Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Elliott Management won two seats on the board of oil refiner Phillips 66, after the activist hedge fund squared off in its first-ever proxy vote against a major US corporation.
Phillips 66 shareholders voted in favour of two Elliott-backed directors. Former ConocoPhillips executive Sigmund Cornelius and ex-Targa Resources executive Michael Heim — were probably set to be added to the board as a result of the vote, according to people familiar with the matter.
Current board director Bob Pease, who was previously backed by Elliott in an earlier settlement with Phillips 66 before the activist investor turned against him, and Nigel Hearne, the chief operating officer of Harbour Energy, were likely to be Phillips 66 nominees elected to the board, the people added.
Funds managed by BlackRock, State Street and Vanguard Group, which collectively own about 23 per cent of the stock — as well as T Rowe Price voted against Elliott, the people added. Preliminary results are expected to be announced later on Wednesday.
The vote caps one of the most volatile and contentious activist campaigns in recent memory, in which Elliott more than doubled its stake to $2.5bn and pushed the $49bn oil refiner to sell assets, including its midstream business and chemicals joint venture, clean up its corporate governance and focus on its core competency of oil refining, in a bid to improve its performance compared with industry peers.
Phillips 66 and Elliott declined to comment.
The presence of even just two Elliott-backed board directors could lead to a strategy shift. In a final appeal to investors, Elliott’s four nominees said in an open letter on Monday that they “fundamentally believe that change is needed at Phillips 66”, adding that they “will ask the hard questions, seek to improve the company’s credibility with its shareholders and insist on a thorough and clear-eyed evaluation of its current structure and operations” if elected.
After first going public with its stake in Phillips 66 in 2023, the company brokered a peace with Elliott offering to put two independent directors on the board. But Phillips 66 only followed through by adding one director — Pease — who Elliott argued quickly became captive to Phillips 66’s management after he approved a move allowing chief executive Mark Lashier to also become chair.
This is a developing story
