8-KLeadership ChangesMaterial AgreementsExhibits & Filings

Howmet Aerospace Inc. 8-K Report, Material Agreement (May 22, 2017)

Filed May 22, 2017For Securities:HWM

Summary

Arconic Inc. (now Howmet Aerospace Inc.) announced a significant settlement agreement with Elliott Associates, L.P. and its affiliates (collectively, "Elliott") on May 22, 2017. This agreement addresses ongoing governance matters, including board composition and leadership succession. Key aspects include the nomination of three Elliott-backed directors, Christopher L. Ayers, Elmer L. Doty, and Patrice E. Merrin, for election at the upcoming annual meeting, and the withdrawal of other director nominations by both parties. The agreement also outlines procedures for Elliott's involvement in the CEO search process and sets expectations for board structure and potential corporate restructuring. In conjunction with the settlement, the company announced the resignation of L. Rafael Reif from the Board of Directors, effective after the annual meeting. James “Jim” F. Albaugh was appointed to fill this vacancy, with his term expiring at the 2018 annual meeting. Mr. Albaugh is also expected to join the CEO Search Committee, providing Elliott with a direct channel to provide input on the CEO selection process. These developments signal a strategic shift and increased engagement with a significant shareholder.

Key Highlights

  • 1Arconic Inc. entered into a settlement agreement with activist investor Elliott Associates.
  • 2Elliott will have three of its nominees (Ayers, Doty, Merrin) nominated for election to the Board of Directors.
  • 3The company will nominate two of its own director candidates (Hess, Schmidt) for election.
  • 4Elliott will have the right to recommend a replacement for its nominated directors if they become unable to serve, until the 2018 annual meeting.
  • 5Elliott will be kept reasonably informed and have an opportunity to provide input on the CEO search process.
  • 6The company plans to declassify its board structure and move incorporation to Delaware by the end of 2017.
  • 7James “Jim” F. Albaugh appointed as a new director, effective post-annual meeting, filling L. Rafael Reif's vacancy.

Frequently Asked Questions

The agreement is a settlement aimed at resolving governance disputes. It outlines changes to the Board of Directors' composition, director nominations for the upcoming annual meeting, and establishes a framework for Elliott's involvement in the CEO search process.

Elliott will have three of its nominees (Christopher L. Ayers, Elmer L. Doty, and Patrice E. Merrin) put forward for election to the Board. Arconic will nominate David P. Hess and Ulrich R. Schmidt. Both parties have agreed to withdraw other nominations, leading to a reconstituted Board.

Elliott will be kept reasonably informed about the CEO search process and will have the opportunity to provide input and feedback, including meeting CEO candidates and presenting views to the CEO Search Committee. However, Elliott and its nominated directors will not have veto rights over the CEO selection.

Yes, Arconic has agreed to use reasonable efforts to change its jurisdiction of incorporation from Pennsylvania to Delaware by the end of 2017. The resulting Delaware corporation's charter and bylaws will provide for a declassified board structure with annual director elections and remove supermajority voting requirements.