requires the Audit Committee’s prior approval of any audit, audit-related and non-audit services provided by the firm that serves as our independent registered public accounting firm. Pursuant to this policy, management cannot engage the firm for any services without the Audit Committee’s pre-approval. The Audit Committee delegates to the Audit Committee Chair the authority to pre-approve non-audit services for purposes of handling immediate needs, with a report to the full Audit Committee of such approvals at its next meeting. The policy complies with Section 10A(i) of the Exchange Act.
Evaluation of Independent Auditors; Auditor Tenure
The Audit Committee is directly responsible for the selection, appointment, compensation, evaluation and, where appropriate, replacement of our independent registered public accounting firm. As in prior years, the Audit Committee has evaluated KPMG LLP in connection with the Audit Committee’s consideration of whether to recommend that the Company’s shareholders ratify the selection of KPMG LLP as the Company’s independent auditor for 2026. In that review, the Audit Committee considered both the continued independence of KPMG LLP and whether retaining KPMG LLP is in the best interests of the Company and its shareholders. The Audit Committee’s evaluation of KPMG LLP further included: (i) the results of an annual management survey of KPMG’s overall performance; (ii) review of external data on audit quality and performance, including recent PCAOB reports on KPMG LLP and its peer firms; (iii) an analysis of KPMG LLP’s known legal risks and significant proceedings that may impair KPMG LLP’s ability to perform the Company’s annual audit; and (iv) a review of the competitiveness of KPMG LLP’s fees given the services provided to the Company. In addition, KPMG LLP reviews with the Audit Committee its analysis of its
| 30 | AWI 2026 Proxy Statement |
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FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)
independence in accordance with PCAOB Rule 3526. The Audit Committee evaluates whether the independent registered public accounting firm should be rotated and considers the advisability and potential impact of selecting a different independent registered public accounting firm. In addition to the matters discussed above, factors considered by the Audit Committee when retaining its independent auditors include:
| • | the firm’s technical expertise; |
| • | the firm’s knowledge of the Company’s business and industry; |
| • | the firm’s reputation; |
| • | the firm’s geographic footprint compared to our business; |
| • | the firm’s tenure as the Company’s independent auditor; and |
| • | continuous evaluation of the quality of communications and engagement with the firm. |
KPMG LLP has served as the independent registered public accounting firm of the Company and its predecessors since 1929. We believe this long tenure is advantageous for several reasons, including the following:
| • | Enhanced audit quality resulting from the institutional knowledge of and expertise regarding Armstrong’s operations and business strategy, accounting policies and practices, and internal control over financial reporting; |
| • | Increased audit efficiency by virtue of KPMG LLP’s familiarity with Armstrong’s accounting policies and practices and relevant personnel; and |
| • | Avoidance of disruption and undue demands on management time involved in onboarding a new independent registered public accounting firm. |
Regular Rotation of Primary Engagement Partner
In accordance with applicable rules on partner rotation, KPMG LLP’s lead engagement partner for our audit is changed every five years and was rotated in accordance with that cadence in 2024. The Audit Committee was involved in considering the selection of KPMG LLP’s lead engagement partner, including interviewing the proposed candidate, and the Chair of the Audit Committee approved the selection of the lead engagement partner in 2024.
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AWI 2026 Proxy Statement | 31 | ||||||
ITEM 3 – APPROVAL OF 2026 DIRECTORS STOCK UNIT PLAN
Our Board is asking shareholders to approve the Armstrong World Industries, Inc. 2026 Directors Stock Unit Plan (the “2026 Directors Stock Unit Plan”). The Governance Committee and our Board previously approved the 2026 Directors Stock Unit Plan, subject to shareholder approval.
The 2026 Directors Stock Unit Plan is a new equity compensation plan for our nonemployee directors and will replace the 2016 Directors Stock Unit Plan, which is set to terminate pursuant to its terms on July 7, 2026. If approved by our shareholders, the 2026 Directors Stock Unit Plan will become effective as of July 1, 2026, after which no further grants will be made under the 2016 Directors Stock Unit Plan.
Shareholder approval of the 2026 Directors Stock Unit Plan is being sought in order to meet New York Stock Exchange listing requirements. The 2026 Directors Stock Unit Plan will enable us to continue our director compensation program, which is intended to attract, motivate and retain experienced, highly-qualified non-employee directors who will contribute to our financial success. The 2026 Directors Stock Unit Plan is intended to align the interests of the nonemployee directors with those of the shareholders through the grant of stock unit awards.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE ARMSTRONG WORLD INDUSTRIES, INC. 2026 DIRECTORS STOCK UNIT PLAN.
| 32 | AWI 2026 Proxy Statement |
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ITEM 3 – APPROVAL OF 2026 DIRECTORS STOCK UNIT PLAN (CONTINUED)
DETERMINATION OF SHARES TO BE AVAILABLE FOR ISSUANCE
If this Item 3 is approved by the shareholders at the Annual Meeting, the maximum aggregate number of shares that may be issued under the 2026 Directors Stock Unit Plan shall be 250,000 shares of our Common Stock, subject to adjustments as provided in the 2026 Directors Stock Unit Plan. When deciding on the number of shares to be available for awards under the 2026 Directors Stock Unit Plan, the Board of Directors considered a number of factors, including the number of shares needed for future stock unit awards, the number of shares authorized and issued under the 2016 Directors Stock Unit Plan and input from the Company’s independent compensation consultant.
As of April 16, 2026, our capital structure consisted of 42,712,328 shares of Common Stock outstanding. The proposed share authorization is a request for 250,000 shares to be available for awards under the 2026 Directors Stock Unit Plan. The 250,000 shares represent approximately 0.58% of fully diluted shares of our Common Stock, including all shares that will be authorized under the 2026 Directors Stock Unit Plan. The Board believes that this number of shares of Common Stock under the 2026 Directors Stock Unit Plan represents a reasonable amount of potential equity dilution, which will allow us to continue awarding equity awards to our nonemployee directors, and that equity awards are an important component of the director compensation program.
Based on our current equity awards practices and the current price of our Common Stock, the Board estimates that the authorized shares under the 2026 Directors Stock Unit Plan will be sufficient to provide stock unit awards for approximately ten years, in amounts determined appropriate by the Board or the Committee described below. This is only an estimate, and circumstances could cause the share reserve to be used more or less quickly.
DESCRIPTION OF THE 2026 DIRECTORS STOCK UNIT PLAN
The following is a brief description of the material features of the 2026 Directors Stock Unit Plan. This description is qualified in its entirety by reference to the full text of the 2026 Directors Stock Unit Plan, a copy of which is attached to this Proxy Statement as Annex B.
SHARE AUTHORIZATION AND ANNUAL COMPENSATION LIMIT
The 2026 Directors Stock Unit Plan authorizes up to 250,000 shares of our Common Stock for issuance, subject to adjustment as described below. If and to the extent stock units granted under the 2026 Directors Stock Unit Plan are forfeited, terminated, or otherwise are not paid in full, the shares reserved for such grants shall again be available for purposes of the 2026 Directors Stock Unit Plan.
The 2026 Directors Stock Unit Plan provides that the maximum grant date value of shares of Common Stock subject to grants of stock units made to any nonemployee director during any one calendar year, taken together with any cash fees earned by such nonemployee director for services rendered during the calendar year, shall not exceed $750,000 in total value. The value of such grants shall be calculated based on the grant date fair value of such grants for financial reporting purposes.
ADMINISTRATION
The 2026 Directors Stock Unit Plan is administered and interpreted by the Board or, if so delegated, to the Governance Committee. The Board has delegated administrative responsibility to the Governance Committee. References to the Committee mean the Governance Committee or the Board, as applicable. Unless the 2026 Directors Stock Unit Plan is administered by the Board, each member of the Committee shall be a “nonemployee director” within the meaning of Rule 16b-3(b)(3) of the Exchange Act. The Committee has the discretionary authority to make such determinations and interpretations and to take such actions in connection with the 2026 Directors Stock Unit Plan and any awards granted under the 2026 Directors Stock Unit Plan as it deems necessary or advisable.
STOCK UNITS
The Committee may award stock units with respect to shares of our Common Stock to nonemployee directors. Unless the Committee determines otherwise, each year, each nonemployee director shall be granted a number of stock units based on a formula approved by the Committee. If a nonemployee director is elected to the Board other than at the annual meeting of shareholders, the Committee may pro-rate the amount of the annual
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AWI 2026 Proxy Statement | 33 | ||||||
ITEM 3 – APPROVAL OF 2026 DIRECTORS STOCK UNIT PLAN (CONTINUED)
grant of stock units awarded to such director to correspond to the period of time to be served by the nonemployee director between such nonemployee director’s election and the next annual meeting of shareholders. Stock units may also be granted to nonemployee directors at such times, in such amounts, and upon such terms and conditions as the Committee deems appropriate. Each stock unit provides the right to receive a payment in shares of Common Stock upon the vesting of the stock unit, unless the nonemployee director elects to defer payment of the stock units. The Committee determines the number of stock units that will be awarded, as well as the other terms and conditions applicable to the stock units.
Unless the Committee determines otherwise, the provisions described below apply to all grants made under the 2026 Directors Stock Unit Plan. Stock units shall vest, contingent upon the participant’s continued service as a director of our Board through the vesting date, on the first to occur of: (i) the date of the next annual shareholders meeting; (ii) the date on which the participant has a separation from service on account of death or total and permanent disability; or (iii) the date of a change in control.
A change in control is deemed to have occurred under the 2026 Directors Stock Unit Plan if any of the following events have occurred:
| (I) | Any individual, entity, or group, other than our company, beneficially owns 35% or more of our voting stock; |
| (II) | Individuals who, as of July 1, 2026, constituted our Board (referred to as the incumbent board) cease to constitute at least a majority of our Board. Any individual who becomes a director after such date by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended shall be deemed a member of the incumbent board. However, no individual who was initially elected as a member of our Board in connection with an actual or threatened election contest or settlement of an actual or threatened election contest will be considered to be a member of the incumbent board; |
| (III) | Consummation of a merger or consolidation of our Company or any direct or indirect subsidiary with any other corporation, other than (i) a |
| merger or consolidation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the surviving company, the entity surviving such merger or consolidation or, if our Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof, or (ii) a merger or consolidation effected to implement a recapitalization of our Company (or similar transaction) in which no individual or entity beneficially owns 35% or more of the combined voting stock of our Company’s then outstanding securities resulting from the transaction; |
| (IV) | Shareholder approval of a liquidation or dissolution of our Company; or |
| (V) | Consummation of a sale of all or substantially all of our Company’s assets. |
The Committee may provide a different definition of change of control in an award agreement if it determines a different definition is necessary or appropriate, including to comply with Section 409A of the Internal Revenue Code.
A director may elect to defer payment of vested stock units that will be granted in a designated year, consistent with the requirements of Section 409A of the Internal Revenue Code. The deferral election may provide for payment upon the first to occur of (i) the date of the director’s separation from service for any reason other than cause or (ii) a change in control that meets the requirements of a “change in the ownership or effective control, or a change in the ownership of a substantial portion of the assets,” under Section 409A of the Internal Revenue Code. The elected deferred date is referred to as a “deferred payment date.”
A vested stock unit will be paid in shares of Common Stock, with one share of Common Stock delivered for each vested stock unit within 60 days after the date of vesting or within 60 days after a deferred payment date, as applicable.
If an award of stock units is outstanding as of the record date for determining the shareholders entitled to receive a cash dividend on outstanding shares of Common Stock, each director shall be credited with dividend equivalents with respect to the director’s outstanding stock units. Dividend equivalents will vest at the same time as the underlying stock units. Unless the Committee
| 34 | AWI 2026 Proxy Statement |
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ITEM 3 – APPROVAL OF 2026 DIRECTORS STOCK UNIT PLAN (CONTINUED)
determines otherwise, dividend equivalents on unvested stock units will be paid in cash at the time of vesting, and dividend equivalents on vested stock units that have been deferred will be paid in cash on the dividend payment dates. If the underlying stock units are forfeited, all related dividend equivalents shall also be forfeited. No interest shall accrue on dividend equivalents.
If a director has a separation from service for cause, as determined by the Committee, all stock units that have not been paid, whether or not vested, shall be forfeited. Upon the effective date of a separation from service for any reason other than cause, all unvested stock units shall be forfeited.
If a participant ceases serving as a nonemployee director and, immediately thereafter, is employed by us, then such participant will not be deemed to have ceased service for purposes of the 2026 Directors Stock Unit Plan at that time. The participant’s continued employment with us will be deemed to be continued service for purposes of the 2026 Directors Stock Unit Plan; provided, however, that such service shall cease as of the date of a separation from service under Section 409A of the Internal Revenue Code, and such former director will not be eligible for additional grants of stock units under the 2026 Directors Stock Unit Plan.
ADJUSTMENTS
Awards under the 2026 Directors Stock Unit Plan and any agreements evidencing such awards, the maximum number of shares of Common Stock that may be issued under the 2026 Directors Stock Unit Plan and the maximum number of shares of Common Stock with respect to which stock units may be made to any one person during any calendar year are subject to mandatory adjustment or substitution, as determined by the Committee in its sole discretion, as to the number, price or kind of a share of Common Stock or other consideration subject to such stock unit or as otherwise determined by the Committee to be equitable
| (I) | in the event of changes in the outstanding Common Stock or in our capital structure by reason of stock or extraordinary cash dividends, stock splits, reverse stock splits, spinoffs, recapitalization, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the relevant grant date, or |
| (II) | in the event of any change in applicable laws or any change in circumstances which results in or would result in any substantial dilution or enlargement of the rights awarded to, or available for, participants, or which otherwise warrants equitable adjustment because it interferes with the intended operation of the 2026 Directors Stock Unit Plan. |
STOCK OWNERSHIP POLICY
Unless the Committee determines otherwise, nonemployee directors who are subject to our stock ownership guidelines must hold a portion of the net after-tax shares received upon payment of stock units under the 2026 Directors Stock Unit Plan until the applicable stock ownership guidelines are met, in accordance with the provisions of such guidelines.
CLAWBACK POLICY
All awards made under the 2026 Directors Stock Unit Plan are subject to the applicable provisions of clawback or other recoupment policies, the Company’s insider trading policy and other policies that may be implemented and approved by the Board, as each such policy may be in effect from time to time.
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend or terminate the 2026 Directors Stock Unit Plan at any time, subject to shareholder approval if such approval is required under applicable laws or stock exchange requirements. The 2026 Directors Stock Unit Plan will terminate on June 30, 2036, unless the 2026 Directors Stock Unit Plan is terminated earlier by the Board or is extended by the Board with the approval of our shareholders.
U.S. FEDERAL INCOME TAX IMPLICATIONS OF THE 2026 DIRECTORS STOCK UNIT PLAN
The U.S. federal income tax consequences arising with respect to stock units are described briefly below. From the recipients’ standpoint, as a general rule, ordinary income will be recognized at the time of payment of cash or delivery of shares of Common Stock. Future appreciation on shares held beyond the ordinary income recognition event will
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AWI 2026 Proxy Statement | 35 | ||||||
ITEM 3 – APPROVAL OF 2026 DIRECTORS STOCK UNIT PLAN (CONTINUED)
be taxable at capital gains rates when the shares are sold. The Company, as a general rule, will be entitled to a tax deduction that corresponds in time and amount to the ordinary income recognized by the recipient, and the Company will not be entitled to any tax deduction in respect of capital gain income recognized by the recipient.
If an award constitutes nonqualified deferred compensation under Section 409A of the Internal Revenue Code and the arrangement fails to meet the requirements of Section 409A, then all amounts deferred under the award that are not subject to a substantial risk of forfeiture may be required to be included in the recipient’s income immediately, and the recipient will be subject to an additional 20% tax on such amounts, plus interest, in addition to regular income tax.
The foregoing provides only a general description of the application of U.S. federal income tax laws to stock units granted to U.S. taxpayers under the 2026 Directors Stock Unit Plan. This discussion is intended for the information of shareholders considering how to vote at the Annual Meeting and not as tax guidance to participants in the 2026 Directors Stock Unit Plan, as the tax consequences
may vary with the identity of the recipients and the method of payment or settlement. This summary does not address the effects of other federal taxes (including possible “golden parachute” excise taxes) or taxes imposed under state, local, or foreign tax laws.
NEW PLAN BENEFITS UNDER THE 2026 DIRECTORS STOCK UNIT PLAN
At the present time, seven nonemployee directors will be eligible to receive stock units under the 2026 Directors Stock Unit Plan after the effective date of the plan. The stock units granted immediately following the Annual Meeting will be granted under the 2016 Directors Stock Unit Plan, after which no further grants will be made under the 2016 Directors Stock Unit Plan. The table below shows, as to each of the Company’s nonemployee directors nominated for election at the Annual Meeting, the stock units that are expected to be granted to nonemployee directors at the 2027 Annual Meeting of Shareholders (“2027 Annual Meeting”), contingent upon their election by the Company’s shareholders. The last reported sale price of a share of our Common Stock on April 16, 2026 was $173.57 per share.
| Name | Stock Units Expected to be Granted After 2027 Annual Meeting | |
| Richard D. Holder |
778 | |
| Kevin P. Holleran |
778 | |
| Barbara L. Loughran |
778 | |
| William H. Osborne |
778 | |
| Kathleen E. Pitre |
778 | |
| Wayne R. Shurts |
778 | |
| Roy W. Templin |
1,066 | |
| 36 | AWI 2026 Proxy Statement |
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ITEM 4 – ADVISORY APPROVAL OF EXECUTIVE COMPENSATION
The Company is seeking your advisory vote on our executive compensation program. The Company asks that you support the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis section and the accompanying tables contained in this proxy statement. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Board will review the voting results and take them into consideration when making future decisions regarding executive compensation. This item, which is provided pursuant to Section 14A of the Exchange Act, is commonly referred to as a “say-on-pay” resolution.
The Company has in the past sought approval from shareholders regarding the incentive plans that we use to motivate, retain, and reward our executives. Those incentive plans, including the 2016 Long-Term Incentive Plan and the Equity and Cash Incentive Plan adopted in 2022, make up a majority of the pay that the Company provides to our executives. Over the years, the Company has made a number of changes to its disclosures concerning executive compensation, as well as to its executive compensation programs, in response to shareholder input, including a number of enhancements mentioned in this proxy statement.We believe our executive compensation
program has played a material role in our ability to drive strong financial results and attract and retain a highly experienced, successful management team. We further believe that our executive compensation program is structured appropriately to support our company and our business objectives.
Our Compensation Committee has developed and maintained a compensation program that: aligns executive interests with shareholders’ interests; links pay and performance by placing a significant portion of compensation “at risk” based on performance against pre-established goals; and provides a competitive level of compensation globally to enable access to high-quality executives in a competitive way.
As reflected in the total shareholder return components of our program, if the value we deliver to our shareholders increases, so does the compensation we deliver to our executives.
We maintain strong corporate governance over our executive pay programs. We closely monitor the compensation programs and pay levels of executives from companies of similar size and complexity, so that we may ensure that our compensation programs are within the norm of a range of market practices.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE COMPANY’S COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THE COMPENSATION DISCUSSION AND ANALYSIS SECTION AND THE ACCOMPANYING COMPENSATION TABLES CONTAINED IN THIS PROXY STATEMENT.
