#United States #New York #Air Products #CEO Succession #D. E. Shaw

D. E. Shaw Group's Open Letter to Air Products' Board

On January 3, 2025, the D. E. Shaw Group, a reputable global investment and technology firm managing over $65 billion, sent an open letter to the Board of Directors of Air Products and Chemicals, Inc. The firm’s dissatisfaction centers on the board's inadequate handling of the CEO succession process, which they argue is undermining shareholder value. The letter outlines concerns regarding CEO Seifi Ghasemi’s unchecked authority, which they believe has led to risky business decisions negatively impacting the company’s performance.

Key Issues Highlighted

In their communication, D. E. Shaw emphasized the board's failure to take responsibility for the CEO's performance and the crucial task of succession planning. They pointed out a trend of value erosion linked to Ghasemi's decision-making approach, particularly involving large investments made without securing necessary partnerships, a risky practice for an industrial gas company. This lack of foresight has caused billions in losses for shareholders.

The D. E. Shaw Group noted that despite the board's governance guidelines mandating proactive succession planning, there has been little action taken, leaving stakeholders concerned about Ghasemi's long-term leadership. They highlighted that Ghasemi himself claimed control over the succession process, undermining the board's role.

Discontent Among Shareholders

Shareholders like Vanguard, State Street, BlackRock, and J.P. Morgan have expressed their lack of confidence in the board's currently perceived passive oversight regarding leadership transitions and have criticized their failure to provide adequate information on succession planning. This scrutiny highlights that the board’s responsibilities have not been met appropriately, raising alarm bells about future stability and performance.

Urging Change

D. E. Shaw has made it clear that they intend to advocate for changes to the composition of the board at the upcoming annual meeting in 2025, including pushing for Ghasemi's retirement. They believe such changes are essential for a successful transition and better future management directions. They argue that the current leadership dynamics expose shareholders to the continued risk of mismanagement and resentment.

In conclusion, D. E. Shaw's open letter starkly points out the urgent need for effective governance at Air Products. By demanding better oversight and accountability, the Group aims to enhance shareholder confidence while steering the company towards a more promising trajectory for the future. Their proactive stance reflects a commitment to sound corporate governance, making their intentions clear as they look towards fostering significant changes at upcoming shareholder meetings.