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Elliott Management won two seats on the Phillips 66 Committee on Oil Refinery after activist hedge funds squared in the first-ever proxy vote for a major US company.
Phillips 66 shareholders voted in favor of two Elliott-backed directors. Elliott said in a statement Wednesday that former ConocoPhillips executive Sigmund Cornelius and former Targa Resource Michael Heim have been elected to the board.
Current board director Bob Peas said that in a previous settlement with Phillips 66, previously backed by Elliott, Harbor Energy’s Chief Operating Officer Nigel Hahn is likely the Phillips 66 candidate before activist investors opposed him.
The funds managed by BlackRock, State Street and Vanguard Group not only collectively own approximately 23% of the stock, but also voted against Elliott.
The vote caps one of the most volatile and controversial activist campaigns in recent memory. Elliot doubles its stock to $2.5 billion, spurs sales of midstream businesses and chemicals, including a joint venture between midstream and chemicals, cleans up corporate governance and improves performance through industry.
The presence of two Elliott-backed directors on the board could lead to a change in strategy. The hedge fund said the two board directors will “help set up a strategic course where they can work with current directors to improve operational execution and stock performance, strengthen corporate governance, and unlock the full value creation potential of Phillips 66.”
Phillips 66 shares fell 6.7% on Wednesday morning in New York, giving oil refineries a market value of $46 billion. Its stock has fallen 21% over the past year. Phillips 66 declined to comment.
Three times, the Elliott Campaign went on the brink of voting for US companies. Activist investors targeted the oil and gas company Hess in 2013, industrial group Arconic in 2017 and Southwest Airlines in 2024.
The first indication that Elliott is likely to travel the distance against the Phillips 66 came when influential proxy advisor Glass Lewis and subsequent institutional shareholder services recommended that the fund manager client vote 3-1 and 4-0 in favor of Elliott’s director Slate respectively.
Elliott incited the Phillips 66 shareholder base by rolling out slide decks, shareholder letters and podcasts. About a quarter of that is made up of retail investors.
Until Wednesday’s vote, there was no contact between the activist heavyweight and the Phillips 66 management since February. At the time, Elliott’s senior portfolio manager John Pike and one of his eu outlined his demands to Mark Lassier, the company’s chief executive officer sandwiched between New York advisors.
Last week, Phillips 66 announced its first hint of sale, selling a majority stake in 970 jet gas stations across Germany and Austria for $1.6 billion to private equity group energy equation partners and Stone Peak. Elliott claims that Phillips 66 can generate roughly $400 billion from selling its mid-class business and non-core assets.
After it was first made public in 2023 with a Philips 66 investment, the company brokered peace with Elliott, listing two independent directors on the board. However, Phillips 66 added the supervision of one of the directors who claimed that Elliot was immediately taken prisoner by the management of Phillips 66 after Elliot approved a move that allowed Lassier to become a chair as well.
