(Adds details from report, Elliott response)
By Michael Flaherty
May 15 Proxy advisory firm Institutional
Shareholder Services Inc recommended on Monday that shareholders
of specialty metals company Arconic Inc vote for two of
activist investor Elliott's four board director nominees.
The recommendation is a blow to Arconic, the $10 billion
company that separated from aluminum maker Alcoa Corp.
last year, and has since been fending off Elliott's efforts to
overhaul the company's strategy and leadership.
Arconic, based in New York, failed to get ISS's
recommendation for any one of four director positions being
contested by Elliott. Elliott supports the election of Ulrich
Schmidt, one of five directors up for election at this year's
Negotiations between Elliott and Arconic to avoid a proxy
contest broke down shortly after the resignation last month of
Arconic Chief Executive Officer Klaus Kleinfeld. His departure
followed a letter he sent to Elliott founder Paul Singer that
was deemed as inappropriate.
"As the dissident has already achieved its explicitly stated
primary goal (of removing Klaus from Arconic), the need to
support all four dissident nominees seems less urgent," ISS said
in its recommendation.
ISS recommended that the two Elliott nominees that Arconic
shareholders should support are Chris Ayers and Elmer Doty.
The shareholder vote on Arconic's board directors is
scheduled for May 25.
"Elliott believes that all four of the highly qualified,
independent shareholder nominees deserve the support of all
Arconic shareholders," the hedge fund said in a statement on
The results of a proxy fight often come down to the votes of
one or two large index funds, who tend to vote based on their
own analysis and recommendations.
Still, many funds do follow the recommendation of ISS,
making Arconic's ability to defeat Elliott all the 7more
Glass Lewis, a smaller proxy advisor, has recommended
previously that shareholders vote for all of Elliot's board
(Editing by Cynthia Osterman)