DEFA14A: Air Products Board Defends Succession Plan Amidst Mantle Ridge Activism

Air Products' Board of Directors defends its CEO succession plan and board nominees against challenges from Mantle Ridge, highlighting strong financial performance and shareholder value creation.

Summary

• Air Products' Board of Directors has issued a statement addressing concerns raised by Mantle Ridge regarding the company's CEO succession plan and board nominees.
• The Board asserts that it is executing a rigorous CEO succession plan, with an announcement of a new President and related timeline for CEO succession expected no later than March 31, 2025.
• Air Products defends its board nominees as highly qualified and suggests that Mantle Ridge's nominees are motivated by pre-existing relationships and a short-term agenda.
• The company highlights its strong financial results, including industry-leading margins and $44 billion of shareholder value created since 2014, with an 11% Adjusted EPS CAGR.
• Air Products urges shareholders to vote for only Air Products nominees and discard any blue proxy card received from Mantle Ridge.

Sentiment

Score: 7

Explanation: The document conveys a confident tone, defending the company's strategy and performance while addressing activist investor concerns. The emphasis on strong financial results and future opportunities contributes to a positive outlook, though the need to address activist pressure tempers the overall sentiment.

Positives

• Air Products is actively managing its CEO succession plan.
• The company emphasizes its strong financial performance and shareholder value creation.
• Air Products defends the qualifications of its board nominees.
• The company has industry leading margins.
• Air Products has created $44 billion of shareholder value since 2014.

Negatives

• Mantle Ridge is challenging Air Products' CEO succession plan and board nominees.
• Mantle Ridge is attempting to impugn Mr. Ghasemi's reputation with misinformation.
• There are concerns about Mantle Ridge nominee, Dennis Reilley, reportedly sharing confidential board materials with a neighbor while serving on three public company boards.

Risks

• The ongoing dispute with Mantle Ridge could distract management and create uncertainty.
• The addition of Mantle Ridge's nominees could be to the detriment of Air Products' shareholders.
• Failure to execute the CEO succession plan effectively could negatively impact the company's performance.

Future Outlook

The company is focused on serving energy, environmental, and emerging markets and generating a cleaner future, supporting the transition to lowand zero-carbon energy.

Management Comments

• The Board has clearly articulated a CEO succession plan to ensure a smooth transition between Mr. Ghasemi and his successor.
• We believe Mantle Ridge's nominees have been selected, not because their experience is superior to or more relevant than our existing nominees, but rather because of pre-existing relationships with Mr. Hilal or status as loyal Hilal supporters in order to enact his short-term agenda.

Industry Context

Air Products operates in the industrial gases industry, serving energy, environmental, and emerging markets. The company is positioning itself as a leader in clean hydrogen projects, supporting the transition to lowand zero-carbon energy.

Comparison to Industry Standards

• Air Products presents profitability metrics in-line with business peers and in a way that enables comparison of our historical performance on a like-for-like basis.
• The company claims to have industry leading margins based on Adjusted EBITDA margin, a non-GAAP financial measure.

Stakeholder Impact

• Shareholders are urged to vote for Air Products' nominees, impacting the composition of the Board of Directors.
• The CEO succession plan will impact the future leadership of the company.
• The company's focus on clean hydrogen projects will impact the environment and the energy industry.

Next Steps

• Shareholders are urged to vote for Air Products' nominees.
• The company will announce a new President and related timeline for CEO succession no later than March 31, 2025.

Key Dates

Keywords

Air Products, Mantle Ridge, CEO succession, board nominees, shareholder value, financial performance, industrial gases