1 of 3 | The investment hedge fund Elliott has requested a Dec. 10 special meeting to consider its names for the new Southwest board of directors.
This signals the official start of a long-awaited proxy fight for control of the Southwest Airlines board of directors and overall control of the company, and likely that of its CEO. File Photo by Larry W. Smith/EPA-EFE
Oct. 14 (UPI) — The investment hedge fund Elliott has called for a December special meeting of the Southwest Airlines board of directors as it pushes for major changes at the Texas-based airline.
Elliott, the activist investor group that now holds an 11% financial stake in the Dallas air carrier, has requested a Dec. 10 special meeting to consider its names for the new Southwest board of directors.
This signals the official start of a long-awaited proxy fight for control of the Southwest Airlines board of directors and overall control of the company, and likely that of its CEO.
It’s Elliott’s first board proxy fight since 2017. It arrived after a Sept. 26 “investor day” event at which Southwest reiterated plans aimed at expanding revenue
The call for a special meeting has been in the works for some time now. Around September, Elliott, one of the world’s largest activist funds, crossed the 10% threshold needed to call for a special meeting with eyes on a possible hostile takeover.
New York-headquartered Elliott Investment Management LP has launched similar challenges at companies such as Starbucks, AT&T, Salesforce and Texas Instruments — but never an airline.
Elliott has sought to remove Southwest CEO Bob Jordan. But the company has stood by Jordan.
After a meeting between Southwest and Elliott officials, last month it was revealed six Southwest board members would soon voluntarily resign and four new independent directors will step in “the near future, including due consideration of up to three of Elliott’s candidates,” according to Southwest’s ex-CEO and outgoing board chair.
Amid the pending board shakeup, in September the company’s former CEO and current executive chairman Gary Kelly announced that he will retire fully from Southwest later next year as Elliott kept up pressure.
Elliott’s slimmed-down board slate now include eight, down from 10, after Southwest in a separate move took steps to shrink its board size down to 12 from 15.
“The nominees we have put forward today are uniquely qualified to hold the company’s executive leadership accountable and ensure that the company delivers improved results,” Elliott partner John Pike and portfolio manager Bobby Xu said in a company statement.
The new proposal calls for the removal eight of Southwest’s current board of directors: Douglas Brooks, Eduardo Conrado, William Cunningham, Thomas Gilligan, David Hess, Gary Kelly, Elaine Mendoza and Jill Soltau.
In addition, Elliott is pushing for the election of eight new hand-picked candidates with a wide array of experience to replace the the other eight.
Elliott’s picks include a number of retired government officials, former airline and other business executives of United Airlines, Air Canada, WestJet, Virgin America, Hawaiian Airlines and Marriott International.
Patty Watson, the current executive vice president and Chief Information & Technology Officer at NCR Atleos, is a longtime technology executive who Elliott hopes to have appointed to its newly-controlled board.
Elliot’s new board pick include Michael Cawley, who was a top executive at Ryanair for a number of years rising to the role of COO and deputy CEO; David Cush, former CEO of Virgin America; Dave Grissen, ex-Group President of Marriott International; Robert Milton, ex-CEO of Air Canada and ACE Aviation Holdings and the former chairman of United Airlines and Gregg Saretsky, the former CEO of WestJet.
Josh Gotbaum, a former assistant secretary of the U.S. Treasury for economic policy who was the first CEO of The September 11th Fund, would join ex-Obama administration appointee Sarah Feinberg, the former administrator of the Federal Railroad Administration, on the new Elliot-picked Southwest board if the election goes as hoped.
The New York-based Elliott called on Southwest on Monday to confirm its Dec. 10 date request “and to publicly announce a reasonable corresponding record date promptly, without any gamesmanship or defensive maneuvers,” Elliott said in its statement.
“It is time for shareholders’ voices to be heard, so that Southwest can finally deliver on its full potential for customers, employees and shareholders alike,” according to Elliott officials.