Phillips 66 Gears Up for Proxy Fight Against Elliott

Phillips 66 has filed a definitive proxy statement and fielded its own set of board director nominees for election, gearing up for a proxy fight against activist stakeholder Elliott Investment Management LP.

In a letter to shareholders, the company said that Elliott was an “activist hedge fund pushing an aggressive short-term agenda,” that included “a rushed breakup of our company based on flawed analysis”.

“Elliott seeks rapid, irreversible change in pursuit of an unrealistic thesis – and risks halting the momentum on our long-term value-creating strategic plan,” Phillips 66 said in the letter.

Phillips 66 is nominating four director candidates, including two new nominees: John Lowe, a leader with more than 40 years of leadership in midstream, refining and chemicals businesses; Robert Pease, a director identified in partnership with Elliott; A. Nigel Hearne, a 35-year veteran of the energy industry with direct refining operations leadership; and Howard Ungerleider, a former President and CFO with extensive chemicals experience. The company’s annual shareholders meeting is scheduled for May 21.

In a March statement, the company’s lead independent director Glenn Tilton said, “After careful consideration of Elliott’s nominees and several conversations with Elliott’s representatives over multiple years, we have determined that the dissident nominees do not possess skills or experiences not represented on the board already or that would directly drive further shareholder value creation. Further, Elliott’s inconsistent approach and evolving demands would introduce undue risk by prioritizing uncertain short-term gains over a disciplined, long-term strategy. The board reiterates its commitment to rigorously evaluating the portfolio and strategic alternatives to maximize long-term shareholder value while avoiding decisions driven by short-term market fluctuations and speculative valuations.”

Goff Letter to Shareholders

In a recent public letter, energy industry veteran Gregory Goff, who said he had a $10 million investment in the company, said that he supported the slate of directors nominated by Elliott.

“I have been disappointed by what I see as a breakdown in effective corporate governance at Phillips 66. I know from experience how critical it is for a company to have a strong board — possessing both the independence and the expertise to question management’s assumptions about the business and consider the long-term implications of every decision. I don’t see evidence of that kind of culture today on the Phillips 66 board,” Goff said in the letter.

Phillips responded with a statement saying that Goff was “clearly affiliated” with Elliott.

“As of this morning, he remains featured as CEO of Amber Energy, an entity that Elliott has backed in its bid for Citgo, a Phillips 66 competitor. This important and obvious fact about a clear conflict of interest was never mentioned in Mr. Goff’s communication and is plainly misleading to shareholders. The notion he is an investor independent of Elliott is obviously false,” the company said.

“This stunt reflects Elliott’s growing desperation to convince real investors to support its shortsighted, rushed breakup of Phillips 66. We will continue to engage with all investors on the facts and remain confident that those investors value the reliable $43 billion dollars of value we have returned through volatile market cycles,” Phillips 66 said.

Earlier in March, Elliott nominated seven candidates for election to Phillips 66’s board. The firm, which has a declared investment of over $2.5 billion in Phillips 66, said it is pushing for portfolio simplification, an operational review, and stronger oversight.

Elliott did not immediately reply to a request for comment from Rigzone.

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