Independent
Tenure on this board
2.0 yrs
Also a director at
Textron Inc (TXT)
11 nominees · 3 ballot items.
Elect eleven directors; advisory (non-binding) vote to approve named executive officer compensation (say-on-pay); and ratify Ernst & Young LLP as independent auditors for fiscal 2026.
Election of eleven directors to serve until the 2027 Annual Meeting of Shareholders or until their earlier death, retirement, resignation, or removal, with proxies to be voted FOR each nominee unless otherwise directed.
Non-binding advisory vote to approve the compensation of the Company’s named executive officers as disclosed in the proxy statement, including the Compensation Discussion and Analysis and compensation tables.
This advisory (non-binding) Say-on-Pay proposal asks shareholders to approve the overall compensation disclosed for Southwest’s named executive officers for 2025. Management seeks shareholder approval to validate its multi-year, pay-for-performance compensation program that ties 100% of short-term incentive payouts to a Board-approved Scorecard (with a 60% weighting on Operating Margin ex special items and additional customer/operational and major-initiative metrics), and emphasizes long-term alignment via time-based RSUs, performance-based RSUs (ROIC after-tax less Excess Cash over a three-year period with a Peer Group Qualifier), and special “Southwest Even Better” performance RSUs tied to Adjusted EBIT for 2026–2027. The Compensation Committee changed the short-term financial metric to Operating Margin (ex special items) and increased its weighting to reinforce a focus on revenue and cost management; it also granted special Southwest Even Better awards to incentivize execution of transformational initiatives. Management’s defense highlights rigorous committee oversight, independent consultant benchmarking, robust share ownership guidelines, a Clawback Policy, multi-dimensional metrics to balance operational and financial objectives, and that prior say-on-pay support was strong (approximately 94% in favor in 2025). The vote is advisory and non-binding, but the Board will consider the outcome in future compensation deliberations; management recommends FOR to endorse the design and outcomes described in the CD&A. Potential investor concerns include the size and structure of special awards (timing and targets for Southwest Even Better awards), the Board’s discretion to increase certain payouts (up to 200% for some awards), and whether realized pay outcomes sufficiently correlate with long-term shareholder returns; these concerns are partly mitigated by multi-year performance vesting, peer-relative qualifiers, and the Clawback Policy. The proposal’s governance context includes extensive shareholder engagement, recent Board refreshment, and a Compensation Committee comprised of independent directors that directly retained independent consultants. For an institutional analyst evaluating this proposal, the core considerations are: alignment of STI and LTI metrics with durable value creation (Operating Margin and ROIC after-tax less Excess Cash), robustness of performance thresholds and peer-relative qualifiers, the rationale and proportionality of special awards tied to transformation execution, and the Board’s responsiveness to shareholder feedback as reflected in prior high say-on-pay support and ongoing engagement.
Ratify the selection of Ernst & Young LLP as Southwest’s independent registered public accounting firm for the fiscal year ending December 31, 2026.
| # | Owner | % of shares | Shares | Value |
|---|---|---|---|---|
| 1 | PRIMECAP MANAGEMENT CO/CA/ | 9.6% | 47,069,495 | $1.8B |
| 2 | FRANKLIN RESOURCES INC | 6.9% | 33,879,331 | $1.3B |
| 3 | VANGUARD CAPITAL MANAGEMENT LLC | 6.5% | 31,644,632 | $1.2B |
| 4 | Elliott Investment Management L.P.Activist | 6.2% | 30,346,000 | $1.1B |
| 5 | STATE STREET CORP | 6.0% | 29,519,791 | $1.1B |
| 6 | VANGUARD PORTFOLIO MANAGEMENT LLC | 4.7% | 23,130,148 | $869M |
| 7 | BlackRock, Inc. | 3.0% | 14,683,276 | $552M |
| 8 | PRICE T ROWE ASSOCIATES INC /MD/ | 2.7% | 13,177,575 | $495M |
| 9 | GEODE CAPITAL MANAGEMENT, LLC | 2.3% | 11,414,542 | $428M |
| 10 | AMERIPRISE FINANCIAL INC | 2.0% | 9,885,010 | $371M |
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