Wednesday, August 14, 2024 Elliott Investment Management L.P., overseeing funds with a collective 11% economic stake in Southwest Airlines, Inc.
(NYSE: LUV), announced its intention to propose ten independent and well-qualified individuals for election to the airline’s Board of Directors. Elliott is set to quickly proceed with the formal nomination of these candidates. Elliott has proposed a trio of strategic initiatives aimed at revitalizing Southwest’s premier status in the industry: revitalizing the board’s composition, ushering in new executive leadership, and embarking on an in-depth review of business practices.
The recent declaration marks a significant advancement in implementing these critical reforms at Southwest. The need for swift action is amplified by the marked ongoing decline in Southwest’s performance since Elliott first released its findings on June 10, alongside the Board’s subsequent actions that further solidify its position and hinder transformative efforts. Upon their appointment, these nominees would offer shareholders an alternative to the incumbent Board, which has been criticized for yielding subpar shareholder returns and failing to hold executives responsible for Southwest’s unsatisfactory performance.
In contrast, the proposed Board promises to inject new expertise, innovative perspectives, and a higher level of accountability. These nominees were identified after an extensive global search aimed at finding individuals ideally suited to tackle Southwest’s immediate challenges and unlock the company’s latent capabilities. The selected candidates consist of four individuals who have served as airline CEOs or Deputy CEOs, along with six others possessing specialized skills in technology, hospitality, consumer industries, labor relations, and regulatory compliance, all seasoned in leading change within these domains.
Here are the nominees, along with more comprehensive biographies attached to this announcement. Michael Cawley, previously the deputy CEO, COO, and CFO of Ryanair David Cush, the ex-CEO of Virgin America Sarah Feinberg, once a senior official at the Department of Transportation and leader of the Federal Railroad Administration Hon. Josh Gotbaum, a seasoned advisor to various organizations and labor groups, and ex-chapter 11 trustee for Hawaiian Airlines Dave Grissen, the past Group President of Marriott International Nancy Killefer, a former senior partner at McKinsey in the Consumer and Retailing Practice and now a board member at Meta Robert Milton, the ex-CEO of Air Canada and ACE Aviation Holdings, and former chairman of United Airlines Gregg Saretsky, the past CEO of WestJet Eash Sundaram, the former Chief Digital and Technology Officer at JetBlue Patty Watson, the current EVP and Chief Information & Technology Officer at NCR Atleos, with extensive experience in technology leadership If chosen, Elliott believes these nominees will guide Southwest toward a brighter future, enhancing the board’s expertise with significant industry knowledge, and aiding in reestablishing the airline as a leader in profitability.
These nominees starkly contrast the existing board, which, prior to Elliott’s intervention on June 10, did not include any independent directors with direct airline experience, nor did it possess essential expertise in other crucial areas for Southwest’s ongoing transformation. Detailed biographies for the nominees are provided below: Michael Cawley Previously Deputy CEO, COO, and CFO at Ryanair With a rich history at Ryanair, Michael Cawley brings years of leadership in the highly competitive low-cost airline sector. Over his 17-year executive stint at Ryanair, Cawley watched the airline skyrocket from under 3 million to 82 million passengers yearly, achieving an astounding 2,700% return to shareholders.
Even after his executive period, he remained on Ryanair’s board, steering the company to an additional 155% shareholder return. Cawley’s pivotal role in shaping Ryanair into a pinnacle of cost efficiency makes him a prime candidate for enhancing Southwest’s operational effectiveness. David Cush, with an extensive three-decade career in aviation including his nine-year tenure as the CEO of Virgin America, has played pivotal roles across various capacities at American Airlines.
His leadership was instrumental in steering Virgin America through significant milestones, such as winning the “Best U.S. Airline” title from Conde Nast Traveler for nine straight years and topping Consumer Reports’ airline satisfaction charts.
Starting his journey with Virgin America shortly after its inaugural flight, Cush managed the airline during the financial crisis, fostering rapid growth and achieving its first annual profit. He also spearheaded a successful IPO and the eventual sale to Alaska Airlines, achieving a remarkable 148% shareholder return. Following this, Cush took on leadership roles at Service King Paint & Body, enriching his legacy of fostering employee-centric cultures and stellar customer service.
Sarah Feinberg, a seasoned transportation regulator, previously led the Federal Railroad Administration and served as a key advisor as Chief of Staff to the U.S. Secretary of Transportation.
During her time at the Federal Railroad Administration, she was pivotal in advancing rail safety following several accidents and promoted substantial safety investments. Her extensive experience across various government roles, including overseeing major initiatives in the aviation and transportation sectors, positions her as an invaluable asset to the Southwest Board, especially in enhancing employee and customer safety protocols. Joshua “Josh” Gotbaum’s career spans significant roles where he has influenced both management and labor relations within the airline industry.
