Yahoo Finance Elliott Requests Special Meeting at Southwest Airlines
(Bloomberg) -- Elliott Investment Management has called for a special shareholder meeting at Southwest Airlines Co., officially kicking off the firm’s first US proxy fight since 2017.
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The activist has requested the meeting take place on Dec. 10, so that its fellow investors can vote on its raft of new board nominees, according to a statement on Monday that confirmed an earlier Bloomberg News report.
Elliott has nominated eight directors to the Southwest board as it seeks to replace the same number of incumbents. Its candidates include Michael Cawley, the former deputy chief executive officer of Ryanair Holdings Plc; David Cush, ex-CEO of Virgin America; and Gregg Saretsky, former CEO of WestJet.
“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 said in its statement.
Southwest’s shares were broadly flat at 10:24 a.m. in New York, giving the company a market value of $18.3 billion. Elliott has amassed an 11% stake in the airline. A representative for Southwest didn’t immediately provide comment.
Led by Paul Singer, Elliott is one of the world’s busiest and most influential boardroom agitators but rarely takes matters to shareholder votes, preferring instead to seek resolutions with target companies.
Southwest is Elliott’s first request for an out-of-cycle shareholder meeting — or special meeting — since its founding in 1977. It is also the first major proxy battle since 2017, when it nominated directors to the board at engineering group Arconic Corp. Elliott and Arconic eventually reached a settlement before the vote.
Southwest Tussle
Elliott disclosed a roughly $2 billion stake in Southwest in June. It called for strategy and leadership changes at the carrier after what it saw as years of underperformance, pointing the finger squarely at CEO Bob Jordan and Chair Gary Kelly.
Shares of Dallas-based Southwest have fallen around 40% over the last three years. In the past year, its shares are up by about 20% but still trail peers’ stock performance. Delta Air Lines Inc. is up almost 50% in the last 12 months and United Airlines Holdings Inc. has risen more than 50% over the period.
After meeting with Elliott, Southwest announced in September that six of its board members and Kelly would depart. It also shrunk the board to 12 members from 15, a series of changes that essentially opened up three board seats. Prior to the shrinking of the board, Elliott said it would nominate a 10-person slate. The activist has since reduced the number of board nominees to reflect the smaller board size.
Elliott’s other nominations to Southwest’s board are: Sarah Feinberg, a former senior official at the Department of Transportation; Josh Gotbaum, a longtime adviser to companies and labor groups; Dave Grissen, former group president of Marriott International; Robert Milton, ex-CEO of Air Canada; and Patty Watson, chief information and technology officer at NCR Atleos.
“We are taking this step today because the need for improved oversight at Southwest has never been more urgent,” Elliott said in its statement.
Poison Pill
In July, Southwest adopted a so-called poison pill strategy to defend itself against Elliott, saying at the time that it had made good faith efforts to engage with the activist.
In September, Southwest announced a share buyback and detailed the ending of its open seating policy. That month it also laid out a comprehensive plan designed to add $4 billion of operating profit by 2027. Jordan said this plan had been in the works since well before Elliott announced its stake. Jordan described Elliott’s campaign as “tactics and gamesmanship” and said a proxy fight wouldn’t be good for the company.
In a letter to fellow Southwest shareholders in August, Elliott said it preferred to avoid the distraction of a proxy fight. It said at the time that “Southwest is a storied American company that deserves to have the best stewards that its board can possibly provide.”
Artisan Partners Limited Partnership, another activist, is also invested in Southwest.
--With assistance from Mary Schlangenstein and Katherine Burton.
(Updates with details of statement throughout. An earlier version of this story corrected the number of board departures announced by Southwest.)
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