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WEST PALM BEACH, Fla. - Elliott Investment Management L.P. ("Elliott"), which oversees funds owning over $2.5 billion in Phillips 66 (NYSE: PSX), a $43.75 billion market cap energy company currently trading at $107.18, has advocated for substantial changes to the energy company’s Board of Directors. According to InvestingPro analysis, Phillips 66 maintains a FAIR financial health score of 2.35. In a recent letter to shareholders, Elliott expressed the urgency for new board members to rectify Phillips’ prolonged underperformance and poor governance practices. Elliott has also introduced a plan, "Streamline 66," aimed at boosting Phillips’ share price above $200 by streamlining operations and enhancing management oversight.
Elliott’s critique points out that Phillips’ shares have significantly lagged behind competitors Valero Energy and Marathon Petroleum over the past decade, with InvestingPro data showing a concerning -25.68% total return over the past year. The company’s current P/E ratio stands at 21.46, while generating substantial revenue of $143.15 billion in the last twelve months. The investment firm has nominated four independent director candidates with extensive experience in refining and corporate governance, including Sigmund Cornelius, Michael Heim, Brian Coffman, and Stacy Nieuwoudt.
In addition to proposing a new board lineup, Elliott has suggested a governance change where all directors would face annual elections, aligning with practices at nearly 90% of S&P 500 companies. This move seeks to increase board accountability, which Elliott argues is currently hindered by Phillips’ staggered board structure and supermajority voting requirements.
Elliott’s engagement with Phillips 66 has been marked by resistance from the company’s leaders to implement suggested improvements. Elliott cites their own successful engagement with Marathon Petroleum, which led to a significant outperformance of Marathon’s share price, as a model for Phillips 66 to follow.
The proposed changes are set against the backdrop of Phillips’ upcoming Annual Meeting of Stockholders scheduled for May 21, 2025. With analyst price targets ranging from $124.43 to $162, and InvestingPro’s Fair Value analysis indicating the stock is currently undervalued, these governance changes could be crucial for unlocking shareholder value. Elliott encourages shareholders to vote using their GOLD proxy card for the proposed director nominees and governance enhancements. The information presented in this article is based on a press release statement from Elliott Investment Management L.P. For deeper insights into Phillips 66’s financial health and growth potential, access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Phillips 66 has finalized its acquisition of EPIC NGL for approximately $2.2 billion, paid in cash. This acquisition includes natural gas liquids pipelines and fractionation facilities, enhancing Phillips 66’s capabilities in energy delivery. The company plans to expand the NGL pipeline capacity significantly by 2026. Additionally, Phillips 66 is experiencing boardroom tensions with Elliott Investment Management, which has nominated seven directors for the upcoming 2025 Annual Meeting. Elliott has also filed a lawsuit in Delaware’s Chancery Court over board seat elections, challenging Phillips 66’s recent decision to reduce its board size. Independent Director Bob Pease has addressed shareholders, emphasizing the board’s commitment to shareholder value and expressing surprise at Elliott’s actions. Phillips 66 has proposed its own board nominees and is seeking shareholder approval to declassify the board for annual elections. The company continues to focus on shareholder engagement and maintaining strong corporate governance.
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