SCHEDULE 14A INFORMATIONTable of Contents
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXCHANGE ACT OFSCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (AMENDMENT NO.(Amendment No. )
Filed by the Registrantx
Filed by a Party other than the Registrant¨
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| ☐ | Preliminary Proxy Statement | |
| Confidential, |
| Definitive Proxy Statement |
| Definitive Additional Materials |
| Soliciting Material |
AIR PRODUCTS AND CHEMICALS, INC.Air Products and Chemicals, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other thanOther Than the Registrant)
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| ☑ | No fee required. | ||
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Proxy Statement for
2019Annual Meeting
of Shareholders
Thursday, January24, 2019
2:00p.m. (Eastern Time)
Corporate Headquarters Auditorium
7201Hamilton Boulevard
Allentown, PA18195
Sustainability at Air Products
Providing innovative solutions through deeply-rooted values
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Growresponsibly through sustainability-driven opportunities that benefit our customers and our world. | Conserveresources and reduce environmental footprints through cost-effective improvements. | Carefor our employees, customers and communities — protecting our ability to operate and grow. | ||
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We help customers improve their sustainability performance through higher productivity, better quality products, reduced energy use and lower emissions. | We set aggressive environmental performance goals for greenhouse gases, energy, water and our fleet, and we measure progress to continually improve our own operations. | We continue to nurture a culture of safety, simplicity, speed and self-confidence. Our goal is zero accidents and zero incidents. We are committed to developing our people, supporting our communities, engaging suppliers and upholding our integrity. |
 | The Company was named to the Dow Jones Sustainability Index (North America), FTSE4Good Index, Ethibel Sustainability Index (Excellence Global) and Corporate Responsibility Magazine’s 100 Best Corporate Citizens. For the Company’s diversity and inclusion initiatives, it was named a 2018 DiversityInc Noteworthy Company and as a Corporate Equality Index Best Place to Work for LGBT Equality. |
Message to Our Shareholders |
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“As we take our Five-Point Plan to the next phase of our journey, our goal remains the same: to be the safest, most diverse and most profitable industrial gas company in the world, providing excellent service to our customers.” |
December 12, 2018 | ||
Dear Fellow Shareholder: | ||
On behalf of the Board of Directors, I am pleased to invite you to attend the 2019 Annual Meeting of Shareholders of Air Products and Chemicals, Inc. to be held at 2:00 p.m. (Eastern Time), Thursday, January 24, 2019, at the Company’s headquarters at 7201 Hamilton Boulevard, Allentown, Pennsylvania. Admission procedures are explained in the attached proxy statement, and directions appear on the last page of these materials. We have arranged to keep parking and navigating our facilities easy for you. I hope you will be able to join us. | ||
Attached you will find a Notice of Annual Meeting and proxy statement that contains additional information, including the items of business and methods you can use to vote your proxy, such as the telephone or Internet. Your vote is important. I encourage you to sign and return your proxy card or use Internet, mobile device or telephone voting prior to the meeting, so that your shares of common stock will be represented and voted at the meeting, even if you cannot attend. | ||
Over the past several years, our talented and dedicated employees have made Air Products the safest and most profitable industrial gas company in the world with the strongest balance sheet. Our strategic Five-Point Plan guided that success and has positioned us for tremendous growth. | ||
Now, we have taken the Five-Point Plan to the next phase of our journey: | ||
| 1. | Sustain the lead.To sustain our lead, we will uphold our focus on safety, diversity, profitability and drive to be best-in-class operationally, in everything that we do. | |
| 2. | Deploy capital.Over the next five years, we have at least $15 billion of capital to commit to high quality industrial gas projects. We are focused on energy, environmental and emerging markets. | |
| 3. | Evolve portfolio.As we deploy capital, we are evolving our portfolio to focus on more large, on-site projects, and we are creating step-change growth opportunities through syngas/gasification and complex megaproject execution. | |
| 4. | Change culture.We are continuing to drive our culture change, building an inclusive and collaborative team that works together and wins together around the world. | |
| 5. | Belong and matter.Finally, as we work hard every day to create value for our shareholders, we are also fulfilling our higher purpose: creating a work environment where people belong and matter, producing products that improve the environment and our customers’ processes and promoting collaboration among people of different cultures and backgrounds all over the world. | |
All the best,
Seifi Ghasemi | ||
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Notice of Annual Meeting of Shareholders |
| Logistics |
 Date and Time Thursday, January 24, 2019 2:00 p.m. (Eastern Time) |
 Location Corporate Headquarters Auditorium 7201 Hamilton Boulevard Allentown, PA |
 Record Date Shareholders of record at the close of business on November 30, 2018 are entitled to receive this notice and to vote at the meeting. |
 Admission Free parking will be available. Admission procedures are explained on page 60. Directions appear on the last page of this proxy statement. |
Important Notice Regarding Internet Availability of Proxy Materials for the Air Products and Chemicals, Inc. 2019 Annual Meeting of Shareholders: Our proxy statement and 2018 Annual Report to Shareholders are available at www.proxyvote.com. |
| Items of Business |
| Board Vote Recommendation | Votes Required | Page | |
| Proposal 1.Elect the eight nominees proposed by the Board of Directors as directors for a one-year term ending in 2020. |  For | Majority of Votes Cast | 1 |
| Proposal 2.Conduct an advisory vote on executive officer compensation. | For | Majority of Votes Cast | 17 |
| Proposal 3.Ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019. | For | Majority of Votes Cast | 51 |
Shareholders will also attend to such other business as may properly come before the meeting or any postponement or adjournment of the meeting.
| How to Vote |
Shareholders of Record(shares registered in your name with the Company’s transfer agent) andRetirement Savings Plan Participants:
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Internet www.proxyvote.com | Mobile Device Scan the QR Code to vote using  | Telephone 1-800-690-6903 | Mail Complete, sign and mail your proxy card or voting instruction form in the self-addressed envelope provided. | In Person For instructions on attending the 2019 Annual Meeting in person, please see page 60. |
December 14, 2016Street Name Holders(shares held through a broker, bank or other nominee): Refer to voting instruction form.
Important |
Whether you plan to attend the meeting or not, please submit your proxy as soon as possible in order to avoid additional soliciting expense to the Company. The proxy is revocable and will not affect your right to vote in person if you attend the meeting.
Dear Fellow Shareholder:
On behalfBy order of yourthe Board of Directors, I am pleased to invite you to attend the 2017 Annual Meeting
Sean D. Major
Executive Vice President, General Counsel and Secretary
December 12, 2018
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Attached you will find a Notice of Annual Meeting and Proxy Statement that contains additional information about the meeting, including the items of business and methods that you can use to vote your proxy, such as the telephone or Internet. Your vote is important. I encourage you to sign and return your proxy card or use telephone or Internet voting prior to the meeting, so that your shares of common stock will be represented and voted at the meeting even if you cannot attend.
I am very proud of what the Air Products team has accomplished over the last year. We have made significant progress towards achieving our goal of being the safest industrial gas company in the world and this year we met our objective of being the most profitable. I look forward to meeting with fellow shareholders in January to answer your questions about our progress.
Cordially,
Seifi Ghasemi
Chairman, President, and Chief Executive OfficerContents
HIGHLIGHTS OF 2016 PROXY STATEMENT
Proxy Statement Highlights |
This section summarizes information contained elsewhere in the proxy statement. These highlights do not contain all the information that you should consider before voting or provide a complete description of the topics covered. Please read the entire proxy statement before voting.
Meeting InformationFiscal 2018 Company Performance Highlights
| Financial Performance |
| EARNINGS PER SHARE | |
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| Increased 28% over fiscal 2017. |
| ADJUSTED EARNINGS PER SHARE1 | ||
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over fiscal 2017, representing the fourth consecutive year of double-digit growth. |
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Items of Business
| OPERATIONS | ||||||
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over fiscal 2017. |
| ADJUSTED EBITDA1 | ||
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over fiscal 2017. |
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| Safety Performance |
| The Company continued its improvement in safety performance, with 71% improvement in the employee lost time injury rate and 50% improvement in the employee recordable injury rate versus fiscal 2014 and even greater improvement in contractor injury rates. |
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| Operational Performance |
| The Company brought major projects on-stream in China, Korea and the U.S. and announced four large gasification projects and the acquisition of gasification technology. |
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| Returns to Shareholders |
| The Company returned nearly $900 million to shareholders through dividends, increasing dividends for the 36th consecutive year. |
| 1 | This is a non-GAAP financial measure. See Appendix A for a reconciliation to the most directly comparable financial measure calculated under GAAP. |
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Proxy Statement Highlights
PROPOSAL | Elect the eight nominees proposed by the Board of Directors as directors for a one-year term ending in | |||||||
| The Board recommends a vote | |||||||
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Director Nominees
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The individuals nominated for election to the Board are all current directors and possess a broad range of qualifications and skills that facilitate strong oversight of Air Products’ management and strategy. Our directors have diverse backgrounds and experiences and have demonstrated a commitment to strong corporate governance, shareholder engagement and sustainability. | |||||
| Director Nominees |
| Committees | ||||||||||||
| Name and Current or Previous Position | Independent | Diverse | Tenure (Full Years) | AF | CGN | E | MDC | |||||
Susan K. Carter | Senior Vice President and Chief Financial Officer of Ingersoll-Rand | ● | ● | 7 |  | | ||||||
Charles I. Cogut | Retired Partner, | ● | 3 | | | |||||||
| ● | 8 | ● | | | |||||||
| Seifollah Ghasemi Chairman, President and Chief Executive Officer of Air Products and Chemicals, Inc. | ● | 5 | ● | |||||||||
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David H. Y. Ho | Chairman and Founder of Kiina Investment Ltd. | ● | ● | 5 | | | ||||||
Margaret G. McGlynn | Retired President and Chief Executive Officer of International AIDS Vaccine | ● | ● | 13 | | | ||||||
Edward L. Monser | Retired President and Chief Operating Officer, Emerson Electric Co. | ● | 5 | | | ● | ||||||
Matthew H. Paull | Retired Senior Executive Vice President and Chief Financial Officer of McDonald’s | ● | 5 | ● | | | ||||||
| AF | Audit and Finance | CGN | Corporate Governance and Nominating | ● Chair | ||||||
| E | Executive | MDC | Management Development and Compensation |  Member |
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2016 Company Performance HighlightsTable of Contents
The Company continued its dramatic improvement in safety performance, with 20% improvement in the lost time injury rate and 12% improvement in the recordable injury rate.
Proxy Statement Highlights
| Board Snapshot |
Independence |
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| Director Qualifications and Skills |
The Board possesses a broad range of qualifications and skills that facilitate strong oversight of Air Products’ management and strategy. The following matrix identifies the primary skills that the Corporate Governance and Nominating Committee and the Board considered in connection with the re-nomination of the current directors.*
| Carter | Cogut | Deaton | Ghasemi | Ho | McGlynn | Monser | Paull | ||
 | Accounting/Financial Reporting | ● | ● | ● | ● | ● | |||
 | Corporate Governance | ● | ● | ● | ● | ● | ● | ● | |
 | Diverse Director | ● | ● | ● | ● | ||||
 | Electronics Industry | ● | ● | ● | ● | ● | ● | ||
 | Executive Leadership | ● | ● | ● | ● | ● | ● | ● | |
 | Finance and Capital Management | ● | ● | ● | ● | ● | |||
 | Government Experience | ● | ● | ● | ● | ● | |||
 | Industry/Operations | ● | ● | ● | ● | ● | |||
 | Information Technology | ● | ● | ● | |||||
 | International Experience | ● | ● | ● | ● | ● | ● | ● | ● |
 | Investor Relations | ● | ● | ● | ● | ● | |||
 | Legal | ● | |||||||
 | Logistics Experience | ● | ● | ● | ● | ||||
 | Mergers & Acquisitions | ● | ● | ● | ● | ● | ● | ● | |
 | Technology | ● | ● | ● | ● | ● | |||
 | Oil and Gas Experience | ● | ● | ● | ● | ||||
| * | The absence of a mark does not necessarily indicate that the director does not possess that qualification or skill. |
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Proxy Statement Highlights
Shareholder Engagement |
The Board believes that fostering long-term and institution-wide relationships with shareholders, listening to their concerns and maintaining their trust and goodwill is a prerequisite to good governance.
| Management conducts extensive engagements with key shareholders. |  | These engagements include discussions about governance, compensation and safety, as well as financial and operational matters, to ensure that management and the Board understand and address the issues that are important to our shareholders. | | The Board oversees the discharge by management of shareholder communication and engagement and receives regular reports on shareholder comments and feedback and is open to dialogue on issues of interest to significant shareholders. | | The Board also specifically seeks to understand any significant voting trends on the Company’s executive officer compensation program and other governance matters. |
| Sustainability |
The Board of Directors has accountability for oversight of our environmental and safety performance, which it reviews at least quarterly. The Corporate Governance and Nominating Committee has responsibility for monitoring our response to important public policy issues, including sustainability, which is reviewed on a routine basis. Business ethics, climate change and talent management are key subjects related to sustainability that are discussed by the Board. The Board also reviews our progress against our 2020 Sustainability Goals that are related to growing our business through products that benefit people and the environment, conserving resources and reducing our environmental footprint, and caring for our employees, customers and communities. Further, the Management Development and Compensation Committee has structured our compensation program to balance financial results with other Company values such as sustainability, safety, diversity and ethical conduct. We also have engaged with our shareholders on sustainability matters.
For information about how we manage sustainability, including our 2020 Sustainability Goals, and to access our 2018 Sustainability Report, please visit the sustainability page of our website.
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2018 Corporate Sustainability Report* | |||
| * | The information on the sustainability webpage is not incorporated by reference into, and does not form part of, this proxy statement. | ||
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Proxy Statement Highlights
PROPOSAL | Conduct an advisory vote on executive officer compensation. | ||||
 | The Board recommends a vote “FOR” this item. | | Page 17 | ||
As described in the Compensation Discussion and Analysis, our executive officer compensation program has been designed to support our long-term business strategies and drive creation of shareholder value. It is aligned with the competitive market for talent, sensitive to Company performance and oriented to long-term incentives to maintain and improve the Company’s long-term profitability. We believe the program delivers reasonable pay which is strongly linked to Company performance. | |||||
| Fiscal 2018 Compensation Highlights |
| ● | Median Pay Program.The executive officer compensation program is designed to deliver compensation that approximates the median for a carefully selected peer group and that exceeds the median when performance exceeds expectations. In Fiscal 2018, the Management Development and Compensation Committee determined that it was appropriate to increase the base compensation of our Chief Executive Officer (“CEO”) to keep Mr. Ghasemi competitive with the market due to his excellent performance over his first three years as CEO. Previously, base salary was positioned at median. As a result of this base salary increase, our CEO’s compensation was positioned at the 75th percentile across all pay elements. |
| ● | Shareholder Focused Performance Metrics.Fiscal 2018 executive officer incentive compensation performance metrics support the Company’s priorities for creation of shareholder value. |
Say on Pay Support At the January 2018 Annual Meeting of Shareholders, our shareholders supported the Company’s executive officer compensation program by a vote of approximately 96.5%of the votes cast. |
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Proxy Statement Highlights
Below is a summary of the components of direct compensation for fiscal 2018 delivered to our CEO and our other named executive officers.
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| Other | Key Terms |
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AIR PRODUCTS AND CHEMICALS, INC.
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|  |  | ●Target at Market Median with adjustment based on level of responsibility, experience, and individual performance | ||
Annual Incentive |  |  | ●Target payout references Market Median ●Actual payout driven by adjusted EPS ●10% Growth required for target payout | |||
 | Long-Term Incentives |  |  | ●Target value based on Market Median for long-term incentives | ||
Performance Shares |  |  | ●Actual payout based on relative TSR over ●50thpercentile required for | |||
Restricted Stock Units |  |  | ● ● |
Pay and Performance Alignment |
The Company completed its spin-offBelow is the Equilar Inc. Pay for Performance Profile for 2015-2017 reported periods comparing Air Products’ CEO compensation and total shareholder return (“TSR”) to that of the Electronicmembers of the S&P 500 Basic Materials business with the distribution of all outstanding shares of Versum Materials, Inc. (“Versum Materials”) to shareholders on October 1, 2016.
The Company announced it had entered into a definitive agreementSector for the salepast three years (reflects TSR for calendar years 2015-2017 and Summary Compensation Table total compensation for CEOs and CEO Conference Board Realizable Pay for fiscal years ending with or within calendar years 2015-2017).
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CEO Total Compensation | CEO Realizable Pay |
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Table of its Performance Materials business for $3.8 billion.Contents
The Company was named to the Dow Jones Sustainability Index (North America), the CDP Climate Change Leadership, the FTSE4Good Index, the Ethibel Sustainability Index (Excellence Global) and Corporate Responsibility Magazine’s 100 Best Corporate Citizens.
2016 CompensationProxy Statement Highlights
At the January 2016 Annual Meeting of Shareholders, shareholders supported the Company’s Executive Officer compensation program by a vote of 98% of the votes cast.
Compensation Governance Best Practices |
The Management Development and Compensation Committee modifiedrecognizes that shareholders want assurance that the Executive Officer long term incentiveprocesses for determining and paying executive officer compensation mix for 2016 to tie more compensation directly to shareholder returns:
| Award Type | 2015 | 2016 | ||||||
Performance Shares | 55 | % | 60 | % | ||||
Restricted Stock | 25 | % | 40 | % | ||||
Stock Options | 20 | % | 0 | % | ||||
Incentive compensation performance metrics supportreflect thoughtful stewardship of the Company’s priorities for creation of shareholder value:resources. The Committee has adopted the following practices, among others, to demonstrate its commitment to this principle:
COMPENSATION GOVERNANCE HIGHLIGHTS | ||
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AIR PRODUCTS AND CHEMICALS, INC.
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Notice of Annual Meeting of Shareholders
●Independent directors make final compensation decisions pertaining to executive officers. ●The Committee is advised by an independent compensation consultant. ●Executive sessions are held at all Committee meetings. ●Compensation is targeted at median for similar industrial companies. ●Stringent stock ownership guidelines. ●Prohibition on hedging or pledging Company stock. ●Consistent administration of performance goals andformulas. ●Annual review of dilution and burn rate relative topeers. ●Double-trigger change in control arrangements. ●Clawback Policy adopted to combat executive officermisconduct and reclaim certain awards and incentives. |
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2:00 p.m. (Eastern Standard Time)
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7201 Hamilton Boulevard
Allentown, PA 18195
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By order of the Board of Directors,
Mary T. Afflerbach
Vice President, Corporate Secretary, Chief
Governance Officer and General Counsel (Interim)
December 14, 2016
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PROXY STATEMENT
 | The Board recommends a vote “FOR” this item. |  | Page 51 | ||
The Audit and Finance Committee selected Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for fiscal 2019 following a competitive selection process and careful consideration of each participating firm’s demonstrated qualifications. The Board believes that the engagement of Deloitte as our independent registered public accounting firm for fiscal 2019 is in the best interests of shareholders and is submitting the appointment of Deloitte to our shareholders for ratification as a matter of good corporate governance. | |||||
In 2018, the Audit and Finance Committee of the Board of Directors conducted a competitive process to select the Company’s independent registered public accounting firm for the Company’s 2019 fiscal year. Following review and evaluation of proposals from the firms participating in that process, the Audit and Finance Committee engaged Deloitte. Our prior independent registered public accounting firm, KPMG LLP (“KPMG”), audited the financial statements included in our Annual Report on Form 10-K for the year ended September 30, 2018. This proposal requests that our shareholders ratify the Audit and Finance Committee’s appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending September 30, 2019.
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Table of Contents |
QUESTIONS AND ANSWERS ON VOTING AND THE ANNUAL MEETING
AIR PRODUCTS AND CHEMICALS, INC.
PROXY STATEMENT
We have provided you this Notice of Annual Meeting and Proxy Statement because the Board of Directors (the “Board”) of Air Products and Chemicals, Inc. (the “Company” or “Air Products”) is soliciting your proxy to vote at the Company’s Annual Meeting of Shareholders on January 26, 2017 (the “Annual Meeting”). This Proxy Statement contains information about the items to be voted on at the Annual Meeting and information about the Company. Instructions on how to access this Proxy Statement and our Annual Report on Form 10-K on the Internet or paper copies of the Proxy Statement and Annual Report are first being sent to shareholders on or about December 14, 2016.
QUESTIONS AND ANSWERS ON VOTING AND
THE ANNUAL MEETING
How many shares can vote at the Annual Meeting?
As of the Record Date, which was November 30, 2016, 217,433,579 shares of Company common stock were issued and outstanding, which are the only shares entitled to vote at the Annual Meeting. Every owner of Company stock is entitled to one vote for each share owned.
Who counts the votes?
A representative of Broadridge Corporate Issuer Solutions, Inc. will tabulate the votes and act as the independent inspector of election.
What is a proxy?
A proxy is your legal appointment of another person to vote the shares of Company stock that you own in accordance with your instructions. The person you appoint to vote your shares is also called a proxy. You can find an electronic proxy card atwww.proxyvote.com that you can use to vote your shares online. If you received these proxy materials by mail, you can also vote by mail or telephone using the proxy card enclosed with these materials.
On the proxy card, you will find the names of the persons designated by the Company to act as proxies to vote your shares at the Annual Meeting. The proxies are required to vote your shares in the manner you instruct.
What shares are included on my proxy card?
If you are a registered shareholder, your proxy card(s) will show all of the shares of Company stock registered in your name with our Transfer Agent, Broadridge Corporate Issuer Solutions, Inc., on the Record Date, including shares in the Direct Stock Purchase and Sale Program administered for Air Products’ shareholders by our Transfer Agent. If you also have shares registered in the name of a bank, broker, or other registered owner or nominee, they will not appear on your proxy card.
How do I vote the shares on my proxy card?
If you received a Notice of Availability of Proxy Materials and accessed these proxy materials online, follow the instructions on the Notice to obtain your records and vote electronically.
If you received these proxy materials by mail, you may vote by signing and dating the proxy card(s) and returning the card(s) in the prepaid envelope. You also can vote online or by using a toll-free telephone number. Instructions
AIR PRODUCTS AND CHEMICALS, INC.
QUESTIONS AND ANSWERS ON VOTING AND THE ANNUAL MEETING
about these ways to vote appear on the proxy card. If you vote by telephone, please have your paper proxy card and control number available. The sequence of numbers appearing on your card is your control number, and your control number is necessary to verify your vote.
If you received these proxy materials via e-mail, the e-mail message transmitting the link to these materials contains instructions on how to vote your shares of Company stock and your control number.
Whether your proxy is submitted by mail, telephone, or online, your shares will be voted in the manner you instruct. If you do not specify in your proxy how you want your shares voted, they will be voted according to the Board’s recommendations below:
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| APPENDIX A | A-1 | |
| Reconciliation of Non-GAAP Financial Measures | A-1 | |
| APPENDIX B | B-1 | |
| Survey Reference Group | B-1 |
Proxy Statement We have provided you this Notice of Annual Meeting and proxy statement because the Board of Directors (the “Board”) of Air Products and Chemicals, Inc. (the “Company” or “Air Products”) is soliciting your proxy to vote at the Company’s Annual Meeting of Shareholders on January 24, 2019 (the “Annual Meeting”). This proxy statement contains information about the items to be voted on at the Annual Meeting and information about the Company. Instructions on how to access this proxy statement and our 2018 Annual Report to Shareholders on the Internet or paper copies of the proxy statement and Annual Report are first being sent to shareholders on or about December 12, 2018. |
| x | 2019 Annual Meeting Proxy Statement |
Corporate Governance at Air Products |
How do I vote shares held by my broker or bank?
If a broker, bank, or other nominee holds shares of Company stock for your benefit, and the shares are not in your name on the Transfer Agent’s records, then you are considered a “beneficial owner” of those shares. If your shares are held this way, sometimes referred to as being held in “street name”, your broker, bank, or other nominee will send you instructions on how to vote. If you have not heard from the broker, bank, or other nominee who holds your Company stock, please contact them as soon as possible. If you plan to attend the meeting and would like to vote your shares held by a bank or broker in person, you must obtain a legal proxy, as described in the admission procedures section on page 4.
If you do not give your broker instructions as to how to vote, under New York Stock Exchange (“NYSE”) rules, your broker has discretionary authority to vote your shares for you on Item 4 to ratify the appointment of auditors. Your broker may not vote for you without your instructions on the other items of business. Shares not voted on these other matters by your broker because you have not provided instructions are sometimes referred to as “broker nonvotes”.
May I change my vote?
Yes. You may revoke your proxy at any time before the Annual Meeting by submitting a later dated proxy card, by a later telephone or on-line vote, by notifying us that you have revoked your proxy, or by attending the Annual Meeting and giving notice of revocation in person.
How is Company stock in the Company’s Retirement Savings Plan voted?
If you are an employee who owns shares of Company stock under the Retirement Savings Plan and you have regular access to a computer for performing your job, you were sent an e-mail with instructions on how to view the proxy materials and provide your voting instructions. Other participants in the Retirement Savings Plan will receive proxy materials and a proxy card in the mail. The Trustee, Fidelity Management Trust Company, will vote shares of Company stock allocated to your Plan account on the Record Date in accordance with the directions you give on how to vote. The Trustee will cast your vote in a manner which will protect your voting privacy. If you do not give voting instructions or your instructions are unclear, the Trustee will vote the shares in the same proportions and manner as overall Retirement Savings Plan participants instruct the Trustee to vote shares allocated to their Plan accounts.
AIR PRODUCTS AND CHEMICALS, INC.
QUESTIONS AND ANSWERS ON VOTING AND THE ANNUAL MEETING
What is a “quorum”?
A quorum is necessary to hold a valid meeting of shareholders. A quorum exists if a majority of the outstanding shares of Company stock are present in person at the Annual Meeting or represented there by proxy. If you vote —including by Internet, telephone, or proxy card — your shares voted will be counted towards the quorum for the Annual Meeting. Proxies marked as abstentions and broker discretionary votes are also treated as present for purposes of determining a quorum.
What vote is necessary to pass the items of business at the Annual Meeting?
ElectionBoard of Directors. Our Bylaws provide that if
Selection of Directors |
The Board has established the following minimum qualifications for all non-management directors:
✓Business experience ✓Judgment ✓Independence | ✓Integrity ✓Ability to commit sufficient time and attention to the activities of the Board | ✓Absence of any potential conflicts with the Company’s interests ✓An ability to represent the interests of all shareholders. |
While the Board has not adopted a quorum is present atformal policy on diversity, the Annual Meeting, the eight director candidates will be elected if they receive a majority of the votes cast at the meeting in person or by proxy. This means the nominees will be elected if the number of shares voted “for” the nominee exceeds the number of shares voted “against” the nominee. Abstentions and broker nonvotes are not counted as votes cast and therefore will have no effect.
Under our Corporate Governance Guidelines any incumbent director who is not reelected by(the “Guidelines”) provide that, as a majority of the votes cast must tender his or her resignation to the Corporate Governance and Nominating Committee ofwhole, the Board forshould include individuals with a diverse range of experiences to give the Board depth and breadth in the mix of skills represented. The Board seeks to include an array of skills, perspectives and experience in its consideration. The Corporate Governanceoverall composition. This guideline is implemented by seeking to identify candidates that bring diverse skills sets, backgrounds and Nominating Committee then recommendsexperiences, including ethnic, gender and geographic diversity, to the Board whether to accept the resignation. Thewhen director will continue to serve until the Board decides whether to accept the resignation, but will not participate in the Committee’s recommendation or the Board’s action regarding whether to accept the resignation. The Board will publicly disclose its decision and rationale within 90 days after certificationcandidates are needed.
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All Other ItemsContents. The other three items of business will be approved if shares voted in favor of the proposal exceed shares voted against the proposal. Abstentions and broker nonvotes will not affect the outcome of the vote.
How will voting on any other business be conducted?
We do not know of any business or proposals to be consideredCorporate Governance at the Annual Meeting other than the items described in this Proxy Statement. If any other business is proposed and the chairman of the Annual Meeting permits it to be presented at the Annual Meeting, the signed proxies received from you and other shareholders give the persons voting the proxies the authority to vote on the matter according to their judgment.
When are Shareholder proposals for the Annual Meeting to be held in 2018 due?
To be considered for inclusion in next year’s proxy statement, proposals and nominations of persons to serve as directors must be delivered in writing to the Secretary of the Company, Air Products and Chemicals, Inc., 7201 Hamilton Boulevard, Allentown, PA 18195-1501 no later than August 16, 2017. To be presented at the 2018 Annual Meeting, proposals and nominations must be delivered in writing by October 30, 2017 and must comply with the requirements of our bylaws (described in the next paragraph).
Our Bylaws require adequate written notice of a proposal to be presented by delivering it in writing to the Secretary of the Company in person or by mail at the address stated above, on or after September 30, 2017, but no later than October 30, 2017. To be considered adequate, the notice must contain other information specified in the Bylaws about the matter to be presented at the meeting and the shareholder proposing the matter. A copy of our Bylaws can be found in the “Governance” section of our website atwww.airproducts.com. A proposal received after October 30, 2017, will be considered untimely and will not be entitled to be presented at the meeting.
The Board is composed of a diverse group of leaders in their respective fields. BOARD SNAPSHOT Independence Diversity Tenure 88% 50% 6.4 years Independent Diverse Average Tenure 7Independent 4Diverse 5Newer Directors (5 years or less) 1Not Independent 4Other 2Medium-Tenured Directors (6 to 10 years) 1Experienced Director (10+ years) BOARD QUALIFICATIONS AND SKILLS The Board believes that it is desirable that the following experience, qualifications and skills be possessed by one or more of Air Products’ Board members because of their particular relevance to the Company’s business and strategy: Accounting/Financial Reporting Executive Leadership Information Technology Logistics Experience Corporate Governance Finance and Capital Management International Experience Mergers & Acquisitions Diverse Director Government Experience Investor Relations Oil and Gas Experience Electronic Industry Industry/Operations Legal Corporate Governance at Air Products Information follows about the age and business experience Public Limited Company BackgroundWhat are the costs of this proxy solicitation?Many of theOur current directors have leadership experience at major domestic and international companies with operations inside and outside the United States and experience on other companies’ boards, which provideprovides an understanding of different business processes, challenges and strategies. OthersThey have substantial experience in key aspects of our operations, finance and capital management and government relations, or keyas well as in the market sectors which reflectwe serve, including the energy, electronics and chemicals industries. Our directors also possess extensive experience in functional areas that are important to the execution of their oversight responsibilities, including corporate governance, accounting and financial reporting, information technology, mergers and acquisitions, investor relations and legal affairs. We believe all of our customer base, or financial or governance expertise. Alldirectors have personal traits such as candor, integrity, commitment and collegiality that are essential to an effective board of directors. 
Technology 
2 2019 Annual Meeting Proxy Statement Director Biographies as of December 1, 2016, of the director nominees up for election and the particular experiences,experience, qualifications, attributes and skills that led the Board to conclude that each director should serve as a director. Each nominee has consented to being nominated for director and has agreed to serve if elected. All of the nominees are currently directors.
SUSANSusan K. CARTERCarter, age 58.Independent
Senior Vice President and Chief Financial Officer of Ingersoll-Rand Plc.of the Company since 2011.Since2011
Susan K. Carter is the Senior Vice President and Chief Financial Officer of Ingersoll-Rand Plc.,Public Limited Company, a diversified industrial company. She joined Ingersoll-Rand in September 2013. Prior to joining Ingersoll-Rand, from 2009 to 2013, Ms. Carter served as Executive Vice President and Chief Financial Officer of KBR, Inc., a global engineering, construction and services company; from 2009 to 2013, as Executive Vice President and Chief Financial Officer of Lennox International Inc, a global provider of climate control solutions for heating, air conditioning, and refrigeration marketsInc. from 2004 to 2009;2009 and as Vice President and Chief Accounting Officer of Cummins, Inc. from 2002 to 2004. She also has held senior financial and accounting roles at Honeywell International Inc., DeKalb Corporation and Crane Co. She is a former director of Lyondell Chemical Company. Ms. Carter received a Bachelor’s degree in Accounting from Indiana University and received a Master’s degree in Business Administration from Northern Illinois University. She is a Certified Public Accountant.As the chief financial officer of global publicly-held corporations, Ms. Carter has gained significant experience in financial reporting, information technology, accounting, finance and capital management, investor relations, and international operations. Her background provides the Board with broad expertise in international financial and operational issues.
| Qualifications Ms. Carter has significant experience in financial reporting, information technology, accounting, finance and capital management, investor relations and international operations due to her experience as chief financial officer for a series of global publicly held corporations. Her background provides the Board with broad expertise in international financial and operational issues, as well as significant understanding of financial reporting issues. |
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Age71 | Committees | ||
Director | ●Audit and Finance ●Corporate Governance and Nominating | ||
Background
Charles “Casey” Cogut is Senior Mergers and Acquisitions (“M&A”) Counsel ata retired partner of Simpson Thacher & Bartlett LLP (“STB”). Mr. Cogut joined the New York-based law firm in 1973 and served as partner in STB from 1980-2012.1980 to 2012 and as a Senior Mergers and Acquisitions Counsel at STB from 2013 to 2016. For many years he was a leading member of STB’s M&Amerger and acquisitions and private equity practices. He specialized in domestic, international and cross-border mergers and acquisitions, the representation of special committees of boards of directors and buyouts and other transactions involving private equity firms. In addition, he regularly advised boards of directors with respect to corporate governance matters and fiduciary responsibilities. From 1990 –to 1993, he served as senior resident partner in the firm’s London office. Mr. Cogut received his J.D. in 1973 from the University of Pennsylvania Law School after graduating summa cum laude from Lehigh University in 1969. He is a member of the Board of Overseers of the University of Pennsylvania Law School;School and Co-Chair of the Board of Advisors of the University’s Institute for Law and Economics; and a member of the Law School’s adjunct faculty.Economics. He also is a memberdirector of The Williams Companies, Inc. and a Vice Chair of the Board of Trustees and a member of the Executive Committee of Cold Spring Harbor Laboratory.
Mr. Cogut brings to the Board expertise in governance and fiduciary responsibilities He was formerly a director of directors. He also has extensive experience in multi-jurisdictional mergers and acquisitions and other complex transactions. He is recognized as one of the leading corporate lawyers in the United States.
AIR PRODUCTS AND CHEMICALS, INC.
THE BOARD OF DIRECTORSPatheon N.V.
| Qualifications Mr. Cogut brings to the Board expertise in governance and fiduciary responsibilities of directors. He also has extensive experience in multi-jurisdictional mergers and acquisitions and other complex transactions. He has been recognized as one of the leading corporate lawyers in the United States. |
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Corporate Governance at Air Products
 | Chadwick C. DeatonIndependent Retired Chairman and Chief Executive Officer of Baker Hughes Inc. | ||
Age66 | Committees | ||
Director | ●Corporate Governance and Nominating (Chair) ●Executive ●Management Development and Compensation | ||
Background
Chadwick C.“Chad” Deaton is the retired Executive Chairman of Baker Hughes, Incorporated,Inc., an oilfield services and products provider with operations in over 90 countries. He joined Baker Hughes in 2004 and served as Chairman and Chief Executive Officer through 2011. He became Executive Chairman in January 2012. He2012 and retired as Executive Chairmanfrom that position in April 2013. Previously, Mr. Deaton was President and Chief Executive Officer of Hanover Compressor Company (now Exterran Holdings, Inc.); and Senior Advisor and Executive Vice President of Schlumberger Oilfield Services. Mr. Deaton is a director of Ariel Corporation, a private manufacturer of gas compressor equipment, CARBO Ceramics, Inc., Marathon Oil Corporation and Transocean Ltd. He is also a former director of Hanover Compression Company and Baker Hughes. He is a director of Houston Achievement Place and a member of the Society of Petroleum Engineers’, and the Governor of Wyoming’s Engineering Task Force for the University of Wyoming. He also serves as a director for the University of Wyoming Foundation. Mr. Deaton earned a Bachelor’s degree in Geology from the University of Wyoming.
As a former chairman and chief executive officer of a global publicly held corporation, Mr. Deaton brings to the Board international business experience and executive leadership experience in operations, technology, talent management, and governance. In addition, his 30-year career in petrochemicals and energy businesses provides him with expertise in key customer segments for the Company.
| Qualifications As a former chairman and chief executive officer of a global publicly held corporation, Mr. Deaton brings to the Board international business experience and executive leadership experience in operations, technology, talent management and governance. In addition, his 30-year career in petrochemicals and energy businesses provides him with expertise in key customer segments for the Company. |
| Seifollah (“Seifi”) Ghasemi Chairman, President and Chief Executive Officer of the | ||
Age74 | Committees | ||
Director | ●Executive (Chair) | ||
Background
Prior to joining Air Products, from 2001-2014,2001 to 2014, Mr. Ghasemi served as Chairman and Chief Executive Officer of Rockwood Holdings, Inc., a global leader in inorganic specialty chemicals and advanced materials that was acquired by Albemarle Corporation in January 2015. From 1997-2001,1997 to 2001, he held leadership roles at GKN, a global industrial company, including positions as director of the Main Board of GKN, plc and Chairman and Chief Executive Officer of GKN Sinter Metals, Inc. and Hoeganes Corporation. Earlier in his career, Mr. Ghasemi spent nearly 20 years with The BOC Group (the industrial gas company which is now part of Linde AG) in positions including director of the Main Board of BOC Group, plc; Presidentplc, president of BOC Gases Americas;Americas and Chairman and Chief Executive Officer of BOC Process Plants, Ltd. and Cryostar. He is a former director of Rockwood Holdings, Inc. and EnerSys. Mr. Ghasemi also serves as non-executive chairman of Versum Materials, Inc. Mr. Ghasemi earned his undergraduate degree from Abadan Institute of Technology and holds a Master’s degree in Mechanical Engineering from Stanford University.
