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Arconic CEO Resigns Over  Letter to Elliott Management

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Klaus Kleinfeld, the Chief Executive of Arconic Inc, sent a letter to Elliott Management Corp. last week, which was not approved by his company board and which cost him his job

Klaus Kleinfeld, the Chief Executive of Arconic Inc, sent a letter to Elliott Management Corp. last week, which was not approved by his company board and which cost him his job. Arconic Inc, the US specialty metals maker which is traded on the NYSE, has been involved in a proxy war with Elliott management. Mr. Kleinfeld took it upon himself to criticize Elliott’s board members again.  Elliott’s president, Paul Singer, immediately complained to Arconic’s board. Mr. Singer said it viewed the letter as “a threat to intimidate or extort” the hedge fund, and further that the letter was “based on completely false insinuations”. Arconic announced last week that the letter displayed “poor judgement”, and that Mr. Kleinfeld has resigned from his position.

In January, Elliott Inc, which owns a 13.2 per cent stake in Arconic, began its aggressive initiative to improve Arconic’s share price.  The activist investor nominated five new directors to the board, among other recommendations. As per the WSJ, Kleinfeld’s letter, which was sometimes in imperfect English, referenced the alleged partying of Paul Singer at the 2006 World Cup in Germany. A commemorative soccer ball from the 2006 World Cup accompanied the letter via courier. The letter mentions Mr. Singer’s singing “Singing in the Rain” in a fountain, and alludes to his “legendary” conduct.  

In response to the news, Arconic’s stock price rose to $26.56 last week, a 2.5 percent jump which the market continues to sustain.  Elliot Inc has also been in the news of late for putting pressure on BHP, the world’s largest mining company, to shake up the company’s structure.

By:  Ilana Siyance

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