Southwest Airlines Co. (LUV, Financial) has entered into a Cooperation Agreement with Elliott Investment Management L.P. and its affiliates, marking a significant development in the company's governance structure. This agreement, effective October 23, 2024, involves the appointment of five new directors to the company's Board of Directors, effective November 1, 2024. These directors, namely David Cush, Sarah Feinberg, David Grissen, Gregg Saretsky, and Patricia Watson, will serve until the 2025 Annual Meeting.
As part of the agreement, Elliott Investment Management has withdrawn its request for a special shareholder meeting, and Southwest Airlines will terminate its Rights Agreement with Equiniti Trust Company, LLC. The cooperation aims to reconstitute the Board's committees, ensuring that the new directors constitute at least one-third of each committee's membership. Gregg Saretsky will be appointed as Chair of the Finance Committee, alongside David Cush and three other directors selected by the Board.
The agreement also includes provisions for selecting replacement directors if any of the newly appointed directors are unable to serve. Elliott Parties must maintain a net-long position of at least 3% of Southwest's outstanding common stock to participate in this selection process.
In addition to these changes, Gary C. Kelly, the Executive Chairman of the Board, and several other directors have announced their retirement, effective November 1, 2024. The Board has also appointed Pierre Breber as a new member, with his term expiring at the 2025 Annual Meeting.
The Cooperation Agreement includes voting commitments, standstill restrictions, and mutual non-disparagement provisions, which will remain in effect until February 14, 2026, or 30 days before the nomination deadline for the 2026 Annual Meeting, whichever comes first.
This strategic move is expected to enhance Southwest Airlines' governance and align its Board with shareholder interests, potentially driving long-term value for investors.
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