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Elliott Administration received two seats on the board of oil refiner Phillips 66, after the activist hedge fund squared off in its first-ever proxy vote in opposition to a serious US company.
Phillips 66 shareholders voted in favour of two Elliott-backed administrators. Former ConocoPhillips govt Sigmund Cornelius and ex-Targa Assets govt Michael Heim had been elected to the board, Elliott and Phillips 66 stated in separate statements on Wednesday.
Present board director Bob Pease, who was beforehand backed by Elliott in an earlier settlement with Phillips 66 earlier than the activist investor turned in opposition to him, and Nigel Hearne, the chief working officer of Harbour Power, had been the Phillips 66 nominees added to the board, the corporate stated.
The vote caps one of the vital risky and contentious activist campaigns in latest reminiscence, through which Elliott greater than doubled its stake to $2.5bn and pushed the oil refiner to promote belongings, together with its midstream enterprise and chemical substances three way partnership, clear up its company governance and concentrate on its core competency of oil refining, in a bid to enhance its efficiency in contrast with trade friends.
Funds managed by BlackRock, State Avenue and Vanguard Group — which collectively personal about 23 per cent of the inventory — in addition to T Rowe Value voted in opposition to Elliott, individuals conversant in the matter stated. Retail buyers signify about 25 per cent of the shareholder base.
The presence of simply two Elliott-backed administrators on the board might nonetheless result in a method shift. The hedge fund stated its two board administrators “will work collaboratively with the incumbent administrators to enhance operational execution and share value efficiency, improve company governance and assist set a strategic course that may unlock Phillips 66’s full value-creation potential”.
Shares in Phillips 66 had been down 6.8 per cent on Wednesday morning in New York, giving the oil refiner a market worth of just about $46bn. Its shares are down 22 per cent over the previous yr.
On three events, Elliott campaigns have gone to the brink of a vote in opposition to a US firm. The activist investor focused oil and fuel firm Hess in 2013, industrials group Arconic in 2017 and Southwest Airways in 2024: all of them settled on the eleventh hour.
The primary indication that Elliott would in all probability go the gap in opposition to Phillips 66 got here this month when influential proxy advisers Glass Lewis after which Institutional Shareholder Providers advisable that their fund supervisor purchasers vote 3-1 and 4-0, respectively, in favour of Elliott’s slate of administrators.
As much as Wednesday’s vote, there had been no contact between the activist heavyweight and Phillips 66 administration since February. On the time, Elliott’s senior portfolio supervisor John Pike and one in every of his lieutenants outlined his calls for to the firm’s chief govt Mark Lashier, flanked by his advisers, in New York.
An Elliott proposal to take away Phillips 66’s staggered board election mode didn’t attain the 80 per cent threshold required to go, the corporate stated in a press release.
Within the first trace of divestments, Phillips 66 final week introduced the sale of a majority stake in its 970 Jet petrol stations throughout Germany and Austria to non-public fairness teams Power Equation Companions and Stonepeak for $1.6bn. Elliott argues Phillips 66 might generate about $40bn from promoting its midstream enterprise and non-core belongings.
After first going public with its stake in Phillips 66 in 2023, the corporate brokered a peace with Elliott providing to place two impartial administrators on the board. However Phillips 66 solely adopted by way of by including one director — Pease — who Elliott argued rapidly grew to become captive to Phillips 66’s administration after he permitted a transfer permitting Lashier to additionally turn into chair.
