Global investment firm DE Shaw has expressed its “continued disappointment” with Air Products’ failure to manage an effective CEO succession process, stating that the board is failing at its core responsibilities.
An open letter from DE Shaw says that holding a CEO accountable for their performance and planning for their succession are among the most important responsibilities of any board, which it says Air Products is not doing.
Seifi Ghasemi, 80, extended his term at the top of the business until September 2028 last year. At the time, it was said that, from 30th September 2024 and each year thereafter, the contract term will automatically renew to be a five-year term unless either party terminates the agreement.
Read more: Air Products extends Ghasemi’s term as Chairman, President, and CEO
Despite his longevity at the industrial gas giant, however, DE Shaw says that Ghasemi has “seemingly unfettered decision-making authority” that has led to the company’s “high-risk capital allocation strategy and longstanding share underperformance.”
It continued, “For years, Ghasemi appears to have gone virtually unchecked as he normalised the practice of committing to multi-billion-dollar projects without securing offtake partners – an uncharacteristically risky strategy for an industrial gas company – leading to billions of shareholder value destruction in the process.”
Back in November, Ghasemi announced Air Products’ withdrawal from its proposed $4.5bn 200-tonne-per-day green hydrogen project in North Texas, US, that was expected to begin operations in 2027.
Originally announced in partnership with AES Corporation in 2022, Ghasemi told investors that the industrial gas major had “stopped” its involvement in the project.
The CEO explained that Air Products does not take FID until it secures an “anchor customer” as it has “loaded 75% of our existing facilities.”
The project never reached a final investment decision. Prior to announcing its withdrawal, Air Products said it would not make a final investment decision on the plant until US subsidy rules were finalised.
Read more: Air Products stalls $4bn project to wait on final call about green hydrogen
Read more: US eases 45V hydrogen tax credit rules
Air Products’ corporate governance guidelines, too, list succession first among the Board’s functions, specifying that the Board is responsible for “selecting, evaluating, compensating, and planning for the succession of the CEO.
This is the second letter from DE Shaw, following an 10th October call to address stock underperformance, governance deficiencies, and the need for a clear CEO succession plan.
Read more: DE Shaw calls for leadership overhaul at Air Products citing ‘longstanding underperformance’
DE Shaw has a meeting with members of the Air Products board in October 2024 and delivered materials to the board prior to the meeting to express its concerns.
DE Shaw reportedly holds a $1bn share in Air Products.
