Arconic Inc. (ARNC) on Monday said it's installing 24-year General Electric Co. veteran Charles "Chip" Blankenship as its CEO, ending a five-month hiring process that was closely scrutinized by Elliott Management's Paul Singer.
Blankenship spent much of his career in GE's aviation and jet engine business, running its commercial engine operations and that experience will likely be valuable when it comes to overseeing the New York-based aerospace parts maker.
However, the candidate is not Larry Lawson, a former Sprint AeroSystems Inc. (SPR) CEO who was recommended by the activist fund during a heated director battle earlier this year. Elliott's Singer had engaged in one of the most expensive and bitter boardroom battles of 2017, a corporate skirmish that pitted the activist fund against the company's then-CEO, Klaus Kleinfeld. Kleinfeld, Singer argued, didn't have sufficient skills to improve Arconic's share price sufficiently.
Kleinfeld resigned in April after he sent an unauthorized letter to Elliott Management that the company's board said demonstrated poor judgment.
Elliott Management sought initially to install four dissident directors and take over the process of finding a new CEO for the company. However, after Kleinfeld's resignation, Elliott and Arconic in May settled their differences and the company three dissident directors to the company's 13-person board. Indirectly, Elliott already had contributed three directors to Arconic's board. In 2016, Elliott settled with Alcoa to add directors, three of which moved over to Arconic when it split from Alcoa in a transaction that was completed in November.
However, even with six of 13 directors, giving Elliott a significant element of control, Arconic's review brought in an outside candidate, not the one initial sought by Elliott. The activist fund in February recommended Lawson in a February presentation titled "a change of leadership is required to improve performance" at Arconic.
Nevertheless, Elliott said Monday that it was pleased with the choice of Blankenship. In a statement, Elliott portfolio manager Dave Miller said Blankenship is an "excellent" selection. "After meeting with Chip and putting extensive time and resources into understanding both his background and Arconic's current opportunities and challenges, we enthusiastically recommended his appointment," Miller said. "Chip is a talented hands-on operator who knows Arconic's core business exceedingly well."
Arconic's shares haven't performed that well since Kleinfeld resigned in April, trading slightly up on the news of the appointment at around $27.56, which is only marginally higher than the $25.80 shares traded at around the time of Kleinfeld's departure.
The company also announced some additional business leadership changes. It appointed Eric Roegner as executive vice president and engineering products group president. It also announced third-quarter results, with $3.2 billion in revenue, up 3% year over year, and net income of $119 million, or $0.22 a share, vs. $166 million in the third quarter of 2016.
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