DEFA14A: Air Products Urges Shareholders to Support Board Nominees, Dismisses ISS Opinion

Air Products is urging shareholders to vote for its board nominees at the upcoming annual meeting and is strongly disagreeing with the ISS opinion, warning of potential negative impacts if shareholders follow the ISS recommendation.

Summary

• Air Products has sent a letter to shareholders urging them to support the company's board nominees at the upcoming 2025 Annual Meeting on January 23rd.
• The company is in disagreement with the ISS opinion and warns that following their voting recommendation could negatively impact the company and shareholder investments.
• Air Products highlights its two-pillar growth strategy and CEO transition plan, contrasting it with Mantle Ridge's lack of a clear plan.
• The company emphasizes the experience and integrity of its board nominees, including new nominees Bhavesh V. (Bob) Patel and Alfred Stern, who bring international and public company CEO experience.
• Air Products criticizes Mantle Ridge's nominees, citing stale operating experience, lack of industry experience, and involvement in projects with significant delays and cost overruns.
• The company warns that allowing Mantle Ridge to unseat key directors could create confusion and put long-term performance at risk, potentially costing shareholders billions of dollars.
• Air Products encourages shareholders to vote FOR ONLY Air Products' nominees on the WHITE proxy card and discard any blue proxy card from Mantle Ridge.
• Air Products had fiscal 2024 sales of $12.1 billion and has a market capitalization of about $65 billion.

Sentiment

Score: 6

Explanation: The document presents a defensive stance against an activist investor, highlighting the company's strengths and criticizing the opposition. While optimistic about the company's strategy, the presence of a proxy fight introduces uncertainty.

Positives

• Air Products is executing a two-pillar growth strategy.
• The company is undergoing a smooth and orderly CEO transition.
• Air Products is making progress on its clean hydrogen strategy, including the NEOM project in Saudi Arabia and the Darrow project in Louisiana.
• The company's board includes experienced directors with relevant experience.
• New board nominees bring international and public company CEO experience.

Negatives

• Air Products is facing a proxy fight with Mantle Ridge.
• Mantle Ridge is threatening to fire the CEO and leadership team.
• Mantle Ridge's nominees are criticized for lacking relevant experience and having a track record of value destruction.
• The company warns that Mantle Ridge's actions could create confusion and put long-term performance at risk.

Risks

• The proxy fight with Mantle Ridge could lead to instability and disruption.
• Mantle Ridge's proposed changes could negatively impact the company's strategy and performance.
• Unwinding capital projects could cost shareholders billions of dollars.
• Failure to execute the clean hydrogen strategy could limit growth opportunities.

Future Outlook

Air Products aims to continue its two-pillar growth strategy and execute its clean hydrogen projects, including the NEOM project in Saudi Arabia and the Darrow project in Louisiana.

Management Comments

• The Air Products Board of Directors believes that supporting the Air Products nominees will ensure stability, growth, and long-term value creation.
• The Board is conducting a smooth, orderly and deliberate CEO transition.
• The Board believes that Mantle Ridge's nominees lack the necessary experience and could create significant instability.

Industry Context

The announcement comes amid increasing investor activism and scrutiny of corporate governance practices. The focus on clean hydrogen projects reflects the broader industry trend towards sustainable energy solutions.

Comparison to Industry Standards

• Air Products competes with companies like Linde, Air Liquide, and Messer in the industrial gases sector.
• The company's focus on clean hydrogen projects aligns with industry efforts to transition to lowand zero-carbon energy.
• The proxy fight with Mantle Ridge is similar to other activist campaigns targeting large corporations.

Stakeholder Impact

• The outcome of the proxy fight will impact shareholders, employees, and customers.
• A successful challenge by Mantle Ridge could lead to changes in strategy and leadership.
• The company's clean hydrogen projects have the potential to benefit the environment and communities.

Next Steps

• Shareholders will vote on the board nominees at the Annual Meeting on January 23, 2025.
• The company will name a President by March 31 and provide a definitive CEO succession timeline.

Key Dates

Keywords

Air Products, Shareholders, Board Nominees, Mantle Ridge, Proxy Fight, CEO Transition, Clean Hydrogen, Annual Meeting, Corporate Governance