A Letter From Independent Director Bob Pease to Phillips 66 Shareholders
Phillips 66 (NYSE: PSX) Independent Director Bob Pease has released an open letter to shareholders addressing Elliott Management's recent campaign. Pease, who joined the board in February 2024 through an agreement with Elliott Management, details how his experience in refining was initially welcomed by Elliott to improve the company's refining performance.
Despite initial concerns about joining through an activist hedge fund's endorsement, Pease reports being positively received by the board. He emphasizes that Phillips 66's integrated model has delivered synergies and less volatile cash flows. The company has committed to maintaining asset integrity while delivering competitive dividends and returning over 50% of net operating cash flow to shareholders through repurchases and dividends.
However, Pease expresses concern over Elliott's inconsistent engagement and their recent decision to run four nominees for the 2025 Annual General Meeting, effectively seeking to replace him just a year after supporting his appointment.
Phillips 66 (NYSE: PSX) Il Direttore Indipendente Bob Pease ha pubblicato una lettera aperta agli azionisti in risposta alla recente campagna di Elliott Management. Pease, che è entrato a far parte del consiglio nel febbraio 2024 tramite un accordo con Elliott Management, descrive come la sua esperienza nel settore della raffinazione sia stata inizialmente apprezzata da Elliott per migliorare le performance di raffinazione dell'azienda.
Nonostante le preoccupazioni iniziali riguardo all'ingresso tramite il sostegno di un fondo attivista, Pease riporta di essere stato accolto positivamente dal consiglio. Sottolinea che il modello integrato di Phillips 66 ha generato sinergie e flussi di cassa meno volatili. L'azienda si è impegnata a mantenere l'integrità degli asset, offrendo allo stesso tempo dividendi competitivi e restituendo oltre il 50% del flusso di cassa operativo netto agli azionisti attraverso riacquisti e dividendi.
Tuttavia, Pease esprime preoccupazione per il coinvolgimento incoerente di Elliott e per la loro recente decisione di presentare quattro candidati per l'Assemblea Generale Annuale del 2025, cercando di sostituirlo a soli un anno di distanza dal supporto alla sua nomina.
Phillips 66 (NYSE: PSX) El Director Independiente Bob Pease ha publicado una carta abierta a los accionistas abordando la reciente campaña de Elliott Management. Pease, quien se unió a la junta en febrero de 2024 mediante un acuerdo con Elliott Management, detalla cómo su experiencia en refinación fue inicialmente bien recibida por Elliott para mejorar el rendimiento de refinación de la empresa.
A pesar de las preocupaciones iniciales sobre unirse a través del respaldo de un fondo activista, Pease informa que fue recibido positivamente por la junta. Enfatiza que el modelo integrado de Phillips 66 ha proporcionado sinergias y flujos de efectivo menos volátiles. La empresa se ha comprometido a mantener la integridad de los activos mientras ofrece dividendos competitivos y devuelve más del 50% del flujo de efectivo operativo neto a los accionistas a través de recompras y dividendos.
Sin embargo, Pease expresa su preocupación por el compromiso inconsistente de Elliott y su reciente decisión de presentar cuatro candidatos para la Junta General Anual de 2025, buscando efectivamente reemplazarlo solo un año después de apoyar su nombramiento.
필립스 66 (NYSE: PSX) 독립 이사 밥 피스가 엘리엇 매니지먼트의 최근 캠페인에 대해 주주들에게 공개 서한을 발표했습니다. 피스는 2024년 2월 엘리엇 매니지먼트와의 합의를 통해 이사회에 합류했으며, 그의 정제 분야 경험이 회사의 정제 성과를 개선하기 위해 엘리엇에 의해 처음에는 환영받았다고 상세히 설명합니다.
활동가 헤지펀드의 지지를 통해 합류하는 것에 대한 초기 우려에도 불구하고, 피스는 이사회에서 긍정적으로 받아들여졌다고 보고합니다. 그는 필립스 66의 통합 모델이 시너지를 창출하고 덜 변동적인 현금 흐름을 제공했다고 강조합니다. 회사는 자산의 무결성을 유지하면서 경쟁력 있는 배당금을 지급하고, 순 운영 현금 흐름의 50% 이상을 재매입 및 배당을 통해 주주들에게 반환할 것을 약속했습니다.
그러나 피스는 엘리엇의 일관되지 않은 참여와 그들이 2025년 정기총회를 위해 네 명의 후보를 내세우기로 한 최근 결정에 대해 우려를 표명하며, 이는 그의 임명이 지지된 지 불과 1년 만에 그를 교체하려는 것입니다.
Phillips 66 (NYSE: PSX) Le directeur indépendant Bob Pease a publié une lettre ouverte aux actionnaires concernant la récente campagne d'Elliott Management. Pease, qui a rejoint le conseil en février 2024 par le biais d'un accord avec Elliott Management, détaille comment son expérience dans le raffinage a été initialement accueillie par Elliott pour améliorer les performances de raffinage de l'entreprise.
