SOUTHWEST AIRLINES CO
For the period ended May 7, 2026. Filed Mar 27, 2026.
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May 7, 2026 · Filed Mar 27, 2026
Contents
Pay Versus Performance Table
As required by Item 402(v) of Regulation
S-K,
the Company is providing the following information regarding the relationship between executive compensation and the Company’s financial performance for each of the last five completed fiscal years. In determining the “compensation actually paid” (“CAP”) to the Company’s NEOs, the Company is required to make various adjustments to amounts that have been reported in the Summary Compensation Table (“SCT”), as the SEC’s valuation methods for this Pay Versus Performance Table (“PVPT”) differ from those required in the SCT. The dollar amounts reported in each column (c) below represent the amount of CAP to each principal executive officer (“PEO”), as computed in accordance with Item 402(v) of Regulation
S-K.
The dollar amounts do not reflect the actual amount of compensation earned by or paid to the applicable PEO during the applicable year. The dollar amounts reported in column (e) below represent the amount of average CAP to the
non-PEO
NEOs, as computed in accordance with Item 402(v) of Regulation
S-K.
The dollar amounts do not reflect the actual amount of compensation earned by or paid to the
non-PEO
NEOs during the applicable year.
| Fiscal Year · SCTTotal forFirstPEO ($) · SCT Totalfor SecondPEO ($) · CAP toFirst PEO($) (1) (3) · CAP toSecondPEO($) (1) (3) · AverageSCTTotal forNon-PEONEOs ($) · AverageCAP toNon-PEONEOs($) (2) (3) · Value of $100InvestmentFrom 12/31/20Based On: · NetIncome($) (inmillions) · Company-SelectedMeasureAdjustedROIC(After-Tax)(%) (5) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| TSR($) · PeerGroupTSR($) (4) | ||||||||||
| (a) | (b) | (b) | (c) | (c) | (d) | (e) | (f) | (g) | (h) | (i) |
| 2025 | — | 16,587,882 | — | 21,865,552 | 6,642,907 | 8,507,752 | 95 | 88 | 441 | 4.1 |
| 2024 | — | 10,562,384 | — | 9,346,471 | 4,492,735 | 3,829,717 | 66 | 63 | 465 | 3.0 |
| 2023 | — | 9,307,298 | — | 8,542,469 | 5,971,172 | 5,374,278 | 55 | 63 | 465 | 5.7 |
| 2022 | 5,069,203 | 5,333,960 | 4,168,811 | 4,758,729 | 2,747,309 | 2,695,718 | 63 | 48 | 539 | 7.6 |
| 2021 | 5,819,756 | — | 6,016,459 | — | 3,143,196 | 3,170,562 | 80 | 74 | 977 | (7.3) |
| (1) | Reconciliation of Equity Component of CAP—PEOs. |
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| FIRST PEO (Gary C. Kelly) – SCT TOTALS | $— | $— | $— | $5,069,203 | $5,819,756 |
| (Deduct): | — | — | — | ||
| Fair value of equity awards granted during the year from the SCT | — | — | — | (3,624,972) | (3,945,578) |
| Add (subtract) Equity Award Adjustments: | — | — | — | ||
| Fair value at year end of equity awards granted during the year | — | — | — | 2,701,479 | 3,631,118 |
| Change in fair value of equity awards granted in prior years that were unvested as of the end of the year | — | — | — | (180,578) | (227,060) |
| Change in fair value of equity awards granted in prior years that vested during the year | — | — | — | 203,679 | 738,223 |
| Equity awards granted in prior years that were forfeited during the year | — | — | — | — | — |
| Dividends or other earnings paid on equity awards during the year | — | — | — | — | — |
| Total Equity Award Related Adjustments | — | — | — | 2,724,580 | 4,142,281 |
| CAP TOTALS | $— | $— | $— | $4,168,811 | $6,016,459 |
| 2025 | 2024 | 2023 | 2022 | 2021 | |
