Slide 1: A New Arconic
A NEW ARCONIC An Opportunity for Real Change on May 25th May 11, 2017 www.NewArconic.com ELLIOTT ®
Slide 2: A New Arconic Is Ready to Rise on May 25th
A New Arconic Is Ready to Rise on May 25th Hire Arconic’s Next CEO Independent directors with aerospace experience – who believe change is needed – to find next CEO Empower the Plants Legacy bureaucracy must give way to de-centralization and rewarding employees for achievement Welcome Accountabi
Slide 3: Improving the Business, Aiming Higher
Improving the Business, Aiming Higher Empower the Plants Culture of Organic R&D at Plants Accountability ROIIC Discipline Pay for Performance at Plant Level Fill the Mill Operating (Asset Turns) Execution Higher Profits Pursue Absolute Higher Margins EBITDA Gains Scale/Cost Growth M&A M&A Arconic mu
Slide 4: Shareholder Nominees for a New Arconic
Shareholder Nominees for a New Arconic Ideal mix of successful operators and proven change agents CHRISTOPHER AYERS Unparalleled institutional knowledge with deep relationships in Arconic’s plants Successful leader of Precision Castparts’ forging operations, extensive operating experience 23 y
Slide 5: Where Things Stand Today
Where Things Stand Today In 14 days, Arconic’s shareholders will at long-last have an opportunity to vote for cultural and strategic change April 17 April 24 By “mutual agreement,” the Board Arconic Board turns attempted good-faith settlement accepts Dr. Kleinfeld’s resignation, but discussions into
Slide 6: The Choice for Shareholders
The Choice for Shareholders White Card Blue Card Attempts to represent the Company’s poor performance as excellent 80 years of cumulative industry operating experience Protected and endorsed worst performing CEO in the S&P 500 Index Phenomenal track records of value creation Voluntarily tr
Slide 7: Resisting Change
Resisting Change The Current Board’s Frantic Campaign to Maintain the Status Quo ELLIOTT ®
Slide 8: Arconic Board Shoves Head Back In The Sand
“Arconic Board Shoves Head Back In The Sand” “Firing CEO Klaus Kleinfeld gave hope directors might embrace bigger strategic changes to improve results. Now they’re contending the former boss had it right and that two new board nominations should be change enough. Its argument, like the outfit’s perf
Slide 9: What has the Board said so far about its desire for change at Arconic?
Having heard from shareholders that they indeed want change at Arconic, the Company is now attempting to spin the notion that no matter which ballot shareholders support, “change” will be coming to Arconic Note: Emphasis added to the above quote What has the Board said so far about its desire for ch
Slide 10: Board unanimous in its support of Kleinfeld
“The Arconic Board of Directors is unanimous in its support of Kleinfeld as Chairman and Chief Executive Officer of the Company.” “The Board supports Klaus and the management team as they execute on our stated strategy.” Arconic Letter from Board of Directors, January 31, 2017 (emphasis added) “As t
Slide 11: Management team's execution record has earned the confidence of the Board
“Arconic’s management team's execution record has earned the confidence of the Board. We are convinced that we have the right strategy and the right team to deliver shareholder value both today and over the long term.” Arconic Letter from Board of Directors, March 24, 2017 (emphasis added) “Board is
Slide 12: The Board believes Arconic has the right strategy
“The Board believes that Arconic has the right strategy and is executing well on that strategy.” Pat Russo, Chairman, April 17, 2017 (emphasis added) Seth M. Seifman, J.P. Morgan: “Thanks very much and good afternoon. Dave, you mentioned supporting the plan that senior management and the board has p
Slide 13: Board Elections Are Not Sporting Events
