Southwest Airlines Option Plan Could Be Derailed By SEC Requirements

Meanwhile, a company that has used employee ownership effectively, Southwest Airlines, may be unable to continue to offer options to its employees. Southwest CFO Gary Kelly said an SEC proposal to require a shareholder vote on all option plans could make it impossible for Southwest to offer options as part of a collective bargaining process. Because the plans have to be approved by shareholders before being instituted, Southwest would need to offer and authorize a plan prior to collective bargaining, something that raises both practical and labor law issues. Southwest is about 10% owned by employees through a profit sharing plan and already offers options to pilots and mechanics; it is now talking with flight attendants about options. One possible out would be for the airline to get shareholder approval in advance for a number of shares that could, but would not have to be, used for option programs.