Proxy Blog

Southwest Airlines Co. 

April 28, 2020

The annual proxy for this airline had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on independent chairman, written consent, and lobbying 

Magni voted as follows: 

  1. For and against the proforma proposals.
    For directors – The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation.
    -For auditors – There appear to be no controversies with the financial statements of the company.
    -Against “say-on-pay” – This year’s proxy listed the companies in the peer group so Magni will hold off on voting against all nominees on the compensation committee (see last year’s proxy vote). That said, the compensation disclosures remain inadequate as there is nothing about a shareholder engagement program and there is no benchmarking the company against the peer group.  The company must continue to improve its compensation disclosures. Failure to do so will cause Magni to vote against all director candidates serving on the compensation committee. 
  2. For and against shareholder proposals.
    For independent chairman – Magni wrote a position paper regarding shareholder proposals for independent chairman.
    -Against written consent – Per the Magni position paper, Magni routinely votes against these proposals.
    Against lobbying – The company already provides good disclosures of these activities. In addition, the proposals seek to limit participation in industry trade groups. Such groups are helpful to the company.