Elliott Sends Second Open Letter to Its Fellow
Shareholders
Declares Intent to Call a Special Meeting in
Coming Weeks, Given Urgent Need for Leadership Change
Southwest's Use of "False Record Dates"
Requires Shareholders Take Action Now to Protect Their
Investment
WEST
PALM BEACH, Fla., Sept. 24,
2024 /PRNewswire/ -- Elliott Investment Management
L.P. ("Elliott"), which manages funds that together have an
investment representing an approximately 11% economic interest
in Southwest Airlines Co. (NYSE: LUV) (the "Company" or
"Southwest"), today sent a second open letter to its fellow
Southwest shareholders.
In the letter, Elliott Partner John
Pike and Portfolio Manager Bobby
Xu wrote that although Elliott's goal has been to
collaborate with Southwest to restore accountability and
best-in-class financial performance, Southwest has chosen a
go-it-alone path, featuring a chaotic series of defensive actions,
with the goal of obstructing a leadership change that is urgently
needed. The letter made clear that Elliott intends to formally call
a special meeting in the coming weeks – possibly as soon as next
week.
The letter also alerted shareholders to certain defensive
actions that Southwest's leaders are taking and urged them to take
action to ensure they would be able to vote their shares. Southwest
has provided several potential record dates (so-called "false
record dates") to banks and brokers in anticipation of Elliott
calling a special meeting. The next "false record date" set by
Southwest is October 7. Therefore,
Elliott strongly urged all Southwest shareholders – especially
those who engage in share lending or authorize their brokers to
engage in share lending – to work with their banks and brokers as
soon as possible to confirm that they are able to vote all their
Southwest shares by no later than October
7.
For more information, please visit
StrongerSouthwest.com.
The full text of the letter follows:
September 24, 2024
Dear Fellow Southwest Shareholders,
We are writing to you today on behalf of Elliott Investment
Management, L.P. ("Elliott") regarding your investment in Southwest
Airlines Co. ("Southwest" or the "Company").
The purpose of today's letter is to a) inform you of our intent
to formally call a special meeting in the coming weeks and b) make
you aware of certain defensive actions that Southwest's leaders are
taking, apparently in an attempt to disenfranchise shareholders and
evade accountability for their poor performance. This letter will
lay out the steps you need to take prior to a potential record date
of October 7 to ensure that
you can vote your shares.
We Intend to Call a Special Meeting at Southwest in the
Coming Weeks
Since becoming large investors in Southwest, it has been our
goal to collaborate with the Company to restore accountability and
best-in-class financial performance.
Unfortunately, Southwest's management and Board have chosen a
go-it-alone path with the goal of obstructing a leadership change
that is urgently needed. This path has featured a chaotic series of
defensive actions, including a "poison pill," a hastily recruited
new director, a half-baked announcement of changes to the Company's
product, and the sudden declaration that nearly half of the Board
intends to resign in November. Executive Chairman Gary Kelly has also said that he intends to
resign, but not until next May.
Now we are seeing reports that Southwest executives are warning
employees of "difficult decisions" ahead that could adversely
affect workers, which are supposedly being made in response to
demands from Elliott Management.
Let us be clear: Whatever "difficult decisions" management has
decided must be made, they are the product of a failed management
team that has delivered years of deteriorating performance and is
now taking any action – no matter how short-sighted – that they
believe will preserve their own jobs. Elliott has had no say in
any of these actions. From the very beginning of this campaign,
our asks have been simple, clear and consistent:
1) Enhance the
Board of Directors: The Board should be reconstituted with new,
truly independent directors from outside of Southwest who have
best-in-class expertise in airlines, customer experience and
technology.
2) Upgrade
Leadership: Southwest must bring in new leadership from outside
of the Company to improve operational execution and lead the
evolution of Southwest's strategy.
3) Undertake a
Comprehensive Business Review: Southwest should form a new
management and Board-level committee to evaluate all available
opportunities to rapidly restore the Company's performance to
best-in-class standards.
In other words, we believe that competent new leaders, working
through a deliberate and thoughtful process, should chart the
course forward for Southwest. We do not support the
Company's current course, which is being charted in a haphazard
manner by a group of executives in full self-preservation mode.
Trusting these executives to implement "transformative" strategic
changes and make "difficult decisions," when they have proven
incapable of competently running the airline, represents a
long-term risk to the business and its culture. We have seen time
and again that when underperforming management teams try to
implement measures without proper governance or the right
expertise, companies fail to address their strategic challenges and
often make matters worse.
The urgency of management and Board change at Southwest could
not be clearer. In the coming weeks, we will be formally
requesting a special meeting to provide you with a choice between
the new directors that we have put forward – who we believe possess
the qualifications and skills to guide Southwest to a brighter
future – or a Board that lacks relevant expertise and has
pre-committed itself to supporting failed CEO Bob Jordan.
Southwest Shareholders Need to Call Back All Their Shares
Prior to October 7
In the event of a special meeting, it is very important that
you, as a fellow Southwest shareholder, have the opportunity to
vote all of your shares.
To be entitled to vote at the special meeting, shareholders must
have the right to vote their shares as of the record date for the
meeting, which will be set by Southwest's Board.
