Elliott management secures board seats in Phillips 66 election
- Elliott Management won two board seats at Phillips 66 during a contested election.
- The company's integrated model has been criticized for inefficiency and distraction by Elliott.
- The election results indicate divided shareholder support and may lead to further activist campaigns.
In a significant event for corporate governance, activist investor Elliott Management won two of the board seats it contested at Phillips 66, an energy giant based in the United States. This election marks a milestone as it was the first proxy vote for Elliott following its activism efforts in the U.S. The hedge fund had argued that the company’s integrated model, which includes both midstream and refining assets, is inefficient and distracts management from focusing on core business strategies. Phillips 66 countered this claim, asserting that Elliott’s proposal for a breakup was a short-sighted approach. Despite this, the company did promise to implement cost-cutting measures as part of their strategy to create long-term shareholder value, highlighting the pressure exerted by Elliott's campaign. During the voting process, shareholders opted to split their votes between Elliott's nominees and those of Phillips 66, resulting in the election of Eliott's Sigmund Cornelius and Michael Heim alongside the company's Bob Pease and Nigel Hearne. This split decision indicates that not all shareholders aligned with Phillips, demonstrating a complex landscape of investor viewpoints. Notably, Elliott secured these board seats without the backing of major passive shareholders like Vanguard, State Street, and Blackrock, which is unprecedented at an S&P 500 election. The CEO of Phillips 66, Mark Lashier, recognized this election reflects ongoing investor support for the company’s integrated strategy and reaffirmed their commitment to enhancing shareholder value. Nevertheless, the loss of multiple board seats in a contested election is rare for companies of this size, and it raises questions about the future direction of Phillips 66. Elliott Management, renowned for its protracted activist campaigns, may not cease its influence here, having already pursued changes in 2023 and potentially preparing for another campaign in the following year based on the responses to earlier changes.