Activist investor Elliott Management has got its way.
Arconic on Monday announced that Klaus Kleinfeld has stepped down as chairman and chief executive of the company and has resigned as a board member even as it argued the decision was not made in response to a proxy fight with Elliott.
Mr Kleinfeld stepped down by mutual agreement after he sent a letter directly to a senior officer at Elliott, without consulting with the Board, a move the company determined showed “poor judgment”. Arconic said:
Importantly, this decision was not made in response to the proxy fight or Elliott Management’s criticisms of the Company’s strategy, leadership or performance and is not in any way related to the financials or records of the Company. The Board continues to believe that under Mr. Kleinfeld’s leadership, the Company successfully executed a transformative vision and improved business performance amid a complex market environment, and the Board reaffirms the strategy developed under Mr. Kleinfeld’s leadership and shared with our investors, customers and employees.
Elliott had launched a campaign to remove Mr Kleinfeld from the top job at the specialised metals and components company earlier this year. The fund, which controls 11.6 per cent of Arconic, according to Bloomberg data, and is the company’s largest shareholder, had argued that management’s failure had destroyed considerable shareholder value.
With Mr Kleinfeld’s departure, the statement said Arconic has undergone a tremendous amount of change and argued that it is now up to Elliott: “whether to continue to burden Arconic and its shareholders with its highly disruptive and distracting proxy fight, or to support Arconic in facilitating an effective CEO search and a strong transition.”
Mr Kleinfeld, who served as CEO of the company since 2008 oversaw the split into two standalone companies last year.
“The board is deeply grateful to Klaus Kleinfeld for his dedication and service as Chair and CEO of Arconic, and previously of Alcoa Inc., and appreciates his assistance with this transition,” Ms Russo, said.
Shares in the value-added business that split from Alcoa last year were up nearly 9 per cent to $28.12.
Current board member David Hess has been appointed interim CEO and Patricia Russo, the company’s lead director has been appointed interim chair of the board.