A US boss today stood down from his position following a campaign by activist investor Elliott Management.
Klaus Kleinfeld will no longer be chair and chief executive of US metals producer Arconic.
The departure, by “mutual agreement”, came after Arconic’s board was disappointed by Kleinfeld writing directly to Elliott without consulting the company. The board has now urged Elliott to halt its “highly disruptive and distracting proxy fight”.
The firm 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.”
But Arconic also noted that Kleinfeld had left by mutual agreement after the board learned that he had written a letter directly to a senior Elliott employee without consultation with, or authorisation from, the board. The board said that this “showed poor judgment”.
Arconic’s shares jumped eight per cent to $28 per share following the news on Monday morning in New York.
“Elliott Management’s central objective – a chief executive change – has been realised at Arconic,” the company said.
“With the completion of Arconic’s transformative separation transaction last November, the substantial refreshment of its board composition with seven of its twelve directors having joined the board since the beginning of last year, and now the departure of Kleinfeld as chief executive and chair of the board, it is clear that the company has recently undergone a tremendous amount of change.
“It is Elliott Management's decision 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 chief executive search and a strong transition.”
Despite the apparent victory, Elliott slammed the company in a statement following the resignation. “When such conduct manifests itself in a pattern as it has here, it is not a CEO problem. It is a board problem,” 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 [statement]... 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.”
- Meanwhile, in the UK, Elliott Advisors is seeking to shake-up mining company BHP Billiton. Elliott last week begun talks with several other BHP investors, increasing pressure on the FTSE 100 firm. Elliott is pushing for an end to BHP’s dual-listing, a demerger of its US petroleum business and a revision of its capital return policy.