Southwest Airlines and activist investor Elliott Investment Management have reached an agreement that will prevent a proxy fight. This deal includes adding six new directors to the airline’s board and speeding up the retirement of executive chairman Gary Kelly. However, the agreement allows CEO Bob Jordan to remain in his position.
Five of Elliott’s board nominees, along with former Chevron CFO Pierre Breber, will be joining the board. Southwest Airlines will select a new chairman to replace Kelly, who will step down in November. Breber is currently on the board of Avianca, the Colombian flag carrier.
Elliott representatives John Pike and Bobby Xu expressed their satisfaction with the agreement and believe that the addition of new directors will bring a fresh perspective to Southwest’s board. The activist investor had previously been preparing for a proxy fight by proposing 10 new directors and calling for a special meeting in December to vote on their election. One of the main goals of Elliott’s campaign was to remove Kelly and Jordan from their leadership roles.
With the addition of eight new directors resulting from the settlement and Southwest’s recent board changes, this deal marks the largest board transformation driven by Elliott in a U.S. battle. Southwest’s board will now consist of 13 members, as announced by the airline in September.
In September, Southwest had announced that Kelly would retire next spring, but the board had stood firmly behind Jordan. Kelly expressed his confidence in Jordan’s leadership and the newly reconstituted board, stating that he believes the airline’s future looks promising under their guidance.
This agreement signifies a significant development in the relationship between Southwest Airlines and Elliott Investment Management, avoiding a potentially contentious proxy fight and paving the way for a new chapter in the airline’s leadership and governance structure.
