Hedge fund D.E. Shaw has voiced “continued disappointment” with major oil and gas company Air Products’ failure to manage an effective CEO succession process.
Following on from an initial letter sent last October, the global investment firm has said the Air Products Board is failing at its core responsibilities. D.E. Shaw, a $1bn Air Products shareholder, previously urged the company to de-risk large projects through offtake agreements and cap annual CAPEX at $2-2.5bn post-2026.
Read more:Air Products faces investor pressure over its board, CAPEX and CEO succession
In a new open letter, D.E. Shaw stressed that holding a CEO accountable for their performance and ensuring a clear succession plan are among a board’s most critical responsibilities – responsibilities it claims Air Products has failed to fulfil.
Despite urging the board to disclose its approach and timeline, no updates were provided by Air Products according to D.E. Shaw, leaving shareholders inadequately informed.
CEO, Seifi Ghasemi, 80, extended his leadership term until September 2028 in 2024, with an automatic annual renewal to a five-year term, unless terminated by either party.
Ghasemi has “seemingly unfettered decision-making authority”, the letter wrote, which has led to the company’s “high-risk capital allocation strategy and longstanding share underperformance.”
The letter added, “For years, Ghasemi appears to have gone virtually unchecked as he normalised the practice of committing to multi-billion projects without securing offtake partners – an uncharacteristically risky strategy for an industrial gas company – leading to billions of shareholder value destruction in the process.”
Ghasemi announced last November that Air Products would withdraw from its proposed $4.5bn 200-tonne-per-day hydrogen project in Texas, US, that was anticipated to begin operations in 2027.
Read more: Air Products exits $4.5bn Texan green hydrogen project as investor pressure rises
Speaking on a Q4 2024 earnings call, Ghasemi explained that Air Products does not take a final investment decision (FID) until it secures an “anchor customer” as it has “loaded 75% of our existing facilities.”
Following this, Air Products responded to investor pressure by defending its own clean hydrogen vision, issuing a statement to stakeholders prior to its 2025 annual meeting to bolster support for its strategy on growing its core gas business while accelerating its clean hydrogen drive.
Read more: Air Products defends clean hydrogen vision amid investor push for overhaul
“We believe this strategy will maximise value for shareholders as the global economy continues to adopt lower carbon sources of energy,” the Air Products statement said in response to challenges on its CAPEX on clean energy projects.
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