Board Elections Are Not Sporting Events Arconic’s Board Seems More Concerned with “Winning” a Vote Than Serving Shareholder Interests or Responding to Shareholder Concerns Disingenuously attempts to represent the Company’s poor performance as excellent and its poor governance structure as unavoidabl
Slide 14: Continuing to Insist Performance Is Excellent
Resisting Change: Continuing to Insist Performance Is Excellent The Board, remarkably, continues to represent that TSR has been excellent by taking credit for share price performance since Elliott initiated its proxy contest, manipulating calculation start-dates, inexplicably ignoring certain tradin
Slide 15: Setting the Bar Low
Resisting Change: Setting the Bar Low At Arconic’s first investor day, the Company proudly rolled-out its new three-year targets. These “new” targets are nearly identical to those the Company planned to achieve in 2016, as recently as the second quarter of 2016 Revenue EBITDA $14.4 $14.0 $2.3 $2.4 2
Slide 16: Vote Buying Review
Resisting Change: Vote Buying Review August 18, 2016 March 20, 2017 Arconic settles legal claims for $20 million and an Arconic waives the Secret August Voting Lock-Up, but agreement to lock up the vote of approximately 8.7 million refuses to provide important details about the agreement shares of A
Slide 17: Poison Put
Resisting Change: Poison Put Based on a review of relevant case law and the advice of counsel, we believe the Board violated its fiduciary duty to shareholders by voluntarily triggering a potential poison put, and other shareholders agree On April 12th, Arconic disclosed its decision to trigger a po
Slide 18: The Revelation of the Hidden April Poison Put
Resisting Change: A timeline depicting management’s deceptive and self-serving behavior in voluntarily triggering a The Revelation of the decades-old “poison-put”-style provision with a corresponding $500 million potential funding Hidden April Poison Put obligation. What other entrenchment tricks do
Slide 19: The Revelation of the Hidden April Poison Put (cont.)
Resisting Change: The Revelation of the Hidden April Poison Put (cont.) April 28, 2017 April 12, 2017 In a legal brief filed in response to one of the independent shareholder lawsuits, the Company Out of nowhere, the Company, in an act of desperation, voluntarily chooses to provide the disingenu
Slide 20: Annual Meeting Delay
Resisting Change: Annual Meeting Delay In late April, Arconic tried to recruit from the slate of director nominees we put Once more, the Arconic Board demonstrates its failure to understand forward and appoint two of these shareholder nominees onto the Company’s the current situation. We understan
Slide 21: "Control" Rhetoric
Resisting Change: “Control” Rhetoric The Board asserts that Elliott is attempting to take control of Arconic. What is the evidence of this claim? Why did the CEO leave? Has the Board agreed that his performance was poor? That ELLIOTT DID NOT NOMINATE DIRECTORS IN 2016. his strategy was not effective
Slide 22: "Short-Term" Rhetoric
Resisting Change: “Short-Term” Rhetoric Utterly lacking credible arguments, Arconic has dusted off the tired “activist has a short-term focus” gambit Elliott’s strategy at Arconic is distinctly long-term What about the hiring of a world-class CEO is “short-term?" What about the empowerment of pl
Slide 23: Suggesting Elliott Is Trying to Sell Stock
Resisting Change: Suggesting Elliott Is Trying to Sell Stock Arconic’s recent statements regarding Elliott’s request for registration rights during the course of settlement discussions are completely false and redolent of desperation In a desperate move, with its proxy solicitation efforts in utte
Slide 24: Pat Russo's Growing Sway and Promotion Prior to the Election
