Arconic CEO Klaus Kleinfeld abruptly resigned on Monday after enduring weeks of pressure from activist investment firm Elliot Management.
According to Arconic’s press release on the subject, Kleinfeld agreed to leave the company after the board discovered that he sent a letter to a senior member of Elliot Management without consulting them.
They went on to say that Kleinfeld’s departure had nothing to do with the pressure put on it by Elliot Management, but it later pointed out that Kleinfeld’s resignation, which has been Elliot’s aim for several weeks, has been realized. Arconic’s statement closed by putting the ball in Elliot’s court, saying the firm could continue its “highly disruptive and distracting proxy fight” or aid in the search for a new CEO.
Though Arconic did not reveal the contents of the letter, Elliot Management indicated that the letter “read as a threat to intimidate or extort a senior officer of Elliott Management based on completely false insinuations, a threat that we took seriously and about which we immediately and privately informed the Board.”
Stepping into the vacated position of CEO is current board member David Hess, and replacing Kleinfeld as Arconic’s board chairman is Patricia Russo.
“The Board is focused on hiring a world-class CEO to lead Arconic into its next chapter. We are focused on ensuring a smooth leadership transition for our customers, employees and many stakeholders,” explained Russo. “The Board is deeply grateful to Klaus Kleinfeld for his dedication and service as Chair and CEO of Arconic, and previously of Alcoa Inc., and appreciates his assistance with this transition. Klaus led a complex and highly successful transformation of Alcoa Inc. that culminated in the launch of two strong, standalone companies – Alcoa Corporation and Arconic. Today, Arconic is a leading advanced manufacturer of highly engineered products with strong market positions.”
“I have had the honor and the privilege of working with so many talented and dedicated colleagues at Alcoa Inc. and now at Arconic,” Kleinfeld said on leaving. “Together we have accomplished a lot. Today, Arconic is well positioned for the next phase. I am committed to supporting David and the Board through this transition phase.”