Southwest Airlines Co. (NYSE: LUV) has announced a landmark addition to its leadership team by appointing Rakesh Gangwal to its Board of Directors, effective immediately. Gangwal, co-founder of IndiGo—India’s largest airline by fleet size and number of passengers—brings with him years of experience, having held executive positions in top airline and travel technology companies.
The low-cost carrier, based in Dallas, said the non-employee board member compensation arrangement for Gangwal has been outlined; he will collect a pro-rated $90,000 annual retainer fee for the service period July 2024-June 2025, plus $1,500 for each non-regularly scheduled meeting attended. In addition, Gangwal and his immediate family shall enjoy free travel privileges on Southwest Airlines, which may extend beyond the service period for himself and probably his spouse with the duration of his service.
Gangwal can also receive equity grants under the Southwest Airlines Co. Amended and Restated 2007 Equity Incentive Plan. During February, non-employee board members each received about $170,000 worth of common stock under the plan. Based on his length of service, he would be eligible for a retirement payment under the company’s Severance Plan for Directors.
It is further noted that, currently, Gangwal has not been assigned to any board committees by Southwest Airlines. The company also noted that Gangwal doesn’t have any material interest in any transaction or agreement requiring additional disclosure in connection with his appointment as a director.
This comes at the best possible time for Southwest Airlines, which is currently under scrutiny because activist investment firm Elliott Investment Management has been rattling its cage over changes at the carrier’s top. Elliott had been calling for leadership changes as the carrier continued to underperform. Southwest Airlines preempted such an event by adopting a “poison pill” strategy to prevent Elliott from going beyond 12.5%.
Bringing Gangwal onto the board seems like a strategic inevitability under Elliott’s pressure to make changes within the leadership structure. His years of industry experience were expected to bring valuable insights into Southwest’s operations and strategy.
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In related news, financial analysts have given mixed outlooks on Southwest Airlines. Raymond James has expressed confidence in Southwest Airlines’ earnings long-term prospects by increasing the price target to $33 from $30 while maintaining its rating of Outperform. In contrast, Barclays has cut its fiscal year 2025 EPS estimate while staying at equal weight in the company.
These developments underline the dynamics continuously existing among Southwest Airlines, its investors, and the broad market as it grapples with challenges in its efforts to find a stronger niche in the competitive airline industry.