Activist hedge fund firm Elliott Investment Management is heading into uncharted territory as the firm gears up for its first-ever proxy vote in a US public company, marking a pivotal moment in its long-standing campaign for change at energy giant Phillips 66, according to a report by Bloomberg.
After more than 100 activist campaigns in the US, Elliott is pressing forward with a shareholder vote at Phillips 66’s annual meeting on Wednesday, seeking to install four director nominees to the board. The $72bn hedge fund is demanding sweeping changes to the company’s strategy, operational focus, and governance – a sharp divergence from its typical playbook of behind-the-scenes influence and negotiated outcomes.
At the centre of Elliott’s campaign is a call for Phillips 66 to shed its conglomerate structure and refocus on its core refining operations. Elliott’s 138-page public pitch argues that the company’s diversification – spanning chemicals, midstream assets, and retail – has weighed on performance, especially when compared to rivals like Valero and Marathon Petroleum, whose shares have outpaced Phillips 66 by wide margins over the last five years.
“Shareholders deserve a stronger, more valuable Phillips 66,” Elliott’s nominees wrote in a final appeal ahead of the vote, pointing to persistent underperformance and governance shortcomings.
Elliott wants Phillips 66 to divest non-core assets including gas stations and midstream infrastructure, and is eyeing a potential sale of the company’s $13bn stake in its chemicals joint venture with Chevron. The hedge fund believes these moves could unlock over $40bn in shareholder value.
With Vanguard, BlackRock, and State Street collectively controlling more than 23% of the vote, passive institutional support will be decisive. Proxy advisors ISS, Egan-Jones, and Glass Lewis have all recommended backing at least some of Elliott’s nominees — a rare show of alignment that tilts momentum toward the activist.
ISS, in particular, cited Phillips 66’s “selective and ambiguous disclosure” and lack of clarity around performance metrics. While ISS stopped short of endorsing Elliott’s asset sale blueprint, its critique of board oversight could sway fence-sitting investors.
While Elliott has launched proxy contests in the US before, this is the first to go to a formal shareholder vote. The firm has traditionally relied on intense private negotiations, often reaching settlements before public confrontation. But Phillips 66’s apparent resistance to compromise – despite nearly 30 meetings with Elliott over the last 18 months – pushed the campaign into open conflict.
The battle has grown increasingly public, with Elliott publishing detailed critiques, press releases, and even podcasts, while Phillips 66 has vigorously defended its integrated model. CEO Mark Lashier has argued that diversification is a competitive edge, not a liability, especially during commodity downcycles.
The dispute has also cast a spotlight on Phillips 66’s trading operation, with Elliott criticising it as underdeveloped and under-resourced. In response, the refiner has emphasised recent hiring momentum, including the recruitment of ex-Cargill executive Mark Senn to lead its commercial operations.
“We’ve hired 40 traders and originators since 2023,” said SVP of Commercial Mark Hughes, pushing back on Elliott’s claim of a talent exodus.
Phillips 66 was trading near $122 per share on Tuesday, with a market capitalisation approaching $50bn.
