Dallas-based Southwest Airlines has announced the next phase of its board’s transformation, including what the company called “significant ongoing refreshment.”

The board presented its plans earlier this week after Elliott Investment Management LP, an activist minority investor, called for changes earlier this year in the management and board at the airline.

Southwest said that Elliott Investment Management was invited to participate in refreshment efforts and other corporate governance changes. Southwest said it intends to continue a constructive engagement with Elliott toward a collaborative resolution in the near term.

Airline leadership met with Elliott executives at the investor’s New York offices. Executive Chairman Gary Kelly sent a letter to shareholders detailing the changes.

Board changes

Kelly announced his intention to voluntarily retire from the board and his executive chairman position effective immediately after the company’s 2025 annual meeting. Southwest said six current directors have informed the board of their plans to voluntarily step down immediately after the company’s regularly scheduled board meeting in November. Those members are:

• David Biegler (Compensation Committee Chairman)
• Veronica Biggins (Nominating and Corporate Governance Committee Chair)
• Sen. Roy Blunt
• Dr. William Cunningham (Lead Director)
• Dr. Thomas Gilligan (Audit Committee Chairman)
• Jill Soltau

The company said the board anticipates appointing four new independent directors in the near future.

In addition to considering Elliott’s director candidates, Southwest’s Nominating and Corporate Governance Committee has engaged an independent search firm to identify and review strong candidates who can bring complementary skills and experience to lead the airline forward.

Southwest said it has added or appointed eight “highly qualified” directors over the past three years, including the recent appointment of Rakesh Gangwal, co-founder of India’s largest airline, InterGlobe Aviation (IndiGo). With those changes, Southwest said it expects the number of directors serving on the board to be reduced to 13 following the regularly scheduled November board meeting and to 12 following the 2025 Annual Meeting.

The company said that inclusive of these changes, 75% of the airline’s directors will have three years or less tenure on the board as of the 2025 annual meeting and the average board tenure will be approximately 2.5 years, reduced from 7.3 today.

Southwest’s intentional transformation

Southwest said that consistent with feedback from shareholders, the board has eliminated the executive committee structure and created a new finance committee with a mandate focused on assisting the board with oversight of financial, operational, and business plans and strategies, major transactions, capital structure and capital allocation priorities, among other duties.

In connection with the planned director retirements in November and other board committees being reconstituted at that time, the finance committee also will be reconstituted to include both new and incumbent directors with relevant strategy and financial expertise, the company said. The board will name a new lead director and new committee chairs for each of the Audit, Compensation, and Nominating and Corporate Governance Committees at that time as well.

The company said its board is confident that there is no better leader than CEO Bob Jordan to successfully execute Southwest Airlines’ robust strategy to evolve the airline and enhance sustainable shareholder value. Jordan, a 36-year industry veteran, has led Southwest Airlines through some of its most turbulent times, while consistently driving transformational initiatives and innovation, the company said.

Jordan has led the acquisition and integration of AirTran Airways; was instrumental in the development of Southwest’s e-commerce platform; launched a new and highly successful Southwest Airlines Rapid Rewards program; oversaw a wholesale refresh of the Southwest Airlines brand; led the expansion of the route network domestically and introduced international flights and, during the height of the pandemic, led efforts around voluntary retirement and leave programs that were critical to maintaining Southwest Airlines’ financial strength and sustainability.

The company said that Jordan is implementing intentional changes to transform the business, meet evolving customer preferences, enhance the customer experience, further modernize the airline, and drive shareholder returns.

BofA Securities and Morgan Stanley & Co. LLC are acting as financial advisors to Southwest Airlines; Vinson & Elkins L.L.P. and Kirkland & Ellis LLP are acting as legal advisors.

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