Resisting Change: Pat Russo’s Growing Sway and Promotion Prior to the Election “Under the leadership of Patricia Russo, the Board of Arconic has demonstrated a pattern of poor judgement and intolerable behavior that can’t be redeemed by their reluctant decision to finally remove Klaus Kleinfeld. Giv
Slide 25: Scare Tactics
The Board has made its judgment and its record of stewardship at Arconic a Resisting Change: central question in this contest. Elliott has not been “personal and Scare Tactics destructive” – all we have done is chronicle, as is appropriate and necessary under the circumstances, the Board’s record an
Slide 26: Examining the Company's Key Arguments
Examining the Company’s Key Arguments The Company uses the day of its dilutive recapitalization, March 18, 2009, as the start date and uses March 1, 2017, as its end-date, taking credit (again) for the rise in Alcoa Corp.’s stock and the post-Elliott announcement performance of Arconic stock – the l
Slide 27: A New Arconic: Summary of Value Creation Plan
A New Arconic Summary of Value Creation Plan
Slide 28: Steps Towards a New Arconic
Steps Towards a New Arconic 1 Elect All Four Shareholder Nominees Critical mass is needed to implement change Hire the Right CEO 2 Independent directors with aerospace experience – who believe change is needed – to find next CEO 3 Change the Company Culture Operational focus must be sharpened New St
Slide 29: Step 1: Elect Shareholder Nominees - Chris Ayers
Step 1: Elect Shareholder Nominees Chris Ayers Deep experience in the aerospace and specialty materials industries and broad institutional knowledge of Arconic Former President and Chief Executive Officer of WireCo WorldGroup, Inc. Former executive at Alcoa Inc., including serving as President o
Slide 30: Step 1: Elect Shareholder Nominees - Elmer Doty
Step 1: Elect Shareholder Nominees Elmer Doty 40 years of leadership experience in the aerospace and defense industry Operating Executive at The Carlyle Group LP (NASDAQ:CG), Aerospace, Defense & Government Services Former President and Chief Executive Officer of Accudyne Industries LLC Former
Slide 31: Step 1: Elect Shareholder Nominees - Bernd Kessler
Step 1: Elect Shareholder Nominees Bernd Kessler Strong background in engineering, operational excellence and organizational development Former Chief Executive Officer of SR Technics AG Former President and Chief Executive Officer of MTU Maintenance, a subsidiary of MTU Aero Engines AG (ETR:MTX)
Slide 32: Step 1: Elect Shareholder Nominees - Patrice Merrin
Step 1: Elect Shareholder Nominees Patrice Merrin Experienced international business executive and corporate director, led multiple CEO searches Former President and Chief Executive Officer of Luscar Ltd., Canada’s largest producer of thermal coal Former Executive Vice President and Chief Operat
Slide 33: Step 2: Hire the Right CEO
Step 2: Hire the Right CEO Larry Lawson should be among the candidates considered Profile for Ideal New CEO of Arconic Track record of creating value for shareholders Successful turnaround experience Aerospace manufacturing expertise Track record of operational improvements Tough, no-nonse
Slide 34: Step 3: Change the Culture
Step 3: Change the Culture Empower Plant Managers Get More out of Our People Decentralize Decision-Making: Reduce Internal and External Consultants: Arconic is too big for anyone to manage centrally. Decision-making Arconic has good people, but poor management and bad processes. should be driven
Slide 35: Step 4: Implement a New Strategy
Step 4: Implement a New Strategy “Strategy is creating fit among a company’s activities. The success of a strategy depends on doing many things GRP well – not just a few – and integrating among them. If there is no fit among activities, there is no distinctive strategy TCS and little sustainability.
