ISS Recommends Air Products Shareholders Support Mantle Ridge's Director Nominees for 2025
In a pivotal moment for Air Products and Chemicals, Inc. (NYSE: APD), the Institutional Shareholder Services (ISS), a leading proxy advisory firm, has voiced its strong recommendation for shareholders to support the election of Andrew Evans, Paul Hilal, and Dennis Reilley—nominees backed by Mantle Ridge LP—for positions on the company’s Board of Directors during its upcoming Annual Meeting scheduled for January 23, 2025. This bold endorsement from ISS is grounded in a critical assessment of the incumbent Board's performance, emphasizing severe deficiencies in oversight and succession planning.
The report highlighted the failures of the existing Board under the leadership of Chairman and CEO Seifi Ghasemi, particularly criticizing its inability to maintain a credible succession plan. As ISS noted, the current Board has allowed Ghasemi to consolidate his power, which has become a significant concern for investors seeking stability and a coherent strategy amidst declining performance.
With a stake of approximately $1.3 billion in Air Products, Mantle Ridge argues that restructuring the Board is essential for initiating a legitimate CEO succession process and enhancing long-term shareholder value. The ISS's findings echo a sentiment shared by other proxy advisory firms, including Glass Lewis, who also advocate for immediate changes to the Board's composition. This consortium of supporters urges shareholders to reject the existing nominees—Ghasemi, Charles Cogut, and Edward L. Monser—while backing the Mantle Ridge nominees.
ISS's analysis outlines serious concerns regarding Air Products’ strategic decisions over the past several years, particularly the company's venture into large-scale projects that have reportedly led to underperformance relative to its peers. The advisory firm's recommendations stem from an evaluation of various risk factors linked to the company's projected growth areas, like the significant expansions in clean hydrogen and coal gasification, which have seen budget overruns and delays, raising questions about the viability of these projects and their associated returns.
Furthermore, the report indicates that the current Board's lack of decisive actions to address these challenges is likely to undermine investor confidence. ISS pointed out that the Board has abdicated its responsibility by allowing Ghasemi to dictate the terms of any potential succession, subsequently leading to a scenario where the company is now grappling with an aging CEO and no solid plan in place for future leadership transitions.
In its call to action, Mantle Ridge emphasizes the extensive qualifications of its nominees—experienced industry veterans who could effectively steer the company out of its current turmoil and into a more profitable direction. The urgency for a reformed Board composition is further compounded by a need to reassess the company’s strategic direction, which has been marked by overly ambitious expansions beyond its traditional business model.
The ISS's backdrop analysis provides a list of weaknesses in Air Products' recent performance metrics, underscoring how these have contributed to diminished investor trust and a plummeting share price, which many attribute to the lack of effective oversight and management. As noted, the strategic pivots taken have resulted not only in lower investor returns but have also cast a shadow on the management’s credibility.
Both ISS and Mantle Ridge assert that the incorporation of fresh perspectives into the Board will be vital in addressing these manifold challenges, ensuring that the company prioritizes value creation for shareholders over the perpetuation of outdated strategies. The process of nominating and electing independent directors is seen as critical in restoring confidence in the company’s governance framework, particularly as it relates to future strategic endeavors.
The upcoming vote on Mantle Ridge’s nominee slate represents a watershed moment for Air Products. It signifies a potential shift toward improved governance practices and a commitment to transparency and accountability within the company. As Mantle Ridge continues to rally investor support for their case, the forthcoming shareholder meeting is poised to be a major turning point that may redefine the trajectory of Air Products and substantially influence its operational strategies in years to come.
The report highlighted the failures of the existing Board under the leadership of Chairman and CEO Seifi Ghasemi, particularly criticizing its inability to maintain a credible succession plan. As ISS noted, the current Board has allowed Ghasemi to consolidate his power, which has become a significant concern for investors seeking stability and a coherent strategy amidst declining performance.
With a stake of approximately $1.3 billion in Air Products, Mantle Ridge argues that restructuring the Board is essential for initiating a legitimate CEO succession process and enhancing long-term shareholder value. The ISS's findings echo a sentiment shared by other proxy advisory firms, including Glass Lewis, who also advocate for immediate changes to the Board's composition. This consortium of supporters urges shareholders to reject the existing nominees—Ghasemi, Charles Cogut, and Edward L. Monser—while backing the Mantle Ridge nominees.
ISS's analysis outlines serious concerns regarding Air Products’ strategic decisions over the past several years, particularly the company's venture into large-scale projects that have reportedly led to underperformance relative to its peers. The advisory firm's recommendations stem from an evaluation of various risk factors linked to the company's projected growth areas, like the significant expansions in clean hydrogen and coal gasification, which have seen budget overruns and delays, raising questions about the viability of these projects and their associated returns.
Furthermore, the report indicates that the current Board's lack of decisive actions to address these challenges is likely to undermine investor confidence. ISS pointed out that the Board has abdicated its responsibility by allowing Ghasemi to dictate the terms of any potential succession, subsequently leading to a scenario where the company is now grappling with an aging CEO and no solid plan in place for future leadership transitions.
In its call to action, Mantle Ridge emphasizes the extensive qualifications of its nominees—experienced industry veterans who could effectively steer the company out of its current turmoil and into a more profitable direction. The urgency for a reformed Board composition is further compounded by a need to reassess the company’s strategic direction, which has been marked by overly ambitious expansions beyond its traditional business model.
The ISS's backdrop analysis provides a list of weaknesses in Air Products' recent performance metrics, underscoring how these have contributed to diminished investor trust and a plummeting share price, which many attribute to the lack of effective oversight and management. As noted, the strategic pivots taken have resulted not only in lower investor returns but have also cast a shadow on the management’s credibility.
Both ISS and Mantle Ridge assert that the incorporation of fresh perspectives into the Board will be vital in addressing these manifold challenges, ensuring that the company prioritizes value creation for shareholders over the perpetuation of outdated strategies. The process of nominating and electing independent directors is seen as critical in restoring confidence in the company’s governance framework, particularly as it relates to future strategic endeavors.
The upcoming vote on Mantle Ridge’s nominee slate represents a watershed moment for Air Products. It signifies a potential shift toward improved governance practices and a commitment to transparency and accountability within the company. As Mantle Ridge continues to rally investor support for their case, the forthcoming shareholder meeting is poised to be a major turning point that may redefine the trajectory of Air Products and substantially influence its operational strategies in years to come.
Topics Financial Services & Investing）
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