By Svea Herbst-Bayliss
NEW YORK (Reuters) -Proxy advisory firm Glass Lewis (JO:LEWJ) on Thursday recommended that Air Products and Chemicals (NYSE:APD) investors elect all four of Mantle Ridge's board candidates, lending support to the activist investor in the year's first big board challenge.
Mantle Ridge argues the industrial gases company needs to lay out a succession plan for its octogenarian CEO Seifi Ghasemi, who has served at the helm for a decade, allocate its capital differently and scale back on risky projects.
It said its four candidates, including the hedge fund's founder, Paul Hilal, would ensure greater order on the board.
Investors will vote on Jan. 23 unless the sides reach a compromise before then.
Glass Lewis wrote that Mantle Ridge "advanced a highly credible slate of candidates who appear well suited to the challenge at hand." It also said the nomination follows years of "poor performance fueled by a spate of high-cost, low visibility strategic expeditions pointedly departing from the company's core risk profile."
The company said it strongly disagreed with Glass Lewis' "sloppily-compiled" view, noting that Mantle Ridge's nominees would create a "destabilizing amount of change" and remove relevant expertise from the board.
"We believe following Glass Lewis would be value-destructive for shareholders," the company said in a statement.
This is the second time Mantle Ridge's Hilal has tangled with Air Products. A decade ago Pershing Square Capital Management, where Hilal was a partner, helped install Ghasemi onto the company's board before he was elevated to CEO.
Hilal signaled early in the current fight that he was working with former top executives at Air Products' rival Linde (NYSE:LIN), including Eduardo Menezes, whom the hedge fund manager identified as a possible replacement for Ghasemi. Menezes is not a proposed director candidate.
The company said last year it would replace two directors who are retiring this year and one of the newcomers would be Bhavesh "Bob" Patel, a former CEO of chemical companies W.R. Grace and LyondellBasell. Patel has been mentioned as a possible replacement for Air Products' current CEO.
Glass Lewis is the first proxy advisory firm to issue its recommendation. Investors are now waiting for Institutional Shareholder Services, Glass Lewis' bigger rival, to issue its report.