His tenure at Hawaiian Airlines is noted for guiding the carrier through chapter 11 to achieve exceptional operational margins and reliability, significantly benefiting shareholders and securing advantageous contracts for employees. Gotbaum’s experience extends into government roles and significant positions within investment banking and capital management, underscoring his adeptness at navigating complex organizational transformations. David “Dave” Grissen, former Group President of Marriott International, managed a vast portfolio that included significant revenue generation and a workforce of 160,000.
His leadership was crucial in nearly doubling Marriott’s presence in the Americas, showcasing his expertise in scaling operations and enhancing brand growth. Grissen’s profound experience in the hospitality sector, combined with his current board roles, aligns seamlessly with Southwest’s strategic goals. Nancy Killefer’s illustrious career at McKinsey spanned roles that shaped her into a formidable leader in the consulting sector, particularly within consumer and retailing practices.
Her public sector roles, which included transformative contributions at the IRS, combined with her board positions at major companies, equip her to drive significant consumer-focused initiatives at Southwest. Robert Milton’s extensive experience as CEO of Air Canada and his tenure as Chairman of United Airlines highlight his deep understanding of airline management and strategic realignment. His leadership has consistently led to enhanced operational performance and shareholder value, making his insights particularly relevant for guiding Southwest’s strategic directions.
Gregg Saretsky, with his profound leadership at WestJet, transformed the airline’s market approach and operational strategies, reflecting in a significant shareholder return. His prior roles at Alaska Airlines enrich his perspectives on airline operations, making him a strategic fit for Southwest’s Board. Eash Sundaram, as the former Chief Digital & Technology Officer at JetBlue, revolutionized the airline’s technological landscape, significantly enhancing its operational and commercial strategies.
His leadership at JetBlue Technology Ventures and previous executive roles highlight his capability in steering technology-driven transformations. Patricia “Patty” Watson’s background as a technology executive in various sectors, coupled with her military service, positions her uniquely to address Southwest’s technological and operational modernization. Her connection to Southwest through family ties adds a personal dimension to her professional insights, aligning her efforts with the company’s cultural and strategic evolution.
PARTICIPANT DETAILS AND PROXY SOLICITATION INFORMATION Elliott Investment Management L.P. and its associates, collectively referred to as “Elliott,” plan to submit a proxy statement and corresponding proxy card to the Securities and Exchange Commission (“SEC”).
These documents will be used to gather votes for the election of Elliott’s chosen director candidates and for other matters that may arise during the forthcoming shareholder meeting of Southwest Airlines Co., a Texas-based corporation (the “Company”). This meeting could be an annual or a special gathering of shareholders.
ALL SHAREHOLDERS OF THE COMPANY ARE URGED TO THOROUGHLY READ THE FORTHCOMING PROXY STATEMENT AND ANY RELATED MATERIALS, INCLUDING THE PROXY CARD, ONCE AVAILABLE, AS THEY WILL PROVIDE CRUCIAL INFORMATION. Elliott will also offer copies of the proxy statement at no charge upon request. Shareholders should direct their requests to Elliott’s proxy solicitor.
Expected participants in this proxy solicitation include Elliott Investment Management L.P. (“EIM”), Elliott Associates, L.
P., Elliott International, L.P.
, The Liverpool Limited Partnership (“Liverpool”), Elliott Investment Management GP LLC (“EIM GP”), along with individuals Paul E. Singer, Michael Cawley, David Cush, Sarah Feinberg, Joshua Gotbaum, David Grissen, Nancy Killefer, Robert Milton, Gregg Saretsky, Easwaran Sundaram, and Patricia Watson. As of today, Elliott controls an approximate 11.
0% economic exposure to the Company via ownership of common stock, each share valued at $1.00. EIM, serving as the investment manager for both Elliott Associates and Elliott International—known together as the “Elliott Funds”—owns 48,948,500 shares of common stock.
The Elliott Funds also engage in derivative agreements amounting to 16,976,000 shares in the form of cash-settled swaps. Direct ownership of these shares and participation in the derivative agreements are held by Elliott Associates, Elliott International, and Liverpool, with Liverpool being a fully owned subsidiary of Elliott Associates. EIM GP, led solely by Paul E.
Singer, acts as the general partner for EIM. Current individual holdings in common stock include 19,765 shares by Mr. Cawley, 10,000 by Mr.
Cush, 3,068 by Ms. Feinberg (inclusive of shares held directly and those by her domestic partner), 19,162 by Mr. Gotbaum, 1,953 by Mr.
Milton, 4,000 by Mr. Saretsky, 2,000 by Mr. Sundaram, and 5,086 by Ms.
Watson (including shares held directly and by her spouse)..
