Southwest Airlines (NYSE:LUV) and activist investor Elliott Investment Management announced Thursday they’ve struck a settlement deal that staves off a proxy fight in exchange for the addition of six directors to the airline’s board and the accelerated retirement of executive chairman Gary Kelly. Notably, the deal allows CEO Bob Jordan to keep the top job.
Five of Elliott’s board nominees along with former Chevron (NYSE:CVX) CFO Pierre Breber will join the board, the company announced. Southwest’s board will appoint a new chairman to replace Kelly, who will now step off in November. Breber is on the board at Avianca, the Colombian flag carrier.
Elliott and Southwest as recently as last week had been girding up for a proxy fight. The activist had been seeking to install 10 new directors to the carrier’s board and had called for a special meeting in December to elect them. Elliott’s campaign hinged in large part on the removal of Kelly and Jordan from their leadership positions.
With eight new directors joining as a result of the settlement and of Southwest’s earlier board refreshment, the deal is the largest board change Elliott has driven in a U.S. fight.
Southwest’s board will ultimately drop down to 13 members, the airline previously announced in September.
LUV shares dumped $1.28, or 4.2%, to $29.45.
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