By Svea Herbst-Bayliss
NEW YORK (Reuters) -Activist investor Mantle Ridge on Monday won support from a second proxy advisory firm as it battles for board seats at industrial gases company Air Products and Chemicals (NYSE:APD) with an eye to changing strategy and finding a successor for its CEO.
Institutional Shareholder Services recommended that Air Products and Chemicals investors elect three of activist investor Mantle Ridge's four director candidates to the company's nine-member board. Last week Glass Lewis (JO:LEWJ), another proxy advisory firm, urged investors to elect all four of the dissident's nominees at the Jan. 23 annual meeting.
ISS backed Mantle Ridge's founder Paul Hilal, former industry executive Dennis Reilley and Andrew Evans. The report also urged investors to withhold their votes from CEO Seifi Ghasemi, lead director Edward Monser, and Charles Cogut.
The company said it "strongly disagrees with ISS' opinion."
Mantle Ridge said Air Products needs to lay out a succession plan for its octogenarian CEO, who has served at the helm for a decade, allocate its capital differently and scale back on risky projects.
ISS expressed concerns with the board's oversight of the company's strategy and succession planning for Ghasemi.
"A reconstituted board would need to focus on de-risking the existing project commitments, evaluating underperformance, rebuilding credibility with investors, and developing and executing an effective succession plan," ISS wrote.
Mantle Ridge's "slate includes candidates that have skills and experience to help the board address these issues," the report said.
On Monday, Air Products told shareholders the election of any Mantle Ridge nominee "could create extraordinary confusion" for investors about the direction and leadership of the company.
"There is no middle ground – appointing any of Mantle Ridge’s nominees could impede our ability to deliver you the long-term shareholder value that the Company has been positioning for," the letter said.
Hilal said Mantle Ridge is pleased that ISS "recognizes the clear need for change" and added that new directors are needed to "conduct a bona fide CEO succession process."
Many investors rely on recommendations from proxy advisory firms to cast votes in elections that decide hot-button issues including who serves on a board.