Mr. Ghasemi brings to the Board strong leadership and extensive management and operating experience, including deep experience in the industrial gases and specialty chemicals industries, and a solid understandingalso was awarded an honorary Doctor of key end markets for the Company. His prior executive leadership of an international chemical company also provides substantial experience in governance and portfolio management, strategic planning, talent management, and international operations. He provides the Board with candid insights into the Company’s industry, operations, management team, and strategic strengths and weaknesses.
Science degree from Lafayette College.
| Qualifications Mr. Ghasemi brings to the Board strong leadership and extensive management and operating experience, including deep experience in the industrial gases and specialty chemicals industries, and a solid understanding of key end markets for the Company. His prior executive leadership of an international chemical company also provides substantial experience in governance and portfolio management, strategic planning, talent management and international operations. He provides the Board with candid insights into the Company’s industry, operations, management team and strategic strengths and weaknesses. |
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Corporate Governance at Air Products
 | David H. Y.
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Age59 | Committees | ||
Director | ●Audit and Finance ●Management Development and Compensation | ||
Background
David H. Y. Ho is Chairman and Founder of Kiina Investment Ltd., a venture capital firm that invests in start-up companies in the technology, media and telecommunications industries. Mr. Ho previously served as Chairman of Greater China for Nokia Siemens Networks, President of Greater China for Nokia Corporation and Senior Vice President of the Nokia Networks Business Group. He has also held senior leadership roles with Nortel Networks and Motorola in China and Canada. Mr. Ho currently serves in the United States as a member of the boardsboard of Pentair PLCnVent Electric plc and Qorvo, Inc.
AIR PRODUCTS AND CHEMICALS, INC.
THE BOARD OF DIRECTORS
and in China as a member of the United States andboard of two Chinese state-owned enterprises: China COSCO Shipping Corporation and China Mobile Communications Corporation. Mr. Ho served as a director of Pentair plc prior to the separation of its electrical business now held by nVent Electric plc, a director of Triquent Semiconductor, Inc. prior to its merger with R. F. Micro Devices to form Qorvo, Inc., and as a director of China Ocean Shipping Company prior to its merger with China Shipping Group. Mr. Ho also previously served as a director of Dong Fang Electric Corporation and Owens Illinois, Inc. He holds a Bachelor’s degree in Engineering and a Master’s degree in Management Sciences from the University of Waterloo in Canada.
Mr. Ho has extensive experience establishing and building businesses in China and in international joint venture operations, government relations, and Asian operations and marketing. His background brings significant value to the Company as we execute on our Asian strategy. He also has executive leadership experience in the electronics and technology industries, key customer markets for the Company.
| Qualifications Mr. Ho has extensive experience establishing and building businesses in China and in international joint venture operations, government relations and Asian operations and marketing. His background brings significant value to the Company as we execute on our Asian strategy. He also has executive leadership experience in the electronics and technology industries, which are key customer markets for the Company. |
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Age59 | Committees | ||
Director | ●Corporate Governance and Nominating ●Management Development and Compensation | ||
Background
Margaret G. McGlynn is the retired President of the Global Vaccine and Infectious Disease Division of Merck & Co., a global pharmaceutical company, where she worked for 26 years until her retirement in 2009. Following retirement, she served as President and Chief Executive Officer of International AIDS Vaccine Initiative, a global not-for-profit, public-private partnership working to accelerate the development of vaccines to prevent HIV infection and AIDS. She joined its board in 2010 and served as President and Chief Executive Officer from 2011 until her retirement in 2015. Ms. McGlynn previously served asAs President, Global Vaccine and Infectious Disease Division of Merck & Co., Inc., a global pharmaceutical company, from 20072006 until her retirement in 2009, where she was responsible for a portfolio of more than $7 billion in global sales. She led the introduction of several new vaccine products and anti-infective therapies, expanded Merck’s vaccine and infectious disease business globally and launched several initiatives to provide access to its vaccines and HIV therapies in the developing world. Earlier she served as President,She also led several other divisions, including U.S. Human Health at Merck, from 2003 to 2005, and in 2005 she was named President, Merck Vaccine Division.Hospital and Specialty Products and Global Marketing. Ms. McGlynn was a member of the Global Alliance for Vaccines and Immunization board of directors and executive committee from 2006 to 2008. She is also a director of Amicus Therapeutics, Inc., and Vertex Pharmaceuticals, Inc., Orphan Technologies Ltd., and She formerly served as a former director of Quidel Diagnostics. She earned a Bachelor’s degree in Pharmacy and a Master’s of Business Administration in Marketing from State University of New York at Buffalo.
From her management of a global pharmaceutical business and experience as chief executive officer of a global organization, Ms. McGlynn brings extensive experience in government relations and public policy, international marketing, mergers and acquisitions and talent management. She has expertise in productivity, and a deep understanding of the healthcare business, an important customer base for the Company. Her service on other boards also provides financial and governance experience.
| Qualifications From her management of a global business and service as chief executive officer of a global organization, Ms. McGlynn brings extensive experience in government relations and public policy, international marketing, mergers and acquisitions and talent management. She has expertise in productivity and a deep understanding of the healthcare business, an important customer base for the Company. Her service on other boards also provides financial and governance experience. |
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Corporate Governance at Air Products
 | Edward L.
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Age68 | Committees | ||
Director | ●Audit and Finance ●Executive ●Management Development and Compensation (Chair) | ||
Background
Mr. Monser is currentlyrecently retired as the President of Emerson Electric Co., a global industrial controls products company. At the time of his retirement, Mr. Monser hashad more than 30 years of experience in senior operational positions at Emerson and has played key roles in globalizing the company, having held increasingly senior positions at the company, including Chief Operating Officer (2001-2015)(2001 to 2015), President of its Rosemount Inc. subsidiary (1996-2001),(1996 to 2001) and various operations, new product development, engineering and technology positions. Mr. Monser currently serves as a director of Vertiv, a private company that provides equipment and services for datacenters, and has been appointed as a director of Canadian Pacific Railway Ltd., effective December 17, 2018. He is Vice Chairman of the U.S.-India Business Council,Strategic Partnership Forum, a member of the Economic Development Board for China’s Guangdong Province and a past board memberformer director and past Vice Chairman of the U.S.-China Business Council. He holds a Bachelor’s degree in Electrical Engineering from the Illinois Institute of Technology and a Bachelor’s degree in Education from Eastern Michigan University.
As the former chief operating officer of a premier industrial organization, Mr. Monser provides the Board with a solid understanding of industrial operations, supply chain optimization, and continuous improvement; extensive experience in international business operations, particularly in emerging markets; and demonstrated capability in strategic planning and organizational development.
AIR PRODUCTS AND CHEMICALS, INC.
THE BOARD OF DIRECTORS
| Qualifications As former president and chief operating officer of a premier global industrial organization, Mr. Monser provides the Board with a solid understanding of industrial operations, supply chain optimization and continuous improvement, extensive experience in international business operations, particularly in emerging markets, and a demonstrated capability in strategic planning and organizational development. |
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Age67 | Committees | ||
Director | ●Audit and Finance (Chair) ●Corporate Governance and Nominating ●Executive | ||
Background
Mr. Paull was Senior Executive Vice President and Chief Financial Officer of McDonald’s Corporation from 2001 until he retired from that position in 2008. Prior to joining McDonald’s in 1993, he was a partner at Ernst & Young where he managed a variety of financial practices during his 18-year career and consulted with many leading multinational corporations. Mr. Paull currently serves as a director of Canadian Pacific Railway Ltd. and Chipotle Mexican Grill Inc. He was formerly a director of KapStone Paper and Packaging Corporation. He was a former director ofCorporation and WMS Industries Inc. and the former lead director of Best Buy Co. He is a member of the Advisory Board of Pershing Square Capital Management, L.P. He also served as an advisory council member for the Federal Reserve Bank of Chicago. He holds a Master’s degree in Accounting and a Bachelor’s degree from the University of Illinois. He is a Certified Public Accountant.
| Qualifications Mr. Paull brings to the Board significant financial expertise with a deep understanding of financial markets, corporate finance, accounting and controls and investor relations. As a former chief financial officer of a multinational corporation, he also has extensive experience in international operations and marketing. |
| 6 | 2019 Annual Meeting Proxy Statement |
Corporate Governance at Air Products
| Director Independence |
| The Board has affirmatively determined that all of the Company’s directors, except Mr. Ghasemi, qualify as independent under the New York Stock Exchange (“NYSE”) corporate governance listing standards. In determining independence, the Board determines whether directors have a material relationship with the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of directors. When assessing materiality, the Board considers all relevant facts and circumstances, including transactions between the Company and the director, family members of directors or organizations with which the director is affiliated. The Board further considers the frequency of and dollar amounts associated with any of these transactions and whether the transactions were in the ordinary course of business and were consummated on terms and conditions similar to those with unrelated parties. |
In its determination, the Board considers the specific tests for independence included in the NYSE listing standards. In addition, the Guidelines provide standards to assist in determining each director’s independence, which meet or exceed the NYSE independence requirements. The Guidelines provide that the following categories of relationships are immaterial for purposes of making an independence determination:
| ● | sales or purchases of goods or services between the Company and a director’s employer or an employer of a director’s family member, which occurred more than three years prior to the independence determination or involved less than 1% of such employer’s annual consolidated gross revenues, took place on the same terms and conditions offered to third parties or on terms and conditions established by competitive bid and did not affect the director’s or family member’s compensation; |
| ● | charitable contributions by the Company to an organization in which the director or his or her immediate family member serves as an executive officer, director or trustee that occurred more than three years prior to the independence determination, were made pursuant to the Company’s matching contributions program or were less than the greater of $1 million or 2% of the organization’s gross revenues; |
| ● | membership of a director in the same professional association, social, fraternal or religious organization or club as an executive officer of the Company; |
| ● | a director’s past matriculation at the same educational institution as an executive officer of the Company; |
| ● | a director’s service on the board of directors of another public company on which an executive officer of the Company also serves as a director, except for prohibited compensation committee interlocks; and |
| ● | a director’s service as a director, trustee or executive officer of a charitable or educational organization where an executive officer of the Company also serves as a director or trustee. |
In accordance with NYSE listing standards, in affirmatively determining the independence of any director who will serve on the Management Development and Compensation Committee, the Board also specifically considers factors relevant to determining whether a director has a relationship to the Company, which is material to that director’s ability to be independent from management in making judgments about the Company’s executive compensation, including sources of the director’s compensation and relationships of the director to the Company or senior management.
In addition, the Guidelines provide that no director may serve on the Audit and Finance Committee or Management Development and Compensation Committee of the Board if he or she has received within the past or preceding fiscal year any compensatory fee from the Company other than for Board or committee service; and no director may serve on the Management Development and Compensation Committee of the Board unless the director qualifies as an “outside director” under U.S. tax laws pertaining to deductibility of executive compensation.
On an annual basis, each member of the Board is required to complete a questionnaire designed in part to provide information to assist the Board in determining whether the director is independent under NYSE rules and the Guidelines. In addition, each director or potential director has an affirmative duty to disclose to the Corporate Governance and Nominating Committee relationships between and among that director (or an immediate family member), the Company and/or the executive officers of the Company.
| 7 |
Corporate Governance at Air Products
The Corporate Governance and Nominating Committee reviews director relationships and transactions for compliance with the standards described above and makes a recommendation to the Board, significantwhich makes the independence determination. For those directors identified as independent, the Company and the Board are aware of no relationships or transactions with the Company or management, which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Routine purchases and sales of products involving Ms. Carter’s and Mr. Monser’s employers (amounting to less than 1% of the Company’s and each such employer’s consolidated revenues) and Mr. Paull’s service on the advisory board of a shareholder were determined not to interfere with their independence.
| Board Refreshment | ||||
Ongoing Assessment of Board Composition The qualities and skills necessary for a specific director nominee are governed by the needs of the Company at the time the Corporate Governance and Nominating Committee determines to add a director to the Board. The specific requirements of the Company are determined by the Committee and are based on, among other things, the Company’s current business, market, geographic and regulatory environments; the mix of perspectives, experience and competencies currently represented by the other Board members; and the CEO’s views as to areas in which management desires additional advice and counsel. | Board Tenure Policy To enable Board succession planning and refreshment, the Board has adopted a policy that a non-executive director may not continue to serve on the Board after the Annual Meeting following the earlier of his or her completion of 15 full years of service on the Board or attainment of age 75. The Board retains the flexibility to waive this policy, including in response to events or recruiting realities. At the time Mr. Ghasemi was recruited to become the Company’s Chairman and CEO in 2014, the Board determined it would waive the age limit for him to enable him to remain a director during his employment. | |||
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Identification of Candidates When the need to recruit a non-management director arises, the Corporate Governance and Nominating Committee’s standard process is to consult the other directors, the CEO and sometimes a third-party recruiting firm to identify potential candidates. Once a candidate is identified, the candidate screening process typically is conducted initially through an interview by one or more members of the Committee and the CEO. | ||||
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Candidate Selection After the initial interviews, the candidate meets with the full Corporate Governance and Nominating Committee for formal consideration and recommendation to the Board. Prior to nomination or election, an investigation is conducted to verify the candidate’s reputation and background, the candidate’s independence as measured by the Board’s independence standards and other factors the Committee deems appropriate at the time. | ||||
| Shareholder Nominations |
The Corporate Governance and Nominating Committee has adopted a policy regarding its consideration of director candidates recommended by shareholders for nomination by the Board at an Annual Meeting and a procedure for submission of such candidates. The policy provides that candidates recommended by shareholders will be considered by the Committee. Submissions of candidates must be made in writing and must be received not later than 120 days prior to the anniversary date of the proxy statement for the prior Annual Meeting. The submission must also provide certain information concerning the candidate and the recommending shareholder(s), a statement explaining why the candidate has the qualifications required and consent of the candidate to be interviewed by the Corporate Governance and Nominating Committee and to serve if elected. A copy of the policy and procedure is available upon request from the Corporate Secretary’s Office. Candidates recommended by shareholders in accordance with these procedures will be screened and evaluated by the Corporate Governance and Nominating Committee in the same manner as other candidates.
| 8 | 2019 Annual Meeting Proxy Statement |
Corporate Governance at Air Products
| Overview |
Our business is managed by our employees under the direction and oversight of the Board. Among other responsibilities discussed below, the Board reviews, monitors and, where appropriate, approves fundamental financial expertiseand business strategies and major corporate actions. The Board of Directors is elected by shareholders to provide advice and counsel to and oversee management to ensure that the interests of the stockholders and other corporate constituents are being served with a deep understandingview toward maximizing our long-term value.
Directors exercise their oversight responsibilities through discussions with management, review of financial markets, corporate finance, accountingmaterials management provides to them, visits to our offices and controls,facilities and investor relations. Astheir participation in Board and Board committee meetings.
| Risk Oversight |
The CEO and other members of senior management are responsible for assessing and managing the Company’s risk exposure, and the Board and its committees provide oversight in connection with those efforts.
| The Board of Directors Responsibility for risk oversight rests with the Board. The Board formally reviews the Company’s risk management processes and policies periodically, including identification of key risks and associated monitoring, control and mitigation activities, but the Board primarily exercises its risk oversight responsibility through meetings, discussions and review of management reports and proposals. Consideration of risk is inherent in the Board’s consideration of the Company’s long-term strategies and in the transactions and other matters presented to the Board, including large capital expenditures, acquisitions and divestitures, cybersecurity and safety and environment updates. Committees help the Board carry out this responsibility by focusing on specific key areas of risk inherent in our business. All Board members are invited to attend most committee meetings, and Board members who do not attend committee meetings receive information about committee activities and deliberations. | ||||||||||||||||
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Audit and Finance Committee | Corporate Governance and Nominating Committee The Corporate Governance and Nominating Committee oversees risks associated with corporate governance, including Board structure, director succession planning and allocation of authority between management and the Board. | Management Development and Compensation Committee | ||||||||||||||
Management | ||||||||||||||||
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Corporate Governance at Air Products
| Management Succession Planning |
The Management Development and Compensation Committee of the Board, the CEO and the Human Resources organization maintain an ongoing focus on executive development and succession planning to prepare the Company for future success. The Board reviews organization and succession plans with our CEO at least annually. In addition, the Company has an emergency succession procedure for the CEO that is reviewed annually by the Board.
| A comprehensive review of executive talent determines readiness to take on additional leadership roles and identifies developmental and coaching opportunities needed to prepare our executives for greater responsibilities. | In addition to preparing for CEO succession, the succession planning process includes other senior management positions. | ||||||||
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| Succession planning is a responsibility of the entire Board and all members participate in this process. | The CEO makes a formal succession planning presentation to the Board annually. | ||||||||
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| Shareholder Communications |
Shareholders and other interested parties may communicate with the independent directors by sending a former chief financial officerwritten communication in care of the Corporate Secretary to:
 | Air Products and Chemicals, Inc. 7201 Hamilton Boulevard |
The Board has adopted a multinational corporation, hewritten procedure for collecting, organizing and forwarding direct communications from shareholders and other interested parties to the non-management directors. A copy of the procedure is available upon request from the Corporate Secretary’s Office.
| Board Leadership Structure |
The Board does not have a policy on whether the roles of Chairman of the Board and CEO should be separate or whether the Chairman of the Board should be independent. The Board determines which structure is in the best interests of the Company at any given time.
At present Mr. Ghasemi serves as both CEO and Chairman of the Board, and the Board also has extensive experiencean independent Lead Director. The Board decided to combine the CEO and Chairman roles because it has a high level of confidence in internationalMr. Ghasemi’s leadership and willingness to work closely and transparently with the independent directors. The Board believes the Company is best served at this time by unified leadership of operations and marketing.oversight of the Company, which ensures that the Board and management act with common purpose. Finally, the Board is satisfied that the independent directors have ample opportunities to execute their responsibilities independently through numerous executive sessions held throughout the year at both the Board and committee levels, substantial interactions with members of the management team other than the CEO and the leadership of the Lead Director and the committee chairs.
AIR PRODUCTS AND CHEMICALS, INC.
| 10 | 2019 Annual Meeting Proxy Statement |
COMPENSATION OF DIRECTORS
Table of ContentsCOMPENSATION OF DIRECTORS
For fiscal year 2016,Corporate Governance at Air Products
| Lead Director |
The Lead Director is elected by majority vote of the Board upon the nomination of the Corporate Governance and Nominating Committee.
Mr. Deaton is currently the Lead Director.
| The Guidelines provide that the Lead Director’s responsibilities include: | |
| ● | presiding at executive sessions of the Board and any other time the Chairman is not present and communicating feedback to the CEO; |
| ● | determining the agenda for executive sessions of non-management directors; and |
| ● | principal authority to convene a meeting of independent directors. |
| Executive Sessions |
The independent directors regularly meet without the CEO or other members of management present in executive sessions that are scheduled at each Board meeting. In addition, the CEO performance review is conducted in executive session, and the Board committees regularly meet in executive session. Board executive sessions are led by the Lead Director, except the CEO performance review is led by the Chair of the Management Development and Compensation Committee.
| Standing Committees of the Board |
The Board has three standing committees, which operate under written charters approved by the Board: Audit and Finance; Corporate Governance and Nominating; and Management Development and Compensation. In accordance with NYSE listing standards, none of the directors who were notserve on the Audit and Finance, Corporate Governance and Nominating or Management Development and Compensation Committees have ever been employed by the Company, received an annual cash retainer for Board service of $100,000. Committee chairs received an additional retainer of $15,000 and the Board has determined in its business judgment that all of them are “independent” from the Company and its management in accordance with the guidelines described above in “Director Independence” as well as with additional NYSE listing criteria that are applicable to members of the Audit and Finance and Management Development and Compensation Committees. The Company’s Bylaws also provide for an Executive Committee.
| The charters of all the committees can be viewed on the Company website at www.airproducts.com/Company/governance/board-of-directors/commitee-descriptions-and-charters.aspx and are available in print to any shareholder upon request. |
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Corporate Governance at Air Products
Audit and Finance Committee
Members ●Matthew H. Paull (Chair) ●Susan K. Carter ●Charles I. Cogut ●David H. Y. Ho ●Edward L. Monser The Board has determined that all of the Audit and Finance Committee members are “financially literate” and that Ms. Carter and Mr. Paull qualify as “audit committee financial experts” as defined by U.S. Securities and Exchange Commission (“SEC”) regulations and NYSE listing standards. FY2018 Meetings:8 | The Audit and Finance Committee operates under a written charter. Primary Responsibilities ●The Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. ●The Committee provides oversight of the Company’s external financial reporting process, systems and processes relating to the integrity of financial statements, internal audit process, programs for compliance with laws and regulations and the employee code of conduct, and processes for risk assessment and management. ●The Committee discusses with the Company’s internal auditor and independent registered public accountant the overall scope and plans for their respective audits. The Committee regularly meets with Internal Audit and the independent registered public accounting firm, with and without management present, to discuss the results of their audits, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. |
Corporate Governance and Nominating Committee
Members ●Chadwick C. Deaton (Chair) ●Charles I. Cogut ●Margaret G. McGlynn ●Matthew H. Paull FY2018 Meetings:2 | The Corporate Governance and Nominating Committee operates under a written charter. Primary Responsibilities ●The Committee monitors and makes recommendations to the Board about corporate governance matters, including the Guidelines, codes of conduct, Board structure and operation, Board policies on director compensation and tenure, the meeting schedules of the Board and its committees, the charters and composition of the committees and the annual Board and committee performance assessment processes. ●The Committee has primary responsibility for identifying, recommending and recruiting nominees for election to the Board and recommending candidates for election as Lead Director. ●The Committee also reviews and monitors the Company’s crisis management procedures, government relations activities and response to significant public policy issues, including social responsibility matters. |
| 12 | 2019 Annual Meeting Proxy Statement |
Corporate Governance at Air Products
Management Development and Compensation Committee
Members ●Edward L. Monser (Chair) ●Susan K. Carter ●Chadwick C. Deaton ●David H. Y. Ho ●Margaret G. McGlynn FY2018 Meetings:3 | The Management Development and Compensation Committee operates under a written charter. Primary Responsibilities ●The Committee establishes the executive officer compensation philosophy, design and strategy for the Company consistent with Company objectives and shareholder interests, determining CEO compensation and approving other executive officer compensation. ●The Committee approves performance objectives relevant to the compensation of the CEO, establishing the process for and leading the Board in evaluation of the performance of the Company’s CEO and providing oversight of the CEO’s evaluation of the performance of other executive officers. ●The Committee oversees CEO succession planning and the development and evaluation of potential candidates for other executive officer positions. ●The Committee oversees the Company’s overall management compensation program, the design and administration of management incentive compensation plans, including equity programs, and the design and administration of the Company’s retirement and welfare benefit plans. The Committee’s charter permits it to delegate all or a portion of the authority granted to it by the Board to one or more Committee members, senior executives or subcommittees to the extent consistent with applicable laws, regulations and listing standards. The Company’s Delegation of Authority Policy reserves for the Board and the Committee all compensation and staffing decisions with respect to executive officers except as specifically delegated. |
Executive Committee
Members ●Seifi Ghasemi (Chair) ●Chadwick C. Deaton ●Edward L. Monser ●Matthew H. Paull FY2018 Meetings:0 | Primary Responsibilities The Executive Committee has the authority of the Board to act on most matters during intervals between Board meetings. It is usually convened to approve capital expenditures associated with a project in excess of the CEO’s authority when a customer requires a commitment prior to the next Board meeting and a special meeting of the Board cannot be convened. |
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Corporate Governance at Air Products
Board Practices, Processes and Policies
| Board Meetings and Attendance |
During fiscal 2018, there were nine meetings of the Board. No director attended less than 75% of the combined total of meetings of the Board and the committees on which he or she was serving. In accordance with the Guidelines, all directors are expected to attend the Annual Meeting unless they have an emergency or unavoidable schedule conflict. All directors attended the last Annual Meeting.
| Board Performance Evaluation |
Each year the Board conducts an evaluation of its performance. The evaluation format is established by the Corporate Governance and Nominating Committee. In recent years, the format has been an unstructured discussion led by the Chair of the Corporate Governance and Nominating Committee covering topics approved by the Committee and provided to directors in advance of the evaluation. The Board committees also conduct annual self-evaluations using a similar format. Individual directors are evaluated by the Corporate Governance and Nominating Committee at the time of nomination for reelection. The Lead Director received an additional annual retaineris evaluated following his first full year of $20,000. Meeting feesservice in that role. This evaluation is conducted by a member of $2,000 per meeting were paid for participatingthe Corporate Governance and Nominating Committee after soliciting input from other directors.
| Corporate Governance Guidelines |
The Board has adopted Corporate Governance Guidelines for the Company in order to establish and maintain practices to govern the Company in accordance with the interests of the shareholders. The Guidelines set forth the governance practices the Board follows, including with respect to the roles and functions of the Board, Board leadership, director independence and qualifications, nomination and election of directors, director responsibilities, access to management and independent advisors, director compensation, director orientation and education, chief executive officer performance assessment, management succession and assessment of Board and committee performance. The Board regularly reviews corporate governance developments and modifies the Guidelines as warranted. | The Guidelines are available on the Company’s website at: www.airproducts.com/company/governance/board-of-directors/governance-guidelines.aspx and are available in print upon request. (Information contained on our website is not part of this proxy statement.) |
| Code of Conduct |
The Board has adopted its own Code of Conduct that is intended to affirm its commitment to the highest ethical standards, integrity and accountability among directors and focuses on areas of potential ethical risk and conflicts of interest especially relevant to directors. The Company also has a Code of Conduct for officers and employees. This Code of Conduct addresses such topics as conflicts of interest, confidentiality, protection and proper use of Company assets and compliance with laws and regulations. | Both Codes of Conduct can be found on the website at www.airproducts.com/company/governance/board-of-directors/director-code-of-conduct.aspx and www.airproducts.com/company/governance/commitment-ethical-business/employee-code-of-conduct.aspx and are available in print to any shareholder who requests them. |
| 14 | 2019 Annual Meeting Proxy Statement |
Corporate Governance at Air Products
| Transactions with Related Persons |
The Company did not engage in committee meetings. Nonemployee directors who meetany reportable related person transactions in fiscal 2018.
The Board recognizes that transactions with employeesrelated persons can present actual or potential conflicts of interest and wants to ensure that Company transactions are based solely on the best interests of the Company and its shareholders. Accordingly, the Board has delegated responsibility to the Audit and Finance Committee to review transactions between the Company and related persons. The Audit and Finance Committee has adopted a written policy providing procedures for review of related person transactions.
A related person transaction is a transaction between the Company and a director, executive officer or 5% or more shareholder, any of their respective immediate family members or a third party atcompany or other entity in which any of these persons have a direct or indirect material interest. The policy specifically excludes certain types of transactions, which the requestCommittee deems to be immaterial. Pursuant to the Audit and Finance Committee policy, related person transactions must be preapproved by the Committee or, in the event of an inadvertent failure to bring the transaction to the Committee for preapproval, ratified by the Committee. In deciding whether to approve or ratify a related person transaction, the Committee considers the benefits of the transaction to the Company, the impact on a director’s independence if a director or to satisfy a requirementdirector’s family member or affiliate is involved, the availability of law or listing standard receivecomparable sources for products and services, the meeting fee for such service. Retainers and meeting fees are paid quarterly in arrears. In addition to retainers and meeting fees, nonemployee directors receive an annual grant of deferred stock units with a value of approximately $120,000 (rounded up to nearest whole share) on the dateterms of the Annual Meeting. Directors electedtransaction and terms available to the Board after the Annual Meeting receive a prorated grant of deferred stock units based on the number of months remainingthird parties for similar transactions. The Audit and Finance Committee Chair is authorized to approve related person transactions when it is impractical or undesirable to wait until the next Annual Meeting.Committee meeting for approval. Such Chair-approved transactions must be reported to the Committee at the next meeting.
| Director Compensation Program | ($) | |
| Annual Deferred Stock Award (made immediately following Annual Meeting)(1) | 150,000 | |
| Annual Cash Retainer | 100,000 | |
| Lead Director Retainer | 25,000 | |
| Audit and Finance Committee Chair Retainer | 25,000 | |
| Management Development and Compensation Committee Chair Retainer | 20,000 | |
| Corporate Governance and Nominating Committee Chair | 15,000 |
| (1) | Directors elected to the Board after the Annual Meeting receive a prorated grant of deferred stock units based on the number of months remaining until the next annual meeting. |
| Our Corporate Governance and Nominating Committee periodically undertakes a review of non-employee director compensation. The most recent review was completed in fiscal 2017, when the Committee reviewed a competitive assessment of directors’ compensation levels and practices among a peer group of chemical and industrial companies with similar capital structure, asset intensity and profitability to the Company, the S&P 500 and the S&P 500 Basic Materials Sector. |
Directors may voluntarily defer all or a part of their cash retainers and their meeting fees under the Deferred Compensation Program for Directors. At the election of each director, voluntarily deferred feesamounts may be credited to deferred stock units or to an account, which is credited with interest based on long-term corporate bond yields. Deferred stock units entitle the director to receive one share of Company stock upon payout, which generally occurs after the director’s service on the Board is over. Deferred stock units earn “dividend equivalents” equal to the dividends that would have been paid on one share of stock for each unit owned by the director on dividend record dates. Deferred retainers and meeting fees (plus dividend equivalents
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Corporate Governance at Air Products
earned on the director’s existing deferred stock units account during a quarter) are converted to deferred stock units based on the NYSE closing price of a share of Company stock on the third to last business day of the quarter.
Directors are reimbursed for expenses incurred in performing their duties as directors. The Company covers directors under its overall directors and officers liability insurance policies. Directors are also covered by the business travel accident policy maintained by the Company and are eligible to participate in the Company’s charitable matching gift program. Under this program, for fiscal 2018 the Company matchesmatched donations of up to $5,000$10,000 per year made by employees and directors to qualifying educational organizations; matches, at twice the amount, donations of up to $2,000 per year made to qualifying arts and cultural organizations; and matches donations of up to $1,000 per year to qualifying environmental and conservationnon-profit organizations.
To emphasize the importance of long-term alignment with shareholders, the Board has adopted stock ownership requirements for directors. Directors are expected to own shares or share equivalents with a value (based on the NYSE closing price) equal to five times the annual cash retainer by the end of the fifth fiscal year after joining the Board. Directors are expected to increase their holdings to reflect an adjustment in the annual cash retainer within a reasonable period of time following the adjustment. Once a director has met the requirement, if there is a subsequent decline in the Company’s share price that causes the director’s ownership level to fall below this guideline, the director is not expected to purchase additional shares to meet the guideline but is expected to refrain from selling or transferring shares until the guideline is again satisfied. All directors are currently in compliance with the stock ownership guidelines for directors.
On October 1, 2016 the Company completed its spin-off of Versum Materials. Consistent with the terms of the Deferred Compensation Program for Directors, director’s outstanding deferred stock units on October 1, 2016 were modified to preserve their value after the spin-off. Each director’s Deferred Compensation Program for Directors account was credited with the number of Versum Materials deferred stock units equal to half the director’s Air Products’ deferred stock units on September 30, 2016, rounded up to the nearest whole unit. Terms and conditions applicable to Versum Materials deferred stock units will be the same as those applicable to Air Products deferred stock units, except the value of Versum Materials deferred stock units will be paid out in cash at the time of distribution.
AIR PRODUCTS AND CHEMICALS, INC.
COMPENSATION OF DIRECTORS
2016 Director Compensation
| Name | Fees Earned or Paid in Cash(1)($) | Stock Awards(2)($) | Option Awards($) | All Other | Total($) | |||||||||||||||
S. K. Carter | $ | 126,000 | $ | 120,081 | $ | - | $ | 246,081 | ||||||||||||
C. I. Cogut | $ | 128,000 | $ | 120,081 | $ | - | $ | 795 | $ | 248,876 | ||||||||||
W. L. Davis, III | $ | 41,083 | $ | - | $ | - | $ | 41,083 | ||||||||||||
C. C. Deaton | $ | 147,000 | $ | 120,081 | $ | - | $ | 5,000 | $ | 272,081 | ||||||||||
W. D. Ford | $ | 41,208 | $ | - | $ | - | $ | 614 | $ | 41,822 | ||||||||||
E. Henkes | $ | 35,333 | $ | - | $ | - | $ | 35,333 | ||||||||||||
D. H. Y. Ho | $ | 128,000 | $ | 120,081 | $ | - | $ | 248,081 | ||||||||||||
M. G. McGlynn | $ | 112,000 | $ | 120,081 | $ | - | $ | 5,000 | $ | 237,081 | ||||||||||
E. L. Monser | $ | 137,250 | $ | 120,081 | $ | - | $ | 257,331 | ||||||||||||
M. H. Paull | $ | 141,125 | $ | 120,081 | $ | - | $ | 4,422 | $ | 265,628 | ||||||||||
FISCAL 2018 DIRECTOR COMPENSATION | |
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | ||||
| Susan K. Carter | 100,000 | 150,162 | — | 250,162 | ||||
| Charles I. Cogut | 100,000 | 150,162 | 12,255 | 262,417 | ||||
| Chadwick C. Deaton | 140,000 | 150,162 | — | 290,162 | ||||
| David H. Y. Ho | 100,000 | 150,162 | — | 250,162 | ||||
| Margaret G. McGlynn | 100,000 | 150,162 | 10,000 | 260,162 | ||||
| Edward L. Monser | 120,000 | 150,162 | 10,000 | 280,162 | ||||
| Matthew H. Paull | 125,000 | 150,162 | 13,741 | 288,903 |
Certain directors voluntarily elected to defer some or all of their cash |
This column shows the grant date fair value of the annual deferred stock unit grant for |
Amounts in this column reflect charitable matching contributions under the Company’s charitable matching gift program for Mr. |
AIR PRODUCTS AND CHEMICALS, INC.
| 16 | 2019 Annual Meeting Proxy Statement |
CORPORATE GOVERNANCE
Our business is managed by our employees under the direction and oversightTable of the Board. We keep Board members informed of our business through discussions with management, materials we provide to them, visits to our offices and facilities, and their participation in Board and Board committee meetings.
The Board has adopted Corporate Governance Guidelines for the Company in order to assure that it has the necessary practices in place to govern the Company in accordance with the interests of the shareholders. The Corporate Governance Guidelines set forth the governance practices the Board follows, including with respect to the roles and functions of the Board, Board leadership, director independence and qualifications, nomination and election of directors, director responsibilities, access to management and independent advisors, director compensation, director orientation and education, chief executive officer performance assessment, management succession, and assessment of Board and committee performance. The Guidelines are available on the Company’s website at:http://www.airproducts.com/company/governance/board-of-directors/governance-guidelines.aspxand are available in print upon request. (Information contained on our website is not part of this proxy statement.) The Board regularly reviews corporate governance developments and modifies these Guidelines as warranted.Contents
The Board has affirmatively determined that all of the Company’s directors, except Mr. Ghasemi, qualify as independent under the NYSE corporate governance listing standards. In determining independence, the Board determines whether directors have a material relationship with the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of directors. When assessing materiality, the Board considers all relevant facts and circumstances including, without limitation, transactions between the Company and the director, family members of directors, or organizations with which the director is affiliated. The Board further considers the frequency and dollar amounts associated with any of these transactions and whether the transactions were in the ordinary course of business and were consummated on terms and conditions similar to those with unrelated parties.
In its determination, the Board considers the specific tests for independence included in the NYSE listing standards. In addition, the Board has adopted guidelines to assist in determining each director’s independence which meet or exceed the NYSE independence requirements. The guidelines provide that the following categories of relationships are immaterial for purposes of making an independence determination:
Any business transactions or relationships involving sales or purchases of goods or services between the Company and a director’s employer or an employer of a director’s family member which occurred more than three years prior to the independence determination or involve less than 1% of such employer’s annual consolidated gross revenues; provided the transaction takes place on the same terms and conditions offered to third parties or on terms and conditions established by competitive bid, and the director’s or family member’s compensation is not affected by the transaction;
Charitable contributions by the Company to an organization in which the director or his or her immediate family member serves as an executive officer, director, or trustee that occurred more than three years prior to the independence determination, were made pursuant to the Company’s matching contributions program, or were less than the greater of $1 million or 2% of the organization’s gross revenues;
Membership of a director in the same professional association, social, fraternal, or religious organization or club as an Executive Officer of the Company;
A director’s past matriculation at the same educational institution as an Executive Officer of the Company;
A director’s service on the board of directors of another public company on which an Executive Officer of the Company also serves as a director, except for prohibited compensation committee interlocks; and
A director’s service as a director, trustee, or executive officer of a charitable or educational organization where an Executive Officer of the Company also serves as a director or trustee.