Southwest has provided several potential record dates to banks
and brokers in anticipation of Elliott calling a special meeting.
The use of these so-called "false record dates" can be a defensive
strategy used to disenfranchise shareholders by not allowing
investors the opportunity to get their shares into a voteable
position prior to the record date.
These "false record dates" will enable Southwest to set its
actual record date for a very short time after the special meeting
is called – possibly the very same day. This maneuver would leave
some Southwest shareholders unable to vote their full share
position at the special meeting.
Because we intend to request that Southwest call a special
meeting in the coming weeks, we strongly urge all Southwest
shareholders – especially shareholders who engage in share lending
or authorize their brokers to engage in share lending – to work
with their banks and brokers as soon as possible to confirm that
they are able to vote all their Southwest shares by no later than
October 7 (the next "false record
date" set by Southwest). If any of your shares are currently on
loan, you can instruct your broker to recall any loaned shares to
ensure you are "long" for your entire eligible position.
Shareholders should be ready for whatever record date is set by the
Southwest Board.
An Urgent Case for Change
Given the reckless and chaotic actions that Southwest's leaders
keep taking in an attempt to preserve their jobs – and the
resulting risk to the Company and its constituents – the need for
change is urgent, and our request for a special meeting may come
as soon as next week.
Any shareholders who have questions about what they need to do
should contact our proxy solicitor, Okapi Partners, by calling
toll-free (877) 629-6357 or by emailing info@okapipartners.com.
Sincerely,
John
Pike
Bobby Xu
Partner
Portfolio Manager
CERTAIN INFORMATION CONCERNING THE
PARTICIPANTS
Elliott Investment Management L.P., together with the other
participants named herein (collectively, "Elliott"), intend to file
a proxy statement and accompanying proxy card with the Securities
and Exchange Commission ("SEC") to be used to solicit proxies with
respect to the election of Elliott's slate of highly qualified
director candidates and other proposals that may come before the
next shareholder meeting of Southwest Airlines Co., a Texas corporation (the "Company"), whether an
annual or special meeting of shareholders.
THE PARTICIPANTS STRONGLY ADVISE ALL SHAREHOLDERS OF THE COMPANY
TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS, INCLUDING A
PROXY CARD, AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO
CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION,
THE PARTICIPANTS WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT
CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE
DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR.
The participants in the solicitation are anticipated to be
Elliott Investment Management L.P. ("EIM"), Elliott Associates,
L.P. ("Elliott Associates"), Elliott International, L.P. ("Elliott
International"), The Liverpool Limited Partnership ("Liverpool"), Elliott Investment Management GP
LLC ("EIM GP"), Paul E. Singer
("Singer"), Michael Cawley,
David Cush, Sarah Feinberg, Joshua
Gotbaum, David Grissen,
Nancy Killefer, Robert Milton, Gregg
Saretsky, Easwaran Sundaram
and Patricia Watson.
As of the date hereof, Elliott has combined economic exposure in
the Company of approximately 11.0% of the shares of its Common
Stock, $1.00 par value per share (the
"Common Stock"), outstanding. As of the date hereof, EIM, the
investment manager of Elliott Associates and Elliott International
(together, the "Elliott Funds") with respect to the shares of
Common Stock held by the Elliott Funds and/or their respective
subsidiaries, beneficially owns 61,116,500 shares of Common Stock.
Additionally, as of the date hereof, the Elliott Funds are party to
notional principal amount derivative agreements in the form of cash
settled swaps with respect to an aggregate of 4,808,000 shares of
Common Stock (the "Derivative Agreements"). Elliott Associates,
Elliott International and Liverpool are the direct holders of the shares
of Common Stock beneficially owned by EIM, and are party to the
Derivative Agreements. Liverpool
is a wholly-owned subsidiary of Elliott Associates. EIM GP is the
sole general partner of EIM. Singer is the sole managing member of
EIM GP. As of the date hereof, Mr. Cawley holds 19,765 shares of
Common Stock, Mr. Cush holds 10,000 shares of Common Stock, Ms.
Feinberg beneficially owns 3,068 shares of Common Stock, including
2,800 shares of Common Stock held directly and 268 shares of Common
Stock held by her domestic partner, Mr. Gotbaum holds 19,162 shares
of Common Stock, Mr. Milton holds 1,953 shares of Common Stock, Mr.
Saretsky holds 4,000 shares of Common Stock, Mr. Sundaram holds
2,073 shares of Common Stock, and Ms. Watson beneficially owns
5,243 shares of Common Stock, including 3,964 shares of Common
Stock held directly and 1,279 shares of Common Stock held by her
spouse.
About Elliott
Elliott Investment Management L.P. (together with its
affiliates, "Elliott") manages approximately $69.7
billion of assets as of June 30, 2024. Founded in 1977,
it is one of the oldest funds under continuous management. The
Elliott funds' investors include pension plans, sovereign wealth
funds, endowments, foundations, funds-of-funds, high net worth
individuals and families, and employees of the firm.
Media
Contact:
Stephen Spruiell
Elliott Investment Management
L.P.
(212)
478-2017
sspruiell@elliottmgmt.com
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SOURCE Elliott Investment Management L.P.