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AWI 2026 Proxy Statement | 37 | ||||||
COMPENSATION DISCUSSION AND ANALYSIS
In this Compensation Discussion and Analysis (“CD&A”) section, we review the objectives and elements of our executive compensation philosophy, as well as the Company’s performance and compensation decisions in 2025 relating to our named executive officers (“NEOs”) who are:
Victor D. Grizzle(1) President and CEO
Mark A. Hershey(2) Senior Vice President and Chief Operating Officer
Christopher P. Calzaretta Senior Vice President and CFO
Austin K. So(3) Senior Vice President, General Counsel, Head of Government Relations & Chief Sustainability Officer
Jill A. Crager, Senior Vice President, Sales and Digital Marketing
| (1) | Mr. Grizzle was appointed as Executive Chair effective April 1, 2026 |
| (2) | Mr. Hershey was appointed as President and Chief Executive Officer effective April 1, 2026 |
| (3) | Mr. So left the organization on April 1, 2026. |
FISCAL 2025 COMPANY PERFORMANCE
Business Overview
AWI is an Americas leader in the design and manufacture of innovative interior and exterior architectural applications including ceilings, specialty walls and exterior metal solutions. We manufacture and source products made of numerous materials, including mineral fiber, fiberglass, metal, felt, architectural resin and glass, wood, wood fiber and glass-reinforced-gypsum. Our operating segments are Mineral Fiber, which produces suspended mineral fiber and soft fiber ceiling systems, Architectural Specialties, which designs, produces and sources specialty ceilings, walls, and other interior and exterior architectural applications primarily for use in commercial settings and Unallocated Corporate. We also manufacture ceiling suspension system (grid) products through a joint venture with Worthington Enterprises, Inc. called Worthington Armstrong Venture (“WAVE”) (results of WAVE are included in our Mineral Fiber segment).
Our fiscal year 2025 key performance highlights were as follows (all comparisons are versus 2024 unless otherwise noted):
| • | Consolidated Net Sales: Net sales increased $175 million, or 12%, to $1,621 million primarily due to $117 million of higher sales volumes and $58 million of favorable like-for-like pricing and product mix, or Average Unit Value (“AUV”). Architectural Specialties net sales increased $130 million, or 28%, and Mineral Fiber net sales increased $45 million, or 5%. The increase in Architectural Specialties net sales was driven primarily by a $94 million year-over-year increase attributable to the December 2024 acquisition of A. Zahner Company and the April 2024 acquisition of 3form, LLC and a $36 million increase in organic net sales. The increase in Mineral Fiber net sales was primarily driven by favorable AUV, as a result of increased like-for-like pricing and, to a lesser extent, favorable mix, partially offset by lower sales volumes. |
| • | Operating Income and adjusted Earnings Before Interest, Taxes, Depreciation and Amortization |
| (“adjusted EBITDA”)*: Operating income of $431 million increased $57 million, or 15%. Adjusted EBITDA of $555 million increased $69 million, or 14%. The year-over-year improvement in adjusted EBITDA* was driven primarily by a margin benefit from increased Architectural Specialties net sales, a favorable AUV benefit and an increase in WAVE equity earnings, partially offset by increased selling, general and administrative (“SG&A”) expenses and higher manufacturing costs. |
| • | Net Cash Provided by Operating and Investing Activities and Adjusted Free Cash Flow (“adjusted FCF”)*: Net cash provided by operating and investing activities of $352 million increased $164 million, or 88%. Adjusted FCF* of $346 million increased $48 million, or 16%, driven primarily by higher cash earnings and an increase in dividends from WAVE, partially offset by an increase in purchases of property, plant and equipment. |
| 38 | AWI 2026 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
| • | Mineral Fiber Volume (“MFV”): MFV decreased $14 million driven by softer demand, primarily from home centers, partially offset by benefits from growth initiatives. |
| • | Mineral Fiber Operating income and adjusted EBITDA*: Mineral Fiber operating income of $362 million increased $40 million, or 12%. Mineral Fiber adjusted EBITDA* of $448 million increased $42 million, or 10%. The year-over-year improvement in Mineral Fiber adjusted EBITDA* was primarily driven by a favorable AUV benefit, an increase in WAVE equity earnings and a decrease in SG&A expenses, partially offset by a negative impact from lower sales volumes. |
| • | Total Shareholder Return (“TSR”): Our annualized absolute TSR for the 2023 – 2025 PSU performance period was 35.9%. |
Please also see our Consolidated Financial Statements in our Annual Report on Form 10-K filed with the SEC on February 24, 2026.
| * | To supplement its consolidated financial statements presented in accordance with GAAP, the Company provides additional measures of performance adjusted to exclude the impact of certain discrete expenses and income including adjusted EBITDA and adjusted FCF. Investors should not consider non-GAAP measures as a substitute for GAAP measures. The Company excludes certain acquisition related expenses (i.e. – impact of adjustments related to the fair value of inventory, contingent third-party professional fees, changes in the fair value of contingent consideration and deferred compensation accruals for acquisitions). Acquisition related deferred compensation accruals excluded from adjusted EBITDA represented cash and stock awards that are recorded over each award’s respective vesting period, as such payments are subject to the sellers’ and employees’ continued employment with the Company. Examples of other excluded items have included plant closures, restructuring charges and related costs, impairments, separation costs and other cost reduction initiatives, environmental site expenses and environmental insurance recoveries, endowment level charitable contributions, the impact of defined benefit plan settlements, gains and losses on sales or impairments of fixed assets, and certain other gains and losses. The Company also excludes income/expense from its U.S. Retirement Income Plan (“RIP”) in the non-GAAP results as it represents the actuarial net periodic benefit credit/cost recorded. For all periods presented, the Company was not required and did not make cash contributions to the RIP based on guidelines established by the Pension Benefit Guaranty Corporation, |
| nor does the Company expect to make cash contributions to the plan in 2026. Adjusted FCF is defined as cash from operating and investing activities, adjusted to remove the impact of cash used or proceeds received for acquisitions and divestitures, environmental site expenses and environmental insurance recoveries. Management’s adjusted FCF measure includes returns of investment from WAVE and cash proceeds received from the settlement of company-owned life insurance policies, which are presented within investing activities on our consolidated statement of cash flows. The Company uses these non-GAAP adjusted measures in managing the business, including communications with its Board of Directors and employees and believes the adjustments provide meaningful comparisons of operating performance between periods. The Company also uses adjusted EBITDA and adjusted free cash flow (with further adjustments, when necessary) as factors in determining at-risk compensation for senior management. These non-GAAP measures may not be defined and calculated the same as similar measures used by other companies. Non-GAAP financial measures utilized by the Company may not be comparable to non-GAAP financial measures used by other companies. Please refer to Annex A for a reconciliation of these non-GAAP financial measures to our results as reported under GAAP. |
2025 Compensation Plan Design
Our Compensation Committee reviews our compensation plans at least annually and, in 2025, determined to continue and maintain the Annual Incentive Plan design established in recent years but made some changes to our Long-Term Incentive Plan. Our plans are designed to work together to directly link compensation opportunities to meaningful achievements in Company strategy and performance and long term stock price performance.
| • | Annual Incentive Plan (“AIP”): Our 2025 AIP continued to use revenue and adjusted EBITDA as the performance metrics for Company results. These measures align to key elements of our operating plan and financial goals, including revenue growth, manufacturing productivity and controlled SG&A expense, and are strong indicators of our overall operating performance. |
| • | Long-Term Incentive Plan (“LTIP”): The awards granted by the Compensation Committee to NEOs under our LTIP was comprised of 60% performance-based restricted stock units (“PSUs”) and 40% time-based restricted stock units (“RSUs”) which aligns to our compensation |
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AWI 2026 Proxy Statement | 39 | ||||||
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
| objectives, and supports attraction and retention of high quality executives in a highly competitive talent market. Our 2025 PSU performance metrics are based on 3-year absolute TSR (“Absolute TSR”), 3-year cumulative adjusted FCF and 3-year cumulative Mineral Fiber volume growth (“MFV”). Our Compensation Committee selected Absolute TSR as a PSU performance metric because it believes Absolute TSR most directly captures shareholder value creation, while providing senior management with the flexibility and levers needed to drive meaningful performance improvement. Our Compensation Committee selected adjusted FCF as a PSU performance metric because it believes adjusted FCF growth is a strong indicator of value-creating activities over the performance period. The Compensation Committee selected MFV as the final metric for the 2025 PSUs. MFV was previously used as a PSU metric from 2020 through 2022 before switching to MF EBITDA for 2023 and 2024. Our Compensation Committee reverted to MFV in 2025 due to the more stable post-COVID economic environment and improved ability to forecast near-term volume and set appropriate growth targets. In addition, we received feedback from our shareholders during outreach in 2024 that they prefer the use of MFV as a PSUs performance metric compared to MF EBTIDA. The 2025 PSU grants, intended to compensate for long term value creation, have a three-year performance period and challenging targets with meaningful payout upside for superior performance. These plan features, and others as described in more detail in this CD&A, are designed to strongly align the interests of management with those of shareholders, and to provide meaningful incentives for performance and growth consistent with our strategic plan. Finally, the Committee modified the provision allowing for the acceleration of vesting upon retirement from 55 years of age and 5 years of service for the 2024 awards to 60 years of age and 5 years of service for the 2025 LTIP awards. We maintained our minimum service requirement which requires participants to be employed ten months following date of grant to be eligible for the retirement provision. |
Shareholder Engagement
In 2025, we continued to engage with our shareholders to seek their perspectives on corporate governance, our executive compensation program, sustainability
and other matters. We conducted formal outreach over the course of the year with shareholders representing approximately 30% of our outstanding shares at the time of outreach. These discussions were conducted by senior leaders from the Company’s Legal, Human Resources, Investor Relations and Sustainability teams. These discussions were complemented by our ongoing outreach initiatives led by our Investor Relations team. Detailed summaries of these discussions were shared with the Compensation Committee and our Board of Directors. In our 2025 outreach discussions, we heard broad support for the Company’s Board composition and governance practices, citing recent director additions, a structured onboarding approach, and a disciplined, skills-based evaluation process. In addition, we received support for our CEO and leadership succession planning, with particular interest in internal talent development. We also continued to receive positive feedback on our sustainability disclosure program. We believe our 2025 nonbinding shareholder advisory vote on executive compensation approval vote of 84% reflects shareholder support for the design and outcomes of our executive compensation programs. Shareholder communications and inquiries are shared with Company management and with the Chairs of the Board and its Committees, as appropriate. The Company considers shareholder feedback as it shapes its governance and executive compensation programs and policies and disclosures. Past examples of disclosure added after communications with shareholders included a Board skill matrix, enhanced disclosure on Board education and CEO succession planning, more robust and plain english disclosures, and additional information on environmental and social initiatives.
Our Executive Compensation Philosophy, Objectives, Elements and Characteristics
Compensation Philosophy and Objectives
Our long-term success and growth depend on highly capable leaders with appropriate experience and skills to deliver our strategy in a variable and challenging market environment. Our executive compensation program is designed to attract, motivate and retain those leaders. In developing and maintaining this program, our Compensation Committee focuses on the following key objectives:
| • | Aligning executive interests with shareholder interests. |
| 40 | AWI 2026 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
| • | Creating a strong link between pay and performance by placing a significant portion of compensation ‘‘at risk’’ based on performance against pre-established goals. |
| • | Structuring competitive compensation packages to attract and retain high-quality executives in a highly competitive talent environment. |
Compensation Elements
In 2025, we executed our compensation philosophy by providing compensation opportunities through a combination of: (i) fixed compensation, including base salaries, benefits and limited perquisites; and (ii) at-risk compensation, including cash incentive awards under our AIP, and LTIP grants of PSUs and RSUs, governed by our Equity and Cash Incentive Plan adopted in 2022 (“2022 ECIP”) (our omnibus equity award plan).
| Type | Compensation Elements |
Form and Objective | Further Information | Key 2025 NEO Actions | ||||
|
|
Base Salary | • Delivered in cash
• Provides reasonable, market competitive fixed pay for each NEO, and reflects his or her role, responsibility, individual performance and contribution to the Company
• Generally set within a range around market median |
• 2025 Base Salary changes for our NEOs are presented on page 46 |
• NEOs received merit increases averaging 5.4%, effective April 1, 2025. | ||||
| Benefits | • Standard range of health, welfare, and retirement benefits generally similar to those provided to other salaried employees, except that executives:
• are eligible to receive enhanced Company-paid long-term disability benefits; and
• are eligible for non-qualified retirement benefits |
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| Select Perquisites |
• Personal financial counseling at a cost generally less than $4,500 per NEO
• Executive physicals at a cost generally less than $5,000 per NEO
• Executive long-term disability at a cost generally less than $5,000 per NEO |
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|
|
Annual Incentive Plan (AIP) |
• Delivered in cash
• Provides an annual incentive opportunity for achieving financial results based on performance goals tied to our annual operating plan
• Supports achievement of shorter-term performance goals
• Payouts tied to Company performance, and may be subject to individual performance modifiers
• Target opportunity set within a range around market median |
• AIP was based on revenue and adjusted EBITDA (as described on page 47) |
• NEOs received AIP payments for 2025 performance at 132% of target. | ||||
| Long-Term Incentive Program (LTIP) |
• Delivered in 60% PSUs and 40% RSUs for 2025
• Drives and promotes long-term value-creation for our shareholders, and fosters retention, by rewarding execution and achievement of goals linked to our longer-term strategic initiatives and stock performance
• Target opportunity set within a range around market median
• In 2025, our Compensation Committee awarded PSUs tied to Absolute TSR, adjusted FCF, and MFV and RSUs. PSUs are earned over a 3-year performance period. RSUs vest in full on the 3rd anniversary of the grant date. |
• PSU performance goals are based on adjusted FCF, MFV and Absolute TSR (as described on page 49) |
• NEOs were granted a mix of PSU / RSU awards in 2025 with target award values ranging from 120% to 540% of base salary at the time of grant. |
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AWI 2026 Proxy Statement | 41 | ||||||
| • | Compensation at Risk – A significant amount of each NEO’s target total direct compensation (“TDC”), composed of base salary and annual- and long-term incentive compensation, depends on the achievement of Company performance-based results. The Board and the Compensation Committee also consider individual performance when finalizing AIP awards and can make upward or downward adjustment. Our NEOs’ annual- and long-term incentive compensation is, therefore, “at risk” as the value is tied to the achievement of financial and/or other measures that the Company considers to be important drivers of shareholder value and future stock price performance. |
| • | Multiple and Appropriate Performance Metrics – We use multiple performance measures to avoid having compensation opportunities overly weighted toward the performance result of a single metric. In 2025, we used Absolute TSR, adjusted FCF, and MFV as performance metrics for our PSU grants for the 2025-2027 performance period to maintain a focus on longer-term results that drive shareholder value. In 2025, we used revenue and adjusted EBITDA as performance metrics in our AIP. These measures align to key elements of our operating plan and financial goals, including revenue growth, manufacturing productivity, optimization of invested capital and competitive SG&A expense levels. Each of these measures is a strong indicator of our overall operating performance. |
| • | Emphasis on Long-Term Incentive and Annual Incentive Compensation – Annual and long-term incentive compensation together comprise a significant percentage of target TDC. Incentive compensation helps drive performance and aligns the interests of employees (including the NEOs) with those of shareholders. By tying a significant portion of TDC to long-term incentives over a three-year period, we promote longer-term perspectives regarding Company performance. |
| • | Recoupment (Clawback) – We may recoup certain stock-based and cash awards distributed to our NEOs and other grantees under our 2022 |
| ECIP (which includes our AIP) in the event of an accounting restatement due to material noncompliance with any financial reporting requirement under applicable securities laws or certain misconduct causing significant financial or reputational harm to the Company. Such awards are also subject to our Incentive Compensation Recoupment Policy in the event the Company is required to prepare an accounting restatement of any of the Company’s financial statements. |
| • | Insider Trading – We have insider trading laws, rules and regulations, and any listing standards applicable to us. |
| • | Prohibition on Derivative Transactions – Our Insider Trading Policy prohibits derivative transactions and other speculative activity in Company securities, including hedging, short sales, trading in puts or calls, other functionally equivalent transactions involving our securities, or trading in “hybrid” species of securities based on Company securities, such as “straddles”, “equity swaps”, “exchange funds” and any other derivative security or contract linked to Company securities. Our Insider Trading Policy further prohibits holding Company securities in a margin account or pledging Company securities as collateral for a loan. |
| • | Stock Ownership Guidelines – Our NEOs are subject to stock ownership guidelines, which help align an executive’s longer-term decision-making and the interests of our long-term shareholders. The required ownership multiple is six times annual base salary for our CEO, three times annual base salary for Messrs. Calzaretta and Hershey and Ms. Crager and one and one-half times base salary for Mr. So. As of December 31, 2025, all NEO’s had met their ownership requirements. Upon his appointment as CEO on April 1, 2026, Mr. Hershey’s ownership multiple increased to six times his annual base salary. |
| • | Linear and Capped Incentive Compensation Payouts – Our Compensation Committee establishes performance goals that are used to determine payouts for annual and long-term |
42 |
AWI 2026 Proxy Statement |
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| incentive compensation. 2025 AIP payouts are capped at 200% of target and 2025 PSUs are capped at 250% of the target number of PSUs granted. The Compensation Committee decreased the maximum opportunity for Absolute TSR from 300% to 250% of target and set the maximum for both FCF and MFV at 250% of target. Based on the metric weighting and maximum opportunity, the overall maximum payout for PSUs decreased from 275% to 250% of target for the NEOs in 2025. |
| • | Change in Control (“CIC”) Double-Trigger – Our CIC agreements include double-trigger vesting provisions for equity grants upon a CIC. |
| • | No Tax – We do not have plans or agreements that provide tax Gross-Ups gross-ups to our NEOs. |
| • | Holding Requirements – Post-vesting holding requirements apply for amounts payable above target under 2023 performance-based equity grants awarded to Mr. Grizzle. Any LTIP shares earned above target must be held for one year following the vesting date. This requirement was eliminated for awards granted in 2024 and for all future awards due to duplicative retention requirements in the stock ownership guidelines. |
| |
AWI 2026 Proxy Statement |
43 | ||||||
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
The following table illustrates how our executive compensation elements align with our compensation objectives.
| Executive Compensation Element | Attract Talented Employees |
Align Management and Shareholder Interests |
Pay for Performance |
Motivate and Retain Management |
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| Base Salary |
✓ |
|
|
|
|
|
|
✓ | ||||||||
| Annual Incentive Plan (AIP) |
✓ | ✓ | ✓ | ✓ | ||||||||||||
| Long-Term Incentive Plan (LTIP) |
✓ | ✓ | ✓ | ✓ | ||||||||||||
HOW WE MAKE COMPENSATION DECISIONS
Our Compensation Committee is responsible for executive compensation program design and the decision-making process relative to NEOs specifically, and broadly, as these programs apply to other senior leaders and participating employees. The Compensation Committee solicits input from
the independent members of the Board, our CEO, other members of management and its independent compensation consultant to assist with its responsibilities. The following summarizes the roles of each of the key participants in the executive compensation decision-making process.
Roles of Key Participants
| Compensation Committee | • Sets the philosophy and principles that guide the executive compensation program;
• Oversees the design of our executive compensation program in the context of our culture, competitive practices, the legal and regulatory landscape, and governance trends;
• Reviews and approves short- and long-term incentive compensation design, including performance goals and the payout scale;
• Reviews and approves corporate goals and individual objectives relevant to the compensation of the CEO, evaluates the CEO’s performance relative to those goals and objectives, and recommends CEO compensation to be approved by the independent directors based on the evaluation; and
• Oversees the evaluation of the other executive officers and approves their compensation based, in part, on recommendations from the CEO.
| |
| Independent Members of the Board | • Participate in the performance assessment process for the CEO; and
• Review and approve decisions regarding CEO compensation, including base salary, AIP and LTIP awards for the CEO.
| |
| Committee Consultant | • Provides analysis, advice and recommendations with regard to executive compensation;
• Attends Compensation Committee meetings, as requested, and communicates between meetings with the Compensation Committee Chair and other Committee members; meets with Compensation Committee in executive session regularly without members of management; and
• Advises the Compensation Committee on market trends, regulatory issues and developments and the potential impact to our executive compensation programs.
| |
| CEO | • Provides input to the Compensation Committee on senior executive performance and compensation recommendations (except with respect to his own performance and compensation). |
| 44 | AWI 2026 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
Independent Compensation Consultant
In 2025, the Compensation Committee retained Meridian Compensation Partners, LLC (“Meridian”) as its independent compensation consultant on executive compensation matters.
