Southwest says investor Elliott ‘entrenched in demanding control of board’
Southwest Airlines has hit back at activist investor Elliott Investment Management after the firm called for a Special Meeting of Shareholders to elect eight new director candidates.
In response, Southwest Airlines said on October 14, 2024, that the meeting was “unnecessary and inappropriate considering the extreme nature of Elliott’s demands”.
Under Elliott’s proposed plans, also published on October 14, 2024, the investor demanded the removal of eight Southwest directors and the election of eight of its own candidates.
Describing the call for a special meeting, Southwest said that “unfortunately, Elliott remains entrenched in demanding control of the board”.
“Elliott’s actions highlight its lack of understanding of Southwest’s business and its insatiable need to put its own interests ahead of those of all Shareholders,” the US airline added.
According to Southwest, it has previously suggested that Elliott’s board candidates be interviewed and three be appointed to a reconstituted 13-member board that would be reduced to 12 following Executive Chairman Gary Kelly’s retirement in 2025.
Southwest accuses Elliott of preventing its candidates from being interviewed, “making it impossible to find a constructive resolution”.
Southwest also says that for four months Elliott has not offered any substantive feedback on the carrier’s strategic plan and “failed to provide input and continued its public attacks ahead of and following Investor Day”.
“Elliott’s failure to provide actionable feedback, coupled with the disruptive nature of its demands, should give Shareholders pause about Elliott’s true intentions,” Southwest said.
Nonetheless, Southwest said it will carefully review the special meeting request to be held on December 10, 2024, and intends to discuss setting it up with Elliott in a “constructive manner”.
Elliott’s call for Special Meeting
Before Southwest issued a response to the special meeting request Elliott said it was taking the step because the “need for improved oversight at Southwest has never been more urgent”.
“Following Elliott’s public push for changes, Southwest has responded with a series of long-overdue strategic and corporate-governance initiatives, promising that better performance will follow. However, Southwest’s shareholders have heard these sorts of promises before, and what they need today, at the outset of this attempted turnaround, is an experienced, highly qualified Board to oversee the changes and ensure successful execution,” Elliott said.
The investor added: “Southwest’s shareholders cannot afford to see – yet again – today’s new initiatives turn into tomorrow’s broken promises.”
Among the board candidates Elliott wants elected are Michael Cawley, the former Deputy CEO, COO and CFO of Ryanair, David Cush, the former CEO of Virgin America, Robert Milton, the former CEO of Air Canada, and Gregg Saretsky, the former CEO of WestJet.
Elliott is pushing for the removal of Douglas Brooks, Eduardo Conrado, William Cunningham, Thomas Gilligan, David Hess, Gary Kelly, Elaine Mendoza, and Jill Soltau from the Southwest board.
Elliott has been actively and publicly criticized the running of Southwest since the summer and made multiple calls for the airline’s CEO Bob Jordan to be replaced.
“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. Electing a world-class slate of exceptional director candidates is the essential first step to making this happen,” Elliott concluded.
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Southwest Airlines has hit back at activist investor Elliott Investment Management after the firm called for a Special…
The post Southwest says investor Elliott ‘entrenched in demanding control of board’ appeared first on AeroTime.
