UTX United Technologies Corporation

By Anne Steele 

Arconic Inc., under pressure from activist investor Elliott Management Corp. to overhaul its board, appointed a new director of its own.

The company said it has appointed David Hess, former aerospace chief customer officer of United Technologies Corp., effective March 10. It said Sir Martin Sorrell decided to not stand for re-election and will resign as a director to devote more time to his business interests.

Elliott launched a campaign at the end of January to shake up Arconic's board and oust Chief Executive Klaus Kleinfeld, three months after he separated the aerospace and automotive-parts maker from aluminum maker Alcoa. The hedge fund -- which currently holds a 12% stake in the company, according to FactSet -- said it would nominate five directors.

Elliott called the changes disappointing and characterized them as "half-measures, taken only grudgingly and under the pressure of an ongoing proxy contest."

Mr. Hess's appointment addresses criticism of some analysts and investors that Arconic's board is short on directors with experience in manufacturing, particularly in the aerospace industry that Arconic is counting on to drive the company's growth.

In a letter to shareholders Thursday, the board also reiterated its strong support of Mr. Kleinfeld and highlighted the changes it had made already to refute Elliott's push for directors.

"The board has taken Elliott's criticisms very seriously and has engaged in a thorough review of Arconic's businesses, strategy and performance, including Mr. Kleinfeld's track record as its CEO. We remain convinced that Arconic has the right strategy and that Klaus Kleinfeld is the CEO who will make it successful."

Companies have in recent years taken to adding their own new directors to try to assuage shareholders that the board is open to change -- and to keep them from voting for activist nominees.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

March 02, 2017 16:56 ET (21:56 GMT)

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