In accordance with NYSE listing standards, in affirmatively determining the independence of any director who will serve on the Management Development and Compensation Committee, the Board also specifically considers factors
AIR PRODUCTS AND CHEMICALS, INC.
CORPORATE GOVERNANCE
relevant to determining whether a director has a relationship to the Company which is material to that director’s ability to be independent from management in making judgments about the Company’s executive compensation, including sources of the director’s compensation and relationships of the director to the Company or senior management.
In addition, the Company’s Corporate Governance Guidelines provide that no director may serve on the Audit Committee or Management Development and Compensation Committee of the Board if he or she has received, within the past or preceding fiscal year, any compensatory fee from the Company other than for Board or committee service; and no director may serve on the Management Development and Compensation Committee of the Board unless the director qualifies as an “outside director” under U.S. tax laws pertaining to deductibility of executive compensation.
On an annual basis, each member of the Board is required to complete a questionnaire designed in part to provide information to assist the Board in determining whether the director is independent under NYSE rules and our Corporate Governance Guidelines. In addition, each director or potential director has an affirmative duty to disclose to the Corporate Governance and Nominating Committee relationships between and among that director (or an immediate family member), the Company, and/or the management of the Company.
The Corporate Governance and Nominating Committee reviews all relationships and transactions for compliance with the standards described above and makes a recommendation to the Board, which makes the independence determination. For those directors identified as independent, the Company and the Board are aware of no relationships or transactions with the Company or management which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Routine purchases and sales of products involving Ms. Carter’s and Mr. Monser’s employers (amounting to less than 1% of the Company’s and each such employer’s consolidated revenues) and Mr. Paull’s service on the advisory board of a shareholder were determined not to interfere with their independence.
The Board believes that fostering long-term and institution-wide relationships with shareholders and maintaining their trust and goodwill is a core Company objective. Management conducts extensive engagements with key shareholders. These engagements may cover governance, compensation, and safety, as well as financial matters to ensure that management and the Board understand and address the issues that are important to our shareholders. The Board oversees the discharge by management of shareholder communication and engagement and receives regular reports on shareholder comments and feedback and is open to dialogue on issues of interest to significant long term shareholders. The Board also specifically seeks to understand any significant voting trends on the Company’s Executive Officer compensation program and other governance matters.
The independent directors regularly meet without the Chief Executive Officer (“CEO”) or other members of management present in executive sessions that are scheduled at each Board meeting. In addition, the CEO performance review is conducted in executive session, and the Audit, Corporate Governance and Nominating, and Management Development and Compensation Committees periodically meet in executive session. Board executive sessions are led by the Lead Director, currently Mr. Deaton¸ except the CEO performance review is led by the Chairman of the Management Development and Compensation Committee.
During fiscal year 2016, there were seventeen meetings of our Board. Board and committee attendance averaged 97% for the Board as a whole, and no director attended less than 75% of the combined total of meetings of the Board and the committees on which he or she was serving. In accordance with the Company’s Corporate Governance Guidelines, all directors are expected to attend the Annual Meeting unless they have an emergency or unavoidable schedule conflict. All directors attended the last Annual Meeting.
AIR PRODUCTS AND CHEMICALS, INC.
CORPORATE GOVERNANCE
Shareholders and other interested parties may communicate with the independent directors by sending a written communication in care of the Corporate Secretary’s Office to the address on page 5. The Board has adopted a written procedure for collecting, organizing, and forwarding direct communications from shareholders and other interested parties to the independent directors. A copy of the procedure is available upon request from the Corporate Secretary’s Office.
The Board has adopted its own Code of Conduct that is intended to affirm its commitment to the highest ethical standards, integrity, and accountability among directors and focuses on areas of potential ethical risk and conflicts of interest especially relevant to directors. The Company also has a Code of Conduct for officers and employees. This Code of Conduct addresses such topics as conflicts of interest, confidentiality, protection and proper use of Company assets, and compliance with laws and regulations. Both Codes of Conduct can be found on the website athttp://www.airproducts.com/company/governance/board-of-directors/director-code-of-conduct.aspx andhttp:// www.airproducts.com/company/governance/commitment-ethical-business/employee-code-of-conduct.aspx and are available in print to any shareholder who requests them.
Transactions with Related Persons
The Company did not engage in any reportable related person transactions in fiscal year 2016.
The Board recognizes that transactions with related persons can present actual or potential conflicts of interest and wants to ensure that Company transactions are based solely on the best interests of the Company and its shareholders. Accordingly, the Board has delegated responsibility to the Audit Committee to review transactions between the Company and related persons. The Audit Committee has adopted a written policy providing procedures for review of related person transactions.
A related person transaction is a transaction between the Company and a director, Executive Officer, or 5% or more shareholder; an immediate family member of a director, Executive Officer, or 5% or more shareholder; or a company or other entity in which any of these persons have a material interest. The policy specifically excludes certain types of transactions which the Committee deems to be immaterial. Pursuant to the Audit Committee policy, related person transactions must be preapproved by the Committee or, in the event of an inadvertent failure to bring the transaction to the Committee for preapproval, ratified by the Committee. In deciding whether to approve or ratify a related person transaction, the Committee considers the benefits of the transaction to the Company, the impact on a director’s independence if a director or a director’s family member or affiliate is involved, the availability of comparable sources for products and services, the terms of the transaction, and terms available to third parties for similar transactions. The Audit Committee chairman is authorized to approve related person transactions when it is impractical or undesirable to wait until the next Committee meeting for approval. Such chairman-approved transactions must be reported to the Committee at the next meeting.
While the Board has not adopted a formal policy on diversity, the Corporate Governance Guidelines provide that, as a whole, the Board should include individuals with a diverse range of experience to give the Board depth and breadth in the mix of skills represented. The Board seeks to include an array of skills, perspectives and experience in its overall composition. This guideline is implemented by seeking to identify candidates that bring diverse skills sets, backgrounds, and experiences, including ethnic, gender, and geographic diversity, to the Board when director candidates are needed.
AIR PRODUCTS AND CHEMICALS, INC.
CORPORATE GOVERNANCE
As provided in the Corporate Governance Guidelines, the Board does not have a policy on whether the roles of Chairman of the Board and CEO should be separate or whether the Chairman of the Board should be independent. The Board determines which structure is in the best interests of the Company at any given time.
At present Mr. Ghasemi serves as both CEO and Chairman and the Board also has an independent Lead Director. The Board decided to combine the CEO and Chairman roles because it has a high level of confidence in Mr. Ghasemi’s leadership and willingness to work closely and transparently with the independent directors, and believes the Company is best served at this time by unified leadership of operations and oversight of the Company, which ensures that the Board and management act with common purpose. The Board also believes that maintaining equality among the independent directors fosters collegiality and openness among directors. Finally, the Board is satisfied that the independent directors have ample opportunities to execute their responsibilities independently through numerous executive sessions held throughout the year at both the Board and committee levels, substantial interactions with members of the management team other than the CEO, and the leadership of the Lead Director and the committee chairs.
The Corporate Governance Guidelines provide that the Lead Director’s responsibilities include:
Presiding at executive sessions of the Board and any other time the Chairman is not present, and communicating feedback to the CEO;
Determining the agenda for executive sessions of non-management directors; and
Principal authority to convene a meeting of independent directors.
The Lead Director is elected by majority vote of the Board upon the nomination of the Corporate Governance and Nominating Committee and serves for a three-year term. Mr. Deaton is currently the Lead Director.
To enable proactive Board succession planning and self-renewal, the Board has adopted a policy that a non-executive director may not continue to serve on the Board after the Annual Meeting following the earlier of his or her completion of fifteen full years of service on the Board or attainment of age 72. The Board retains the flexibility to waive this policy in response to events or recruiting realities. At the time Mr. Ghasemi was recruited to become the Company’s Chairman and CEO in 2014, the Board determined it would waive the age limit for him to enable him to remain a director for the full term of his employment agreement.
Each year the Board conducts an evaluation of its performance. The evaluation format is established by the Corporate Governance and Nominating Committee. In recent years, the format has been an unstructured discussion led by the Chairman of the Corporate Governance and Nominating Committee, covering topics approved by the Committee and provided to directors in advance of the evaluation, including performance against objectives the Board established for itself the prior year. Following the evaluation, the Committee reviews and reports to the Board on action items arising from the evaluation. The Audit, Corporate Governance and Nominating, and Management Development and Compensation Committees of the Board also conduct annual self-evaluations using a similar format.
Individual directors are evaluated by the Corporate Governance and Nominating Committee at the time of nomination for reelection. The Lead Director is evaluated following his first full year of service in that role. This evaluation is conducted by a member of the Corporate Governance Compensation Committee after soliciting input from other directors.
AIR PRODUCTS AND CHEMICALS, INC.
CORPORATE GOVERNANCE
Management Succession Planning
The Management Development and Compensation Committee of the Board, the CEO, and the Human Resources organization maintain an ongoing focus on executive development and succession planning to prepare the Company for future success. In addition to preparing for CEO succession, the succession planning process includes all senior management positions. A comprehensive review of executive talent, including, from time to time, assessments by an independent consulting firm, determines readiness to take on additional leadership roles and identifies developmental and coaching opportunities needed to prepare our executives for greater responsibilities. The CEO makes a formal succession planning presentation to the Board annually. Succession planning is a responsibility of the entire Board and all members participate. In addition, the Company has an emergency succession procedure for the CEO that is reviewed periodically by the Board.
The Board’s role in risk oversight of the Company is consistent with the Company’s leadership structure, with the CEO and other members of senior management having responsibility for assessing and managing the Company’s risk exposure, and the Board and its committees providing oversight in connection with those efforts. Management is responsible for assessing and managing the Company’s various exposures to risk on a day-to-day basis, including the creation of appropriate risk management programs and policies. Responsibility for risk oversight rests with the full Board. The Board formally reviews the Company’s risk management processes and policies periodically, including inventories of key risks and associated monitoring, control, and mitigation activities; but the Board primarily exercises its risk oversight responsibility through meetings, discussions, and review of management reports and proposals. Consideration of risk is inherent in the Board’s consideration of the Company’s long-term strategies and in the transactions and other matters presented to the Board, including large capital expenditures, acquisitions and divestitures, and safety and environment updates. Committees help the Board carry out this responsibility by focusing on specific key areas of risk inherent in our business:
The Audit and Finance Committee oversees risks associated with financial and accounting matters, including compliance with legal and regulatory requirements; financial instruments, financial transactions, financial policies and strategies, pension funding, and capital structure; and the Company’s financial reporting and internal control systems. The Audit and Finance Committee also has oversight for the Company’s risk assessment and management process and associated monitoring, control and mitigation activities;
The Corporate Governance and Nominating Committee oversees risks associated with corporate governance, including Board structure, director succession planning, and allocation of authority between management and the Board;
The Management Development and Compensation Committee helps ensure that the Company’s executive compensation policies and practices support the retention and development of executive talent with the experience required to manage risks inherent to the business and do not encourage or reward excessive risk-taking by our executives.
All Board members are invited to attend most committee meetings and Board members who do not attend Committee meetings receive reports from the committees about their activities and deliberations.
AIR PRODUCTS AND CHEMICALS, INC.
STANDING COMMITTEES OF THE BOARD
STANDING COMMITTEES OF THE BOARD
The Board has three standing committees which operate under written charters approved by the full Board: Audit and Finance; Corporate Governance and Nominating; and Management Development and Compensation. During 2016, the Board determined to simplify its Committee structure to demonstrate its leadership in simplification and cost reduction. The Board eliminated the Finance Committee and assumed some of its responsibilities. The remainder of its responsibilities were transferred to the Audit Committee, which was renamed the Audit and Finance Committee.
In accordance with NYSE listing standards, none of the directors who serve on the Audit and Finance, Corporate Governance and Nominating, or Management Development and Compensation Committees have ever been employed by the Company, and the Board has determined in its business judgment that all of them are “independent” from the Company and its management in accordance with the guidelines described above in “Director Independence”. The charters of all the committees can be viewed on the Company website athttp://www.airproducts.com/company/governance/board-of-directors/committee-composition/commitee-descriptions-and-charters.aspxand are available in print to any shareholder upon request. The Company’s Bylaws also provide for an Executive Committee. The chart below identifies directors who were members of each committee at the end of fiscal year 2016, the number of meetings held by each committee during fiscal year 2016, and the committee chairs.
| Name | Audit and Finance | Corporate Nominating | Executive | Management Development & Compensation | ||||
S. K. Carter | X | X | ||||||
C. I. Cogut | X | X | ||||||
C. C. Deaton | C | X | X | |||||
S. Ghasemi | C | |||||||
D. H. Y. Ho | X | X | ||||||
M. G. McGlynn | X | X | ||||||
E. L. Monser | X | X | C | |||||
M. H. Paull | C | X | X | |||||
FY2016 Meetings | 11 | 3 | 0 | 3 | ||||
C = Chairman
The Board has determined that all of the Audit and Finance Committee members are “financially literate” and that Ms. Carter and Mr. Paull qualify as “audit committee financial experts” as defined by SEC regulations and NYSE listing standards. The Committee operates under a written charter. The Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. The Committee provides oversight of the Company’s external financial reporting process, systems and processes relating to the integrity of financial statements, internal audit process, programs for compliance with laws and regulations, administration of the employee code of conduct, and processes for risk assessment and management. The Committee discusses with the Company’s internal auditor and independent registered public accountant the overall scope and plans for their respective audits. The Committee regularly meets with the internal auditor and the independent registered public accounting firm, with and without management present, to discuss the results of their audits, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.
Each year the Committee approves an annual agenda plan which specifies matters to be considered and acted upon by the Committee over the course of the year in fulfilling its responsibilities. In fiscal year 2016, the Committee met ten times.
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STANDING COMMITTEES OF THE BOARD
Audit and Finance Committee Report
The Audit and Finance Committee provides oversight of the Company’s financial reporting process on behalf of the Board. Management bears primary responsibility for the financial statements and the reporting process, including the system of internal controls and disclosure controls. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of the audited consolidated financial statements with United States generally accepted accounting principles (“GAAP”).
In fulfilling its responsibilities, the Audit and Finance Committee has reviewed and discussed the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016 with the Company’s management and the independent registered public accounting firm, KPMG. The Committee has discussed with KPMG the matters that are required to be discussed under Public Company Accounting Oversight Board standards governing communications with audit committees. KPMG has provided to the Committee the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm communications with the Audit and Finance Committee concerning independence, and the Committee has discussed with KPMG the firm’s independence.
Based on the reviews and discussions referred to above, the Committee approved the audited consolidated financial statements and recommended to the Board that they be included in the Company’s Annual Report on Form 10-K for fiscal year 2016.
Audit and Finance Committee
Matthew H. Paull, Chairman
Susan K. Carter
Charles I. Cogut
David H. Y. Ho
Edward L. Monser
Independent Registered Public Accounting Firm
Appointment and Attendance at Annual Meeting. The Audit Committee appointed KPMG as the Company’s independent registered public accounting firm for fiscal year 2016. KPMG has been retained as the Company’s independent registered public accounting firm since 2002. Representatives of KPMG will be present at the Annual Meeting to respond to appropriate questions and make a statement if they desire.
Fees of Independent Registered Public Accounting Firm. Consistent with the Audit and Finance Committee’s responsibility for engaging the Company’s independent registered public accounting firm, all audit and permitted nonaudit services performed by KPMG require preapproval by the Audit and Finance Committee. The full Committee approves projected services and fee estimates for these services and establishes budgets for major categories of services at its first meeting of the fiscal year. The Committee chairman has been designated by the Committee to approve any services arising during the year that were not preapproved by the Committee and services that were preapproved if the associated fees will cause the budget established for the type of service at issue to be exceeded by more than ten percent. Services approved by the chairman are communicated to the full Committee at its next regular quarterly in person meeting, and the Committee reviews actual and forecast services and fees for the fiscal year at each such meeting. During fiscal year 2016, all services performed by the independent registered public accounting firm were preapproved.
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STANDING COMMITTEES OF THE BOARD
During fiscal years 2015 and 2016, KPMG billed the Company fees for services in the following categories and amounts (in millions):
| KPMG Fees | 2015 | 2016 | ||||||
Audit Fees | $ | 7.2 | $ | 7.1 | ||||
Audit-related Fees(1) | $ | 1.4 | $ | 10.7 | ||||
Tax Fees | $ | 0.9 | $ | .3 | ||||
All Other Fees | $ | 0.0 | $ | 0.0 | ||||
Total Fees | $ | 9.5 | $ | 18.1 | ||||
| Advisory Vote on Executive Officer Compensation | |||
The Board is committed to excellence in governance and recognizes the interest our shareholders have in the Company’s executive compensation program. As a part of that commitment, and in accordance with SEC rules, our shareholders are asked to approve an advisory resolution on the compensation of our named executive officers, as disclosed in the Compensation Discussion and Analysis and accompanying Executive Compensation Tables and narrative. This proposal, commonly known as a “say on pay” proposal, gives you the opportunity to endorse or not endorse our fiscal 2018 executive compensation program by voting for or against the following resolution: RESOLVED, that the compensation of the named executive officers as discussed and disclosed in the Compensation Discussion and Analysis and the executive compensation tables and accompanying narrative is approved. Although the vote is non-binding, the Board and the Management Development and Compensation Committee will review the voting results. If there are a significant number of negative votes, we will seek to understand the concerns that influenced the vote and to address them in making future decisions about executive compensation programs. The Company intends to conduct an advisory vote on executive officer compensation annually. The next such vote will be conducted at our 2020 Annual Meeting. | |||
 | The Board recommends a vote “FOR” this resolution. |
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The increase in Audit-related fees for fiscal year 2016 is primarily attributable to services related to the Company’s spin-off of its Electronic Materials division as Versum Materials, Inc. Audit fees are fees for those professional services rendered in connection with the audit of the Company’s consolidated financial statements and the review of the Company’s quarterly consolidated financial statements on Form 10-Q that are customary under the standards of the Public Company Accounting Oversight Board (United States), and in connection with statutory audits in foreign jurisdictions. Audit-related services consisted primarily of services rendered in connection with the audits of Versum Materials combined financial statements included on Form 10 and review of Versum Materials quarterly combined financial statements, employee benefit plan audits, SEC registration statements, due diligence assistance, and consultation on financial accounting and reporting standards. Tax fees were primarily for preparation of tax returns in non-U.S. jurisdictions, assistance with tax audits and appeals, advice on restructuring to enable the tax free separation of the Materials Technologies businesses and technical assistance.
Selection of Independent Registered Public Accounting Firm. The Audit and Finance Committee annually evaluates the performance of the Company’s independent registered public accounting firm, and determines whether to reappoint the current accounting firm or consider other firms. The Committee also evaluates and approves the selection of the lead engagement partner. At its meeting held in November 2016, the Committee approved reappointment of KPMG as the Company’s independent registered public accounting firm for fiscal year 2017. In determining whether to reappoint KPMG, the Committee took into consideration a number of factors, including:
KPMG’s global capabilities to handle the breadth and complexity of the Company’s global operations;
KPMG’s technical expertise and knowledge of the Company’s industry and global operations;
The quality and candor of KPMG’s communications with the Committee and management;
KPMG’s independence;
The appropriateness of KPMG’s fees; and
KPMG’s tenure as our independent registered public accounting firm, including the benefits of that tenure, and the controls and processes in place (such as rotation of key partners) that help ensure KPMG’s continued independence.
Based on its evaluation, the Committee believes the continued retention of KPMG is in the best interest of our shareholders. The Board concurs and requests that shareholders ratify the appointment of KPMG as the independent registered public accounting firm for fiscal year 2017.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee operates under a written charter. The Committee monitors and makes recommendations to the Board about corporate governance matters including the Corporate Governance Guidelines, codes of conduct, Board structure and operation, Board policies on director compensation and tenure,
AIR PRODUCTS AND CHEMICALS, INC.
STANDING COMMITTEES OF THE BOARD
the meeting schedules of the Board and the committees, the charters and composition of the committees, and the annual Board and committee performance assessment processes. The Committee has primary responsibility for identifying, recommending, and recruiting nominees for election to the Board and recommending candidates for election as Lead Director. The Committee also reviews and monitors the Company’s crisis management procedures, lobbying activities, policies on political contributions and response to significant public policy issues, including social responsibility matters. The Committee met three times in fiscal year 2016.
Selection of Directors. The Board has established the following minimum qualifications for all directors: business experience, judgment, independence, integrity, ability to commit sufficient time and attention to the activities of the Board, absence of any potential conflicts with the Company’s interests, and an ability to represent the interests of all shareholders. The qualities and skills necessary for a specific director nominee are governed by the needs of the Company at the time the Committee determines to add a director to the Board. The specific requirements of the Company are determined by the Committee and are based on, among other things, the Company’s current business, market, geographic, and regulatory environments; the mix of perspectives, experience, and competencies currently represented by the other Board members; and the CEO’s views as to areas in which management desires additional advice and counsel.
When the need to recruit a nonmanagement director arises, the Committee’s standard process is to consult the other directors, the CEO, and sometimes a third-party recruiting firm to identify potential candidates. Once a candidate is identified, the candidate screening process most recently has been conducted initially through an interview by one or more members of the Committee and the CEO. After the initial interviews, the candidate meets with the full Committee for formal consideration and recommendation to the Board. Prior to final election to the Board, a background investigation is conducted to verify the candidate’s reputation and background, the candidate’s independence as measured by the Board’s independence standards, and other factors the Committee deems appropriate at the time.
This year eight incumbent directors are standing for election, Ms. Carter, Mr. Cogut, Mr. Deaton, Mr. Ghasemi, Mr. Ho, Ms. McGlynn, Mr. Monser, and Mr. Paull. All the nominees have been previously elected by the Company’s shareholders.
The Committee has adopted a policy regarding its consideration of director candidates recommended by shareholders for nomination by the Committee at an Annual Meeting, and a procedure for submission of such candidates. The policy provides that candidates recommended by shareholders will be considered by the Committee; submissions of candidates must be made in writing; and must be received not later than 120 days prior to the anniversary date of the proxy statement for the prior Annual Meeting. The submission must also provide certain information concerning the candidate and the recommending shareholder(s), a statement explaining why the candidate has the qualifications required, and consent of the candidate to be interviewed by the Committee and to serve if elected. A copy of the policy and procedure is available upon request from the Corporate Secretary’s Office. Candidates recommended by shareholders in accordance with these procedures will be screened and evaluated in the same manner as other candidates.
The Executive Committee has the authority of the Board to act on most matters during intervals between Board meetings. It is usually convened to approve capital expenditures associated with a project in excess of the CEO’s authority when a customer requires a commitment prior to the next Board meeting and a special meeting of the Board cannot be convened. The Committee did not meet in fiscal year 2016.
The Finance Committee was eliminated for 2016 and its responsibilities were assumed by the Board and the Audit Committee, which was renamed the Audit and Finance Committee.
AIR PRODUCTS AND CHEMICALS, INC.
STANDING COMMITTEES OF THE BOARD
Management Development and Compensation Committee
Pursuant to its charter, the primary responsibilities of the Management Development and Compensation Committee (the “Committee”) are:
Establishing the Executive Officer compensation philosophy, design and strategy for the Company, consistent with Company objectives and shareholder interests, determining CEO compensation, and approving other Executive Officer compensation;
Approving performance objectives relevant to the compensation of the CEO, establishing the process for and leading the Board in evaluation of the performance of the Company’s CEO, and providing oversight of the CEO’s evaluation of the performance of other Executive Officers;
Overseeing CEO succession planning and the development and evaluation of potential candidates for other Executive Officer positions; and
Overseeing the Company’s overall management compensation program, the design and administration of management incentive compensation plans, including equity programs, and the design and administration of the Company’s retirement and welfare benefit plans.
The Committee’s charter permits it to delegate all or a portion of the authority granted to it by the Board to one or more Committee members, senior executives, or subcommittees to the extent consistent with applicable laws, regulations, and listing standards. The Company’s Delegation of Authority Policy reserves for the Board and the Committee all compensation and staffing decisions with respect to Executive Officers except as specifically delegated.
Roles of the Committee, Management, and Compensation Consultant in the Compensation Process. The Committee is responsible to the Board and to shareholders for establishment and oversight of the Company’s compensation program for Executive Officers, and for approving the compensation level of the Executive Officers. For fiscal year 2016, the Company’s Executive Officers were:
Seifi Ghasemi, Chairman, President and Chief Executive Officer;
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Corning F. Painter, Executive Vice President, Industrial Gases; and
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The Committee establishes overall compensation strategies and policies for the Executive Officers, allocates compensation for Executive Officers among the various components of compensation, evaluates and approves performance measures and goals relevant to the incentive compensation of the Executive Officers, evaluates the performance of the CEO with input from the full Board, determines direct compensation levels for the CEO, and evaluates and approves direct compensation levels for other Executive Officers. Each year, the Committee:
reviews and evaluates the appropriateness of the Company’s current Executive Officer compensation program based on several factors, including competitiveness of the program and alignment of compensation delivered under the program with the Company’s strategy and performance;
reviews whether the program design encourages excessive risk taking;
approves peer groups for market reference;
reviews dilution and burn rates associated with the Company’s equity compensation;
evaluates and approves changes to incentive compensation and benefit plans when needed;
approves incentive compensation payouts for the current year; and
addresses other specific issues regarding management development and compensation as needed.
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AIR PRODUCTS AND CHEMICALS, INC.
STANDING COMMITTEES OF THE BOARDCompensation
Periodically, the Committee also undertakes an extensive review of the competitiveness and appropriateness of certain pay practices. In fiscal year 2016, the Committee conducted an in-depth review of Executive Officer severance and change in control arrangements.
The Committee retains an external compensation consultant to provide independent advice, information, and analysis on executive compensation. The Committee has established several practices to ensure the external consultant’s independence, candor, and objectivity. The consultant is engaged by, has its compensation set by, and reports directly to the Committee; frequently meets separately with the Committee with no members of management present; and consults with the Committee chairman in between meetings. Management reports fees paid for services performed by the consultants to the Committee at each meeting and the Committee approves in advance the services to be performed. The Committee retained Farient Advisors LLC (“Farient”) as its external consultant for fiscal year 2016. Farient has also advised the Corporate Governance and Nominating Committee on director compensation, but has performed no other services for the Company or management. The Committee assessed Farient’s independence and is not aware of any conflicts of interest raised by Farient’s work.
During fiscal year 2016, Farient provided advice and analysis to the Committee on direct compensation for individual Executive Officers, peer group composition, incentive plan performance measures, compensation program design, and external trends and developments. Farient also provided an analysis of the alignment of pay delivered under the Company’s Executive Officer compensation program with its performance compared to peer group pay and performance, an assessment of the fit of the Company’s Executive Officer compensation program design with its business strategy, a comparison of the program design to peer programs, and an assessment of the potential relationship between the Company’s compensation program and risk-taking by management.
While the Committee determines overall compensation strategy and policies for the Executive Officers and approves their compensation, it seeks input from several Executive Officers and other management employees with respect to both overall guidelines and discrete compensation decisions. Specifically:
Human Resources staff works with the Committee to develop the design of compensation programs and decision-making frameworks for determining compensation levels;
the CEO provides input to the Committee on the forms of incentive compensation and performance measures that will best support his strategic goals for the Company;
the CEO provides the Committee perspective on the performance of other Executive Officers and develops and recommends compensation actions for the other Executive Officers, in consultation with Human Resources, and based on competitive market analysis received from external compensation consultants;
the CFO provides background to the Committee regarding the Company’s key financial objectives and performance against them; and
the Company’s Law and Human Resources staff provide technical advice and other support to the Committee.
These Executive Officers and employees attend portions of the Committee meetings; however, the Committee’s usual practice is to meet in executive session both alone and with its external compensation consultant to reach final decisions about CEO and other Executive Officer compensation.
AIR PRODUCTS AND CHEMICALS, INC.
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION OF EXECUTIVE OFFICERS
Report of the Management Development and Compensation Committee
The Management Development and Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis section of the Company’s Proxy Statement for fiscal year 2016.Analysis. Based on its review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in the proxy statement for the Company’s Proxy Statement2019 Annual Meeting of Shareholders and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year 2016.ended September 30, 2018.
Management Development and Compensation Committee
Edward L. Monser, Chairman
Chair
Susan K. Carter
Chadwick C. Deaton
David H. Y. Ho
Margaret G. McGlynn
Compensation Discussion and Analysis
The Compensation Discussion and Analysis describes and analyzes our Executive Officer Compensationexecutive officer compensation program with emphasis on compensation actions taken during fiscal year 2016. It2018. For fiscal 2018, the Company’s named executive officers were:
| ● | Seifi Ghasemi, Chairman, President and Chief Executive Officer; |
| ● | M. Scott Crocco, Executive Vice President and Chief Financial Officer (“CFO”); |
| ● | Sean D. Major, Executive Vice President, General Counsel and Secretary; |
| ● | Dr. Samir Serhan, Executive Vice President; and |
| ● | Corning F. Painter, former Executive Vice President, Industrial Gases. |
The Compensation Discussion and Analysis is organized into 56 sections:
| SECTION | Page Number | ||||
 | Highlights of Fiscal 2018 Company Performance and Compensation Actions | 19 | |||
 | Fiscal 2018 Executive Officer Compensation Program Overview | 22 | |||
 | Fiscal 2018 Direct Compensation Components | 24 | |||
 | Employee Benefits and Other Compensation | 29 | |||
 | Executive Compensation Decision-Making Process | 30 | |||
 | Key Compensation Practices and Policies | 33 | |||
| 18 | 2019 Annual Meeting Proxy Statement |
Executive Compensation
 | Highlights of Fiscal 2018 Company Performance and Compensation Actions |
Fiscal 2018 Performance and Strategic Highlights
Financial Performance
| EARNINGS PER SHARE | |
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over fiscal 2017. | |
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| Increased 28% over fiscal 2017. | |||
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| Increased 18%over fiscal 2017, representing the fourth consecutive year of | |
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Increased 11%over fiscal 2017. | |||
| Operational Performance | Returns to Shareholders | ||
| The Company brought major projects on-stream in China, Korea and the U.S. and announced four large gasification projects and the acquisition of gasification technology. | |||
2016 Company Performance Highlights
The Company continued its dramatic improvement in safety performance, with 20% improvement in the lost time injury rate and 12% improvement in the recordable injury rate.
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The Company returned |
The Company completed its spin-off ofOur goal is to be the Electronic Materialssafest, most diverse and most profitable industrial gas company in the world, providing excellent service to our customers.
In fiscal 2014, we established a five-point plan that, when implemented, successfully focused our efforts on our core industrial gas business, withrestructured the distribution of all outstanding shares of Versum Materialsorganization, changed the culture, controlled capital and costs and aligned our awards. Accordingly, in fiscal 2018 we evolved our five-point plan to shareholdersguide our success over the coming years. Our new five-point plan focuses on October 1, 2016.
The Company announced it had entered into a definitive agreement for the sale of its Performance Materials business for $3.8 billion.following objectives:
The Company was named to the Dow Jones Sustainability Index (North America), the CDP Climate Change Leadership, the FTSE4Good Index, the Ethibel Sustainability Index (Excellence Global) and Corporate Responsibility Magazine’s 100 Best Corporate Citizens.
| Sustain The Lead |  | Deploy Capital | | Evolve Portfolio | | Change Culture | | Belong and Matter | |
| Safest, most diverse, and most profitable | Strategically invest significant available capacity | Grow onsite portion | Safety, Simplicity, Speed, Self-Confidence | Inclusion | |||||
| Best-in-class performance | Win profitable growth projects globally | Energy, environment and emerging markets | Committed and motivated | Enjoyable work environment | |||||
| Productivity | Positive attitudes and open minds | Proud to innovate and solve challenges | |||||||
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AIR PRODUCTS AND CHEMICALS, INC.
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COMPENSATION OF EXECUTIVE OFFICERS
HighlightsTable of Fiscal Year 2016 Compensation Committee ActionsContents
Committee determined incentive compensation program design.Executive Compensation
For fiscal year 2016 the Committee continued to refine incentive compensation design to support Mr. Ghasemi’s strategic vision for the Company. At the beginning of 2015, Mr. Ghasemi unveiled a five point plan for increasing shareholder value:
Focus on the core business;
Restructure the organization to decentralize, releasing entrepreneurial energy and reducing costs;
Change the culture to focus on safety, simplicity, speed and self-confidence;
Control capital and costs; and
Align rewards to drive accountability and value creation.
In fiscal year 2015, Mr. Ghasemi requested that the Committee support this plan by focusing the Company’s annual incentive program on achieving aggressive adjusted earnings per share and EBITDA targets. For 2016,Fiscal 2018 Executive Officers’ annual incentive awards were again based on adjusted earnings per share, and the adjusted earnings per share targets were translated to adjusted EBITDA targets for the business units below the Executive Officer level to align rewards with value-creating performance. Target level payouts were based on meeting or exceeding the Company’s adjusted earnings per share goal of approximately 10% growth for 2016. Threshold performance for earning any annual incentive award required adjusted earnings per share of at least 90% of this target.Compensation Highlights
Mr. Ghasemi also recommended the Committee tie the long term incentive program more explicitly to long term shareholder value creation. At his recommendation, for fiscal year 2016 the Committee determined to grant a larger percentage of long-term incentives in performance shares (increased to 60%), eliminating stock options, and performance share earn out levels were again tied to total shareholder return relative to a peer group of industrial companies.
| HISTORY OF COMPENSATION PROGRAM CHANGES | ||||||
| 2014 | 2015 | 2016 | ||||
Annual Incentive Metric | Earnings Per Share Growth Underlying Sales Growth | Rigorous adjusted Earnings Per Share Goals (100%) | Rigorous adjusted Earnings Per Share Goals (100%) | |||
Performance Shares Metric | Earnings Per Share growth Return on Capital Employed | Relative Total Shareholder Return (100%) | Relative Total Shareholder Return (100%) | |||
Performance Shares | 35% | 55% | 60% | |||
Stock Options | 40% | 20% | 0 | |||
Restricted Stock | 25% | 25% | 40% | |||
AIR PRODUCTS AND CHEMICALS, INC.
COMPENSATION OF EXECUTIVE OFFICERS
Target Fiscal Year 2016 Total Direct Compensation Set for Other Executive Officers.
At the beginning of the year, after benchmarking against peer companies as discussed below, the Management Development and Compensation Committee (within this Compensation Discussion and Analysis, the “Committee”) established 2016 Total Direct Compensationfiscal 2018 target total direct compensation for the executive officers. Mr. Ghasemi’s compensation was determined pursuant to his amended and restated employment agreement, dated November 14, 2017, which is described on page 24.
The table below indicates the target total direct compensation opportunity (base salary, annual incentive award target and target value of long termlong-term incentive awards) provided to our named executive officers for fiscal 2018. Total direct compensation that is actually paid to our named executive officers varies from the information below based on the amount of annual incentive awards that are achieved and any discretionary bonuses or severance that is paid out during a fiscal year. This information regarding target total direct compensation opportunity is intended to supplement, but not replace, the Summary Compensation Table, which reports fiscal 2018 compensation in the format required by SEC rules.
| Officer | Base Salary ($) | Annual Incentive Target ($) | Grant Value of Long-Term Incentives ($) | Total Direct Compensation ($) | ||||
| Seifi Ghasemi | 1,350,000 | 2,025,000 | 8,500,000 | 11,875,000 | ||||
| M. Scott Crocco | 600,000 | 510,000 | 1,700,000 | 2,810,000 | ||||
| Sean D. Major | 550,000 | 412,500 | 1,000,000 | 1,962,500 | ||||
| Samir Serhan | 550,000 | 467,500 | 1,000,000 | 2,017,500 | ||||
| Corning F. Painter | 600,000 | 510,000 | 1,300,000 | 2,410,000 |
For fiscal 2018, total direct compensation opportunities established by the Committee for all executive officers (excluding the CEO as referenced below) approximated the market median. At the beginning of fiscal 2018, at the Committee’s direction its compensation consultant, Willis Towers Watson (“WTW”), performed a competitive assessment of Mr. Ghasemi’s total direct compensation and determined long-term incentives and total direct compensation were aligned with the 756th)percentile for the Executive Officers.Peer Reference Group (defined below) while his base salary and target total cash approximated market median. Based on Mr. Ghasemi’s excellent performance during fiscal years 2016-2017, including leading the Company to improvement in safety performance and financial results, the Committee increased Mr. Ghasemi’s base salary from $1,200,000 to $1,350,000. Mr. Ghasemi’s resultant positioning on all pay elements was at the 75thpercentile.
