Reiterates the Need for the Board to Engage in
Proper Succession Planning and Insist on a More Rigorous Capital
Allocation Policy
NEW
YORK, Oct. 10, 2024 /PRNewswire/ -- The D.
E. Shaw group, a global investment and technology development firm
with more than $60 billion in
investment capital and a history of working with companies to help
build long-term value, today sent an open letter to the Board of
Directors of Air Products and Chemicals, Inc. (NYSE: APD) (the
"Company" or "APD") calling for changes aimed at addressing the
longstanding underperformance in its shares and deficiencies in its
governance and capital allocation policies. Funds advised by D. E.
Shaw & Co., L.P. are shareholders of APD and currently hold a
significant economic position in the Company.
The initial set of communications, including a portion of the
presentation D.E. Shaw made to the APD Board on October 2nd, is available HERE.
The full text of today's open letter to the Board is as
follows:
Board of Directors
Air Products and Chemicals, Inc.
1940 Air Products Boulevard
Allentown, PA 18106-5500
We are writing to you on behalf of certain investment funds
advised by D. E. Shaw & Co., L.P., a member of the D. E. Shaw
group. The D. E. Shaw group is a global investment and technology
development firm with more than $60
billion in investment capital and a history of working with
companies to help build long-term value. Funds advised by D. E.
Shaw & Co., L.P. are shareholders of Air Products and
Chemicals, Inc. (the "Company" or "APD") and currently hold a
significant economic position in the Company.
We initially reached out to you privately over a month ago in
the hopes of having a constructive dialogue aimed at addressing the
Company's longstanding total shareholder return underperformance as
well as deficiencies in the Company's governance and capital
allocation policies. At our initial meeting with the Board of
Directors and the Company's CEO on October
2nd, we presented our extensive analysis as well
as specific proposals to generate long-term shareholder value,
including that the Company should:
- Accelerate efforts to de-risk existing large project
commitments by signing offtake agreements at reasonable return
hurdles;
- Publicly commit to tying future capital investment to offtake
agreements, consistent with well-established practice in the
industrial gas sector;
- Establish and publicly announce a new capital allocation
framework whereby Air Products' CapEx levels will not exceed the
mid-teens as a percentage of revenue beyond fiscal year 2026;
- Communicate a clear, credible, and transparent CEO succession
plan;
- Refresh the Board with highly qualified, independent directors
with relevant experience leading capital-intensive businesses and
managing succession processes;
- Restructure executive compensation to improve alignment with
strategy and performance; and
- Form one or more ad hoc Board committees to focus on and
oversee these critical initiatives on behalf of shareholders.
Despite having received our materials days in advance of the
meeting, many of the Board members present seemed unwilling or
unable to engage with the substance of our analysis and suggested
actions. Instead, the Company's Lead Independent Director,
Ed Monser, indicated that a
substantive response would occur at a subsequent meeting. That
follow-up meeting was abruptly cancelled by the Company's Lead
Independent Director.
Given the apparent lack of urgency on the part of the Company's
Board to engage in meaningful dialogue or take steps to address Air
Products' persistent and long-term share price underperformance, we
are today compelled to make public our analysis and recommendations
for change.
We remain open to engaging with the Company in a productive and
constructive manner to advance the changes we believe are necessary
to improve the Company's business, strategy, and governance.
Best Regards,
Edwin Jager
Managing Director
D. E. Shaw & Co., L.P.
Michael O'Mary
Managing Director
D. E. Shaw & Co., L.P.
About the D. E. Shaw Group
The D. E. Shaw group is a
global investment and technology development firm with more than
$60 billion in investment capital as
of June 1, 2024, and offices in
North America, Europe, and Asia. Since our founding in 1988, our firm has
earned a reputation for successful investing based on innovation,
careful risk management, and the quality and depth of our staff. We
have a significant presence in the world's capital markets,
investing in a wide range of companies and financial instruments in
both developed and developing economies. For more information,
please visit www.deshaw.com.
This letter reflects the opinions of D. E. Shaw & Co.,
L.P. ("DESCO LP") on behalf of certain investment funds managed or
advised by it that currently beneficially own, or otherwise have an
economic interest in, shares of Air Products and Chemicals, Inc.
(the "Company" or "APD"). This letter is for informational purposes
only and does not constitute investment advice or convey an offer
or solicitation of any type with respect to any securities or other
financial products. The views expressed in this letter are
expressed as of the date hereof and are based on publicly available
information and DESCO LP's analyses. This letter contains
statements reflecting DESCO LP's opinions and beliefs with respect
to the Company and its business based on DESCO LP's research,
analysis, and experience; all such statements are based on DESCO
LP's opinion and belief, whether or not those statements are
expressly so qualified. DESCO LP acknowledges that the Company may
possess information that could lead the Company to disagree with
DESCO LP's views and/or analyses. Nothing contained in this letter
may be relied upon as a guarantee, promise, assurance, or
representation as to future events. The investment funds managed or
advised by DESCO LP are in the business of trading (i.e., buying
and selling) securities, and it is expected that they will from
time to time engage in transactions that result in changes to their
beneficial and/or economic interest in the Company.
Media Contact
Prosek Partners
Brian Schaffer / Kiki O'Keeffe
Pro-DESCO@prosek.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/the-d-e-shaw-group-calls-for-air-products-and-chemicals-to-address-longstanding-underperformance-302273053.html
SOURCE The D.E. Shaw Group