Meridian performed the following services relating to 2025 compensation decisions:
| • | advised on the design considerations with respect to the 2025 short- and long-term incentive plans; |
| • | advised the Compensation Committee on the composition of a revised compensation peer group; |
| • | advised the Compensation Committee on setting the CEO’s compensation; |
| • | advised the Compensation Committee on setting the new CEO’s and Executive Chair’s compensation; and |
| • | provided an update on current compensation trends, market practices and relevant executive compensation legislation. |
The Compensation Committee determined the work of Meridian did not raise any conflicts of interest in 2025. In making this assessment, the Compensation Committee considered the independence factors enumerated in Rule 10C-1(b) under the Exchange Act and corresponding rules of NYSE. After considering all of the factors provided in the SEC and the NYSE rules and all other factors relevant to Meridian’s independence, the Compensation Committee has determined it was independent.
Use of Competitive Data
In setting NEO compensation, the Compensation Committee considers independent survey data, peer compensation data, tally sheets, wealth accumulation analyses and related benchmark information.
Annual Compensation Benchmarking
Annually, the Compensation Committee reviews all components of NEO compensation compared to the Competitive Market (defined below) data.
In general, we target NEO pay to be at or near the 50th percentile of our defined Competitive Market, but we may deviate from this target based on an individual’s tenure, experience, performance,
internal equity with peers situated at similar levels, or to attract the required level of business knowledge and leadership needed to achieve our strategic objectives.
The principal sources of market data include the following (“Competitive Market”):
| • | Survey data (all NEOs), including surveys conducted by Aon and Willis Towers Watson; and |
| • | Peer Group (defined below) data (CEO and CFO). |
Consideration of Advisory Shareholder Votes on Executive Compensation
At our 2023 Annual Meeting, our shareholders expressed a preference that advisory votes on executive compensation occur every year. Accordingly, the Board is continuing the practice of an annual advisory vote on executive compensation until the next required vote on the frequency of shareholder votes on the compensation of executives. The next vote concerning the frequency of the advisory vote on executive compensation is scheduled to occur at the 2029 annual meeting of shareholders.
Our Board and Compensation Committee appreciate and value the views of our shareholders regarding our executive compensation program. Disclosures concerning our most recent advisory vote can be found on page 40 along with our shareholder engagement.
The Compensation Committee recognizes executive pay practices and notions of sound governance principles continue to evolve. Please refer to “COMMUNICATION WITH THE BOARD” on page 13 for further information about communication with the Compensation Committee or the Board.
Peer Group
The Compensation Committee uses compensation data compiled from a group of peer companies based on several pre-established criteria, including business model comparability, company size measured by both revenue (approximately one-half to two times the Company’s annual revenue) and market capitalization, geographic presence and investment capital.
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AWI 2026 Proxy Statement | 45 | ||||||
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
In 2025, our Compensation Committee reviewed and approved our compensation Peer Group. The Committee removed Masonite International Corp due to its acquisition during 2024. The Committee
added Knife River Corp and Zurn Elkay Water Solutions to the Peer Group bringing our number of peer companies to seventeen.
Our current compensation Peer Group consists of the following 17 manufacturing companies (“Peer Group”):
| AAON, Inc. | Eagle Materials, Inc. | Quanex Building Products Corp | ||
| Advanced Drainage Systems, Inc. | Franklin Electric Co, Inc. | Simpson Manufacturing Co., Inc. | ||
| American Woodmark Corp | Gibraltar Industries, Inc. | SPX Technologies, Inc. | ||
| The AZEK Co., Inc. | Griffon Corp | Trex Company, Inc. | ||
| Apogee Enterprises, Inc. | Interface, Inc. | Zurn Elkay Water Solutions | ||
| CSW Industrials, Inc. | Knife River Corp |
Tally Sheets and Wealth Accumulation Analyses
The Compensation Committee uses tally sheets and wealth accumulation analyses when evaluating compensation-related decisions for each NEO.
| • | Tally sheets provide historical information on each executive’s equity and non-equity compensation, and other compensation such as potential payments upon termination of employment. |
| • | Wealth accumulation analysis assesses the total Company-specific wealth that could be earned by each NEO given certain stock price assumptions. |
Compensation Mix
To facilitate the link between NEO pay and Company performance, a significant amount of TDC is performance-based and “at risk.”
In 2025, 87% of our CEO’s target TDC, and, on average, 68% of the target TDC of our other NEOs, was variable and “at risk.” The following chart shows the 2025 compensation mix, consisting of base salary, AIP, and RSUs/PSUs.
2025 COMPENSATION DESIGN AND OUTCOMES
Base Salary
In 2025, the Compensation Committee reviewed the base salaries of our NEOs. After consideration of individual performance and the competitiveness of each NEO’s base salary compared to the Competitive Market, the Compensation Committee increased base salaries for each of our NEOs except for Mr. Grizzle who did not receive a base salary increase. Pay increases were approved during the Compensation Committee meeting held in February 2025 and were effective April 1, 2025.
The table below represents each NEO’s annual base salary as of December 31, 2025 and 2024. This information differs from the Summary Compensation Table (“SCT”), which reflects the total base salary received for the year.
| Name | 2024 Salary $ |
2025 Salary $ |
||||||
| Victor D. Grizzle |
1,000,000 | 1,000,000 | ||||||
| Mark A. Hershey(1) |
527,290 | 565,000 | ||||||
| Christopher P. Calzaretta |
500,000 | 520,000 | ||||||
| Austin K. So(2) |
454,270 | 485,000 | ||||||
| Jill A. Crager(3) |
360,000 | 425,000 | ||||||
| 1) | Mr. Hershey received a salary adjustment effective April 1, 2025, in recognition of his role change to Senior Vice President & COO. |
| 2) | Mr. So left the organization on April 1, 2026. |
| 3) | Ms. Crager received a market adjustment to align closer to market median for her role effective January 1, 2025. The market adjustment was in recognition of increased experience and strong performance. |
| 46 | AWI 2026 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
Annual Incentive Plan Awards
AIP awards provide an annual incentive opportunity for achieving financial results based on short-term performance goals tied to the Company’s annual operating plan.
Each NEO’s target AIP opportunity (expressed as a percent of base salary) is based on the NEO’s role, responsibility and alignment with similar internal positions and the external Competitive Market.
Actual payout varies based upon actual business performance relative to performance targets, and may be subject to individual performance modifiers against pre-established individual goals.
For 2025, AIP awards were determined based on the following formula, measures and weightings, all subject to the approval of our Compensation Committee.
2025 AIP Design
|
Base Salary Earnings $
|
x | Target AIP Opportunity % |
= | Target AIP $ |
x | Company Performance % |
x | Individual Performance % Modifier |
= | Annual AIP Payout $ |
2025 Target AIP Opportunity
The Committee set corresponding target AIP opportunities for each NEO, measured as a percentage of their base salary earned for fiscal year 2025. 2025 target AIP opportunities for NEOs are set forth in the table below.
| Name | Target AIP % Base Salary |
|||
| Victor D. Grizzle(1) |
120% | |||
| Mark A. Hershey |
70% | |||
| Christopher P. Calzaretta |
70% | |||
| Austin K. So |
60% | |||
| Jill A. Crager |
60% | |||
| (1) | Mr. Grizzle’s target increased from 110% to 120% effective January 2025 based on individual performance and tenure with the company. |
2025 AIP Performance Metrics
Our Compensation Committee selected revenue and adjusted EBITDA as performance metrics in order to create strong alignment with shareholders and reflect key measures of value creation. Revenue was weighted 30% and adjusted EBITDA was weighted 70%.
These performance metrics align to key elements of our operating plan and financial goals, including revenue growth, manufacturing productivity, optimization of invested capital and competitive SG&A levels, and they are strong indicators of our overall operating performance.
For purposes of the 2025 AIP, the Compensation Committee defined: (i) revenue to be gross sales minus returns, discounts and allowances and minus intercompany sales, and (ii) adjusted EBITDA to be operating income plus depreciation and amortization plus/minus non-cash pension impact and plus/minus earnout/deferred purchase price accruals and certain acquisition-related charges, subject to certain exceptions which is consistent with the calculation of adjusted EBITDA that we report with our quarterly earnings. The revenue and adjusted EBITDA definitions did not change from the prior year. The 2025 revenue target of $1,608 million and adjusted EBITDA target of $540 million, each represented a 11% increase from prior-year results. These targets were directly tied to the Company’s annual operating plan.
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
In connection with those targets, the Compensation Committee also established the following performance ranges and associated payout ranges for the 2025 AIP. The Company’s performance was converted to a corresponding payout factor on a straight-line basis between threshold and target and between target and maximum. AIP payouts are capped at 200% of target. These performance ranges and thresholds applied to all of our NEOs.
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Target $ (in millions) | Performance as % of Target Goal | Payout as % of Target Bonus | |||||||||||||||||||||||||||||||||
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|
Threshold | Target | Maximum | Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||
| Revenue |
1,518.0 | 1,608.0 | 1,698.0 | 94 | % | 100 | % | 106 | % | 50 | % | 100 | % | 200 | % | |||||||||||||||||||||
| Adjusted EBITDA |
502.0 | 540.0 | 578.0 | 93 | % | 100 | % | 107 | % | 50 | % | 100 | % | 200 | % | |||||||||||||||||||||
2025 Performance and Payout Factors
For AIP purposes our 2025 revenue performance was 101% of target goal, resulting in a payout equal to 113% of target, and our adjusted EBITDA performance represented 103% of target goal with a corresponding payout of 140% of target. These results yielded a combined payout factor of 132% of the target bonus for the NEOs. Consistent with prior years, when applicable, current year revenue and adjusted EBITDA of acquired entities not included in our annual operating plan are excluded from our final results for AIP calculations, resulting in $1,620 million of revenue versus the overall Company result of $1,621 million.
| Measure | 2025 AIP Target $M |
2025 AIP Actual $M |
Performance % of Target Goal |
Payout % of Target Bonus |
||||||||||||
| Revenue |
1,608 | 1,620 | 101 | % | 113 | % | ||||||||||
| Adjusted EBITDA |
540 | 555 | 103 | % | 140 | % | ||||||||||
2025 Individual Performance
The Board and the Compensation Committee also considered individual performance when finalizing AIP awards for the CEO and other NEOs and decided not to make any upward or downward adjustments for individual performance.
2025 Final AIP Awards
The Compensation Committee determined the final 2025 AIP payouts by multiplying each NEO’s target AIP opportunity by the final weighted payout factors as outlined below.
| Name | Target AIP $ |
Payout Factor |
2025 Final AIP Award $ |
|||||||||
| Victor D. Grizzle |
1,200,000 | 132 | % | 1,584,000 | ||||||||
| Mark A. Hershey |
388,900 | 132 | % | 513,350 | ||||||||
| Christopher P. |
360,500 | 132 | % | 475,860 | ||||||||
| Austin K. So |
286,390 | 132 | % | 378,040 | ||||||||
| Jill A. Crager |
255,000 | 132 | % | 336,600 | ||||||||
2025-2027 Long-Term Incentive Plan Awards
The goal of our LTIP is to provide equity-based long-term incentive awards that link management interests to shareholder returns and focus management on our long-term performance.
In determining the LTIP award opportunity for the CEO and other NEOs, our Board and Compensation Committee consider a number of factors including, CEO’s recommendation (other than for myself), the Competitive Market, internal equity with peers at similar levels and cost (dilution and accounting cost), as well as tally sheet and wealth accumulation analyses.
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
LTIP awards for a given year are typically made shortly following the release of our financial results for our prior fiscal year. This governance practice is designed to allow the equity markets to absorb the announcement of earnings and performance guidance prior to awards being granted.
The Compensation Committee retained the same vehicle mix as the prior year for the annual grants to our NEOs. Accordingly, the 2025 LTIP was granted 60% in PSUs and 40% in RSUs to stay aligned with market practice and our compensation objectives, including access to high quality executives in a highly competitive talent market. The greater weight of PSUs reflects our pay-for-performance philosophy. The time-based awards support long-term retention and are linked to shareholder value and ownership, which are important goals of our executive compensation program.
The time vested RSU grants will fully vest and company stock will be issued if the NEO is still actively employed and in good standing on February 26, 2028 (three-year cliff vesting), subject to certain exceptions. Three-year vesting is
common in our industry and supports executive retention and alignment with shareholder value.
The 2025 LTIP PSU grants for the 2025 – 2027 performance period (“2025 LTIP PSU Awards”) consisted of awards based on achievement of Absolute TSR (50% of the award down from 60% in the prior three-year period), adjusted FCF (40% of the award up from 25% in the prior three-year period) and MFV (10% of the award down from 15% for MF adjusted EBITDA in the prior three-year period).
2025 LTIP Performance Metrics and Weighting
The number of shares eligible to vest under the 2025 LTIP PSU Awards is based on the achievement of applicable performance targets relative to Absolute TSR, adjusted FCF and MFV targets during the performance period (January 1, 2025 to December 31, 2027). The grants, intended to compensate based on long-term value creation, have a three-year performance period to allow a reasonable timeframe for value creation, challenging targets with a substantial payout upside
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AWI 2026 Proxy Statement | 49 | ||||||
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
for superior performance, and a payout scale that defines meaningful performance hurdles. The PSUs for the NEOs can vest 50% of target at threshold performance to 250% of target at maximum performance, on a weighted-average basis. There is no payout below threshold performance. In 2025, the Compensation Committee decreased the maximum opportunity for Absolute TSR from 300% to 250% of target and set the maximum for both FCF and MFV at 250% of target. The overall maximum payout for PSUs decreased from 275% to 250% of target for the NEOs in 2025.
Absolute TSR measures the appreciation in share price of the Company’s Common Stock, including dividends, and is annualized for the performance period. The ending share price for the Absolute TSR calculation will be based on the volume-weighted, average closing price of the Company’s Common Stock for the highest consecutive 30 trading days in the 60- trading-day-period beginning with and immediately following January 3, 2028. The starting price was based on the volume-weighted average of the highest consecutive 30 trading days in the subsequent 60-trading-day-period closing price of the Company stock for the highest 30 trading days immediately following January 2, 2025, resulting in starting price of $151.11 per share.
| Performance to TSR Target |
Annualized Absolute TSR Target |
Ending Share Price |
Incentive Payout |
|||||||||
| 50% |
5.0% | $ | 174.93 | 50% | ||||||||
| 75% |
7.5% | $ | 187.72 | 75% | ||||||||
| 83% |
8.3% | $ | 191.95 | 83% | ||||||||
| 100% |
10.0% | $ | 201.13 | 100% | ||||||||
| 150% |
15.0% | $ | 229.82 | 200% | ||||||||
| 175% |
17.5% | $ | 245.14 | 250% | ||||||||
Adjusted FCF is defined as cumulative three-year cash flow from operations, minus (i) cash payments to purchase property, plant and equipment, plus (ii) the return of investment from WAVE. The Adjusted FCF definition differs from that used for external reporting purposes due to the exclusion of
proceeds from company-owned life insurance, which are classified as a component of Cash Flows from Investing Activities on our Consolidated Statements of Cash Flows within our Annual Report on Form 10-K.
| Performance to FCF Target |
Adjusted FCF $(M) |
Incentive Payout |
||||||
| 85% |
$902 | 50% | ||||||
| 100% |
$1,061 | 100% | ||||||
| 108% |
$1,148 | 150% | ||||||
| 115% |
$1,220 | 250% | ||||||
MFV is defined as total square feet of Mineral Fiber products sold during the plan period. The Mineral Fiber definition is consistent with that used for the external reporting segment.
| Performance to MFV Target |
MFV CAGR |
Incentive Payout |
||||||
| 0% |
0.0% | 50% | ||||||
| 100% |
0.5% | 100% | ||||||
| 300% |
1.5% | 200% | ||||||
| 360% |
1.8% | 250% | ||||||
2025 Target LTIP Opportunities
The Compensation Committee annually determines the LTIP target opportunity (expressed as a percent of base salary) based on each NEO’s role, responsibility, alignment with similar positions internally and the external Competitive Market, as well as a review of tally sheets and wealth accumulation analyses.
After a review of individual performance, Company performance and Competitive Market data during the Compensation Committee meeting held in February 2025, the Compensation Committee increased targets for Mr. Calzaretta and Ms. Crager to align to market median. The Compensation Committee also increased LTIP targets for Mr. Hershey to recognize his new role as Senior Vice President & COO, and for Mr. So to recognize his expanded role including Government Relations.
| 50 | AWI 2026 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
The respective target percentages for annual LTIP grants to our NEOs in 2025 and the resulting target values are set forth in the table below.
| Name | 2025 LTIP Target as % of March 2025 Base Salary |
2025 RSUs Value ($)(1) |
2025 PSUs Value ($)(1) |
2025 LTIP Annual Target Value ($)(1) |
||||||||||||
| Victor D. Grizzle |
540% | 2,160,000 | 3,240,000 | 5,400,000 | ||||||||||||
| Mark A. Hershey(2) |
160% | 337,480 | 506,220 | 843,700 | ||||||||||||
| Christopher P. Calzaretta(3) |
150% | 300,000 | 450,000 | 750,000 | ||||||||||||
| Austin K. So(4) |
140% | 254,400 | 381,600 | 636,000 | ||||||||||||
| Jill A. Crager(5) |
120% | 204,000 | 306,000 | 510,000 | ||||||||||||
| (1) | Amounts represent the targeted value of the long-term incentive equity awards granted in February 2025, as calculated using the closing market price of our shares of Common Stock ($152.23) on the date of the grant (February 26, 2025). |
| (2) | Mr. Hershey’s target increased from 140% to 160% effective January 2025 to recognize his new role as Senior Vice President & COO. |
| (3) | Mr. Calzaretta’s target increased from 130% to 150% effective January 2025 to align to market median. |
| (4) | Mr. So’s target increased from 120% to 140% effective January 2025 to recognize his expanded role including Government Relations. |
| (5) | Ms. Crager’s target increased from 100% to 120% effective January 2025 to align to market median. |
Payout of 2023-2025 Performance-Based Restricted Stock Units
The performance for PSUs awarded in 2023 for the 2023 to 2025 performance period was determined on April 8, 2026. The awards were based on the achievement of Absolute TSR (60% of the award), adjusted FCF (25% of the award) and MF adjusted EBITDA (15% of the award).
