Immediately prior to the completion of the IPO, the Company converted to a Delaware
corporation from a limited liability company. The Companys certificate of incorporation provides for two classes of common stock: Class A common stock and Class B common stock. In addition, the certificate of incorporation authorizes
shares of undesignated preferred stock, the rights, preferences and privileges of which may be designated from time to time by the board of directors. The Company is authorized to issue up to 1.1 billion shares of Class A common stock, up
to 1 hundred million shares of Class B common stock and up to 1 million shares of preferred stock, each par value $0.001 per share, in one or more series. The Class A common stock and Class B common stock provide identical
economic rights, but holders of Class B common stock have limited voting rights, specifically that such holders have no right to vote, solely with respect to their shares of Class B common stock, with respect to the election, replacement
or removal of directors. Holders of Class A common stock and Class B common stock are not entitled to preemptive rights. Holders of Class B common stock may convert their shares of Class B common stock into shares of Class A
common stock on a one-for-one basis, in whole or in part, at any time and from time to time at their option. The Companys Class A common stock is traded on
the New York Stock Exchange under the symbol AZEK.
In conjunction with the Corporate Conversion and prior to the closing of
the IPO, the Company effected a unit split of its then-outstanding unit, resulting in an aggregate of 108,162,741 units, including 75,093,778 Class A units and 33,068,963 Class B units. Concurrently with the Corporate Conversion, the units
were converted to an aggregate of 108,162,741 shares of common stock, including 75,093,778 shares of Class A common stock and 33,068,963 shares of Class B common stock. In addition, a class of the Companys former indirect
parents partnership interests referred to as Profits Interests were exchanged for an aggregate of 2,703,243 shares of Class A common stock and 5,532,037 shares of Class A restricted stock, and 3,477,413 shares of
Class A common stock reserved for issuance upon the exercise of stock options.
On September 15, 2020, the Company completed an
offering of 28,750,000 shares of Class A common stock, par value $0.001 per share, including the exercise in full by the underwriters of their option to purchase up to 3,750,000 additional shares of Class A common stock, at a public
offering price of $33.25 per share. The shares were sold by the Selling Stockholders. The Company did not receive any of the proceeds from the sale of the shares by the Selling Stockholders. Immediately subsequent to the closing of the secondary
offering, Class B common stockholders converted 33,068,863 shares of Class B common stock into Class A common stock.
12. STOCK-BASED
COMPENSATION
The Company grants stock-based awards to attract, retain and motivate key employees and directors.
Prior to the completion of the IPO, Profits Interests were issued through an LP Interest Agreement. The Profits Interests were, as part of the
Corporate Conversion, converted into shares of common stock, restricted stock and stock options. The 2020 Omnibus Incentive Compensation Plan (2020 Plan), became effective as of June 11, 2020, the day of effectiveness of the
registration statement filed in connection with the IPO. The 2020 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, and performance-based or other
equity-related awards to the Companys employees and directors. The maximum aggregate number of shares that may be issued under the 2020 Plan is 15,852,319 shares with 4,541,059 shares remaining in the reserve. The total aggregate number of
shares may be adjusted as determined by the Board of Directors.
Stock-based compensation expense for the three months ended
December 31, 2020 and 2019 was $2.9 million and $0.7 million, respectively, recognized in Selling, general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income (Loss). Total income
tax benefit for the three months ended December 31, 2020 and 2019 was $0.5 million and $0.0 million, respectively. As of December 31, 2020, the Company had not yet recognized compensation cost on unvested stock-based awards of
$33.6 million, with a weighted average remaining recognition period of 2.9 years.
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