7Performance-Based Compensation
The table below indicatesmajority of compensation provided to the Company’s executive officers is dependent upon total returns delivered to shareholders and/or the achievement of performance objectives. Approximately 89% of the CEO’s Total Direct Compensation opportunity grantedis performance-based to Executive Officers for fiscal year 2016.ensure that compensation directly reflects the creation of shareholder value.
| CEO TARGET COMPENSATION MIX | OTHER NAMED EXECUTIVE OFFICER TARGET COMPENSATION MIX |
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| 20 | 2019 Annual Meeting Proxy Statement |
Executive Compensation
| Officer | Base Salary | Annual Incentive Target | Grant Long-Term Incentives | Total Direct Compensation | ||||||||||||
S. Ghasemi | $ | 1,200,000 | $ | 1,620,000 | $ | 7,000,000 | $ | 9,820,000 | ||||||||
M. S. Crocco | $ | 600,000 | $ | 510,000 | $ | 1,300,000 | $ | 2,410,000 | ||||||||
G. Novo | $ | 465,000 | $ | 395,000 | $ | 850,000 | $ | 1,710,000 | ||||||||
C. F. Painter | $ | 600,000 | $ | 510,000 | $ | 1,300,000 | $ | 2,410,000 | ||||||||
J. D. Stanley | $ | 575,000 | $ | 460,000 | $ | 1,000,000 | $ | 2,035,000 | ||||||||
Incentive Plan Metrics and Goals
In fiscal 2018, the Committee Determined Fiscal Year 2016 Incentive Compensation Payouts.continued incentive compensation opportunities designed to support the Company’s strategies.
| The Committee supports the Company’s strategy by focusing the Company’s annual incentive program on achieving aggressive adjusted earnings per share and EBITDA targets, and the results have been excellent. For fiscal 2018, executive officers’ annual incentive awards were again based on adjusted earnings per share, and the adjusted earnings per share targets were translated to adjusted EBITDA targets for the business units below the executive officer level to align rewards with value-creating performance. Target level payouts for fiscal 2018 were conditioned on meeting or exceeding the Company’s adjusted earnings per share goal of approximately 9% growth. |
For fiscal 2018, the Committee also continued to grant 60% of long-term incentives in performance shares tied to TSR relative to a Peer Reference Group of industrial companies. Additional information about the Peer Reference Group is provided on pages 31-32. This metric reflects the growth in capital that would be experienced from purchasing a share of Company or Peer Reference Group member stock and holding it for the performance period, while reinvesting any dividends paid. The remaining 40% of long-term incentives was granted in restricted stock units (“RSUs”) that vest over a four-year period.
| FISCAL 2018 INCENTIVE COMPENSATION | |
| Annual Incentive Metric | Adjusted Earnings Per Share |
| Performance Shares Metric | Relative TSR |
| Performance Shares Weight | 60%Long-Term Incentive Value |
| Restricted Stock Units Weight | 40%Long-Term Incentive Value |
Pay and Performance Alignment
In fiscal 2018, the Company delivered excellent financial and safety results, including our fourth consecutive year of double-digit annual growth, industry leading safety and EBITDA margins, and successfully executed on the largest and most complex projects in the Company’s history. Following the end of the year, the Committee determined actual annual incentive awards for the Executive Officers. In fiscal year 2016 the Company significantly improved its safety performance and exceeded its adjusted earnings per share target and shareholders’ expectations.executive officers. The performance measure for the annual incentive awards was adjusted earnings per share and the payout metrics and calculation methodology are described on page 34.pages 25-26. Based on the Company’s outstanding performance, the annual incentive award payout factor was 200%127% for all Executive Officers. executive officers.
The Committee also determined final payout levels for performance share awards granted in fiscal year 20142016 with a performance cycle ending at the end of fiscal year 2016,2018, which were basedconditioned on fiscal year 2014-2016 return on capital employed netTSR performance relative to a peer group of cost of capital (“Net ROCE”) and non-GAAP earnings per share growth (“EPS Growth”). Performance resulted in a payout factor of 106% of target. The Committee adjustedsimilar industrial companies. For the payout factor downward to 91%, the full extent permitted by the award agreements, to reflect the underperformance of certain investments made during thethree-year performance period, in particular the Company’s Energy from Waste projects, which were written off when the Company exited the Energy from Waste business during fiscal year 2016.
Committee determined adjustments to outstanding long term incentive awards to preserve value following spin-off of Versum Materials.
On October 1, 2016, the Company spun-off its Electronics Materials business via a distribution of all the shares of Versum Materials to its shareholders. In preparation for the spin-off, the Committee evaluated different methodologies for adjusting outstanding long term incentive awards, as required by the Company’s Long Term Incentive Plan, to preserve their economic value following the spin-off. The Committee determined to use a general approach of converting outstanding Air Products awards held by employees transferring to Versum Materials into an equivalent valuedelivered a cumulative TSR of Versum Materials equity awards,48%; the resultant TSR Percentile Rank was below the threshold required for a minimum payout under the plan. The payout metrics and adjusting the number of awards held by continuing Air Products’ employees to preserve the same value after the spin-off. For more details, see “Treatment of Outstanding Equity Awards at the Time of Versum Materials Spin-off”calculation methodology are described on page 37.pages 26-28.
Shareholder Feedback
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AIR PRODUCTS AND CHEMICALS, INC.
COMPENSATION OF EXECUTIVE OFFICERS
Committee evaluated potential linkage between compensation and risk taking.
During fiscal year 2016, the Committee, with Farient, conducted a risk assessment of the Company’s Executive Officer compensation program. The Committee concluded that the program is balanced and does not provide an enticement for executives to take excessive risks, including because of the following features:
The Company does not use highly leveraged short-term incentives that drive risky investments at the expense of long-term Company value.
The Company’s compensation programs reward consistent, long term performance by heavily weighting compensation to long term incentives.
Cash incentive awards are capped at sustainable levels, and the Committee has discretion to reduce awards, including for nonfinancial considerations.
The Company imposes substantial Executive Officer stock ownership and holding requirements.
The Company has recovery policies (“clawbacks”) applicable to incentive compensation that permit the Company to cancel awards and recoup certain gains in the event of conduct detrimental to the Company.
In addition, management conducted and reported to the Committee on its evaluation of the Company’s overall compensation practices and programs to assess whether any of these programs and practices exposed the Company to excessive risk taking, concluding there were no such programs or practices.
Committee reviewed results of the shareholder advisory vote on Executive Officer compensation and comments received.
Following the 20162018 Annual Meeting, the Committee reviewed the results of the shareholder advisory vote on Executive Officer compensation and comments received on the Executive Officer compensation program.executive officer compensation. With over 98%approximately 96.5% of votes cast voted in favor of approval, the Committee determined that the great majority of shareholders were satisfied with the program.
Compensation Governance Best Practices
In fiscal 2018, the Committee maintained strong compensation governance practices.
The Committee recognizes that shareholders want assurance that the processes for determining and paying Executive Officer compensation reflect thoughtful stewardship See page ix of the Company’s resources. The Committee has adopted the following practices, among others, to help demonstrate commitment to this principle:
proxy summary.
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Executive Compensation
Our Compensation Philosophy
AIR PRODUCTS AND CHEMICALS, INC.
COMPENSATION OF EXECUTIVE OFFICERSOverview
Fiscal Year 2016 Executive Officer Compensation Program
Overview.. The overall objective of our Executive Officerexecutive officer compensation program is to attract and retain a talented management team and provide them with the right incentives to execute our strategic objectives and to maximize our shareholders’ investment in the Company. The same principles that govern the compensation of all our salaried employees apply to the compensation of our Executive Officers:executive officers:
The Company’s programs provide
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The Company seeks to offer compensation opportunities that are sufficient to attract talented and experienced managers who have a choice about where they work, and to discourage them from seeking other opportunities. |
While financial results are the primary commitment the Company makes to shareholders, the compensation program balances financial results with other Company values such as safety, diversity and environmental stewardship. Certain components of the program provide flexibility to |
The Company has sought to provide some elements of compensation, such as severance benefits, |
Our Executive Officer compensation program emphasizes compensation opportunities that are linked to key performance indicators, such as earnings per share, EBITDA and total shareholder returns. The majority of compensation provided to the Company’s Executive Officers is dependent upon the achievement of short-, medium-, and long-term performance objectives and/or appreciation in the value of Company stock. Nearly 90% of the CEO’s total direct compensation opportunity is performance-based to ensure that compensation directly reflects the creation of shareholder value.Fiscal 2018 Direct Compensation
AIR PRODUCTS AND CHEMICALS, INC.
COMPENSATION OF EXECUTIVE OFFICERS
The Committee has designedintends the Executive Officerexecutive officer compensation program to provide our Executive Officersexecutive officers with target compensation that, on average, approximates the median for relevant peer groups,9 on average, with actual compensation driven up or down based on the Company’s operating performance, stock price and overall shareholder return. Individual components of compensation may be greater or lesser than the median, and actual compensation delivered may vary significantly from the target opportunity and the median based on Company or individual performance and changes in Company stock price.
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Executive Compensation
Direct compensation for fiscal year 20162018 was delivered to the CEO and other Executive Officersnamed executive officers through the components listed in the table below, which provides a brief description of the principal types of direct compensation, how performance factors into each type of compensation, and the compensation program objectives served by each type. Detailed descriptions of the components of direct compensation and how the Committee determined compensation levels for fiscal year 2016 begin on page 33.10
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| Component | ||||||
| How Amount Determined/ Performance Considerations | Objectives | |||||
Base Salary | Fixed cash payment. | Targeted at | Provide competitive foundational pay. | |||
| Annual Incentive | Short-term incentive, cash payment. | Target payout references | Promote achievement of short-term financial and strategic objectives. | |||
| Performance Shares | Deferred stock units that pay out upon achievement of performance targets. Delivered in shares of stock with dividend equivalents also payable on vesting. | Target value based on | Promote achievement of | |||
| Restricted Stock Units | Shares of stock that vest over | Target value based on | Retain | |||
The Committee annually reviews and establishes the performance measures, target goals and payout schedules used for theour Annual Incentive Plan and the performance share component of the long-term incentive program.awards granted under our Long-Term Incentive Plan. In determining actual performance against these metrics, the Committee decides whether to include or exclude the impact of items reported in the Company’s financial statements that may not be reflective of underlying operating results for the current or a prior year. Adjustments from reported earnings are intended to avoid artificial inflation or deflation of awards due to unusual or non operationalnon-operational items in the applicable period and align pay outcomes with how the Committee and management view the performance of the business.
Benchmarking. The Committee believes that a threshold characteristic of reasonable compensation is that it be aligned with compensation provided by companies the Company competes against for talent. In preparation for determining fiscal year 2016 compensation, the Committee benchmarked the Executive Officer compensation levels to evaluate the competitiveness of the program and as a reference for establishing compensation levels for fiscal year 2016.
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AIR PRODUCTS AND CHEMICALS, INC.
COMPENSATION OF EXECUTIVE OFFICERS
The Committee uses two peer groups for benchmarking which it annually reviews and approves.
For purposes of assessing competitiveness and recommending compensation levels for fiscal year 2016, the Committee used survey data from Mercer and Willis Towers Watson compensation databases on a group of industrial companies with revenue of $7 to $13 billion (consistent with the Company’s fiscal year 2015 revenue of $9.9 billion) (“Survey Reference Group”). This Survey Reference Group is representative of the companies the Company competes against for talent and is used by the Company for various compensation benchmarking purposes, not just Executive Officer compensation. A list of companies included in the Survey Reference Group is provided in Appendix B on page B-1.
Prior to the beginning of the fiscal year, the Committee reviewed an assessment of each Executive Officer’s compensation level relative to the Survey Reference Group based on similar functional responsibilities.12 The assessment identified median, 25th and 75th percentile levels for base salary, target annual incentive, target long-term incentives and targetSetting Total Direct Compensation. Annual and long-term incentive levels reflected a three-year average to reduce volatility in results. Because the survey data was collected in mid-2015, the analysis was based on projected levels as of the beginning of the Company’s 2016 fiscal year. Data are also adjusted to reflect revenue scope for operating positions.
At the Committee’s request, Farient also compiles proxy data from a smaller group of companies that are competitors of the Company or are similar to the Company in that they are chemical or other industrial companies with similar capital structures, asset intensity, operating margins, and business models (“Peer Reference Group”). Peer Reference Group companies are generally similar in revenue size to the Company; however certain larger companies are included based on proximity of business model. Data for these companies are size adjusted using regression analysis. The Committee used this reference group for benchmarking specific pay practices and for assessing alignment of pay with performance. In addition, the Committee used the Peer Reference Group to assess competitive compensation levels for CEO and CFO compensation. Because proxy data does not necessarily reflect similar positions to the other Executive Officers, only the Survey Reference Group is used to benchmark pay levels for them. The Peer Reference Group used for benchmarking 2016 pay was:
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AIR PRODUCTS AND CHEMICALS, INC.
COMPENSATION OF EXECUTIVE OFFICERS
The Peer Reference Group is also used for determining the Company’s relative TSR performance for purposes of performance share payouts.
Setting Total Compensation Levels for Fiscal Year 2016.2018
Overall, the Committee seekssought to provide a Total Direct Compensationtotal direct compensation target opportunity (base salary, target annual incentive award and long-term incentive award value) for the Executive Officersexecutive officers that approximated the projected median level (the “Market Median”) for similar positions in the Market Survey Reference Group and in the case of the CEO and CFO, the projected median level for two data sources—the Survey Reference Group and Peer Reference Group.Group, each weighted equally. Additional information regarding these peer groups is provided on pages 31-32. Consistent with industry practice, the Company considers Total Direct Compensation targetswithin 15% of median to be competitive with median. This margin allows for year-to-year swings in data than can occur based on a number of factors unrelated to underlying compensation strategy.
The Company utilizes two peer groups for benchmarking CEO and CFO compensation to ensure that the compensation is reasonably aligned with compensation provided by companies the Company competes against for talent. The Survey Reference Group is comprised of companies that are similar in revenue size to the Company to benchmark specific pay practices. The Peer Reference Group is comprised of peers to determine the Company’s relative TSR performance for purposes of performance share payouts. Total direct compensation target opportunities may be established at greater or lesser levels for individual Executive Officersexecutive officers based on performance factors, experience in the position, retention and succession planning considerations or year-to-year swings in the market reference data.
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Executive Compensation
For fiscal year 2016, Total Direct Compensation2018, total direct compensation opportunities established by the Committee for all Executive Officers, including Mr. Ghasemi,named executive officers (excluding the CEO as referenced below), approximated the Market Median.
market median. Within the Total Direct Compensationtotal direct compensation opportunity for each Executive Officer,executive officer, individual components of compensation may be greater or lesser than the Market Medianmarket median because the Committee is primarily concerned with the competitiveness of the entire program versus any one element of compensation. Actual compensationCompensation realized canby each executive officer may vary significantly from the target opportunity for any component of Total Direct Compensation based on Company or individual performance and Company stock price fluctuation.
As part of the process for determining Total Direct Compensation,total direct compensation, the Committee also reviews tally sheets, which detail the value, earnings and accumulated potential payout of each element of an Executive Officer’sexecutive officer’s compensation in various employment termination scenarios. The tally sheets help the Committee consider the retention value of an Executive Officer’sexecutive officer’s accumulated compensation package, compare Executive Officers’executive officers’ accumulated compensation and understand the impact of their compensation decisions on various termination of employment scenarios.
Mr. Ghasemi. Mr. Ghasemi’s Employment Agreement was amended and restated on November 14, 2017, and provides that Mr. Ghasemi will receive a minimum annual base salary of $1,200,000 and participate in the Company’s Annual Incentive Plan with a minimum target annual incentive award equal to 150% of base salary, with actual awards to be determined by the Committee. Under the Agreement, Mr. Ghasemi was also entitled to receive minimum annual equity compensation awards under the Company’s Long-Term Incentive Plan with a grant date value (determined under the Company’s normal valuation practices) of $7,000,000, apportioned in a manner consistent with the allocation for other executive officers. At the Committee’s direction, WTW performed a competitive assessment of Mr. Ghasemi’s Total Direct Compensation at the beginning of fiscal 2018 and determined long-term incentives and total direct compensation were aligned with the 75thpercentile for the Within the competitive target value for an Base Base salary is generally targeted at the Base salaries approved for the % Increase S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley Annual Incentive Target annual incentive opportunities under the Annual Incentive Plan are intended to approximate the Determination of annual incentive awards is a multi-step process which begins with establishing target opportunities. At the beginning of the fiscal year, the Committee determines 2015 Target (% of Base Salary) 2016 Target (% of Base Salary) 2016 Target Value S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley An As a first step in determining an Executive Compensation 2016 Adjusted Earnings per Share14 (% increase from 2015) <$6.60 $6.60 $7.26 (10%) $7.62 (15%) Adjusted earnings per share is defined as Non-GAAP EPS, as referenced in Appendix A, and further adjusted to eliminate the effect of foreign exchange fluctuations not anticipated in the operating plan. Further, consistent with the Company’s position as the safest industrial gas company in the world and other non-financial and strategic goals, the Committee also reserved the ability to adjust the payout within a range to reflect performance in areas such as safety, sustainability, diversity and productivity, progress on strategic objectives or individual performance factors. The actual payout factor can range Adjust Payout Factor Within the Range to Determine Actual Payout Factor Multiply Actual Payout Factor by Target Award For fiscal Long-Term The Committee believes long-term incentive compensation is For fiscal incentive value for The Committee determined the level of Individual performance or other factors may result in awards which are above or below the Executive Compensation grant levels and other recent compensation actions with respect to the individual such as special S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley The Committee may The target number of fiscal 2018 performance shares granted to each M. Executive Compensation shareholders for each share of Company stock) was included in the Company’s TSR through the end of the performance period. The resulting cumulative TSR was 48%, which ROCE over Cost of Capital Net ROCE % EPS Growth Factor <0% 0% 2% 4% FISCAL 2016-2018 PERFORMANCE SHARES PAYOUT Target performance shares were adjusted by a share price ratio of Restricted Stock Units follows: integrating our global gasification technologies. Our employee benefit programs are offered and designed to be competitive and to provide reasonable security for Retirement Benefits Executive Welfare The Company provides medical and dental coverage, life insurance and disability insurance to Severance and Change in Control Executive All Change in Control To enable the management team to negotiate effectively for shareholders without concern for their own future in the event of any actual or threatened change in control of the Company, the Company has entered individual change in control severance agreements for each of the The Committee has approved Mr. Ghasemi’s use of corporate aircraft for personal travel in order to mitigate security concerns, preserve confidentiality and maximize the time he is able to spend on the Company’s business. The Committee has also approved Executive Compensation responsibilities to the Company. Mr. Ghasemi is responsible for any taxes on his Roles of the Committee, Compensation Consultant and Management in the Compensation Process Committee Responsibilities The Committee is responsible to the Board and to shareholders for establishment and oversight of the Company’s compensation program for executive officers, and for approving the compensation level of the executive officers. The Committee establishes overall compensation strategies and policies for the executive officers, allocates compensation for executive officers among the various components of compensation, evaluates and approves performance measures and goals relevant to the incentive compensation of the executive officers, evaluates the performance of the CEO with input from the Board, determines direct compensation levels for the CEO, and evaluates and approves direct compensation levels for other executive officers. Each year, the Committee: Periodically, the Committee also undertakes an extensive review of the competitiveness and appropriateness of certain pay practices such as severance and change in control arrangements. Engagement of Compensation Consultant The Committee retains an external compensation consultant to provide independent advice, information and analysis on executive compensation. The Committee has established several practices to ensure the external consultant’s independence, candor and objectivity. The consultant is engaged by, has its compensation set by, and reports directly to the Committee, frequently meets separately with the Committee with no members of management present, and consults with the Committee chairman in between meetings. Management reports fees paid for executive compensation consulting services performed by the consultants to the Committee at each meeting and the Committee approves in advance the executive compensation consulting services to be performed. The Committee retained WTW as its external consultant for fiscal 2018. Aggregate fees for WTW’s executive compensation consulting services provided to the Committee were $158,000. During fiscal 2018, WTW also performed global retirement plan actuarial, administrative and consulting, health care exchange and aviation insurance brokering services for the Company in addition to the work performed for the Committee. The aggregate fees for those services were $677,000. The decision to engage a predecessor to WTW for actuarial services was made over a decade ago after an extensive bid process. WTW is one of few firms which is able to provide these services on a global basis. Decisions to hire WTW for the health care exchange and insurance brokering services were made by the responsible functional managers after a bid process. Executive Compensation Independence Assessment The Committee has assessed WTW’s independence and concluded that there are no conflicts of interest that would prevent WTW from independently advising the Committee. In making this determination, the Committee considered, among other things, the fees paid for services provided to management as a percentage of WTW’s consolidated revenues, policies and procedures established by WTW to mitigate conflicts of interest, and the lack of business and personal relationships between WTW team members and the Company’s executive officers or Committee members. Management Input While the Committee determines overall compensation strategy and policies for the executive officers and approves their compensation, it seeks input from several executive officers and other management employees with respect to both overall guidelines and discrete compensation decisions. Specifically: These executive officers and employees attend portions of the Committee meetings; however, the Committee meets in executive session both alone and with its external compensation consultant to reach final decisions about CEO and other executive officers’ compensation. Benchmarking The Committee believes that a threshold characteristic of reasonable compensation is that it is aligned with compensation provided by companies the Company competes against for talent. In preparation for determining fiscal 2018 compensation, the Committee benchmarked the executive officer compensation levels to evaluate the competitiveness of the program and as a reference for establishing compensation levels for fiscal 2018. Executive Compensation The Committee uses two peer groups for benchmarking, which it reviews and approves annually. PEER GROUPS For purposes of assessing competitiveness and recommending compensation levels for fiscal 2018, the Committee used survey data from WTW and Mercer compensation databases on a group of industrial companies with revenue of $7 to $13 billion (consistent with the Company’s fiscal 2017 revenue of $8.2 billion) (the “Survey Reference Group”). This Survey Reference Group is representative of the companies the Company competes against for talent and is used by the Company for various compensation benchmarking purposes, not just executive officer compensation. A list of companies included in the Survey Reference Group is provided in Appendix B on page B-1. Prior to the beginning of the fiscal year, the Committee reviewed an assessment of each named executive officer’s compensation level relative to the Survey Reference Group based on similar functional responsibilities. The assessment identified median, 25thand 75thpercentile levels for base salary, target annual incentive, target long-term incentives and target total direct compensation. Annual and long-term incentive levels reflected a three-year average to reduce volatility in results. The Committee also reviewed proxy data compiled from a smaller group of companies that are competitors of the Company or are similar to the Company in that they are chemical or other industrial companies with similar capital structures, asset intensity, operating margins and business models (the “Peer Reference Group”). Peer Reference Group companies are generally similar in revenue size to the Company, however certain companies with higher revenues are included based on proximity of business model. The Committee used the Peer Reference Group for benchmarking specific pay practices and for assessing alignment of pay with performance. In addition, the Committee also uses the Peer Reference Group to assess competitive compensation levels for CEO and CFO total direct compensation. Because proxy data does not necessarily reflect similar positions to the other executive officers, only the Survey Reference Group is used to benchmark pay levels for them. The Peer Reference Group is also used for determining the Company’s relative TSR performance for purposes of performance share payouts. The fiscal 2018 Peer Reference Group consisted of the following companies: For fiscal 2018, the Peer Reference Group was updated to add Chemours Company and Olin Corporation and to remove Du Pont (E.I.) De Nemours & Co., Eaton Corp., Rockwell Automation Inc. and TE Connectivity, Ltd. Eaton Corp., Rockwell Automation Inc. and TE Connectivity, Ltd. were closely aligned with the Materials Technologies business and were removed from the peer group following the spin-off of Versum Materials. Chemours Company and Olin Corporation were added as peers based on their fit with our business strategy focused on industrial gases. Du Pont (E.I.) De Nemours & Co. was removed from the peer group as a result of the DowDuPont merger. Executive Compensation Risk Assessment During fiscal 2018, the Committee, with assistance from WTW, conducted a risk assessment of the Company’s executive officer compensation program. The Committee concluded that the program is balanced and does not provide an enticement for executives to take risks that are likely to have an adverse effect on the Company, due to the following features: In addition, management conducted and reported to the Committee on its evaluation of the Company’s overall compensation practices and programs to assess whether any of these programs and practices exposed the Company to excessive risk taking, concluding there were no such programs or practices. Executive Officer Stock Ownership The Committee has approved ownership guidelines that require Hedging and Pledging Policy It is the policy of the Company that Clawback Policy The Company’s equity plans and agreements provide that awards may be cancelled and that certain gains will be “clawed back” Executive Compensation shares in the event an Granting Practices Executive Compensation Executive Compensation Tables Stock Non-Equity Changes in All Other Total Mr. This column includes a transactional bonus paid to Mr. Crocco upon the completion of the sale of the Performance Materials business and sign-on bonuses paid to Dr. Serhan in his first month and first year anniversary with Air Products. S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley Amounts in this column reflect Annual Incentive Plan awards. At their election, Executive Compensation Amounts in this column reflect the annual change in the actuarial present value of each Interest is calculated for the Deferred Compensation Plan accounts using a Moody’s A-rated Corporate Bond Rate because S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley Amounts shown in this column are detailed in the chart below. Perquisites or Personal Benefits(i) S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley (i) Executive Compensation Grant Date Estimated Future Payouts Under Equity Incentive Plan All Other Units(#) All Other Options(#) Exercise ($/Sh) Grant Awards($) S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley Annual Incentive Plan awards are based on performance for the fiscal year. The Committee approves performance measures Equity Incentive Plan Awards— Performance The Equity Incentive Plan Awards reflected in the table are performance shares. Performance shares are deferred stock units whose Executive Compensation The performance shares reflected in the table have a three-year performance cycle which will be completed at the end of fiscal Other Stock Awards — RSUs The Other Stock Awards reflected in the table are Executive Compensation Number of Shares of Units of Stock Held That Have Not Vested (#)(2) Market Value of Shares Or Units of Stock Held That Have Not Vested ($)(3) Equity Incentive Plan Number of Unearned Shares, Units, or Other Rights That Have Not Vested(#)(4) Equity Incentive Plan Awards: Market or Payout Unearned Shares, Units, or Other Rights That Have Not Vested ($)(3) Option Grant Date Number of Securities underlying unexercised options (#) Option Exercise Price Option Expiration Date S. Ghasemi(5) M. S. Crocco G. Novo C. F. Painter J. D. Stanley Grant dates for all stock options are shown in the first column. All stock options have an exercise price equal to the closing market value on the grant date and This column reflects unvested restricted stock and deferred stock units Executive Compensation (See page 46 for the definition of “Cause” and “Good Reason” under the Employment Agreement.) If another executive officer’s employment termination is covered by the Executive Separation Program described on pages 45-48, the terms of that Program regarding treatment of equity compensation will apply. Shares of restricted stock granted in fiscal 2015 vested on the earlier of December 1, 2018 or the executive officer’s termination of employment due to death, disability or retirement. Shares of restricted stock granted in fiscal 2015 are as follows: Mr. Ghasemi 12,145 and Mr. Crocco 2,082. Shares of restricted stock granted in fiscal 2016 vest on the earlier of December 1, 2019 or the executive officer’s termination of employment due to death, disability or retirement. Shares of restricted stock granted in fiscal 2016 are as follows: Mr. Ghasemi 20,125 and Mr. Crocco 3,738. Restricted stock is subject to special vesting rules for terminations upon a change in control of the Company as described on pages 48-49. DEFERRED STOCK UNITS Paid at separation. This column also shows special recruiting Three-year vesting restricted stock units granted These amounts are based on the This column reflects deferred stock units granted as performance shares granted in fiscal Target Award Performance Shares End of Performance Period S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley Table of Contents Executive Compensation S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley The shares in this column include restricted stock granted in fiscal year The following dividend equivalents were paid on the performance share awards and the restricted stock units but are not included in the S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley The table above illustrates the actuarial present value of accrued pension benefits for each of the Executive Compensation The The amount of the benefit under the Salaried Pension Plan is based on the following formula: 1.184% x Years of Service x Average Monthly Compensation (Up to the Average Social Security Maximum Taxable Wage Base) Plus 1.5% x Years of Service x Average Monthly Compensation (In excess of the Average Social Security Maximum Taxable Wage Base) “Average Monthly Compensation” is the average monthly compensation for the 36 months (or 3 years) during which the participant’s compensation was the highest during the Benefits under the Salaried Pension Plan become vested after a participant has completed five years of service. The Normal Retirement Age under the Salaried Pension Plan is age 65. A participant with at least five years of service may retire after attaining age 55 and receive a benefit reduced by 3% per year for the number of years prior to his attaining age 62. Under U.S. federal tax laws, benefits payable under the Salaried Pension Plan, and compensation which can be considered in calculating the benefits, are limited. The Supplementary Pension Plan (“Supplementary Plan”) is a nonqualified, unfunded pension plan that provides benefits that cannot be provided under the Salaried Pension Plan due to these limits. Benefits under the Supplementary Plan are calculated using the same formula as the Salaried Pension Plan, but there is no limit on the amount of base salary that can be covered by the pension formula, and Average Monthly Compensation under the Supplementary Plan also includes Annual Incentive Plan awards. Supplementary Plan benefits are subject to the same vesting and early retirement terms as the Salaried Pension Plan. Supplementary Plan benefits are generally payable following retirement in one of the annuity forms available under the Salaried Pension Plan or, at the election of the participant, in a lump sum. In the case of the Amounts shown in this table are provided under the Company’s nonqualified Deferred Compensation Plan. S. Ghasesmi M. S. Crocco G. Novo C. F. Painter J. D. Stanley All amounts reported in this column were voluntary deferrals of base salary Executive Compensation Amounts reported in this column A portion of the earnings reflected in this column are reported in the Summary Compensation Table as above-market interest, as described in footnote 5 to such table. S. Ghasesmi M. S. Crocco G. Novo C. F. Painter J. D. Stanley The Company provides the The Deferred Compensation Plan provides for a Company matching credit for participants in the Participants may elect to have their Deferred Compensation Plan balances earn interest at a corporate bond rate or be deemed to be invested in Company stock and earn dividend equivalents and market appreciation on the stock. If a participant chooses the Company stock alternative, his or her account balance will be distributed in shares of Company stock, except for dividend equivalents. Participants can elect to receive payments of their Deferred Compensation Plan balances in service, or in lump sum or in one to Executive Compensation Potential Payments Upon Termination Potential payments to A voluntary termination by Mr. Executive Most outstanding awards under the Long-Term Incentive Plan would be forfeited Upon retirement, all outstanding stock options which were restricted stock and RSUs awarded at least one year prior to retirement will vest immediately upon retirement and restricted stock and RSUs granted less than one year prior to retirement are forfeited; and all earned performance shares and dividend equivalents thereon will be paid on the normal schedule. A pro-rata portion of unearned performance shares awarded at least one year prior to retirement and associated dividend equivalents will be paid in accordance with the normal schedule and at the normal payout level if performance thresholds are met. Performance shares awarded less than one year prior to retirement are forfeited. The table below shows the value of Mr. J.D. Stanley The Committee established the Executive Separation Program (the “Separation Program”) to facilitate changes in the leadership team and recruiting of senior executives. a material adverse change in the executive officer’s position, material diminution of his duties or authority or assignment to him of duties or responsibilities inconsistent with his status; a decrease in the executive officer’s salary or a material reduction in benefits or annual incentive compensation opportunities if not similarly applied to other highly compensated employees; or a relocation of the executive officer’s principal workplace more than 50 miles from the existing location. Benefits under the Separation Program are contingent upon the a bonus for the year of termination equal to a pro-rata portion of the executive officer’s target bonus multiplied by the Annual Incentive Plan payout factor for the fiscal year in which the termination of employment occurs; outplacement assistance; in the case of Mr. Crocco, a cash payment equal to the actuarial equivalent of pension benefits that would have accrued based on one additional year of service and a payment equal to the value of the early retirement subsidy that would have been provided under the pension plans on the accumulated benefit if age and service conditions were met, calculated with an additional year of service; and for the other executive officers who receive their primary retirement benefit under the RSP, a cash payment equal to the additional (nonmatching) contributions and credits each would have received under the RSP and the Deferred Compensation Plan, respectively, had he remained employed an additional two years for Mr. Ghasemi and an additional year for Mr. Major and Dr. Serhan, assuming base salary remained the same and Executive Noncash benefits are also provided or maintained under the Separation Program as follows: The Company pays the cost of continued coverage under the Company’s medical and dental plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for executive officers and their dependents for one year following termination. (Executive officers eligible for retiree medical participate in the medical plan on the same basis as other eligible retirees at no incremental cost to the Company.) Nonretirement eligible executive officers forfeit unexercisable stock options. Their exercisable options remain in effect for the normal term. Retirement provisions described above apply to the stock options of retirement