Key Arconic Customers – Airbus, Boeing, United Technologies and GE Aviation – Endorse Company Management Team and Strategy

April 10, 2017

Arconic Board Issues Letter to Shareholders Highlighting Board and Management’s Clearly Defined Three-Year Plan to Drive Shareholder Value

Plan Focuses on Continued Customer-Centric Innovation, Continued Cost Effectiveness

Elliott’s Ideas Would Damage Arconic’s Customer Relationships, Risk Company’s Future; Elliott’s Proposed CEO Not Independent, Wrong for Arconic

Arconic Board Urges Shareholders to Vote “FOR” the Company’s Nominees on the WHITE Proxy Card – a Vote “FOR” Arconic’s Strategic Plan and Customer Relationships

The independent directors of Arconic (NYSE: ARNC) today issued an open
letter to shareholders highlighting why key Arconic customers, including
Airbus Group, The Boeing Company, United Technologies Corp., and GE
Aviation support the Company’s management team and strategy of investing
in innovation while continuing to focus on cost effectiveness, why ideas
proposed by Elliott Management would put these relationships at risk and
how they could damage Arconic’s future. Additional information,
including the letter to shareholders, is available at www.arconic.com/annualmeeting.

The full text of the letter follows:

Dear Fellow Arconic Shareholder:

Over the past eight years, your management team, under the leadership of
Chief Executive Officer Klaus Kleinfeld, has executed a highly
successful transformation and built Arconic into a global leader in
precision engineering and advanced manufacturing. Elliott
Management (“Elliott”) agrees: “Arconic possesses a world class asset
base, and in some cases, one of a kind assets.”1*

Arconic was created through years of deliberate investments developing
cutting-edge technology, material science and advanced manufacturing.
This, along with management’s focus on strong cost control, has enabled
Arconic to very successfully develop long-term customer partnerships and
profitably grow.

Your Board and management team have a clear plan to continue the
progress we have already made: continue to invest in innovative and
high-value solutions for our customers and ensure that customers
continue turning to Arconic to help them solve their most critical
technological and manufacturing challenges.

ARCONIC CUSTOMERS SUPPORT THE COMPANY’S MANAGEMENT TEAM AND STRATEGY
OF INVESTING IN INNOVATION WHILE ENSURING COST EFFECTIVENESS

Arconic has a best-in-class technology portfolio with more than 2,000
pending and granted patents. This includes game-changing innovations:
bonding technology that helps automakers build better-performing,
stronger, lighter cars and trucks, like the Ford F-150; high temperature
blades for jet engines made by Pratt and Whitney and GE that make
airplanes fly more efficiently; and 3D printed parts for aerospace
giants like Airbus that push the reaches of current technology.

We have a proven 128-year heritage of innovation born in places like
Cleveland, Pittsburgh and Davenport. Our deep understanding of our
customers’ applications allows us to develop solutions that create
substantial value for them. Our innovations drive performance and,
paired with our focus on cost effectiveness, have allowed us to
successfully build long-term customer relationships.

Today, our hard-working and talented employees make the products that
are mission critical to some of the world’s leading companies, including
GE, United Technologies, Boeing, Airbus, Ford and PACCAR; these
customers believe in what we are doing.

Don’t just take our word for it. Here’s what our
customers have to say:

“Arconic has become a key partner to Airbus for new technologies.
What I particularly value is Klaus’ deep understanding of the critical
levers to support OEM goals. As CEO of Airbus, I fully support his
continued leadership of Arconic.”

– Tom Enders, CEO, Airbus
Group, March 2017

“In a technology-driven sector like aerospace…we need our top-tier
suppliers operating as true business and industry partners. Klaus
Kleinfeld and his team have…improved our business relationship by
focusing in the right areas, increasing our collective competitiveness
and delivering innovation and greater value to the customers we serve
together in global markets.”

– Dennis Muilenburg, Chairman,
President & CEO, The Boeing Company, March 2017

“Klaus Kleinfeld and his team have been among our most valuable
partners in the development of some of the most complex parts that make
up Pratt & Whitney’s Geared Turbofan Engine… [we] support Klaus and the
rest of Arconic management as they remain focused on the investments
that will secure sustainable, long-term growth for UTC, for Arconic, and
for our entire industry.”

– Greg J. Hayes, Chairman,
President & CEO of United Technologies Corp., March 2017

“Investments in technology and rate readiness are more important than
ever within the supply chains of our growing aviation industry. GE
supports Klaus and the Arconic commitment to those priorities and the
long-term future of our industry.”

– David Joyce, GE Vice
Chair and GE Aviation President & CEO, February 2017

Shareholders should ask themselves: if Elliott has
credible ideas about how to strengthen Arconic’s business, improve
operating performance and build long-term value, why haven’t any of our
key customers endorsed Elliott?

