Phillips 66 in the Spotlight: A Battle for Board Control

In a dramatic turn of events, Phillips 66, a diversified energy company known for its operations in oil refining, marketing, transportation, chemical manufacturing, and power generation, finds itself at the center of a high-stakes proxy battle. The company, listed on the New York Stock Exchange with a market cap of $42.15 billion, has recently faced significant pressure from activist investor Elliott Management.

Proxy Advisors Back Elliott’s Proposals

On May 13, 2025, Phillips 66 publicly rejected recommendations from proxy advisors Institutional Shareholder Services (ISS) and Glass Lewis, which supported several proposals from Elliott Management. These proposals include the nomination of four new directors to Phillips 66’s board: Brian Coffman, Sigmund Cornelius, Michael Heim, and Stacy Nieuwoudt. ISS, in particular, criticized Phillips 66’s “disappointing” operating performance and raised concerns about “selective disclosure” and “unverifiable claims” regarding operational successes.

Market Reaction and Stock Performance

Despite the controversy, Phillips 66’s stock has shown resilience. On May 12, the stock surged by 7.01%, closing at $118.68, just shy of its 52-week high of $150.12 set in July 2024. Earlier in the day, the stock had already climbed by 5.57%, marking it as one of the top performers in the market. This uptick came even as Elliott Management continued to push for a board restructuring, highlighting the complex dynamics at play.

Elliott’s Strategic Victory

Elliott Investment Management has scored a strategic victory with ISS’s endorsement, which is a significant development in the proxy battle. ISS’s support underscores the growing investor sentiment for change within Phillips 66, particularly in light of governance concerns. This endorsement is expected to influence shareholder votes at the upcoming annual meeting, where Elliott’s nominees will be on the ballot.

Phillips 66’s Response

In response to the proxy advisors’ recommendations, Phillips 66 has expressed strong disagreement, emphasizing its commitment to its current strategic direction and governance practices. The company has highlighted its recent operational achievements and strategic initiatives aimed at enhancing shareholder value.

Looking Ahead

As Phillips 66 prepares for its virtual 2025 annual shareholders meeting, the outcome of this proxy battle remains uncertain. The meeting will be a critical juncture for shareholders to voice their opinions on the proposed board changes. Meanwhile, Barclays has adjusted its price target for Phillips 66, reflecting the ongoing market fluctuations and the potential impact of the board restructuring.

In summary, Phillips 66 is navigating a challenging period marked by activist pressure and proxy advisor endorsements. The company’s ability to address these governance concerns while maintaining its operational focus will be crucial in determining its future trajectory.