Institutional Shareholder Services "ISS" Finds
Incumbent Board Has Failed to "Properly Oversee" a "Credible
Succession Plan" and States that Reconstitution of the Board with a
"New Chairman" Would "Allow Fresh Board Assessment of Board
Leadership and the Careful Deliberation on Optimal Timing for a CEO
Transition"
ISS Recommends Shareholders Vote
"WITHHOLD" Against Seifi Ghasemi, Charles Cogut and Edward
L. Monser – Company Nominees Opposed by Mantle Ridge –
Further Reinforcing the Need for Change
ISS Finds Company's Framing of Mr.
Eduardo Menezes' Qualifications
"Disingenuous at Best"
ISS Recommends Shareholders Vote "FOR"
Mantle Ridge Nominees Andrew Evans, Paul Hilal, And Dennis Reilley
and States that Tracy McKibben is
"Well Qualified to Serve as a Member of the APD Board"
Mantle Ridge Reiterates Belief that the Root
Cause of Air Products' Current Issues is Mr. Ghasemi's
Entrenchment, Dominion Over the Company, and Subordination and
Comprehensive Failure of the Current Board to Function as a
Governing Body
Mantle Ridge Believes a Reconstituted Board –
Refreshed with Four Shareholder Nominees – Would Be Best Positioned
to Lead a Bona-Fide CEO Succession Process and Create Substantial
Long-Term Value for Shareholders
Mantle Ridge Urges Shareholders to Vote the
BLUE Proxy Card "FOR" All Four of its Superbly
Qualified Director Nominees – Andrew
Evans, Paul Hilal, Tracy
McKibben, and Dennis Reilley
– and "WITHHOLD" on the Company Nominees Charles Cogut,
Lisa A. Davis, Seifollah "Seifi"
Ghasemi, and Edward L.
Monser
NEW
YORK, Jan. 13, 2025 /PRNewswire/ -- Mantle
Ridge LP, which, together with its affiliates (collectively,
"Mantle Ridge"), beneficially owns approximately $1.3 billion of the outstanding common shares of
Air Products and Chemicals, Inc. (NYSE: APD) ("Air Products" or the
"Company"), today announced that Institutional Shareholder Services
Inc. ("ISS"), a leading independent proxy advisory firm, has
recommended that Air Products shareholders vote "FOR" the election
of Mantle Ridge nominees Andrew
Evans, Paul Hilal, and Dennis
Reilley to the Company's Board of Directors (the "Board") at
its 2025 Annual Meeting of Shareholders, scheduled for January 23, 2025. ISS also noted that
Tracy McKibben is "well qualified to
serve as a member of the APD board."
ISS also joined proxy advisory firm Glass Lewis & Co. in
recommending change is needed on the Air Products Board and that
shareholders vote "WITHHOLD" on the Company nominees Charles Cogut, Seifollah "Seifi" Ghasemi, and
Edward L. Monser.
Paul Hilal, Founder and CEO of Mantle Ridge, commented, "We are
pleased that ISS recognizes the clear need for change at Air
Products, and has recommended that shareholders vote for the
election of three of our highly qualified independent nominees to
the Company's Board, and vote to remove Messrs. Ghasemi, Monser,
and Cogut. We believe a shareholder-led reconstitution of the Board
is necessary, and positions the refreshed Board to properly
reconsider allowing Mr. Ghasemi's dominion over the Company to
extend indefinitely. It also will finally allow the Board to
conduct a bona fide CEO succession process that no longer
excludes Mr. Eduardo Menezes – the
exceptional executive widely hailed as a part of the 'Dream Team'
to lead Air Products. A reconstituted Board could also more
objectively revisit the Company's strategic and operational issues
and challenged projects."
With respect to Air Products' material underperformance for
shareholders over the last five years, poor track record of capital
allocation, and poor execution of and disclosures regarding
challenged projects, ISS stated*:
- "[S]ince the company began implementing its capital deployment
strategy, namely expanding APD's scope to coal gasification, as
well as committing to build clean hydrogen mega projects around the
world, return on capital has declined and APD TSR has significantly
underperformed its two closest peers and the broader market. These
projects introduced risks into a historically predictable business,
leading investors to question whether the promised returns would
adequately compensate them for the uncertainty and potential
challenges of these projects."
- "Prior to public reports of Mantle Ridge's position in the
company, APD's P/E multiple had fallen well below those of its
peers, reflecting investor skepticism about the strategy."
- "APD's decision to pursue mega projects beyond the scope of its
traditional business has resulted in deterioration of key metrics
and investor sentiment, driving TSR underperformance relative to
peers."
- "The company's TSR has underperformed that of its peers in
every measurable period since the company began implementing its
articulated capital deployment strategy, as well over the entirety
of Ghasemi tenure, despite Ghasemi's successful turnaround of the
business upon his initial appointment. Although most of the clean
hydrogen projects are still several years away from beginning
operations and may ultimately prove successful, the budget
increases and delays, coupled with the decline in ROCE, have
damaged management and the board's credibility."
- "The company is continuing to assure investors that it will
deliver its promised rate of return. In the meantime, World Energy,
which was initially guided to 2025 start, had a budget increase
from $2.0 to $2.5 billion, experienced delays in receiving
permits and is currently on hold. Louisiana Blue has had a budget
increase from $4.5 billion to
$7.0 billion, no off-take agreement,
and is also delayed from the original guidance. NEOM initially did
not have an off-take agreement, introduced commodity exposure and
operational and technological risk, and significant capital
commitments."
