(Adds Elliott statement)
By Ankit Ajmera and Michael Flaherty
March 2 U.S. specialty metals maker Arconic Inc
said on Thursday it appointed former United
Technologies Corp executive David Hess as an independent
director on its board amid a proxy battle with hedge fund
Elliott Management Corp.
Arconic said Hess, formerly chief customer officer of
aerospace at UTC, would replace advertising agency WPP's
chief executive, Martin Sorrell, who will not stand for board
Arconic has been under pressure from activist hedge fund
Elliott Management Corp, which last week stepped up pressure for
Chief Executive Klaus Kleinfeld's ouster after raising its stake
in the company to about 13 percent.
"The Board has proffered nothing more than a handful of
inadequate and long-overdue corporate-governance half-measures,
taken only grudgingly and under the pressure of an ongoing proxy
contest," an Elliott spokesman said in an emailed statement.
The statement repeated the hedge fund's call for new board
directors "with a mandate for change." Elliott has made clear in
previous letters and releases that it wants the removal of
Kleinfeld as the company's CEO.
The creation of New York-based Arconic as a publicly traded
company started in September 2015, when Kleinfeld, then the CEO
of Alcoa, said the company would separate its lucrative parts
businesses from the volatile raw aluminum business.
The spinoff came at a time when aluminum prices were near
historic lows, which forced Alcoa to reduce its refining
and smelting capacity and sharpen its focus on the fast-growing
aerospace and automotive products businesses now part of
Arconic began trading on the New York Stock Exchange last
November with Kleinfeld as its CEO. It has a market worth of
more than $10 billion.
Arconic's 12-member group of independent directors put its
weight behind Kleinfeld on Thursday, saying in a separate
statement that it took Elliott's concerns "very seriously", but
that it remains unanimously convinced in Kleinfeld's ability to
run the company.
Arconic said on Thursday it would ask shareholders to
approve a proposal to declassify its board structure.
Declassification is viewed as a shareholder-friendly move that
ensures that the entire board is held accountable by investors
A classified, or staggered board, has different classes of
directors coming up for re-election at different times.
If the declassification proposal does not win the required
shareholder vote, Arconic's board would take steps to ensure all
directors are subject to annual elections by no later than its
2018 shareholder meeting, the company said.
(Reporting by Ankit Ajmera and Michael Flaherty; Editing by Sai
Sachin Ravikumar and Andrew Hay)