| SECOND PEO (Robert E. Jordan) – SCT TOTALS | $16,587,882 | $10,562,384 | $9,307,298 | $5,333,960 | — |
| (Deduct): | |||||
| Fair value of equity awards granted during the year from the SCT | (13,075,072) | (7,012,553) | (4,105,004) | (3,626,960) | — |
| Add (subtract) Equity Award Adjustments: | |||||
| Fair value at year end of equity awards granted during the year | 17,046,889 | 7,887,655 | 3,327,323 | 2,702,960 | — |
| Change in fair value of equity awards granted in prior years that were unvested as of the end of the year | 1,655,430 | (2,482,295) | 10,013 | 273,506 | — |
| Change in fair value of equity awards granted in prior years that vested during the year | (349,577) | 391,280 | 2,840 | 75,263 | — |
| Equity awards granted in prior years that were forfeited during the year | — | — | — | — | — |
| Dividends or other earnings paid on equity awards during the year | — | — | — | — | — |
| Total Equity Award Related Adjustments | 18,352,742 | 5,796,640 | 3,340,175 | 3,051,729 | — |
| CAP TOTALS | $21,865,552 | $9,346,471 | $8,542,469 | $4,758,729 | — |
| 56 | Southwest Airlines 2026 Proxy Statement |
Compensation of Executive Officers
The Company’s SCT does not include pension service cost or any prior service cost. In the fiscal years above for the PEOs, the Company did not have any equity awards that were granted and vested in the same year, and did not have any forfeitures of prior awards. Dividends are not paid on unvested shares. To compute CAP, the Company used “Total Equity Award Related Adjustments,” as noted in the reconciliations above, in place of “Fair Value of Equity Awards granted during the year from SCT” for each applicable fiscal year.
| (2) | Reconciliation of Equity Component of CAP — average for non-PEO NEOs. |
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| NON-PEO NEOS AVERAGE SCT TOTALS | $6,642,907 | $4,492,735 | $5,971,172 | $2,747,309 | $3,143,196 |
| (Deduct): | |||||
| Fair value of equity awards granted during the year from the SCT | (4,863,258) | (2,720,867) | (2,463,209) | (1,638,860) | (1,982,723) |
| Add (subtract) Equity Award Adjustments: | |||||
| Fair value at year end of equity awards granted during the year | 6,406,398 | 3,060,406 | 1,996,561 | 1,221,346 | 1,824,701 |
| Change in fair value of equity awards granted in prior years that were unvested as of the end of the year | 397,945 | (1,264,701) | (133,072) | 291,943 | (82,099) |
| Change in fair value of equity awards granted in prior years that vested during the year | (76,240) | 262,144 | 2,826 | 73,980 | 267,487 |
| Equity awards granted in prior years that were forfeited during the year | — | — | — | — | — |
| Dividends or other earnings paid on equity awards during the year | — | — | — | — | — |
| Total Equity Award Related Adjustments | 6,728,103 | 2,057,849 | 1,866,315 | 1,587,269 | 2,010,089 |
| AVERAGE CAP TOTALS | $8,507,752 | $3,829,717 | $5,374,278 | $2,695,718 | $3,170,562 |
The Company’s SCT does not include pension service cost or any prior service cost. In the fiscal years above for the non-PEO NEOs, the Company did not have any equity awards that were granted and vested in the same year, and did not have any forfeitures of prior awards. Dividends are not paid on unvested shares. To compute CAP, the Company used “Total Equity Award Related Adjustments,” as noted in the reconciliations above, in place of “Fair Value of Equity Awards granted during the year from SCT” for each applicable fiscal year.
