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Even after Klaus Kleinfeld’s departure, activist investor Elliott Management is not backing down from its calls for change at Arconic.
Hours after Arconic said Mr Kleinfeld was stepping down as chief executive of the the metals and components group for sending an unauthorised letter to an officer at Elliott in a move that displayed “poor judgment”, Elliott fired back, saying the letter showed a pattern of failed board oversight and the need for meaningful board-level change.
Elliott, which has a 13.2 per cent economic interest in the company, said Mr Kleinfeld’s letter read as a “threat to intimidate or extort a senior officer of Elliott Management based on completely false insinuations” noting the behaviour was “highly inappropriate”. The statement added that “when such conduct manifests itself in a pattern as it has here, it is not a CEO problem. It is a board problem”.
Elliott first launched a campaign to remove Mr Kleinfeld in January and has been calling for changes at the company, which split from Alcoa last year. In its statement on Monday, the firm founded by billionaire Paul Singer criticised what it described as the company’s efforts to further entrench legacy directors by naming Patricia Russo as its interim chair.
The activist investor took particular offense to Arconic’s rebuke of its proxy fight. Elliott said:
Clearly, this Board is a poor judge of character and doesn’t even appear to understand how profoundly it has failed Arconic’s shareholders and employees. The Company’s attempt at the end of its press release to say that Elliott has achieved its objective of a new CEO and therefore should stand down rather than ‘burden’ the Company with a continued contest is a ridiculous attempt to try to take its own failings and use them to tarnish Elliott’s efforts.
We intend to pursue our campaign for fundamental Board-level change as vigorously as ever, and we encourage all Arconic shareholders to vote the BLUE card for new leadership.
The fund has nominated five new directors to the board, to be voted on at its annual meeting on May 16.
Arconic shares, which advanced nearly 10 per cent earlier in the day, trimmed their gains and were trading about 4 per cent higher at $26.90.