By Svea Herbst-Bayliss
NEW YORK (Reuters) -Proxy advisory firm Glass Lewis on Thursday recommended that Air Products and Chemicals investors pick all four of Mantle Ridge’s board candidates, lending support to the activist investor in the first major governance challenge of the year.
Mantle Ridge says the industrial gases company must draw up a succession plan for its octogenarian CEO Seifi Ghasemi, who has been at the helm for a decade, reallocate its capital and scale back on risky projects.
It said the four candidates, including hedge fund founder Paul Hilal, would bring more order to the board.
Investors will vote on January 23 unless the parties reach a compromise before then.
Glass Lewis wrote that Mantle Ridge has “put forward a very credible set of candidates who appear well suited to the challenge at hand.” It also says the nomination follows years of “poor performance, fueled by a wave of expensive, low-visibility strategic expeditions that markedly deviate from the company’s core risk profile.”
The company said it strongly disagreed with Glass Lewis’ “sloppily constructed” vision, noting that Mantle Ridge’s nominees would create a “destabilizing amount of change” and remove relevant expertise from the board.
“We believe that following Glass Lewis would be value destructive to shareholders,” the company said in a statement.
This is the second time that Hilal from Mantle Ridge has come into contact with Air Products. Ten years ago, Pershing helped install Square Capital Management, where Hilal was a partner, Ghasemi to the company’s board of directors before he was elevated to CEO.
Hilal indicated early in the current fight that he was working with former top executives at Air Products’ rival Linde, including Eduardo Menezes, who the hedge fund manager identified as a possible replacement for Ghasemi. Menezes is not a proposed director candidate.
The company said last year it would replace two executives who are retiring this year and one of the newcomers would be Bhavesh “Bob” Patel, a former CEO of chemical companies WR Grace and LyondellBasell. Patel has been mentioned as a possible replacement for the current CEO of Air Products.
Glass Lewis is the first proxy advisory firm to issue its recommendation. Investors are now waiting for the report from Institutional Shareholder Services, Glass Lewis’ bigger rival.
(Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler and Sonali Paul)
