Elliott Slams Phillips 66 Governance, Urges Shareholders To Back Board Overhaul

Phillips 66

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(RTTNews) - Elliott Investment Management L.P., a top-five shareholder in Phillips 66 (PSX), has issued a strongly worded letter to fellow investors, criticizing the company's governance, leadership, and resistance to shareholder engagement.

The firm highlighted what it views as over 18 months of poor corporate conduct, culminating in a public campaign to nominate four independent directors and advocate for governance reforms.

In the letter, Elliott stated that its efforts to collaborate with Phillips 66 since late 2023 were consistently dismissed. The firm claims that the company misrepresented Elliott's intentions, published misleading public communications, and failed to engage sincerely on proposals to enhance board independence and performance.

Elliott alleged a deep-rooted culture of complacency and control within Phillips 66's boardroom, particularly since CEO Mark Lashier was also appointed Chairman in March 2024. According to Elliott, this consolidation of power has hindered meaningful change and sidelined shareholder voices.

Attempts to add new independent directors were reportedly undermined by the company, despite Elliott providing qualified candidates. One agreed-upon nominee, Robert Pease, allegedly shifted stance after joining the board and deferred back to Lashier's leadership, further demonstrating, in Elliott's view, a lack of true independence.

The firm also accused Phillips 66 of resisting transparency regarding board elections, forcing Elliott to resort to litigation to obtain basic information. Elliott claimed that recent board refreshment actions by the company were reactive and only occurred due to shareholder pressure.

Further criticisms were leveled at Lashier's public statements, which Elliott described as self-serving and misleading, especially regarding the company's performance and structure. They argue that Lashier prioritizes "empire building" over shareholder returns.

Regarding board structure, Elliott condemned Phillips 66's classified board and its opposition to a voluntary annual election policy. Independent governance experts supported Elliott's stance, suggesting the board is obstructing reform under the guise of legality.

The letter also addressed the company's treatment of respected energy executive Gregory Goff, who publicly supported Elliott's campaign with a $10 million investment. Phillips 66 allegedly questioned Goff's integrity and motives, despite no financial ties to Elliott. The firm framed this as further evidence of the board's hostility toward independent voices.

Elliott defended the qualifications of its four nominees—Brian Coffman, Sigmund Cornelius, Michael Heim, and Stacy Nieuwoudt—highlighting their industry experience and independence. The firm concluded by urging shareholders to vote for these candidates via the Gold Card to help drive essential change and improve long-term shareholder value.

PSX is currently trading at $106.15, or 2.60% higher on the NYSE.