Based upon performance during the measurement period, the Absolute TSR achievement for the 2023 to 2025 period was 35.9%, with a calculated price of $198.20 compared to the starting price for the TSR PSUs of $79.00. This exceeded our 10% annualized TSR target, resulting in a 300% payout under this metric. The cumulative adjusted FCF was $889 million for the performance period, above our target of $799 million. The Compensation Committee approved a payout factor of 156% for
this metric. The Mineral Fiber adjusted EBITDA was $1,218.1 million for the performance period, above our target of $1,107 million. The Compensation Committee approved a payout factor of 229% for this metric. Based on the metrics and the certified Absolute TSR, adjusted FCF and Mineral Fiber adjusted EBITDA results, the PSUs payout was set at 253% of target.
| Name | 2023 PSU Shares Granted (#) |
2023 PSU Payout Factor |
2023 PSU Final Payout (#) |
|||||||||
| Victor D. Grizzle |
38,616 | 253 | % | 97,835 | ||||||||
| Mark A. Hershey |
5,298 | 253 | % | 13,423 | ||||||||
| Christopher P. Calzaretta |
3,611 | 253 | % | 9,149 | ||||||||
| Austin K. So |
3,893 | 253 | % | 9,864 | ||||||||
| Jill A. Crager |
1,622 | 253 | % | 4,111 | ||||||||
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AWI 2026 Proxy Statement | 51 | ||||||
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
2025 Total Direct Compensation
The table below summarizes TDC awarded to our NEOs during 2025. This table is not intended to be a substitute for the SCT or the Grants of Plan-Based Awards Table (‘‘GPBAT’’). Base salary reflects the total salary paid for 2025 reflective of the April 2025 salary increase for Messrs. Calzaretta, Hershey and So, and the January 2025 salary increase for Ms. Crager. AIP awards and LTIP awards for 2025 are reflected in the SCT and GPBAT. LTIP awards are shown at target and represent an incentive for future performance, not current cash compensation, and are “at risk” of forfeiture.
| Name | 2025 Salary Earnings $ |
2025 Final AIP $ |
2025 LTIP $(1) |
2025 Other Long Term Grants $ |
TDC $ | |||||||||||||||
| Victor D. Grizzle |
1,000,000 | 1,584,000 | 5,400,000 | — | 7,984,000 | |||||||||||||||
| Mark A. Hershey |
555,572 | 513,350 | 843,700 | — | 1,912,622 | |||||||||||||||
| Christopher P. Calzaretta |
515,000 | 475,860 | 750,000 | — | 1,740,860 | |||||||||||||||
| Austin K. So |
477,317 | 378,040 | 636,000 | — | 1,491,357 | |||||||||||||||
| Jill A. Crager |
425,000 | 336,600 | 510,000 | — | 1,271,600 | |||||||||||||||
| (1) | Amounts represent the aggregate value for the equity awards granted in 2025, as calculated using the closing market price of our shares of Common Stock on the date of the grant. |
2026 Compensation Program Design
For 2026, the Compensation Committee reviewed the design of our executive compensation program and decided to maintain the 2025 metrics for our AIP (Revenue and adjusted EBITDA) and PSUs, namely Absolute TSR, adjusted FCF and MFV.
ADDITIONAL INFORMATION REGARDING OUR COMPENSATION PROGRAMS
Qualified and Non-Qualified Defined Benefit Pension Plans
Ms. Crager was the only NEO who participated in the Company’s qualified defined benefit pension plan, or RIP , which was closed to newly hired salaried employees after January 1, 2005. Pension benefits were frozen for all salaried employees on December 31, 2017.
A non-qualified defined benefit pension plan, the Retirement Benefit Equity Plan (“RBEP”), pays benefits that cannot be paid under the RIP due to statutory limits. This plan was also closed to newly hired salaried employees after January 1, 2005 and RBEP benefits were frozen on December 31, 2017. None of our NEOs participated in the Company’s RBEP.
Qualified Defined Contribution Savings Plan and Non-qualified Deferred Compensation Plan
The Company maintains a 401(k) plan. For salaried employees, we provide a 401(k) match of 100% on
the first 4% of employee contributions and a 50% match on the next 4% of employee contributions for a maximum company match of 6%. All NEOs participated in this program in 2025.
The Company offers an unfunded, nonqualified deferred compensation plan, the Armstrong Nonqualified Deferred Compensation Plan (“NQDCP”), to restore Company contributions that would be lost due to Internal Revenue Code limits on compensation that can be taken into account under the Company’s tax-qualified 401(k) plan and to allow participants to voluntarily elect to defer base salary and AIP until a future date.
Participants in the NQDCP receive a Company match identical to the 401(k) Company match on compensation in excess of the Internal Revenue Code limits, up to a maximum contribution of 6% of eligible earnings. All NEOs participated in this program in 2025.
Severance Arrangements
Each NEO has a severance agreement with the Company. These agreements are designed to:
| • | assure continuity of executive management during the evaluation and execution of any transaction that may result in loss of or material changes to employment; |
| • | reduce risk to the Company and provide shareholder alignment by keeping executives |
| 52 | AWI 2026 Proxy Statement |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
| neutral to job loss when pursuing actions that may result in termination of employment; |
| • | ensure executive management can objectively evaluate any transaction and act in the best interests of shareholders during the design and execution of such a transaction; and |
| • | define transition support and terms in the event of not-for-cause termination to foster retention of key executives during times of uncertainty. |
Payments upon Termination of Employment
Our severance arrangements provide for certain cash severance benefits if the executive’s employment is terminated by the Company without Cause or by the executive for Good Reason (as such terms are defined in the severance agreement). Under the severance agreements that apply in absence of a change in control, the severance benefit is equal to (i) 1.5 times (two times in the case of Mr. Grizzle) the executive’s then-current annual base salary plus target annual incentive under the AIP program, payable in a lump sum, and (ii) a pro-rated annual incentive bonus based on actual performance for the year of termination, payable at the time that bonuses are paid to employees of the Company generally.
Under each executive’s severance agreement, the executive is entitled to receive severance payments upon involuntary termination without Cause or termination for Good Reason within two years following a change in control (“CIC”), or within six months preceding a CIC if the termination is in connection with a potential CIC. In a CIC, the severance is equal to (i) two times (2.5 times in the case of Mr. Grizzle) the executive’s then-current annual base salary plus target annual incentive under the AIP program, payable in a lump sum, and (ii) a pro-rated annual incentive bonus based on actual performance for the year of termination, payable at the time that bonuses are paid to employees of the Company generally.
None of the severance agreements provide for tax gross-ups under Sections 280G and 4999 of the Internal Revenue Code. For more information regarding our NEO separation arrangements, please refer to the “Potential Payments upon Termination or Change in Control” section beginning on page 65.
Stock Ownership Guidelines
The Compensation Committee reviews our NEOs’ compliance with applicable stock ownership guidelines to foster long-term ownership of company stock and further align the NEOs’ interests with those of shareholders. Ownership requirements and progress toward their achievement are reviewed annually as part of the compensation planning process. A significant percentage of each NEO’s compensation is directly linked to our stock price performance via LTIP awards. The guidelines require retention of 50% of the net shares acquired upon any vesting or exercise of equity awards until the stock ownership guidelines are met.
The stock ownership guidelines for our NEOs are calculated as a multiple of the executive’s annual base salary as of a certain date, and the stock price as of a fixed date. The required ownership multiple is six times annual base salary for our CEO, three times annual base salary for Messrs. Calzaretta and Hershey and Ms. Crager and one and one-half times base salary for Mr. So. Upon his appointment on April 1, 2026, Mr. Hershey’s required multiple increases to six times his base salary.
For purposes of the stock ownership guidelines, we include direct ownership of shares and stock units held under employee plans. Stock Options and unearned PSUs are not included in determining whether an executive has achieved the ownership levels.
The stock ownership guidelines require achievement of the ownership multiple within five years from date of hire or promotion into the role for the NEOs.
The Compensation Committee last reviewed the NEOs’ progress toward meeting the stock ownership requirements in December 2025. As of December 2025, all NEO’s had met their ownership requirements.
Restrictive Covenants
The severance agreement of each NEO includes a restrictive covenants agreement that requires the following:
| • | For 12 months following a termination, the NEO shall not, directly for the NEO or any third party, |
|
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AWI 2026 Proxy Statement | 53 | ||||||
COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
| become engaged in any business or activity which is directly in competition with any services or products sold by, or any business or activity engaged in by, the Company or any of its affiliates; |
| • | For 24 months following a termination, the NEO shall not solicit any person who was a customer of the Company or any of its affiliates during the period of the NEO’s employment, or solicit potential customers who are or were identified through leads developed during the course of employment with the Company, or otherwise divert or attempt to divert any existing business of the Company or any of its affiliates; and |
| • | For 24 months following a termination, the NEO shall not, directly for the NEO or any third party, solicit, induce, recruit or cause another person in the employment of the Company or any of its affiliates to terminate such employee’s employment for the purposes of joining, associating, or becoming employed with any business or activity which is in competition with any services or products sold, or any business or activity engaged in, by the Company or any of its affiliates. |
Recoupment (Clawback) Policies
Mandatory Clawback Policy
Effective October 18, 2023, the Board of Directors implemented an Incentive Compensation Recoupment Policy (“Mandatory Clawback Policy”). The policy was adopted in compliance with the rules implemented by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act and corresponding NYSE listing standards.
If the Company is required to prepare an accounting restatement (including a “Big R” or a “little r” restatement) due to material noncompliance with any federal securities laws, any Erroneously Awarded Compensation Received by a Covered Executive during the applicable three-year lookback
period must be forfeited or paid back to the Company reasonably promptly (as such terms are defined in the Mandatory Clawback Policy).
“Erroneously Awarded Compensation” is limited to certain Section 16 officer compensation, including our NEOs, that is granted, earned or vested based wholly or in part upon the attainment of a financial reporting measure, such as PSUs and annual incentive plan pay outs.
Compensation must be “Received” (as defined by the NYSE listing standards) on or after the effective date of the applicable NYSE listing standards to be subject to recovery, among other limitations. Compensation is deemed “Received” in the Company’s fiscal period during which the financial reporting measure specified in or otherwise relating to the applicable award is attained.
Amounts of Erroneously Awarded Compensation are recoverable to the extent they exceed the amount that otherwise would have been granted, vested or paid had such amount been determined based on the applicable restatement, computed on a pre-tax basis.
The Compensation Committee is generally required to pursue (and does not have discretion to waive) recovery in the event of an accounting restatement, except if it determines that recovery is impracticable, in accordance with narrow exceptions described in the Mandatory Clawback Policy and in accordance with the SEC clawback rule and corresponding NYSE listing standards. Accordingly, whether recovery is sought under the Mandatory Clawback Policy is not dependent on a Covered Executive’s commission of fraud or misconduct or consideration of any other mitigating circumstances, including the relative culpability, if any, of any Covered Executive in the events that gave rise to the triggering of an accounting restatement.
| 54 | AWI 2026 Proxy Statement |
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| • | an accounting restatement of the Company’s financial statements that is required due to material noncompliance with any financial reporting requirements under applicable securities laws and GAAP; |
| • | the participant is involved in (i) the commission of a felony or a crime involving moral turpitude; (ii) fraud, dishonesty, misrepresentation, theft or misappropriation of funds; (iii) a violation of our Code of Conduct or employment policies; or (iv) gross negligence or willful, deliberate or gross misconduct, in each case of (i) through (iv) that results in significant financial or reputational harm to the Company; |
| • | during the participant’s employment or the one-year period thereafter, the participant engages in business that is competitive with the Company or substantially injurious to the Company’s business interests; |
| • | during the participant’s employment or the two-year period thereafter, the participant solicits the Company’s customers or employees; or |
| • | the participant breaches any written noncompetition, confidentiality or non-solicitation covenant with the Company. |
| • | Trading in puts, calls, short sales, or functionally equivalent transactions in Company securities, including any “hybrid” species of securities based on Company securities. |
| • | Engaging in any hedging transaction with respect to Company securities. |
| • | Holding Company securities in a margin account or pledging Company securities as collateral for a loan. |
AWI 2026 Proxy Statement |
55 | |||||||
56 |
AWI 2026 Proxy Statement |
|||||||
COMPENSATION COMMITTEE REPORT
The Management Development and Compensation Committee (Compensation Committee) of our Board has reviewed and discussed the CD&A required by Item 402(b) of Regulation S-K with our management. Based on this review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in this proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Submitted by the following independent directors, who comprise the Compensation Committee:
Wayne R. Shurts, Chair
Kevin P. Holleran
William H. Osborne
Kathleen E. Pitre
This report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor incorporated by reference into any future SEC filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates it by reference therein.
|
|
AWI 2026 Proxy Statement | 57 | ||||||
2025 SUMMARY COMPENSATION TABLE
The table below sets forth the total compensation for our NEOs during fiscal 2025, 2024 and 2023.
| Name and Principal Position |
Year | Salary ($) |
Bonus ($) |
Stock Awards(1) ($) |
Non-Equity Incentive Plan Compensation(2) ($) |
Change in Pension Value & Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation(3) ($) |
Total ($) |
||||||||||||||||||||||||
| Victor D. Grizzle | 2025 | 1,000,000 | — | 5,599,532 | 1,584,000 | — | 353,468 | 8,537,000 | ||||||||||||||||||||||||
| President & Chief Executive Officer | |
2024 2023 |
|
|
1,000,000 981,750 |
|
|
— — |
|
|
6,137,577 11,019,636 |
|
|
1,738,000 1,436,310 |
|
|
— — |
|
|
278,684 104,020 |
|
|
9,154,261 13,541,716 |
| ||||||||
| Mark A. Hershey Senior Vice President & Chief Operating Officer |
|
2025 2024 2023 |
|
|
555,573 520,418 497,350 |
|
|
— — — |
|
|
874,959 795,393 825,879 |
|
|
513,349 575,590 463,040 |
|
|
— — — |
|
|
124,873 82,936 48,424 |
|
|
2,068,753 1,974,337 1,834,693 |
| ||||||||
| Christopher P. Calzaretta Senior Vice President & Chief Financial Officer |
|
2025 2024 2023 |
|
|
515,000 483,375 431,375 |
|
|
— — — |
|
|
777,891 640,747 562,964 |
|
|
475,860 534,620 344,240 |
|
|
— — — |
|
|
62,018 45,224 14,625 |
|
|
1,830,769 1,703,966 1,353,204 |
| ||||||||
| Austin K. So Former Senior Vice President, GC, Head of Government Relations & Chief Sustainability Officer |
|
2025 2024 2023 |
|
|
477,318 449,903 432,600 |
|
|
— — — |
|
|
659,657 595,964 606,837 |
|
|
378,036 426,510 316,450 |
|
|
— — — |
|
|
100,234 46,007 192,795 |
|
|
1,615,244 1,518,384 1,548,682 |
| ||||||||
| Jill A. Crager Senior Vice President Sales & Digital Marketing |
|
2025 2024 |
|
|
425,000 350,250 |
|
|
— — |
|
|
529,117 364,955 |
|
|
336,600 332,040 |
|
|
— — |
|
|
57,933 38,709 |
|
|
1,348,651 1,085,954 |
| ||||||||
| (1) | The amounts reflect the aggregate grant date fair value of RSUs and PSUs granted in the fiscal year, computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 718. Under ASC Topic 718, the grant date fair value is calculated using the closing price of the Company’s shares of Common Stock ($152.23) on the date of grant (February 26, 2025) for the RSUs and PSUs with FCF and MFV components. For the Absolute TSR component, the grant date fair value of $170.96 was computed based on a Monte Carlo valuation. The 2025 LTIP awards consist of PSUs and RSUs. The target and maximum payouts for the PSUs based were as follows: target of $5,599,532 and maximum of $13,998,829 for Mr. Grizzle, target of $874,959 and maximum of $2,187,397 for Mr. Hershey, target of $777,891 and maximum of $1,944,728 for Mr. Calzaretta, target of $659,657 and maximum of $1,649,141 for Mr. So, and target of $529,117 and maximum of $1,322,793 for Ms. Crager (maximums were 250% of target). Messrs. Grizzle, Hershey, Calzaretta and So and Ms. Crager also received RSUs (Grizzle 14,190 shares, Hershey 2,217 shares, Calzaretta 1,971 shares, So 1,672 shares and Crager 1,341 shares). |
| (2) | The 2025 amounts disclosed are the awards under the 2025 AIP. |
| (3) | The amounts shown in the “All Other Compensation” column include: (i) cash dividends declared on shares underlying PSUs and RSUs to be paid when the restrictions on the underlying shares lapse, (ii) Company matching contribution to the Savings and Investment 401(k) Plan and to the NQDCP; (iii) premiums for long-term disability insurance; (iv) termination payments (severance); (v) relocation expenses; and (vi) personal benefits (“perquisites”) consisting of medical examinations and financial planning expense reimbursements to the extent the total perquisite value is $10,000 or greater per individual. For all individuals, the aggregate value of perquisites did not exceed $10,000 in 2025, except for Mr. So. Mr. So’s perquisites totaled $16,590 and are therefore reported in the “All Other Compensation” column. |
The following table provides the detail for the amounts reported in All Other Compensation for 2025 for each NEO:
| Name | Perquisites and Other Benefits ($) |
Cash Dividends ($) |
Company Match Savings Plan Contributions ($) |
Executive Long- Term Disability ($) |
Vacation Termination ($) |
Relocation ($) |
All Other Compensation ($) |
|||||||||||||||||||||
| Victor D. Grizzle |
— | 219,977 | 133,491 | — | — | — | 353,468 | |||||||||||||||||||||
| Mark A. Hershey |
— | 56,979 | 66,714 | 1,179 | — | — | 124,873 | |||||||||||||||||||||
| Christopher P. Calzaretta |
— | 15,193 | 46,825 | — | — | — | 62,018 | |||||||||||||||||||||
| Austin K. So |
16,590 | 31,704 | 50,501 | — | — | 18,029 | 116,824 | |||||||||||||||||||||
| Jill A. Crager |
— | 11,549 | 46,384 | — | — | — | 57,933 | |||||||||||||||||||||
| 58 | AWI 2026 Proxy Statement |
| ||||||
GRANTS OF PLAN-BASED AWARDS
The table below shows information on AIP awards and PSUs and RSUs granted to each NEO in 2025. There is no assurance that the grant date fair value of PSU or RSU awards will be realized by the executive.
|
Estimated Future |
Estimated Future |
All Other Units |
All Other Options |
Exercise Awards |
Grant Date Awards |
|||||||||||||||||||||||||||||||||||||||||||
| Name/Award Type | Grant Date | Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||||||||||||||||||||||
| Victor D. Grizzle | ||||||||||||||||||||||||||||||||||||||||||||||||
| Annual Cash Incentive | N/A | 600,000 | 1,200,000 | 2,400,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Performance Stock Units | 2/26/2025 | (2) | 10,642 | 21,284 | 53,210 | 3,439,388 | ||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock Units | 2/26/2025 | (2) | 14,190 | 2,160,144 | ||||||||||||||||||||||||||||||||||||||||||||
| Mark A. Hershey | ||||||||||||||||||||||||||||||||||||||||||||||||
| Annual Cash Incentive | N/A | 194,450 | 388,901 | 777,802 | ||||||||||||||||||||||||||||||||||||||||||||
| Performance Stock Units | 2/26/2025 | (2) | 1,663 | 3,326 | 8,315 | 537,465 | ||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock Units | 2/26/2025 | (2) | 2,217 | 337,494 | ||||||||||||||||||||||||||||||||||||||||||||
| Christopher P. Calzaretta | ||||||||||||||||||||||||||||||||||||||||||||||||
| Annual Cash Incentive | N/A | 180,250 | 360,500 | 721,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Performance Stock Units | 2/26/2025 | (2) | 1,479 | 2,957 | 7,393 | 477,846 | ||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock Units | 2/26/2025 | (2) | 1,971 | 300,045 | ||||||||||||||||||||||||||||||||||||||||||||
| Austin K. So |
||||||||||||||||||||||||||||||||||||||||||||||||
| Annual Cash Incentive | N/A | 143,195 | 286,391 | 572,781 | ||||||||||||||||||||||||||||||||||||||||||||
| Performance Stock Units | 2/26/2025 | (2) | 1,254 | 2,507 | 6,268 | 405,128 | ||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock Units | 2/26/2025 | (2) | 1,672 | 254,529 | ||||||||||||||||||||||||||||||||||||||||||||
| Jill A. Crager | ||||||||||||||||||||||||||||||||||||||||||||||||
| Annual Cash Incentive | N/A | 127,500 | 255,000 | 510,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Performance Stock Units | 2/26/2025 | (2) | 1,006 | 2,011 | 5,028 | 324,977 | ||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock Units | 2/26/2025 | (2) | 1,341 | 204,140 | ||||||||||||||||||||||||||||||||||||||||||||
| (1) | The amounts shown represent the 2025 AIP threshold, target, and maximum opportunity for each NEO. Actual payouts are included in the Non-Equity Incentive Plan Compensation column of the SCT. |
| (2) | In 2025, the Company’s LTIP program for NEOs included PSUs and RSUs. PSUs have a three-year performance period based on Absolute TSR, adjusted Cumulative FCF and MFV; participants earn up to 250% of target if the Company achieves the established performance goals. RSUs will vest in a single installment three years from the effective date of the grant. Any cash dividends declared on shares underlying RSUs and PSUs will be accrued in a non-interest-bearing account and paid when the restrictions on the underlying shares lapse. |
|
|
AWI 2026 Proxy Statement | 59 | ||||||
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The table below shows the number of unvested RSUs and PSUs held by each NEO on December 31, 2025. Market or payout values in the table below are based on the closing price of our shares of Common Stock on that date, $191.10.
