The Scoop
Activist investor Elliott Management has won two of the board seats it was seeking at energy giant Phillip 66, according to people familiar with the matter.
Elliott, taking a boardroom fight to its first ever vote in the US, had argued that Phillips’ “integrated” model — it owns both midstream and refining assets — made it inefficient and distracted its executives. Phillips said Elliott’s breakup plan, a common activist demand at conglomerates like Philips 66, was short-sighted, though it promised to cut costs.
Shareholders split the ticket, electing two Elliott nominees, Sigmund Cornelius and Michael Heim, and two of the company’s picks, Bob Pease and Nigel Hearne. (Pease was endorsed by Elliott when he joined the board in 2024, but lost the fund’s support after he backed giving CEO Mark Lashier the dual role as board chair.)
“As one of Phillips 66’s largest investors, Elliott will continue to actively engage with the Company while holding management and the Board accountable,” Elliott said in a statement.
Influential investor advisors ISS and Glass Lewis had recommended in favor of, respectively, all four and three of Elliott’s nominees, support that the hedge fund was unable to convert into a clean sweep.
Elliott secured its two board seats without support from Phillips’ largest passive shareholders, Vanguard, State Street and Blackrock, according to another person familiar with the matter. No activist investor has won a seat at an S&P 500 election without support from at least one of those investors, according to Insightia data.
“This vote reflects a belief in our integrated strategy and a recognition that our early results do not yet reflect the full potential of our plan or the value inherent in this business. As a board, we are focused on creating meaningful long-term value for our shareholders,” CEO Lashier said in a statement.
Still, Phillips 66 is a rare large company to lose multiple board seats in a contested election. Typically boards, which hire advisors to sound out investors and keep informal whip counts heading into a meeting, agree to negotiated terms rather than see more their preferred directors rejected by shareholders. Elliott has been particularly successful over the years at forcing finish-line settlements, including at Southwest Airlines last year.
Wednesday’s vote may not be the end of Elliott’s pressure campaign at Phillips 66. The activist has honed a reputation for multi-year campaigns — this was its second run at Phillips 66, having pushed for and received board changes in 2023 — and some fellow activists expect it to return for a third next year, depending on how quickly the company considers and pursues changes.