Elliott files lawsuit against Phillips 66

Elliott Investment Management, which manages funds that together have an investment of more than $2.5B in Phillips 66 (PSX), filed a lawsuit in the Court of Chancery of the State of Delaware against the company and its Board of Directors. “The complaint seeks an order requiring that four board seats be up for election at Phillips’ 2025 Annual Meeting of Shareholders. After receiving Elliott’s notice of director nominations, on February 18 Phillips announced that two sitting directors previously in the 2025 class, Gary Adams and Denise Ramos, would not stand for reelection, and that the size of the Board would be reduced from 14 to 12 directors after the Annual Meeting. As a result, there would only be two seats up for election in the 2025 class and then five in each of the 2026 and 2027 classes – which Elliott argues in the complaint is in violation of the company’s governing documents requiring director classes to be equalized. Despite Elliott privately requesting confirmation, Phillips has still not disclosed how many seats will be up for election or who its nominees will be, requiring Elliott to file a complaint in order to preserve its shareholder rights. The company’s current gamesmanship around its directors follows the company’s previous failure to honor its representations made to Elliott – dating back to February 2024 – that it would appoint a mutually agreed-upon director with energy experience. In its complaint, Elliott states that if the company ends its defensive maneuvers and confirms that at least four director seats will be up for election at the 2025 Annual Meeting, Elliott intends to withdraw the complaint and no longer proceed with the litigation. This preference for gamesmanship and disregard for stockholder rights demonstrated by Phillips reinforces why change is urgently needed on the Board in order for the company to achieve its full value-creation potential. On March 4, Elliott announced a slate of seven highly qualified director candidates with complementary backgrounds and experience related to improving refining and midstream operations, evaluating complex strategic transactions and enhancing corporate governance. Prior to the filing of Elliott’s definitive proxy materials, Elliott will identify the final slate of director candidates that will stand for election at the Annual Meeting.”