Air Products Says Ghasemi Will Retire From Its Board; New CEO to Start This Year and CEO and Chairman Roles to be Separated In the Future

— Jeff Ward, Lehigh Valley News Briefs

Air Products said today it will have a new president by March 31, and that person will become chief executive officer within three months of joining the company.

Current Chairman, Chief Executive and President Seifi Ghasemi, 80, will retire from the company’s board, and in the future, the chairman and CEO roles will be split up.

Separating the two top jobs at the company is viewed as good corporate governance, adding checks on the chief executive by having an independent director as chairman.

Air Products’ moves come after pressure from activist investor Mantle Ridge, which has been attacking the company’s strategy and leadership for months. Mantle Ridge is based in New York City, and owns about 2% of the shares (NYSE:APD) in the maker of industrial gases.

Other investors and firms that advise mutual funds and other institutional investors have come out in favor of Mantle Ridge’s stance. Until Air Products put out its statement today, the Upper Macungie Township-based company had not budged.

Air Products makes hydrogen and helium, among many other things. Ghasemi has been steering it to invest in “green energy,” particularly hydrogen, as part of what he calls a global transition to a clean-energy economy.

Mantle Ridge has challenged that direction and use of funds. Here is a look at some of the background. There have been a lot of statements, but it all comes down to money.

Mantle Ridge says Air Products could be trading at $425. Ghasemi said almost a year ago that the market has not recognized the company’s value, but that it would in time.

At 3:13 p.m. today, the shares were trading at $315.30, up $3.24.

The two sides have been engaged in a proxy battle, seeking votes of shareholders for their slates of nominees for the company’s Board of Directors. Air Products’ annual meeting of shareholders will be Jan. 23, and it will be Ghasemi’s last as leader of the company, based on today’s statement.

— Disclosure: I own shares in Air Products, and I made sure that Seifi Ghasemi was one of my four picks for the board. I have listened to a lot of conference calls over the years, and Ghasemi is informative, sometimes blunt and always worth listening to.

Here is a cut-and-paste version of the statement:

The Board Expects the Following: After the Announcement of a New President No Later Than March 31st, the CEO Transition Will Be Completed Within Three Months of Joining the Company. Additionally, the Roles of Chair and CEO Will Be Separated, a New Independent Chair Appointed, and Mr. Ghasemi Will Retire from the Board

Air Products’ Highly Qualified Board Is Significantly Refreshed with Outside Perspectives

Our Independent Directors Are Running a Rigorous and Orderly CEO Succession Process

Achieved Strong Preliminary Fiscal Q1 2025 Earnings Results (GAAP EPS of $2.77; adjusted EPS of $2.86)¹ Which Reinforce that the Company is Committed to Creating Superior Shareholder Value

LEHIGH VALLEY, Pa., Jan. 17, 2025 /PRNewswire/ — Air Products’ (NYSE:APD) Board of Directors today issued the following open letter to shareholders in connection with its upcoming 2025 Annual Meeting of Shareholders (the “Annual Meeting”), which will be held at 8:30 a.m. U.S. Eastern Time on January 23, 2025. The letter is available at voteairproducts.com, and the full text follows: 

The full text of the letter to shareholders follows:

Dear Fellow Shareholder,

This year’s Annual Meeting is only days away and we urge you to protect the value of your investment in Air Products by voting “FOR” ONLY Air Products’ nominees on the WHITE proxy card.

While Air Products successfully executes a long-term strategy for growth and value creation, Mantle Ridge continues to run a disruptive and misguided campaign focused on impeding our significant progress in favor of its own short-term goals. Support for Mantle Ridge and its insufficiently qualified and highly conflicted nominees would bring about value destruction and jeopardize Air Products’ prospects.

The Board’s Independent Directors Are Executing a Thoughtful, Controlled CEO Succession Plan

√	The Board has clearly articulated a CEO succession plan to ensure a smooth transition between Mr. Ghasemi and his successor. We are committed to providing an announcement of a new President no later than March 31, 2025, and expect the transition to the new CEO to occur within three months of the individual joining the Company.
√	The Board also expects to split the Chair and CEO roles and appoint a new independent Chair, and Mr. Ghasemi will retire from the Board.
×	Eduardo Menezes, Mantle Ridge’s designated candidate to be Air Products’ next CEO, does not bring any public company CEO or board experience. He does not meet the basic criteria that the Board has outlined for Air Products’ CEO role, for which the Board has already identified other, superior candidates through its rigorous succession process designed to identify the best candidate. He was rather more likely selected by Mantle Ridge due to his availability and the fact his tenure at Praxair overlapped with Dennis Reilley’s. Notably, Mantle Ridge is only advocating for Mr. Menezes’ appointment to the CEO role if he is paired with Mr. Reilley, and Mr. Menezes was not nominated by Mantle Ridge as a director candidate, demonstrating it does not trust him to stand alone.

