Arconic Inc (NYSE:ARNC), due to increased pressure from Elliott Management Corp, an activist investor company, to disband its board; appointed a new director David Hess to its board. The appointment of David who worked at Technologies Corp as the aerospace chief customer officer will take effect on March 10. David will be succeeding Sir Martin Sorrell who declined to seek relation and will instead step down from the position of director so as to concentrate on his business.
Elliott Management Corp started a campaign in late January demanding changes in Arconic’s board and oust the company’s Chief Executive, Klaus Kleinfeld. This was barely three months after he created different and distinct lines of the aerospace and automotive-parts maker and the aluminum maker Alcoa.
Elliott Management Corp, which has a 12% stake in Arconic, according to figures from FactSet said it will appoint five directors to the new board.
The hedge fund said the changes are unsatisfactory and disappointing and termed them as half-measures taken because of pressure and grudgingly due to the ongoing proxy contest.
Mr. David’s appointment is a response to long time investors and analysts’ criticism that the company’s board has a shortage of directors experienced in manufacturing especially in the aerospace industry. Arconic is banking on his experience to drive its growth.
In a letter addressed to shareholders, the board affirmed its full commitment to supporting Mr. Kleinfeld and listed all the changes it had made to disqualify Elliott’s push for changes in the board of directors.
The board said it had taken Elliott’s criticisms with a lot of gravity and carried a conclusive review of the company’s business performance as well as strategy including a review of Mr. Kleinfeld’s track record as its CEO. The board said it is fully convinced that that the company has a working strategy and the CEO will make it successful.
In recent year, companies have been absorbing their own new directors as a way of convincing shareholders that the company’s board of directors if embracing change. The move is also aimed at keeping them from voting for activist nominees