eligible executive officers. A pro-rata portion of four-year vesting restricted stock, RSUs and recruiting and retention grants of RSUs vest. The remaining RSUs are forfeited. However, retirement provisions described above apply to outstanding restricted stock and RSUs held by retirement eligible executive officers if more favorable. A pro-rata portion of unearned performance shares based on actual performance at the end of the performance period vest and are paid at the end of the performance period and the remainder are forfeited. The unforfeited shares are paid in accordance with the normal schedule and at the normal payout level if performance thresholds are met. The Company and Mr. Painter entered into a Separation Agreement (the “Separation Agreement”) in connection with Mr. Painter’s separation from the Company in fiscal 2018. Under the Separation Agreement, Mr. Painter received a lump sum cash severance payment of $2,582,005. In addition, under the Separation Agreement Mr. Painter’s outstanding stock options will remain exercisable for the remainder of his term, unearned performance shares will remain outstanding and be paid out based on the Company’s performance for the applicable award cycle, calculated on a pro rata basis to account for Mr. Painter’s service to the Company during the applicable performance period, restrictions on restricted shares lapsed and unvested restricted stock units granted in fiscal 2017 are retained and will vest in accordance with their original terms and unvested restricted stock units granted in fiscal 2018 became vested on a prorated basis. The Separation Agreement also provided Mr. Painter and his eligible dependents with subsidized continuation coverage under the Company’s group medical and dental plans, outplacement assistance for up to 12 months and attorneys’ fees incurred in connection with the Separation Agreement. In addition, both Mr. Painter and the Company executed a release of claims pursuant to the terms of the Separation Agreement, and Mr. Painter agreed to comply with certain confidentiality, non-solicitation and non-disparagement covenants, while the Company waived Mr. Painter’s compliance with non-competition covenants. The table below shows estimated cash payments that would have been made to each S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley(1) Includes payment in lieu of Company contributions and credits under the RSP and Deferred Compensation Plan for Mr. Ghasemi, Mr. Major and Dr. Serhan and the pension plan make-up payment for Mr. Includes the value of outplacement benefits estimated based on current arrangements for these Stock options are shown at their intrinsic value based on the September These amounts reflect the value of Performance shares are reflected at Upon involuntary termination for Cause, Upon termination due to death or disability of an All stock options that have been outstanding for at least a year at the time of termination continue to be and become exercisable on the normal schedule as if the employee had remained active. All other stock options are forfeited. All restrictions on restricted stock outstanding for at least one year are removed. All other restricted stock is forfeited. All earned but deferred performance shares, all career-vesting deferred stock units and retention and recruiting grants of deferred stock units outstanding more than one year are paid out. A prorated portion of unearned performance shares outstanding for at least one year continues to earn out and be payable as if the employee had remained active. All other unearned performance shares are forfeited. Executive Executive officers or their beneficiaries may also receive an Annual Incentive Plan award at the discretion of the Committee. In addition, Mr. Ghasemi’s Employment Agreement provides that upon his termination of employment due to death or disability, his The Company provides individual change in control severance agreements for all of the The severance agreements give each for each for each of Mr. Ghasemi, Mr. Major and Dr. Serhan, a cash payment equal to the additional primary retirement benefit contributions and credits he would have received under the RSP and the Deferred Compensation Plan, respectively, had he remained employed for an additional three years in the case of Mr. Ghasemi and two years in the case of Mr. Major and Dr. Serhan, at the same base salary and the higher of the executive officer’s most recent Annual Incentive Plan award or the average such award for the three full fiscal years preceding the Change in Control; continuation of medical, dental, health and accident disability and life insurance benefits for a period of up to two years (three years in the case of Mr. Ghasemi), and provision of outplacement services and certain legal fees; and indemnification if he becomes involved in litigation because he is a party to the agreement. A termination for “Cause” occurs under the agreements upon the a material adverse change in the executive officer’s position; a decrease in the executive officer’s salary, benefits or incentive compensation if not applied to other highly compensated employees; or relocation of the executive officer’s principal workplace more than 50 miles from the existing location. Executive Compensation The table below shows amounts that would be payable under the change in control severance agreements if the In addition to the change in control severance agreements, the Company’s Long-Term Incentive Plan provides change in control Awards granted on or after October 1, 2014 will not automatically vest on an accelerated basis as a result of a change in control if they are replaced by the surviving entity. For these provisions to apply; the replacement awards must be issued by a publicly listed company and preserve the value of, and be on terms as favorable as the existing award; S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley S. Ghasemi M. S. Crocco G. Novo C. F. Painter J. D. Stanley The table below shows the estimated value of long-term incentive awards that would have vested upon an eligible termination on September 30, 2018 following a change in control. These acceleration provisions apply to all Long-Term Incentive Plan participants. In the case of Mr. Ghasemi, who was retirement eligible on September 30, 2018, most of these amounts would have vested on voluntary termination, but payment or lapse of restrictions could be accelerated upon a change in control. For the other executive officers, most of the amounts shown would become vested or payable if his or her active employment continued without a change in control, but payment, lapse of restrictions would be accelerated upon a change in control. Finally, accrued benefits under the nonqualified pension and deferred compensation plans (described on pages 41-43) would be paid out upon a change in control. As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and SEC regulation, we are providing the following information about the ratio of the annual total compensation of the median Air Products employee and the annual total compensation of our CEO, Seifi Ghasemi as of our fiscal year-end, September 30, 2018. The pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules, using methodologies, reasonable assumptions and adjustments as described below. The annual total compensation of our CEO, as reported in the Summary Compensation Table of this Proxy Statement was $13,941,507. Based on this information, the estimated ratio of annual total compensation of Mr. Ghasemi, our CEO, to the annual total compensation of our median employee was 274 to 1. Our total employee population as of fiscal year-end consisted of approximately 16,300 employees, including 4,500 US employees and 11,800 non-US employees. We employed thede minimisexemption to exclude 281 employees (less than 2% of the global workforce) in the following countries: Norway (54), Oman (60), Qatar (1), Russia (89), Saudi Arabia (19), Switzerland (2) and United Arab Emirates (56). In addition, as permitted by SEC rules, we excluded 79 employees of Dixons of Westerhope, a United Kingdom subsidiary that we acquired in fiscal 2018. As a result, the aggregate employee population for purposes of identifying our median employee was approximately 15,900. To identify the median employee from our employee population, we used annual base salary as our consistently applied compensation measure. For hourly employees, annual salary was estimated by multiplying the hourly rate by the scheduled work hours for each work location. After identifying the median employee, the Company calculated annual total compensation for both the median employee and CEO in accordance with SEC rules to determine the pay ratio. Under SEC’s rules and guidance, companies are allowed to adopt numerous ways to identify the median employee. In addition, other companies have different employee demographics and compensation and benefit practices. As a result, CEO pay ratios reported by other companies may vary significantly and are likely not comparable to our CEO pay ratio. The Audit and Finance Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. In 2018 the Audit and Finance Committee conducted a competitive process, which resulted in the Audit and Finance Committee selecting a new independent registered public accounting firm for fiscal 2019 — Deloitte & Touche LLP. The Board concurs with the appointment of Deloitte and, as a matter of good corporate governance, requests that our shareholders ratify the appointment of Deloitte even though ratification is not legally required. If shareholders do not ratify this appointment, the Audit and Finance Committee will consider such vote a recommendation to consider the appointment of another public accounting firm for the fiscal year ending September 30, 2020. Representatives of Deloitte will be available at The Board recommends a vote “FOR” the ratification of the appointment of Deloitte as the Company’s independent registered public accounting firm for fiscal 2019. As discussed in more detail below, the Audit and Finance Committee recently conducted a competitive process to determine our independent registered public accounting firm for fiscal 2019. Following the review and evaluation of proposals, the Audit and Finance Committee approved the engagement of Deloitte. The Board believes that the engagement of Deloitte as our independent registered public accounting firm for fiscal 2019 is in the best interests of shareholders and is submitting the appointment of Deloitte to our shareholders for ratification as a matter of good corporate governance. Selection of New Independent Registered Public Accounting Firm As previously reported on the Company’s Current Report on Form 8-K, dated July 26, 2018, the Audit and Finance Committee conducted a competitive process to determine the Company’s independent registered public accounting firm for the Company’s fiscal year ending September 30, 2019. The process included consideration of, among other things, external auditor independence, capability, effectiveness and efficiency of audit services, the qualifications and experience of the lead engagement partner and proposed team, results from management and Audit and Finance Committee performance assessments, performance in Public Company Accounting Oversight Board assessments, technological capabilities and the relative benefits of tenure versus fresh perspective. Several independent registered public accounting firms were invited to participate in this process, including KPMG, which had served as our independent registered public accounting firm since 2002. Following the review and evaluation of proposals from the firms participating in that process, and after careful consideration of each firm’s demonstrated qualifications, the Audit and Finance Committee approved the engagement of Deloitte as our independent registered public accounting firm for the Company’s fiscal year ending September 30, 2019. The Board believes that the engagement of Deloitte as the Company’s independent registered public accounting firm for fiscal 2019 is in the best interests of the Company and our shareholders and recommends that shareholders ratify the appointment of Deloitte. Audit and Finance Committee Matters No Disagreements with Prior Accountants As previously reported, KPMG’s audit reports on the Company’s consolidated financial statements as of and for the fiscal years ended September 30, 2016 During the fiscal years ended September 30, 2016 and 2017, and the subsequent interim periods through July 24, 2018, there were (i) no disagreements between the Company and KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, any of which, if not resolved to KPMG’s satisfaction, would have caused KPMG to make reference thereto in their reports and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K. During the fiscal years ended 30 September 2017 and 2016, and the subsequent interim periods through July 24, 2018, neither the Company nor anyone on its behalf consulted with Deloitte regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that Deloitte concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K. We have been advised by Deloitte that it will have a representative present at the Annual Meeting. Deloitte’s representative will have the ability to make a statement, if he or she desires, and will be available to respond to questions. We have been advised that a representative of KPMG will not be present at the Annual Meeting. Based on its evaluation, the Audit and Finance Committee believes the appointment of Deloitte is in the best interests of the Company and our shareholders. The Board concurs and requests that shareholders ratify the appointment of Deloitte as the independent registered public accounting firm for fiscal 2019. Fees of Independent Registered Public Accounting Firm Consistent with the Audit and Finance Committee’s responsibility for engaging the Company’s independent registered public accounting firm, all audit and permitted non-audit services performed by the Company’s independent registered public accounting firm require preapproval by the Audit and Finance Committee. The full Committee approves projected services and fee estimates for these services and establishes budgets for major categories of services at its first meeting of the fiscal year. The Committee Chair has been designated by the Committee to approve any services arising during the year that were not preapproved by the Committee and services that were preapproved if the associated fees will cause the budget established for the type of service at issue to be exceeded by more than 10%. Services approved by the Chair are communicated to the full Committee at its next regular quarterly in person meeting, and the Committee reviews actual and forecasted services and fees for the fiscal year at each such meeting. During fiscal 2018, all services performed by the independent registered public accounting firm were preapproved. Audit and Finance Committee Matters During fiscal 2017 and fiscal 2018, the Company’s former independent registered public accounting firm, KPMG, billed the Company fees for services in the following categories and amounts (in millions): Audit fees are fees for those professional services rendered in connection with the audit of the Company’s consolidated financial statements and the review of the Company’s quarterly consolidated financial statements on Form 10-Q that are customary under the standards of the Public Company Accounting Oversight Board (United States) and in connection with statutory audits in foreign jurisdictions. Audit-related services consisted primarily of services rendered in connection with employee benefit plan audits, SEC registration statements, due diligence assistance and consultation on financial accounting and reporting standards. Tax fees were primarily for preparation of tax returns in non-U.S. jurisdictions, assistance with tax audits and appeals and consulting on tax reform matters. Audit and Finance Committee Report The Audit and Finance Committee provides oversight of the Company’s financial reporting process on behalf of the Board. Management bears primary responsibility for the financial statements and the reporting process, including the system of internal controls and disclosure controls. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of the audited consolidated financial statements with United States generally accepted accounting principles. In fulfilling its responsibilities, the Audit and Finance Committee has reviewed and discussed the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018 with the Company’s management and KPMG, which was the independent registered public accounting firm that audited such financial statements. The Committee has discussed with KPMG the matters that are required to be discussed under Public Company Accounting Oversight Board standards governing communications with audit committees. KPMG has provided to the Committee the written disclosures and the letter concerning independence required by applicable requirements of the Public Company Accounting Oversight Board regarding independent registered public accounting firm communications with the Audit and Finance Committee, and the Committee has discussed with KPMG the firm’s independence. Based on the reviews and discussions referred to above, the Committee approved the audited consolidated financial statements and recommended to the Board that they be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018. Audit and Finance Committee Matthew H. Paull, Chair Persons Owning More than 5% of Air Products Stock as of September 30, Amount and Nature of Beneficial Ownership Percent of Class Pershing Square Capital Management, L.P.(1) 888 Seventh Avenue 42nd Floor New York, NY 10019 State Farm Mutual Automobile Insurance Company (“State Farm”)(2) One State Farm Plaza Bloomington, IL 61710 The Vanguard Group (“Vanguard”)(3) 100 Vanguard Boulevard Malvern, PA 19355 Black Rock, Inc.(4) 55 East 52nd Street New York, NY 10055 Air Products Stock Beneficially Owned by Officers and Directors The table below shows the number of shares of common stock beneficially owned as of November 1, Common Stock(1)(2) Stock Options(3) Currently Distributable Deferred Stock Units(4) S. K. Carter M. S. Crocco C. I. Cogut C. C. Deaton S. Ghasemi D. H. Y. Ho M. G. McGlynn E. L. Monser G. Novo C. F. Painter M. H. Paull J. D. Stanley Directors and Executive Officers as a group (14 persons)(6) Certain The Executive Information About Stock Ownership Section 16(a) Beneficial Ownership Reporting Section 16(a) of the Securities Exchange Act of 1934 requires our directors and As of the record date, which was November 30, 2018, 219,549,135 shares of Company common stock were issued and outstanding, which are the only shares entitled to vote at the Annual Meeting. Every owner of Company stock is entitled to one vote for each share owned. Who counts the votes? A representative of Broadridge Corporate Issuer Solutions, Inc. will tabulate the votes and act as the independent inspector of election. What is a proxy? A proxy is your legal appointment of another person to vote the shares of Company stock that you own in accordance with your instructions. The person you appoint to vote your shares is also called a proxy. You can find an electronic proxy card at www.proxyvote.com that you can use to vote your shares online or you can scan the QR code provided with your proxy materials. If you received these proxy materials by mail, you can also vote by mail or telephone using the proxy card enclosed with these materials. On the proxy card, you will find the names of the persons designated by the Company to act as proxies to vote your shares at the Annual Meeting. The proxies are required to vote your shares in the manner you instruct. What shares are included on my proxy card? If you are a registered shareholder, your proxy card(s) will show all of the shares of Company stock registered in your name with our Transfer Agent, Broadridge Corporate Issuer Solutions, Inc. on the record date, including shares in the Direct Stock Purchase and Sale Program administered for Air Products’ shareholders by our Transfer Agent. If you have shares registered in the name of a bank, broker or other registered owner or nominee, they will not appear on your proxy card. How do I vote the shares on my proxy card? If you received a Notice of Availability of Proxy Materials and accessed these proxy materials online, follow the instructions on the Notice to obtain your records and vote electronically. If you received these proxy materials by mail, you may vote by signing and dating the proxy card(s) and returning the card(s) in the prepaid envelope. You also can vote via mobile device, online or by using a toll-free telephone number. Instructions about these ways to vote appear on the proxy card. If you vote by telephone, please have your paper proxy card and control number available. The sequence of numbers appearing on your card is your control number, and your control number is necessary to verify your vote. If you received these proxy materials via e-mail, the e-mail message transmitting the link to these materials contains instructions on how to vote your shares of Company stock and your control number. Questions and Answers on Voting and the Annual Meeting Whether your proxy is submitted by mail, telephone, mobile device or online, your shares will be voted in the manner you instruct. If you do not specify in your proxy how you want your shares voted, they will be voted according to the Board’s recommendations below: If a broker, bank or other nominee holds shares of Company stock for your benefit and the shares are not in your name on the Transfer Agent’s records, then you are considered a “beneficial owner” of those shares. If your shares are held this way, sometimes referred to as being held in “street name,” your broker, bank or other nominee will send you instructions on how to vote. If you have not heard from the broker, bank or other nominee who holds your Company stock, please contact them as soon as possible. If you plan to attend the meeting and would like to vote your shares held by a bank, broker or other nominee in person, you must obtain a legal proxy, as described in the admission procedures section on page 60. If you do not give your broker instructions as to how to vote, under NYSE rules, your broker has discretionary authority to vote your shares for you on Item 3 to ratify the appointment of auditors. Your broker may not vote for you without your instructions on the other items of business. Shares not voted on these other matters by your broker because you have not provided instructions are sometimes referred to as “broker nonvotes.” May I change my vote? Yes. You may revoke your proxy at any time before the Annual Meeting by submitting a later dated proxy card, by a later telephone or on-line vote, by notifying us that you have revoked your proxy or by attending the Annual Meeting and giving notice of revocation in person. How is Company stock in the Company’s Retirement Savings Plan voted? If you are an employee who owns shares of Company stock under the Retirement Savings Plan and you have regular access to a computer for performing your job, you were sent an e-mail with instructions on how to view the proxy materials and provide your voting instructions. Other participants in the Retirement Savings Plan will receive proxy materials and a proxy card in the mail. The Trustee, Fidelity Management Trust Company, will vote shares of Company stock allocated to your Plan account on the record date in accordance with the directions you give on how to vote. The Trustee will cast your vote in a manner that will protect your voting privacy. If you do not give voting instructions or your instructions are unclear, the Trustee will vote the shares in the same proportions and manner as overall Retirement Savings Plan participants instruct the Trustee to vote shares allocated to their Plan accounts. What is a “quorum”? A quorum is necessary to hold a valid meeting of shareholders. A quorum exists if a majority of the outstanding shares of Company stock are present in person at the Annual Meeting or represented there by proxy. If you vote, including by Internet, telephone or proxy card, your shares voted will be counted towards the quorum for the Annual Meeting. Proxies marked as abstentions and broker discretionary votes are also treated as present for purposes of determining a quorum. Questions and Answers on Voting and the Annual Meeting Election of Directors. Our Bylaws provide that if a quorum is present at the Annual Meeting and the number of director nominees does not exceed the number of directors to be elected (i.e., an uncontested election), director nominees will be elected if they receive a majority of the votes cast at the meeting in person or by proxy. This means that in uncontested elections the nominees will be elected if the number of shares voted “for” the nominee exceeds the number of shares voted “against” the nominee. In a contested election, nominees would be elected by a plurality of votes cast. Abstentions and broker nonvotes are not counted as votes cast and therefore will have no effect. Under our Corporate Governance Guidelines, any incumbent director who is not reelected by a majority of the votes cast must tender his or her resignation to the Corporate Governance and Nominating Committee of the Board for its consideration. The Corporate Governance and Nominating Committee then recommends to the Board whether to accept the resignation. The director will continue to serve until the Board decides whether to accept the resignation but will not participate in the Committee’s recommendation or the Board’s action regarding whether to accept the resignation. The Board will publicly disclose its decision and rationale within 90 days after certification of the election results by the inspector of election. If the Board does not accept the director’s resignation, the director will continue to serve. All Other Items. The other two items of business will be approved if shares voted in favor of the proposal exceed shares voted against the proposal. Abstentions and broker nonvotes will not affect the outcome of the vote. How will voting on any other business be conducted? We do not know of any business or proposals to be considered at the Annual Meeting other than the items described in this proxy statement. If any other business is proposed and the chairman of the Annual Meeting permits it to be presented at the Annual Meeting, the signed proxies received from you and other shareholders give the persons voting the proxies the authority to vote on the matter according to their judgment. When are Shareholder proposals for the Annual Meeting to be held in 2020 due? To be considered for inclusion in next year’s proxy statement, shareholder proposals must be delivered in writing to the Secretary of the Company, Air Products and Chemicals, Inc., 7201 Hamilton Boulevard, Allentown, PA 18195-1501 no later than August 14, 2019. To be presented at the 2020 Annual Meeting, our Bylaws require that adequate written notice of a proposal to be presented or nomination must be delivered in writing to the Secretary of the Company in person or by mail at the address stated above on or after September 26, 2019 but no later than October 26, 2019. To be considered adequate, the notice must contain other information specified in the Bylaws about the matter to be presented at the meeting and the shareholder proposing the matter. A copy of our Bylaws can be found in the “Governance” section of our website at www.airproducts.com. A proposal received after October 26, 2019 will be considered untimely and will not be entitled to be presented at the meeting. What are the costs of this proxy solicitation? We hired Morrow Sodali, 470 West Ave., Stamford CT 06902 to help distribute materials and solicit votes for the Annual Meeting. We will pay them a fee of $13,000, plus out-of-pocket costs and expenses. We also reimburse banks, brokers and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy materials to you, because they hold title to Company stock for you. In addition to using the mail, our directors, officers and employees may solicit proxies by personal interview, telephone, telegram or otherwise, although they will not be paid any additional compensation. The Company will bear all expenses of solicitation. Questions and Answers on Voting and the Annual Meeting For a period of 10 days prior to the Annual Meeting, a list of shareholders registered on the books of our Transfer Agent as of the record date will be available for examination by registered shareholders during normal business hours at the Company’s principal offices as long as the examination is for a purpose germane to the meeting. How can I get materials for the Annual Meeting? Under rules adopted by the SEC, we are furnishing proxy materials to most of our shareholders via the Internet instead of mailing printed copies of those materials to each shareholder. On December 12, 2018, we mailed to our shareholders (other than those who previously requested electronic or paper delivery) a Notice of Availability of Proxy Materials containing instructions on how to access our proxy materials, including our proxy statement and our 2018 Annual Report to Shareholders. The Notice of Availability of Proxy Materials also instructs you on how to access your proxy card to vote through the Internet. This process is designed to expedite shareholders’ receipt of proxy materials, lower the cost of the Annual Meeting and help conserve natural resources. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Availability of Proxy Materials. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise. Current Employees. If you are an employee of the Company or an affiliate who is a participant in the Retirement Savings Plan or who has outstanding stock options, with an internal Company e-mail address as of the record date, you should have received e-mail notice of electronic access to the Notice of Annual Meeting, the proxy statement and the 2018 Annual Report to Shareholders on or about December 12, 2018. You may request a paper copy of these materials by contacting the Corporate Secretary’s Office. If you do not have an internal Company e-mail address, paper copies of these materials were mailed to your home. Instructions on how to vote shares in your Plan account are contained in the e-mail notice or accompany the paper proxy materials mailed to you. If you have employee stock options awarded to you by the Company or an affiliate but do not otherwise own any Company stock on the record date, you are not eligible to vote and will not receive a proxy card for voting. You are being furnished this proxy statement and the 2018 Annual Report to Shareholders for your information and as required by law. What are the admission procedures for the Annual Meeting? To gain admission to the Annual Meeting, if not a Company employee, you must present your admission ticket at the Visitor’s Entrance to the Air Products Corporate Headquarters. Registered Shareholders. If you received a “Notice of Availability of Proxy Materials,” the Notice is your admission ticket. If you received these proxy materials by mail or e-mail, your admission ticket is on the top half of the reverse side of your proxy card, which must be printed if you received it by e-mail. Shares held through broker, bank or other nominee. When you vote your shares, either electronically or via the voting instruction form you receive from your broker, bank or other nominee, you will be given the opportunity to check a box indicating that you intend to attend the Annual Meeting. If you check the box, you will be sent a “legal proxy”, which will serve as your admission ticket. (Please note, if you check this box, your shares must be voted in person.) Alternatively, you will be admitted if you present a Notice of Availability of Proxy Materials or Voting Instruction Form relating to the Air Products Annual Meeting; however, you must present a legal proxy if you wish to vote your shares in person. Questions and Answers on Voting and the Annual Meeting How can I reach the Company to request materials or information referred to in these Questions and Answers? You may reach us by mail addressed to: Corporate Secretary’s Office or by calling 610-481-4880. (Millions of dollars unless otherwise indicated, except for per share data) The Company has presented certain financial measures on a non-GAAP (“adjusted”) basis and has provided a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP. These financial measures are not meant to be considered in isolation or as a substitute for the most directly comparable financial measure calculated in accordance with GAAP. The Company believes these non-GAAP measures provide investors, potential investors, securities analysts, and others with useful supplemental information to evaluate the performance of the business because such measures, when viewed together with our financial results computed in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our historical financial performance and projected future results. In many cases, our non-GAAP measures are determined by adjusting the most directly comparable GAAP financial measure to exclude certain disclosed items (“non-GAAP adjustments”) that we believe are not representative of the underlying business performance. For example, The following non-GAAP reconciliation is on a continuing operations basis. Appendix A 2013 GAAP — As Reported FY2016 Form 10-K(A) Adjustment for Energy-from-Waste (EfW) discontinued operations 2013 GAAP — Historical Air Products Business restructuring and cost reduction actions Advisory costs 2013 Non-GAAP Measure — Historical Air Products(B) 2014 GAAP — As Reported FY2016 Form 10-K(A) Adjustment for EfW discontinued operations 2014 GAAP — Historical Air Products Business restructuring and cost reduction actions Pension settlement loss Goodwill and intangible asset impairment charge Chilean tax rate change Tax election benefit 2014 Non-GAAP Measure — Historical Air Products(B) 2015 GAAP — As Reported FY2016 Form 10-K(A) Adjustment for EfW discontinued operations 2015 GAAP — Historical Air Products Business restructuring and cost reduction actions Pension settlement loss Business separation costs Gain on previously held equity interest Gain on land sales Loss on extinguishment of debt(D) 2015 Non-GAAP Measure — Historical Air Products(B) Adjustment for EfW discontinued operations 2015 Non-GAAP Measure — As Reported FY2016 Form 10-K(A) 2016 GAAP — As Reported FY2016 Form 10-K(A) Business separation costs Tax costs associated with business separation Business restructuring and cost reduction actions Pension settlement loss Loss on extinguishment of debt(D) 2016 Non-GAAP Measure — As Reported FY2016 Form 10-K Adjustment for EfW discontinued operations(C) 2016 Non-GAAP Measure — with discontinued operations adjustment(B) Non-GAAP 3 Year EPS Average for Compensation(B) 2015 Non-GAAP Measure with EfW in Discontinued Operations 2016 Non-GAAP Measure with EfW in Discontinued Operations Currency and foreign exchange impact 2016 Non-GAAP Measure, excluding currency impact Appendix A We define Adjusted EBITDA as income from continuing operations (including noncontrolling interests) excluding certain disclosed items, which the Company does not believe to be indicative of underlying business trends, before interest expense, other non-operating income (expense), net, income tax provision, and depreciation and amortization expense. Adjusted EBITDA provides a useful metric for management to assess operating performance. Income from Continuing Operations(A) Add: Interest expense Add: Income tax provision Add: Depreciation and amortization Add: Business separation costs Add: Business restructuring and cost reduction actions Add: Pension settlement loss Less: Gain on previously held equity interest Less: Gain on land sales Add: Loss on extinguishment of debt Adjusted EBITDA Change from prior year % change from prior year (A) Includes net income attributable to noncontrolling interests. Adjusted EBITDA Margin Change from prior year Net income from continuing operations attributable to Air Products Interest expense Interest expense tax impact Interest expense, after-tax Net income attributable to noncontrolling interests Earnings After-Tax—GAAP Disclosed items, after-tax Business separation costs Tax costs associated with business separation Business restructuring and cost reduction actions Pension settlement loss Gain on previously held equity interest Goodwill and intangible asset impairment charge Gain on land sales Loss on extinguishment of debt Chilean tax rate change Tax election benefit Energy-from-Waste discontinued operations adjustment(A) Adjusted Earnings After-Tax Five-Quarter Average Total Capital Energy-from-Waste discontinued operations adjustment(A) Five-Quarter Average Total Capital including discontinued operations ROCE—GAAP Change GAAP Measure Adjusted ROCE Change Non-GAAP Measure Adjusted ROCE Cost of capital ROCE spread Adjusted 3 Year Average Arkema Williams Companies Group Driving Directions to Air Products and Chemicals, Inc. 7201Hamilton Boulevard From Pennsylvania Turnpike (US 476) Follow Route 22 West to Trexlertown Exit (Exit 49A off Route 22 and I-78) onto Route 100 South. Proceed on Route 100 South for 3 miles; continue straight and at this point Route 100 becomes Trexlertown Road. Proceed one more mile to the traffic light at Trexlertown Road and Hamilton Boulevard. Turn left onto Hamilton Boulevard. Go under the RR bridge and proceed to the second traffic light. Turn left at the “Visitor Entrance” sign (Gate 2) into the Air Products complex. From Route 22 Proceed on Route 100 South for 3 miles; continue straight, and at this point Route 100 becomes Trexlertown Road. Proceed one more mile to a traffic light at Trexlertown Road and Hamilton Boulevard. Turn left onto Hamilton Boulevard. Go under the RR bridge and proceed to the second traffic light. Turn left at the “Visitor Entrance” sign (Gate 2) into the Air Products complex. From Route 309 North and I-78 West Follow 222 South to the traffic light at Mill Creek Road. Turn left on Millcreek Road Proceed south on Hamilton Boulevard. Corporate Office is located on right side of highway. Turn right at the “Visitor Entrance” sign (Gate 2) into the Air Products complex. From Route 309 South and I-78 East Follow 222 South to the traffic light at Mill Creek Road. Turn left on Millcreek Road Proceed south on Hamilton Boulevard. Corporate Office is located on right side of highway. Turn right at the “Visitor Entrance” sign (Gate 2) into the Air Products complex. For more information, Investor Relations Office VOTE BY INTERNET -www.proxyvote.com or scan the QR Barcode above ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS VOTE BY PHONE - 1-800-690-6903 VOTE BY MAIL The Board of Directors recommends you vote FOR Advisory vote approving Executive Officer compensation. Ratify the appointment of Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Admission Ticket Annual Meeting of Air Products and Chemicals, Inc. Corporate Headquarters Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: Annual Meeting of Shareholders - January 24, 2019 Proxy This proxy is solicited on Behalf of the Board of Directors The undersigned hereby appoints Seifi Ghasemi, M. Scott Crocco and Sean D. Major, or any one of them, with full power of substitution, to represent the undersigned at the annual meeting of shareholders of Air Products and Chemicals, Inc. on Thursday, January 24, 2019, at 2:00 p.m. (Eastern Time), and at any adjournments thereof, and to vote at such meeting the shares which the undersigned would be entitled to vote if personally present, as directed on the reverse side, and to vote in their judgment upon all other matters which may properly come before the meeting and any adjournments thereof. This proxy will be voted as directed, but if no instructions are given for voting on the matters listed on the reverse side, this proxy will be voted as recommended by the Board of Directors. If any other matters are properly presented for consideration at the Annual Meeting, the proxy holders, or any one of them, will have discretion to vote on those matters in accordance with their best judgment. Shareholders who are present at the meeting may withdraw their Proxy and vote in person if so desired. Air Products and Chemicals, Inc. Retirement Savings Plan Participants The person signing on the reverse directs that Fidelity Management Trust Company, as Trustee for the Air Products and Chemicals, Inc. Retirement Savings Plan (the "Plan"), vote the shares of common stock of Air Products and Chemicals, Inc. ("shares") allocated to his or her account under the Plan at the annual meeting of shareholders of Air Products and Chemicals, Inc. to be held on January 24, 2019 as directed on the reverse side. The Trustee will tabulate the instructions from all participants and vote shares held in the Plan according to the instructions. The Trustee will vote shares held in the Plan for which no voting instructions are received by January 21, 2019 in the same proportions and manner as shares held in the Plan for which instructions have been received. Continued and to be signed on reverse sideMr. Ghasemi. The Board recruited Mr. Ghasemi in June 2014 after an extensive search. The Company entered into a five year employment agreement with Mr. Ghasemi in June 2014 (“Employment Agreement”) which established the minimum components of his term of the agreement, which ends in September 2019. In determining the terms of his Employment Agreement, the Committee considered peer group data13, Mr. Ghasemi’s experience, the compensation arrangements that he would have to give up at his former employer to accept employment with the Company, and the Company’s existing CEO compensation arrangements which had been repeatedly approved by the overwhelming majority of our shareholders. Consistent with market practice, and based on greater responsibility levels, the Company’s CEO compensation is substantially more than that of other Executive Officers.The Employment Agreement provides that Mr. Ghasemi will receive a minimum annual base salary of $1,200,000 and participate in the Company’s Annual Incentive Plan with a minimum target annual incentive award equal to 130% of base salary, with actual awards to be determined by the Committee; andMr. Ghasemi is also entitled to receive minimum annual equity compensation awards under the Company’s Long-Term Incentive Plan with a grant date value (determined under the Company’s normal valuation practices) of $7,000,000, allocated among restricted stock, performance shares, stock options or other equity awards in a manner consistent with the allocation for other Executive Officers.For fiscal year 2016, Farient’s competitiveness assessment showed Mr. Ghasemi to be at the Market Median. The Committee determined to increase Mr. Ghasemi’s annual incentive target opportunity by a modest 5% to recognize his important contributions to the Company during fiscal year 2015 and increase the incentive for him to sustain his leadership of the Company’s transformation to the safest and most profitable industrial gases company, providing excellent service to customers.13Farient advised the Committee on the competitiveness of the compensation levels based on Survey Reference Group and Peer Reference Group, data. These peer groups are describedwhile his base salary and target total cash approximated market median. Based on page 31.Mr. Ghasemi’s excellent performance during fiscal years 2016-2017, including leading the Company to improvement in safety performance and financial results, the Committee increased Mr. Ghasemi’s base salary from $1,200,000 to $1,350,000. Mr. Ghasemi’s resultant fiscal 2018 pay positioning is at the 75thpercentile.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSFiscal Year 2016 Direct Compensation Components