Your Purpose-Built Board is Meaningfully Refreshed. The Independent Directors, including Two New Nominees, Have no Pre-Conceived Notions and a Proven Track Record as Advocates of Long-Term Shareholder Value Creation

√	With the appointments of our two new nominees, Bhavesh V. (“Bob”) Patel and Alfred Stern, six out of nine Directors will have been elected in the last five years.
√	The Board has already selected the most qualified individuals to deliver long-term shareholder value. Identified through a rigorous process with the assistance of a leading executive search firm, Mr. Patel and Mr. Stern will approach their duties as directors with a critical lens, reviewing all aspects of the business and helping ensure the CEO transition process is carried out smoothly and expeditiously.
×	Mantle Ridge has put forth nominees whose experience and qualifications pale in comparison to the Air Products nominees’ extensive and deep expertise in relevant industries. We believe Mantle Ridge’s nominees have been selected not because of any superior or more relevant experience than our existing nominees, but rather because of pre-existing relationships with Mr. Hilal or due to their penchant for acting as activist nominees.

Your Board and Management Team Are Delivering on its Commitment to Create Superior Shareholder Value

√	Preliminary fiscal 2025 first quarter GAAP EPS of $2.77 and preliminary fiscal 2025 first quarter adjusted EPS of $2.86 exceeds the top end of our fiscal 2025 first quarter adjusted EPS guidance[1] and analyst consensus.
×	In contrast, Mantle Ridge has not provided ANY plan. If Mantle Ridge is successful, Air Products’ hydrogen strategy could be derailed, leading to long-term value destruction, and its attempts to secure long-term offtakes with major international customers would be hindered by an inexperienced, underqualified CEO and weakened board. We urge you not to jeopardize your investment.

Mantle Ridge’s Four Nominees Have Stale or Inferior Experience and Lack Any Go-Forward Plan, Including Dennis Reilley, Whose Nomination Calls into Question Mantle Ridge’s Judgement in Putting Him Forward

×	According to official court filings and news reports, a purported friend of Mr. Reilley, John Davidson, testified under oath that, as a board director, Mr. Reilley leaked confidential information from three separate public companies, including information about a merger before it was publicly announced. Further, in an SEC enforcement action against a second individual, John Special, he claimed to have received material, non-public information from the same director, including related to the aforementioned merger before it was publicly announced.
×	Mantle Ridge would have you believe that these individuals lied in Federal court, risking perjury charges.
×	If true, and regardless of Mr. Reilley’s intentions or account of events, we view Mr. Reilley’s failure to protect confidential information as reckless, misaligned with the fundamental duties of a director and wholly disqualifying from his candidacy to any public company board.
×	Mr. Reilley has not held an executive or operating position in over 18 years in an industry that has undergone tremendous change during that time, thereby rendering any “experience” that he has as stale.

In casting your vote, please keep in mind the facts presented above and consider the serious risks of letting Mantle Ridge replace high-quality directors from our Board with handpicked, underqualified nominees who will attempt to install an ill-prepared CEO candidate who would upend our two-pillar strategy and potentially cost shareholders billions of dollars. DO NOT LET ACTIVIST PAUL HILAL OBTAIN CONTROL OF YOUR COMPANY TO ENABLE HIM TO PURSUE HIS OWN, MISGUIDED PERSONAL GOALS.

Protect your investment and your Company by voting the WHITE proxy card “FOR” ONLY Air Products’ full slate of director nominees. Please discard any blue proxy card you may receive from Mantle Ridge.

Thank you for your continued support.

Sincerely,

The Air Products Board of Directors

We strongly urge that you vote your shares “FOR” ONLY Air Products’ Nominees. Please visit voteairproducts.com for additional information on voting and discard any blue proxy card you may receive from Mantle Ridge. All Air Products shareholders of record as of the close of business on November 27, 2024 will be entitled to vote at the Annual Meeting.

YOUR VOTE IS IMPORTANT. Whether or not you plan to virtually attend the 2025 Annual Meeting, please take a few minutes now to vote by Internet or by telephone by following the instructions on the WHITE proxy card. Regardless of the number of Company shares you own, your presence by proxy is helpful to establish a quorum and your vote is important.

OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” ONLY AIR PRODUCTS’ NINE NOMINEES AND PROPOSALS ON THE WHITE PROXY CARD.