Elliott Calls for December 10 Special Meeting at Southwest as It Looks to Replace Board
Skift Take
Key Points
- Elliott Investment Management is pushing for a December 10 special meeting to replace Southwest's board with its nominees, citing a need for improved oversight.
- Southwest Airlines, under pressure from Elliott, is implementing changes like premium seating and international partnerships but faces criticism from Elliott.
- Southwest's leadership supports CEO Bob Jordan despite Elliott's push for his resignation, echoing a past proxy fight outcome with Arconic.
Summary
Elliott Investment Management is initiating a proxy fight to replace Southwest Airlines' board with its own nominees, citing the need for better oversight. The hedge fund holds an 11% stake and is advocating for leadership changes, including the potential ousting of CEO Bob Jordan. Southwest, facing Elliott's pressure, announced various strategic changes but maintains support for Jordan, drawing parallels to Elliott's past proxy fight with Arconic.
Elliott Investment Management said Monday that it is requesting a December 10 special meeting for Southwest Airlines shareholders, kicking off the hedge fund’s first proxy fight since 2017.
Elliott, which has an 11% stake in Southwest, said it wants to elect its eight nominees to the carrier’s board of directors.
“We are taking this step today because the need for improved oversight at Southwest has never been more urgent,” wrote Elliott partner John Pike and portfolio manager Bobby Xu in a letter to Southwest shareholders.
Elliott has been pushing for a leadership overhaul at Southwest, including the ouster of CEO Bob Jordan. While the carrier's chairman Gary Kelly said he would step down at the end of his term in 2025, the airline’s board said it still supported Jordan. Ever since Elliott made its stake in Southwest public, Jordan has said he isn’t planning to resign.
Southwest held its investor day in Dallas on September 26, where it proposed a series of changes such as assigned and premium seating, red-eye flights, capacity cuts and partnerships with international carriers. The airline also said it was implementing a $2.5 billion share buyback program.
“For Elliott to call that plan rushed and haphazard is, in my opinion, inane,” Jordan said during the company’s investor day.
The last time Elliott had a proxy fight was in 2017 with Arconic, a manufacturing company. That ended with Arconic making concessions to Elliott and the two ultimately had to work out a settlement, according to Reuters.
Southwest criticized Elliott for calling for the meeting in a statement on Monday.
"Elliott’s Special Meeting request is unnecessary and inappropriate considering the extreme nature of Elliott’s demands," Southwest said in a statement. "The timing of Elliott’s request to apparently pursue Board control appears designed to maximize disruption of Southwest’s execution of its important business transformation underway as we approach one of the busiest travel periods of the year."
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