Arconic Stock Rises After CEO Steps Down

Apr 18, 2017, 01:27
Arconic Stock Rises After CEO Steps Down

Arconic said Kleinfeld's action "showed poor judgment" on his part.

The ouster comes after the company's board learned that he sent a letter directly to Elliott Management, an institutional investment group that has been pushing for Kleinfeld's ouster, without authorization from the board.

Arconic Inc ARNC.N said on Monday Chief Executive Klaus Kleinfeld resigned after the USA 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 board. The internal battle between Kleinfeld and Elliott had been going on ever since the company was created by a split with the commodity aluminum production half of what used to be Alcoa, Inc., that company is now Alcoa, Corp.

Arconic's shares jumped eight per cent to $28 per share following the news on Monday morning in NY.

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 disagreed with.

Elliott Management, the activist hedge fund run by Paul Singer, has made some shocking claims about Arconic's newly departed CEO, who resigned Monday amid an ongoing effort by the activist fund to persuade the company to get a new chief. Elliott said it believed that Lawson's work as a consultant or his potential role as Arconic CEO were not in violation of the non-compete clause.

Elliott was not immediately available for comment.

Klaus Kleinfeld agreed to leave his job as a result of a challenge from the company's largest shareholder, Elliott Management Corp.

Arconic shares initially surged by as much as 9 percent following the news of Kleinfeld's resignation.

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