Key Takeaways
- Southwest Airlines’ former CEO and current Executive Chair Gary Kelly and several board members announced they will be stepping down.
- The moves came as Elliott Investment Management puts pressure on executives to make significant changes to the airline.
- Kelly told shareholders it was “the time for change.”
Southwest Airlines (LUV) shares fell in intraday trading Tuesday as the carrier facing pressure from activist investor Elliott Investment Management announced the exit of its former Chief Executive Officer (CEO) and several board members.
The airline wrote in a regulatory filing that ex-CEO and current Executive Chair Gary Kelly said he would not stand for re-election at the 2025 shareholders meeting, and will retire and step down from the board immediately following it.
In addition, board members David Biegler, Veronica Biggins, Sen. Roy Blunt, Dr. William Cunningham, Dr. Thomas Gilligan, and Jill Soltau have submitted their resignations to be effective after the board’s regularly scheduled meeting in November.
The company added that the resignations will reduce the size of the board to nine, although it expects four new members to be appointed in the near future. It explained that after the annual meeting, the total number will be reduced by one, giving Southwest a total of 12.
Moves Come Amid Elliott Pressure
Elliott has been pressuring Southwest to shake up the company, and has especially targeted Kelly and CEO Bob Jordan for what Elliott believes is poor leadership and a failure to address its concerns.
In a letter to shareholders, Kelly argued that Jordan and the board have constructively engaged with Elliott and other shareholders, and are taking steps to strengthen the airline. However, while he expressed optimism the plans the executives have laid out for growing Southwest will succeed, he noted it was “the time for change.”
Shares of Southwest Airlines fell more than 3.5% to $28.65 as of noon ET and are down less than 1% year-to-date.