Provides Clarity on Important Topics where Elliott Has Sought to Mislead Investors
Reiterates Strength of Company's Transformative Strategy and the Valuable Skills of Phillips 66's Board and Nominees in Contrast to Elliott's Risky, Misleading Analysis and Conflicted Nominees
Phillips 66 Urges Shareholders to Vote "FOR" ONLY Phillips 66's Nominees on the WHITE Proxy Card
Phillips 66 (NYSE:PSX) today provided investors with important information to make fully informed voting decisions at the Phillips 66 Annual Meeting on May 21, 2025. This overview is intended to ensure investors understand the facts on these critical topics as they assess how to cast their upcoming vote.
Reliable, Long-Term Value Creation
- Since Mark Lashier became President & CEO, Phillips 66 outperformed against relevant benchmarks, delivering total shareholder returns of 67% (compared to the S&P 500 Energy at 45%, and our Synthetic Proxy Peer Median1 at 42%).2
- In under 3 years, the Company returned over $14 billion to shareholders through share repurchases and dividends. We grew our dividend at a 15% CAGR since the spinoff3 in 2012, and our annual dividend paid increased every year.
- While the Board recognizes the reliable returns we have provided for our shareholders, we are never satisfied and continuously review our portfolio with a sharp focus on long-term value creation.
Investors and analysts recognize the long-term potential inherent in the execution of our transformational strategy, which is in its early innings:
"PSX remains a Large Cap refining top pick. PSX's management team is focused on delivering growth at attractive returns, and further diversification and improvements to refining uptime might combine to restore PSX's premium positioning. We are Overweight rated." (Wells Fargo (4/25/2025))4
Effective Board Governance
- Elliott helped to select Bob Pease and he has proven to be a constructive challenger in the boardroom. As Bob has directly stated, he supports the Board because it is actively working to get to the right answer, not protecting any individual's interests.
- The Phillips 66 Board has demonstrated an ability to consistently refresh the boardroom. To ensure fresh and independent viewpoints, we have added five new independent directors in the past four years and two new nominees stand for election at this year's Annual Meeting.
- Our directors and nominees have unparallelled experience taking decisive and transformative action when it makes sense, and together theyhave overseen more than $300 B in breakup or major divestiture transactions.
"[Mark Lashier] stressed that the board has taken a look at strategic options in the past and continues to do so regularly. As such, questions surrounding the makeup of the portfolio have been asked inside the boardroom. And answered. He also added there are plenty of folks in the boardroom who have been involved in spinoffs elsewhere and they'd be the kind of people who'd be raising their hand if they thought this one made sense. Lastly, he pointed out that "incredible dis-synergies" and "massive tax burdens" would come from midstream monetization. In today's deck, PSX claims these costs could amount to $28/share."(Gordon Haskett (4/28/2025))4
Elliott's Flawed Thesis to Separate Midstream and Sell CPChem
- The Board has absolutely evaluated a breakup of Midstream and sale of CPChem, and following meaningful consideration, came to the conclusion that neither action is in the best interest of long-term shareholders at this time.
- Simply put, Elliott's analysis is based on speculative analysis and flawed assumptions:
- Elliott's $50 billion Midstream analysis ignores or significantly underestimates tax leakage, dis-synergies, buying power of potential buyers, among other factors that would destroy value uplift in a sale and/or spin scenario.
- Elliott's valuation of CPChem has appreciated by 50% to $15 billion since 2023, while Chemical peers have traded down 19%5 during the same time frame.
- We have carefully evaluated and disclosed important details around Elliott's flawed analysis in our recent investor presentation, which outlines the facts around the costs and risks of a CPChem sale or Midstream spin and the long-term value of the integrated business.
