The showdown between airliner Southwest Airlines and activist investor Elliott Management has taken a new twist. According to Reuters, Elliott now has enough Southwest’s shares to call a “special meeting”.
Elliott unveiled that it had 11% economic interest in Southwest earlier this year and embarked on a campaign to oust the company’s leadership, including CEO Robert Jordan, due to poor performances and declining stock.
So far, the firm has threatened with a proxy fight and expressed the intention to nominate 10 candidates for the company’s 15-person board. On the other hand, the airliner responded by adopting a “poison pill” clause and expanding its board.
Now, Elliott reportedly converted some of its holdings in Southwest to common shares and upped its stake to 10%. This allows it to call a “special meeting” outside the annual general meeting, during which shareholders can discuss pressing matters and take votes on proposals. One such proposal could possibly see Elliott taking its proxy fight to the next level.
At this moment, it remains highly unlikely that Elliott will take this step. However, having the option to do so will further increase the pressure on Southwest’s leadership.
Southwest’s stock is currently trading at $28.92 per share. This represents a 50% decline in the past three years.