Southwest Airlines shakes up board amid Elliott fight
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Southwest Chairman Gary Kelly. Getty Images
Southwest Airlines said chairman Gary Kelly plans to retire next year, as the company listed a host of corporate governance changes amid a heap of pressure from an activist investor .
Why it matters: Southwest's board-level moves appear to be a step forward in its engagement with Elliott Management, though the hedge fund is known to stay in a fight until it gets what it wants.
Zoom in: In addition to Kelly's departure, Southwest said six existing directors will also step down.
- The board expects to appoint four new independent directors and will consider nominees that Elliott puts forward, it said.
- Southwest said it's also eliminating its executive committee structure and creating a new finance committee on the board, as well as appointing new board committee leaders.
Yes, but: One of Elliott's chief demands is the ouster of Southwest CEO Bob Jordan, who continues to get the board's backing.
- "Southwest Airlines' Board is confident that there is no better leader than Bob Jordan to successfully execute" the company's strategy and enhance shareholder value, it said in a statement.
What they're saying: "We are pleased that the Board is beginning 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," Elliott said in a statement Tuesday morning.
- "We believe the highly qualified nominees we have put forward are the right people to steady the Board and chart a new course for the airline."
What we're watching: The level of board changes that Southwest outlined is heavy in the context of a company duking it out with an activist like Elliott, which owns 10% of the airline's shares.
- Still, for Elliott to ease some pressure with these moves, the company will have to perform. If it does not, the investor will ratchet up the pressure for even more leadership change in the form of a new CEO.
