Change is coming for Air Products and Chemicals after the industrial gas company lost a boardroom fight with the activist investment firm Mantle Ridge.
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Change is coming for Air Products and Chemicals after the industrial gas company lost a boardroom fight with the activist investment firm Mantle Ridge.
At Air Products’ annual meeting earlier today, shareholders voted in three new board members nominated by Mantle Ridge. The vote ousted Air Products CEO Seifi Ghasemi and lead director Ed Monser from their seats on the company’s board—a dramatic rebuke for a profitable, publicly traded company.
The result follows a monthslong campaign by Mantle Ridge that criticized Ghasemi’s strategy for Air Products as too risky and too focused on sustainability. The investor said the approach resulted in profit margins that lag those of competitors.
Mantle Ridge has also been critical of the succession plan for Ghasemi, who is 80 years old and, until now, was the firm’s president and board chair in addition to its CEO. The plan had been for Ghasemi himself to select a successor, who would wait in a subordinate role until Ghasemi died or was otherwise unable to serve.
In recent weeks, Air Products began to backpedal. Six days before the shareholders meeting, the company issued a statement saying it would name a new president by the end of March. That person would take over as CEO within 3 months of joining the company, and Ghasemi would retire from the board in a similar time frame. Air Products had previously promised to scale back its capital investment plans, most notably by canceling a major green hydrogen plant in Texas and pausing a sustainable aviation fuel project in California.
It wasn’t enough. Shareholders voted to replace Ghasemi, Monser, and board member Casey Cogut with the Mantle Ridge nominees Paul Hilal, Dennis Reilley, and Andrew Evans. Hilal is the CEO and founder of Mantle Ridge. Board members Lisa A. Davis, Tonit M. Calaway, Jessica Trocchi Graziano, and Wayne T. Smith retained their seats, and Air Products nominees Alfred Stern and Bhavesh V. “Bob” Patel will replace David Ho and Matthew Paull, who both declined to run for reelection. One Mantle Ridge nominee, Tracy McKibben, did not win a seat.
The fight got personal at times. Air Products said Mantle Ridge’s nominees had “stale or inferior experience.” It accused Reilley, CEO of the former industrial gas firm Praxair, of mishandling confidential corporate information; it portrayed Hilal’s nomination choices as cronyism.
Mantle Ridge has been similarly abrasive, calling Ghasemi’s judgment “deficient,” characterizing the board as subservient, and accusing the incumbents of overstating the firm’s financial performance.
In a press release announcing the results, Air Products says the new board will meet promptly to name a chair and start selecting a new CEO. “We appreciate the engagement and dialogue we have had with all our shareholders throughout this process and reiterate our commitment to delivering meaningful, long-term value,” it says.
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