Activist investor Elliott Management has gained key support from proxy advisory giant Institutional Shareholder Services (ISS) in its ongoing campaign to overhaul the board of oil refiner Phillips 66 ahead of the company’s upcoming shareholder meeting, according to a report by the Financial Times.
In a recommendation issued on Monday and seen by the Financial Times, ISS urged Phillips 66 shareholders to vote for all four of Elliott’s board nominees, citing concerns over corporate governance and a lack of industry expertise on the current board. The endorsement from ISS, which influences major institutional investors including BlackRock, comes just days after rival proxy adviser Glass Lewis backed three of Elliott’s candidates.
Elliott’s proposed directors include former ConocoPhillips executives Brian Coffman and Sigmund Cornelius, former Targa Resources COO Michael Heim, and former Citadel energy analyst Stacy Nieuwoudt.
“Although the board has been reshaped since the pandemic, important industry perspectives have been overlooked, and there is strong evidence that the board is not willing to exercise independent oversight of management,” ISS wrote in its report. The adviser also criticised Phillips 66’s staggered board structure and questioned the independence of recent appointee Bob Pease, who supported consolidating the CEO and chair roles under Mark Lashier.
Elliott, which first invested in Phillips 66 in 2023 and recently increased its stake to $2.5bn, has accused the company of underperformance and weak governance. The activist fund is pressing for asset sales, improvements to refining operations, and greater board independence.
Only four of Phillips 66’s 14 board seats are up for election this year due to its staggered board structure. Shareholders will vote on the nominations at the company’s annual meeting on 21 May.
In a statement following the ISS endorsement, Elliott said the advisory firm “cited Phillips 66’s disappointing operating performance, poor corporate governance and track record of providing selective and ambiguous disclosure” as justification for backing the activist’s “strong slate”.
Phillips 66 has not yet responded to the latest developments.