ELLIOTT’S IDEAS WOULD DAMAGE OUR CUSTOMER RELATIONSHIPS AND RISK OUR
FUTURE

Unfortunately, Elliott fails to understand that the success of our
business requires close, collaborative partnerships with our customers
that have been built over many years and even decades. By successfully
shifting to higher-value, less commoditized products, we have doubled
the profitability in Arconic’s businesses over the last eight years. At
Arconic, we believe that pricing should reflect the value we bring to
our customers – and the greater value we create for them, the greater
profitability for our shareholders. In contrast, rather than maintaining
or strengthening our close customer ties and innovation edge, Elliott
has proposed that Arconic cut R&D spending and “utilize its pricing
power with customers”2* – otherwise known as price gouging.

These short-sighted ideas might be good for an activist hedge fund
investor in the near term. But, they would put our critical customer
relationships at significant risk, and potentially lead to the loss of
their business altogether – significantly damaging our future.

Arconic’s Board and management have a strong, clearly defined three-year
plan that focuses on delivering value to you, our shareholders. Elliott
has no clear plan.

       


Arconic’s Value-Enhancing Path

   


Elliott’s Value-Destroying Ideas

• Focus on sustained profitable growth in       X No operational plan presented
attractive markets

X

Likely near-term plan of cutting R&D, which

• Deliver value to customers through

 

would risk losing the innovative edge that

unique technology and material science

is critical to Arconic’s customers and future

•

Continuously invest in innovation for

profitable growth

new products and better processes

X

Indicated plan of price gouging, which

•

Disciplined focus on cost efficiencies in

 

would alienate customers and potentially

the businesses as well as in corporate

lead to loss of business

•

Increase capital efficiency with a focus

X

Recommending a CEO candidate who has

 

on both short- and long-term returns

 

reportedly had a difficult relationship with

•

Maintain a high-performance team

valued Arconic customers; is in breach of

his non-compete contract; and has financial

arrangements with Elliott

X

Removal of critical and necessary skills from

 

 

       

 

the Board of Directors

 

ELLIOTT’S PROPOSED CEO IS WRONG FOR ARCONIC AND IS NOT INDEPENDENT

Elliott has proposed that Larry Lawson, a former Spirit AeroSystems CEO
and currently Elliott’s consultant, should replace Mr. Kleinfeld, our
CEO. In our view, Mr. Lawson is not the right person to lead Arconic.
There are significant doubts about his ability to maintain the customer
relationships that are an essential element of our future success.

Shareholders should ask themselves: Why did Mr. Lawson depart from
both Lockheed Martin and Spirit AeroSystems so abruptly? And what issues
did he leave behind?

Here’s what independent third parties had to say about Mr. Lawson’s
customer relationships:*

  • In relation to Mr. Lawson serving as CEO of Spirit AeroSystems:
    “Industry executives and government officials who worked with Lawson
    said he might not be best suited for often tense negotiations with
    both Boeing and Airbus about large supply agreements…” (Reuters,
    1/27/16)
  • Following Mr. Lawson’s departure from Lockheed Martin: “‘The change
    in leadership could pave the way for better relations with the
    Pentagon…There’s just been a very bad dynamic established by current
    [Lockheed] leadership and the customer [the Pentagon]…’” (Richard
    Aboulafia, aerospace industry analyst, quoted in Fort Worth
    Star-Telegram, 3/20/13)

…and Mr. Lawson’s mysterious exits from Spirit AeroSystems and Lockheed
Martin:

  • Regarding his departure from Spirit AeroSystems: “‘His sudden
    decision to go with contract negotiations with Boeing and Airbus
    unresolved is puzzling.’” (Cai von Rumohr, aerospace analyst at Cowen
    & Co., quoted in the Wall Street Journal, 6/8/16)
  • Regarding his departure from Lockheed Martin: “The departure of
    Lawson is especially intriguing, because he took over as head of
    aeronautics only 12 months ago, and he is leaving to lead a
    second-tier company that has a fraction of the sales his Lockheed unit
    did.”     (Forbes, 3/19/13)

Shareholders should also ask themselves whether Mr. Lawson is a
viable CEO candidate given that he is subject to a non-compete
agreement with Spirit AeroSystems; Spirit AeroSystems has said Mr.
Lawson is already in violation of that agreement as a result of his
involvement with Elliott.

And, finally, shareholders must wonder how Elliott’s proposed
compensation arrangements with Mr. Lawson would influence his actions if
he were to become CEO. Elliott has already paid Mr. Lawson approximately
$6.6 million in consulting fees and indemnification payments. In total,
Elliott has agreed to pay him approximately $28 million over the course
of the next two years, so that if Mr. Lawson became Arconic’s CEO, he
would nevertheless continue to be on Elliott’s payroll.

This compensation arrangement creates conflicts of interest. Mr.
Lawson is getting paid by Elliott. How will he be objective and act in
the best interests of all our shareholders? Elliott should not be
permitted to “buy” the next CEO in hopes of influencing him to implement
its short-sighted plan.