Fiscal 2018 Direct Compensation Components Executive Officer’sexecutive officer’s Total Direct Compensation established by the Committee, the Committee determines the individual compensation components of the program.Salary.SalaryMarket Median,market median, with adjustment where the Committee believes appropriate for proficiency, performance, experience and the uniqueness of the responsibilities held by certain Executive Officers.executive officers. Changes in base salaries for Executive Officersexecutive officers become effective as of the first payroll period in the calendar year; so the amounts reflected in the Summary Compensation Table reflect the fiscal year 20152017 base salary rate for the first quarter of the Company’s entire fiscal year and the fiscal year 20162018 base salary rate for the remainder of the fiscal year. For fiscal year 2016,2018, the CEO’s base salary was increased and, as a result, it aligned with the 75thpercentile. For all Executive Officers’other named executive officers, base salaries remained the same and approximated Market Median.market median.24 2019 Annual Meeting Proxy Statement Mr. Ghasemi, Mr. Novo, Mr. Painter and Mr. Stanley received no increase in base salary for 2016. Mr. Crocco received a modest increase consistent with Market Median positioning. Executive CompensationExecutive Officersexecutive officers for 2015fiscal 2017 and 2016fiscal 2018 were as follows:Officer 2017 Base
Salary Rate
($) 2018 Base
Salary Rate
($) %
IncreaseSeifi Ghasemi 1,200,000 1,350,000 12.5 M. Scott Crocco 600,000 600,000 0 Sean D. Major 550,000 550,000 0 Samir Serhan 550,000 550,000 0 Corning F. Painter 600,000 600,000 0 Officer 2015 Base
Salary Rate 2016 Base
Salary Rate $ 1,200,000 $ 1,200,000 0 $ 590,000 $ 600,000 2 % $ 465,000 $ 465,000 0 $ 600,000 $ 600,000 0 $ 575,000 $ 575,000 0 Plan.PlanMarket Median.market median. Targets may be established at greater or lesser levels for individual Executive Officersexecutive officers based on performance factors, internal equity, experience in the position or year-to-year swings in the market data. Actual annual incentive awards may be above or below target depending upon the Company’s fiscal year performance as measured by the performance measures and goals established by the Committee at the beginning of the fiscal year. When performance exceeds the target goals for the performance measures, annual incentive awards may exceed target as well, and may exceed Market Medianmarket median payouts. Actual annual incentive awards can range from 0% to 230% of target.target, inclusive of up to 30 percentage points of positive discretion. Over the previous five years, Executive Officerexecutive officer awards have ranged from 50% to 200% of target.Executive Officerexecutive officer target annual incentive awards as a percentage of each Executive Officer’sexecutive officer’s base salary based on the Survey Reference Group and Peer Reference Group (for the CEO and CFO) competitive assessment. For fiscal year 2016,2018, the target award levelslevel for Mr. Major and Dr. Serhan was increased to enhance overall amount of performance-based compensation and to align target bonus opportunities reflective of job scope. All other named executive officers remained the Executive Officers were increased from prior year consistent with the emphasis on elements of compensation tied directly to performance and were as follows:same for fiscal 2018. Officer 130 % 135 % $ 1,620,000 75 % 85 % $ 510,000 75 % 85 % $ 395,000 75 % 85 % $ 510,000 75 % 80 % $ 460,000 Officer 2017 Target
(% of Base Salary) 2018 Target
(% of Base Salary) 2018
Target Value
($)Seifi Ghasemi 150% 150% 2,025,000 M. Scott Crocco 85% 85% 510,000 Sean D. Major 70% 75% 412,500 Samir Serhan 70% 85% 467,500 Corning F. Painter 85% 85% 510,000 Executive Officer’sexecutive officer’s actual award is determined by multiplying the target award by his or her individual payout factor.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSExecutive Officer’sexecutive officer’s individual payout factor, the Committee determines an initial payout factor derived from the Company’s performance against the payout schedules established by the Committee at the beginning of the fiscal year. As described above, for fiscal year 20162018 the Committee selected rigorous adjusted earnings per share(1)targets as the performance measure for the Annual Incentive Plan.Plan to sustain the Company’s position as the most profitable industrial gas company in the world. Target adjusted earnings per share of $6.90 represents a 9.35% increase from fiscal 2017 adjusted earnings per share of $6.31. The threshold, target and maximum factors for each measure are set out below. (Factors are interpolated between points.)2018 Adjusted
Earnings per Share(1) Initial Payout
Factor %<$6.31 0% $6.31 50% $6.90 100% $7.20 200% 25 Payout % 0% 50% 100% 200% (1) is from 30 percentage points below the initial payout factor determined using the schedule above based on Company performance for the year to 30 percentage points above the initial payout factor. Actual payout factors can be adjusted within the range by the Committee based on safety and individual performance and other nonfinancial factors. In addition, the EBITDA performance of Mr. Novo’s and Mr. Painter’s businesses was considered for purposes of determining their factors within the payout factor range.DETERMINATION OF ANNUAL INCENTIVE PLAN PAYOUT Determination of Annual Incentive Plan PayoutDetermine Target Award (Beginning of year) 
Determine Payout Factor Range (After year-end) 
Individual
Individualyear 2016,2018, adjusted earnings per share for purposes of the Annual Incentive Plan was $7.73.15 In determining fiscal year 2016 adjusted earnings per share, the Committee excluded certain non recurring items and normalized for currency and foreign exchange impacts that were not anticipated$6.98, which resulted in the operating plan because of the significant negative impact of currency fluctuation, which the management team cannot influence, on financial results for fiscal year 2016. The unadjustedan initial payout factor based solely on the financial results, was 200%of 127%. The potential payout range was 170%97% to 230%, but157%; however, the Committee determineddecided not to exercise its discretion to adjust the initial payout factor. Fiscal year 20162018 awards determined for Executive Officersexecutive officers appear in the NonequityNon-Equity Incentive Plan Compensation column of the Summary Compensation Table.Incentives.Incentivesathe most critical part of Executive Officerexecutive officer compensation because it creates alignment with shareholders and promotes achievement of longer termlong-term financial and strategic objectives. The success of the Company’s business and resulting value for our shareholders is predominantly built on stable, long-term relationships with customers and substantial capital investments that reap returns over a long time horizon through technological differentiation, cost control and operational efficiencies. Reflecting this long-term business model, the Committee emphasizes long-term incentive compensation designed to ensure that the decisions being made today build value for the long term, and to reward sustainable growth, disciplined capital investment, sustainable cost reduction and consistent operational excellence. For 2016fiscal 2018, the Committee selected two components for the Executive Officer’sexecutive officer’s long-term incentives: “performance shares”performance shares which are conditioned on performance over a three-year period (for fiscal year 20162018 grants, relative total shareholder returnTSR for fiscal year 2016-2018)2018-2020); and restricted stockRSUs which links Executive Officers’link executive officers’ interests to shareholder returns and providesprovide a retention incentive.year 2016, the Committee determined to eliminate stock options because compensation delivered through stock options can be more heavily influenced by market volatility than Company performance. For fiscal year 2016,2018, the mix of intended long-term14After the Committee established the payout schedules, each of the performance goals were increased by .03-.06 per share to adjust for the classification of the Energy from Waste business as a discontinued operation, which eliminated the operating losses associated with that business from earnings from continuing operations.15Based on non-GAAP continuing operations earnings per share of $7.55 adjusted for currency ($.18). See Appendix A for a reconciliation to GAAP measures.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSExecutive Officersexecutive officers was 60% performance shares and 40% restricted stock.RSUs. The Committee chose this mix of performance shares and restricted stock to provide a balance of stock-based compensation contingent onto encourage both above-market performance and talent retention. Because both components of an Executive Officer’sexecutive officer’s long-term incentive opportunity are delivered in Company stock-based awards, they become more or less valuabletheir value is based on our stock price, which serves the Committee’s objective of creating alignment with changes in Company stock value that affect shareholders.long termlong-term incentive grants for fiscal year 20162018 at the beginning of the fiscal year. Prior to making the grants, the Committee established an intended long-term incentive value for each Executive Officer.executive officer. When setting these intended values, the Committee considersconsidered the Survey and Peer Reference Group competitive data and target Total Direct Compensation opportunities for each Executive Officer.total direct compensation opportunities. It is the Committee’s intent that the long-term incentive value and total direct compensation opportunity for our CEO be at the 75thpercentile of the Peer Reference Group. It is the Committee’s intent that for executive officers other than our CEO, the long-term incentive value approximate the Market Medianmarket median and bring the Total Direct Compensationtotal direct compensation opportunity for each Executive Officer to approximatelysuch executive officers approximate the Market Medianmarket median level when combined with base salary and target Annual Incentive Plan awards.Market Median.market median. These factors include tenure and experience, succession planning and retention, concerns, subjective evaluations of performance, historical26 2019 Annual Meeting Proxy Statement one-time retention awards. For fiscal year 2016,2018, all intended long termlong-term incentive values approximated the projected Market Median.market median (except for the CEO value, which approximated the 75th percentile). The actual value realized may differ significantly (up or down) from the intended value due to Company stock price performance over the life of the awards and the extent to which performance goals are met in the case of performance shares.Officer Intended Long-Term Incentive Value
($)Seifi Ghasemi 8,500,000 M. Scott Crocco 1,700,000 Sean D. Major 1,000,000 Samir Serhan 1,000,000 Corning F. Painter 1,300,000 Officer Intended Long Term Incentive Value $ 7,000,000 $ 1,300,000 $ 850,000 $ 1,300,000 $ 1,000,000 Granting Practices.Performance Shares Equity compensation awards are provided to Executive Officers and other management employees under the Company’s Long Term Incentive Plan and (except for off-cycle recruiting and retention awards) are granted as of the first NYSE business day in the month of December. Recruiting grants are generally issued as of the first day of employment. Off-cycle retention grants are made occasionally in response to extraordinary retention needs that arise during the year.2016 Performance Shares. The primarymore significant component of the long-term incentive program for 2016incentives granted to our executive officers in fiscal 2018 was performance shares. Performance shares entitle the recipient to receive one share of Company stock and accumulated dividend equivalents for each performance share earned upon the satisfaction of performance objectives and other conditions to earning the award. Performance shares are granted each year with overlapping three-year performance cycles. The awards are paid out at the end of the three-year period based on performance, if threshold performance goals are met. Payouts of performance shares range from 0% to 215%200% of the target level of shares awarded. The target level for fiscal year 20162018 grants, (60% of each Executive Officer’sexecutive officer’s total intended long-term incentive value), was converted to a number of shares based on the grant date closing market valueprice of Company stock. The actual number of performance shares earned is determined by multiplying the target number of shares by a payout factor.factor, which is subject to adjustment by the Committee within a narrow range to address performance factors that may not be reflected in relative TSR results.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSFor fiscal year 2016,Fiscal 2018 performance shares were granted conditioned upon the Company’s three-year TSR16 percentile rank compared to the TSR of Peer Reference Group members over the three-year performance period.period (fiscal 2018-2020). The payout factor will be determined in accordance with the following schedule (with payout factors interpolated between levels):Company’s TSR
Percentile RankPayout Factor* >75th%ile 200% Company’s TSRPercentile RankPayout %*50th%ile100% >7530th%ile %ile200% 30% 50<30th%ile %ile100% 30th %ile30% <30th %ile0% 0%* adjustincrease or decrease the payout factorPayout Factor by up to 15 percentage points.Executive Officer for fiscal year 2016named executive officer was as follows:Officer Target Performance Shares S.Seifi Ghasemi30,18831,489 S.Scott Crocco5,6076,297 G. Novo3,6663,704 C.Samir Serhan3,704 Corning F. Painter 5,607S. D. Stanley4,3134,816 2016 Payout for FY2014-2016 Performance Shares.The Committee also establisheddetermined final payout levels for performance sharesshare awards granted in fiscal year 20142016 with a performance cycle ending at the end of fiscal 2018. Prior to determining the payout, the Committee considered the need to reflect the impact on TSR of the spin-off of Versum Materials. The Committee determined the most logical way to reflect the spinoff was to calculate the TSR performance as if one half of a share of Versum Materials (the distribution received by 27 were tied to average Net ROCE and EPS Growth performance for fiscal years 2014-2016. The payout factor was determined using the formula below, reflecting performance during the three-year performance period:67% NetROCE Factor17 + 33% EPS Growth Factor = Payout Factor The Factor Schedule excerpted below applied14thpercentile compared to the fiscal year 2014 grants. The Committee may adjustPeer Reference Group. Air Products’ TSR percentile rank was below the 30thpercentile threshold required for a minimum payout level by up to 15 percentage points.under our Long-Term Incentive Plan. 2014 Performance Shares Factor Schedule Net ROCE (67%) EPS Growth (33%)
Factor EPS Growth 0 % 0% 35 % 50 % 4% 50 % 100 % 7% 80 % 200 % 9% 100 % 16% 200 % The EPS Growth and Net ROCE factorsThis resulted in a zero percent payout of performance shares for the fiscal year 2014-20162016-2018 performance period were determined usingcycle as outlined in the Factor Schedule. The average Net ROCE over the performance period was 2.3% and the average EPS Growthfollowing table.Officer(1) Target Performance Shares Grant(2) Performance Shares Earned(3) Seifi Ghasemi 32,332 0 M. Scott Crocco 6,006 0 Samir J. Serhan 4,694 0 Corning F. Painter 6,006 0 16(1)“TSR” or “Total Shareholder Return” isDr. Serhan joined the growthCompany in capital that would be experienced from purchasingearly fiscal 2017 and received a grant of fiscal 2016 performance shares as a sign-on award. Mr. Major joined the Company later in fiscal 2017 and did not participate in these awards.(2) Company or Peer Reference Group member stock and holding it1.071 on October 1, 2016 in conjunction with the spin-off of Versum Materials. This adjustment was provided for under the non-discretionary anti-dilution provisions for the Performance Period, assuming that dividends are reinvested inaward terms to maintain the Company’s stock, or Peer Reference Group member’s stock, respectively, onintrinsic value of the record date.award immediately after the spin-off.17(3)For purposesBased on final payout factor of calculating Net ROCE (return on capital net of cost of capital) for fiscal years 2014-2016, the Company’s average cost of capital was 9%0%.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSwas 10.7%18, resulting inRestricted stock units entitle the recipient to receive one share of Company stock upon payout, generally at the end of a calculated payout factor of 106% of the target shares. The Committee determined to use negative discretion to adjust the payout factor down to 91% to hold the management team accountable for the underperformance of certain large capital investments madefour-year vesting period. RSUs are conditioned upon continued employment during the performancevesting period in particular the challenges associated with the Company’s Energy from Waste projects which resulted in the Company exiting the Energy from Waste business.Restricted Stock. Restricted stock awards are shares of Company common stock that possess voting and dividend rights but are subject to restrictionsspecial vesting rules for terminations due to death, disability or retirement or terminations covered by the Executive Separation Program described on transferability and forfeitable until vesting.pages 45-48. Upon vesting, RSUs also entitle the holder to receive dividend equivalents equal to the amount of dividends paid on a share of Company stock during the vesting period. The vesting conditions provide an incentive for retention, and the value of this compensation element increases or decreases in direct proportion to Company Stock.our TSR. The amountvalue of restricted stockRSUs granted to the Executive Officersexecutive officers in fiscal year 20162018 is reflected in the Summary Compensation Table and the Grants of Plan-Based Awards table. Individual award amounts were determined by calculating the value (based on the average closing market value of a share ofstock price for the Company’s stock on10 trading days preceding the grant date) to approximate 40% of the total intended long-term incentive value for the Executive Officer.executive officer.Treatment Of Long Term Incentive Awards Outstanding At Time Of Versum Materials Spin-Off. Long term incentive awardsIn fiscal 2018 we granted RSUs to employees under Air Products’ Long-Term Incentive Plan that were outstanding on October 1, 2016, other than restricted stock, were adjusted using the following principles:Awards were adjusted to maintain the economic value of those awards before and after the spin-off; andOther than certain performance shares, treatment of which is described below, the terms of equity awards, suchour named executive officers as the vesting schedule, generally continue unchanged.The following table provides additional information regarding conversion of each type of Air Products equity award:Air Products EmployeesOfficer Versum Materials EmployeesRSUsStock OptionsThe number and exercise price of Air Products stock options was adjusted to maintain economic value.Air Products stock options were converted into options to purchase Versum Materials common stock, with the number and exercise price adjusted to maintain economic value.20,992Restricted Stock UnitsThe number of Air Products restricted stock units was adjusted to maintain economic value.Air Products restricted stock units were converted to Versum Materials restricted stock units, with the number adjusted to maintain economic value.4,198Performance SharesThe number of Air Products performance shares was adjusted to maintain economic value.2,469Samir J. Serhan Air Products performance shares were converted to Versum Materials equity awards, with the number adjusted to maintain economic value, as described below.2,469Corning F. Painter 3,210 Air Products performance sharesFollowing the completion of fiscal 2018, the Committee granted Dr. Serhan 9,424 RSUs in fiscal year 2014December 2018 as a special retention award that will vest in three equal installments beginning on December 3, 2019. Dr. Serhan also received an adjustment to his salary and held by Versum Materials employees were converted to Versum Materials performance sharesan increase in an amount adjusted to maintain the economic value of his annual equity grants. The Committee took these actions in recognition of the expanding scope of Dr. Serhan’s responsibilities in our operations and, were paidin particular, the leadership role he will play in winning and executing the Company’s largest projects and building out based upon Air Products’ performance at the payout percentage determined by the Committee.Air Products performance shares granted in 2015 and held by Versum Materials employees were converted to Versum Materials performance shares in an amount adjusted to maintain the economic value and will be earned out based on the achievement of metrics to be determined by the Versum Materials board of directors, with due consideration given to Air Products’ relative TSR performance through the distribution date.1828 In determining performance, the Committee excluded certain items but included certain losses associated with Energy from waste operations. See Appendix A for a reconciliation to GAAP measures.AIR PRODUCTS AND CHEMICALS, INC.Executive CompensationCOMPENSATION OF EXECUTIVE OFFICERSAir Products performance shares granted in 2016 and held by Versum Materials employees will be converted into Versum Materials performance shares and will be earned out based on the achievement of metrics to be determined by the Versum Materials board of directors.Holders of Air Products restricted stock received one-half of a fully vested share of Versum Materials common stock for every share of Air Products restricted stock held at the time of the spin-off, as if such holder held fully vested Air Products common stock on the record date.Employee Benefit Plans and Other Compensation Practices and Policies
Employee Benefit Plans and Other Compensation Executive Officers and other employees. Welfare and retirement benefits are offered at essentially the same level to all U.S. salaried employees, including executive officers.Officers.Retirement Benefits. Executive Officersofficers participate in the Company’s generally available U.S. salaried retirement programs. The Company maintains qualified retirement programs for its salaried employees, including a defined benefit pension planPension Plan for Salaried Employees (the “Salaried Pension Plan”), which has been closed to new entrants since 2005, and a retirement savings and profit sharing plan. The Company also maintains a nonqualified pension plan (alsowhich is closed to new entrants)entrants and a nonqualified deferred compensation plan in which Executive Officerscertain executive officers and other eligible employees participate. The plans are discussed in more detail below in the narrative accompanying the Pension Benefits table and the Nonqualified Deferred Compensation table.Benefits.BenefitsExecutive Officersexecutive officers under the same programs offered to all salaried employees. All participating employees pay a portion of the cost of these programs.Arrangements.ArrangementsOfficerofficer severance and change in control arrangements are provided to support major corporate and management transitions. The Committee believes these arrangements provide benefit to the Company and its shareholders. The Committee periodically reviews these arrangements in depth for market competitiveness and appropriateness for the Company’s business.Severance.SeveranceExecutive Officers participatedexecutive officers participate in the Executive Separation Program. This program is intended to facilitate changes in the leadership team by establishing terms for the separation of an Executive Officerexecutive officer in advance, allowing a smooth transition of responsibilities when it is in the best interests of the Company. The program provides severance benefits and accelerated vesting of certain long termlong-term incentives upon involuntary termination other than for cause or voluntary termination for good reason.reason in exchange for certain post-employment restrictions designed to protect the Company. Details of the Programprogram are provided beginning on pages 51-53.page 45.Arrangements.ArrangementsExecutive Officers. Theexecutive officers. Consistent with compensation governance best practice, our change in control agreements giveare “double-trigger,” which means that each Executive Officerexecutive officer will receive specific rights and benefits if, following a change in control, his or her employment is terminated by the Company without “cause” (as defined) or he terminates employment for “good reason” (as defined). in exchange for certain post-employment restrictions. Details of the agreements are described below on pages 54-56.48-49.Perquisites.Perquisites The Company provides minimal perquisites to executives. the Company’s providing Mr. Ghasemi theGhasemi’s personal use of a Company car and driver for commuting and providing Mr. Ghasemi’s spouse thespouse’s use of a car and driver on rare occasions where security is a concern. Mr. Ghasemi uses commuting time for performing his 29 orpersonal use and his spouse’s use of corporate aircraft and cars. The Committee believes the benefits of security, confidentiality and efficiency achieved by these arrangements outweigh the expense to the Company and are in the best interestinterests of shareholders.
Executive Compensation Decision-Making Process ● reviews and evaluates the appropriateness of the Company’s current executive officer compensation program based on several factors, including competitiveness of the program and alignment of compensation delivered under the program with the Company’s strategy and performance; ● reviews whether the program design encourages excessive risk taking; ● approves peer groups for market reference; ● reviews dilution and burn rates associated with the Company’s equity compensation; ● evaluates and approves changes to incentive compensation and benefit plans when needed; ● approves incentive compensation payouts for the current year; and ● addresses other specific issues regarding management development and compensation as needed. 30 2019 Annual Meeting Proxy Statement AIR PRODUCTS AND CHEMICALS, INC.During fiscal 2018, WTW provided advice and analysis to the Committee on direct compensation for individual executive officers, peer group composition, incentive plan performance measures, compensation program design and external trends and developments. WTW also provided an analysis of the alignment of pay delivered under the Company’s executive officer compensation program with its performance compared to peer group pay and performance, an assessment of the fit of the Company’s executive officer compensation program design with its business strategy, a comparison of the program design to peer programs, and an assessment of the potential relationship between the Company’s compensation program and risk taking by management.● Human Resources staff work with the Committee to develop the design of compensation programs and decision-making frameworks for determining compensation levels; ● the CEO provides input to the Committee on the forms of incentive compensation and performance measures that will best support his strategic goals for the Company; ● the CEO provides the Committee perspective on the performance of other executive officers and develops and recommends compensation actions for the other executive officers, in consultation with Human Resources, and based on competitive market analysis; ● the CFO provides background to the Committee regarding the Company’s key financial objectives and performance against them; and ● the Company’s Law and Human Resources staff provide technical advice and other support to the Committee. 31 COMPENSATION OF EXECUTIVE OFFICERSTable of ContentsName Criteria Purpose Source Survey Reference Group Broad group of industrial companies with $7 – 13 billion in revenue Benchmark competitive executive officer direct compensation levels at target WTW and Mercer surveys Peer Reference Group Chemical and industrial companies with similar capital structure, asset intensity and profitability to Company Benchmark competitive direct compensation levels for CEO and CFO, pay practice and pay for performance assessment, peer group for performance share relative TSR measure Compiled from proxy statement filings Celanese Corp. Ecolab Inc. Olin Corporation Chemours Company Huntsman Corp. Parker-Hannifin Corp. Danaher Corp. Illinois Tool Works, Inc. PPG Industries, Inc. Dover Corp. Ingersoll-Rand plc Praxair, Inc. Eastman Chemical Co. 32 2019 Annual Meeting Proxy Statement ● the Company does not use highly leveraged short-term incentives that drive risky investments at the expense of long-term Company value; ● the Company’s compensation programs reward consistent, long-term performance by heavily weightingcompensation to long-term incentives; ● concentration of long-term incentive compensation in awards based on relative TSR combined with overlapping grant cycles strengthens executives’ incentive to foster stable, long-term performance; ● cash incentive awards are capped at sustainable levels, and the Committee has discretion to reduce awards, including for non-financial considerations; ● the Company enforces substantial executive officer stock ownership and holding requirements; ● the Company has recovery policies (“clawbacks”) applicable to incentive compensation that permit the Company to cancel awards and recoup certain gains in the event of conduct detrimental to the Company. 
Key Compensation Practices and Policies . Executive Officersexecutive officers to achieve an ownership stake in the Company that is significant in comparison with the Executive Officer’sexecutive officer’s salary. The ownership guidelines are six times base salary for the CEO and three times base salary for the other Executive Officers.executive officers. The Executive Officersexecutive officers are expected to achieve the specified ownership level within five years of assuming their position. Executive Officersofficers may count toward these requirements the value of shares owned, share equivalents held in their Retirement Savings Plan accounts, earned performance shares, restricted shares, unvested RSUs and deferred stock units which are fully vested and held in the Company’s nonqualified deferred compensation plan.Deferred Compensation Plan. Stock options and unearned performance shares are not counted. All Executive Officersexecutive officers are currently in compliance with this policy.. Executive Officersexecutive officers and directors may not purchase or sell options on Company stock; engage in short sales with respect to Company stock; or trade in puts, calls, straddles, equity swaps or other derivative securities that are directly linked to Company stock. It is also the policy of the Company that shares of Company stock owned by Executive Officersexecutive officers or directors may not be held in a margin account or pledged as collateral on a loan.. (i.e.(i.e., must be repaid to the Company) if an Executive Officerexecutive officer engages in activity that is detrimental to the Company, such as performing services for a competitor, disclosing confidential information or violating Company policies. The Committee has also adopted a policy allowing the clawback of cash incentive payments and performance 33 Executive Officer’sexecutive officer’s conduct leads to a restatement of the Company’s financial results. The Committee may, in its discretion, seek to recoup any bonus or incentive compensation paid to an Executive Officerexecutive officer if (i) the amount of such payment was based on the achievement of certain financial results that were subsequently the subject of a restatement, (ii) the Committee determines that the Executive Officerexecutive officer engaged in misconduct that resulted in the requirement to restate and (iii) a lower payment would have been made to the Executive Officerexecutive officer based upon the restated financial results.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERS2016 Summary Compensation TableLong term incentiveEquity compensation awards depictedare provided to executive officers and approximately 200 other management employees under the Company’s Long-Term Incentive Plan and (except for off-cycle recruiting and retention awards) are granted as of the first NYSE business day in the month of December. Recruiting grants are generally issued as of the first day of employment. Off-cycle retention grants are made occasionally in response to extraordinary retention needs that arise during the year.34 2019 Annual Meeting Proxy Statement except for restricted stock, were adjusted following the spin-off of Versum Materials on October 1, 2016, after the end of fiscal year 2016. The Executive Compensation Tables, except as otherwise indicated, reflect awards as of September 30, 2016. See “Treatment Of Long Term Incentive Awards Outstanding At Time Of Versum Materials Inc. Spin-Off” for more information on the adjustments made.Name and PrincipalPositionFiscal 2018 Summary Compensation TableYearSalaryStockAwards(2)OptionAwards(3)Non-equityIncentivePlanCompen-sation(4)Changes inPensionValue andNonqualifiedDeferredCompen-sationEarnings(5)All OtherCompen-sation(6)TotalS. GhasemiChairman, President and Chief Executive Officer201620152014$$$1,200,0001,200,000295,385$$$6,839,9516,947,0864,785,981$$$-1,505,5634,785,704$$$3,240,0003,120,000196,603$$$4,2901,07911$$$251,592184,385126,029$$$11,535,83312,958,11310,189,713M. S. CroccoExecutive Vice President and Chief Financial Officer201620152014$$$597,308581,923529,038$$$1,270,4341,190,851687,439$$$-258,099509,022$$$1,020,000757,530210,000$$$1,311,4161,018,815726,287$$$19,60818,46616,807$$$4,218,7663,825,6842,678,593G. NovoExecutive Vice President, Materials Technology(1)201620152014$$465,000465,000$$830,642843,379$$-182,789$$790,600698,000$$5,1743,025$$66,77245,112$$2,158,0882,237,305C. F. PainterExecutive Vice President, Industrial Gases201620152014$$$600,000573,077491,538$$$1,270,4341,290,082687,439$$$-279,594509,022$$$1,020,000769,500187,500$$$1,433,4491,153,174766,916$$$21,77718,20015,699$$$4,345,6604,083,6272,658,114J. D. StanleySenior Vice President, General Counsel and Chief Administrative Officer201620152014$$$575,000575,000565,577$$$977,194992,441687,439$$$-215,070509,022$$$920,000737,010215,625$$$1,031,522841,572526,355$$$18,25818,25817,936$$$3,521,9743,379,3512,521,954Name and Principal Position Year Salary
($)
Bonus(2)
($)
Awards(3)
($)
Incentive
Plan
Compensation(4)
($)
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(5)
($)
Compensation(6)
($)
($)Seifi Ghasemi,
Chairman, President and
Chief Executive Officer2018 1,309,615 — 9,788,563 2,571,750 6,181 265,398 13,941,507 2017 1,200,000 — 9,194,498 3,276,000 5,793 283,476 13,959,767 2016 1,200,000 — 6,839,951 3,240,000 4,290 251,592 11,535,833 M. Scott Crocco,
Executive Vice President and Chief Financial Officer2018 600,000 — 1,957,485 647,700 726,537 8,851 3,940,573 2017 600,000 250,000 1,622,219 928,200 1,959,685 19,179 5,379,283 2016 597,308 — 1,270,434 1,020,000 1,311,416 19,608 4,218,766 Sean D. Major,
Executive Vice President,
General Counsel and Secretary(1)2018 550,000 — 1,151,372 523,875 187 45,140 2,270,574 Samir Serhan,
Executive Vice President(1)2018 550,000 770,000 1,151,372 593,725 472 61,418 3,126,987 2017 448,462 1,100,000 2,132,692 700,700 71 477,748 4,859,673 Corning F. Painter,
Former Executive Vice President,
Industrial Gases(1)2018 461,538 — 1,496,994 — 4,342,921 2,589,855 8,891,308 2017 600,000 — 1,405,789 928,200 2,582,803 19,179 5,535,971 2016 600,000 — 1,270,434 1,020,000 1,433,449 21,777 4,345,660 (1) Novo was not a Executive Officer for 2014; so hisMajor and Dr. Serhan joined the Company in fiscal 2017 and became named executive officers in fiscal 2018 and fiscal 2017, respectively; therefore their compensation is not shown for that year.(2) (3) Amounts in this column represent the U.S. GAAP grant date fair value of RSUs (2018 and 2017), restricted stock (2016) and performance share awards granted in the fiscal year indicated, disregarding any estimate of forfeitures related to time basedtime-based vesting. Generally, the expense for these awards is recognized over the vesting or performance period unless the recipient is eligible for retirement and the award vests upon retirement, in which case the expense may be required to be recognized entirely in the year of grant. The valuation models and assumptions applicable to these grant date fair values are set forth in Note 19, Share-Based Compensation, to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2016,2018, filed with the SEC on November 21, 2016.20, 2018. The amounts shown may not correspond to the actual value that maywill be realized by the executive officers. The grant date fair values of the performance shares are based upon the grant date probable outcomes of satisfying the 2014 time-based performance conditions and the 2015 and 2016 market-based performance conditions as stipulated in the grants. If, at the grant date, the fiscal year 2016 market-based stock awards probable outcome was 215% of the target number of shares (the maximum potential payout), the total value realized by the executive officers would increase from the amounts shown by approximately 120%. Maximum grant date values are displayed in the table below. Maximum values reflect the maximum calculated payout at 200% as well as the maximum discretion that could be applied of up to 15% based on grant date stock price. For additional information on awards made in fiscal year 2016,2018, see the Fiscal 2018 Grants of Plan-Based Awards Table and Outstanding Equity Awards at 2018 Fiscal Year-End Table on pages 4237 and 44,39, respectively. 2016 Performance Shares Grant Date Values Officer Value
Included Maximum
Value $ 4,062,701 $ 8,956,780 $ 754,590 $ 1,663,597 $ 493,370 $ 1,087,702 $ 754,590 $ 1,663,597 $ 580,444 $ 1,279,667 AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERS(3)This column shows the grant date fair value of stock options granted in the fiscal year indicated, disregarding any estimate of forfeitures relating to time-based vesting. The assumptions for the valuation determination are set forth in Note 19, Share Based Compensation, to our financial statements included in our Annual Report on Form 10-K for the fiscal year ending September 30, 2016, filed with the SEC on November 21, 2016. Additional information regarding these awards is set forth in the “Outstanding Equity Awards” table and accompanying footnotes.FISCAL 2018 PERFORMANCE SHARES GRANT DATE VALUES Officer Value
Included
($) Maximum
Value
($) Seifi Ghasemi 6,395,416 10,943,246 M. Scott Crocco 1,278,921 2,188,371 Sean D. Major 752,282 1,287,236 Samir Serhan 752,282 1,287,236 Corning F. Painter 978,130 1,673,685 (4) Executive Officersexecutive officers may defer awards received under this Plan. Amounts deferred are also reflected as “Executive Contributions” in the “Nonqualified Deferred Compensation” table. 35 (5) Executive Officers’executive officer’s accumulated tax qualifiedtax-qualified and nonqualified pension benefits and interest considered to be above marketabove-market interest credited to their Deferred Compensation Plan balances.thisit is comparable to the rate the Company pays its other creditors on long-term obligations. When this rate exceeds 120% of a rate set by the U.S. Internal Revenue Service, it is treated as above marketabove-market interest, even though it is based on a market average for corporate bonds. The amounts included as above marketabove-market interest were as follows: $ 4,290 $ 7,168 $ 5,174 $ 3,339 $ 3,241 The pension accrual amounts represent the difference between the September 30, 2015 and September 30, 2016 actuarial present value of accumulated benefits under the Company’s tax qualified and nonqualified pension plans for those Executive Officers who participate in the pension plans. No amounts are shown in the Summary Compensation Table for negative changes in value. The pension accrual amounts are as follows: $ - $ 1,304,248 $ - $ 1,430,110 $ 1,028,280 No changes were made to pension benefit formulas for this year. Changes in pension value can result from additional years of service, changes in pensionable compensation, and changes to discount and mortality rates. Additional information on how these amounts are calculated is included in the notes accompanying the Pension Benefits table.ABOVE-MARKET INTEREST Seifi Ghasemi $ 6,181 M. Scott Crocco $ 5,763 Sean D. Major $ 187 Samir Serhan $ 472 Corning F. Painter $ 3,559 The pension accrual amounts represent the difference between the September 30, 2017 and September 30, 2018 actuarial present value of accumulated benefits under the Company’s tax-qualified and nonqualified pension plans for those executive officers who participate in the pension plans. No amounts are shown in the Summary Compensation Table for negative changes in value. The pension accrual amounts are as follows: PENSION ACCRUALS M. Scott Crocco $ 720,774 Corning F. Painter $ 4,339,362 No changes were made to pension benefit formulas for this year. Changes in pension value can result from additional years of service, changes in pensionable compensation and changes to discount and mortality rates. Additional information on how these amounts are calculated is included in the footnotes accompanying the Pension Benefits Table. (6) Officer Contributions
Under Defined
Contribution Plans Group Term
Life Insurance
Premiums $ 220,800 $ 1,008 $ 29,784 $ 18,600 $ 1,008 $ 65,835 $ 937 $ 20,769 $ 1,008 $ 17,250 $ 1,008 Officer Severance
($) Contributions
Under Defined
Contribution Plans
($) Group Term
Life Insurance
Premiums
($) Perquisites or
Personal Benefits
