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Bill Ackman Wins Air Products Management Shakeup

Tickers in this article: APD HLF JCP PG

Updated from 8:20 a.m. to include Valence Group comments and share prices.

NEW YORK (TheStreet) -- Air Products will replace its CEO John E. McGlade in 2014 and elect three new independent directors to its Board of Directors, after Bill Ackman of Pershing Square Capital Management took a large stake in the chemicals manufacturer and pressed for change.

The management and board shakeup at Air Products is Ackman's first successful activist move since he resigned from J.C. Penney's board of directors in August and sold Pershing's stake in the struggling retail chain for a loss of more then half a billion dollars. Ackman's Air Products campaign also comes as the hedgie continues to press a $1 billion short position in Herbalife that has drawn criticism from peers such as Carl Icahn of Icahn Associates and Dan Loeb of Third Point Capital Management.

The unsuccessful campaign to turn J.C. Penney around and a controversial short position in Herbalife has caused some in the media to treat Ackman as a spectacle and question whether he has lost his clout on Wall Street.

Ackman's involvement in the shakeup at Air Products, however, indicates that he still holds significant influence as an activist investor and has the ability to impact change on large corporations.

"While we can debate whether Ackman's authority as an activist was tarnished after his J.C. Penney and Herbalife setbacks, Air Products proves that he still wields clout," Alex Khutorsky, managing director of The Valence Group, an M&A advisory investment bank focused on the chemical industry, said in an e-mail.

"The avoidance of a noisy fight should satisfy shareholders who have benefited from Ackman's investment in the firm, and for the moment, appease Ackman," he added.

Pershing Square built an over $2.2 billion stake in Air Products, about 10% of the company's outstanding shares, and advocated for management and board change after the company fell short on targets on its strategic initiative to grow revenue to $15 billion by 2015.

Air Products currently has a market capitalization of over $22 billion and the company's over 27% year-to-date stock gain, largely influenced by Ackman's investment, is a turn from a spell of underperformance.

Pershing Square also appears to have had an influence in change atop other prominent corporations this year. Earlier in 2013, Dow Jones Industrial Average component Procter & Gamble replaced its CEO with A.G. Lafley, in a move cheered on by Ackman after Pershing took a large stake in the consumer products giant.

Air Products said in a Thursday statement that the retirement of current CEO John E. McGlade in 2014, taken with its board change, will ensure that the company has appropriate experience and expertise to deliver long-term value for shareholders.

"We invested in Air Products because it is a great business in an industry with excellent long-term prospects. In recent weeks, we have been delighted to get to know John and the rest of the board working with them on their mission of continuous improvement and long-term shareholder value creation," Bill Ackman said in a statement.

"We look forward to a successful long-term partnership."

The three new independent directors will join Air Products' board immediately. As part of the board change, Pershing Square has agreed to vote in favor of an Air Products slate of nominees recommended by the board at the company's 2014 annual meeting.

Two of Air Products' new independent directors, Edward Monser and Matthew Paull, will stand for election at the 2014 meeting, while Seifi Ghasemi, will stand for election at the 2015 meeting.