3 Min Read
(Adds Elliott statement)
By Ankit Ajmera and Michael Flaherty
March 2 (Reuters) - 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 re-election.
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.
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 every year.
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)