Aluminum maker
Alcoa
surprised investors on Monday with a new chief executive. The unexpected move sent the stock lower.
In midday trading, shares of
Alcoa
(ticker: AA) were off 5.2% at $28.69 apiece. The
S&P 500
was up 0.2% and the
Dow Jones Industrial Average
was down 0.2%.
In a statement, the company announced that William Oplinger had succeeded Roy Harvey as CEO on Sunday. Harvey will serve as strategic adviser until Dec. 31.
Oplinger, 56, had served as executive vice president and chief operations officer since February. From November 2016 until this year, he was EVP and chief financial officer. Harvey, whose age wasn’t mentioned, had been CEO since November 2016, when the company went public.
The company said the change reflects its “succession planning process.”
Speaking for Alcoa’s board of directors, nonexecutive Chairman Steven Williams thanked Harvey for his service and showed support for Oplinger.
Harvey had helped “to transform Alcoa into the stronger and more resilient company that it is today,” said Williams. He added: “Our Board believes Bill’s extensive experience with Alcoa makes him well-positioned to carry the Company forward.”
The element of surprise might have something to do with the stock drop.
“Ever since this Pittsburgh-based company split off from
Arconic
/Howmet in 2016, it has been Harvey who has been calling the shots,” wrote Gordon Haskett analyst Don Bilson in a Monday report.
Bilson pointed out that Harvey, at 49 or 50 years old, is younger than Oplinger.
“We suppose the foundation for such a move was set last winter when the 56-year-old Oplinger was promoted from CFO to COO,” added Bilson. “Management swaps that are made with this type of haste are always suspicious.”
Stock price performance could have had something to do with the switch. Alcoa stock is down about 23% over the past 12 months. By comparison, shares of
Kaiser Aluminum
(KALU) and
Century Aluminum
(CENX) are both up—17% and about 15%, respectively. Aluminum prices have been roughly flat over the past year.
Alcoa didn’t immediately respond to a request for comment from Barron’s about the change.
Investors might have to wait for third-quarter earnings to hear more from management about the change. Results are due out about three weeks into October.
Investors don’t like waiting. They don’t like unwelcome surprises either.
Write to Al Root at [email protected]
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