($)Seifi Ghasemi — 196,348 1,236 67,814 (i) M. Scott Crocco — 7,615 1,236 — Sean D. Major — 43,904 1,236 — Samir Serhan — 60,182 1,236 — Corning F. Painter 2,582,005 (ii) 6,923 927 — (i)This amount isincludes the incremental cost to the Company of providing Mr. Ghasemi a car and driver for occassionaloccasional personal use ($25,666), including for occasional use by his spouse to mitigate security concerns.concerns, and of providing Mr. Ghasemi personal use of corporate aircraft ($42,148). The incremental cost for the car and driver is calculated using the U.S. Internal Revenue Service mileage rate based on the variable costs of operating a vehicle. The variable cost rate is used rather than the standard business rate as the Company uses the car and driver for Company business, including to transport other passengers, when not being used by Mr. Ghasemi, and would incur the fixed costs of operating the vehicle and employing the driver whether or not Mr. Ghasemi was provided the car and driver for commuting. In addition to the mileage rate, which includes trips to and from Mr. Ghasemi’s residence with no passengers, the amount calculated for use of the car and driver includes tolls and overtime compensation and reimbursement for meals and lodging provided to the driver in connection with Mr. Ghasemi’s commuting.use. Mr. Ghasemi pays all taxes associated with personal use of the car and driver.The incremental cost of the corporate aircraft is calculated using an hourly rate for each flight hour for variable operating costs (fuel and maintenance) plus flight specific costs such as parking and landing fees and crew expenses. The valuation also includes these costs with respect to flights with no passengers that are associated with Mr. Ghasemi’s personal travel. Fixed costs such as pilot compensation and lease payments are not included as the aircraft is primarily used for business purposes, and the Company would incur these costs regardless of Mr. Ghasemi’s personal use. Mr. Ghasemi’s family members traveled with Mr. Ghasemi on some of the flights reflected; however, no incremental cost to the Company arises from their accompanying Mr. Ghasemi. Mr. Ghasemi pays all taxes associated with personal use of the aircraft. (ii) Reflects severance paid to Mr. Painter in connection with his separation from the Company. For additional information, see Potential Payments Upon Termination — Mr. Painter’s Separation Agreement on page 46. 36 2019 Annual Meeting Proxy Statement Fiscal 2018 Grants of Plan-Based Awards Table Officer Award Type Grant
DateEstimated Future Payouts
Under Non-Equity Incentive
Plan Awards ($)
Estimated Future Payouts
Under Equity Incentive
Plan Awards(#) All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(#) Grant
Date Fair
Value of
Stock and
Option
Awards
($)(1) Threshold Target Maximum Threshold Target Maximum Seifi Ghasemi Annual Incentive Plan — 2,025,000 4,000,000 Performance Shares 12/1/2017 0 31,489 67,701 6,395,416 Restricted Stock Units 12/1/2017 20,992 3,393,147 M. Scott Crocco Annual Incentive Plan — 510,000 1,173,000 Performance Shares 12/1/2017 0 6,297 13,539 1,278,921 Restricted Stock Units 12/1/2017 4,198 678,565 Sean D. Major Annual Incentive Plan — 412,500 948,750 Performance Shares 12/1/2017 0 3,704 7,964 752,282 Restricted Stock Units 12/1/2017 2,469 399,089 Samir Serhan Annual Incentive Plan — 467,500 1,075,250 Performance Shares 12/1/2017 0 3,704 7,964 752,282 Restricted Stock Units 12/1/2017 2,469 399,089 Corning F. Painter Annual Incentive Plan — 510,000 1,173,000 Performance Shares 12/1/2017 0 4,816 10,354 978,130 Restricted Stock Units 12/1/2017 3,210 518,864 (1) Mr. Painter separated from the Company on June 30, 2018. Amounts that would have been potentially payable under the Non-Equity Incentive Plan were forfeited. Mr. Painter received cash payments under his Separation Agreement and equity vested upon termination under the Executive Separation Program as outlined on pages 45-48. AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERS2016The Fiscal 2018 Grants of Plan-Based Awards Estimated Future Payouts Under
Nonequity Incentive
Plan Awards($)
Awards(#)
Stock
Awards:
Number of
Shares Of
Stock or
Option
Awards:
Number of
Securities
Underlying
Or Base
Price of
Option
Awards
Date Fair
Value of
Stock and
Option Officer Award Type Threshold Target Maximum Threshold Target Maximum Annual Incentive Plan $- $1,620,000 $3,726,000 Performance Shares 12/1/2015 0 30,188 64,904 $4,062,701 Restricted Shares 12/1/2015 20,125 $2,777,250 Annual Incentive Plan �� $- $ 510,000 $1,173,000 Performance Shares 12/1/2015 0 5,607 12,055 $ 754,590 Restricted Shares 12/1/2015 3,738 $ 515,844 Annual Incentive Plan $- $ 395,250 $ 909,075 Performance Shares 12/1/2015 0 3,666 7,881 $ 493,370 Restricted Shares 12/1/2015 2,444 $ 337,272 Annual Incentive Plan $- $ 510,000 $1,173,000 Performance Shares 12/1/2015 0 5,607 12,055 $ 754,590 Restricted Shares 12/1/2015 3,738 $ 515,844 Annual Incentive Plan $- $ 460,000 $1,058,000 Performance Shares 12/1/2015 0 4,313 9,272 $ 580,444 Restricted Shares 12/1/2015 2,875 $ 396,750 AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSThe Grants of Plan-Based Awards table Table reports the dollar value of cash (nonequity)(non-equity) incentive awards and the number and value of equity awards granted to each Executive Officerexecutive officer during fiscal year 2016.2018. With regard to cash incentives, this table reports the range of potential value that could have been obtained by the Executive Officer;executive officer; whereas the Summary Compensation Table reports the actual value realized for fiscal year 2016.2018. Equity amounts represent the grant date values of the awards determined under FASB ASC Topic 718 for purposes of financial statement reporting, which are based on probable outcomes.NonequityNon-Equity Incentive Plan Awards— Annual Incentive Plan.Plan and goals and payout schedules prior to or at the beginning of the fiscal year. Following the end of the fiscal year, the Committee determines the range of actual amounts that can be paid out under a formula which reflects the Company’s performance against the approved performance goals.measures. Individual awards are determined by the Committee within the range, based on individual performance. There is no minimum bonus under the terms of the Plan, so the threshold amount is shown as 0.$0. The maximum bonus payable under this Plan is capped at $4,000,000. For more information on fiscal year 20162018 targets and the award determination, see pages 33-34.25-26.Shares.Sharesearn outpayout is conditioned on the Company’s TSR percentile relative to the Peer Reference Group. “DeferredDeferred stock units”units are an award type provided under the Company’s Long-Term Incentive Plan that entitle the holder to the value of one share of Company stock and accumulated dividend equivalents upon satisfaction of performance and/or time-based vesting conditions. Dividend equivalents are paid in cash and equal the dividends that would have accrued on a share of Company stock from the grant date of a deferred stock unit until it is paid out. Dividend equivalents are not paid until the award is vested. No dividend equivalents are paid on units that are forfeited. 37 year 2018.2020. The number of performance shares that will be paid out is based on a schedule tied to the Company’s TSR percentile as described on page 36.pages 27-28. Performance shares are generally forfeited if the Executive Officerexecutive officer voluntarily terminates employment during the performance period; however, if an Executive Officerexecutive officer terminates due to death, disability or retirement one year or more after the grant date, he will receive a pro-rata portion of any performance share payout upon completion of the performance period. Upon a termination covered by the Executive Separation Program described on pages 51-53,45-48, the terms of that Program regarding treatment of equity compensation will apply.—sharesRSUs, which are deferred stock units that have time-based vesting conditions. Most of restricted stock.Restricted Stock Awards. Shares of restricted stock are shares of Company stock that are issued in the Executive Officer’s name subject to restrictions on transferability. The shares may be voted but the Executive Officer may not sell or transfer restricted stock during the vesting period. Dividends are paid on the restricted stock during the vesting period. Restricted stockRSUs granted in fiscal year 2016 is2018 are subject to a four-year vesting period. Generally, ifIf an Executive Officer’s employment terminates during the vesting period, the stock will be forfeited. However, if an Executive Officer’sexecutive officer’s employment terminates due to death, disability or retirement one year or more after the grant date, the stockunits will vest. Pursuant to his Employment Agreement, Mr. Ghasemi’s sharesRSUs will not be forfeited and will continue to vest if he is terminated at any time due to death or disability, voluntarily for Good Reason, by the Company without Cause or at the conclusion of thehis Employment Agreement. (See page 5145 for the definitiondefinitions of “Cause” and “Good Reason” under the Employment Agreement.). If another Executive Officer’sexecutive officer’s employment termination is covered by the Executive Separation Program described on pages 52-54,45-48, the terms of that Program regarding treatment of equity compensation will apply.38 2019 Annual Meeting Proxy Statement AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSOutstanding Equity Awards at Fiscal Year-End Option Awards(1) Stock Awards
Awards:
Value of Officer Exercisable Unexercisable 44,612 $ 6,706,968.08 83,626 $ 12,572,332.84 7/1/2014 102,852 51,426 $ 129.26 7/1/2024 12/1/2014 13,494 26,989 $ 144.09 12/1/2024 12,631 $ 1,898,944.54 14,767 $ 2,220,070.78 10/2/2006 4,400 0 $ 67.23 10/2/2016 10/1/2007 5,100 0 $ 98.85 10/1/2017 10/1/2008 7,427 0 $ 66.90 10/1/2018 12/1/2009 4,149 0 $ 83.60 12/1/2019 12/1/2010 4,028 0 $ 86.39 12/1/2020 12/1/2011 6,352 0 $ 82.64 12/1/2021 12/3/2012 13,325 0 $ 81.57 12/3/2022 12/2/2013 11,255 5,628 $ 107.69 12/2/2023 12/1/2014 2,313 4,627 $ 144.09 12/1/2024 9,715 $ 1,460,553.10 10,154 $ 1,526,552.36 9/12/2013 8,224 0 $ 105.73 9/12/2023 12/2/2013 8,441 4,221 $ 107.69 12/2/2023 12/1/2014 1,638 3,277 $ 144.09 12/1/2024 17,610 $ 2,647,487.40 15,531 $ 2,334,930.54 10/1/2007 6,400 0 $ 98.85 10/1/2017 12/1/2009 5,127 0 $ 83.60 12/1/2019 12/1/2010 5,094 0 $ 86.39 12/1/2020 12/1/2011 13,865 0 $ 82.64 12/1/2021 12/3/2012 15,990 0 $ 81.57 12/3/2022 12/2/2013 11,255 5,628 $ 107.69 12/2/2023 12/1/2014 2,506 5,012 $ 144.09 12/1/2024 21,840 $ 3,283,425.60 11,947 $ 1,796,111.98 12/1/2011 18,907 0 $ 82.64 12/1/2021 12/3/2012 23,319 0 $ 81.57 12/3/2022 12/2/2013 11,255 5,628 $ 107.69 12/2/2023 12/1/2014 1,927 3,856 $ 144.09 12/1/2024 Outstanding Equity Awards at 2018 Fiscal Year-End Table Option Awards(1) Stock Awards Option
Grant Date
Number of
Securities Underlying
Unexercised Options (#)
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares
of Units
of Stock
Held that
have not
Vested (#)(2) Market
Value of
Shares
or Units
of Stock
held that
have not
Vested ($)(3)
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other
Rights that
have not
Vested (#)(4) Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested ($)(3)Officer Exercisable Unexercisable Seifi Ghasemi 77,440 12,936,352 103,968 17,367,854 7/1/2014 165,235 0 120.69 6/28/2024 12/1/2014 43,358 0 134.54 12/1/2024 M. Scott Crocco 14,284 2,386,142 19,939 3,330,810 10/1/2008 7,954 0 62.47 10/1/2018 12/1/2009 4,443 0 78.06 12/1/2019 12/1/2010 4,314 0 80.67 12/1/2020 12/1/2011 6,803 0 77.16 12/1/2021 12/3/2012 14,271 0 76.17 12/3/2022 12/2/2013 18,082 0 100.55 12/2/2023 12/1/2014 7,432 0 134.54 12/1/2024 Sean D. Major 5,989 1,000,462 7,964 1,330,386 Samir Serhan 8,515 1,422,431 12,231 2,043,189 Corning F. Painter 0 — 5,824 972,899 12/1/2011 14,849 0 77.16 12/1/2021 12/3/2012 17,125 0 76.17 12/3/2022 12/2/2013 18,082 0 100.55 12/2/2023 12/1/2014 8,051 0 134.54 12/1/2024 (1) becomebecame exercisable in three consecutive, equal annual installments on the first, second and third anniversary of the grant date. They generally remain exercisable until ten10 years after the grant date; however, except as described below, exercisable options generally expire ninety90 days after voluntary termination of employment and non exercisableunexercisable options are forfeited upon voluntary termination. Options granted more than one year prior to an Executive Officer’sexecutive officer’s termination due to death, disability or retirement continue to become and remain exercisable for their full term. If an Executive Officer’sexecutive officer’s termination is covered by the Executive Separation Program described on pages 45-48, the terms of that Program regarding treatment of equity compensation will apply. Mr. Ghasemi’s Employment Agreement provides that, upon his death, disability, involuntary termination without Cause, voluntary termination for Good Reason or the conclusion of the term of his Employment Agreement, his options will not terminate but will continue to become and be exercisable through the end of their term. (See page 45 for the definition of “Cause” and “Good Reason” under the Employment Agreement.) Stock options are also subject to special vesting rules upon a change in control of the Company.Company as described on pages 48-49.(2) described below thatwhich, upon vesting, entitle the holder to a share of Company stockStock and dividend equivalents accumulated since the date of grant upon vesting. It also reflects restricted stock granted to Mr. Ghasemi pursuant to his Employment Agreement described in footnote 5.grant.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSRestricted Stock. RESTRICTED STOCK
Shares of restricted stock grantedare shares of Company stock that are issued in fiscal year 2013 vestthe executive officer’s name subject to restrictions on transferability. The shares may be voted but the executive officer may not sell or transfer restricted stock during the vesting period. Dividends are paid on the earlier of December 1, 2016 orrestricted stock during the Executive Officer’s termination ofvesting period. Generally, if an executive officer’s employment terminates during the vesting period, the stock will be forfeited. However, if an executive officer’s employment terminates due to death, disability or retirement. Shares of restrictedretirement one year or more after the grant date, the stock granted in fiscal year 2013 shown are as follows: Mr. Crocco 1,532, Mr. Painter 1,838, Mr. Novo 1,838 and Mr. Stanley 2,681. Shares of restricted stock granted in fiscal year 2014 vest, except forwill vest. Pursuant to his Employment Agreement, Mr. Ghasemi’s on the earlier of December 1, 2017 or the Executive Officer’s death, disability or retirement. Shares of restricted stock granted in fiscal year 2014 shown are as follows: Mr. Crocco 2,321, Mr. Painter: 2,321, Mr. Novo 1,741shares will not be forfeited and Mr. Stanley, 2,321. In addition, Mr. Ghasemi was granted 37,026 shares of restricted stock on July 1, 2014 vesting in one third installments on the first, second and third anniversary of grant. One third of these shares vested on July 1, 2015 and July 1, 2016. Shares of restricted stock granted in fiscal year 2015 vest on the earlier of December 1, 2018 or the Executive Officer’s termination of employment due to death, disability or retirement. Shares of restricted stock granted in fiscal year 2015 shown are as follows: Mr. Ghasemi 12,145, Mr. Crocco 2,082, Mr. Novo 1,474, Mr. Painter 2,255, and Mr. Stanley 1,735. Shares of Restricted Stock granted in fiscal year 2016 vest on the earlier of December 1, 2019 or the Executive Officer’s termination of employment due to death, disability or retirement. Shares of restricted stock granted in fiscal year 2016 shown are as follows: Mr. Ghasemi 20,125, Mr. Crocco 3,738; Mr. Novo 2,444, Mr. Painter 3,738, and Mr. Stanley 2,875. Mr. Ghasemi’s Restricted Stock also will continue to vest and not be forfeited if he is terminated voluntarilyat any time due to death or disability, involuntary termination without Cause, voluntary termination for Good Reason or byat the Company without Cause. (See page 53 for a definition of “Good Reason” and “Cause”). Restricted stock is subject to special vesting rules for terminations covered by the Executive Separation Program described on pages - or upon a change in controlconclusion of the Company.Employment Agreement. 39
The Company grants two types of deferred stock units; restricted stock units and performance shares. Each deferred stock unit is the equivalent in value to one share of common stock and, subject to satisfaction of any applicable performance or time-based conditions, entitles the executive officer to receive from the Company at the end of the deferral period one share of common stock for each restricted stock unit or earned performance share. Restricted stock units typically have a four-year vesting period. This column reflects four-year restricted stock units granted to executive officers on December 1, 2016 and December 1, 2017 and special recruiting and retention grants of restricted stock units. All deferred stock units, including the performance shares described in footnote 4 below, are subject to special vesting rules for terminations covered by the Executive Separation Program described on pages 45-48 or upon a change in control as described on pages 48-49.(i) Deferred Stock Units. This column reflects three kinds of deferredUnvested restricted stock units: (i) deferred stock units that vest upon death, disability, or retirement (“career-vesting deferred stock units”) (ii) earned performance shares granted in fiscal year 2014 that vested on December 1, 2016;2017 and (iii)fiscal 2018 are as follows: Officer FY17 FY18 Total Seifi Ghasemi 24,178 20,992 45,170 M. Scott Crocco 4,266 4,198 8,464 Sean D. Major 0 2,469 2,469 Samir Serhan 2,845 2,469 5,314 Corning F. Painter* 0 0 0 * (ii) and retention grants. All deferred stock units are subject to special vesting rules for terminations covered by the Executive Separation Program described on pages 52-54 or upon a change in control.(i)The number of career-vesting deferred stock units shown is 3,220 for Mr. Stanley.(ii)Fiscal year 2014 earned performance shares are shown at 91% of target, the payout factor determined by the Committeegrants and are as follows:OfficerNumber ofUnitsM. S. Crocco3,168G. Novo2,218C. F. Painter3,168J. D. Stanley3,168 (iii)OfficerNumber of Units Sean D. Major* 3,520 Dr. Samir Serhan** 3,201 * This column also reflects special retention grants of 6,050 deferredTwo-year vesting restricted stock units granted to Mr. Stanley and 4,500 deferredMay 1, 2017. These will vest on May 1, 2019.** to Mr. Painter.December 1, 2016. These grants were made to Mr. Stanley and Mr. Painter in fiscal year 2012. Mr. Stanley’s units vested on his retirement. Mr. Painter’s units will vest on September 24, 2017 or upon his earlier disability or death. Retention grants generally are forfeitable upon termination of employment prior to vesting.December 1, 2019.(3) 20162018 fiscal year-end NYSE closing market price of $150.34.$167.05.(4) years 20152017 and 2016.fiscal 2018. These shares are conditioned upon performance during three-year cycles ending on September 30, 20172019 and September 30, 2018,2020, respectively. These awards will earn out and be paid out following the end of the relevant performance period as indicated in the chart below. The dollar values and numbers of sharesshare counts for fiscal year 20152017 awards are shown in the table at the 200%target payout level and fiscal year 2018 awards are shown at 215% (maximum payout including full positive discretion) based on the Company’s current total shareholder return percentile rank compared to the Peer Reference Group.Group for the respective performance periods. The valuesfiscal 2016 performance share payout was 0% (zero payout) as described on page 28 and, numbers for fiscal year 2016 awards are shownaccordingly, the amounts reported in this column and in the table atbelow do not include performance shares granted in 2016 or, with respect to Dr. Serhan, when he joined the target payout level based on the Company’s current below target total shareholder return percentage rank compared to the peer reference group.Company in fiscal 2017. Officer 09/30/2017 09/30/2018 26,719 30,188 4,580 5,607 3,244 3,666 4,962 5,607 3,817 4,313 AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERS Fiscal 2017 and 2018 Unearned
Performance Shares End of
Performance PeriodOfficer 09/30/2019 09/30/2020 Seifi Ghasemi 36,267 67,701 M. Scott Crocco 6,400 13,539 Sean D. Major 0 7,964 Samir Serhan 4,267 7,964 Corning F. Painter* 3,235 2,589 (5)*Pursuant to the EmploymentProrated per Separation Agreement Mr. Ghasemi received a one-time equity compensation award under the Long Term Incentive Plan in 2014 to compensate him for the forfeiture of compensation from his previous employer (the “Make Whole Award”). The Value of the Make Whole Award was divided equally between stock options (154,278) and restricted stock (37,026) and the Award provided for vesting in one-third tranches on July 1st of 2015, 2016, and 2017. The remaining unvested portion of the Make Whole Award will also vest upon Mr. Ghasemi’s death, disability, retirement, resignation for Good Reason, or termination without Cause. See page 53 for the definition of “Good Reason” and “Cause” under the Employment Agreement. A prorated portion of the restricted stock will vest upon voluntary termination. The prorated portion is based on the number of days which he was employed during the vesting period. The Award is reflected in the table above in the “Option Awards” Columns and the first 2 columns under “Stock Awards”terms40 2019 Annual Meeting Proxy Statement 2016 Option Exercises and Stock Vested Option Awards Stock Awards Officer Number of Shares
Acquired on Exercise (#) Value Realized
on Exercise Number of Shares
Acquired on Vesting (#)(1) Value Realized
on Vesting(2) 0 $ — 12,342 $ 1,739,481 5,000 $ 375,950 1,742 $ 238,211 25,983 $ 1,744,759 3,067 $ 444,412 0 $ — 2,839 $ 389,160 35,564 $ 2,366,369 3,984 $ 545,965 Fiscal 2018 Option Exercises and Stock Vested Table Option Awards Stock Awards Officer Number of Shares
Acquired on Exercise
(#) Value Realized
on Exercise
($)Number of Shares
Acquired on Vesting
(#)(1) Value Realized
on Vesting
($)(2)Seifi Ghasemi 0 — 28,617 4,641,964 M. Scott Crocco 0 — 7,227 1,172,733 Sean D. Major 0 — 0 — Samir Serhan 0 — 0 — Corning F. Painter 10,946 971,355 17,794 2,818,544 (1) 20122014 which vested in December 2015;2017; performance shares granted in fiscal year 20132015 which vested in December 2015;2017; and for Mr. Painter, it also includes fiscal year 2015 and fiscal year 2016 restricted shares and fiscal year 2017 restricted stock units granted inand pro-rated fiscal year 2012 which vested in December 2015. It also includes one third of the special “Make Whole” award of restricted shares made to Mr. Ghasemi upon his recruitment to compensate him for the value of equity forfeited when he left his prior employer, and one half of a recruiting grant of2018 restricted stock units made to Mr. Novo upon his recruitment to compensate him for forfeited equity.which vested on an accelerated basis at separation, as described on page 46.(2) Value Realizedvalue realized on vesting: Officer Dividend
Equivalents
Paid $ — $ 8,810 $ 28,461 $ 10,572 $ 15,427 AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERS Officer Plan Name Number of
Years Credited
Service (#) Present Value
of Accumulated
Benefit Payments
During Last
Fiscal Year Air Products and Chemicals, Inc. Pension Plan for Salaried Employees 0 $ — $ — Air Products and Chemicals, Inc. Supplementary Pension Plan 0 $ — $ — Air Products and Chemicals, Inc. Pension Plan for Salaried Employees 26 $ 1,106,530 $ — Air Products and Chemicals, Inc. Supplementary Pension Plan 26 $ 3,150,156 $ — Air Products and Chemicals, Inc. Pension Plan for Salaried Employees 0 $ — $ — Air Products and Chemicals, Inc. Supplementary Pension Plan 0 $ — $ — Air Products and Chemicals, Inc. Pension Plan for Salaried Employees 32 $ 1,418,643 $ — Air Products and Chemicals, Inc. Supplementary Pension Plan 32 $ 3,936,954 $ — Air Products and Chemicals, Inc. Pension Plan for Salaried Employees 28 $ 1,417,289 $ — Air Products and Chemicals, Inc. Supplementary Pension Plan 28 $ 3,895,664 $ — Officer Dividend
Equivalents
Paid
($)Seifi Ghasemi 283,881 M. Scott Crocco 48,668 Corning F. Painter 74,979 Fiscal 2018 Pension Benefits Table Number of
Years Credited
Service Present Value
of Accumulated
BenefitOfficer Plan Name (#) ($) M. Scott Crocco Air Products and Chemicals, Inc. 28 1,121,762 Pension Plan for Salaried Employees Air Products and Chemicals, Inc. 28 5,808,523 Supplementary Pension Plan Corning F. Painter Air Products and Chemicals, Inc. 34 1,910,099 Pension Plan for Salaried Employees Air Products and Chemicals, Inc. 34 10,335,846 Supplementary Pension Plan Executive Officers underexecutive officers who participated in the Company’s defined benefit plans as of September 30, 2016.2018. Actuarial present values are complex calculations that rely on many assumptions. The Company has calculated the amounts shown above generally using the same assumptions used in determining the pension cost recognized in its financial statements, which are described in Note 16, Retirement Benefits, to the financial statements and under “Critical Accounting Policies”Policies and Estimates” in the ManagementManagement’s Discussion and Analysis in the financial statements,of Financial Condition and Results of Operations, both of which are included in the Company’s Annual Report on Form 10-K for the fiscal year endingended September 30, 2016,2018, filed with the SEC on November 21, 2016.20, 2018. However, in accordance with SEC requirements, the Company has calculated these values assuming payment begins the earliest date the Executive Officerexecutive officer can receive an unreduced early retirement benefit. The Company has also used actual fiscal year 20162018 annual incentive awards in the calculation; whereas the value in the financial statements is based on estimated annual incentive awards. 41 Company’s Pension Plan for Salaried Employees (“Salaried Pension Plan”)Plan is a funded, tax qualifiedtax-qualified defined benefit plan funded entirely by the Company. All U.S. salaried employees hired before October 1, 2004 are eligible to participate; however, participants as of January 1, 2005 were given the opportunity to make a one-time election to prospectively receive their primary retirement benefitBenefits under the Company’s qualified defined contribution plan, the Retirement Savings Plan. Messrs. Crocco, Painter and Stanley, elected to remain in the Salaried Pension Plan. (Mr. Ghasemi and Mr. Novo are not eligible for this Plan). Benefits under the Plan are paid after retirement in the form of a monthly annuity. Participants may select from monthly payments for their lifetime or smaller monthly payments for their life and the life of a beneficiary.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSten10 years preceding retirement; generally this is the participant’s average base salary for the three years preceding retirement. The “Average Social Security Maximum Taxable Wage Base” is the average of the U.S. Social Security Wage Bases over a 35-year period.Participants who were age 50 on or beforeBenefits accrued as of January 1, 2005 are eligible for early retirement at age 55 with no reduction in benefit if the sum of their age and credited service under the Plan equals 80 or more at the time of retirement. Participants who had not attained age 50 on January 1, 2005 may receive the portion of their benefit accrued on that date unreducedreduced upon retirement at age 55 or later if the sum of theirthe participants age and credited service under the Plan equals 80 or more at the time of retirement.Executive Officersexecutive officers and certain other executives, distribution of benefits under the Supplementary Plan, whether in annuity or lump sum form, is delayed for six months after termination of employment to comply with U.S. federal tax laws.2016 Nonqualified Deferred CompensationFiscal 2018 Nonqualified Deferred Compensation Table Officer Executive
Contributions
in Last FY(1) Registrant
Contributions
in Last FY(2) Aggregate
Earnings
in Last FY Aggregrate
Withdrawals/
Distributions Aggregate
Balance
at Last
FYE(3) $ 58,154 $ 202,339 $ 14,212 $ — $ 466,027 $ 84,431 $ 15,831 $ 23,890 $ — $ 647,049 $ 30,404 $ 48,666 $ 17,155 $ — $ 465,522 $ 62,769 $ 13,154 $ 31,482 $ — $ 348,358 $ 23,221 $ 9,952 $ 10,788 $ — $ 292,112 Officer Executive
Contributions
in Last FY(1)
($) Registrant
Contributions
in Last FY(2)
($) Aggregate
Earnings
in Last FY(3)
($) Aggregate
Withdrawals/
Distributions
($) Aggregate
Balance
at Last FYE(4)
($)Seifi Ghasemi 5,538 177,886 36,361 — 975,536 M. Scott Crocco 87,231 4,846 33,665 — 897,439 Sean D. Major 16,923 29,519 1,186 — 47,628 Samir Serhan 2,538 41,566 2,557 — 79,566 Corning F. Painter 150,000 — 35,629 — 627,705 (1) or Annual Incentive Plan awards by the Executive Officers.executive officers. These amounts are also reported in the Summary Compensation Table.42 2019 Annual Meeting Proxy Statement (2) areinclude Company matching credits based on each Executive Officer’sexecutive officer’s voluntary deferrals of base salary. In the case of Mr. Ghasemi, Mr. Major and Mr. Novo,Dr. Serhan, a Company contribution credit of a percentage of their base salaries in excess of tax law limits on Retirement Savings Plan contributions and their Annual Incentive Plan awards is also included because they receive their primary retirement benefit under the Company’s defined contribution plansRetirement Savings Plan (the “RSP”) rather than the pension plans. The percentage is based on years of serviceSalaried Pension Plan and for fiscal year 2016 was 4%.Supplementary Plan. Amounts reported in this column are also reported in the Summary Compensation Table.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERS(3) (4) The following portion of these accumulated balances has been previously reported as compensation in the Summary Compensation Table of the Company’s proxy statements for prior years: Officer Amount Previously Reported
($)Seifi Ghasemi 723,898 M. Scott Crocco 446,732 Sean D. Major — Samir Serhan 32,648 Corning F. Painter 227,363 Officer Amount Previously Reported $ 188,031 $ 235,982 $ 150,842 $ 75,500 $ 140,800 tax qualified Retirement Savings Plan (the “RSP”)tax-qualified RSP to all U.S.-based salaried and certain hourly employees of the Company. Currently, U.S. tax laws limit the amounts that may be contributed to tax-qualified savings plans and the amount of compensation that can be taken into account in computing benefits under the RSP. The Deferred Compensation Plan was amended and restated effective January 1, 2018 to “unlink” the RSP from the Deferred Compensation Plan. Prior to January 1, 2018, elective deferrals to the RSP in excess of the U.S. tax law limits would automatically be deferred into the Deferred Compensation Plan. Effective January 1, 2018, once a participant reaches the U.S. tax law limits in the RSP for elective deferrals such deferrals cease and are not contributed to the Deferred Compensation Plan; rather, Deferred Compensation Plan participants may make a separate deferral election prior to the calendar year to defer amounts of base salary into the Deferred Compensation Plan. The Deferred Compensation Plan is intended to permit participants to defer an amount of base salary and to make up, out of general assets of the Company, an amount substantially equal to thecertain benefits an employee did not receive under the RSP due to these limits. U.S. employees who participate in the Annual Incentive Plan, including all Executive Officers,executive officers, are eligible to participate in the Deferred Compensation Plan. Participants can elect to defer up to 16 percent50% of base salary on a before-tax basis (offset by amounts deferred under the RSP). and up to 75% of Annual Incentive Plan awards.same amounts asRSP, including all executive officers, whose Company matching contributions undercontribution in the RSP;i.e., 75 percent of the first three percent ofRSP is limited by U.S. tax law limitations. The Deferred Compensation Plan also provides for a Company core credit on base salary deferredwhen such core contribution in the RSP is limited by participantsU.S. tax law limitations and 25 percent of the next three percent of base salary deferred. In addition to base salary, Plan participants may also elect to deferon Annual Incentive Plan awards. No matching credit is providedawards for these deferrals.For employees who receive their primary retirement benefit under the Company’s defined contribution plansRSP rather than the pension plans, the RSP also provides an enhanced matching contribution of 75% of elective deferrals up to 4% of base salary and 50%,Salaried Pension Plan, including Mr. Ghasemi, Mr. Major and Mr. Novo, of elective deferrals of an additional 2% of base salary; and a defined contribution primary retirement benefit contribution of 4 to 6% of base salary, depending on years of service. The Deferred Compensation Plan provides a comparable matching credit and primary retirement benefit credit for base salary to the extent not covered under the RSP due to tax law limits, and a primary retirement benefit credit of 4 to 6% for Annual Incentive Plan awards. The primary retirement contributions and credits vest ratably over the participant’s first five years of service for the Company.Dr. Serhan.ten10 equal annual installments following termination from service. The Executive Officersexecutive officers and certain other executives cannot commence distribution until six months following termination to comply with tax laws. 43 or Change in ControlTermination Prior to Change in ControlExecutive Officersexecutive officers upon termination other than a change in control vary depending on the exact nature of the termination and, generally, whether the Executive Officerexecutive officer is retirement eligible at the time of the termination. Retirement eligibility for U.S. employees, including the Executive Officersexecutive officers except Mr. Ghasemi, generally occurs upon the attainment of age 55 after completing at least five years of service to the Company. Mr. Stanley is eligible for retirement. Mr. Ghasemi’s Employment ContractAgreement provides that he will beis eligible for retirement treatment under all equity, equity derivative and incentive awards after three years of employment with the Company. Accordingly, he became eligible for retirement on July 1, 2017. The following discussion explains potential payments to the Executive Officersexecutive officers under various termination scenarios.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSVoluntary Termination Other Than RetirementVoluntary Termination Other Than Retirement Stanley on September 30, 2016Ghasemi would be a retirement, as discussed below. If Mr. Ghasemi, Mr. Crocco, Mr. Novo,Major or Mr. PainterDr. Serhan voluntarily terminated employment with the Company prior to retirement eligibility, like all salaried employees of the Company, he would receive any unpaid salary and accrued vacation, vested RSP balances and nonqualified deferred compensation shown in the table on page 4842 and earnings thereon. OnceUpon attainment of age 55, Mr. Crocco or Mr. Painter attained age 55, he could commence his accrued benefits under the qualified, and will commence accrued benefits under the nonqualified, pension plans described on page 47pages 41-42 on the same terms as all other participants under these plans who were not eligible for retirement at the time of termination. Mr. Ghasemi and Mr. Novo are not eligible for the pension plans.Officersofficers and other eligible employees generally must remain employed until the last day of the fiscal year to receive an Annual Incentive Plan award for the fiscal year. Therefore, if Mr. Ghasemi, Mr. Crocco, Mr. Novo or Mr. Painteran executive officer voluntarily terminated, he would forfeit any Annual Incentive Plan award for the fiscal year of termination, unless he terminated on the last day of thesuch fiscal year. If he voluntarily terminated on September 30, 2016,2018, he would be eligible for a fiscal year 20152018 Annual Incentive Plan award in an amount, if any, determined by the Committee in its discretion.by Mr. Ghasemi, Mr. Crocco, Mr. Novo or Mr. Painter upon a voluntary termination prior to retirement eligibility, including all unexercisable stock options, all restricted stock, all RSUs and all performance shares, whether or not earned. Exercisable stock options would continue to be exercisable for 90 days following termination and then, if unexercised, would be forfeited. Mr. Ghasemi’s Employment Agreement provides that a prorated portion of the restricted stock granted to Mr. Ghasemi under the Make Whole Award would not be forfeited upon his voluntary termination. The prorated portion is based on the number of days he is employed during the three year vesting period for the Make Whole Award.RetirementRetirement Executive Officersexecutive officers are entitled to unpaid salary and accrued vacation, theiraccrued qualified and nonqualified pension benefits, vested RSP balances and deferred compensation described above, and retiree medical benefits, if they are eligible, on the same terms as for all salaried employees meeting age and service conditions. Retiring Executive Officersexecutive officers may also receive, in the discretion of the Committee, an Annual Incentive Plan award for the year of retirement. In addition, like all Long-Term Incentive Plan participants, they receive the following treatment of their outstanding long-term incentive awards:All● granted one year or more prior to retirement will continue to become exercisable in accordance with the normal schedule as if the Executive Officer remained employed, and will be exercisable for the normal term. Options granted one year or more prior to retirement will continue to be and become exercisable in accordance with the normal schedule as if the executive officer remained employed, and will be exercisable for the normal term;● ● 44 2019 Annual Meeting Proxy Statement Restricted stock and restricted stock units awarded at least one year prior to retirement will vest immediately upon retirement. Restricted stock and restricted stock units granted less than one year prior to retirement are forfeited.Career-vesting deferred stock units and all dividend equivalents thereon will vest and be paid six months after retirement. Career-vesting deferred stock units comprise several typesTable of awards granted over the career of Executive Officers that vest upon death, disability, or retirement.All earned performance shares and dividend equivalents thereon will be paid on the normal schedule. A pro-rata portion of unearned performance shares awarded at least one year prior to retirement and associated dividend equivalents will be paid in accordance with the normal schedule and at the normal payout level if performance thresholds are met. Performance shares awarded less than one year prior to retirement are forfeited.Mr. Ghasemi’s Employment Agreement provides that, for purposes of all equity and other incentive awards, he will receive retirement treatment after three years of employment with the Company.On July 28, 2016, Mr. Stanley entered into a retirement and retention agreement with the Company (the “Retirement and Retention Agreement”) in connection with his planned retirement. He retired on October 3, 2016. The Agreement provided that, until his retirement, Mr. Stanley would continue to perform such duties for the Company asAIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSthe Chairman, President and Chief Executive Officer directed, including assisting in the transition of his responsibilities to the interim general counsel. Mr. Stanley also agreed to serve as the chairman of the Air Products Foundation following retirement, subject to termination by either party.Under the terms of the Retirement and Retention Agreement, subject to certain conditions described below, Mr. Stanley was entitled to receive (i) a lump sum cash payment, payable no later than December 31, 2016, equal to the difference between the present value of his accrued vested pension benefits under the Company’s Pension Plan for Salaried Employees and Supplementary Pension Plan (the “Plans”) as of his retirement date and the present value of such accrued vested pension benefits under the Plans as of December 31, 2016; (ii) a payment in respect of his unused vacation days for calendar year 2016, calculated as if Mr. Stanley retired on December 31, 2016; and (iii) payment of a bonus for fiscal year 2016 under the Company’s Annual Incentive Plan equal to his target award multiplied by the payout factor generally applied to other Executive Officers of the Company.Under the Retirement and Retention Agreement, Mr. Stanley’s restricted stock units and restricted stock would be treated in accordance with their terms as if Mr. Stanley retired on December 31, 2016. Mr. Stanley’s performance shares would be treated in accordance with their terms, provided that Mr. Stanley would receive a cash payment to compensate him for any potential loss in value related to such performance shares that he would have received had he retired on December 31, 2016.Under the Retirement and Retention Agreement, Mr. Stanley agreed not to disparage the name, business practices or business reputation of the Company or its officers or directors for a period of two years, acknowledged certain confidentiality and return of property obligations, and generally released the Company from claims.Estimated Payments Upon RetirementContentsAs of September 30, 2016Executive CompensationStanley’sGhasemi’s outstanding long termlong-term incentive awards that would have vested had he retired as of September 30, 2016,2018, and the value of awards that would have been forfeited. Amounts are based on the closing price of a share of Company stock as of September 30, 2016 ($150.34). Because of the Retirement and Retention Agreement, his restricted stock and restricted stock unit awards would have been treated as if he retired on December 31, 2016. Mr. Crocco, Mr. Ghasemi, Mr. Novo, and Mr. Painter2018. Other executive officers were not eligible for retirement on September 30, 2016;2018; so no amounts are shown for them. Officer Unvested
Stock
Options($) Restricted
Stock($) Deferred
Stock
Units(1)($) Performance
Shares(2)($) Value of
Awards
Forfeited($) $ 264,134 $ 1,012,841 $ 590,859 $ 867,734 $ 2,284,507 Officer Unvested
Stock Options
($) Restricted Stock
($) Restricted
Stock Units
($) Performance
Shares(1)
($) Value of
Awards
Forfeited
