Elliott seeks Phillips 66 board seats, sees 75% share upside

Elliott Investment Management confirmed this morning that it manages funds that together have an approximately $1B investment in Phillips 66 (PSX) and that it sent a letter today to the board of Phillips 66. In its letter, Elliott “outlined a path by which Phillips 66 can remedy its underperformance, improve its execution, restore trust with investors and unlock significant and sustainable value for its shareholders. Elliott sees approximately 75% upside to the current stock price.” Elliott said that while the company’s 2025 targets “are admirable, investors are skeptical of the Company’s ability to achieve them.” Elliott wrote, “At present we believe Mr. Lashier and the rest of the management team deserve investor support so long as they demonstrate meaningful progress against these targets. At the same time, we find the market’s skepticism to be understandable, and we believe the Board must take several steps to reassure investors that Phillips 66 is in the best possible position to achieve its value-creation potential.” Among the steps Elliott recommended is the appointment to the Phillips 66 board of two new directors. “Should Phillips 66 be unable to deliver on its 2025 targets, Elliott believes the Company could successfully implement a similar path to the one Marathon Petroleum Corporation (MPC) followed after its engagement with Elliott in 2019,” the activist said.