Why Phillips 66 Shareholders Must Vote for Elliott’s Nominees to Unlock Value and Fix Governance Failures

As the May 21 shareholder vote approaches, Phillips 66 (PSX) stands at a crossroads. The Institutional Shareholder Services (ISS) has issued a rare and forceful endorsement of Elliott Management’s four director nominees, signaling a damning verdict on the company’s governance and strategy. This is not just a proxy battle—it’s a stark choice between stagnation and revival. For shareholders, voting for Elliott’s slate is not optional; it is the only path to restore accountability, unlock trapped value, and avoid further erosion of shareholder returns.

The Case Against the Status Quo: ISS’s Indictment of Phillips 66

ISS’s scathing analysis exposes systemic failures at Phillips 66:

1. Operational Underperformance:
   Phillips 66’s refining segment has lagged peers for years, with margins consistently below industry averages. . Meanwhile, its midstream division—once a touted growth engine—has underdelivered, dragging down total shareholder returns (TSR). Since 2021, PSX’s TSR has fallen behind peers by an average of 25%, a gap ISS attributes to flawed strategy execution.

2. Governance Failures:
   The board’s decision to combine the CEO and Chair roles under Mark Lashier has created a governance vacuum. ISS condemns this as a “counterproductive realignment” that stifles accountability. The board’s lack of independent, sector-specific expertise—exacerbated by the retention of over-tenured directors—has left it ill-equipped to oversee a complex conglomerate.

3. Transparency Deficits:
   Phillips 66’s pattern of “selective disclosure” and inconsistent messaging has left investors in the dark. ISS highlights vague claims about operational successes and ambiguous responses to basic questions, eroding trust in management’s credibility.

The Elliott Solution: Governance Reform as a Value Catalyst

Elliott’s nominees are not just a “board refresh”—they represent a strategic reset:

• Expertise-Driven Leadership:
  The slate includes Sigmund Cornelius (CEO of Pioneer Natural Resources), Michael Heim (former CEO of HollyFrontier), Brian Coffman (ex-ConocoPhillips executive), and Stacy Nieuwoudt (investment strategist). Collectively, they bring decades of energy-sector experience, including midstream and refining expertise critical to addressing PSX’s structural flaws.

• Strategic Reorientation:
  Elliott’s “Streamline 66” plan mandates divesting the midstream business—a division ISS calls “suboptimal”—and focusing on core refining. This mirrors Elliott’s success at Marathon Petroleum, where a similar restructuring boosted PSX’s peer’s TSR by 150% relative to competitors.

• Governance Overhaul:
  The nominees will push to separate the CEO/Chair roles, enhance board independence, and adopt transparent capital-allocation policies. ISS emphasizes that these changes are “critical” to restoring investor confidence.

The Precedent: Elliott’s Track Record in Energy Turnarounds

Elliott’s success at Marathon Petroleum is instructive. When they intervened there in 2017, the company was mired in underperformance. By divesting non-core assets and refocusing on refining, Marathon’s stock surged, outpacing peers by 150%. The same playbook applies to Phillips 66:

• Midstream Divestiture:
  Selling the midstream division—valued at $40+ billion—could unlock immediate value, while refocusing on refining would align PSX with higher-margin opportunities.

• Cost Efficiency:
  Elliott’s operational expertise could cut refining expenses per barrel, narrowing the 15% gap with peers.

The Risks of Inaction: A Costly Gamble

Failure to vote for Elliott’s nominees risks:
- Continued Underperformance: PSX’s TSR gap with peers will widen, as the conglomerate model fails to deliver synergies.
- Shareholder Disenfranchisement: The current board’s “evasive” communication and opaque governance will deter institutional investors.
- Missed Value Creation: The midstream division’s potential—$40+ billion—will remain trapped, while refining operations languish in inefficiency.

Act Now: The May 21 Vote is a Make-or-Break Moment

With ISS, Glass Lewis, and Egan-Jones all backing Elliott’s slate, the advisory consensus is clear. Shareholders who cling to the status quo risk compounding losses. Voting for Elliott’s nominees is not just a tactical move—it’s a vote for transparency, accountability, and the return of Phillips 66 to its rightful place as an industry leader.

Conclusion: The Path to Value Unlocked

The data is unequivocal: Phillips 66’s current trajectory is unsustainable. Elliott’s governance reforms and strategic clarity offer the only credible path to restoring shareholder value. With the vote just days away, investors must act decisively. Vote for all four Elliott nominees on May 21. The future of Phillips 66—and your investment—depends on it.

Act now. The clock is ticking.

Ask Aime: Should I vote for Elliott Management's nominees at the May 21 Phillips 66 (PSX) shareholder vote?