Two names put forward by Elliott Investment Management LP and another two endorsed by Phillips 66 are expected to have won at the refiner’s directorial election during its annual meeting of shareholders on Wednesday.
“Based on the preliminary results, the elected Phillips 66 directors are expected to be Robert W. Pease and Nigel Hearne”, Houston, Texas-based Phillips 66 said in an online statement. “The Elliott nominees expected to be elected are Sigmund L. Cornelius and Michael A. Heim. Phillips 66 nominees John E. Lowe and Howard Ungerleider were not elected”.
In the build-up to the meeting, West Palm Beach, Florida-based asset manager Elliott, which claims to be a top-five shareholder in Phillips 66, repeatedly called for portfolio simplification, an operational review and stronger oversight. Elliott blamed Phillips 66’s current leadership and structure for “persistent underperformance”. Phillips 66 expressed confidence in its board and pointed to improvements in performance and progress toward targets.
Elliott initially nominated seven names, including an Elliott partner, with the “best-in-class experience in refining and midstream operations”, for election to Phillips 66’s board. It later reduced the pool to four.
“The director nominees announced today will bring the right experience and objective perspectives to the Board as it executes the best path forward for the Company, including by bolstering accountability and improving oversight of management initiatives”, Elliott said in a press release March 4 announcing its seven candidates.
One of the Elliott nominees who is now expected to have secured a seat, Cornelius, formerly served as senior vice president and chief financial officer of ConocoPhillips.
The other Elliott nominee expected to join Phillips 66’s board, Heim, is co-founder and former president and chief operating officer of Targa Resources.
Pease, one of the Phillips 66 nominees expected to win, was appointed to the board last year in coordination with Elliott.
“We welcome our new directors and look forward to working constructively as a Board”, said Phillips 66 chair and chief executive Mark Lashier.
“This vote reflects a belief in our integrated strategy and a recognition that our early results do not yet reflect the full potential of our plan or the value inherent in this business”, Lashier added. “As a Board, we are focused on creating meaningful long-term value for our shareholders”.
In a separate statement, Elliott said, “Today’s vote sends a clear message: Shareholders demand meaningful change at Phillips 66”.
Elliott added, “We are confident Sig and Mike will work collaboratively with the incumbent directors to improve operational execution and share-price performance, enhance corporate governance and help set a strategic course that can unlock Phillips 66’s full value-creation potential”.
Vote estimates also indicated that a management proposal to declassify the board had “received significant support” but fallen short of the required affirmative number, which is 80 percent of the outstanding shares of stock entitled to vote, Phillips 66 said.
Meanwhile Elliott’s proposal to require annual director resignations was rejected “overwhelmingly”, Phillips 66 added.
Elliott’s statement said the investor will “continue to actively engage with the Company while holding management and the Board accountable for delivering on their commitment to improve shareholder value”.
“We are hopeful that these words will translate into actions, and we will remain focused on helping Phillips 66 become a stronger, more valuable company for all shareholders”, it added.
To contact the author, email jov.onsat@rigzone.com
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