Proxy Blog

Southwest Airlines Co.

May 6, 2019

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 proxy access and independent chairman 

Magni voted as follows: 

  1. For and against the proforma proposals.
    -For and against directors  All but two of the directors were consistent with Magni Corporate Governance best practices. Two directors are from Welsh Carson. Only one person from this company should be on the board. Voted against Bruce Anderson (but for the other director candidate from Welsh Carson) as his experience seemed less applicable than the other proposed director from Welsh Carson.
    -For auditors – There appear to be no controversies with the financial statements of the company.
    -Against say-on-pay” – Last year Magni voted against this proposal based on material deficiencies in disclosure. Those deficiencies have not been addressed (e.g., no shareholder engagement program, lack of peer group disclosure). If progress is not made over the course of the coming year, then Magni will vote next year against all director candidates serving on the compensation committee. 
  2. For and against shareholder proposals.
    -Against modifying proxy access – The existing practices are comparable to other companies with good governance. The shareholder proposal effectively provided for a director to stand election repeatedly over many years, despite being nominated from shareholders representing a small minority of shares and the candidate receiving a few votes in each election.
    -For independent chairman – An independent board is an important part of good governance. An independent chairman is an element of an independent board, though there are situations where an independent chairman does not make sense (e.g., a visionary founder where a material portion of the company value is connected to the founder). This company does not have one of those situations.