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HOUSTON - Phillips 66 (NYSE:PSX), the $40.4 billion energy company currently trading near $99, has urged shareholders to support its board nominees, emphasizing their track record and expressing concerns over the nominees put forth by hedge fund Elliott Management. In a recent letter, the company highlighted the board’s experience and actions taken to deliver shareholder value, while raising questions about Elliott’s nominees’ conflicts of interest and history of value destruction. According to InvestingPro analysis, Phillips 66 appears undervalued based on its comprehensive Fair Value model, suggesting potential upside for investors.
The company’s letter, sent ahead of its Annual Meeting on May 21, 2025, underscores the board’s commitment to acting in the best interest of shareholders, citing over $43 billion returned to shareholders through dividends and share repurchases since its inception in 2012. The company maintains an attractive 4.64% dividend yield, with 9.52% dividend growth over the last twelve months. It also pointed to the board’s role in overseeing transformative transactions and strategic decisions that have shaped the company’s growth.
Phillips 66’s management team, under CEO Mark Lashier since 2022, has divested $3.5 billion in non-core assets, doubled Midstream adjusted EBITDA from 2021 to 2024, and returned $13.6 billion to shareholders. With annual revenue of $143.15 billion and a "FAIR" financial health score from InvestingPro, the company maintains solid operational performance. The company also highlighted the addition of new independent directors and ongoing shareholder engagement. Discover more insights with InvestingPro’s comprehensive research report, offering detailed analysis of Phillips 66’s financial health and growth prospects.
However, Phillips 66 expressed concern over Elliott’s proposed nominees, citing their lack of experience, potential conflicts of interest, and ties to Elliott. The company also pointed out Elliott’s interest in acquiring CITGO, a direct competitor, which could pose a conflict of interest.
Phillips 66’s board also addressed the issue of board declassification, advocating for a legal approach to amending the company’s governing documents, as opposed to Elliott’s proposal, which the company believes would be illegal under Delaware law.
The letter concluded with a unanimous recommendation from the independent directors to vote for Phillips 66’s nominees on the white proxy card, emphasizing the importance of the upcoming shareholder vote for the future of the company.
This news article is based on a press release statement from Phillips 66.
In other recent news, Phillips 66 has been facing significant shareholder discontent, as reported by Elliott Investment Management. A survey revealed dissatisfaction with the company’s strategic direction, with investors pushing for divestment of non-core assets to unlock shareholder value. Elliott has proposed a "Streamline 66" plan and nominated four candidates to the board, seeking to drive strategic changes. Meanwhile, TD Cowen adjusted its outlook on Phillips 66, lowering the price target to $127 but maintaining a Buy rating, citing increased operational expenses and reduced tax credits affecting earnings estimates. The company is also under scrutiny for its response to activist pressures, particularly regarding its integrated structure and refining performance transparency.
Gregory J. Goff, an energy industry veteran, has endorsed Elliott’s board nominees, advocating for improved corporate governance and shareholder value. Phillips 66 has responded to these developments, addressing a letter from Goff and emphasizing its past returns to shareholders through dividends and stock repurchases. The company has also filed a proxy statement with the SEC for its upcoming annual meeting, encouraging shareholders to review the details. These recent developments highlight the ongoing strategic and governance challenges facing Phillips 66.
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