Southwest Airlines in the US will oversee a partial overhaul of its board of directors over the next few months as it looks to find a middle ground on the demands of activist investment group Elliott Investment Management.
The airline will say goodbye to six of its board members in November and its executive chairman Gary Kelly will retire after its 2025 annual meeting after almost four decades at the company, with four independent directors to be appointed to the board.
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The move is an effort to appease some of Elliott’s demands for “fresh” leadership and Southwest stated some of its new board members may include candidates proposed by the investor.
The board’s proposed changes stopped short of a full overhaul however and the airline expressed its support for CEO Bob Jordan to continue leading the company with the board stating its “unanimous support” for the man who has held the role since 2022.
Kelly said: “Bob has a proven track record over decades and, most importantly, he has what it takes to lead Southwest through a significant transformation and usher in a new era of profitable growth, innovation, and industry leadership.”
Southwest’s announcement is the latest move in a leadership fight that had become increasingly hostile with the airline executing a ‘poison pill’ plan to dissuade Elliott from further investments in July.
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By GlobalDataThe investment company had also recently written a letter to shareholders accusing Southwest’s management of “arrogance” and “falsehoods” last month, but the airline said it was now engaged in “constructive engagement” with Elliott as they worked on a resolution.
In response to the board changes, Elliott said it was pleased that the company had begun to “recognise the degree of change” it was calling for at the airline and hoped to work together on “further necessary changes”.
The company, which has built a 10% stake in the airline, previously claimed the airline’s leadership had overseen “hasty, ad-hoc changes designed to boost its stock price” and said Southwest’s management posed a significant risk to the company’s long-term well-being.
Since the board changes were announced Southwest’s share price has dropped almost 4% after a consistent rise since August while the airline showed strength against Elliott’s demands.
