Three days ago Arconic's CEO Klaus Kleinfeld was fired unceremoniously for "showing poor judgment," in a letter sent to Paul Singer, founder of hedge fund Elliott Management. Elliott has just released the letter and its response which claims Kleinfeld made "veiled suggestions that he might intimidate or extort Mr. Singer" over his behavior at a 2006 soccer match… involving "singing in the rain… in a fountain" and an indian head-dress.
Mr Kleinfeld wrote…
Dear Mr Singer,
In the last eighteen months, we have enjoyed the unique attention and unlimited pleasure of multiple exchanges with various representatives of yours in every such way remarkable firm. Unfortunately. we have not yet had the pleasure to meet. More than once have I been wondering what a special person the founder of such a firm must be.
It was much to my delight when I recently learned from Berlin what a phenomenal soccer enthusiast you must be. Quite a few people who accompanied you in Berlin in 2006 during and especially after the many matches you attended are still full of colorful memories about this obviously remarkable time; it indeed seems to have the strong potential to become lastingly legendary. How you celebrated your soccer enthusiasm and the "great time" you must have had in your Berlin weeks – unforgettable without a doubt – left a deep impression on them.
As a token of my appreciation to learn about this completely "other side" of you, I allow myself to send you a little souvenir, which might bring back some "vivid (hopefully positive) memories": The official match ball of the FIFA World Championships 2006 (called "Teamgeist", in English "Team spirit"). I would be honored if it found an adequate place on your memorabilia shelfs.
PS: If I manage to find a native American Indian's feather head-dress I will send this additional essential part of the memories. And by the way: "Singing in the rain" is indeed a wonderful classic — even though I have never tried to sing it in a fountain.
Which seems innocent enough until you read the response from Elliott's chief counsel to Arconic's board…
Dear Directors of Arconic Inc. ("Arconic" or the "Company"):
I am the General Counsel and Chief Legal Officer of Elliott Management Corporation. On April 11, Paul Singer received the attached letter and a soccer ball, both apparently sent to him by Klaus Kleinfeld.
As for the letter, it appears to have been sent from Dr. Kleinfeld because it is on stationery with his name printed on it, it appears to bear his signature, it was sent from Arconic's offices at 390 Park Avenue, and it was delivered by an Arconic messenger. Assuming therefore that the letter is from Dr. Kleinfeld, we find it to be an irresponsible and inappropriate communication. While much of what it says doesn't make sense, we do understand Dr. Kleinfeld to be making veiled suggestions that he might intimidate or extort Mr. Singer based on Mr. Singer's family trip to Germany in 2006 when he attended the World Cup. This is highly inappropriate behavior by anyone and certainly by the CIO of a regulated, publicly traded company, in the midst of a proxy contest, and it raises a number of obvious issues. Further, we assume that: (I) Dr. Kleinfeld was not authorized by the Board to make this communication, and (2) you will assess with your counsel, as we will, the implications of this unusual communication to a dissenting shareholder in the context of a proxy process.
Dr. Kleinfeld should understand that this conduct will not inhibit Elliott's efforts on behalf of shareholders. We are interested in shareholder value and putting Arconic on the right track, not games and false innuendo even if couched in clever ambiguities.
If the letter is not from Dr. Kleinfeld, as unlikely as that seems, then I think he and the Board need to know that someone purporting to be him, using your building and messenger service, is behaving in an irresponsible manner. I am certain that you would want to know about that and stop it. Of course, we expect that you will let us know if this is not in fact a letter from Dr. Kleinfeld and tell us what steps you are taking so that we may likewise take appropriate steps.
Richard B. Zabel
We can only imagine what shenanigans Mr. Singer was up to. But this does indeed reflect crushingly on Mr. Kleinfeld – is this really the way the world works?
Full original letters here.
Source: Zerohedge – Elliott Management Releases Klaus Kleinfeld's "Veiled Extortion" Letter