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                                                                    Exhibit 10.3

                              COMPENSATION PROGRAM
                            FOR NONEMPLOYEE DIRECTORS

a.       Each director continuing in office after the Annual Meeting of
         Shareholders, effective as of the day of the Annual Meeting, shall be
         granted the right and option to purchase up to 2,000 shares of Common
         Stock of Air Products and Chemicals, Inc. under the Stock Option
         Program for Directors (formerly the Stock Option Plan for Directors)
         which is provided under the Air Products and Chemicals, Inc. Long-Term
         Incentive Plan (the "Plan").

b.       Each director shall be paid an annual retainer of $37,000 for serving
         as a member of the Board of Directors and any Board Committee(s), which
         retainer shall be payable in quarterly installments. Fifty percent of
         this retainer will be paid by the Company in the form of a credit to
         the directors' Air Products Stock Account under the Deferred
         Compensation Program for Directors (formerly the Deferred Compensation
         Plan for Directors) and converted to deferred stock units under the
         Plan.

c.       Each director who serves as the Chairman of a Board Committee shall be
         paid an additional annual retainer of $5,000, which retainer shall be
         payable in quarterly installments.

d.       Each director shall be paid a meeting fee of $1,250 per meeting
         attended.*/

e.       One thousand one hundred deferred stock units shall be credited under
         the Plan's Air Products Stock Account (i) effective as of the date the
         director first serves on the Board, and (ii) annually, notwithstanding
         the date of first
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         service, for directors continuing in office after the Annual Meeting of
         Shareholders effective as of the day of the Annual Meeting.

f.       Directors shall be reimbursed for out-of-pocket expenses incurred in
         attending regular and special meetings of the Board and Board
         Committees and any other business function of the Company at the
         request of the Chairman of the Board. Expenses will be reimbursed as
         submitted.**/

*/    For purposes of administering these provisions, a director will be
      considered to have attended any meeting for which he or she was present in
      person or by secure telephone conference call for substantially all of the
      meeting, as determined by the Corporate Secretary. Members of the Audit
      Committee who participate with management and/or the independent auditors
      to review such things as quarterly earnings releases and registration
      statements as required by law or listing standard will also receive the
      meeting fee. Directors who meet with a constituent or other third party on
      behalf of the Company and at the request of the Chief Executive Officer
      will also receive the meeting fee.

**/   Directors are reimbursed at the rate of $.37 per mile for use of their
      personal cars in connection with Company business. Directors using
      personal aircraft or aircraft of noncarrier will be reimbursed for such
      expenses at a rate equivalent to first-class air fare of scheduled
      carriers.