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Southwest Airlines ‘Success’-style investor battle claims first casualty

Southwest Airlines ‘Success’-style investor battle claims first casualty

In the past month, Southwest Airlines (LUV) went through a boardroom battle worthy of the hit HBO show “Succession.”

Repeatedly echoing its desire to see Chief Executive Bob Jordan and Chairman Gary Kelly ousted over what it described as “poor execution and management’s stubborn unwillingness to evolve,” hedge fund Elliott Investments Management eventually bought enough of the company’s stock to call for a special offer. meeting of shareholders who might ultimately put the question to a vote.

Related: Southwest Airlines’ succession-style board battle

Southwest, which previously said it was “confident it has the right management team in place,” responded to mounting investor pressure by shaking up its board.

Here’s what you need to know about Southwest’s board change

While Jordan survived to see another day as CEO, Kelly stepped down from his role as chairman of the board, announcing early retirement. A further six board directors will leave their roles in a major reshuffle; they include Compensation Committee Chair David Biegler, Nominating and Corporate Governance Committee Chair Veronica Biggins, Senator Roy Blunt and Lead Director Dr. William Cunningham.

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While it has not yet floated potential names, Southwest also said it plans to add four new executives to the board in the “near future” and will consider Elliott’s suggested candidates for their seats. The investment firm has previously expressed a desire to see the former Ryanair (RYAOF) and Virgin America CEOs Michael Cawley and David Cush, respectively, on the board.

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“We hired a leading independent search firm to identify new candidates”

“In addition to considering Elliott’s executive candidates, the Nominating and Corporate Governance Committee engaged a leading independent search firm to identify and screen strong candidates who can bring complementary skills and experience to lead the airline forward” , Southwest said in a statement that also wished the departing board members “the best in their future endeavors.”

In a statement about his departure, Kelly said it was “time to shake things up, not just mix it up a bit.”

The change comes amid a series of other major changes Southwest has made in response to growing investor pressure over its poor financial performance. In July, Jordan dropped the ax by announcing that the airline would replace its decades-old open-seat policy with one where customers pay to choose their seat. Many are now speculating that the airline’s two-baggage perk, regardless of fare class, could be the next drastic step to start turning a profit.

Elliott called that commitment “too little, too late” to undo months of declining revenue and the overall business strategy with which it disagrees.

Shares of Southwest, already down more than 3% year-to-date, fell 4.31% to $28.35 on the morning of September 10.

Elliott responded to the news of the board change with a statement similar to those in the past.

“The need for thoughtful and deliberate change at Southwest remains urgent, and we believe the highly qualified candidates we have proposed are the right people to stabilize the Board and chart a new course for the airline,” the investment firm wrote on its website or.

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