Southwest Airlines’ executive chairman Gary Kelly announced on Tuesday that he will step down from his position and “voluntarily retire.” The airliner also revealed that six of its board directors will also leave their positions.
The executive shakeup at Southwest comes amid pressure from activist investor Elliott Management, who has been campaigning for a change of leadership at the company.
Elliott unveiled 11% economic interest, worth approximately $1.9 billion, in Southwest earlier this year and has been pressuring the company to oust its CEO, Bob Jordan, and make changes to its board. Elliott proposed 10 candidates for the airliner’s 15-person board, saying that the current executive lineup isn’t open to changes and is failing to create value for shareholders.
Kelly served as the CEO of Southwest for 17 years before stepping down in favor of Jordan and assuming the executive chairman role in 2022. While Kelly intended to remain at the position at least through 2026, he now intends to walk away after the 2025 annual meeting. The departing board members, on the other hand, will step down in November.
Despite the changes, Southwest said it remains committed to Jordan as its CEO. It intends to consider Elliott’s candidates for its board, but it isn’t given that they will get the nod.
On the other hand, Elliott, who floated the idea of a proxy fight recently, said it is “pleased” with recent changes.
“We are pleased that the board is beginning to recognize the degree of change that will be required at Southwest, and we hope to engage with the remaining directors to align on the further necessary changes,” the activist investor said in a statement. “The need for thoughtful, deliberate change at Southwest remains urgent, and we believe the highly qualified nominees we have put forward are the right people to steady the board and chart a new course for the airline.”
Southwest’s stock dropped by more than 5% at one point on Tuesday before making up most of its losses later in the day.