Elliott Management's Paul Singer is expected to play a major role when it comes to picking Arconic (ARNC)   next chief executive after the insurgent investor on Monday reached a settlement with the embattled aerospace company's board to add three dissident directors to its 13-person board.

The deal brings to a conclusion the most contested activist battle of 2017 in advance of what otherwise would have been a heated director-election dual at the company's annual meeting set for May 25.

As part of the deal, Elliott Management, which has a 13.2% stake, will get to install three of the fund's four dissident candidates: Christopher Ayers, a former Alcoa executive, Elmer Doty, an operating executive at the Carlyle Group, and Patrice Merrin, a director at Glencore and Novadeq Technologies.

The settlement is a second major win for Elliott in recent days, after Arconic's CEO, Klaus Kleinfeld, resigned from the aerospace company's board last month after he sent an unauthorized letter to the activist fund. 

The agreement also comes after the two most influential proxy advisory firms, Institutional Shareholder Services, and Glass Lewis recommended that shareholders back either some or all of Elliott's dissident slate. Glass Lewis urged investors to support all four Elliott nominees, and ISS suggested supporting two. 

In another coup for Elliott, one of the dissidents, Merrin, will be added to a CEO search committee, according to a person familiar with the situation. The makeup of the CEO search committee is critical because it will decide whether Arconic will be led by a chief executive candidate suggested by Elliott, former Spirit AeroSystems (SPR)   Larry Lawson, or another candidate. In addition, Elliott Management gets a right provide consulting to the company on its CEO search, the person added.

In a statement, Arconic said it would "consider a number of candidates, including Larry Lawson."

A settlement had been discussed earlier but had originally fallen apart after the two sides appeared to disagree on the number of directors the activist fund would have on a CEO search committee. A key sticking point was over whether two of Elliott Management's director nominees and one incumbent Arconic director, Sean O. Mahoney, would make up three of five members of the committee, according to a person familiar with the situation.

Mahoney and two other directors were installed onto Alcoa's board in a 2016 settlement with Elliott. Those three directors moved over to Arconic when it split from Alcoa in a transaction concluded in November. Now, Mahoney and John Plant, another director installed as part of the previous settlement with Elliott, are expected to join Merrin on a five-person CEO search panel, the person familiar with the situation added. 

In essence, there will be three new dissidents on the company's board that will join the three directors brought on the 2016 Elliott settlement, all of which gives Elliott a significant element of control. 

That said, the three Elliott-backed directors brought on in the previous settlement had indicated previously as part of a unanimous letter from the board that all of the incumbent directors were "exceptionally well-qualified." This suggests that it is unclear whether they would support Elliott's push to bring in Lawson. 

Also, as part of the settlement, Arconic will seek to reincorporate in the state of Delaware. If Arconic does move its incorporation to Delaware, it will be another success for Elliott. However, Elliott had also been pushing for an operations board subcommittee, which was not included in the settlement, a win for the company. 

The activist fund had sought to put a spotlight in recent months on a series of anti-shareholder provisions Arconic had installed, mechanisms that would likely not have been possible had the company been incorporated in Delaware. For example, Arconic installed a so-called "poison put" mechanism, which requires $500 million of liabilities to come due upon a change in control. Governance experts have argued that the mechanism represents poor governance and is only being used as a tactic to scare investors away from supporting Elliott's candidates. The mechanism would not have been looked at favorably by a court in Delaware. However, Arconic is incorporated in Pennsylvania, which is significantly less shareholder-friendly.

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