THE BOARD RECOMMENDS SHAREHOLDERS VOTE “FOR” ARCONIC’S INDEPENDENT
NOMINEES AND GOVERNANCE PROPOSALS

Your Board unanimously recommends that shareholders vote “FOR”
Arconic’s five highly qualified candidates – Amy E. Alving, David P.
Hess, Klaus Kleinfeld, Ulrich Schmidt and Ratan N. Tata – which is a
vote in favor of the Company’s strategic plan and a Board that is
committed to creating value for all shareholders.

Elliott has no experience operating a business like ours, and the
election of its nominees would remove critical skills from your Board
and jeopardize our future. Elliott has no fiduciary responsibility to
Arconic shareholders. They have misled and manipulated the facts. And
they have no plan to deliver value.

After careful study, your Board believes that Arconic has the right
strategy and the right team to drive future value. We ask for your
support.

PROTECT YOUR INVESTMENT. KEEP ARCONIC ON A STRONG PATH.

VOTE
THE WHITE PROXY CARD TODAY.

Thank you.

The Independent Directors of Arconic Inc.:
 
Patricia F. Russo, Lead Independent Director       Amy E. Alving
Arthur D. Collins, Jr. Rajiv L. Gupta
David P. Hess Sean O. Mahoney
E. Stanley O’Neal John C. Plant
L. Rafael Reif Julie G. Richardson
Ulrich Schmidt Ratan N. Tata
 
 

Please vote today by telephone, via the Internet or by signing,
dating and returning the enclosed WHITE proxy card.

 
If you have questions, need assistance in voting your shares or wish
to change a prior vote, please contact:
INNISFREE M&A INCORPORATED
Shareholders Call Toll-Free: (877) 750-5836
Banks and Brokers Call Collect: (212) 750-5833
 

REMEMBER:


Please simply discard any Blue proxy card
that you may receive from Elliott Management.

 

Submitting a proxy using a Blue proxy card – even if you
“withhold” on Elliott Management’s nominees – will revoke any vote
you had previously submitted on Arconic’s WHITE proxy card.

About Arconic

Arconic (NYSE: ARNC) creates breakthrough products that shape
industries. Working in close partnership with our customers, we solve
complex engineering challenges to transform the way we fly, drive, build
and power. Through the ingenuity of our people and cutting-edge advanced
manufacturing techniques, we deliver these products at a quality and
efficiency that ensure customer success and shareholder value. For more
information: www.arconic.com.
Follow @arconic: Twitter,
Instagram,
Facebook,
LinkedIn
and YouTube.

Forward–Looking Statements

This communication contains statements that relate to future events and
expectations and as such constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those containing such words as
“anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,”
“guidance,” “goal,” “intends,” “may,” “outlook,” “plans,” “projects,”
“seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of
similar meaning. All statements that reflect Arconic’s expectations,
assumptions or projections about the future, other than statements of
historical fact, are forward-looking statements, including, without
limitation, forecasts relating to the growth of end markets and
potential share gains; statements and guidance regarding future
financial results or operating performance; and statements about
Arconic’s strategies, outlook, business and financial prospects.
Forward-looking statements are not guarantees of future performance, and
it is possible that actual results may differ materially from those
indicated by these forward-looking statements due to a variety of risks
and uncertainties, including, but not limited to: (a) deterioration in
global economic and financial market conditions generally; (b)
unfavorable changes in the markets served by Arconic; (c) the inability
to achieve the level of revenue growth, cash generation, cost savings,
improvement in profitability and margins, fiscal discipline, or
strengthening of competitiveness and operations anticipated from
restructuring programs and productivity improvement, cash
sustainability, technology advancements, and other initiatives; (d)
changes in discount rates or investment returns on pension assets; (e)
Arconic’s inability to realize expected benefits, in each case as
planned and by targeted completion dates, from acquisitions,
divestitures, facility closures, curtailments, expansions, or joint
ventures; (f) the impact of cyber attacks and potential information
technology or data security breaches; (g) political, economic, and
regulatory risks in the countries in which Arconic operates or sells
products; (h) the outcome of contingencies, including legal proceedings,
government or regulatory investigations, and environmental remediation;
and (i) the other risk factors discussed in Arconic’s Form 10-K for the
year ended December 31, 2016, and other reports filed with the U.S.
Securities and Exchange Commission (SEC). Arconic disclaims any
obligation to update publicly any forward-looking statements, whether in
response to new information, future events or otherwise, except as
required by applicable law. Market projections are subject to the risks
discussed above and other risks in the market.

1

Elliott Management letter to shareholders, March 9, 2017

2

Elliott letter to shareholders, March 10, 2017

*

Permission to use quotations neither sought nor obtained



Arconic
Investor Contact
Patricia Figueroa, 212-836-2758
Patricia.Figueroa@arconic.com
or
Media Contact
Shona Sabnis, 212-836-2626
Shona.Sabnis@arconic.com