After lobbying from Elliott Management, Gary Kelly will retire as executive chairman next year and six other board members are stepping down.
Aviation Reporter, Dallas Morning News
Southwest Airlines’ executive chairman and former CEO Gary Kelly will not seek reelection and six board members will leave their roles amid pressure from activist investor Elliott Management, which has spent months pushing for change at the Dallas-based air carrier.
The changes came as Southwest leaders met Monday with representatives from Elliott Investment Management, which took a $1.9 billion stake in June and has pressured the airline to make changes to executive ranks and board members, along with other shifts in strategy.
CEO Bob Jordan, who Elliott had pressured to step aside, will remain even as the company has made major changes to key philosophies that set it apart from other airlines, including starting assigned seating and red eye flights.
Kelly, in a letter to shareholder, said it is “important that we not delay the meaningful Board refreshment and corporate governance changes already underway…”
“Now is the time for change,” Kelly wrote. “It’s time to shake things up, not just stir them a bit. The wisdom comes in knowing what to change and what not to change. We know that changes are required to some of our historic business practices. We know we will need to continually bring in new talent – in leadership and on the Board.”
According to a regulatory filing on Tuesday, Kelly notified the company and board that he will not stand for re-reelection at the company’s 2025 annual meeting of shareholders and will retire following a quarterly board meeting on Nov. 21. Six board candidates will also step down: David Biegler, Veronica Biggins, Roy Blunt, William Cunningham, Thomas Gilligan and Jill Soltau.
Kelly was Southwest’s CEO for 18 years before turning it over to Jordan as his hand-picked successor in February 2022, said that “Jordan has the Board’s unanimous support and, along with our executive leadership team.” Kelly became executive chairman after he moved on from CEO.
Elliott had previously disclosed it achieved 10% common shares in the company, enough to call a special shareholders meeting under Southwest’s bylaws. Although, Elliott will have to request a meeting in order for one to occur.
Southwest’s next investor day is Sept. 26.
This story is developing and will be updated.