Phillips 66 highlights annual meeting agenda

HOUSTON - Phillips 66 (NYSE:PSX), an integrated energy company with a market capitalization of $51.25 billion, has issued a letter to its shareholders emphasizing the significance of the upcoming Annual Meeting scheduled for May 21. The company’s independent directors outlined key issues for shareholder consideration, urging votes for their nominees on the white proxy card, and discussed the company’s strategy and performance. According to InvestingPro data, the company has demonstrated solid momentum with an 11.35% year-to-date return.

The letter highlighted the qualifications of the company’s four board nominees, including their industry expertise and independent oversight. Two nominees are new, with one identified by shareholder Elliott Management just last year. The board addressed criticism from Elliott and proxy advisory firms, asserting that their analyses did not fully consider the strengths of the company’s nominees.

Phillips 66 also detailed its commitment to improving refining operations, noting a 15% reduction in Refining Adjusted Controllable Costs since CEO Mark Lashier took office in 2022. The company has completed a significant Spring turnaround program, achieved record product yields, and aims to further reduce costs by 2027. With annual revenue of $137.77 billion and an EBITDA of $3.28 billion, InvestingPro analysis indicates the stock is currently undervalued, supported by a FAIR Financial Health Score of 2.37. Analysts from Wells Fargo, TD Cowen, and Goldman Sachs acknowledged the company’s recent performance improvements and potential for continued growth.

The letter also addressed Elliott Management’s proposal to break up the company, describing it as an overly simplistic plan that underestimates risks and potential value destruction. Phillips 66’s board argued that the current integrated business model provides stability and supports a consistent dividend, currently yielding 3.82%, which could be jeopardized by a breakup. Get deeper insights into Phillips 66’s financial health and growth potential with InvestingPro’s comprehensive research report, part of our coverage of over 1,400 US stocks. The board has thoroughly evaluated and rejected the breakup proposal based on current market conditions and strategic considerations.

Phillips 66’s directors concluded their letter by urging shareholders to vote in favor of the company’s nominees and against Elliott’s proposal for annual director resignations, which they claim would violate Delaware law and pose legal and reputational risks.

The company’s proxy statement, filed on April 8, 2025, and other solicitation materials are available to shareholders, who are encouraged to read them for more detailed information.

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

In other recent news, Phillips 66 has announced a significant transaction involving its retail marketing business in Germany and Austria. The company has reached an agreement to sell a 65% stake in this business to a consortium led by Energy Equation Partners and Stonepeak, while retaining a 35% interest through a new joint venture. This deal, valued at approximately €2.5 billion ($2.8 billion), is expected to close in the second half of 2025, pending regulatory approvals. Phillips 66 anticipates receiving pre-tax cash proceeds of about €1.5 billion ($1.6 billion), which will be allocated towards strategic priorities like debt reduction and shareholder returns.

In related developments, TD Cowen analyst Jason Gabelman has raised the price target for Phillips 66 to $120, maintaining a Buy rating. This comes as the company faces pressure from activist investor Elliott Management, which is pushing for changes in corporate governance and capital allocation. Proxy advisory firms Glass Lewis and ISS have made recommendations regarding board nominations, with Phillips 66 challenging their analyses. The company has defended its current board structure and strategy, emphasizing its strong performance under CEO Mark Lashier and highlighting its commitment to shareholder engagement.

Phillips 66 has also countered Elliott Management’s proposals, arguing against the separation of its Midstream operations and the sale of CPChem. The company has urged shareholders to support its board nominees and reject Elliott’s proposals, emphasizing its focus on long-term value creation and governance practices. As the annual meeting approaches, these issues remain at the forefront of shareholder discussions.

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