| Stock Awards | ||||||||||||||||||||
| Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested ($) |
Equity Incentive Plans Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plans Awards Market or Payout Value of Unearned Shares or Other Rights That Have Not Vested ($) |
|||||||||||||||
| Victor D. Grizzle |
3/1/2023 | 25,744 | (1) | 4,919,678 | 38,616 | (2) | 7,379,518 | |||||||||||||
| 4/28/2023 | 72,823 | (1) | 13,916,475 | |||||||||||||||||
| 2/21/2024 | 18,143 | (1) | 3,467,127 | 27,214 | (3) | 5,200,595 | ||||||||||||||
| 2/26/2025 | 14,190 | (1) | 2,711,709 | 21,284 | (4) | 4,067,372 | ||||||||||||||
| Mark A. Hershey |
3/1/2023 | 3,532 | (1) | 674,965 | 5,298 | (2) | 1,012,448 | |||||||||||||
| 2/21/2024 | 2,351 | (1) | 449,276 | 3,527 | (3) | 674,010 | ||||||||||||||
| 2/26/2025 | 2,217 | (1) | 423,669 | 3,326 | (4) | 635,599 | ||||||||||||||
| Christopher P. Calzaretta |
3/1/2023 | 2,408 | (1) | 460,169 | 3,611 | (2) | 690,062 | |||||||||||||
| 2/21/2024 | 1,894 | (1) | 361,943 | 2,841 | (3) | 542,915 | ||||||||||||||
| 2/26/2025 | 1,971 | (1) | 376,658 | 2,957 | (4) | 565,083 | ||||||||||||||
| Austin K. So |
3/1/2023 | 2,595 | (1) | 495,905 | 3,893 | (2) | 743,952 | |||||||||||||
| 2/21/2024 | 1,762 | (1) | 336,718 | 2,642 | (3) | 504,886 | ||||||||||||||
| 2/26/2025 | 1,672 | (1) | 319,519 | 2,507 | (4) | 479,088 | ||||||||||||||
| Jill A. Crager |
3/1/2023 | 1,082 | (1) | 206,770 | 1,622 | (2) | 309,964 | |||||||||||||
| 2/21/2024 | 1,079 | (1) | 206,197 | 1,618 | (3) | 309,200 | ||||||||||||||
| 2/26/2025 | 1,341 | (1) | 256,265 | 2,011 | (4) | 384,302 | ||||||||||||||
| (1) | Grant will vest in a single installment three years from the date of grant. |
| (2) | The number of shares of Common Stock represents the amount that vests if threshold is achieved for the 2023 PSU grant (based on Absolute TSR, Cumulative FCF and MF adjusted EBITDA goals). Messrs. Grizzle, Hershey, Calzaretta, So, and Ms. Crager can earn up to 275% of target. The final payout determination was made in April 2026 by the MDCC after a review of the Company’s performance and certification of achievement of the performance goals. The final 2023 PSU shares paid out and the value realized in April 2026 are set forth below. See “Payout of 2023-2025 Performance-Based Restricted Stock Units” on page 51. |
| (3) | The number of shares of Common Stock represents the amount that vests if threshold is achieved for the 2024 PSU grant (based on Absolute TSR, Cumulative FCF and MF adjusted EBITDA goals). The awards will vest on December 31, 2026. Messrs. Grizzle, Hershey, Calzaretta, So, and Ms. Crager can earn up to 275% of target. |
| (4) | The number of shares of Common Stock represents the amount that vests if threshold is achieved for the 2025 PSU grant (based on Absolute TSR, Cumulative FCF and MFV goals). The awards will vest on December 31, 2027. Messrs. Grizzle, Hershey, Calzaretta, So, and Ms. Crager can earn up to 250% of target. |
| 60 | AWI 2026 Proxy Statement |
| ||||||
OPTIONS EXERCISED AND STOCK VESTED
The following table shows the exercise of stock options by each NEO during 2025, as well as stock awards held by each NEO that became free of restrictions during 2025.
| Stock Awards | ||||||||
| Name | Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($)(1) |
||||||
| Victor D. Grizzle |
— | — | ||||||
| Mark A. Hershey |
— | — | ||||||
| Christopher P. Calzaretta |
— | — | ||||||
| Austin K. So |
1,269 | 191,632 | ||||||
| Jill A. Crager |
— | — | ||||||
| (1) | Represents the number of RSUs that vested in 2025. The value realized upon vesting is computed by multiplying the number of units by the value of the underlying shares on the vesting date. |
The performance period for PSUs granted in 2023 ended on December 31, 2025. The final payout determination was made in April 2026 by the Compensation Committee after a review of the Company’s performance and certification of achievement of the performance goals. The final 2023 PSU shares paid out and the value realized in April 2026 are set forth below. See “Payout of 2023—2025 Performance-Based Restricted Stock Units” on page 51.
| Grizzle | Hershey | Calzaretta | So | Crager | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 PSU Metric |
Payout Factor |
PSUs Granted |
Final Payout (#) |
Value on Vesting (a) ($) |
PSUs Granted |
Final Payout |
Value on Vesting (a) ($) |
PSUs Granted |
Final Payout |
Value on Vesting (a) ($) |
PSUs Granted |
Final Payout |
Value on Vesting (a) ($) |
PSUs Granted |
Final Payout |
Value on Vesting (a) ($) |
||||||||||||||||||||||||||||||||||||||||||||||||
| Absolute TSR |
300 | % | 23,170 | 69,510 | 12,009,243 | 3,179 | 9,537 | 1,647,707 | 2,167 | 6,501 | 1,123,178 | 2,336 | 7,008 | 1,210,772 | 974 | 2,922 | 504,834 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cumulative FCF |
156 | % | 9,654 | 15,061 | 2,602,089 | 1,325 | 2,067 | 357,116 | 903 | 1,409 | 243,433 | 974 | 1,520 | 262,610 | 406 | 634 | 109,536 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cumulative MF EBITDA |
229 | % | 5,792 | 13,264 | 2,291,621 | 794 | 1,819 | 314,269 | 541 | 1,239 | 214,062 | 583 | 1,336 | 230,821 | 242 | 555 | 95,887 | |||||||||||||||||||||||||||||||||||||||||||||||
| (a) | Value at $172.77, the closing price of our shares of Common Stock on April 8, 2026, the date of Compensation Committee final payout determination. |
|
|
AWI 2026 Proxy Statement | 61 | ||||||
PENSION BENEFITS
The table below shows the present value of accumulated benefits payable to each of the NEOs, including the number of years of service credited to each such NEO, under the RIP and the RBEP as of December 31, 2025. The amounts were determined using the same interest rate and mortality rate assumptions used in the Company’s Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2025. Information regarding the RIP and RBEP can be found in Note 17 to the Company’s Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2025.
| Name | Plan Name | Number of Years Credited Service (#) |
Present Value of Accumulated Benefit ($) |
Payments During Last Fiscal Year ($) |
||||||||||
| Victor D. Grizzle |
Not eligible | |||||||||||||
| Mark A. Hershey |
Not eligible | |||||||||||||
| Christopher P. Calzaretta |
Not eligible | |||||||||||||
| Austin K. So |
Not eligible | |||||||||||||
| |
Retirement Income Plan for Employees of Armstrong World Industries, Inc. |
|
27.1 | $ | 172,119 | — | ||||||||
| Jill A Crager(1) |
||||||||||||||
| |
Retirement Benefit Equity Plan of Armstrong World Industries, Inc. |
|
Not Eligible | |||||||||||
| (1) | Pension benefits for Ms. Crager were frozen on February 28, 2006 because she did not have the requisite 60 points of age and service to continue accruing benefits under the RIP. Ms. Crager’s pension benefit will not change due to additional service or pay; however, the present value will go up or down depending on the discount rate and mortality assumptions. |
The RBEP was established to pay any benefit which cannot be paid under the RIP due to Internal Revenue Code compensation or benefits limitations. All pension benefits are paid by the Company. The pension plans were closed to new salaried participants effective January 1, 2005 and pension benefits were frozen for all salaried employees on December 31, 2017. Benefits payable under the RIP and RBEP are based on a formula that yields an annual amount payable over the participant’s lifetime beginning at the age where the participant qualifies for an unreduced life annuity benefit.
In addition, Ms. Crager qualified for an additional annuity payment under the ESOP Pension Account (the “EPA”) to the extent such benefit can be paid under the qualified pension plan. The EPA was established in 2000 to restore a portion of the value lost by a broad group of employees who had purchased shares of Company stock and received Company contributions of additional shares which were intended to help fund the cost of their retiree health care coverage. The starting EPA balance was determined by multiplying the number of ESOP
shares held by the participant by $47.75 which was the guaranteed value of the original ESOP convertible preferred shares. The EPA is credited with interest annually using the November 30-year Treasury bond rate. Interest is credited up to the date the participant commences regular pension benefits under the RIP. Participants in the RIP may retire as early as age 55 provided the participant is vested under the plan. Participants become vested after completing five years of continuous employment having worked at least 1,000 hours in each year. The normal retirement date is the first of the month nearest the participant’s 65th birthday. Except as noted below, there is a reduction for early retirement for salaried participants who retire between the ages of 55 and 65. An employee who retires from active employment can receive an unreduced pension benefit commencing on the date of retirement if the employee’s age (minimum age 55) and total service totals 90 points (the “Rule of 90”). The unreduced Rule of 90 benefit is limited to the employee’s pension amount accrued to February 28, 2006. Employees receive credit for post-March 1, 2006 age and service for Rule of 90 eligibility.
| 62 | AWI 2026 Proxy Statement |
| ||||||
PENSION BENEFITS (CONTINUED)
The normal form of benefit payment is a monthly annuity. Except for payments having a lump sum present value of $100,000 or less under the qualified plan, no involuntary lump sum payments are permitted. Various forms of annuity payments (including life, joint and survivor, period certain and level income options) are available under the pension plans. The annuity payments for these options are determined by actuarially adjusting the life annuity pension amount for the selected form of payment.
The formula for the regular life annuity pension benefit for salaried employees under the RIP is based on the following factors:
| • | the participant’s Average Final Compensation (the “AFC”) which is the average of the three highest years of eligible compensation (base salary plus annual incentive) during the last ten years of employment ending with 2017; |
| • | the participant’s number of years of Total Service (credited years of employment with the Company) used to calculate the pension amount; and |
| • | the participant’s Adjusted Covered Compensation (the “ACC”), which is a percentage of the average Social Security tax base for the 35-year period ending with the year the participant will qualify for an unreduced Social Security pension benefit. |
The unreduced annual life annuity pension is the sum of the following four calculations, each of which may not be less than zero:
| 1. | AFC x 0.009 x Total Service to a maximum of 35 years; plus |
| 2. | (AFC – ACC) x 0.005 x Total Service to 35 years; plus |
| 3. | (AFC – 2 x ACC) x 0.0015 x Total Service to 35 years; plus |
| 4. | AFC x 0.012 x Total Service over 35 years. |
To the extent the participant is eligible for an EPA pension benefit that can be paid from the RIP, all the allowable portion of the calculated EPA annuity will be added to the regular pension amount. EPA annuity amounts that cannot be paid from the qualified plan are forfeited.
Special provisions apply if the qualified pension plan is terminated within five years following an Extraordinary Event, as this term is defined in the RIP. Upon the occurrence of such an event, plan liabilities would first be satisfied, and then remaining plan assets would be applied to increase retirement income to employees. The amount of the increase is based on the assumption that the employee would have continued employment with Armstrong until retirement. Ms. Crager would be entitled to this benefit under these circumstances.
The assumptions used to calculate the actuarial present values shown in the table above are as follows:
| • | Discount rated used to value benefit obligations equals 5.49%; |
| • | PRI2012 Generational Mortality Table Projected from 2012 base tables with Scale MP2021; |
| • | EPA interest rate of 4.66%; |
| • | 1994 GAR (RR2001-62) Mortality Table for EPA annuity conversion; and |
| • | Retirement at age 65 or Rule of 90 eligibility, as specified. |
|
|
AWI 2026 Proxy Statement | 63 | ||||||
NONQUALIFIED DEFERRED COMPENSATION
The table below shows the executive and company contributions, earnings and account balances for each NEO who participates in the NQDCP.
| Name | Executive Contributions in 2025 ($)(1) |
Registrant Contributions in 2025 ($)(2) |
Aggregate Earnings in 2025 ($) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at 12/31/2025 ($) |
|||||||||||||||
| Victor D. Grizzle |
122,212 | 109,991 | 438,278 | — | 3,142,241 | |||||||||||||||
| Mark A. Hershey |
66,993 | 50,245 | 244,814 | — | 1,817,776 | |||||||||||||||
| Christopher P. Calzaretta |
30,217 | 23,741 | 12,910 | — | 114,777 | |||||||||||||||
| Austin K. So |
152,520 | 36,605 | 88,861 | — | 629,603 | |||||||||||||||
| Jill A. Crager |
37,063 | 27,798 | 22,082 | — | 176,771 | |||||||||||||||
| (1) | The amount in this column is also reported as either Salary or Non-Equity Incentive Plan Compensation in the SCT. |
| (2) | The amount in this column is also reported in the All Other Compensation column of the SCT. |
The table below reflects NQDCP amounts reported in the aggregate balance at last fiscal year end that were previously reported as compensation to the NEO in the SCT for previous years.
| Name | Amount Previously Reported ($) |
|||
| Victor D. Grizzle |
1,848,983 | |||
| Mark A. Hershey |
805,608 | |||
| Christopher P. Calzaretta |
45,226 | |||
| Austin K. So |
281,884 | |||
| Jill A. Crager |
38,182 | |||
All salaried employees, including the NEOs, are eligible to participate in a 401(k) savings plan. We match 100% on the first 4% of employee contributions and 50% on the next 4% of employee contributions.
The NQDCP was established to provide benefits similar to the 401(k) plan as it applies to eligible employees whose eligible earnings (base salary plus annual incentive) exceed 12.5 times the Internal Revenue Code 402(g) elective deferral limit in effect for the plan year. A participant may elect to defer up to 25% of eligible base salary earnings and up to 25% of eligible annual incentive earnings. The Company matching contribution will be the same as that provided under the 401(k) savings plan with the Company match. Participants may transfer account balances between any of the applicable plans’ available investment options.
Under the NQDCP, participants become 100% vested in the Company match account after completing three years of continuous employment having worked at least 1,000 hours in each year.
Under the NQDCP, except in the case of an unforeseeable emergency or having reached age 70, no in-service distributions are permitted. Participants can elect to receive plan benefits as a single lump sum or in 120 monthly installments commencing after the date of the participant’s termination of employment. All elections must comply with the Internal Revenue Code requirements. If the total account value is less than $10,000, the entire account balance will be paid as a single sum at the time of termination. In the event of a participant’s death, any remaining payments shall be paid to the participant’s designated beneficiary or estate.
Under the NQDCP, the Company reserves the right to cause the participant to forfeit or require repayment of the Company match benefits where the participant is discharged for willful, deliberate, or gross misconduct or where the participant has engaged in conduct that is injurious to the Company.
| 64 | AWI 2026 Proxy Statement |
| ||||||
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The tables below summarize the estimated value of the potential payments and benefits under the Company’s plans and arrangements to which each NEO would be entitled upon termination of employment under the circumstances indicated. Except for the continuation of health and welfare benefits and outplacement support, amounts would be paid as a lump sum at termination. The amounts shown assume that such termination was effective December 31, 2025.
The “Change in Control” column assumes that there is no limitation on payments under the “best net” provision in each CIC agreement relating to tax under Section 4999 of the Internal Revenue Code. Amounts in the “Change in Control” column are “double trigger” payments and are therefore applicable only in the event both a CIC event and either an involuntary (without cause) termination or a termination for Good Reason under the CIC agreement occur. The PSUs are valued at target using the December 31, 2025 stock price for purposes of the tables below.