Slide 36: Nominees for a New Arconic
Nominees for a New Arconic VOTE THE BLUE CARD FOR CHANGE A video detailing the deep industry knowledge, extensive operating experience, commitment to long-term value creation and fresh perspectives of the shareholder nominees can be found at: http://newarconic.com/shareholder-information/videos/
Slide 37: Notable Support for Change
Notable Support for Change ELLIOTT ®
Slide 38: Analysts
Analysts CASE FCF could rise we believe COWEN 2 s driver for stock performance over the i ext few quarters as investors now weigh the increasingly likely outcome that Larry Lawson, Elliot’s prime candidate to succeed Klaus to become the next CEO. Given Mr. Lawson’s background as @ turn-around/cost-
Slide 39: Analysts
Analysts “Clearly, Arconic’s Board has lost credibility given disclosures which have come to light and authorizing the spending of millions in a bid to maintain their status quo. Our read-thru is Dr. Kleinfeld’s decision clears roadblocks and more departures will follow.” “For one, the board's past
Slide 40: Shareholders
Shareholders Elliott Prods Arconic Anew After Kleinfeld's `Long-Overdue' Orbis Denounces Arconic’s Efforts to Undermine Shareholder Exit Choice and Mislead Investors By Jack Kaskey and Joe Deaux Business Wire Bloomberg April 17, 2017 April 17, 2017 SAN FRANCISCO – Orbis Investment Management Limited
Slide 41: Shareholders
Shareholders Cramer’s “Lightning” Round Orbis Announces Shareholding of Approximately 2.8% of By Elizabeth Gurdus Arconic Shares Outstanding CNBC Business Wire May 5, 2017 March 3, 2017 Arconic, Inc: “I'm going with Elliott's guys, right there. My charitable trust SAN FRANCISCO – Orbis Investment Ma
Slide 42: Shareholders
Shareholders Lion Point Capital Demands To The Board of Directors Of Arconic By TheDev Value Walk February 17, 2017 An activist hedge… sent a letter to the BOD of Arconic.... ValueWalk has exclusively obtained a full copy of the letter which can be found below. Lion Point Capital’s letter to members
Slide 43: Shareholders
Shareholders First Pacific Advisors Letter February 6, 2017 Dear Arconic Directors, First Pacific Advisors, LLC ("FPA") currently beneficially owns approximately 20.1 million shares of Arconic Inc. ("Arconic" or the "Company"), which represents over 4.5% of the Company's shares. FPA has been a share
Slide 44: Shareholders
Shareholders Orbis Announces Intention to Vote against Klaus Kleinfeld for First Pacific Advisors to Support Elliott in Fight for Arconic Reelection Board Seats Business Wire By David Benoit February 2, 2017 The Wall Street Journal February 6, 2017 SAN FRANCISCO – Orbis Investment Management Limited
Slide 45: Media
Media “This month, Arconic shareholders will vote on competing visions for the future. The independent directors under Chairman Patricia Russo are digging in…. And so it’s worth looking at how the Russo board supervised Kleinfeld at the helm of one of the worst-performing companies in the S&P 500, a
Slide 46: Media
Despite a $1.3 million relocation package to pay for his move from Munich, and a $6.5 million signing bonus, Kleinfeld sold a diol number of shares his first day on the new job in October 3007 while being awarded a special grant of new vested and vestricted shares. Kleinfeld wasn’t the only benefici
Slide 47: Media
Media “Over the past nine years running Alcoa and then Arconic, Kleinfeld has been a poor steward of investors’ booty… News of his exit won a $400 million applause from the market on Monday, which boosted Arconic’s capitalization to $11.8 billion. But that barely begins to compensate for the nearly
Slide 48: Media
Corp. was set up with these more res and, unlike Arconic, has @ separate EO and chairman... In the split, Alcoa was incorporated in Delaware, astate t for shareholders to vote against leadership 's aren't improving the value of the business. ArCONC 0 nd, took with it staggered board and incorporatio
Slide 49: Contact Information
Contact Information Arconic Shareholders 1212 Avenue of the Americas, 24th Floor New York, NY 10036 Tel: +1.212.297.0720 Toll Free: +1.877.796.5274 Fax: +1.212.297.1710 Email: info@okapipartners.com Media Inquiries Stephen Spruiell Tel: +1.212.478.2017 Email: sspruiell@elliottmgmt.com 49 ELLIOTT ®
Slide 50: Disclaimer
Disclaimer THIS PRESENTATION IS FOR DISCUSSION AND GENERAL INFORMATIONAL PURPOSES ONLY. IT DOES NOT HAVE REGARD TO THE SPECIFIC INVESTMENT OBJECTIVE, FINANCIAL SITUATION, SUITABILITY, OR THE PARTICULAR NEED OF ANY SPECIFIC PERSON WHO MAY RECEIVE THIS PRESENTATION, AND SHOULD NOT BE TAKEN AS ADVICE O