- "It is worth noting that tracking the progress of each project
is not trivial for investors. Despite the company's frequent
appearances at investor conferences, direct questions are often met
with vague answers, or assertions that the company cannot disclose
information due to competitive reasons or confidentiality
agreements with their partners. Cancellations and project delays
are not proactively announced, as was the case with Yankuang,
Indonesia, and World Energy, and
certain unusual features of the structure are only disclosed after
they begin affecting financials[.]"
With respect to the current Board's succession planning
failures and entrenched Chairman & CEO Seifi Ghasemi, ISS stated:
- "Confoundingly, the board appears to have ceded control of
deciding on Ghasemi's successor to Ghasemi himself, and extended an
evergreen contract to Ghasemi shortly after purportedly beginning
an extensive search for a qualified CEO successor. As a result of
these failures to properly oversee the succession process, the
company now has an 80-year-old CEO and no credible succession plan
for investors to evaluate."
- "It appears that the board's independent members lost control,
if they ever had it, of the non-emergency CEO succession planning
process…"
- "[T]he independent members of the board do not appear to have
credibly discharged their responsibility to manage the CEO
succession process."
- "Although the board states that it has a short list of five
candidates for the newly created position of company president, who
would be expected to eventually take over as CEO, once again,
Ghasemi's statements that he has decided to bring an executive who
'can be my successor if something unexpected were to happen to me'
suggest that the board is not fully in control of the process, or
of Ghasemi's public characterizations of it."
- "The board's stated requirement that the president candidates
have public company CEO experience also raises questions about the
viability of this approach. Would a successful public company CEO
really agree to be president under a CEO who has an evergreen
contract, appears to have significant influence over the board, and
has publicly indicated that he would like to stay as long as
possible?"
- "[Mr. Ghasemi's] removal from the board would allow for a fresh
board assessment of board leadership and the careful deliberation
on optimal timing for a CEO transition."
- "Lead Independent Director Monser is one of the longest-tenured
directors on the board and does not appear to have been a
sufficiently strong counterbalance to Ghasemi. Similarly, director
Cogut has been on the board for nine years, and worked at the law
firm that represented Rockwood when Ghasemi was CEO there. The
replacement of these two directors would further facilitate the
reconstituted board's ability to appoint a new independent chairman
and accomplish the goals outlined above."
With respect to the qualifications of Mantle Ridge's superior
director nominees and proposed CEO candidate, Eduardo Menezes, ISS stated:
- "There are concerns with oversight of strategy and succession
planning that will require substantial change to rectify.
Specifically, a reconstituted board would need to focus on
de-risking the existing project commitments, evaluating
underperformance, rebuilding credibility with investors, and
developing and executing an effective succession plan. The
dissident's slate includes candidates that have skills and
experience to help the board address these issues."
- "Under the leadership of a new chairman, the reconstituted
board would be better able to get succession planning back on
track, including an impartial assessment of the CEO successor
candidates currently identified by the board, as well as the
dissident's candidate, Menezes, whose industry knowledge was
apparent during engagement with ISS."
- "The current board's dismissal of Menezes as a candidate
appears premature and shortsighted, as his experience in multiple
executive roles at Praxair and Linde would be valuable and relevant
at APD, and the attempt to frame Menezes as unqualified due to the
fact that he was 'passed over' for the CEO role at Linde, a
substantially larger company, seems disingenuous at best."
- "There is no question that the board would benefit from
Reilley's expertise, built during his multi-decade experience at
industrial chemical companies and as CEO of Praxair. He is the
best-suited candidate from the dissident slate to tackle the
critical task of evaluating and de-risking existing projects."
- "The company's repeated attempts to publicly discredit Reilley
reflect poorly on the board's judgement."
- "The board would also benefit from dissident nominee Evans'
experience as CFO and CEO in a capital-intensive industry. Along
with his public company board experience, these skills would be
particularly useful in assessing the company's current strategic
direction and focus on large-scale projects."
- "Finally, Hilal's perspective as a shareholder, his prior
involvement with the company, and his financial expertise would
bring a strong independent voice to the board deliberations."
- "The fourth dissident nominee, McKibben, seems likewise well
qualified to serve as a member of the APD board."
*Mantle Ridge has neither sought nor obtained consent from
ISS to use previously published information in this press
release.
To Enhance Air Products' Performance and
Create the Long-Term Value that Shareholders Deserve, Mantle Ridge
Urges Shareholders to Vote the BLUE Proxy Card "FOR" Mantle Ridge's
Four Highly Qualified Director Nominees – Andrew Evans, Paul Hilal, Tracy McKibben, and Dennis Reilley – and "WITHHOLD" on the Company
Nominees Charles Cogut, Lisa A.
Davis, Seifollah "Seifi" Ghasemi and Edward L. Monser.
Additional information regarding Mantle Ridge's highly qualified
nominees, as well as voting instructions, may be found at
www.RefreshingAirProducts.com.
About Mantle Ridge
Founded in 2016, Mantle Ridge LP is an engaged, long-term
owner-steward that works closely and constructively with company
boards to create durable long-term value for all stakeholders. None
of Mantle Ridge's affiliated entities is a hedge fund or other
investment vehicle with a structurally short-term incentive.
Mantle Ridge engages with the expectation of maintaining an
ownership position over the very long-term. Mantle Ridge has raised
separate, single-investment, five-year special purpose vehicles to
support its previous engagements with companies including CSX
Corporation, Aramark, and Dollar Tree. For more information,
visit https://www.mantleridge.com/.
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Investor Contact
D.F. King & Co., Inc.
Edward McCarthy
Tel: (212) 493-6952
Media Contacts
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Gasthalter / Nathaniel
Garnick
Gasthalter & Co.
Tel: (212) 257-4170
Email: RefreshingAPD@gasthalter.com
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