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Lehigh Valley's Air Products faces battle for leadership in upcoming shareholder vote

Air-Products-DSF-002[1].JPG
Donna S. Fisher
/
For LehighValleyNews.com
Air Products, based in Upper Macungie Township, has faced criticism from an investment firm called Mantle Ridge with $1.3 billion worth of shares.

UPPER MACUNGIE TWP., Pa. — Air Products and Chemicals Inc. is facing criticism from a large stakeholder ahead of a shareholder vote that could decide the company's direction.

Air Products, based in Upper Macungie Township, is a major worldwide producer of industrial gases, clean energy products and equipment.

The investment firm Mantle Ridge, which owns $1.3 billion of Air Products' stock, is pushing for new people in leadership roles at the company.

Among them is Mantle Ridge founder and Chief Executive Officer Paul Hilal.

Mantle Ridge previously bought large shares in companies such as Dollar Tree, and made changes to improve company performance.

Mantle Ridge has created a website that outlines its problems with Air Products and asks for votes to support its perspective.

Mantle Ridge alleges that Air Products' stock "underperforms industry peers," such as competitors Linde and Air Liquide.

Edward Menezes, one of Mantle Ridge's nominations for Air Products' leadership, is a former executive at Linde.

Criticisms from Mantle Ridge

Air Products' stock price as of Wednesday afternoon had increased 23.34% in the past five years, while Linde's and Air Liquide's stocks have risen 100% and 40%, respectively.

"Over the past five years, Air Products has significantly underperformed... due to its flawed strategy, inappropriately high-risk capital allocation program, and poor execution."
Mantle Ridge's "Refreshing Air Products" website

"Over the past five years, Air Products has significantly underperformed its industry peers, the S&P 500, and its own potential due to its flawed strategy, inappropriately high-risk capital allocation program, and poor execution," a passage from Mantle Ridge's "Refreshing Air Products" website reads.

Another passage says "deficiencies" in Air Products Chief Executive Officer Seifi Ghasemi's "judgment, coupled with his failure to maintain execution discipline, have elevated Air Products’ risk profile to unacceptable levels, generated inadequate returns, and destroyed substantial shareholder value."

Mantle Ridge also criticizes Air Products' investments focus on what it calls "speculative ventures" such as clean hydrogen and renewable energy initiatives.

Mantle Ridge says that detracts from Air Products' core gas industrial gas operations.

Response from Air Products

In response to Mantle Ridge's public campaign, Air Products posted a statement on its website.

"We believe Mantle Ridge’s nominees have been selected not because their experience is superior to or more relevant than our existing nominees, but rather because of pre-existing relationships with Mr. Hilal or status as loyal Hilal supporters in order to enact his short-term agenda," the statement reads, in-part.

Sen. Bob Casey and Air Products CEO Seifi Ghasemi
Julian Abraham
/
LehighValleyNews.com
Sen. Bob Casey and Air Products CEO Seifi Ghasemi watch a promotional video for the company during an event in June of 2023.

Air Products also said its CEO succession plan already was in place long before Mantle Ridge began questioning its leadership.

It sets a timeline for announcing a new president no later than March 31.

Ghasemi has led Air Products since 2014.

The company also defended its performance under Ghasemi's leadership. The statement from Air Products cites a $44 billion increase in total shareholder value during Ghasemi's leadership.

It also accused Mantle Ridge of attempts to "manipulate our strong financial results, inaccurately portraying Air Products' appropriate and industry-standard financial reporting."

Air Products' statement ends by encouraging shareholders — which in many cases includes employees — to "discard" any proxy cards received from Mantle Ridge.