Arconic Board Issues New Letter to Shareholders
Vote “FOR” the Company’s Nominees on the WHITE Proxy Card
Arconic (NYSE: ARNC) today issued a letter to shareholders explaining
why they should choose the Company’s strong governance and outstanding
director slate dedicated to serving shareholder interests over Elliott’s
questionable tactics.
In a separate release also issued today, the Company announced its
nomination of former Boeing Commercial Airplanes President and Chief
Executive Officer James “Jim” F. Albaugh and Air Force retired General
Janet Wolfenbarger for election to Arconic’s Board of Directors at the
Company’s 2017 Annual Meeting. Mr. Albaugh and General Wolfenbarger will
stand for election with current directors David Hess, Amy Alving and
Ulrich Schmidt.
Additional information, including the letter to shareholders, investor
presentation and supplemental proxy materials are available at www.arconic.com/annualmeeting.
The Company urges shareholders to vote “FOR” the Company’s new slate of
five director nominees and governance proposals on the WHITE proxy card.
The full text of the letter follows:
Dear Fellow Shareholders:
We are writing to ask you to vote for the slate of directors nominated
by the Arconic Board of Directors at the upcoming 2017 Annual Meeting of
Shareholders.
Our director candidates are all accomplished professionals who will help
guide Arconic as it recruits a permanent Chief Executive Officer and
builds upon its strong first quarter 2017 financial results. Three of
our nominees are current Board members (none having served for more than
16 months), and two are entirely new nominees who have not yet served on
Arconic’s Board.
One commitment, though, binds them together: an unwavering dedication to
shareholder interests.
We recently made several attempts to settle the disruptive proxy contest
started by Elliott Management (“Elliott”). Despite our best efforts, we
were unsuccessful. Elliott agreed to end the fight on terms both sides
indicated were acceptable. Then Elliott reneged. We resumed discussions
and then Elliott agreed again, though on different terms. Elliott then
reneged. Again.
We tried, nevertheless, to end the battle by offering two Board seats to
the candidates Elliott has nominated. Notably, and reflecting Elliott’s
pervasive influence over its nominees, none of Elliott’s director
candidates accepted our offer.
An outstanding director slate, dedicated to serving your interests
We have now recruited two exceptional new director nominees for the
Board who are purely independent. They join our slate alongside three
current Board members – our Interim CEO, the head of our Audit Committee
and the head of our Cybersecurity Subcommittee. Together, these five
nominees bring decades of experience in aerospace and defense. We hope
you will join us in voting for them.
Our new nominees are:
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James “Jim” F. Albaugh, an internationally recognized aerospace
executive who was the President and Chief Executive Officer of Boeing
Commercial Airplanes until his retirement in 2012. Prior to that role,
Mr. Albaugh was President and CEO of Boeing Integrated Defense Systems
and President of Rocketdyne Propulsion and Power. Mr. Albaugh is the
Chairman of the National Aeronautic Association, past Chairman of the
Aerospace Industries Association and serves on the Boards of American
Airlines and Harris Corporation. He holds a Master’s degree in Civil
Engineering from Columbia University and is an elected member of the
National Academy of Engineering. The aerospace segment represents
close to half of Arconic’s overall revenue today and has significant
prospects for the future. Mr. Albaugh brings a deep understanding of
the aerospace segment’s needs. -
Janet C. Wolfenbarger, a retired four-star general who was
responsible for procurement, science and technology, test and
evaluation, logistics and supply chain for the U.S. Air Force; she
oversaw an approximately $60 billion annual budget, including a large
portion of the approximately $1 billion of business that Arconic does
in the defense industry. In her last military role, General
Wolfenbarger oversaw an organization of 80,000 people and led
significant restructuring of the Air Force Materiel Command to improve
efficiency. General Wolfenbarger was the first female four-star
general in Air Force history. Among her many accomplishments, General
Wolfenbarger holds a Master’s degree in Aeronautics and Astronautics
from the Massachusetts Institute of Technology.
Both of these new nominees know Arconic from having served as respected
leaders at important Arconic customers. They bring operating experience
and commercial insights that we believe will help optimize the Company
and its strategy for many years. We are confident that these two
nominees, like our other nominees, are independent and objective and
seeking only to serve Arconic using their best judgment and insights
from decades of relevant experience.
The reality is that regardless of who wins this proxy fight, there
will be change in the Board, and there will be new perspectives.
Our
slate of nominees has five new directors: two who have never
served on our Board, two who have served for fewer than seven months and
one who was originally nominated by Elliott and who joined the Board
just last year. So, your choice at this meeting is not really about
“change” or “no change.”
The most important decision this Board will make in the coming months is
the selection of a new CEO. Arconic’s recommended Board is without
question best placed to select the next CEO, given its deep industry
expertise and view of the marketplace.
Your choice is about some important principles
and some critical people.
Strong governance over questionable tactics
Elliott has had three primary goals during its campaign:
- Remove the sitting CEO and steer the selection of his replacement;
- Shape a majority of the Arconic Board; and
- Dictate the direction of key Board decisions and processes.
