The D. E. Shaw Group Calls for Air Products and Chemicals to Address Longstanding Underperformance
The D. E. Shaw group, a global investment firm with over $60 billion in investment capital, has sent an open letter to the Board of Directors of Air Products and Chemicals, Inc. (NYSE: APD) calling for changes to address longstanding underperformance and governance issues. The letter outlines specific proposals to generate long-term shareholder value, including:
- Accelerating efforts to de-risk large project commitments
- Tying future capital investment to offtake agreements
- Establishing a new capital allocation framework
- Communicating a clear CEO succession plan
- Refreshing the Board with qualified, independent directors
- Restructuring executive compensation
- Forming ad hoc Board committees to oversee these initiatives
The D. E. Shaw group expressed disappointment with the Board's apparent lack of urgency in addressing these concerns and has made their analysis and recommendations public.
Il gruppo D. E. Shaw, una società di investimento globale con oltre 60 miliardi di dollari in capitale investito, ha inviato una lettera aperta al Consiglio di Amministrazione di Air Products and Chemicals, Inc. (NYSE: APD) chiedendo cambiamenti per affrontare problemi di lunga data legati alla scarsa performance e alla governance. La lettera delinea proposte specifiche per generare valore a lungo termine per gli azionisti, tra cui:
- Accelerare gli sforzi per ridurre i rischi legati agli impegni per grandi progetti
- Collegare gli investimenti futuri in capitale agli accordi di offerta
- Stabilire un nuovo framework per l'allocazione del capitale
- Comunicare un chiaro piano di successione per il CEO
- Rinnovare il Consiglio con dirigenti qualificati e indipendenti
- Ristrutturare le retribuzioni dei dirigenti
- Costituire comitati ad hoc del Consiglio per supervisionare queste iniziative
Il gruppo D. E. Shaw ha espresso delusione per la mancanza di urgenza del Consiglio nell'affrontare queste preoccupazioni, rendendo pubbliche le proprie analisi e raccomandazioni.
El grupo D. E. Shaw, una firma de inversión global con más de 60 mil millones de dólares en capital invertido, ha enviado una carta abierta a la Junta Directiva de Air Products and Chemicals, Inc. (NYSE: APD) pidiendo cambios para abordar problemas de larga data relacionados con el bajo rendimiento y la gobernanza. La carta detalla propuestas específicas para generar valor para los accionistas a largo plazo, que incluyen:
- Acelerar los esfuerzos para reducir los riesgos asociados con compromisos de grandes proyectos
- Vincular las futuras inversiones de capital a los contratos de compra
- Establecer un nuevo marco de asignación de capital
- Comunicar un plan claro de sucesión para el CEO
- Renovar la Junta con directores calificados e independientes
- Reestructurar la compensación ejecutiva
- Formar comités ad hoc de la Junta para supervisar estas iniciativas
El grupo D. E. Shaw expresó su decepción por la aparente falta de urgencia de la Junta para abordar estas preocupaciones, haciendo pública su análisis y recomendaciones.
D. E. Shaw 그룹은 600억 달러 이상의 투자 자본을 보유한 글로벌 투자 회사로, Air Products and Chemicals, Inc. (NYSE: APD)의 이사진에게 오픈 레터를 보내 오랜 기간 동안의 저조한 성과 및 거버넌스 문제를 해결할 것을 촉구했습니다. 이 레터는 장기 주주 가치를 창출하기 위한 구체적인 제안 사항을 outline하였습니다. 제안사항은 다음과 같습니다:
- 대규모 프로젝트 투자 리스크 줄이기 위한 노력을 가속화하기
- 앞으로의 자본 투자를 오프테이크 계약에 연결하기
- 새로운 자본 할당 프레임워크 설정하기
- 명확한 CEO 승계 계획 전달하기
- 유자격 독립 이사로 이사회 구성 갱신하기
- 임원 보상 구조 재편하기
- 이러한 이니셔티브를 감독하기 위해 특별 이사회 위원회 구성하기
D. E. Shaw 그룹은 이러한 우려를 해결하는 데 이사회의 긴급성이 부족한 것에 실망감을 표현하며, 자신의 분석 및 권장 사항을 공개하였습니다.
Le groupe D. E. Shaw, une firme d'investissement mondiale disposant de plus de 60 milliards de dollars en capital d'investissement, a envoyé une lettre ouverte au Conseil d'Administration d'Air Products and Chemicals, Inc. (NYSE: APD) appelant à des changements pour résoudre des problèmes de performance et de gouvernance de longue date. La lettre présente des propositions spécifiques pour générer de la valeur à long terme pour les actionnaires, notamment :
- Accélérer les efforts pour réduire les risques liés aux engagements de grands projets
- Lier les futurs investissements en capital aux contrats d'achat
- Établir un nouveau cadre d'allocation de capital
- Communiquer un plan de succession clair pour le CEO
- Rafraîchir le Conseil avec des administrateurs qualifiés et indépendants
- Restructurer les rémunérations des dirigeants
- Former des comités ad hoc du Conseil pour superviser ces initiatives
Le groupe D. E. Shaw a exprimé sa déception face au manque d'urgence apparent du Conseil pour traiter ces préoccupations et a rendu public son analyse et ses recommandations.
Die D. E. Shaw Gruppe, eine globale Investmentfirma mit über 60 Milliarden Dollar an investiertem Kapital, hat einen offenen Brief an den Vorstand von Air Products and Chemicals, Inc. (NYSE: APD) geschickt, in dem Veränderungen gefordert werden, um langjährige Leistungs- und Governance-Probleme zu beheben. Der Brief umriss spezifische Vorschläge zur Generierung langfristiger Aktionärswerte, darunter:
- Bemühungen zur Risikominimierung großer Projektverpflichtungen beschleunigen
- Zukünftige Kapitalinvestitionen an Abnahmeverträge binden
- Ein neues Rahmenwerk für die Kapitalallokation einrichten
- Ein klarer Nachfolgeplan für den CEO kommunizieren
- Den Vorstand mit qualifizierten, unabhängigen Direktoren auffrischen
- Die Vergütung der Führungskräfte umstrukturieren
- Ad-hoc-Vorstands Ausschüsse bilden, um diese Initiativen zu überwachen
Die D. E. Shaw Gruppe äußerte Enttäuschung über das offensichtliche Fehlen von Dringlichkeit seitens des Vorstands bei der Behandlung dieser Anliegen und hat ihre Analyse und Empfehlungen veröffentlicht.
- D. E. Shaw group, a significant shareholder, is actively engaging with APD to improve shareholder value
- Proposed changes aim to address longstanding underperformance and improve governance
- Specific recommendations provided for capital allocation, project de-risking, and board refreshment
- APD has experienced persistent and long-term share price underperformance
- Board members appeared unwilling or unable to engage with D. E. Shaw's analysis and suggestions
- Follow-up meeting to discuss proposals was abruptly cancelled by APD's Lead Independent Director
- Lack of urgency from APD's Board to address shareholder concerns
Insights
This letter from D.E. Shaw to Air Products and Chemicals (APD) is a significant development that could impact the company's future direction and shareholder value. The activist investor's critique focuses on several key areas:
- Longstanding total shareholder return underperformance
- Deficiencies in governance and capital allocation policies
- Need for de-risking large projects and tying future investments to offtake agreements
- Establishing a new capital allocation framework
- Implementing a clear CEO succession plan
- Board refreshment and executive compensation restructuring
These demands from a major shareholder could lead to substantial changes in APD's strategy and operations. If implemented, they may improve capital efficiency and potentially boost shareholder returns. However, the company's apparent reluctance to engage fully with D.E. Shaw suggests potential for a contentious process ahead. Investors should monitor this situation closely, as it could lead to significant shifts in APD's business model and valuation.
D.E. Shaw's letter highlights serious concerns about Air Products and Chemicals' corporate governance practices. The key issues raised include:
- Lack of transparency in CEO succession planning
- Need for board refreshment with relevant industry experience
- Inadequate executive compensation structure
- Insufficient board oversight on critical initiatives
These points suggest potential weaknesses in APD's governance framework that could be impacting its performance and shareholder value. The call for forming ad hoc board committees and bringing in new directors with specific expertise indicates a push for more robust oversight and strategic direction. The board's reported reluctance to engage substantively with these concerns is troubling from a governance perspective. This situation may lead to increased scrutiny from other shareholders and could potentially result in proxy battles or other forms of shareholder activism if not addressed promptly and effectively by APD's leadership.
Reiterates the Need for the Board to Engage in Proper Succession Planning and Insist on a More Rigorous Capital Allocation Policy
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
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
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
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
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SOURCE The D.E. Shaw Group
FAQ
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