($)Seifi Ghasemi — 5,390,871 4,204,796 4,204,796 11,034,664 (1) Retention restricted stock units granted to Mr. Stanley in 2012 would have been forfeited.(2)Actual payout amounts are shown for Performance Shares granted in fiscal year 2014. Unearned performance shares are shown at the target payout level. Amounts include accumulated dividend equivalents. The 20162018 grant and a prorated portion of the fiscal year 20152017 grant would be forfeited.Executive Separation ProgramExecutive Separation Program During fiscal year 2016, allAll the Executive Officers wereexecutive officers are covered by this Program. An Executive Officerexecutive officer becomes eligible for program benefits upon involuntary termination of employment other than for “Cause” or upon voluntary termination for “Good Reason”.Reason.” A termination for Cause“Cause” occurs upon the Executive Officer’sexecutive officer’s failure to substantially perform his duties after demand therefor, willful misconduct, certain illegal acts, insubordination, dishonesty, or violation of the Company’s Code of Conduct. “Good Reason” includes:A material adverse change in the Executive Officer’s position, material diminution of his duties or authority, or assignment to him of duties or responsibilities inconsistent with his status;AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSA decrease in the Executive Officer’s salary or a material reduction in, benefits, or annual incentive compensation opportunities if not similarly applied to other highly compensated employees; orA relocation of the Executive Officer’s principal workplace more than 50 miles from the existing location.● ● ● Executive Officer’sexecutive officer’s continuing to perform the duties typically related to his or her position (or such other position as the Board reasonably requests) until termination, and assistance in the identification, recruitment and/or transitioning of his or her successor. The Executive Officerexecutive officer also is required to sign a general release of claims against the Company and a two-year noncompetition, nonsolicitation and nondisparagement agreement. If all these requirements are met, the Executive Officerexecutive officer is entitled to cash benefits as follows:•● Aa cash severance payment of one times (two timesthe executive officer’s annual base salary and the executive officer’s target bonus for the fiscal year in which the termination of employment occurs, provided that in the case of Mr. Ghasemi)Ghasemi, the Executive Officer’s annualcash severance will be two times such amount and, if the termination occurs after September 30, 2020, the payment will be prorated based on the remaining term of his amended and restated employment agreement;● ● ● ● average annual incentivethe Annual Incentive Plan award forwas the threehigher of his most recent award or the average of the last five years for which his award was highest or, if less, the number of years he received awards;19three awards. 45 A bonus for the yearTable of termination equal to a pro-rata portion of the ContentsOfficer’s average annual incentive award for the three of the last five years for which his award was highest or, if less, the number of years he received awards;CompensationOutplacement assistance;A cash payment equal to the actuarial equivalent of pension benefits that would have accrued based on one additional year of service in the case of Mr. Crocco, Mr. Painter and Mr. Stanley;A cash payment for the Executive Officers participating in the pension plans who are not eligible for early retirement, Mr. Crocco and Mr. Painter, equal to the value of the early retirement subsidy provided under the pension plans on the Executive Officer’s accumulated benefit, calculated for with an additional year of service; andFor Mr. Ghasemi and Mr. Novo, because they receive their primary retirement benefit under the Company’s defined contribution plans, a cash payment equal to the additional (nonmatching) contributions and credits each would have received under the RSP and the Deferred Compensation Plan, respectively, had he remained employed an additional two years for Mr. Ghasemi and an additional year for Mr. Novo, assuming his base salary remained the same and his Annual Incentive Plan award was the higher of his most recent award or the average of the last three awards.The Company pays the cost of continued coverage under the Company’s medical and dental plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for Executive Officers and their dependents for one year following termination. (Retirement eligible Executive Officers participate in the medical plan on the same basis as other salaried retirees at no incremental cost to the Company.)Nonretirement eligible Executive Officers forfeit unexercisable stock options. Their exercisable options remain in effect for the normal term. Retirement provisions described above apply to the stock options of retirement eligible Executive Officers.A pro-rata portion of four-year vesting restricted stock and recruiting and retention grants of deferred stock units vests. The remaining four-year vesting restricted stock and retention grant deferred stock units are forfeited. However, retirement provisions described above apply to outstanding restricted stock held by the retirement eligible Executive Officers if more favorable.Career-vesting restricted stock and deferred stock units become fully vested.A pro-rata portion of unearned performance shares based on actual performance at the end of the performance period vest and are paid at the end of the performance period and the remainder are forfeited. The unforfeited shares are paid in accordance with the normal schedule and at the normal payout level if performance thresholds are met.19●● ● ● Mr. Ghasemi’s cash severance payment is prorated after July 1, 2017 based upon the remaining term of his Employment Agreement.AgreementAIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSMr. Ghasemi’s Employment Agreement. In addition to the Separation Program, Mr. Ghasemi’s Employment Agreement provides that, upon his termination by the Company other than for Cause or his voluntary termination for Good Reason, his Make Whole Award and all of his other long termlong-term incentive awards will continue to vest as if he remained employed. For purposes of the Employment Agreement, “Cause” is Mr. Ghasemi’s willful failure to substantially perform his duties after a demand for substantial performance is delivered, willful misconduct that has caused or would reasonably be expected to result in a material injury to the Company, criminal conviction of or a plea of nolo contendere to a crime that constitutes a felony, repeated acts of insubordination, an act of dishonesty inconsistent with his position or material violation of the Company’s Code of Conduct. Mr. Ghasemi has the right to resign for “Good Reason” under the Agreement if there is a material adverse change in his position or office; a decrease in his salary, benefits or incentive compensation if not applied to other highly compensated employees; or a relocation of his principal workplace more than 50 miles from the existing location.Mr. Painter’s Separation Agreement 46 2019 Annual Meeting Proxy Statement Estimated Payments on SeveranceExecutive CompensationAs of September 30, 2016Estimated Payments on Severance As of September 30, 2018 Executive Officer under the Separation Programexecutive officer upon an involuntary termination on September 30, 20162018 covered under the Executive Separation Program and the Employment Agreement in the case of Mr. Ghasemi, his Employment Agreement, and the estimated value of long termlong-term incentive awards that would have vested upon termination under the Program. Long-Term Incentive Plan Officer Severance
Benefit Pro-rata
Bonus Pension
Payment(2) Benefits(3) Stock
Options(4) Restricted
Stock Deferred
Stock Units(5) Performance
Shares(6) $ 5,716,603 $ 1,658,302 $ 345,600 �� $ 28,840 $ 3,505,199 $ 6,707,118 $ - $ 8,784,874 $ 995,843 $ 395,843 $ 1,416,361 $ 37,976 $ 3,623,376 $ 728,429 $ - $ 1,218,337 $ 819,792 $ 354,792 $ 46,520 $ 36,190 $ 2,505,799 $ 628,327 $ - $ 877,196 $ 1,009,500 $ 409,500 $ 1,465,390 $ 36,190 $ 3,531,469 $ 784,437 $ 585,000 $ 1,272,582 $ 1,071,003 $ 496,003 $ 247,936 $ 18,334 $ 3,639,855 $ 1,102,888 $ 961,232 $ 1,087,510 Long-Term Incentive Plan Officer Severance
Benefit
($) Pro-rata
Bonus
($) Retirement
Plan
Payment(1)
($) Benefits(2)
($) Stock
Options(3)
($) Restricted
Stock
($) Restricted
Stock Units(4)
($) Performance
Shares(5)
($)Seifi Ghasemi(6) 6,750,000 2,571,750 370,080 25,852 — — 3,572,838 7,461,826 M. Scott Crocco 1,110,000 647,700 2,378,166 30,860 4,952,393 775,613 488,892 1,099,266 Sean D. Major 962,500 523,875 33,750 32,392 — — 510,432 210,140 Samir Serhan 1,017,500 593,725 50,028 32,392 — — 654,515 1,259,155 Corning F. Painter(7) 1,825,020 756,985 — 15,709 4,516,882 931,852 669,870 1,616,838 (1) Values of Mr. Stanley’s awards that would have vested upon his voluntary termination due to his retirement eligibility are not shown.(2)Novo.(3)(2)services;services and the cost of COBRA payments for the Company’s dentalmedical plan and for the Company’s medical plan for those not eligible for retiree medical benefits.(4)(3)30, 201628, 2018 closing price of $150.34.(5)(4)career-vesting deferred stock units and time-based deferred stock unitsRSUs such as four-year restricted stock unitsRSUs and special recruiting and retention grants, and dividend equivalents thereon.(6)(5)the actual payout level for fiscal year 2014 grants and at target payout level for fiscal year 2015 and 2016 grants. Amountsamounts include accumulated dividend equivalents.(6) Values of Mr. Ghasemi’s long-term incentive awards that would have vested upon his voluntary termination due to his retirement eligibility are not shown. (7) Mr. Painter separated from the Company on June 30, 2018. The amounts reported in this table for Mr. Painter reflect the terms of the Separation Agreement, dated as of May 16, 2018, between the Company and Mr. Painter. Mr. Painter did not earn the cash bonus payment of $1,000,000 disclosed in the Company’s Current Report on Form 8-K filed May 17, 2018; that payment was contingent upon completion of a business development project before December 31, 2019 which was not attained. Termination for CauseTermination for Cause Executive Officers who are not retirement eligible willexecutive officers receive only unpaid salary and accrued vacation, qualified and nonqualified pension and deferred compensation. If a retirement eligible employee is terminated for cause, it is treated as a retirement.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSDeath or DisabilityTermination Due to Death or Disability Executive Officer,executive officer, in addition to insurance, continuation of medical benefits and other benefits provided to all salaried employees and their families to help with these circumstances, the Long-Term Incentive Plan has provisions that provide continued vesting or accelerated payout of equity awards as follows:● ● ● ● 47 All restrictions on restricted stock outstanding for at least one year are removed. All other restricted stock is forfeited.All earned but deferred performance shares, all career-vesting deferred stock units, and retention grants of deferred stock units outstanding more than one year are paid out.A prorated portion of unearned performance shares outstanding for at least one year continues to earn out and be payable as if the employee had remained active. All other unearned performance shares are forfeited.Officers may also be eligible for an Annual Incentive Plan Award at the discretion of the Committee.Compensation● Make Whole Award and any other Long TermLong-Term Incentive Plan awards will continue to vest as if he remained employed and he will receive a prorated Annual Incentive Award.Change in Control ArrangementsChange in Control Arrangements Executive Officers.executive officers. For purposes of the agreements, a change in control occurs upon a 30% stock acquisition by a person not controlled by the Company, a greater than 50% change in membership on the Board during any two-year period unless approved by two-thirds of directors still in office who were directors at the beginning of the period,period; consummation of a business reorganization, merger, consolidation or other events determined bycorporate transaction that results in the Board.Company’s shareholders owning less than 50% of the surviving entity; or shareholder approval of a plan of liquidation or sale of substantially all of the Company’s assets.Executive Officerexecutive officer specific rights and certain benefits if, within two years after a change in control, his or her employment is terminated by the Company without Cause (as defined below) or he or she terminates employment for Good Reason (as defined below). In such circumstances the Executive Officerexecutive officer would be entitled to:•● Aa cash severance payment equal to two (three for Mr. Ghasemi) times the sum of his annual base salary and target bonus under the Annual Incentive Plan;A cash payment of a pro-rata target bonus for the year;•● Fora cash payment of a pro-rata target bonus for the year;● Executive Officer, exceptof Mr. GhasemiCrocco and Mr. Novo,Painter, a cash payment equal to the additional actuarial present value of the pension benefits he would have been entitled to receive under the Company’s pension plans had he accumulated two additional years of credited service after termination;20termination and a cash payment equal to the actuarial present value of the early retirement subsidy on the accumulated benefit, calculated with an additional two years of credited service;For Mr. Crocco and Mr. Painter, a cash payment equal to the actuarial present value of the early retirement subsidy on their pension benefits, calculated with an additional two years of credited service;•● Aa cash payment equal to two (three for Mr. Ghasemi) times the value for the most recent fiscal year of the Company’s matching contributions and/or credits on his behalffor the executive officer under the RSP and the Deferred Compensation Plan;● ● ● ForThe payments referenced in the first, third, fourth and fifth bullets above will be reduced each month on a pro-rated basis when the named executive officer, other than Mr. Ghasemi, is between ages 63 and Mr. Novo, a cash payment equal to the additional primary retirement benefit contributions and credits each would have received under the RSP and the Deferred Compensation Plan, respectively, had he remained employed for an additional three years in the case of Mr. Ghasemi and two years in the case of Mr. Novo at the same base salary and the higher of his most recent Annual Incentive Plan award or the average such award for the three full fiscal years preceding the Change in Control;20Except for Mr. Ghasemi, the payment is reduced once the Executive Officer attains age 63, by a prorated amount for each month as the Executive Officer approaches age 65.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSContinuation of medical, dental, disability, and life insurance benefits for a period of up to two years (three years in the case of Mr. Ghasemi), and provision of outplacement services and legal fees; andIndemnification if he becomes involved in litigation because he is a party to the agreement.Executive Officer’sexecutive officer’s continued willful failure to perform his duties or willful misconduct. “Good Reason” includes:A● ● ● 48 2019 Annual Meeting Proxy Statement Executive Officer’s position;A decreaseexecutive officer had been terminated on September 30, 2018 following a change in the Executive Officer’s salary, benefits, or incentive compensation if not applied to other highly compensated employees; orcontrol.Relocation of the Executive Officer’s principal workplace more than 50 miles from the existing location.Officer Severance
Payment
($) Pro-rata
Bonus
($) Matching
Contribution
Payment
($) Retirement
Plan Payment(1)
($) Outplacement/
Financial
($) Benefits(2)
($)Seifi Ghasemi 10,125,000 2,025,000 38,769 555,120 14,500 35,111 M. Scott Crocco 2,220,000 510,000 15,231 2,683,994 14,500 32,488 Sean D. Major 1,925,000 412,500 20,308 67,500 14,500 34,922 Samir Serhan 2,035,000 467,500 20,308 100,056 14,500 34,922 Corning F. Painter(3) — — — — — — (1) Includes payments in lieu of Company core contributions and credits under the RSP and Deferred Compensation Plan for Mr. Ghasemi, Mr. Major and Dr. Serhan and, for Mr. Crocco, the pension payment. (2) Includes continuation of medical, dental, disability and life insurance benefits. (3) Mr. Painter separated from the Company on June 30, 2018. protectionsprotection for all participants. For awards granted prior to October 1, 2014, upon a change in control (as defined by the Plan):All outstanding stock options become exercisable and remain exercisable for their full term on the earlier of the change in control or six months after the grant date.Restrictions lapse on all restricted stock.All forms of deferred stock units, except unearned performance shares and related dividend equivalents, will fully vest and be paid immediately. A pro-rata portion of unearned performance shares and related dividend equivalents will be paid out in shares at the target performance level.The Committee, in its discretion, may pay out the value of stock options, restricted stock, and deferred stock units in cash.performance conditionedperformance-conditioned awards must be replaced by time basedtime-based vesting awards; and the replacement awards must provide that if the participant is terminated without Cause or voluntarily terminates for Good Reason within 24 months following the change in control, the award will vest immediately upon termination. The Long TermLong-Term Incentive Plan also provides that, pursuant to an agreement associated with a change in control or in the discretion of the Board or an appropriate committee thereof, awards may be settled for cash at the change in control price.Finally, accrued benefits under the nonqualified pension and deferred compensation plans (described onpages 47-49) would be paid out upon a change in control, and the Company has established grantor trusts to pay benefits to employees under these plans upon a change in control. The trusts are secured by an agreement to contribute Company stock and are to be funded upon a change in control.AIR PRODUCTS AND CHEMICALS, INC.COMPENSATION OF EXECUTIVE OFFICERSEstimated Payments Upon Change in ControlOn September 30, 2016The table below shows additional amounts that would be payable under the change in control severance agreements if the Executive Officer were terminated following a change in control. Officer Severance Pro-rata
Bonus Matching
Contribution
Payment Pension
Payment(1) Outplacement/
Financial Benefits(2) $ 8,460,000 $ 1,620,000 $ 144,000 $ 518,400 $ 17,100 $ 33,205 $ 2,220,000 $ 510,000 $ 35,838 $ 1,624,995 $ 17,100 $ 34,862 $ 1,720,500 $ 395,250 $ 37,200 $ 93,040 $ 17,100 $ 34,692 $ 2,220,000 $ 510,000 $ 36,000 $ 1,681,245 $ 17,100 $ 34,862 $ 2,070,000 $ 460,000 $ 34,500 $ 495,870 $ 17,100 $ 6,779 (1)Includes payment in lieu of Company nonmatching contributions and credits under the RSP and Deferred Compensation Plan for Mr. Ghasemi and Mr. Novo.(2)Includes continuation of dental, disability, and life insurance benefits. Also includes continuation of medical benefits for Mr. Crocco, Mr. Ghasemi, Mr. Novo and Mr. Painter. On September 30, 2016, Mr. Stanley was currently eligible for retiree medical benefits upon any termination of employment on the same basis as other retirement eligible salaried employees; so there would be no incremental benefit to him.The table below shows the estimated value of long term incentive awards that would have automatically vested upon a change in control occurring on September 30, 2016, whether or not the Executive Officer was terminated. These acceleration provisions apply to all Long TermLong-Term Incentive Plan participants. In the case of Mr. Stanley, who was retirement eligible on September 30, 2016, most of these amounts would be vested on voluntary termination, but payment, lapse of restrictions,awards granted in fiscal 2015 or exercisability would be accelerated upon a change in control. For Mr. Crocco, Mr. Ghasemi, Mr. Novo or Mr. Painter, most of the amounts shown would become vested or payable if his active employment continued without a change in control, but payment, lapse of restrictions, or exercisability would be accelerated upon a change in control. Fiscal year 2016 awards, which are reported in the Grants of Plan Based Awards table on page 42, and fiscal year 2015 awardslater would not automatically vest upon a change in control but would vest upon a termination of the Executive Officerexecutive officer by the Company without causeCause or a voluntary termination by the Executive Officerexecutive officer for Good Reason within 24 months of the change in control. Officer Unvested
Stock
Options(1) Restricted
Stock Performance
Shares(2) Other
Deferred
Stock Units $ 1,084,060 $ 1,855,496 $ - $ - $ 240,034 $ 579,260 $ 517,043 $ 540,034 $ 538,067 $ 387,702 $ - $ 240,034 $ 625,264 $ 517,043 $ 731,250 $ 240,034 $ 752,001 $ 517,043 $ 1,585,237 (1)OfficerEstimated Value
($)Seifi Ghasemi 28,545,562 M. Scott Crocco 8,480,289 Sean D. Major 1,227,379 Samir Serhan 2,730,839 Corning F. Painter — 49
CEO Pay Ratio● Options are shownThe median employee annual total compensation was $50,802.● ● ● ● ● 50 2019 Annual Meeting Proxy Statement
Audit and Finance Committee MattersRatification of Appointment of Independent Auditors their intrinsic value based upon the Annual Meeting to respond to questions.
51 closing priceand 2017 did not contain an adverse opinion or a disclaimer of $150.34.opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The audit reports of KPMG on the effectiveness of internal control over financial reporting as of September 30, 2016 and 2017 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.(2)52 Performance shares are reflected at the target performance level.2019 Annual Meeting Proxy StatementKPMG Fees 2017
($) 2018
($)Audit Fees 6.7 6.8 Audit-related Fees 2.8 1.1 Tax Fees 0.3 0.3 All Other Fees 0.0 0.0 Total Fees 9.8 8.2
Susan K. Carter
Charles I. Cogut
David H. Y. Ho
Edward L. Monser 53
Information About Stock OwnershipAIR PRODUCTS AND CHEMICALS, INC.INFORMATION ABOUT STOCK OWNERSHIPINFORMATION ABOUT STOCK OWNERSHIP20162018 Name and Address of Beneficial Owner 16,973,076 7.8% 15,485,710 7.1% 12,921,756 5.9% 11,250,410 5.2% Name and Address of Beneficial Owner Amount and
Nature of
Beneficial
Ownership Percent of
ClassThe Vanguard Group (“Vanguard”)(1)
100 Vanguard Boulevard
Malvern, PA 1935518,059,167 8.25% Black Rock, Inc.(2)
55 East 52ndStreet
New York, NY 1005517,544,664 8.00% State Farm Mutual Automobile Insurance Company (“State Farm”)(3)
One State Farm Plaza
Bloomington, IL 6171015,499,889 7.08% (1) Based on information set forthAs reported in Amendment No.3No. 6 to its Schedule 13D13G filed on September 13, 2016 with the SEC jointly by Pershing Square Capital Management L.P.; PS Management GP, LLC; Pershing Square GP, LLC; PS V GP LLC;on February 7, 2018, Vanguard has sole voting power over 302,146 shares, shared voting power over 43,249 shares, sole power to direct disposition of 17,718,550 shares and William A. Ackman (together, “Pershing Square”) reporting the beneficial ownership of shared power to vote or direct the vote and to dispose or direct the disposition of 16,973,076 shares of Company common stock. This amount includes 4,025,140 shares of Common Stock and 12,947,936 shares of Common Stock underlying over-the-counter American style call options.340,617 shares.(2) InAs reported in Amendment No. 2 to its Schedule 13G filed with the SEC on January 29, 2018, Black Rock, Inc. has sole voting power over 15,283,725 shares and sole power to direct disposition of 17,544,664 shares.(3) As reported on its Schedule 13G filed with the SEC on February 8, 2018, in the aggregate entities affiliated with State Farm hashave sole voting power over 15,393,100 shares, shared voting power over 92,610106,789 shares, sole power to direct disposition of 15,393,100 shares and shared power to direct disposition of 92,610106,789 shares.(3)54 In the aggregate, Vanguard has sole voting power over 368,907 shares, sole power to direct disposition of 12,530,069 shares, and shared power to direct disposition of 391,687 shares.(4)Table of ContentsIn the aggregate, Black Rock, Inc. has sole voting power over 9,340,826 shares and sole power to direct disposition of 11,250,410.AIR PRODUCTS AND CHEMICALS, INC.INFORMATION ABOUT STOCK OWNERSHIPInformation About Stock Ownership20162018 by each member of the Board and each Executive Officer,named executive officer as well as the number of shares owned by the directors and all Executive Officersexecutive officers as a group. None of the directors or Executive Officersexecutive officers own one percent or more of the Company’s common stock. Name of Beneficial Owner Total(5) 0 0 0 0 (5) 31,294 64,192 0 95,486 1,000 0 1,498 2,498 0 0 8,795 8,795 314,960 139,061 0 454,021 0 0 7,877 7,877 0 0 32,026 32,026 0 0 6,393 6,393 11,933 0 0 11,933 22,535 73,223 0 95,758 3,645 0 0 3,645 359 67,434 0 67,793 387,487 377,853 56,589 821,929 Name of Beneficial Owner Common
Stock(1) Right to
Acquire(2)(3) Total(4) Seifi Ghasemi 343,683 208,593 552,276 M. Scott Crocco 39,589 55,345 94,934 Sean D. Major 73 0 73 Samir Serhan 109 0 109 Corning F. Painter 27,055 58,107 85,162 Susan K. Carter 0 0 0 Charles I. Cogut 1,000 3,290 4,290 Chadwick C. Deaton 0 10,971 10,971 David H. Y. Ho 0 11,451 11,451 Margaret G. McGlynn 0 12,664 12,664 Edward L. Monser 0 9,565 9,565 Matthew H. Paull 4,057 0 4,057 Directors and executive officers as a group (12 persons) 415,566 369,986 785,552 (1) Executive Officersexecutive officers hold restricted shares, which we include in this column. The Executive Officerexecutive officer may vote the restricted shares but may not sell or transfer them until the restrictions expire. The individuals in the table hold the following number of restricted shares:Name Shares Seifi Ghasemi 32,270 NameM. Scott Crocco Shares5,820 M. S. CroccoAll executive officers 9,67338,090 S. Ghasemi44,612G. Novo7,497C. F. Painter10,152J. D. Stanley0All Executive Officers71,934(2)Includes share unitsThis column also includes shares held by Executive Officersexecutive officers in the Company’s qualified 401(k) plan.Retirement Savings Plan. Participants have voting rights with respect to such unitsshares and can generally redirect their plan investments.(3)(2)Executive Officersexecutive officers have the right to acquire this number of shares within 60 days of November 1, 2018 by exercising outstanding options granted under the Company’s Long-Term Incentive Plan.(4)Directors’Plan or through the vesting of performance shares or RSUs. In addition to these amounts, our executive officers hold equity awards granted under the Company’s Long-Term Incentive Plan that will not vest within 60 days of November 1, 2018. For additional information regarding such holdings, refer to the Outstanding Equity Awards at 2018 Fiscal Year-End Table on page 39. Directors hold deferred stock units shown in the table that are distributable within 60 days upon a director’s retirement or resignation based upon the director’s payout elections.elections under the Deferred Compensation Program for Directors. Deferred stock units held by directors who have elected to defer payout for longer periods are describeddisclosed in note (5).footnote 3 below. Deferred stock units entitle the holder to receive one share of Company stock and accrued dividend equivalents. Deferred stock units do not have voting rights.AIR PRODUCTS AND CHEMICALS, INC.INFORMATION ABOUT STOCK OWNERSHIP(5)(3)Officersofficers and directors also own thehold deferred stock units reflected in the table below, which are not distributable within 60 days and which have been awarded, earned out or purchased. Deferred stock units confer an economic interest substantially similar to a shareacquired through deferrals of stock.salary, annual incentive awards or directors’ fees. Directors’ deferred stock units shown below are not included in the table on the preceding pageabove solely because the directors have elected to defer payout of those units beyond their retirement or resignation. Certain deferred stock units held by Executive Officers are subject to forfeiture if employment ends before death, disability, or retirement, or for engaging in specified activities such as competing with the Company. 55 Name of Beneficial Owner Deferred Stock Units S.Seifi Ghasemi 2,590 Corning F. Painter 1,045 Susan K. Carter 9,78013,454 M. S. CroccoMargaret G. McGlynn 3,16822,762 S. GhasemiMatthew H. Paull 2,4615,416 C. F. Painter9,034M. H. Paull3,518J. D. Stanley6,619(6)Not counting their deferred stock units which are not distributable within 60 days, directors,Directors, nominees and Executive Officersexecutive officers as a group beneficially own 0.3%less than 1% of the Company’s outstanding shares. ComplianceExecutive Officersexecutive officers to file reports of holdings and transactions in Company stock and related securities with the SEC and the NYSE. Based on our records and other information, we believe that in 2016fiscal 2018 all of our directors and Executive Officersexecutive officers met all applicable Section 16(a) filing requirements.requirements with one exception. On October 9, 2018, Russell A. Flugel filed a Form 4 to report the disposition of 100 shares that were withheld for taxes incurred upon the vesting of certain restricted stock units on December 5, 2017. The reporting of this transaction was delayed due to an administrative oversight.56 2019 Annual Meeting Proxy Statement
Questions and Answers on Voting and the Annual Meeting
How many shares can vote at the Annual Meeting? 
57 Item Board Recommendation 1. Election of the Board’s Eight Nominees as Directors FOR 2. Advisory Vote on Executive Officer Compensation FOR 3. Ratification of Deloitte & Touche LLP as the Company’s
Independent Registered Public Accounting FirmFOR How do I vote shares held by my broker, bank or other nominee? 58 2019 Annual Meeting Proxy Statement What vote is necessary to pass the items of business at the Annual Meeting? 59 May I inspect the shareholder list? 60 2019 Annual Meeting Proxy Statement
Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
Allentown, PA 18195-1501, 61
Appendix AAIR PRODUCTS AND CHEMICALS, INC.APPENDIX AReconciliation of Non-GAAP Financial MeasuresRECONCILIATION OF NON-GAAP FINANCIAL MEASURESAir Products is currently executing its strategic plan to restructurein fiscal years 2017 and 2016, we restructured the Company and to focus on the Company’sits core Industrial Gases businesses, which has and will continue to resultbusiness. This resulted in significant disclosed itemscost reduction and asset actions that we believe arewere important for investors to understand separately from the performance of the underlying business. Additionally, in fiscal year 2018, we recorded discrete impacts associated with the Tax Act. The reader should be aware that we may incur similar expenses in the future. The tax impact ofon our pre-tax non-GAAP adjustments reflects the expected current and deferred income tax expense impact of the transactions and is impacted primarily by the statutory tax rate of the various relevant jurisdictions and the taxability of the adjustments in those jurisdictions. In evaluating these financial measures, the reader should be aware that we may incur expenses similar to those eliminated in this presentation in the future. Investors should also consider the limitations associated with these non-GAAP measures, including the potential lack of comparability of these measures from one company to another. A-1 Consolidated ResultsTable of Contents Growth vs Prior Year Sales Operating
Income Operating
Margin Diluted
EPS Operating
Income Operating
Margin Diluted
EPS $ 10,180.4 $ 1,331.8 13.1 % $ 4.75 - (7.4 ) (.1 )% (.02 ) $ 10,180.4 $ 1,324.4 13.0 % $ 4.73 231.6 2.3 % .74 10.1 .1 % .03 $ 10,180.4 $ 1,566.1 15.4 % $ 5.50 $ 10,439.0 $ 1,339.1 12.8 % $ 4.62 - (10.9 ) (.1 )% (.03 ) $ 10,439.0 $ 1,328.2 12.7 % $ 4.59 (3.0 )% 12.7 .1 % .04 5.5 .1 % .02 310.1 3.0 % 1.27 - - % .10 - - % (.24 ) $ 10,439.0 $ 1,656.5 15.9 % $ 5.78 5.1 % $ 9,894.9 $ 1,708.3 17.3 % $ 5.91 - (9.2 ) (.1 )% (.03 ) $ 9,894.9 $ 1,699.1 17.2 % $ 5.88 28.1 % 207.7 2.1 % .71 21.2 .2 % .06 7.5 .1 % .03 (17.9 ) (.2 )% (.05 ) (33.6 ) (.4 )% (.13 ) - - % .07 $ 9,894.9 $ 1,884.0 19.0 % $ 6.57 13.7 % - 9.2 .1 % .03 $ 9,894.9 1,893.2 19.1 % $ 6.60 $ 9,524.4 $ 2,106.0 22.1 % $ 6.94 23.3 % 480bp 17.4 % 52.2 .5 % .22 - - % .24 33.9 .4 % .11 6.4 .1 % .02 - - % .02 $ 9,524.4 $ 2,198.5 23.1 % $ 7.55 16.1 % 400bp 14.4 % (.11 ) $ 7.44 13.2 % 10.7 % $ 6.60 7.55 .18 $ 7.73 17.1 % (A)Consolidated ResultsAmounts are on a continuing operations basis. As a result of the Company’s decision to exit the EfW business in 2016, the business has been presented in the 2016 Form 10-K as a discontinued operation. Prior year results have been reclassified to conform to current year presentation.2018 2017 GAAP EPS $ 6.59 $ 5.16 Change in inventory valuation method (.08 ) — Business separation costs — .12 Tax benefit associated with business separation — (.02 ) Cost reduction and asset actions — .49 Goodwill and intangible asset impairment charge — .70 Gain on land sale — (.03 ) Equity method investment impairment charge — .36 Pension settlement loss .15 .03 Tax reform repatriation 2.16 — Tax reform benefit related to deemed foreign dividends (.25 ) — Tax reform rate change and other (.96 ) — Tax restructuring (.16 ) — Tax election benefit — (.50 ) Non-GAAP EPS 7.45 6.31 GAAP Change from prior year $ 1.43 GAAP % Change from prior year 28 % Non-GAAP Change from prior year $ 1.14 Non-GAAP % Change from prior year 18 % (B)A-2 Compensation plans are not adjusted for the presentation of the EfW business as a discontinued operation. An adjustment was made to reconcile to results used to calculate the Non-GAAP 3 Year EPS Average for compensation purposes.(C)Adjusted EBITDARepresents adjustment made for certain losses from discontinued operations for compensation purposes.(D)Income from continuing operations before taxes impact of $6.9 and $16.6 in 2016 and 2015, respectively.Adjusted EBITDA 2016 2015 $ 1,545.7 $ 1,324.4 115.5 103.5 586.5 418.3 925.9 936.4 52.2 7.5 33.9 207.7 6.4 21.2 - 17.9 - 33.6 6.9 16.6 $ 3,273.0 $ 2,984.1 288.9 10 % 2016 2015 34.4 % 30.2 % 420bp Return on Capital Employed (ROCE)Return on capital employed (ROCE) is calculated on a continuing operations basis as earnings after-tax divided by five-quarter average total capital. Earnings after-tax is defined as the sum of net income from continuing operations attributable to Air Products, interest expense, after-tax, at our effective quarterly tax rate, and net income attributable to noncontrolling interests. On a non-GAAP basis, the GAAP measure has been adjusted for the impact of the disclosed items detailed below. Total capital consists of total debt, total equity, and redeemable noncontrolling interest less assets of discontinued operations. 2016 2015 2014 $ 1,515.3 $ 1,284.7 $ 994.6 115.5 103.5 125.1 (32.2 ) (24.8 ) (30.1 ) 83.3 78.7 95.0 30.4 39.7 1.4 $ 1,629.0 $ 1,403.1 $ 1,091.0 $ 48.3 $ 7.5 $ - 51.8 - - 24.0 153.2 8.2 4.1 13.7 3.6 - (11.2 ) - - - 308.8 - (28.3 ) - 4.3 14.2 - - - 20.6 - - (51.6 ) (25.2 ) (6.8 ) (7.5 ) $ 1,736.3 $ 1,545.4 $ 1,373.1 $ 12,772.0 $ 12,976.8 $ 13,591.2 886.3 748.6 428.2 $ 13,658.3 $ 13,725.4 $ 14,019.4 11.9 % 10.2 % 7.8 % 170bp 240bp 12.7 % 11.3 % 9.8 % 140bp 150bp 2018 2017 Income from Continuing Operations(A) $ 1,490.7 $ 1,155.2 Less: Change in inventory valuation method 24.1 — Add: Interest expense 130.5 120.6 Less: Other non-operating income (expense), net 5.1 16.6 Add: Income tax provision 524.3 260.9 Add: Depreciation and amortization 970.7 865.8 Add: Business separation costs — 32.5 Add: Cost reduction and asset actions — 151.4 Add: Goodwill and intangible asset impairment charge — 162.1 Less: Gain on land sale — 12.2 Add: Equity method investment impairment charge — 79.5 Add: Tax reform repatriation- equity method investment 28.5 — Adjusted EBITDA $ 3,115.5 2,799.2 Income from Continuing Operations Change from prior year 335.5 Income from Continuing Operations % Change from prior year 29 % Adjusted EBITDA Change from prior year 316.3 Adjusted EBITDA % Change from prior year 11 % (A) Includes net income attributable to noncontrolling interests. 2018 2017 Adjusted EBITDA Margin 34.9 % 34.2 % Change from prior year 70bp (A) A-3Represents the adjustment for discontinued operations to arrive at Adjusted ROCE for compensation purposes.
Appendix B 2016 2015 2014 12.7 % 11.3 % 9.8 % 9.0 % 9.0 % 9.0 % 3.7 % 2.3 % .8 % 2.3 % APPENDIX BSurvey Reference GroupSURVEY REFERENCE GROUPAlticor Estee Lauder PVH AlticorAvon ProductsFederated-Mogul Quanta Services Baker Hughes Hershey R.R. Donnelley Ball Hormel Foods Reynolds American Becton Dickinson Illinois Tool Works Rockwell Automation BorgWarner Jabil Circuit S.C. Johnson & Son Boston Scientific Jacobs Engineering Sealed Air Cameron International Campbell SoupKellogg Sherwin-Williams Chesapeake Energy Kinder Morgan Stanley Black & Decker Coca-Cola Enterprises Land O’Lakes Stryker Commercial Metals Coca-Cola EnterprisesMasco TE Connectivity Corning CovidienMedline Terex Covestro MillerCoors Textron Dairy Farmers of America Mohawk United States Steel Dana Holding Mosaic VF Corporation Dean Foods Navistar International Waste Management Devon Energy ONEOK WestRock Dover Parker Hannifin Weyerhaeuser Eastman Chemical Federal-MogulH. J. HeinzHenry ScheinHormel FoodsIngersoll RandKinder MorganL-3 CommunicationsMasco CorporationPeabody Energy MillerCoorsMohawk IndustriesMosaicNavistar InternationalOshkoshParker HannifinEcolab Performance Food Phillips-Van HeusenEOG Resources Praxair Reynolds AmericanSC JohnsonStrykerTE ConnectivityTerexThe Hershey CompanyThermo Fisher ScientificTransoceanUnivar USAVisteonW. W. GraingerWeyerhaeuserWesco InternationalWilliams Companies B-1
Table of Contents
Air Products and Chemicals, Inc. Corporate Headquarters
Allentown, PA18195-1501
610-481-4911From Pennsylvania Turnpike (US 476)–
Take Lehigh Valley Exit 56 (formerly exitExit 33) from Turnpike to Route 22 West, Harrisburg.–––––From Route 22–
Take Exit 49A from Route 22 and I-78 onto Route 100 South. ––––From Route 309 North and I-78 West–
Take Exit 54A to Route 222 South. ––Proceedand proceed to Hamilton Boulevard.––From Route 309 South and I-78 East–
Take Exit 54. At the bottom of the ramp, turn right onto Route 222 South. ––Proceedand proceed to Hamilton Boulevard.––
please contact us at:
Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
T 610-481-4911
F 610-481-5900
Corporate Secretary’s Office
Sean D. Major
Executive Vice President,
General Counsel and Secretary
T 610-481-4880
Simon Moore, Vice President,
Investor Relations and
Corporate Relations
T 610-481-5775
AIR PRODUCTS AND CHEMICALS, INC.
7201 HAMILTON BLVD.
ALLENTOWN, PA 18195-1501
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If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on January 23, 2019 (January 21, 2019 for Retirement Savings Plan Participants). Have your proxy card in hand when you call and then follow the instructions.
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: VOTE BY INTERNET -www.proxyvote.comAIR PRODUCTS AND CHEMICALS, INC.7201 HAMILTON BLVD.ALLENTOWN, PA 18195-1501Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on January 25, 2017 (January 23, 2017 for Retirement Savings Plan Participants). Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALSIf you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on January 25, 2017 (January 23, 2017 for Retirement Savings Plan Participants). Have your proxy card in hand when you call and then follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:E15437-P84131-Z68929E53692-P14957-Z73500 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.AIR PRODUCTS AND CHEMICALS, INC. AIR PRODUCTS AND CHEMICALS, INC. The Board of Directors recommends you vote FOR the following: 1. Election of Directors The Board of Directors recommends you vote FOR the following: Nominees: For Against Abstain 1a. Susan K. Carter ☐ ☐ ☐ 1b. Charles I. Cogut ☐ ☐ ☐ 1c. Seifi Ghasemi ☐ ☐ ☐ 1d. Chadwick C. Deaton ☐ ☐ ☐ 1e. David H. Y. Ho ☐ ☐ ☐ 1f. Margaret G. McGlynn ☐ ☐ ☐ 1g. Edward L. Monser ☐ ☐ ☐ 1h. Matthew H. Paull ☐ ☐ ☐ 1. Election of Directors Nominees:ForAgainstAbstain1a. Susan K. Carter¨ ¨¨The Board of Directors recommends you vote 1 YEAR on the following proposal:1 year2 years3 yearsAbstain1b. Charles I. Cogut¨ ¨¨3.Frequency of advisory votes on Executive Officer compensation.¨¨¨¨1c. Seifi Ghasemi¨ ¨¨1d. Chadwick C. Deaton¨ ¨¨the following proposal:For Against Abstain ForAgainstAbstain 2. ☐ ☐ ☐ 1e. David H. Y. Ho¨ ¨¨ 3. 4.KPMGDeloitte & Touche LLP as the Company’sCompany's independent registered public accounting firm for the fiscal year ending September 30, 2017.2019.¨¨¨☐ 1f. Margaret G. McGlynn¨ ¨¨1g. Edward L. Monser¨ ¨¨NOTE:Such other business as may properly come before the meeting or any adjournment thereof.1h. Matthew H. Paull¨ ¨¨The Board of Directors recommends you vote FOR the following proposal:ForAgainstAbstain2.Advisory vote on Executive Officer compensation.¨ ¨¨ Signature [PLEASE SIGN WITHIN BOX]DateSignature (Joint Owners)Date Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date Shareholders
Air Products and Chemicals, Inc.
Thursday, January 26, 201724, 2019 - 2:00 p.m. Eastern Time
7201 Hamilton Boulevard
Allentown, PA 18195
The Notice and Proxy Statement, Telephone/Internet insert (BR supplied) and Annual Report are available at www.proxyvote.com.E15438-P84131-Z68929Air Products and Chemicals, Inc.Annual Meeting of Shareholders - January 26, 2017ProxyThis proxy is solicited on Behalf of the Board of DirectorsThe undersigned hereby appoints Seifi Ghasemi, M. Scott Crocco and Mary T. Afflerbach, or any one of them, with full power of substitution, to represent the undersigned at the annual meeting of shareholders of Air Products and Chemicals, Inc. on Thursday, January 26, 2017, at 2:00 p.m., and at any adjournments thereof, and to vote at such meeting the shares which the undersigned would be entitled to vote if personally present, as directed on the reverse side, and to vote in their judgment upon all other matters which may properly come before the meeting and any adjournments thereof. This proxy will be voted as directed, but if no instructions are given for voting on the matters listed on the reverse side, this proxy will be voted as recommended by the Board of Directors. If any other matters are properly presented for consideration at the Annual Meeting, the proxy holders, or any one of them, will have discretion to vote on those matters in accordance with their best judgment. Shareholders who are present at the meeting may withdraw their Proxy and vote in person if so desired.Air Products and Chemicals, Inc. Retirement Savings Plan ParticipantsThe person signing on the reverse directs that Fidelity Management Trust Company As Trustee for the Air Products and Chemicals, Inc. Retirement Savings Plan (the “Plan”) vote the shares of common stock of Air Products and Chemicals, Inc. (“shares”) allocated to his or her account under the Plan at the annual meeting of shareholders of Air Products and Chemicals, Inc. to be held on January 26, 2017 as directed on the reverse side.The Trustee will tabulate the instructions from all participants and vote shares held in the Plan according to the instructions. The Trustee will vote shares held in the Plan for which no voting instructions are received by January 23, 2017 in the same proportions and manner as shares held in the Plan for which instructions have been received.Continued and to be signed on reverse sideE53693-P14957-Z73500 V.1.1Air Products and Chemicals, Inc.