Victor D. Grizzle
|
|
Reason for Termination | |||||||||||||||
| Program Element | Resignation | Involuntary for Cause |
Involuntary without Cause |
Termination for Good Reason |
Change in Control |
|||||||||||
| Cash Severance |
— | — | $ | 4,400,000 | $ | 4,400,000 | $ | 5,500,000 | ||||||||
| Health & Welfare Benefit Continuation |
— | — | — | — | 45,700 | |||||||||||
| Outplacement Support |
— | — | 220,000 | 220,000 | 220,000 | |||||||||||
| Pro-rated Bonus |
— | — | 1,200,000 | 1,200,000 | 1,200,000 | |||||||||||
| Accelerated Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
| |||||
| Performance Stock Units |
— | — | — | — | 16,647,485 | |||||||||||
| Time-Based Restricted Stock Units |
— | — | — | — | 25,014,990 | |||||||||||
|
|
||||||||||||||||
| Total |
— | — | $ | 5,820,000 | $ | 5,820,000 | $ | 48,628,176 | ||||||||
Mark A. Hershey
|
|
Reason for Termination | |||||||||||||||
| Program Element | Resignation | Involuntary for Cause |
Involuntary without Cause |
Termination for Good Reason |
Change in Control |
|||||||||||
| Cash Severance |
— | — | $ | 1,416,710 | $ | 1,416,710 | $ | 1,888,947 | ||||||||
| Health & Welfare Benefit Continuation |
— | — | — | — | 71,200 | |||||||||||
| Outplacement Support |
— | — | 94,400 | 94,400 | 94,400 | |||||||||||
| Pro-rated Bonus |
— | — | 388,901 | 388,901 | 388,901 | |||||||||||
| Accelerated Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
| |||||
| Performance Stock Units |
— | — | — | — | 2,322,056 | |||||||||||
| Time-Based Restricted Stock Units |
— | — | — | — | 1,547,910 | |||||||||||
|
|
||||||||||||||||
| Total |
— | — | $ | 1,900,011 | $ | 1,900,011 | $ | 6,313,414 | ||||||||
|
|
AWI 2026 Proxy Statement | 65 | ||||||
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL (CONTINUED)
Christopher P. Calzaretta
|
|
Reason for Termination | |||||||||||||||
| Program Element | Resignation | Involuntary for Cause |
Involuntary without Cause |
Termination for Good Reason |
Change in Control |
|||||||||||
| Cash Severance |
— | — | $ | 1,313,250 | $ | 1,313,250 | $ | 1,751,000 | ||||||||
| Health & Welfare Benefit Continuation |
— | — | — | — | 63,900 | |||||||||||
| Outplacement Support |
— | — | 87,600 | 87,600 | 87,600 | |||||||||||
| Pro-rated Bonus |
— | — | 360,500 | 360,500 | 360,500 | |||||||||||
| Accelerated Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
| |||||
| Performance Stock Units |
— | — | — | — | 1,798,060 | |||||||||||
| Time-Based Restricted Stock Units |
— | — | — | — | 1,198,770 | |||||||||||
|
|
||||||||||||||||
| Total |
— | — | $ | 1,761,350 | $ | 1,761,350 | $ | 5,259,831 | ||||||||
Austin K. So
|
|
Reason for Termination | |||||||||||||||
| Program Element | Resignation | Involuntary for Cause |
Involuntary without Cause |
Termination for Good Reason |
Change in Control |
|||||||||||
| Cash Severance |
— | — | $ | 1,145,562 | $ | 1,145,562 | $ | 1,527,416 | ||||||||
| Health & Welfare Benefit Continuation |
— | — | — | — | 64,100 | |||||||||||
| Outplacement Support |
— | — | 76,400 | 76,400 | 76,400 | |||||||||||
| Pro-rated Bonus |
— | — | 286,391 | 286,391 | 286,391 | |||||||||||
| Accelerated Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
| |||||
| Performance Stock Units |
— | — | — | — | 1,727,926 | |||||||||||
| Time-Based Restricted Stock Units |
— | — | — | — | 1,152,142 | |||||||||||
|
|
||||||||||||||||
| Total |
— | — | $ | 1,508,353 | $ | 1,508,353 | $ | 4,834,375 | ||||||||
Jill A. Crager
|
|
Reason for Termination | |||||||||||||||
| Program Element | Resignation | Involuntary for Cause |
Involuntary without Cause |
Termination for Good Reason |
Change in Control |
|||||||||||
| Cash Severance |
— | — | $ | 1,020,000 | $ | 1,020,000 | $ | 1,360,001 | ||||||||
| Health & Welfare Benefit Continuation |
— | — | — | — | 54,200 | |||||||||||
| Outplacement Support |
— | — | 68,000 | 68,000 | 68,000 | |||||||||||
| Pro-rated Bonus |
— | — | 255,000 | 255,000 | 255,000 | |||||||||||
| Accelerated Long-Term Incentives |
|
|
|
|
|
|
|
|
|
|
| |||||
| Performance Stock Units |
— | — | — | — | 1,003,466 | |||||||||||
| Time-Based Restricted Stock Units |
— | — | — | — | 669,232 | |||||||||||
|
|
||||||||||||||||
| Total |
— | — | $ | 1,343,000 | $ | 1,343,000 | $ | 3,409,899 | ||||||||
| 66 | AWI 2026 Proxy Statement |
| ||||||
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL (CONTINUED)
Resignation or Involuntary Termination for Cause
No incremental benefits are provided to any of the NEOs in the event of a voluntary resignation or an involuntary termination for Cause. Cause is defined as (i) the willful and continued failure by the executive to substantially perform the executive’s duties after a written demand for substantial performance is delivered to the executive by the Board, (ii) the willful engaging by the executive in conduct, which is demonstrably and materially injurious to the Company, or (iii) the executive’s conviction of any felony.
Involuntary Termination Without Cause in the Absence of a Change in Control
In the event of a qualifying involuntary termination, all salaried employees are eligible for continuation of health care and life insurance benefits at active employee premium contributions for a period of six months unless the employee is eligible for and elects retiree health care coverage. In addition, senior executives, including the NEOs, are eligible for twelve months of executive outplacement support provided by an outside service provider.
Pursuant to the individual severance agreements, and upon the execution of a release of claims, Messrs. Grizzle, Calzaretta, Hershey, So and Ms. Crager are entitled to severance upon a termination by the Company without cause or Good Reason (as defined below) in an amount equal to one and one-half times (two times for Mr. Grizzle) their then current annual base salary plus target annual incentive under the Company’s AIP program, payable in a lump sum, and a pro-rated annual incentive bonus based on actual performance for the year of termination, payable at the time that bonuses are paid to employees of the Company
For purposes of the severance agreements, Good Reason is generally defined to mean: (i) a material diminution in authority, duties, or responsibilities or the assignment of duties or responsibilities that are materially inconsistent with those currently in effect; (ii) a 10% reduction of base salary, except for across-the-board salary reductions similarly affecting all senior executive officers of the Company; (iii) the relocation of principal place of
employment to a location more than 50 miles from his or her current principal place of employment; (iv) a material breach by the Company of its obligations under the severance agreement; or (v) failure of the Company to obtain assumption and agreement by a successor of the Company to be bound by the severance agreement.
Information in the tables above assumes that any termination was effective December 31, 2025, and is based on the program parameters in effect as of December 31, 2025 as outlined above.
Qualifying Involuntary Termination Following a Change in Control
Under each executive’s severance agreement, the executive is entitled to receive severance payments upon involuntary termination without cause or termination for Good Reason within two years following a CIC, or within six months preceding a CIC if the termination is in connection with a potential CIC. Termination for Good Reason is defined in each executive’s individual CIC agreement and includes any one of the following events following a CIC:
| (i) | the assignment to the executive of any duties inconsistent with the executive’s status as an executive officer of the Company or a substantial adverse alteration in the nature or status of the executive’s responsibilities, including diminution as a result of the Company no longer being a publicly traded corporation following the CIC; |
| (ii) | a reduction by the Company in the executive’s annual base salary; |
| (iii) | relocation of the executive’s principal place of employment to a location more than 50 miles from the principal place of employment immediately before the CIC; |
| (iv) | failure by the Company to pay to the executive any portion of the executive’s current compensation; or |
| (v) | failure by the Company to continue in effect any compensation or benefit plan in which the executive participates immediately prior to a CIC which is material to the executive’s total compensation unless an equitable arrangement has been made. |
|
|
AWI 2026 Proxy Statement | 67 | ||||||
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL (CONTINUED)
Change in Control Arrangements – Key Terms
We will not provide tax gross ups under Sections 280G and 4999 of the Internal Revenue Code to any of our officers. Set forth below are certain key terms of the CIC agreements:
| Term of Agreement |
Fixed one-year term that automatically renews for an additional year unless notice is given at least 90 days prior to the anniversary of intent not to renew; term automatically continues for two years if the CIC occurs during term | |
| Severance Benefits |
2.5 times base salary plus target AIP for Mr. Grizzle, two times base salary plus target AIP for Messrs. Calzaretta, Hershey and So and Ms. Crager | |
| Pro rata AIP |
Prorated target AIP bonus for year of termination | |
| Accelerated Equity Vesting |
Double trigger accelerated vesting (requires a CIC and qualifying termination of employment) for stock options, RSUs, PSUs and other equity grants to vest if assumed by the acquirer; the Compensation Committee may cash out equity grants if not assumed by the acquirer | |
| 280G Taxation |
Any amounts paid under the CIC agreement will be reduced to the maximum amount that can be paid without being excess parachute payments under Internal Revenue Code Section 280G and that are subject to the excise tax imposed under Internal Revenue Code Section 4999, but only if the after-tax benefit of the reduced amount is higher than the after-tax benefit of the unreduced amount | |
“Change in Control” generally means the occurrence of one of the following events:
| (I) | any person is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates) representing 35% or more of the combined voting power of the Company’s then outstanding securities, excluding any person who becomes such a beneficial owner in connection with a transaction described in clause (A) of paragraph (III) below; or |
| (II) | the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Company’s board of directors and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Company’s board of directors or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the |
| directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or |
| (III) | there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (A) a merger or consolidation immediately following which the individuals who comprise the Company’s board of directors immediately prior thereto constitute at least a majority of the board of directors of the Company, the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates) representing 35% or more of the combined voting power of the Company’s then outstanding securities; or |
| 68 | AWI 2026 Proxy Statement |
| ||||||
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL (CONTINUED)
| (IV) | the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all the Company’s assets, other than a sale or disposition by the Company of all or |
| substantially all the Company’s assets immediately following which the individuals who comprise the board of directors of the Company immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent thereof. |
|
|
AWI 2026 Proxy Statement | 69 | ||||||
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Securities authorized for issuance under equity compensation plans as of December 31, 2025.
|
|
(a) Number of securities to be issued upon exercise of outstanding options, warrants, and rights |
(b) Weighted-average exercise price of outstanding options, warrants, and rights |
(c) Number of securities remaining available for future Issuance under equity compensation plans (excluding securities reflected in column (a)) | |||
| Equity compensation plans approved by security holders | 467,100(1) | $—(2) | 2,997,515(3) | |||
| Equity compensation plans not approved by security holders | —(4) | Not Applicable | 8,903(5) | |||
| Totals | 467,100 | $—(2) | 3,006,418 | |||
| (1) | Includes RSUs, PSUs and stock options to purchase our shares of Common Stock granted under the Company’s 2022 ECIP, 2016 LTIP and the 2016 Directors Stock Unit Plans. |
| (2) | Represents the weighted-average exercise price of the outstanding stock options only; the outstanding RSUs and PSUs are not included in this calculation. |
| (3) | Reflects shares available pursuant to the issuance of stock options, RSUs, PSUs, or other stock-based awards under the 2022 ECIP and the 2016 Director Stock Unit Plans. The aggregate number of shares of Common Stock reserved for the grant or settlement of awards under the 2022 ECIP (Share Limit) is 3,619,268, subject to adjustment as provided therein. With respect to awards granted on or after June 16, 2022, the number of shares of Common Stock reserved for award and issuance under this plan is reduced on a one-for-one basis for each share of Common Stock subject to a stock option or stock appreciation right and is reduced by a fixed ratio of 1.6 shares of Common Stock for each share of Common Stock subject to a Restricted Stock Award or Restricted Stock Unit granted under the 2022 ECIP. |
| (4) | Represents the Restricted Stock Awards (“RSAs”) issued to the sellers of Arktura as of the acquisition date under the Arktura Equity Interest Purchase Agreement entered into as of November 19, 2020, and the Company’s 2020 Inducement RSAs to certain employees of Arktura following acquisition under a Registration Statement on Form S-8. We reissued treasury shares to grant all the RSAs associated with the Arktura acquisition. |
| (5) | Reflects shares available pursuant to the issuance of RSAs under the 2020 Inducement Award Plan under a Registration Statement on Form S-8. The 2020 Inducement Award Plan authorizes us to issue stock options, stock appreciation rights, restricted stock awards and stock units to key employees and expires on December 14, 2030, after which time no further awards may be made. The 2020 Inducement Award Plan authorizes us to issue up to 19,000 shares of Common Stock. As of December 31, 2025, 8,903 shares were available for future grants under the 2020 Inducement Award Plan. |
| 70 | AWI 2026 Proxy Statement |
| ||||||
CEO PAY RATIO
For fiscal year 2025, we are providing the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all our employees (other than our Chief Executive Officer).
We used the same median employee that was identified in fiscal year 2024 to calculate the CEO pay ratio for fiscal year 2025. We believe there were no material changes to our employee population or compensation arrangements that would significantly affect the pay ratio disclosure. We determined our median compensated employee by examining the total gross taxable earnings for fiscal 2024 gathered from payroll data. Exclusions from the analyzed population included 53 non-U.S. employees in Argentina, Latin America and Mexico. The total numbers of U.S. employees, Canadian employees, and other non-U.S. employees were 3,672, 155, and 53, respectively, before taking into account such exclusions and for purposes of calculating such exclusions. We annualized the total taxable compensation paid to those
employees who commenced work with us during 2024 and therefore did not work for us in the entire calendar year. Using this annual taxable compensation data, we identified the employee whose total taxable compensation was the median. Disclosed below is the 2025 annual total compensation of our median employee, and the ratio of these amounts. We calculated the annual total compensation for both Mr. Grizzle and our median employee using the same methodology that is used for the Summary Compensation Table.
The annual total compensation of the median employee for fiscal year 2025 was $91,600, and the annual total compensation of our Chief Executive Officer was $8,537,000.
Based on this information, the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all our employees for fiscal year 2025 was approximately 93 to 1.
|
|
AWI 2026 Proxy Statement | 71 | ||||||
| Value of $100 Investment Based on |
||||||||||||||||||||||||||||||||
| Year | Summary Compensation Table Total for CEO (1) |
Compensation Actually Paid CEO (2) |
Average Summary Compensation Table Total for other NEOs (3) |
Average Compensation Actually Paid for Other NEOs (4) |
TSR (5) |
Peer Group TSR (6) |
Net Income (loss) $ in millions (7) |
Company Selected Measure: EBITDA millions (8) |
||||||||||||||||||||||||
2025 |
||||||||||||||||||||||||||||||||
2024 |
||||||||||||||||||||||||||||||||
2023 |
||||||||||||||||||||||||||||||||
2022 |
( |
) | ||||||||||||||||||||||||||||||
2021 |
||||||||||||||||||||||||||||||||
| (1) |
| (2) | SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine “compensation actually paid” as reported in the Pay versus Performance Table. “Compensation actually paid” does not necessarily represent cash and/or equity value transferred to our CEO without restriction, but rather is a value calculated under applicable SEC rules. In general, “compensation actually paid” is calculated as Summary Compensation Table total compensation adjusted to include the fair market value of equity awards as of December 31 of the applicable year or, if earlier, the vesting date (rather than the grant date) and certain adjustments in the values of pensions. Compensation actually paid generally fluctuates due to stock price achievement and varying levels of projected and actual achievement of performance goals (as reflected in the significant decrease to 2021 and 2022 compensation actually paid). For information regarding the decisions made by our MDCC in regard to the CEOs compensation for each fiscal year, please see the “Compensation Discussion and Analysis” sections in this proxy statement and in the proxy statement for our annual meeting of shareholders for 2022, 2023, 2024 and 2025. |
| Year | 2025 | 2024 | 2023 | 2022 | 2021 | |||||||||||||||
CEO |
||||||||||||||||||||
SCT Total Compensation |
||||||||||||||||||||
| Less: Stock Award Values Reported in SCT for the Covered Year ($) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
| Plus: Fair Value at Year-End for Stock Awards Granted in the Covered Year that Remain Outstanding ($) |
||||||||||||||||||||
| Change in Fair Value during the Year of Outstanding Unvested Stock Awards Granted in Prior Years ($) | ( |
) | ||||||||||||||||||
| Change in Fair Value of Stock Awards Granted in Prior Years that Vested in the Covered Years ($) | ( |
) | ||||||||||||||||||
| Less: Fair Value of Stock Awards Forfeited during the Covered Year ($) | ||||||||||||||||||||
Compensation Actually Paid ($) |
( |
) | ||||||||||||||||||
72 |
AWI 2026 Proxy Statement |
|||||||
| (3) | The following non-CEO named executive officers are included in the average figures shown |
| a. | 2024 and 2025: Christopher Calzaretta, Mark Hershey, Austin So and Jill Crager |
| b. | 2023: Christopher Calzaretta, Mark Hershey, Austin So and Monica Maheshwari |
| c. | 2022: Christopher Calzaretta, Mark Hershey, Austin So and Ellen Romano |
| d. | 2021: Brian MacNeal, Charles Chiappone, Mark Hershey, and Ellen Romano |
| (4) | Average “compensation actually paid” for our non-CEO NEOs in each of 2025, 2024, 2023, 2022 and 2021 reflects the adjustments to the Summary Compensation Table totals required by the SEC rules. For information regarding the decisions made by our MDCC in regard to the non-CEO NEOs compensation for each fiscal year, please see the “Compensation Discussion and Analysis” in this proxy statement and in the proxy statement for our annual meeting of shareholders for 2022, 2023, 2024 and 2025. |
| Year | 2025 | 2024 | 2023 | 2022 | 2021 | |||||||||||||||
Non-CEO NEOs |
||||||||||||||||||||
SCT Total Compensation |
||||||||||||||||||||
| Less: Stock Award Values Reported in SCT for the Covered Year ($) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
| Plus: Fair Value at Year-End for Stock Awards Granted in the Covered Year that Remain Outstanding ($) |
||||||||||||||||||||
| Change in Fair Value during the Year of Outstanding Unvested Stock Awards Granted in Prior Years ($) | ( |
) | ||||||||||||||||||
| Change in Fair Value of Stock Awards Granted in Prior Years that Vested in the Covered Years ($) | ( |
) | ||||||||||||||||||
| Less: Fair Value of Stock Awards Forfeited during the Covered Year ($) | ||||||||||||||||||||
| Less: Aggregate Change in Actuarial Present Value of Accumulated Benefit Under Pension Plans ($) | ||||||||||||||||||||
| Plus: Aggregate Service Cost and Prior Service Cost for Pension Plans ($) | ||||||||||||||||||||
| Compensation Actually Paid ($) | ||||||||||||||||||||
| (5) | For the relevant fiscal year, represents the cumulative total shareholder return (TSR) of the Company for the measurement periods ending on December 31 of each of 2025, 2024, 2023, 2022 and 2021, respectively, assuming $100 invested in our shares of Common Stock on December 31, 2020, and reinvestment of all dividends. |
| (6) |
| (7) | Reflects “Net Income (Loss)” as reported in the Company’s Consolidated Income Statements included in the Company’s Annual Reports on Form 10-K for each of the years ended December 31, 2025, 2024, 2023, 2022 and 2021. |
| (8) | non-cash pension impact and plus/minus earnout/deferred purchase price accruals and certain acquisition-related charges, subject to certain exceptions and described more fully in “Compensation Discussion and Analysis” in this proxy statement. |
AWI 2026 Proxy Statement |
73 | |||||||
| a. |
| b. |
| c. |
| d. |
| e. |
74 |
AWI 2026 Proxy Statement |
|||||||
ADDITIONAL MEETING INFORMATION
Why did I receive a one-page notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?
This year we have again utilized the SEC rule allowing companies to furnish proxy materials to their shareholders over the internet. We believe that this approach enables us to provide the materials to shareholders more quickly, while also reducing the impact of our Annual Meeting on the environment and the costs associated with printing and mailing.
How can I receive printed shareholder and proxy materials?
Please follow the instructions for “How to Access the Proxy Materials” on the one-page notice described above.
Who is soliciting my proxy?
The Board is soliciting your proxy in order to provide you with an opportunity to vote on all matters scheduled to come before the meeting, whether or not you attend the meeting via the internet.
Who is entitled to vote?
Each holder of record of our shares of Common Stock, at the close of business on the record date, April 16, 2026 (“Record Date”), is entitled to one vote for each share of Common Stock owned on each matter to be voted on. As of the Record Date, 42,712,328 shares of Common Stock were issued and outstanding and entitled to vote at the Annual Meeting.
What must I do to attend the meeting via the internet?
You may attend and participate in the Annual Meeting via the internet at www.virtualshareholdermeeting.com/AWI2026 where you will be able to vote and submit questions during the meeting. Shareholders who use the control number that was furnished to them (either with the notice sent to them regarding the availability of these proxy materials or with their copy of these proxy materials) to log on to the meeting will be able to vote and submit questions during the meeting.
Why can’t I attend the meeting in person?
Our Board has opted, as with the 2025 Annual Meeting, to hold a virtual-only Annual Meeting that affords shareholders the same rights and opportunities to participate in the virtual meeting as they would have at an in-person meeting. Hosting a virtual Annual Meeting provides easy access for our shareholders and facilitates participation since shareholders can participate from any location around the world at no cost to them.
How can I revoke my proxy?
