(Dallas Morning News)
Elliott Investment Management, the activist investor aggressively pushing for change at Dallas-based Southwest Airlines, says it now has control of the required 10% of shares needed to call a special shareholder meeting.
The total beneficial ownership was disclosed in a government filing Tuesday and shows Elliott had reached over 61 million common shares. According to Southwest’s corporate bylaws, the hedge fund, which first disclosed an 11% economic interest in Southwest in June, can request a special shareholders meeting. Special shareholders meetings are rare but would signal Elliott has advanced its fight against the airline. Elliott has previously said it intends to call a shareholder meeting to elect 10 new members to Southwest’s board, which currently consists of 15 people.
Elliott is demanding that Southwest reevaluate its board of directors, bring in new leadership and conduct a business review. Southwest and Elliott are scheduled to meet on Sept. 9. “We remain prepared to meet with Elliott next week and look forward to sharing details on our continued transformation at our investor day on Sept. 26,” a Southwest spokesperson said in an email.
Southwest’s board has five committees. Two of them can play a role in who is on the board. There’s an executive committee, which consists of five board members. That committee has Bob Jordan, Southwest’s CEO and executive chairman Gary Kelly. Elliott has called on both to leave the company. David Biegler, William Cunningham and David Hess also sit on this committee. According to Southwest’s executive committee’s charter, not only can this committee fill vacancies on the board, but it can also amend the bylaws of the company.
Southwest also has a nominating and corporate governance committee. This committee can identify and review candidates for the board, among other responsibilities. Seven members of the board sit on this committee, chaired by Veronica Biggins. Members include Lisa Atherton, Douglas Brooks, William Cunningham, Rakesh Gangwal, Thomas Gilligan and Jill Soltau.
On June 10, the hedge fund took an 11% economic stake through derivatives. Since then, Elliott has converted enough of those holdings into common shares to cross the 10% threshold. Its overall economic stake has stayed the same since the initial disclosure.
When Elliott sought after more shares, Southwest enacted a “poison pill plan,” a plan often used to thwart activist investors looking to take over a company. The plan makes it hard for an investor, like Elliott, to accumulate more than 12.5% of the stock of the company.
Southwest’s next investor day is scheduled for Sept. 26.
#southwestairlines #elliottinvestmentmanagement #specialshareholdermeeting #activistinvestor
