(Corrects to fix spelling of Elliott in headline; fixes typo in
* Kleinfeld writes to Elliott exec without consulting board
* Elliott says letter "read as a threat to intimidate"
* Elliott launched proxy fight against Arconic in January
* Arconic names director David Hess as interim CEO
* Company's shares rise as much as 9.8 pct, before easing
By Arunima Banerjee
April 17 Arconic Inc said on Monday
Chief Executive Klaus Kleinfeld resigned after the U.S.
specialty metals maker found he sent a letter in "poor judgment"
to Elliott Management, with whom it is embroiled in a proxy war
and which used the chance to again criticize the company's
Activist hedge fund Elliott said the letter "read as a
threat to intimidate or extort a senior officer of Elliott
Management based on completely false insinuations" and that it
immediately informed Arconic's board of the letter.
Arconic said Kleinfeld resigned as he sent the letter – the
content of which neither party made public – without consulting
the board, and not in response to the proxy fight or Elliott's
criticisms of the company's strategy, leadership or performance.
Arconic also said its board reaffirmed the strategy
developed by Kleinfeld, under whose leadership, it said, the
company improved its performance.
Elliott said the company's statement was to defend Kleinfeld
and "should be enough to prove that Arconic's Board simply lacks
the judgment to steward Arconic."
Elliott, which owns a 13.2 percent stake in Arconic, started
its campaign against the company in January, when it nominated
five directors to the board and outlined ways for Arconic to
improve its share price.
Arconic's stock jumped as much as 9.8 percent on Monday,
before easing to trade up 2.5 percent at $26.56 in late
afternoon trading. The stock had risen nearly 14 percent since
Elliott mounted its proxy bid through its close on Thursday.
Kleinfeld had served as Alcoa Inc's CEO for eight years and
oversaw the company's split-up into Arconic and Alcoa Corp
Arconic said since Elliott's central objective – a CEO
change – had been realized, the hedge fund should now chose
whether to go ahead with its proxy fight or help find Kleinfeld'
The company said its interim CEO would be David Hess, a
former United Technologies Corp executive who was
appointed as an independent director to Arconic's board in
Elliott's choice to lead Arconic has been Larry Lawson, who
resigned as CEO of aircraft parts supplier Spirit AeroSystems
Holdings Inc last July. Lawson is also Elliott's
Elliott reported in March that Spirit AeroSystems had said
Lawson breached a non-compete clause in his retirement contract
by consulting for Elliott, a view the hedge fund has said it
(Reporting by Arathy S Nair, Ankit Ajmera and Arunima Banerjee
in Bengaluru; Editing by Saumyadeb Chakrabarty, Anil D'Silva and