Elliott Investment Management has fired another shot in its campaign to overhaul Phillips 66 (NYSE: PSX), nominating seven independent director candidates to the company’s board as it filed its preliminary proxy. The activist investor, which now holds a more than $2.5 billion stake in the refining and midstream giant, has also proposed a governance policy change that would move the company toward annual board elections—an issue that has seen strong but so far ineffective shareholder support in recent years.
Phillips tops the list of companies in the energy sector at risk from activists based on Boardroom Alpha’s Activist Risk score. Given its underperformance, activist risk profile, and governance issues — staggered board, multiple directors receiving low support from shareholders, non-independent chair, a history of say-on-pay questions — we weren’t surprised to see Elliott make a big push. CEO Mark Lashier has now been on the job for almost 3 years and while the stock has bounced under his tenure, the direction has been negative over the past year with the stock down -9%.
Elliott’s Push for Change
Elliott has been vocal about what it sees as persistent underperformance at Phillips 66. In its public letter to the board on February 11, the firm laid out a three-pronged plan aimed at unlocking value:
- Portfolio Simplification: Focusing on Phillips 66’s most profitable assets and shedding underperforming or non-core businesses.
- Operating Review: Identifying efficiencies and performance improvements in refining and midstream operations.
- Enhanced Oversight: Strengthening board oversight and accountability to ensure long-term shareholder value creation.
The nomination of new board members, Elliott argues, is essential to advancing these initiatives and ensuring the company finally makes meaningful progress.
Who Are Elliott’s Nominees?
Elliott’s slate includes a mix of industry veterans with experience in refining, midstream operations, capital allocation, and governance:
- Brian Coffman – Former CEO of Motiva Enterprises and former SVP of Refining at Andeavor.
- Sigmund Cornelius – Former SVP and CFO of ConocoPhillips.
- Michael Heim – One of the founders and former President and COO of Targa Resources.
- Alan Hirshberg – Former EVP, Production, Drilling, and Projects at ConocoPhillips.
- Gillian Hobson – Former M&A and Capital Markets Partner at Vinson & Elkins, with significant expertise in midstream transactions.
- Stacy Nieuwoudt – Former Energy and Industrials Analyst at Citadel.
- John Pike – Partner at Elliott Investment Management.
Phillips 66’s Response and Board Uncertainty
The nominations come just weeks after Phillips 66 announced that two of its current directors, Gary Adams and Denise Ramos, would not stand for re-election, and that the board would shrink from 14 to 12 members after the 2025 annual meeting. However, the company has yet to clarify how many board seats will be contested or who it intends to nominate. Adams and Ramos have both been at PSX for over 8 years.
This uncertainty gives Elliott room to adjust its final slate ahead of the definitive proxy filing, potentially allowing for further negotiations or boardroom maneuvering.
The Governance Battle: Push for Annual Elections
In addition to its board challenge, Elliott has submitted a proposal aimed at shifting Phillips 66 to an annual director election model. Over the past nine years, the company has repeatedly put forward proposals to declassify the board—most recently in 2023, when 99% of shares voted in favor—but these efforts have failed due to an 80% supermajority requirement for a charter amendment.
Elliott’s new proposal seeks to bypass this structural hurdle by requesting that the board adopt a corporate governance policy requiring each director to commit to a one-year term at each annual meeting. While not a formal declassification, the move would effectively create annual elections, aligning Phillips 66 with modern governance best practices and increasing board accountability to shareholders.
What’s Next?
With a significant stake and a detailed plan, Elliott is making it clear that it intends to push hard for change at Phillips 66. Vanguard, Blackrock, and State Street are the largest shareholders so the retail component of the campaign will be important. Elliott is using long-time advisor Okapi Partners, who has a long and successful track record for contested situations, as its proxy solicitor. The company’s response—whether through engagement with Elliott or a firm defense of its existing board structure—will be closely watched by investors and governance watchers alike.