Comprehensive board shake-up for Southwest Airlines
Six Southwest Airlines directors are to step down this November, including executive chairman Gary Kelly, as the airline faces increasing pressure from activist investor Elliott Investment Management. However, despite a difference of opinion with its significant shareholder, Southwest has also reiterated its “unanimous support” for CEO Bob Jordan.
Kelly has announced his intention to retire from the board and his position effective immediately after the 2025 annual meeting, with five other directors also informing the board of their plans to voluntarily step down immediately after the regularly scheduled meeting in November – something described by Elliott has “unprecedented”.
To fill the vacant positions, Southwest’s nominating and corporate governance committee has “engaged a leading independent search firm” to appoint four new independent directors, potentially including up to three candidates proposed by Elliott Investment Management.
The investment firm and 11% shareholder has been engaged in long-running outspoken criticism of the airline, having previously called for sweeping change including a shake-up of the board, the appointment of new leaders, and the undertaking of a comprehensive business review. This included Elliot’s proposal of what it deemed ten “independent, highly qualified candidates”.
Refuting Elliott’s claims, Southwest has maintained that it has “consistently sought to engage constructively and in the best interests of all shareholders,” adding that it has “appointed a total of eight new independent and highly qualified directors over the last three years”.
In a letter to shareholders, Kelly – who has served as chairman since 2008 – also reinforced that Jordan “is vital to executing the transformative business plan,” something he described as “ambitious yet eminently achievable”.
Responding to the resignations, Elliott reaffirmed its position that the “need for thoughtful, deliberate change at Southwest remains urgent,” adding: “We are pleased that the board is starting to recognize the degree of change that will be required at Southwest, and we hope to engage with the remaining directors to align on the further necessary changes”.
