Southwest, Elliott strike deal to keep CEO Jordan, add six directors

Southwest Airlines 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 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.

“We are pleased to have come to an agreement with Southwest on the addition of six new directors that will enhance and revitalize its Board,” Elliott’s John Pike and Bobby Xu said in a statement.

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.

In September, Southwest said Kelly would step down next spring, but the airline’s board had staunchly backed Jordan.

“I believe Southwest’s best days lie ahead under the vision and leadership of Bob Jordan and the oversight of this reconstituted Board,” Kelly said in a release Thursday.

— CNBC’s Leslie Josephs contributed to this report.