We know the market recognizes Elliott's analysis is based on speculative valuations and flawed assumptions:
"Sale of companies may not work as: 1) buyers for these large assets are limited, 2) tax leakage could be high, 3) standalone Refining multiple may suffer (PSX is trading at a premium to MPC on standalone Refining)." (Citi (3/14/2025))4
"We believe selling CPChem ahead of two large projects coming online and close to the bottom of the margin cycle may not be the right idea." (Citi (2/13/2025)) 4
Refining Performance
- Refining performance has been improving meaningfully, and we remain committed to continuously increasing margins in our Refining business.
- As a result of optimizing our integrated value chain and cost reduction efforts, our R&M EBITDA outperforms our core peer group by $2.80 per barrel6 in the Central Corridor and is in-line globally.
- Between 2022 and 2024, Phillips 66 reduced refining adjusted controllable costs by $1.08 per barrel7, a 15% improvement and 44% above our original $0.75 per barrel target. These results surpassed both Marathon and Valero's respective cost improvements over the same period.7
- By 2027, we aim to further reduce refining adjusted controllable costs from $5.90 to $5.50 per barrel.8 We expect that every $0.50 per barrel of cost reduction will improve adjusted EBITDA by roughly $315 million.9
We know the market sees the progress we are making:
"[We] recently analyzed PSX refining EBITDA per barrel on a like-for-like basis with peers, adjusting for Marketing, Midstream, and turnaround accounting. We found that PSX performs in-line with peers based on our analysis ā¦ This is better than the consensus view that PSX refining earnings lags peers." (TD Cowen (4/27/2025)) 4
"Management highlighted the completion of its large turnaround program, which should support improved refining earnings through the remainder of the year. We note the company remains focused on improving operational execution and yields across its refining footprint though accretive capital investments." (Goldman Sachs (5/1/2025)) 4
The Risk of Elliott's Nominees
- Elliott's nominees, who have histories of value destruction, pose a risk to shareholders' investments and have redundant experience relative to our more qualified nominees.
- Sigmund Cornelius and Brian Coffman both hold concerning and poorly disclosed ties to Elliott and Gregory Goff (CEO of Amber Energy, an Elliott portfolio company, who is pursuing an acquisition of CITGO, our direct competitor), creating serious questions about their ability to act in the best interests of all Phillips 66 shareholders.
- There are serious questions about Elliott's expectation of director loyalty. Elliott's attempt to replace Bob Pease while denying Phillips 66 access to interview and evaluate its nominees is a clear testament to the activist's expectation of loyalty rather than true independence.
Phillips 66 Has the Right Nominees
- John Lowe has over 30 years of experience in the energy sector and has created tangible value both in his executive and board positions at publicly traded energy companies.
- Bob Pease, who we appointed with support from Elliott, has extensive refining and commercial experience from his over 39-year career, and his leadership overseeing major corporate transformations has made him a highly effective Director.
- Nigel Hearne has substantial international upstream and downstream operating experience and will provide valuable refining operations and HS&E expertise.
- Howard Ungerleider holds over 30 years of chemicals leadership experience and oversaw the financial complexities of one of the largest and most complex mergers and spin-off transactions in recent history as CFO of DowDuPont.
Your Vote Matters
Phillips 66's Board of Directors urges shareholders to use only the WHITE proxy card to vote:
- "FOR" all four of the candidates proposed by the Company and not Elliott's four nominees;
- "FOR" management's proposal to approve the declassification of the Board of Directors; and
- "AGAINST" Elliott's proposal requiring annual director resignations, which implementing would violate Delaware law and put your Board at significant legal and reputational risk
The Board strongly recommends that shareholders safeguard their investment in Phillips 66 by casting their vote as soon as possible, regardless of plans to attend the Annual Meeting virtually on May 21, 2025.
Shareholders may receive materials from Elliott Management that say "gold proxy card" or "gold voting instructions" or similar. Phillips 66 recommends that shareholders DISCARD any Gold voting materials they may receive from Elliott. Shareholders may cancel out any vote made using a Gold proxy card by voting again TODAY using the Company's WHITE proxy card. Only the latest-dated vote will count.