by Mia Taylor
Last updated: 2:00 PM ET, Tue September 10, 2024
Southwest Airlines has announced a shakeup of its board that includes the departure of Executive Chairman Gary Kelly.
In a statement issued Tuesday, the airline said it is entering "the next phase of the Board's transformation, including significant ongoing refreshment.
The move comes amid what has been described in media reports as pressure for changes from activist investor Elliott Investment Management. Elliott is seeking refreshment efforts and other corporate governance changes.
Southwest Airlines said that it intends to continue its constructive engagement with Elliott toward a collaborative resolution in the near term.
In the meantime, Kelly, 69, who has been with the airline for about 40 years, will leave the board in 2025.
In a lengthy letter to shareholders detailing his departure, Kelly said now is the time for change.
My role has been leading Board oversight, but it has always been transitional, which begs the question as to our vision for the role going forward, wrote Kelly. While my heart will always be with Southwest and a part of me would love to continue supporting this great Company day-to-day, I recognize it is critical to demonstrate my immense confidence and support for Bob Jordan as CEO to all our Stakeholders.
Southwest Airlines plane landing at Baltimore/Washington International Airport. (Photo Credit: Patrick Clarke)
Kellys letter also pointed out that despite experiencing an unprecedented, uninterrupted profit streak of 47 years, Southwest has not performed as expected in the years since the pandemic.
Emerging from the destruction of the pandemic has been especially challenging amid soaring industry costs and capacity, Kelly explained.
Our performance has fallen short of our expectations. We've faced challenges many times and have overcome them.
We are taking swift and bold action, and we will overcome these challenges, too," Kelly said in the letter to shareholders.
In order to help improve Southwests performance, the airlines leadership team and its board have been focused on making tactical changes in a variety of areas including to the carriers route network; revenue management techniques; and marketing, merchandising, and distribution methods.?
A thorough, comprehensive, and urgent analysis and evaluation of our strategy has been underway since last year that will transform Southwest, yet again, and further strengthen our position as the friendly, reliable and low-cost airline of choice, said Kelly.
In addition to Kellys upcoming departure, several other members will voluntarily step down immediately from the Southwest Airlines board. These departures will take place after the companys upcoming board meeting in November.
The departing board members include:
- David?Biegler (Compensation Committee Chairman)
- Veronica?Biggins (Nominating and Corporate Governance Committee Chair)
- Senator Roy Blunt
- Dr. William Cunningham (Lead Director)
- Dr. Thomas?Gilligan (Audit Committee Chairman)
- Jill?Soltau
The airline said in its statement that it deeply appreciates the service of the outgoing Directors, each of whom offered unique experience and expertise that benefitted all Shareholders. The Company wishes them all the best in their future endeavors.
Four new directors will be appointed in the near future, according to the airline.
The airline said it expects the number of directors serving on the board to be reduced to 13 following the regularly scheduled November Board meeting and to 12 following the 2025 Annual Meeting.
Elliott Investment Management has a nearly $2 billion stake in Southwest, according to CNBC. The investment firm has said that Southwest has had stunning underperformance.
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