Earlier this year, the hard-fought proxy contest at Air Products ended with activist investor Mantle Ridge unseating the company’s legendary CEO, Seifi Ghasemi. The outcome was striking—not just for the leadership change, but for the way it unfolded. Ghasemi, age 82, himself became CEO a decade ago after Mantle Ridge founder Paul Hilal supported him in an earlier proxy contest. This year, a campaign of thoughtful critiques focused on presenting an alternative strategic vision, differing capital allocation priorities and addressing succession concerns resonated with the shareholder base, which voted resoundingly to jettison Ghasemi in favor of a new slate supported by Mantle Ridge.
As the 2025 proxy season reaches its peak, boards and management teams would do well to heed these three takeaways from the Air Products drama:
1. Pick your battles carefully and know when to fight—not all activists are alike. Many high-profile activist campaigns have been unsuccessful in recent years— including battles at Disney, Salesforce, Norfolk Southern—suggesting a broader pattern of once-feared activist investors de-activating. However, boards should remember that all activist campaigns are not equally vulnerable to defeat.
In this proxy fight, the board might have been well-served to remember that the widely admired value investor Hilal has never lost a fight, boasting an enviable track record of outperformance across virtually all his portfolio companies, most notably CSX and Canadian Pacific. Consistent with his regular approach, Hilal sought to engage Air Products constructively, only resorting to the proxy fight as last resort when rebuffed by the board.
The board may also have benefitted from heeding the philosophy that it is never too late to settle. In contrast to other activists who ran macho campaigns filled with ad hominem slander with little understanding of the underlying operating businesses that alienate shareholders, Mantle Ridge presented a genuine strategic case for change that resonated with shareholders. Yet, the company stubbornly chose to dig in despite ample warning signs.
2. Fit your strategy to your shareholder base and listen to their capital allocation priorities. Ghasemi’s triumphant record of decades- long success cemented his status as a genuine business legend revered by his peers, enabling his bold bet of investing massively into clean hydrogen, which he believed to be the future of the company.
This strategy may prove prescient, but it plainly outpaced the appetite of the shareholder base, who were nervous and frustrated as peer companies soared past Air Products in relative performance. Perhaps the board could have used a reminder that unlike other companies where managements are insulated from shareholder blowback on big futuristic bets thanks to dual-class shares or founder control, Air Products’ shareholder base consists of passive and retail investors anxious about this capital allocation course. Some of these shareholders might have been won over if there were more proactive engagement and communication with them. Instead, Mantle Ridge came in with a thoughtful, savvy alternative strategic roadmap based on peer company Linde’s roadmap toward proven success, and disgruntled shareholders flocked toward this alternative.
3. Communicate with shareholders and address their concerns proactively as a matter of good governance. For boards, there is no such thing as too much proactive, preemptive communication with major shareholders. For example, on the highly contested issue of succession given Ghasemi’s age, Air Products ran a succession process that, whether rightly or wrongly, was perceived by many shareholders as too little, too late. The company waited until merely days before the votes were due to lay out a firm succession timetable. One wonders whether any activist would have waged a proxy fight had the same announcement been made weeks, if not months, sooner.
Activists are not all the same in style, impact or timeframe. Investor confidence in management’s good intentions, even when anchored by collaboration with an activist in the past, requires continued constructive nurturing—as Air Products learned the hard way.
