Southwest Airlines Is Heading Toward A Proxy Fight

Elliott Investment Management, led by billionaire Paul Singer, has intensified its campaign to overhaul the board of Southwest Airlines, aiming to replace up to 10 directors. The activist fund plans to convene a special meeting of shareholders, contingent upon acquiring at least 10% of the airline's stock, as stipulated by Southwest's bylaws. Keith Gottfried, CEO of Gottfried Shareholder Advisory, noted that Elliott is moving swiftly to nominate qualified candidates while simultaneously increasing its stock ownership. The push for change began in June when Elliott disclosed its significant stake in Southwest and presented a detailed turnaround plan. This plan proposed various strategies, including assigned seating, premium options, and the replacement of CEO Bob Jordan and Chairman Gary Kelly. Gottfried suggested that Elliott's recent announcements may be more about demonstrating readiness for a special meeting than solely highlighting the qualifications of its proposed candidates. Elliott is nearing the 10% ownership threshold necessary to call the special meeting, as evidenced by its recent stock trades. Shareholders must file a Schedule 13D with the SEC upon acquiring more than 5% of a company's equity, and Elliott's filings indicate that some of its proposed board candidates have also been purchasing Southwest stock. The fund believes that implementing its proposed changes could significantly increase the airline's stock value, which closed at $25.42 on Tuesday, with Elliott projecting a potential value of $49.