Air Products sees three new directors nominated by hedge fund D.E. Shaw, with a $1 billion stake in the company.

• Air Products and Chemical's board has been nominated by multi-strategy hedge fund D.E. Shaw to have three new directors, and the fund is advocating for the company to revert to its past profitable business methods.
• D.E. Shaw believes that Air Products CEO Seifi Ghasemi, one of the oldest S&P 500 CEOs, has not been adequately managed in terms of succession planning and executive compensation by the company's board.
• D.E. Shaw's stake in the company was revealed just days after Mantle Ridge disclosed its $1 billion stake.

On Thursday, D.E. Shaw, a multi-strategy hedge fund, disclosed that it had accumulated a roughly $1 billion investment in Air Products and Chemicals, the second activist investment in the $71 billion company.

The hedge fund D.E. Shaw, one of the largest in the world, stated in a public letter that its attempts to privately communicate with the company were mostly unsuccessful and characterized by a "lack of urgency."

An investor plans to nominate three directors to the company's board, according to sources. The potential challenge would come from another activist fund, Paul Hilal's Mantle Ridge, which also has a similarly sized stake and seeks a clear succession plan for Air Products' CEO, 80-year-old Seifi Ghasemi.

D.E. Shaw criticized Air Products' approach to large-scale infrastructure projects, specifically its use of offtake agreements. The company has invested billions of dollars in hydrogen projects without any guaranteed cash flow.

Air Products' underperformance compared to its historic average and peers is partly due to its departure from industry norms, as perceived by D.E. Shaw.

Despite the success of competitors like Linde in pursuing less-risky projects with offtake agreements, CEO Ghasemi has defended his strategy.

D.E. Shaw, like Mantle Ridge and other analysts, has also pointed out the lack of succession planning and the generous contract given to CEO Ghasemi. In its letters and presentation, the activist raised concerns about whether the company's board was effectively managing the succession process.

Air Products declined to comment on either activist engagement.