DEFA14A: Air Products Board Defends Succession Plan Amidst Mantle Ridge Activist Campaign

Air Products' board is actively defending its succession planning process and the quality of its director nominees against challenges from activist investor Mantle Ridge, while highlighting the company's strong financial performance.

Summary

• Air Products' Board of Directors has issued a statement reiterating its deliberate succession planning process and defending the qualifications of its board candidates.
• The board emphasizes that its CEO succession plan was announced long before Mantle Ridge's involvement and includes the addition of two highly qualified directors at the 2025 Annual Meeting of Shareholders.
• A CEO succession plan is in place to ensure a smooth transition between Mr. Ghasemi and his successor, with an announcement of a new President and related timeline for CEO succession expected no later than March 31, 2025.
• The company is refuting Mantle Ridge's attempts to manipulate Air Products' strong financial results, asserting that its profitability metrics are in line with industry standards.
• Air Products highlights its industry-leading margins and the creation of $44 billion of shareholder value since 2014, with an 11% Adjusted EPS CAGR.
• The Board urges shareholders to vote FOR ONLY Air Products nominees and discard any blue proxy card received from Mantle Ridge.
• Air Products had fiscal 2024 sales of $12.1 billion from operations in approximately 50 countries and has a current market capitalization of over $65 billion.

Sentiment

Score: 6

Explanation: The document conveys a mixed sentiment. While it highlights strong financial performance and defends the company's succession plan, it also acknowledges the challenges posed by the activist investor Mantle Ridge. The tone is defensive but confident.

Positives

• Air Products emphasizes its deliberate and rigorous CEO succession plan.
• The company highlights its strong financial performance, including industry-leading margins.
• Air Products has created significant shareholder value, with $44 billion added since 2014.
• The company's adjusted EPS CAGR has been 11% since 2014.
• Air Products had fiscal 2024 sales of $12.1 billion and a market capitalization of over $65 billion.

Negatives

• Air Products is facing an activist campaign from Mantle Ridge, which is attempting to influence the company's board and strategy.
• Mantle Ridge is attempting to impugn Mr. Ghasemi's reputation with misinformation.
• The company is actively refuting Mantle Ridge's claims and defending its financial reporting practices.

Risks

• The ongoing activist campaign by Mantle Ridge could create uncertainty and potentially disrupt the company's strategic direction.
• The company faces the risk of potential board changes if Mantle Ridge's nominees are elected.
• There is a risk that Mantle Ridge's actions could negatively impact shareholder value.

Future Outlook

The company is focused on executing its two-pillar growth strategy and delivering superior shareholder value. Air Products is committed to a smooth CEO transition and will announce a new President and related timeline for CEO succession no later than March 31, 2025.

Management Comments

• Air Products is executing on a rigorous CEO succession plan, announced long before Mantle Ridge and O.E. Shaw started advocating for succession.
• The Board has clearly articulated a CEO succession plan to ensure a smooth transition between Mr. Ghasemi and his successor.
• None of Mantle Ridge's nominees are as qualified as Air Products' nominees, and the addition of any one of them could be to the detriment of our shareholders.
• Mantle Ridge continuously attempts to manipulate our strong financial results, inaccurately portraying Air Products' appropriate and industry standard financial reporting.

Industry Context

Air Products, as a leading industrial gases company, operates in a sector where succession planning and shareholder value are critical. The activist campaign by Mantle Ridge reflects a broader trend of increased shareholder activism in the industrial sector, where investors seek to influence company strategy and governance.

Comparison to Industry Standards

• Air Products claims its profitability metrics are in line with business peers and enable comparison of historical performance on a like-for-like basis.
• The company asserts that it has industry-leading margins, but does not provide specific comparisons to companies such as Linde, L'Air Liquide, or Messer.
• Air Products' market capitalization of over $65 billion places it among the largest industrial gas companies globally, but specific comparisons to competitors' market capitalization are not provided.

Stakeholder Impact

• Shareholders are directly impacted by the proxy fight and the outcome of the vote on director nominees.
• Employees may be affected by potential changes in leadership and strategy.
• Customers and suppliers could experience indirect impacts depending on the direction the company takes.

Next Steps

• Shareholders are urged to vote FOR ONLY Air Products nominees on the white proxy card.
• The company will announce a new President and related timeline for CEO succession no later than March 31, 2025.
• The 2025 Annual Meeting of Shareholders will be held on January 23, 2025.

Key Dates

Keywords

Air Products, Mantle Ridge, succession planning, board of directors, shareholder value, activist investor, proxy fight, financial performance, industrial gases