The NEOs included in this table represent the following individuals for each of the years shown:
2025: Tammy Romo, Andrew M. Watterson, Justin Jones, Tom Doxey, and Anthony Roach
2024: Tammy Romo, Andrew M. Watterson, Mark R. Shaw, Gary C. Kelly, Ryan Green, and Linda Rutherford
2023: Tammy Romo, Andrew M. Watterson, Mark R. Shaw, and Gary C. Kelly
2022: Tammy Romo, Andrew M. Watterson, Mark R. Shaw, and Michael G. Van de Ven
2021: Tammy Romo, Andrew M. Watterson, Michael G. Van de Ven, Thomas M. Nealon, and Robert E. Jordan
| (3) | See “Compensation Discussion and Analysis – Determination of 2025 Executive Compensation; Analysis of Compensation Elements – Long-Term Incentive Compensation – Long-term Incentive Compensation Opportunities and Related Payouts – Performance-Based RSUs” for discussion of the vesting provisions and requirements associated with the Company’s annual performance-based RSUs and special Southwest Even Better awards in the form of performance-based RSUs. The performance-based RSUs granted in 2019 and 2020 that were scheduled to vest in February 2022 and February 2023, respectively, lost all value and paid out at zero percent due to the Company’s performance results during the COVID-19 pandemic. The valuation of the performance-based RSU portion of the Equity Awards for purposes of computing CAP required the following valuation assumptions: |
| Performance- based RSU Grant Year | Percent VestingAssumption atDecember 31, 2021(%) | Percent VestingAssumption atDecember 31, 2022(%) | Percent VestingAssumption atDecember 31, 2023(%) | Percent VestingAssumption atDecember 31, 2024(%) | Percent Vesting Assumption at December 31, 2025 (%) |
|---|---|---|---|---|---|
| 2025 | — | — | — | — | 100* |
| 2024 | — | — | — | 100 | 100 |
| 2023 | — | — | 100 | 0 | 0 |
| 2022 | — | 100 | 150 | 50 | — |
| 2021 | 100 | 300 | 276.3 | — | — |
| 2020 | 0 | 0 | — | — | — |
| 2019 | 0 | — | — | — | — |
| * | The valuation of the 2025 annual performance-based RSUs and the Southwest Even Better award portion of the Equity Awards for purposes of computing CAP each required a 100 percent vesting assumption at December 31, 2025. |
|---|
| (4) | The Company is using the NYSE ARCA Airline Index for calculating its peer group Total Shareholder Return (“TSR”) to be consistent with its 2025 Annual Report on Form 10-K. |
| (5) | The Company-Selected Measure, ROIC (after-tax) less Excess Cash, is calculated in the manner set forth in “Compensation Discussion and Analysis – Determination of 2025 Executive Compensation; Analysis of Compensation Elements – Long-Term Incentive Compensation.” |
Relationship between CAP and Performance Measures
The graphs below show the relationship of CAP to the Company’s PEO and
non-PEO
NEOs with (i) TSR for both the Company and the NYSE ARCA Airline Index, (ii) the Company’s Net Income, and (iii) the Company’s ROIC (after tax) Less Excess Cash, in each case, for the fiscal years ended December 31, 2025, 2024, 2023, 2022, and 2021.
| Southwest Airlines 2026 Proxy Statement | 57 |
Compensation of Executive Officers
CAP, as calculated in accordance with Item 402(v) of Regulation
S-K,
reflects, among other things, year-over-year changes in the fair value of equity awards. These changes are driven primarily by movements in the Company’s stock price, as well as the projected and actual achievement of performance goals. Overall, CAP movements for both the PEO and the non-PEO NEOs show directional alignment with TSR trends over the period. CAP for both the PEO and non-PEO NEOs did not correlate directly with Net Income trends; instead, CAP was more significantly affected by changes in equity values and the Company’s TSR performance. The correlation between CAP and ROIC (after tax) Less Excess Cash over the period is directional but not linear.
The COVID-19 pandemic had a materially negative impact on the airline industry from 2020 through early 2022. Performance-based RSUs granted in 2020 that were scheduled to vest in 2023 lost all value and paid out at zero percent due to the Company’s performance results during the
COVID-19
pandemic. CAP during the five-year-period presented was also affected by the vesting of long-term performance-based cash awards granted in 2021, 2022, and 2023, restricted cash performance awards granted in 2022, and long-term restricted cash awards granted in 2022 and 2023, which contributed to misalignment between CAP and TSR, Net Income, and ROIC (after tax) Less Excess Cash. The Company did not grant long-term performance-based cash awards, restricted cash performance awards, or long-term restricted cash awards in 2024 or 2025. See “Compensation Discussion and Analysis” for further information on these prior-period awards.
Tabular List of Performance Measures Linking Pay for all Named Executive Officers to Company Performance
The list below sets forth, in the Company’s assessment, the most important financial and non-financial performance measures used to link CAP to our NEOs to Company performance.
Financial
| • | ROIC (after-tax) less Excess Cash; |
| • | Operating Margin, excluding special items; |
| • | Adjusted EBIT; and |
| • | Company Stock Price. |
Non-Financial
| • | Wall Street Journal ranking of U.S. airlines, using seven equally weighted objective industry operational performance metrics; and |
| • | Company progress towards major initiatives. |
See “Compensation Discussion and Analysis” for further information on each of the performance measures above.
| 58 | Southwest Airlines 2026 Proxy Statement |
Compensation of Executive Officers
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.