Phillips 66 adjustments board to keep away from new proxy battle with Elliott | USAEMALL.com

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US oil refiner Phillips 66 has made changes to its board to prevent a repeat of last year’s acrimonious proxy battle with activist hedge fund Elliott Management.

In a move endorsed by Elliott, Phillips said on Sunday that ex-Dow finance chief Howard Ungerleider and former ConocoPhillips executive Kevin Meyers would be added to its 14-person board to replace a pair of retiring directors.

The board changes mean Elliott will not nominate a rival slate of directors to Phillips’ board, preventing the oil refiner from becoming embroiled in a second proxy fight this year.

In a sign of how much Phillips’ standing has improved since a proxy battle with Elliott ended in a split vote last year, one of the new directors, Ungerleider, was a Phillips nominee from 2025 who was not voted on to the board.

The brokered peace between Phillips and Elliott will for the time being draw a line under one of the activist hedge fund’s most bitterly fought activist campaigns in recent memory, which resulted in Elliott’s first-ever full-blown proxy vote against a major US company. Following last year’s fight, two Phillips nominees and two Elliott nominees were added to the oil refiner’s board.

Elliott partners John Pike and Mike Tomkins endorsed the board changes in a statement, adding: “While more work must be done, we note the team’s focus on execution, capital return and the actions to enhance the company’s advantaged mid-continent position,” referring to the heartland of US crude oil refining.

The pair of new directors will replace Glenn Tilton and Marna Whittington, who announced their retirement last year.

Elliott first built a stake in Phillips in September 2023 before upping its position to $2.5bn last year and launching a proxy fight. Elliott made several demands of Phillips, including pushing it to offload its midstream unit and its stake in a chemicals joint venture, but Phillips’ management has not acquiesced.

The détente between Phillips and Elliott occurs against the backdrop of an improved financial performance at the refiner, whose shares have jumped 39 per cent over the past 12 months, giving it a market value of $66.5bn as of Friday’s close. The S&P 500 index is up by nearly 17 per cent over the same period.

Paul Singer’s Elliott, which had nearly $80bn of assets under management at the end of last year, has been a prolific investor in the oil and gas sector and is targeting UK oil major BP as part of an ongoing activist campaign.

Earlier this month, Phillips beat analysts’ quarterly earnings expectations due to higher margins in its refining business and record volumes shipped in its pipelines business. The company cut debt by $2bn to $19.7bn during the quarter after selling its 65 per cent stake in a German and Austrian fuel retail business.

US refiners such as Phillips have benefited from increasing supplies of Venezuelan crude following the US ousting of President Nicolás Maduro and are more immune to the US-Israel bombardment of Iran affecting oil exports from the wider regions as they are less reliant on Middle Eastern crude than rivals. Phillips’ stock is up 7 per cent over the past week.

Jason Gabelman, analyst at TD Cowen, said Phillips had benefited from a sector-wide recovery in the US refining industry driven by widening discounts in the lower-quality heavy crude they process to make petroleum products.

“The move has been catalysed by the Venezuelan regime change that increased exports of the country’s heavy sour crude to the US, in addition to OPEC+ supply increases that were instituted throughout last year but did not start to influence the market until late last year,” said Gabelman.