Air Products to refresh board following D.E. Shaw pressure

Air Products will propose two new changes to its Board of Directors at the company’s 2025 annual shareholders meeting, following hedge fund D.E. Shaw publicly calling for an overhaul of the board last month (October 2024).

The industrial gas giant will nominate Bhavesh V. “Bob” Patel and Alfred Stern for election, both of whom have extensive experience growing industrial gas companies and capitalising on clean energy and sustainability opportunities.

D.E. Shaw had publicly stated that Air Products should refresh its board with “highly qualified, independent directors with relevant experience leading capital-intensive businesses and managing succession processes.”

It appears that Air Products has listened to the call with its new elections, but with the majority of the board still remaining in their positions it could still be questioned by companies such as D.E. Shaw as to whether the effort is enough.

Seifi Ghasemi, Chairman, President, and CEO of Air Products, said he welcomes Patel and Stern’s extensive business experience and proven leadership as Air Products delivers on its growth strategy of optimising and growing its core industrial gases business while advancing the energy transition through clean hydrogen.

Alongside these additions, David H.Y. Ho and Matthew H. Paull will not seek re-election to the Board at the 2025 annual meeting. With these changes, the board will consist of nine directors, six of whom have been appointed in the last five years—signalling a deliberate shift in leadership dynamics.

Edward Monser, Air Products’ Lead Director, said, “With their addition, the Board will continue to be well-positioned to oversee the company through its next phase of growth and execute on a successful leadership succession.”

In July 2024, Air Products introduced a new senior management board to execute its two-pillar growth strategy: expanding its industrial gas business, including related technologies, and becoming a leader in clean hydrogen.

 However, no changes to the Board of Directors were made at that time, leaving some investors questioning the company’s direction.

Read more: Air Products names new senior management board

Despite its focus on clean hydrogen, Air Products has faced scrutiny over recent project decisions. Earlier this month, the company announced its exit from a proposed $4.5bn, 200-tonne-per-day green hydrogen project in North Texas.

The project, announced in partnership with AES Corporation in 2022, was expected to begin operations in 2027. But, during the company’s Q4 2024 earnings call, Ghasemi stated that Air Products had “stopped” its involvement due to the absence of an “anchor customer,” emphasising a cautious approach to final investment decisions (FIDs) given its already heavily loaded facilities.

D.E. Shaw’s case

Aside from scrutinising the Air Products board, D.E. Shaw has called on the industrial gas company to address its “longstanding underperformance” in its stock performance and “deficiencies” in governance and capital allocation policies.

Read more: D.E. Shaw calls for leadership overhaul at Air Products citing ‘longstanding underperformance’

In an open letter to Air Products’ Board of Directors on October 10, D.E. Shaw detailed its concerns after a month of seeking constructive dialogue with the company.

In both the letter and an October 2 meeting with the Air Products Board and CEO, D.E. Shaw presented seven actions aimed at boosting long-term shareholder value.

Specifically, Air Products was advised to accelerate efforts to de-risk large project commitments by securing offtake agreements. D.E. Shaw also urged the company to publicly commit to linking future capital investments to such agreements and adopt a capital allocation framework limiting CapEx to mid-teen percentages of revenue after fiscal year 2026.

D.E. Shaw further called for a clear, credible, and transparent CEO succession plan to be communicated.