Malgré des préoccupations initiales concernant son adhésion par le soutien d'un fonds activiste, Pease rapporte avoir été bien reçu par le conseil. Il souligne que le modèle intégré de Phillips 66 a généré des synergies et des flux de trésorerie moins volatils. L'entreprise s'est engagée à maintenir l'intégrité des actifs tout en offrant des dividendes compétitifs et en retournant plus de 50 % du flux de trésorerie opérationnel net aux actionnaires par le biais de rachats et de dividendes.
Cependant, Pease exprime ses inquiétudes concernant l'engagement incohérent d'Elliott et leur récente décision de présenter quatre candidats pour l'assemblée générale annuelle de 2025, cherchant ainsi à le remplacer seulement un an après avoir soutenu sa nomination.
Phillips 66 (NYSE: PSX) Der unabhängige Direktor Bob Pease hat einen offenen Brief an die Aktionäre veröffentlicht, in dem er auf die jüngste Kampagne von Elliott Management eingeht. Pease, der im Februar 2024 durch eine Vereinbarung mit Elliott Management in den Vorstand eintrat, beschreibt, wie seine Erfahrung in der Raffination zunächst von Elliott begrüßt wurde, um die Raffinationsleistung des Unternehmens zu verbessern.
Trotz anfänglicher Bedenken, durch die Unterstützung eines aktivistischen Hedgefonds beizutreten, berichtet Pease, dass er vom Vorstand positiv aufgenommen wurde. Er betont, dass das integrierte Modell von Phillips 66 Synergien und weniger volatile Cashflows geliefert hat. Das Unternehmen hat sich verpflichtet, die Integrität der Vermögenswerte zu wahren und gleichzeitig wettbewerbsfähige Dividenden zu zahlen und über 50 % des Nettobetriebs-Cashflows an die Aktionäre durch Rückkäufe und Dividenden zurückzugeben.
Pease äußert jedoch Bedenken über das inkonsistente Engagement von Elliott und deren jüngste Entscheidung, vier Kandidaten für die Hauptversammlung 2025 aufzustellen, was effektiv darauf abzielt, ihn nur ein Jahr nach der Unterstützung seiner Ernennung zu ersetzen.
- Commitment to return over 50% of net operating cash flow to shareholders
- Strong operational performance in refining segment
- Integrated business model delivering synergies and reduced cash flow volatility
- Ongoing conflict with major shareholder Elliott Management
- Board instability with potential director changes at 2025 Annual Meeting
Insights
This letter from recently-appointed Phillips 66 director Bob Pease reveals a significant escalation in the activist campaign led by Elliott Management. What makes this particularly notable is the unusual dynamic: Pease was originally appointed to the board in February 2024 with Elliott's endorsement as part of an earlier agreement, but now finds himself targeted for replacement just months later as Elliott nominates four new directors.
The timing suggests a breakdown in the relationship between Elliott and the company following their initial settlement. Activist situations typically follow a predictable pattern - activists push for board seats, secure representation, then work toward operational changes. Elliott's rapid pivot to a new proxy contest indicates their dissatisfaction with progress despite gaining partial board representation.
Notably, Pease defends the board's effectiveness, stating they welcomed his refining expertise and are "committed to challenging management" - directly countering a common activist narrative that boards are passive or management-friendly. The letter also reveals the company's capital allocation strategy: maintaining dividends while returning over
This governance battle creates near-term uncertainty for shareholders, with the potential for disruption if Elliott succeeds in replacing multiple directors. However, the increased attention on operational performance could benefit shareholders regardless of the outcome, as both sides appear focused on improving refining operations and overall returns.
Shareholders of Phillips 66:
I joined the Phillips 66 Board of Directors in February 2024. My appointment came as a result of an agreement between Elliott Management and Phillips 66. At the time, Elliott Management said I would bring to the Board “extensive experience in refining and energy more broadly.”
Now Elliott wants me off the Board.
Today I’m writing you, our shareholders, to lay out the truth about the Phillips 66 Board and why my own view of Elliott’s campaign for change at the Phillips 66 has evolved.
I’ll start first with why I agreed to join the Phillips 66 Board in this relatively unusual manner. I’m a refinery guy first and foremost, holding numerous leadership roles, particularly in downstream businesses. When I joined the Board, Elliott’s primary demand was for Phillips 66 to improve its performance in refining. My experience was a perfect fit. Joining the Board then with Elliott’s endorsement felt like a win-win.
I worried that joining a board with the endorsement of a well-known activist hedge fund may not be the best way to win the hearts and minds of other board members. I have been around long enough to know human nature, so I believed it would take some time to have an impact on this Board.
I was wrong. My experience, insight and voice were immediately welcomed. In fact, I was encouraged early on to look closely at refining plans and challenge management.
The level of debate, in-depth analysis and looking under every stone that I have seen so far on this Board is exactly what shareholders should want in the Board room.
The Phillips 66 Board has delivered strong operational performance in refining while constantly exploring opportunities to create value across the full portfolio. Our integrated model has delivered synergies between the businesses and less volatile cash flows – it is a competitive advantage. We have set ambitious goals and are committed to maintaining best-in-class asset integrity while delivering a secure, competitive, and growing dividend; pursuing further accretive growth; and returning over
You simply don’t achieve results like this without a high functioning, deeply engaged Board.
