Phillips 66 challenges proxy advisors’ recommendations

HOUSTON - Phillips 66 (NYSE: PSX) has publicly disagreed with Institutional Shareholder Services (ISS) and Glass Lewis & Co. (Glass Lewis) concerning their recent recommendations on board nominations and corporate strategy. The energy company contends that the proxy advisory firms failed to address critical issues in their analyses.

The company’s Independent Directors stated their commitment to shareholder engagement and emphasized their belief in the strength of the current board and nominees. They highlighted that ISS and Glass Lewis did not assess Elliott Management’s proposal to break up Phillips 66, which is central to Elliott’s campaign. The board maintains that maintaining the integrated model is the best path to shareholder value creation.

Phillips 66 also expressed concern about the assessments of director independence, particularly regarding Robert Pease. The proxy advisors’ stance against Pease sets a troubling precedent, according to the company, by questioning his independence after a single vote on the board.

Furthermore, Phillips 66 criticized the proxy advisors for relying on outdated board analysis and overlooking governance issues, such as Elliott’s attempt to acquire CITGO and misleading disclosures.

The company reiterated its commitment to transformation and governance refreshment, highlighting the addition of five new independent directors since July 2020. Phillips 66 also pointed out its strong governance practices, including a declassification proposal supported by ISS, which would enhance board accountability.

Under the leadership of CEO Mark Lashier since July 1, 2022, Phillips 66 has reportedly improved its operating results and achieved a total shareholder return above its key competitors. The company has been focusing on corporate cost takeouts, refining performance, and asset divestitures. Recent financial data shows a healthy 4.04% dividend yield with 14.29% dividend growth, while maintaining a solid current ratio of 1.23. InvestingPro subscribers have access to over 30 additional key metrics and exclusive ProTips about Phillips 66’s operational efficiency and market position.

Phillips 66’s board composition is aligned with its strategy, with directors and nominees having significant experience in refining, chemicals, midstream, and business transformations. The company’s financial strength is reflected in its $137.77 billion in revenue and $2.96 billion in levered free cash flow over the last twelve months. For deeper insights into Phillips 66’s governance and financial performance, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers 1,400+ top US stocks with expert analysis and actionable intelligence.

The company advises shareholders to vote for its four nominees using the WHITE proxy card, support the board declassification proposal, and reject Elliott’s proposal for annual director resignations. The annual meeting is scheduled for May 21, 2025.

This news is based on a press release statement from Phillips 66.

In other recent news, Phillips 66 has been actively defending its strategic direction against Elliott Management’s criticisms, emphasizing its strong performance under President & CEO Mark Lashier. The company highlighted a 67% total shareholder return and a 15% compound annual growth rate in dividends since 2012. Phillips 66 refuted Elliott’s proposal to separate its Midstream operations and sell CPChem, arguing that such moves could harm shareholder interests. Meanwhile, Elliott Management, a significant shareholder, has been pushing for changes in the company’s boardroom, nominating four independent candidates and promoting its "Streamline 66" campaign. This campaign aims to improve governance and operational performance, suggesting that Phillips 66’s assets could perform competitively with peers if properly managed. Elliott has filed a definitive proxy statement with the SEC to solicit proxies for its director candidates at the upcoming annual meeting. The ongoing dispute between Phillips 66 and Elliott Management includes debates over corporate governance practices and board composition. Phillips 66 has urged shareholders to support its nominees and reject Elliott’s proposals, while Elliott continues to advocate for its nominees using the GOLD proxy card.

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