Oct. 24 (UPI) — Southwest Airlines Thursday reached an agreement with activist investor Elliot Investment Management to head off a proxy battle.
The deal includes CEO Bob Jordan staying on as six new directors join the board and an early retirement for Executive Chairman Gary Kelly.
Southwest Airlines said in a statement that Kelly will leave the board effective Nov. 1 and will assume the title of chairman emeritus.
“We are pleased to have reached a collaborative resolution with Elliott, continuing our Board refreshment with the addition of new directors who bring complementary skills and experience,” Kelly said in a statement. “I am confident this Board will continue to hold the leadership team accountable for executing its transformational plan and delivering financial performance.”
David Cush, Sarah Feinberg, Dave Grissen, Gregg Saretsky and Patricia Watson were appointed to Southwest’s board under the Cooperation and Information Sharing Agreements reached with Elliot Investment Management.
Pierre Breber, former CFO of Chevron, was also appointed to the board of directors.
“We are pleased to have come to an agreement with Southwest on the addition of six new directors that will enhance and revitalize its Board,” Elliott Partner John Pike and Portfolio Manager Bobb said in a joint statement. “They are all highly qualified and will bring diverse skills and backgrounds to the task of overseeing Southwest under the leadership of a new Board Chairman.”
They added that the strategic changes at Southwest triggered by Elliot Investment Management actions “will position the Company to enhance business performance, drive operational execution and evaluate additional changes to create long-term shareholder value.”
Elliot had called for both Kelly and Jordan to leave the company in a sustained bid to overhaul Southwest’s management structure after criticizing top managers for lackluster sales and profits.
Southwest share prices are up over 6% in 2024 while the airline reported better than expected third-quarter profits Thursday.
The airline said its cost cutting and revenue initiatives have put the company on course to boost profits by $4 billion by 2027.
Elliot Investment Management holds 11% of Southwest shares and earlier this month had called for a special December meeting in its push for major changes at the airline.
Elliot is one of the biggest activist funds in the world. It has pushed for changes with proxy challenges at other companies like Starbucks, AT&T, Salesforce and Texas Instruments.