Proxies are voted at the Annual Meeting. You may revoke your proxy at any time before it is voted, and your last vote is the vote that will be counted. If you are a shareholder of record on the Record Date and you returned a paper proxy card, you can write to the Corporate Secretary at our corporate offices, 2500 Columbia Avenue, Lancaster, Pennsylvania 17603, stating that you wish to revoke your proxy and that you need another proxy card. If you submitted your proxy by the internet or by telephone, you can vote again over the internet or by telephone. If you hold your shares of Common Stock through a broker, bank or other nominee, you can revoke your proxy by contacting the broker, bank or other nominee and following its procedure for revocation. If you are a shareholder of record on the Record Date and you attend the Annual Meeting in person via the internet, you may revoke your proxy by voting electronically during the meeting. Your attendance via the internet alone at the Annual Meeting will not of itself constitute a revocation of your proxy.
How many votes can be cast by all shareholders?
42,712,328 votes, consisting of one vote for each outstanding share of Common Stock outstanding on the Record Date.
What is the quorum requirement for the Annual Meeting?
A quorum of the holders of the outstanding shares of Common Stock must be present for the Annual Meeting to be held. A “quorum” is the presence at the Annual Meeting, virtually or represented by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast on a matter to be acted on at the
|
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AWI 2026 Proxy Statement | 75 | ||||||
ADDITIONAL MEETING INFORMATION (CONTINUED)
Annual Meeting. Abstentions and broker “non-votes” are counted as present and entitled to vote for purposes of determining a quorum. A broker “non-vote” occurs when a broker does not vote on a particular proposal because the broker does not have discretionary voting power with respect to the proposal and has not received voting instructions from the beneficial owner.
Under the rules of the NYSE, a broker will generally have discretionary voting power on “routine” matters but cannot vote on “non-routine” matters. The election of directors, the advisory approval of executive compensation, and the approval of the 2026 Directors Stock Unit Plan are non-routine matters. The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2026 is a routine matter.
What if a quorum is not present at the Annual Meeting?
If the Annual Meeting cannot be organized because a quorum is not present, the shareholders present at the Annual Meeting will have the power, except as otherwise provided by statute, to adjourn the Annual Meeting to such time and place as they may determine. Those shareholders who attend the second of such adjourned meetings, even if less than a quorum, shall nevertheless constitute a quorum for the purpose of electing directors.
What vote is required to elect directors at the Annual Meeting?
At the Annual Meeting, in connection with the election of directors, you will be entitled to cast one vote for each share held by you for each nominee. Votes may be cast “for” or “withheld” with respect to each nominee. Directors will be elected by a plurality of the votes cast at the Annual Meeting. A plurality means that the nominees with the largest number of votes cast “for” their election, up to the nine (9) directors to be chosen at the Annual Meeting, will be elected. Votes that are “withheld” will be excluded entirely from the vote and will have no effect, other than for purposes of determining the presence of a quorum. However, the Board has adopted a Policy on Majority Voting, pursuant to which, in an uncontested election, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election will within 10 business days following certification of the shareholder vote, tender his or her resignation to the Board. Such
tendered resignation will be considered by the Governance Committee taking into account any factors or other information it considers appropriate and relevant and, within 60 days following the date of the shareholders’ meeting at which the election occurred, will make a recommendation to the Board concerning the acceptance or rejection of such resignation. The Board will take formal action on the Governance Committee’s recommendation no later than 90 days following the date of the shareholders’ meeting at which the election occurred. The Board will consider the information, factors and alternatives considered by the Governance Committee and such additional factors, information and alternatives as the Board deems relevant. See “CORPORATE GOVERNANCE — Policy on Majority Voting in the Election of Directors.”
What vote is required to approve the other items at the Annual Meeting?
The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2026 requires the affirmative vote of a majority of the votes present and entitled to vote at the meeting to be approved. The approval of the 2026 Directors Stock Unit Plan requires the affirmative vote of a majority of the votes present and entitled to vote at the meeting to be approved. The advisory approval of executive compensation requires the affirmative vote of a majority of the votes present and entitled to vote at the meeting to be approved. Any other matters that may be acted upon at the Annual Meeting will be determined by the affirmative vote of the holders of a majority of our shares of Common Stock represented via the internet or by proxy at the Annual Meeting and entitled to vote on the matter.
How are votes, abstentions and broker non-votes counted?
Broker non-votes will be included in determining whether a quorum is present but will have no effect on the outcome of the matters to be voted upon at the Annual Meeting, including in connection with the election of directors. Abstentions are not considered a vote cast under Pennsylvania law. Under our Bylaws, however, other than in connection with the election of directors, abstentions will have the effect of a negative vote with respect to matters to be voted upon at the Annual Meeting.
| 76 | AWI 2026 Proxy Statement |
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ADDITIONAL MEETING INFORMATION (CONTINUED)
Who will count the votes and how much does it cost the Company?
We have engaged Broadridge Investor Communications Solutions, Inc. to tabulate the proxy votes and any votes cast at the Annual Meeting for a fee of approximately $85,000 plus reasonable expenses.
What does it mean if I receive more than one proxy card or voting instructions?
It means that you have multiple accounts in which you own our shares of Common Stock. Please vote all proxy cards/voting instructions from the Company to ensure that all your shares of Common Stock are voted. However, you may want to contact your broker, bank, other similar organization acting as nominee or the Company’s transfer agent to consolidate as many accounts as possible under a single name and address. Our transfer agent is Equiniti Trust Company, LLC. All communications concerning shares of Common Stock you hold in
your name, including address changes, name changes, requests to transfer and similar issues, can be handled by contacting Equiniti at:
Equiniti Trust Company, LLC
55 Challenger Road, Floor 2
Ridgefield Park, NJ 07660
E-mail: HelpAST@equiniti.com
Telephone: 1-800-937-5449
What should we do if multiple shareholders reside in our household, and we wish to change the copies of proxy materials that we receive?
Some banks, brokers, broker-dealers and other similar organizations acting as nominee record holders may be participating in the practice of “householding” proxy statements and annual
reports. This means that, unless we have received contrary instructions from such bank, broker, broker-dealer or similar organization, only one copy of this proxy statement and the annual report may have been sent to multiple shareholders in your household. If you would prefer to receive separate copies of a proxy statement or annual report for other shareholders in your household, either now or in the future, please contact your bank, broker, broker-dealer or other similar organization serving as your nominee. Upon written or oral request to the attention of Investor Relations, 2500 Columbia Avenue, Lancaster, Pennsylvania 17603, or via telephone to the Investor Relations department at 717-396-6354, we will promptly provide separate copies of the annual report and/or this proxy statement. Shareholders sharing an address who are receiving multiple copies of this proxy statement or annual report and who wish to receive a single copy of such materials in the future will need to contact their bank, broker, broker-dealer or other similar organization serving as their nominee to request that only a single copy of each document be mailed to all shareholders at the shared address in the future.
Who may solicit proxies on the Company’s behalf?
Our directors, officers and employees may solicit proxies from our shareholders. These persons will not receive any additional compensation for these services. We will request that the Notice of Annual Meeting, this proxy statement, the proxy card, and related materials (if any), be forwarded to beneficial owners by banks, brokers, broker-dealers or other similar organizations serving as nominees. We will bear the costs of preparing, assembling and mailing the proxy materials and expect to reimburse such beneficial owners for all such solicitations in handling those materials.
OTHER BUSINESS
The Board knows of no matters other than the foregoing to come before the meeting. However, if any other matters properly come before the meeting, the persons named in the enclosed proxy will vote in their discretion with respect to such other matters.
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AWI 2026 Proxy Statement | 77 | ||||||
SUBMISSION OF SHAREHOLDER PROPOSALS
In order to submit shareholder proposals for the 2027 Annual Meeting for inclusion in the Company’s 2027 proxy statement pursuant to SEC Rule 14a-8, materials must be received by the Corporate Secretary at the Company’s corporate offices in Lancaster, Pennsylvania, no later than December 31, 2026.
The proposals must comply with all of the requirements of SEC Rule 14a-8. Proposals should be addressed to: Corporate Secretary, 2500 Columbia Avenue, Lancaster, Pennsylvania 17603. As the rules of the SEC make clear, simply submitting a proposal does not guarantee its inclusion.
The Bylaws also establish an advance notice procedure with regard to director nominations and shareholder proposals that are not submitted for inclusion in the proxy statement, but that a shareholder instead wishes to present directly at an annual meeting. All director nominations and shareholder proposals must comply with the requirements of our Bylaws, a copy of which may be obtained at no cost from the Corporate Secretary. To be properly brought before the 2027 Annual Meeting, a notice of the nomination or the matter the shareholder wishes to present at the meeting must be delivered to the Corporate Secretary at the Company’s corporate offices in Lancaster (see above), not later than 90 days nor earlier than 120 days prior to the first anniversary of
the date of this Annual Meeting. As a result, any notice given by or on behalf of a shareholder pursuant to these provisions of the Bylaws (and not pursuant to SEC Rule 14a-8) must be received no earlier than February 11, 2027 and no later than March 13, 2027. Further, shareholders who intend to nominate an individual for election to the Board and solicit proxies in support of such nominee at the 2027 Annual Meeting must also provide the notice and additional information required by SEC Rule 14a-19 to our Corporate Secretary not later than April 12, 2027. The supplemental notice and information required by Rule 14a-19 are in addition to the advance notice requirements under the Company’s Bylaws, described above, and do not extend any such deadline set forth under the Bylaws.
In either case, if the date of our 2027 Annual Meeting is more than 30 calendar days before or after the first anniversary of this Annual Meeting, your proposal must be received by the Corporate Secretary by close of business on the fifteenth day following the day we publicly announce the date of the 2027 Annual Meeting.
Any shareholder proposals not received by such applicable dates will be considered untimely and, if presented at the 2027 Annual Meeting, the proxy holders will be able to exercise discretionary authority to vote on any such proposal to the extent authorized by Exchange Act Rule 14a-4(c).
ANNUAL REPORT ON FORM 10-K
Our Annual Report to Shareholders, including financial statements, is being furnished simultaneously with this proxy statement to all shareholders of record as of the Record Date. A copy of our Annual Report and Form 10-K for the year ended December 31, 2025, including financial statements, but excluding the financial statement schedules and most exhibits, will be provided without charge to shareholders upon written request to: Armstrong World Industries, Inc.,
Investor Relations, 2500 Columbia Avenue, Lancaster, PA 17603. Our Annual Report is also available at www.proxyvote.com, or www.armstrong.com – Investors – Financials – Annual Reports & Proxy Statements. The Form 10-K will include a list of exhibits to the Form 10-K. Copies of exhibits will be furnished to shareholders upon written request and upon our receipt of payment of reproduction and mailing expenses.
| 78 | AWI 2026 Proxy Statement |
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INCORPORATION BY REFERENCE
To the extent that this proxy statement has been or will be specifically incorporated by reference into any other filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, the sections of this proxy statement
entitled “Audit Committee Report” (to the extent permitted by the rules of the SEC) and “Compensation Committee Report” shall not be deemed to be so incorporated, unless specifically provided otherwise in such filing.
SHAREHOLDER LIST
A list of shareholders entitled to vote at the Annual Meeting will be available for examination by shareholders at the Annual Meeting through the website portal for shareholders (see Additional Meeting Information section above).
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AWI 2026 Proxy Statement | 79 | ||||||
ANNEX A TO ARMSTRONG WORLD INDUSTRIES, INC. 2026 PROXY STATEMENT
To supplement its consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company provides additional measures of performance adjusted to exclude the impact of certain discrete expenses and income including adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) and adjusted free cash flow. The Company uses these adjusted performance measures in managing the business, including communications with its Board of Directors and employees, and believes that they provide users of this financial information with meaningful comparisons of operating performance between current results and results in prior periods. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance, as well as prospects for its future performance. These non-GAAP financial measures should not be considered in isolation or as a substitute for the most comparable GAAP measures and may not be defined and calculated the same as similar measures used by other companies. Dollars are in millions unless otherwise indicated. In the following charts, numbers may not sum due to rounding.
| Adjusted EBITDA |
||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | ||||||||||||||||
| Net earnings |
$ | 309 | $ | 265 | $ | 224 | $ | 203 | $ | 183 | ||||||||||
| Less: Net earnings (loss) from discontinued operations |
— | — | — | 3 | (2 | ) | ||||||||||||||
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| Earnings from continuing operations |
$ | 309 | $ | 265 | $ | 224 | $ | 200 | $ | 185 | ||||||||||
| Add: Income tax expense |
92 | 82 | 75 | 58 | 57 | |||||||||||||||
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| Earnings from continuing operations before income taxes |
$ | 400 | $ | 347 | $ | 298 | $ | 258 | $ | 243 | ||||||||||
| Add: Interest/other income and expense, net |
31 | 27 | 25 | 21 | 17 | |||||||||||||||
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| Operating income |
$ | 431 | $ | 374 | $ | 324 | $ | 279 | $ | 260 | ||||||||||
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| Add: RIP expense(1) |
2 | 2 | 3 | 4 | 5 | |||||||||||||||
| Add: Acquisition-related impacts(2) |
2 | 4 | 11 | 19 | 10 | |||||||||||||||
| Add: Cost reduction initiatives and other |
— | — | 3 | — | — | |||||||||||||||
| (Less)/Add: (Gain)/ loss on sales of fixed assets, net(3) |
(1 | ) | 1 | — | — | — | ||||||||||||||
| Add: Environmental expense |
— | 2 | — | — | — | |||||||||||||||
| Adjusted operating income |
$ | 435 | $ | 383 | $ | 340 | $ | 301 | $ | 275 | ||||||||||
| Add: Depreciation and amortization |
120 | 103 | 89 | 84 | 97 | |||||||||||||||
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| Adjusted EBITDA |
$ | 555 | $ | 486 | $ | 430 | $ | 385 | $ | 372 | ||||||||||
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| (1) | RIP expense represents only the plan service cost that is recorded within Operating Income. For all periods presented, we were not required to and did not make cash contributions to our RIP. |
| (2) | Represents the impact of acquisition-related adjustments for the fair value of inventory, contingent third-party professional fees, changes in fair value of contingent consideration, deferred compensation and restricted stock expenses. |
| (3) | In 2025, we recorded a gain on sale of a parcel of land at a Mineral Fiber plant. In 2024, we recorded a loss on sale of an undeveloped parcel of land adjacent to our corporate headquarters, which was partially offset by a gain on sale of our idled Mineral Fiber plant in St. Helens, Oregon. |
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AWI 2026 Proxy Statement | A-1 | ||||||
ANNEX A TO ARMSTRONG WORLD INDUSTRIES, INC. 2026 PROXY STATEMENT (CONTINUED)
| Adjusted Free Cash Flow |
||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Net cash provided by operating activities |
$ | 356 | $ | 267 | $ | 234 | ||||||
| Net cash (used for) investing activities |
(4 | ) | (79 | ) | (10 | ) | ||||||
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| Net cash provided by operating and investing activities |
$ | 352 | $ | 188 | $ | 223 | ||||||
| Add: Cash paid for acquisitions, net of cash acquired and investment in unconsolidated affiliate |
14 | 129 | 27 | |||||||||
| Add: Arktura deferred compensation(1) |
1 | 6 | 8 | |||||||||
| Add: Environmental expenses, net |
— | — | 1 | |||||||||
| Add: Contingent consideration in excess of acquisition-date fair value(2) |
1 | — | 5 | |||||||||
| (Less): Proceeds from sales of facilities(3) |
(1 | ) | (24 | ) | — | |||||||
| (Less): Non-recurring cash tax benefit due to 2025 federal tax reform(4) |
(20 | ) | — | — | ||||||||
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| Adjusted Free Cash Flow |
$ | 346 | $ | 298 | $ | 263 | ||||||
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| (1) | Deferred compensation related to acquisitions that were recorded as components of net cash provided by operating activities. |
| (2) | Contingent compensation payments related to the acquisitions of BOK Modern LLC and Turf Design, Inc. |
| (3) | Proceeds related to the sale of Architectural Specialties design center, our Mineral Fiber plant in St. Helens, Oregon and undeveloped land adjacent to our corporate headquarters. |
| (4) | Represents the cash tax benefit from retroactive application of domestic research and development expense deductions for prior years, realized in 2025 as a one-time reduction in cash taxes paid resulting from 2025 federal tax reform. |
| Mineral Fiber Adjusted EBITDA |
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| 2025 | 2024 | 2023 | ||||||||||
| Operating income |
$ | 362 | $ | 323 | $ | 286 | ||||||
| Add: Cost reduction initiatives and other |
— | — | 3 | |||||||||
| Add: Acquisition-related impacts(1) |
1 | — | — | |||||||||
| (Less)/Add: (Gain) loss on sales of fixed assets, net(2) |
(1 | ) | 1 | — | ||||||||
| Add: Environmental expense |
— | 2 | — | |||||||||
| Adjusted Operating Income |
$ | 362 | $ | 325 | $ | 289 | ||||||
| Add: Depreciation and amortization |
87 | 80 | 75 | |||||||||
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| Adjusted EBITDA |
$ | 448 | $ | 406 | $ | 364 | ||||||
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| (1) | Represents the impact of acquisition-related adjustments for changes in fair value of contingent consideration. |
| (2) | In 2025, we recorded a gain on sale of a parcel of land at a Mineral Fiber plant. In 2024, we recorded a loss on sale of an undeveloped parcel of land adjacent to our corporate headquarters, which was partially offset by a gain on sale of our idled Mineral Fiber plant in St. Helens, Oregon. |
| A-2 | AWI 2026 Proxy Statement |
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ANNEX B TO ARMSTRONG WORLD INDUSTRIES, INC. 2026 PROXY STATEMENT
ANNEX B to Armstrong World Industries, Inc. 2026 Proxy Statement
Armstrong World Industries, Inc.
2026 Directors Stock Unit Plan
1. Purpose
The purposes of this 2026 Directors Stock Unit Plan (the “Plan”) are to promote the growth and profitability of Armstrong World Industries, Inc. (the “Company”) by increasing the mutuality of interests between directors and the shareholders of the Company.
The Plan is a successor to the 2016 Directors Stock Unit Plan (the “2016 Plan”). No additional grants will be made under the 2016 Plan after the Effective Date of this Plan. Outstanding grants under the 2016 Plan shall continue in effect according to their terms, consistent with the 2016 Plan.
2. Definitions
The following terms shall have the meanings shown:
2.1 “2016 Plan” shall have the meaning ascribed to the term in Section 1.
2.2 “Affiliate” shall mean, with respect to any Person, any other Person that, at any time that a determination is made hereunder, directly or indirectly, controls, is controlled by, or is under common control with such first Person. For the purpose of this definition, “control” shall mean, as to any Person, the possession, directly or indirectly, of the power to elect or appoint a majority of directors (or other persons acting in similar capacities) of such Person or otherwise to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
2.3 “Beneficial Owner” and “Beneficially Own” shall have the meanings set forth in Rules 13d-3 and 13d-5 promulgated under the Exchange Act or any successor provision.
2.4 “Board” shall mean the Board of Directors of the Company.
2.5 “Change in Control” of the Company shall be deemed to have occurred if the event set forth in any one of the following sections shall have occurred:
(a) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing thirty-five percent (35%) or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of subsection (c) below;
(b) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then
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AWI 2026 Proxy Statement | B-1 | ||||||
ANNEX B TO ARMSTRONG WORLD INDUSTRIES, INC. 2026 PROXY STATEMENT (CONTINUED)
still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended;
(c) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the Company, the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing thirty-five percent (35%) or more of the combined voting power of the Company’s then outstanding securities; or
(d) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent thereof.
Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred (i) by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions or (ii) by virtue of the consummation of a spin-off of any business line or business unit of the Company or a sale of (or similar transaction with respect to) all or substantially all of the assets that comprise a business line or business unit of the Company. The Committee may provide in a grant agreement for another definition of Change in Control, including as necessary to comply with Section 409A of the Code.
2.6 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provisions.
2.7 “Committee” shall mean the Nominating, Governance and Social Responsibility Committee of the Board, or any other committee designated by the Board to administer the Plan.
2.8 “Common Stock” shall mean Common Stock of the Company.
2.9 “Company” shall have the meaning ascribed to the term in Section 1.
2.10 “Deferred Payment Date” shall have the meaning set forth in Section 4.3(c).
2.11 “Dividend Equivalent” shall mean the right to receive an amount equal to any cash dividend that is paid on a share of Common Stock underlying a Unit, including regular cash dividends and extraordinary cash dividends.
2.12 “Effective Date” shall have the meaning ascribed to the term in Section 5.14.
2.13 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
| B-2 | AWI 2026 Proxy Statement |
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ANNEX B TO ARMSTRONG WORLD INDUSTRIES, INC. 2026 PROXY STATEMENT (CONTINUED)
2.14 “Non-Employee Director” shall mean a member of the Board who is not an employee of the Company or its subsidiaries.
2.15 “Participant” shall mean a Non-Employee Director to whom Units are granted under the Plan.
2.16 “Person” shall mean any individual, entity or group, including any “person” or “group” within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision.
2.17 “Plan” shall have the meaning ascribed to the term in Section 1.
2.18 “Separation from Service” shall mean a “separation from service” with the Company and its subsidiaries under Section 409A of the Code.
2.19 “Unit” shall mean a right granted by the Committee pursuant to Section 4.1 to receive one share of Common Stock as of a specified date, which right may be made conditional upon continued service or the occurrence or nonoccurrence of specified events as herein provided.
3. General
3.1 Administration. The Plan may be administered by the Board or, if so delegated, to the Committee. Administration shall be delegable to the extent it does not adversely affect the exemption provided by Rule 16b-3 of the Exchange Act and provided that such delegation complies with applicable law and applicable stock exchange requirements. To the extent that the Board or Committee administers the Plan, references in the Plan to the “Committee” shall be deemed to refer to the Board or the Committee, as applicable.
(a) Committee Membership. Unless the Plan is administered by the Board, each member of the Committee shall at the time of any action under the Plan be a “Non-Employee Director” within the meaning of Rule 16b-3(b) (or any successor rule) promulgated under the Exchange Act, and to the extent any member of the Committee is not a “Non-Employee Director” within the meaning of Rule 16b-3(b) (or any successor rule) promulgated under the Exchange Act, such member shall abstain or recuse himself or herself from such action, provided that, upon such abstention or recusal, the Committee remains composed of two or more “Non-Employee Directors.”
(b) Committee Authority. The Committee shall have the authority in its sole discretion from time to time: (i) to make discretionary grants of Units to eligible directors as provided herein; (ii) to prescribe such terms, conditions, limitations and restrictions, not inconsistent with the Plan, applicable to any grant as deemed appropriate; and (iii) to interpret the Plan, to adopt, amend and rescind rules and regulations relating to the Plan, and to make all other determinations and take all other action necessary or advisable for the implementation and administration of the Plan. A majority of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at any meeting at which a quorum is present, or acts unanimously adopted in writing without the holding of a meeting, shall be the acts of the Committee. All such actions of the Committee shall be final, conclusive and binding upon the Participant and their legal representatives.
(c) Indemnification. No member of the Committee and no employee of the Company shall be liable for any act or failure to act hereunder, except in circumstances involving his or her bad faith or willful misconduct, or for any act or failure to act hereunder by any other member or employee or by any agent to whom duties in connection with the administration of this Plan have been delegated. The Company shall indemnify members of the Committee and any agent of the Committee who is an employee of the Company, a subsidiary or an Affiliate against any and all liabilities or expenses to which they may be subjected by reason of any act or failure to act with respect to their duties on behalf of the Plan, except in circumstances involving such person’s bad faith or willful misconduct.
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AWI 2026 Proxy Statement | B-3 | ||||||
ANNEX B TO ARMSTRONG WORLD INDUSTRIES, INC. 2026 PROXY STATEMENT (CONTINUED)
3.2 Eligibility. A grant of Units under the Plan may be made to any Non-Employee Director of the Company.
3.3 Common Stock Available under the Plan.
(a) Aggregate Limitation. The aggregate number of shares of Common Stock that may be issued in connection with Units granted under the Plan shall not exceed 250,000 shares, subject to adjustments pursuant to Section 5.4.
(b) Individual Participant Limitation. For grants made on or after the Effective Date, the maximum grant date value of shares of Common Stock subject to grants of Units made to any Participant during any one calendar year, taken together with any cash fees earned by such Participant for services rendered during the calendar year, shall not exceed $750,000 in total value. For purposes of this limit, the value of such grants shall be calculated based on the grant date fair value of such grants for financial reporting purposes.
(c) Source of Shares. Shares of Common Stock issued under the Plan may be authorized but unissued shares of Common Stock or reacquired shares of Common Stock, including shares purchased by the Company on the open market for purposes of the Plan.
(d) Share Counting. If and to the extent any Units granted under this Plan are forfeited, terminated, or otherwise are not paid in full, the shares reserved for such grants shall again be available for purposes of the Plan. The provisions of this Section 3.3(d) shall apply only for purposes of determining the aggregate number of shares of Common Stock that may be issued under the Plan, but shall not apply for purposes of determining the maximum number of shares of Common Stock with respect to which grants may be granted to any individual Participant under the Plan.
4. Units
4.1 Grant of Units. Each Non-Employee Director shall be granted Units under the Plan in accordance with the provisions set forth below, contingent upon his or her continued service as a director of the Company:
(a) Annual Grants. Unless the Committee determines otherwise, each year, each Non-Employee Director shall be granted a number of Units based on a formula approved by the Committee. The Committee shall establish appropriate terms and conditions for the annual grants of Units under the Plan.
(b) Pro-Rated Grants. In the case of a Non-Employee Director who is elected to the Board other than at the annual meeting of shareholders, the Committee may pro-rate the amount of the annual grant of Units awarded to such director to correspond to the period of time to be served by the Non-Employee Director between such Non-Employee Director’s election and the next annual meeting of shareholders.
(c) Discretionary Grants. Units may also be granted to eligible Non-Employee Directors at such times, in such amounts, and upon such terms and conditions as the Committee deems appropriate.
4.2 Grant Agreements. The grant of Units shall be evidenced by a written agreement executed by the Company and the Participant, stating the number of Units granted and such other terms and conditions of the grant as the Committee may from time to time determine. Units granted under the Plan shall be made conditional upon the Participant’s acknowledgement, in writing or by acceptance of the Units, that all decisions and determinations of the Committee shall be final and binding on the Participant, his or her successors and any other person having or claiming an interest under such Units.
| B-4 | AWI 2026 Proxy Statement |
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ANNEX B TO ARMSTRONG WORLD INDUSTRIES, INC. 2026 PROXY STATEMENT (CONTINUED)
4.3 Standard Terms and Conditions of Units. Unless otherwise determined by the Committee, each grant of Units shall be made on the following terms and conditions, in addition to such other terms and conditions as the Committee may prescribe:
(a) Vesting. The date on which each Unit shall vest, contingent upon the Participant’s continued service as a director of the Company on such date, shall be the first to occur of:
| (i) | The date of the next annual shareholders meeting; |
| (ii) | The date on which the Participant has a Separation from Service on account of death or total and permanent disability of the Participant (as determined by the Committee); or |
| (iii) | The date of a Change in Control. |
(b) Payment Date. Each vested Unit shall be paid upon vesting of the Units in accordance with Section 4.3(d) below, unless the Participant has made an effective deferral election in accordance with Section 4.3(c) below.
(c) Deferral Elections. A Participant may elect to defer payment of vested Units that will be granted in a designated year, consistent with the requirements of Section 409A of the Code. The deferral election may provide for payment upon the first to occur of (i) the date of the Participant’s Separation from Service for any reason other than cause (as determined by the Committee) or (ii) a Change in Control that meets the requirements of a “a change in the ownership or effective control, or a change in the ownership of a substantial portion of the assets,” of the Company under Section 409A of the Code. The first to occur of (i) or (ii) is referred to as the “Deferred Payment Date.” Any election to defer payment of Units must be made in writing in a form approved by the Committee and must be made prior to January 1 of the calendar year in which the Units are to be granted to the Participant, or as otherwise permitted under Section 409A of the Code. The Company shall create a bookkeeping account for each Participant who defers Units, and shall credit the Participant’s deferred Units to such bookkeeping account.
(d) Time and Form of Payment. Vested Units shall be paid in the form of shares of Common Stock, with one share of Common Stock delivered for each vested Unit, within 60 days after the date of vesting in accordance with Section 4.3(b) or within 60 days after the Deferred Payment Date in accordance with Section 4.3(c), as applicable.
(e) Forfeiture of Units. Upon the effective date of a Separation from Service for cause, as determined by the Committee, all Units that have not been paid, whether or not vested, shall immediately be forfeited to the Company without consideration or further action being required of the Company or the Participant. Upon the effective date of a Separation from Service for any reason other than cause, as determined by the Committee, all unvested Units (other than those that vest in accordance with Section 4.3(a)(ii)) shall immediately be forfeited to the Company without consideration and without further action being required of the Company or the Participant.
(f) Dividend Equivalents. If an award of Units is outstanding as of the record date for determining the shareholders of the Company entitled to receive a cash dividend on its outstanding shares of Common Stock, each Participant shall be entitled to be credited with Dividend Equivalents with respect to the Participant’s outstanding Units. Dividend Equivalents will accrue as of the date of the dividend payment and, if applicable, will be credited to a bookkeeping account established by the Company for the Participant. Dividend Equivalents on unvested Units will accrue and be paid in cash within 60 days after the date of vesting of the underlying Units. Dividend Equivalents on vested Units that have been deferred will be paid in cash on the payment date for the applicable dividend. If and to the extent that the underlying Units are forfeited, all related accrued Dividend Equivalents shall also be forfeited. No interest shall accrue on Dividend Equivalents.
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AWI 2026 Proxy Statement | B-5 | ||||||
ANNEX B TO ARMSTRONG WORLD INDUSTRIES, INC. 2026 PROXY STATEMENT (CONTINUED)
4.4 Optional Terms and Conditions of Units. To the extent not inconsistent with the Plan, the Committee may prescribe such terms and conditions applicable to any grant of Units as it may in its discretion determine, notwithstanding the provisions of Section 4.3. The Committee shall have discretion to accelerate vesting of Units in such circumstances as the Committee deems appropriate.
4.5 Transfer Restriction. No Unit shall be assignable or transferable by another other than by will, or if the Participant dies intestate, by the laws of descent and distribution of the state of domicile at the time of death.
4.6 Continued Service as an Employee. Unless the Committee determines otherwise, if a Participant ceases serving as a director and, immediately thereafter, he or she is employed by the Company or any subsidiary, then such Participant will not be deemed to have ceased service for purposes of the Plan at that time, and his or her continued employment by the Company or any subsidiary will be deemed to be continued service for purposes of the Plan; provided, however, that such service shall cease as of the date of a Separation from Service, and such former director will not be eligible for additional grants of Units under the Plan while he or she is an employee of the Company or a subsidiary.
5. Miscellaneous
5.1 No Right to Continued Service. Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon any Participant the right to continue in the service as a director of the Company or an employee of the Company or any of its subsidiaries, nor shall it affect any right that the Company or its shareholders may have to elect or remove directors or hire or fire any employees.
5.2 Non-Uniform Determinations. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, grants under the Plan, whether or not such persons are similarly situated.
5.3 No Rights as Shareholders. Recipients of grants under the Plan shall have no rights as shareholders of the Company with respect thereto until shares of Common Stock are delivered in payment therefor.
5.4 Adjustments of Stock. Units granted under the Plan and any agreements evidencing such grants, the maximum number of shares of Common Stock that may be issued under the Plan as stated in Section 3.3(a) and the maximum number of shares of Common Stock with respect to which grants may be made to any one Participant as stated in Section 3.3(b) shall be subject to mandatory adjustment or substitution, as determined by the Committee in its sole discretion, as to the number, price or kind of a share of Common Stock or other consideration subject to such Units or as otherwise determined by the Committee to be equitable:
| (i) | in the event of changes in the outstanding Common Stock or in the capital structure of the Company by reason of stock or extraordinary cash dividends, stock splits, reverse stock splits, spinoffs, recapitalization, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the date of grant of any such Units, or |
| (ii) | in the event of any change in applicable laws or any change in circumstances which results in or would result in any substantial dilution or enlargement of the rights granted to, or available for, Participants, or which otherwise warrants equitable adjustment because it interferes with the intended operation of the Plan. |
The adjustments of grants under this Section 5.4 shall include adjustment of shares or other terms and conditions, as appropriate. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.
| B-6 | AWI 2026 Proxy Statement |
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ANNEX B TO ARMSTRONG WORLD INDUSTRIES, INC. 2026 PROXY STATEMENT (CONTINUED)
5.5 Amendment or Termination of the Plan.
(a) Amendment. The Board may from time to time amend the Plan as it may deem advisable; provided, however, that approval of the shareholders of the Company will be required if such approval is required in order to comply with applicable law or stock exchange requirements. An amendment of this Plan will, unless the amendment provides otherwise, be immediately and automatically effective for all outstanding grants. The Committee may amend any outstanding grants under this Plan, provided the grants, as amended, contain only such terms and conditions as would be permitted or required for a new grant under this Plan.
(b) Termination. The Plan shall terminate on the day immediately preceding the tenth (10th) anniversary of the Effective Date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the shareholders. The termination of the Plan shall not impair the power and authority of the Committee with respect to outstanding grants.
5.6 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.
5.7 No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any grant. The Committee shall determine whether (i) cash or other property shall be issued or paid in lieu of fractional shares, (ii) fractional shares shall be rounded, and how they shall be rounded, or (iii) such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
5.8 Company Policies; Holding Requirements. All Units granted under the Plan shall be subject to any applicable clawback or recoupment policies, share trading policies and other policies that may be implemented by the Board from time to time. Unless the Committee determines otherwise, Non-Employee Directors must hold a portion of the net after-tax shares received upon payment of Units under this Plan until the applicable stock ownership guidelines are met, in accordance with the Company’s stock ownership policy applicable to Non-Employee Directors.
5.9 Requirements for Issuance of Shares. No Common Stock shall be issued in connection with any grant hereunder unless and until all legal requirements applicable to the issuance of such Common Stock have been complied with to the satisfaction of the Committee. The Committee shall have the right to condition any grant to any Participant hereunder on such Participant’s undertaking in writing to comply with such restrictions on his or her subsequent disposition of such shares of Common Stock as the Committee shall deem necessary or advisable, and certificates representing such shares may be legended to reflect any such restrictions. Certificates representing shares of Common Stock issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be required by applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon. No Participant shall have any right as a shareholder with respect to Common Stock covered by a grant until shares have been issued to the Participant.
5.10 Compliance with Law. The Plan and the obligations of the Company to issue or transfer shares of Common Stock in accordance with grants under the Plan shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to Section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the
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AWI 2026 Proxy Statement | B-7 | ||||||
ANNEX B TO ARMSTRONG WORLD INDUSTRIES, INC. 2026 PROXY STATEMENT (CONTINUED)
Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. To the extent that any legal requirement of Section 16 of the Exchange Act ceases to be required under Section 16 of the Exchange Act, that Plan provision shall cease to apply. The Committee may revoke any grant under the Plan if it is contrary to law or modify a grant to bring it into compliance with any valid and mandatory government regulation. The Committee may also adopt rules regarding the withholding of taxes on payments to Participants. The Committee may also, in its sole discretion, agree to limit its authority under this Section.
5.11 Grants in Connection with Corporate Transactions and Otherwise. Nothing contained in this Plan shall be construed to (a) limit the right of the Committee to make grants under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or assets of any corporation, firm or association, including grants to persons who become Non-Employee Directors of the Company, or for other proper corporate purposes, or (b) limit the right of the Company to make stock-based awards outside of this Plan. The terms and conditions of the grants hereunder may vary from the terms and conditions required by the Plan and from those of the substituted stock incentives, as determined by the Committee.
5.12 Section 409A. The Plan is intended to comply with the requirements of Section 409A of the Code, to the extent applicable. All grants shall be construed and administered such that the grant either (a) qualifies for an exemption from the requirements of Section 409A of the Code or (b) satisfies the requirements of Section 409A of the Code. If a grant is subject to Section 409A of the Code, (i) distributions shall only be made in a manner and upon an event permitted under Section 409A of the Code, including, if required by Section 409A, the six-month delay applicable to payments to specified employees upon Separation from Service, (ii) payments to be made upon a termination of service shall only be made upon a Separation from Service under Section 409A of the Code, (iii) unless the grant specifies otherwise, each installment payment shall be treated as a separate payment for purposes of Section 409A of the Code, and (iv) in no event shall a Participant, directly or indirectly, designate the calendar year in which a distribution is made except in accordance with Section 409A of the Code.
5.13 Governing Law. This Plan, grants hereunder and actions taken in connection herewith shall be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania (regardless of the law that might otherwise govern under applicable Pennsylvania principles of conflict of laws).
5.14 Effective Date. The Plan shall be effective as of July 1, 2026, subject to shareholder approval of the Plan (the “Effective Date”).
| B-8 | AWI 2026 Proxy Statement |
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ARMSTRONG WORLD INDUSTRIES, INC. JESSICA M. CICALI 2500 COLUMBIA AVENUE LANCASTER, PA 17603 SCAN TO VIEW MATERIALS & VOTE w VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on June 10, 2026. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/AWI2026 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on June 10, 2026. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. The deadline for our receipt of proxies submitted by mail or by express delivery services for voting is 3:00 P.M., local time, on June 10, 2026. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: V92726-P49466 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY ARMSTRONG WORLD INDUSTRIES, INC. For Withhold For All To withhold authority to vote for any individual All All Except nominee(s), mark “For All Except” and write the The Board of Directors recommends you vote FOR the number(s) of the nominee(s) on the line below. following: 1. Election of Directors ! ! ! Nominees: 01) Victor D. Grizzle 06) William H. Osborne 02) Mark A. Hershey 07) Kathleen E. Pitre 03) Richard D. Holder 08) Wayne R. Shurts 04) Kevin P. Holleran 09) Roy W. Templin 05) Barbara L. Loughran The Board of Directors recommends you vote FOR each of proposals 2, 3 and 4. For Against Abstain 2. To ratify the selection of KPMG LLP as our independent registered public accounting firm for 2026. ! ! ! 3. To approve the 2026 Directors Stock Unit Plan. ! ! ! 4. To approve, on an advisory basis, our executive compensation program. ! ! ! NOTE: Such other business as may properly come before the meeting or any adjournment thereof. In their discretion, the proxy holders are authorized to vote such other business as may properly come before the meeting or any postponement or adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report and Notice and Proxy Statement are available at www.proxyvote.com. V92727-P49466 ARMSTRONG WORLD INDUSTRIES, INC. Annual Meeting of Shareholders June 11, 2026 11:00 AM This proxy is solicited by the Board of Directors The undersigned hereby appoints Mark A. Hershey and Victor D. Grizzle as proxies, each with full power of substitution, to represent and vote as designated on the reverse side, all of the Common Shares of Armstrong World Industries, Inc. held of record by the undersigned on April 16, 2026, at the Annual Meeting of Shareholders to be held on June 11, 2026 at 11:00 AM, or any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Continued and to be signed on reverse side