In my view, it was Elliott’s inconsistent engagement that has proven most peculiar. There would be long silences, followed by rapid public action. What I saw from the Board was a clear commitment to getting to the right answer but a real struggle to understand and engage with an apparently highly distracted shareholder in Elliott.
We have only been met with a declaration that there were “no next steps” and then continued public assaults, even while Elliott refused to allow us to meet their nominees. Then came their notification that Elliott would in fact be running four nominees for election at the 2025 Annual General Meeting. With my re-nomination to the Board confirmed, that meant I would be targeted for replacement by Elliott’s nominees, just a year after they publicly supported me. I do not know why Elliott now wants me off the Board.
The Phillips 66 Board is committed to shareholder value creation.
We are committed to challenging management to deliver results. We are committed to acting, when necessary, but we are not a group that makes sweeping, irreversible costly change in response to short-term market fluctuations and speculative valuations.
We will always act in the best interest of our long-term shareholders for long-term value creation.
Sincerely,
Bob Pease
Independent Director
About Phillips 66
Phillips 66 (NYSE: PSX) is a leading integrated downstream energy provider that manufactures, transports and markets products that drive the global economy. The company’s portfolio includes Midstream, Chemicals, Refining, Marketing and Specialties, and Renewable Fuels businesses. Headquartered in
Forward-Looking Statements
This document contains forward-looking statements within the meaning of the federal securities laws relating to Phillips 66’s operations, strategy and performance. Words such as “anticipated,” “committed,” “estimated,” “expected,” “planned,” “scheduled,” “targeted,” “believe,” “continue,” “intend,” “will,” “would,” “objective,” “goal,” “project,” “efforts,” “strategies” and similar expressions that convey the prospective nature of events or outcomes generally indicate forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements included in this news release are based on management’s expectations, estimates and projections as of the date they are made. These statements are not guarantees of future events or performance, and you should not unduly rely on them as they involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include: changes in governmental policies or laws that relate to our operations, including regulations that seek to limit or restrict refining, marketing and midstream operations or regulate profits, pricing, or taxation of our products or feedstocks, or other regulations that restrict feedstock imports or product exports; our ability to timely obtain or maintain permits necessary for projects; fluctuations in NGL, crude oil, refined petroleum, renewable fuels and natural gas prices, and refining, marketing and petrochemical margins; the effects of any widespread public health crisis and its negative impact on commercial activity and demand for refined petroleum or renewable fuels products; changes to worldwide government policies relating to renewable fuels and greenhouse gas emissions that adversely affect programs including the renewable fuel standards program, low carbon fuel standards and tax credits for renewable fuels; potential liability from pending or future litigation; liability for remedial actions, including removal and reclamation obligations under existing or future environmental regulations; unexpected changes in costs for constructing, modifying or operating our facilities; our ability to successfully complete, or any material delay in the completion of, any asset disposition, acquisition, shutdown or conversion that we have announced or may pursue, including receipt of any necessary regulatory approvals or permits related thereto; unexpected difficulties in manufacturing, refining or transporting our products; the level and success of drilling and production volumes around our midstream assets; risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products, renewable fuels or specialty products; lack of, or disruptions in, adequate and reliable transportation for our products; failure to complete construction of capital projects on time or within budget; our ability to comply with governmental regulations or make capital expenditures to maintain compliance with laws; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets, which may also impact our ability to repurchase shares and declare and pay dividends; potential disruption of our operations due to accidents, weather events, including as a result of climate change, acts of terrorism or cyberattacks; general domestic and international economic and political developments, including armed hostilities (such as the
Additional Information
On March 26, 2025, Phillips 66 filed a preliminary proxy statement on Schedule 14A (the “Proxy Statement”) and accompanying WHITE proxy card with the
Certain Information Regarding Participants
Phillips 66, its directors, its director nominees and certain of its executive officers and employees may be deemed to be participants in connection with the solicitation of proxies from Phillips 66 shareholders in connection with the matters to be considered at the 2025 Annual Meeting. Information regarding the names of such persons and their respective interests in Phillips 66, by securities holdings or otherwise, is available in the Proxy Statement, which was filed with the SEC on March 26, 2025, and will be included in Phillips 66’s definitive proxy statement, once available, including in the sections captioned “Beneficial Ownership of Phillips 66 Securities” and “Appendix C: Supplemental Information Regarding Participants in the Solicitation.” To the extent that Phillips 66’s directors and executive officers who may be deemed to be participants in the solicitation have acquired or disposed of securities holdings since the applicable “as of” date disclosed in the Proxy Statement, such transactions have been or will be reflected on Statements of Changes in Ownership of Securities on Form 4 or Initial Statements of Beneficial Ownership of Securities on Form 3 filed with the SEC. These documents are or will be available free of charge at the SEC’s website at www.sec.gov.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250327565528/en/
Jeff Dietert (investors)
832-765-2297
jeff.dietert@p66.com
Owen Simpson (investors)
832-765-2297
owen.simpson@p66.com
Thaddeus Herrick (media)
855-841-2368
thaddeus.f.herrick@p66.com
Source: Phillips 66
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