Last week, the chief operating officer of Southwest Airlines apologized in advance to employees.

According to Bloomberg, the COO said some employees may be impacted by “difficult decisions” the company has to make as it tries to improve profitability.

This is all happening because Southwest is under pressure from an activist investor. Elliott Investment Management is pushing for the airline to find a new chief executive officer and overhaul its board in an effort to improve the company’s finances and boost its share price.

Southwest is far from alone in dealing with this kind of campaign. It’s right out of the activist investor’s standard playbook.

Activist investors have a very straightforward motive, said Margarethe Wiersema, a strategic management professor at UC Irvine. 

“They all want to see the stock price go up, that’s the main, general objective,” Wiersema said.

But they’re not just going to sit around and wait for that. They’re going to try to make it happen. First, she said, by doing a deep dive.

“They do a lot of research on the company,” Wiersema said. “They point out the shortcomings of the firm relative to its competitors in the industry.”

That last part is key, said Nell Minow, vice chair at ValueEdge Advisors. She was an activist investor in the ’90s.

“If the company is doing poorly, when its peers are doing well, then you’ve got something to work with,” Minow said.

Because, she said, that’s an indication that the company could be doing better. 

Once they’ve got the evidence that the targeted company is falling short, they go make their case to other investors. 

“We would reach out to large investors, usually pension funds,” Minow said. “And we found that, like us, they felt that the company needed to make some changes.” 

With that backing, they go to company leaders with demands. 

And a lot of times, everything gets worked out behind closed doors, said Greg Taxin at Spotlight Advisers. But, at the other end of the spectrum, there are campaigns like the one at Southwest.

“These more public spats, which can involve things like a contested election for the board seats at the company,” Taxin said.

Because that’s generally the limit of shareholders’ actual influence.  

“But the larger context is, what direction should the company go in, and has the board either made mistakes or failed to get the company on the right path?” Taxin said.

Taxin said companies have actually been winning more of these votes lately, in part because they’ve gotten more transparent about their shortcomings and how they plan to fix them.