Phillips 66 shareholders split board vote

Market: Crude oil, Oil products, Petrochemicals
21/05/25

Activist hedge fund Elliott Investment Management is set to win two seats on Phillips 66's board of directors, short of its goal of four seats, according to preliminary results.

Two Phillips 66 nominees were also elected in the vote, a positive result for the US refiner and midstream operator.

Elliott, which has amassed a $2.5bn stake in Phillips 66, had put forth four nominees for the board in a proxy fight which culminated today at an annual meeting of shareholders.

Both sides declared victory after the split vote on the four open seats.

Phillips 66 said the vote reflects a belief in its integrated strategy of holding assets in different sectors, while Elliott said the vote "sends a clear message" that shareholders demand meaningful change at Phillips 66.

The two Elliott nominees elected to the 14-member Phillips 66 board are Sigmund Cornelius, former chief financial officer of ConocoPhillips and Michael Heim, former chief operating officer of Targa Resources, according to preliminary voting results.

The two Phillips 66 nominees elected to the board are Nigel Hearne, a 35-year veteran of Chevron, and Robert Pease, a former Motiva and Cenovus downstream executive who was appointed to the board in 2024 to address Elliott's concerns about a shift in focus from refining to midstream.

Phillips 66 also said today that shareholders "overwhelmingly" rejected an Elliott proposal requiring annual director resignations, according to the preliminary results.

The voting tally will be tabulated and certified by an independent inspector and final results will be reported to the US Securities and Exchange Commission.

The two Elliott nominees for the Phillips 66 board who were not elected are Brian Coffman, former chief executive at Motiva, and Stacy Nieuwoudt, former energy analyst at Citadel.

The two Phillips 66 nominees to the board that were not elected are current director John Lowe, who was up for re-election, and Howard Ungerleider, a former Dow president and chief financial officer.

Long-running battle over direction

Elliott contends that Phillips 66 has consistently trailed its industry peers and needs to streamline operations, including spinning off or selling its midstream business, selling its 50pc stake in Chevron Phillips Chemical (CPChem), and possibly other assets.

Elliott has waged an aggressive campaign, launching a website dubbed "Streamline 66" with power point presentations, podcasts, biographies of its dissident board nominees, press releases and information on how shareholders can vote.

Phillips 66 has told shareholders that its board and management team are implementing a transformative strategy that has delivered results. The company has expanded its NGL business, improved its refining cost structure and continues to position CPChem as the lowest cost producer of ethylene, Phillips 66 said.

Phillips 66 told shareholders that Elliott was pushing "an aggressive short-term agenda" that would cause disruption, slow momentum and jeopardize shareholders' investment capital.

Phillips 66 has made some adjustments since Elliot started to agitate for change. In addition to adding Pease to the board, the company recently agreed to sell off some of its European retail business, and expects about $1.6bn in pre-tax cash proceeds from the sale that it will use toward debt reduction and shareholder returns.

But the refiner has resisted the other major Elliott recommendations to divest its midstream business and sell its 50pc share of CPChem, saying earlier this month that the Phillips board has evaluated them and "came to the conclusion that neither action is in the best interest of long-term shareholders at this time".

Meanwhile, Chevron has advised Phillips 66 of its interest in acquiring the other half of CPChem "at a reasonable value for both parties", Chevron chief executive Mike Wirth said on 2 May.

Three top shareholder advisory firms [backed the Elliott nominees] (https://direct.argusmedia.com/newsandanalysis/article/2687988) in the proxy fight. Institutional Shareholder Services (ISS) and Egan-Jones recommending all four of Elliot's dissident nominees, while Glass Lewis backed three of the four.

By Eunice Bridges

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