Elliott Investment Management Targets Southwest Airlines Board
Elliott Investment Management has formally initiated a proxy fight for control at Southwest Airlines, marking its first U.S. shareholder battle since 2017. The activist investor, which holds an 11% stake in the airline, has called for a special meeting set for December 10, 2024, to discuss the ouster of CEO Bob Jordan. This move underscores Elliott’s intention to reshape the airline’s leadership amidst growing tensions over its strategic direction.
Elliott’s request for a special meeting comes as part of a broader strategy to challenge the current board composition at Southwest Airlines. Initially proposing ten nominees, Elliott has reduced its board slate to eight candidates after Southwest Airlines recently downsized its board from 15 to 12 members. The investor’s call for a special meeting highlights a significant moment in corporate governance, as Elliott seeks to gain influence over the airline’s decision-making processes.
The pressure for change at Southwest Airlines is intensifying, particularly as Elliott has been vocal about its dissatisfaction with CEO Bob Jordan’s leadership. In previous reports, it was revealed that Elliott aimed to not only oust Jordan but also remove executive chairman Gary Kelly. However, Kelly’s recent announcement to step down from the board has shifted the focus solely on Jordan.
Elliott’s campaign to reshape the board of Southwest Airlines is significant given the company’s historical resistance to activist investors. This will be Elliott’s first proxy fight since its challenge against Arconic in 2017, reflecting the firm’s aggressive approach to influencing company policies and leadership. The investor has a relatively short window—less than two months—to rally support from Southwest’s shareholders before the December meeting.
Interestingly, support for Elliott’s position appears to be growing among certain shareholders. Artisan Partners, a significant investor in Southwest Airlines, has publicly backed Elliott’s initiative, indicating a potential shift in shareholder sentiment regarding the airline’s management. This support may embolden Elliott’s efforts to push for the proposed board changes.
In response to Elliott’s actions, Southwest Airlines has labeled the proxy fight as “unnecessary and inappropriate,” asserting that Elliott’s demands prioritize the firm’s interests over the collective well-being of all shareholders. Southwest’s shares dipped approximately 1% following the announcement of the proxy fight, reflecting market apprehension regarding the ongoing turmoil.
During an investor day on September 26, Southwest Airlines reaffirmed its commitment to enhancing revenue by introducing features like extra legroom seating and phasing out its unassigned seating policy. The airline remains steadfast in its support for CEO Jordan, who criticized Elliott’s assessment of the company’s strategic plans as “inane.”
Elliott Investment Management has a reputation as one of the most influential activist investors globally, with previous campaigns against companies such as Salesforce and Starbucks. Elliott partners John Pike and Bobby Xu stated that their nominated candidates are “uniquely qualified” to hold the airline’s executive leadership accountable and to drive improved results.
As the December meeting approaches, all eyes will be on Southwest Airlines and how the airline navigates this challenge from Elliott. The outcome could significantly alter the company’s governance structure and strategic direction, setting a precedent for future interactions between activist investors and corporate boards in the aviation sector.
Sources: AirGuide Business airguide.info, bing.com, cnbc.com
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