Elliott Investment Management LP intends to file a proxy statement with the U.S. Securities and Exchange Commission and has named 10 nominees for the board of directors of Southwest Airlines (WN, Dallas Love Field) to intensify its campaign against the airline.
In a statement dated August 13, 2024, Elliott, the 11 percent Southwest shareholder, said the proxy statement was “an important step toward implementing urgent changes at Southwest.” A proxy statement (also known as Form DEF 14A) is a statement that a company or individual must file before an annual meeting when soliciting shareholder votes. Elliott will call a special meeting rather than wait for the airline’s annual meeting.
Elliott, often described as an activist investment fund, managed approximately $69.7 billion in assets as of June 30, 2024, including 48,948,500 shares of Southwest common stock held either directly or through subsidiaries. Elliott says Southwest represents “the most compelling turnaround opportunity for an airline in the last two decades” and has previously called for changes to the airline’s strategy and board, including the firing of CEO Robert Jordan.
Elliott’s nominations for Southwest’s board
Elliott’s so-called “Stronger Southwest” plan calls for restoring the efficiencies needed to continue offering low fares, updating product offerings to align with current passenger preferences and expectations, improving management capabilities to ensure strong operational performance, and facilitating investment in technology and new facilities to maintain reliable operations. Elliott’s nominations to the board include:
- Michael Cawley, former Deputy CEO, COO and CFO of Ryanair (FR, Dublin International). Cawley holds 19,765 common shares of Southwest;
- David Cush, former CEO of Virgin America (San Francisco), who owns 10,000 shares of Southwest common stock;
- Sarah Feinberg, a former senior Department of Transportation official and former head of the Federal Railroad Administration, who owns 3,068 shares of Southwest common stock;
- Josh Gotbaum, a longtime corporate and union consultant and former Chapter 11 trustee of Hawaiian Airlines (HA, Honolulu), who owns 19,162 shares of Southwest common stock;
- Dave Grissen, former group president of Marriott International;
- Nancy Killefer, former senior partner at McKinsey in the firm’s consumer and retail practice and current board member of Meta;
- Robert Milton, former CEO of Air Canada (AC, Montréal Trudeau) and ACE Aviation Holdings and former Chairman of United Airlines (UA, Chicago O’Hare), who owns 1,953 common shares of Southwest;
- Gregg Saretsky, the former CEO of WestJet (WS, Calgary), who owns 4,000 common shares of Southwest;
- Eash Sundaram, former Chief Digital and Technology Officer of JetBlue Airways (B6, New York JFK), who holds 2,000 shares of Southwest common stock; and
- Patty Watson, current EVP and Chief Information and Technology Officer at NCR Atleos and a long-time technology executive, owns 5,086 shares of Southwest common stock.
“If these candidates were nominated, shareholders would have a choice between the company’s existing board, which has delivered poor returns to shareholders and failed to hold management accountable for Southwest’s unacceptable performance, or a new board that brings relevant expertise, fresh thinking and accountability,” Elliott’s statement said.
Southwest’s response
Southwest says it has tried to work constructively with Elliott since the campaign began. “Elliott has rebuffed these efforts at every turn,” the airline said in an Aug. 14 statement. Southwest says it scheduled a meeting with Elliott in September to discuss board and leadership changes, but “Elliott instead unilaterally decided to publicly announce his intention to replace the majority of Southwest Airlines’ board of directors.”
While Southwest said it remains open to discussions with Elliott and will evaluate proposed candidates as part of the ongoing board renewal process, the existing board “continues to believe the airline has the right leadership team in place to develop the business and lead Southwest Airlines forward.” The statement said the airline remains focused on restoring its financial performance and building a sustainable and profitable future.
“Southwest Airlines will provide further details on a comprehensive plan to transform its business, improve operating efficiencies and ensure disciplined capital allocation at its Investor Day in late September,” the airline’s statement added.
Southwest’s current 15-member board of directors includes Chairman Gary Kelly, Vice Chairman Robert Jordan, Chief Executive Officer William Cunningham, Lisa Atherton, David Biegler, J. Veronica Biggins, Roy Blunt, Douglas Brooks, Eduardo Conrado, Rakesh Gangwal, Thomas Gilligan, David Hess, Elaine Mendoza, Christopher Reynolds and Jill Soltau.
