REUTERS/MIKE SEGAR / 2023
A Southwest Airlines jet lands at LaGuardia Airport in New York City, New York.
NEW YORK >> Elliott Investment Management is launching a power struggle on Southwest Airlines’ board, hoping to replace as many as 10 directors as the hedge fund pushes to fire the airline’s chief executive and improve performance, sources said Tuesday.
The hedge fund has been in talks with candidates for the 15-member board and is working to convene a special meeting at which investors could vote on the nominees, the people said.
Elliott said in a regulatory filing last week that it had a 7% economic interest, closer to the stake required to call an extraordinary general meeting.
The hedge fund is pushing to replace both Robert Jordan, who will become CEO in 2022, and Chairman Gary Kelly, who was CEO before Jordan.
The company did not immediately respond to a request for comment.
The Wall Street Journal was the first to report on Elliott’s plans to appoint directors.
The airline, whose share price has fallen 24 percent over the past 52 weeks, has tried to fix some of its problems and appointed a new board member in July.
At Southwest, an investor can only call a special meeting of shareholders if it owns 10 percent of the company’s common stock. Currently, Elliott owns less than 10 percent of the common stock, but the hedge fund has been quickly amassing common shares, according to filings last week.
Southwest responded to Elliott’s investment by introducing a shareholder rights plan, or poison pill, which would kick in if an investor acquired 12.5 percent or more of the shares and allow other shareholders to buy more shares at a cheaper price, thus preventing a takeover.
