After months of an ongoing battle, Southwest Airlines has reached a settlement with activist investor Elliott Investment Management.
The Dallas-based airline announced in a press release on Thursday morning that the agreement would restructure the board’s leadership, including the retirements of longtime CEO and executive chairman Gary Kelly and six other directors.
These changes will go into effect on Nov. 1, 2024. Kelly was previously set to leave in 2025, and the directors were going to leave after a November board meeting. Following Kelly's departure from the board, he 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 press release. "I am confident this board will continue to hold the leadership team accountable for executing its transformational plan and delivering financial performance. It has been the honor of my lifetime to work with our people and serve our customers in making Southwest the leader it is today. I believe Southwest’s best days lie ahead under the vision and leadership of Bob Jordan and the oversight of this reconstituted board.”
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According to Southwest, David Cush, Sarah Feinberg, Dave Grissen, Gregg Saretsky, and Patricia Watson have been appointed as independent directors of the Southwest board. Pierre Breber, former CFO of Chevron, has also been appointed to the board of directors. These appointments will also go into effect on Nov. 1.
All five are candidates from Elliott’s slate. Saretsky, Cush, and three additional directors will be appointed to serve on the board’s finance committee, with Saretsky as chair.
The airline said that the newly reconstituted board of directors will appoint a new independent chairman, and the board will be reduced to 13 members as of Southwest’s 2025 Annual Shareholder Meeting.
“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 Bobby Xu said. "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. We believe the strategic changes Southwest has announced since we commenced our engagement, together with the new independent directors and governance improvements, will position the Company to enhance business performance, drive operational execution, and evaluate additional changes to create long-term shareholder value. We are grateful to Southwest’s shareholders, labor groups, and leadership for their constructive engagement, and we look forward to a strengthened Southwest delivering on its full potential.”
The announcement comes just hours after Southwest announced a profitable earnings report that topped analysts' estimates.
For more information about the newly-appointed independent directors, click here.
