Elliott Sends Letter to Shareholders Detailing Phillips 66's Broken Corporate Governance and Disingenuous Shareholder Engagement

Core Viewpoint - Elliott Investment Management asserts that Phillips 66's current board has fostered a culture of complacency and poor governance, urging shareholders to support its independent director nominees to unlock the company's value-creation potential [1][2][5] Group 1: Governance Issues - Elliott highlights a breakdown in corporate governance at Phillips 66, citing a culture of deference to management and a lack of responsiveness to shareholder concerns [5][6][10] - The board's refusal to engage constructively with Elliott has led to a proxy contest, which Elliott views as indicative of the company's governance failures [3][6] - Phillips 66's classified board structure is criticized for insulating directors from accountability, with Elliott proposing a non-binding annual election policy to enhance governance [11][12][45] Group 2: Shareholder Engagement - Elliott claims that its attempts to engage with Phillips 66's leadership have been repeatedly rebuffed, necessitating direct appeals to shareholders [3][10] - The company has been accused of mischaracterizing Elliott's engagement efforts, framing them as lacking transparency [4][10] - Elliott emphasizes the importance of independent directors in improving the company's governance and performance, presenting its nominees as qualified candidates [14][39] Group 3: Performance and Strategy - Since CEO Mark Lashier assumed the dual role of CEO and Chairman, Phillips 66's performance has reportedly declined, with the company falling short of its mid-cycle EBITDA target of approximately $14 billion for 2025 [9][10] - Elliott argues that the board's focus on "empire building" rather than maximizing shareholder returns is detrimental to the company's interests [11][31] - The company has faced criticism for its lack of transparency regarding its operational performance and strategic direction, particularly in refining [9][10] Group 4: Response to Elliott's Campaign - Phillips 66 has publicly attacked Elliott's director nominees and their qualifications, claiming that their proposals lack independence and transparency [12][14][40] - The company has also questioned the motives of industry veteran Gregory Goff, who publicly supported Elliott's campaign, suggesting conflicts of interest where none exist [36][37] - Elliott counters that Phillips 66's attacks on Goff reflect a broader unwillingness to accept constructive criticism and input from experienced industry leaders [36][37]