The Southwest Airlines board will undergo a major shakeup after the US carrier resolved a long running public feud with activist investor Elliot Investment Management.
In a statement on October 24, 2024, Southwest announced that six new directors will be appointed, five of which were put forward by Elliot earlier this month.
As part of the resolution, Executive Chairman Gary Kelly will accelerate his retirement and leave his role on November 1, 2024. Kelly will assume the title of Chairman Emeritus.
The five directors backed by Elliot include David Cush, the former CEO of Virgin America, Gregg Saretsky, the former CEO of WestJet and Dave Grissen, the former Group President of Marriott International.
Sarah Feinberg and Patricia Watson will also join the board, along with Pierre Breber, former CFO of Chevron. A new independent chairperson will be appointed.
In September 2024, six current directors “informed the Board of their plans to voluntarily step down immediately after the Company’s regularly scheduled Board meeting in November.”
“We are pleased to have reached a collaborative resolution with Elliott, continuing our Board refreshment with the addition of new directors who bring complementary skills and experience,” Kelly said in a statement. “I am confident this Board will continue to hold the leadership team accountable for executing its transformational plan and delivering financial performance.”
The Southwest Chairman added: “It has been the honor of my lifetime to work with our People and serve our Customers in making Southwest the leader it is today. I believe Southwest’s best days lie ahead under the vision and leadership of Bob Jordan and the oversight of this reconstituted Board.”
Elliott has informed Southwest that it withdrew its request to call a Special Meeting of shareholders and has entered into a Cooperation Agreement.
Elliott Partner John Pike and Portfolio Manager Bobby Xu said, “We are pleased to have come to an agreement with Southwest on the addition of six new directors that will enhance and revitalize its Board […] We believe the strategic changes Southwest has announced since we commenced our engagement, together with the new independent directors and governance improvements, will position the Company to enhance business performance, drive operational execution and evaluate additional changes to create long-term shareholder value.”
The Southwest board will be reduced to 13 members as of the 2025 Annual Shareholder Meeting.
In plans published by Elliot on October 14, 2024, the investor demanded the removal of eight Southwest directors and the election of eight of its own candidates.
The investor also called for a special meeting so that shareholders “voices can be heard” and a new slate of directors approved.
“Southwest’s shareholders cannot afford to see – yet again – today’s new initiatives turn into tomorrow’s broken promises,” Elliot stated.
In response, Southwest said that the meeting was “unnecessary and inappropriate considering the extreme nature of Elliott’s demands” and that the investor was “entrenched in demanding control of board.”
Elliott has actively and publicly criticized the running of Southwest since Summer 2024 and made multiple calls for the airline’s CEO Bob Jordan to be replaced.