Since Arconic’s CEO stepped down, Elliott has shifted its attacks to the
Board level with increasingly personal attacks on directors and
hyperbolic assertions that the Board is weak on governance. Elliott’s
latest attack theme – “subversion of shareholder democracy” – is
ironically being deployed in an effort to enable one 13.2% shareholder
to shape a majority of the Board. If successful, Elliott will have
nominated seven of Arconic’s 13 directors.
A weak-governance Board would have ended this fight to spare itself
Elliott’s unfair attacks. We could have agreed, via settlement, to
Elliott’s over-reaching demands, including its insistence on appointing
a majority of both an Operating Committee and the CEO Search Committee.
But Arconic’s Board has refused to allow one shareholder these
unilateral rights; instead we are focused on full shareholder
representation and participation.
For our part, we believe public companies should be run for all
shareholders and should be governed ethically.
We also believe that:
-
In the public markets, no single minority investor should have the
right to shape a majority of the Board, select a CEO, or unilaterally
define how a Board organizes itself and operates; -
Hedge funds should not have free reign to level false or
unsubstantiated accusations with the aim of embarrassing, ruining or
damaging people.
We believe that a vote on Elliott’s proxy card is a vote of
encouragement for activists who demand undue influence as Elliott has
clearly demanded at Arconic, and for activists to use tactics of
personal destruction as their means.
The right kind of change to keep Arconic on a strong path
Your choice at the 2017 Annual Meeting is between two sets of
directors – both essentially new to Arconic. Shareholders should ask
themselves – which set is most qualified to be stewards of their
investment and this Company? We believe that our nominees – including
Mr. Albaugh and retired General Wolfenbarger – bring substantially more
relevant expertise to the Board than those nominated by Elliott. We
welcome your thoughtful evaluation of the two director slates.
Our nominees also include:
-
David Hess. Mr. Hess has more than 38 years of operational and
leadership experience in aerospace and deep knowledge of jet engine
technology and manufacturing. As our interim CEO, Mr. Hess has been a
stabilizing force at Arconic during a time of leadership transition.
We do not believe that shareholders should reject his candidacy at
this critical time. -
Amy Alving. Dr. Alving is a leading expert on aerospace
innovation and engineering, as well as cybersecurity, and is the Chair
of Arconic’s Cybersecurity Advisory Subcommittee. Although she has
been on the Board just six months, her contributions in these areas
have been very substantial. As part of enterprise risk management,
Arconic is highly focused on improving its cyber-security fluency; Dr.
Alving’s deep expertise directly addresses this core need. -
Ulrich Schmidt. Mr. Schmidt has over 22 years of aerospace and
financial experience. He was one of the three directors nominated by
Elliott to join the Board last February and serves as Chair of the
Audit Committee, in addition to serving on the Governance and
Nominating Committee and Finance Committee.
Our Board believes in responsible, thoughtful change targeted to create
sustainable shareholder value. We have been willing to shed businesses,
acquire others, split the company to create two independent firms and
make a swift and decisive change in leadership. We have augmented our
Board, modified our strategies and redesigned our compensation plans.
So, this election is not about whether Arconic should stand still or
change. We will continue to evolve and change. In fact, Arconic’s
proposed Board includes nine directors who
will have joined in just the last 16 months, making it one
of the shortest tenured Boards in the S&P 500.
A strong first quarter as an independent Company, on track to create
shareholder value
We are proud that Arconic is positioned well for the future. Last week,
we announced strong earnings for the first quarter of 2017 – our first
full quarter as a standalone company. Revenue was up 4.5% year over
year, and strong performance and continued cost savings allowed Arconic
to deliver net income that exceeded expectations. Our earnings
announcement is a strong first data point that we are on the right path
after the highly complex separation transaction that the Company
executed this past November. Significant shareholder value has been
created in just the first few months since the separation was completed.
Arconic has a clear strategy to harness innovation, control costs and
deepen our close customer relationships to generate value for
shareholders. Our customers agree: Airbus, Boeing, United
Technologies and GE Aviation have all expressed support for the strategy
Arconic’s Board has endorsed.
To keep the business healthy and build sustainable shareholder value, we
need to ensure we continue to execute the right strategy, appoint a
permanent CEO who will focus on value creation, and not compromise on
sound governance. To do these things, we need your support and your vote.
Please vote for the principles and people that will create the best
Arconic for shareholders. Vote on the White card for the Board’s
recommended nominees.
Unanimously,
The Board of Directors of Arconic Inc.
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VOTE USING THE |
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The Arconic Annual Meeting of Shareholders will take place on May |
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We request that, even if you previously voted on the WHITE |
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“FOR” each of Arconic’s five nominees, including its two new |
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by voting AGAIN on the enclosed WHITE proxy card. |
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Even if you previously voted the “Blue” proxy card, you have the |
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If you have questions, need assistance voting your shares, or wish |
| Innisfree M&A Incorporated, TOLL-FREE at (877) 750-5836 |
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.
Dissemination of Company Information
Arconic intends to make future announcements regarding Company
developments and financial performance through its website at www.arconic.com.
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.
Arconic
Investor Contact
Patricia Figueroa, 212-836-2758
Patricia.Figueroa@arconic.com
or
Media Contact
Shona Sabnis, 212-836-2626
Shona.Sabnis@arconic.com