Following a comprehensive review, Elliott Investment Management nominates ten independent board candidates for Southwest Airlines and calls for a change in company leadership.
The brewing proxy war comes after Elliott publicly criticized the company in June, blaming CEO Bob Jordan and Chairman Gary Kelly for the problems. The activist move comes as the company claims Southwest’s leadership is resisting change.
“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,” the $69.7 billion company said in a statement.
Elliott, who owns about 11 percent of the U.S. airline, believes the board restructuring offers investors a choice between the company’s existing board, which has delivered poor returns to shareholders and failed to hold management accountable.
According to quarterly figures, the airline’s net revenue fell by more than 46 percent compared to the previous year.
The candidates
Elliott’s board nominees include four former airline CEOs and deputy CEOs, as well as other executives with expertise in technology, hospitality, customer-facing business, labor relations and regulatory oversight.
The candidates selected after a months-long global search process are:
- Michael Cawley, former Deputy CEO, COO and CFO of Ryanair
- David Cush, former CEO of Virgin America
- Sarah Feinberg, former senior official in the Department of Transportation and former head of the Federal Railroad Administration
- Hon. Josh Gotbaum, long-time advisor to companies and employee groups and former trustee of Hawaiian Airlines under the US Chapter 11 procedure
- Dave Grissen, former Group President of Marriott International
- Nancy Killefer, former senior partner at McKinsey in the Consumer and Retailing division and currently a board member of Meta
- Robert Milton, former CEO of Air Canada and ACE Aviation Holdings and former Chairman of United Airlines
- Gregg Saretsky, former CEO of WestJet
- Eash Sundaram, former Chief Digital and Technology Officer at JetBlue
- Patty Watson, current EVP and Chief Information & Technology Officer at NCR Atleos and long-time technology executive.
Solution in sight?
Southwest Airlines officials stressed that Elliott recently agreed to meet with Southwest Airlines in early September to discuss a mutually acceptable solution, which would also include further significant board renewal and other corporate governance improvements.
“Elliott has instead unilaterally decided to publicly announce his intention to replace the majority of the board of directors of Southwest Airlines,” the executives said in a statement.
Southwest Airlines leadership reiterated its support for an independent board and said it plans to remain open to discussions with Elliott to discuss ideas for increasing shareholder value. Executives also said the board will evaluate Elliott’s proposed candidates as part of its ongoing board renewal process, stressing that “no immediate action is required from shareholders.”
Airline executives added that the board has appointed a total of eight new independent and “highly qualified” directors over the past three years, including the recent addition of experienced airline executive and entrepreneur Rakesh Gangwal.
