And now, on to the main event…

The saga began in September 2023, after Elliott started building a substantial position in Phillips. The exact size of the stake was undisclosed, but it was big enough to be taken seriously (and probably around $1 billion). Around that time, Elliott requested, by email, to have a phone conversation with Lashier, who was then Phillips’ C.E.O., but not yet its chairman. The conversations and meetings between Elliott executives and Lashier continued through the fall. Elliott said it was trying to be “supportive” while pushing Phillips to return cash to shareholders and improve EBITDA in parts of the company’s operations. On November 29, 2023, Elliott issued a public letter to the Phillips board of directors urging the company to take steps necessary to improve its financial performance and increase its stock price, and requested that two new directors with oil refining expertise be added to Phillips’ board. Elliott kindly provided the names of several potential new board members. Initially, it seemed like Lashier would accede to Elliott’s request. But on December 22, he told Elliott that Phillips would only add one new board member. When Elliott pushed back, presumably because one Elliott-aligned director would be too easy to isolate, Lashier reversed course and indicated a willingness to add a second board member. But over the next few weeks, the two sides couldn’t agree on candidates. Meanwhile, the deadline approached for Elliott to decide whether it would launch a full-scale proxy contest in the spring 2024. In the end, the two sides agreed on one new director—Robert Pease, a veteran of the oil and gas industry—and Elliott extracted a promise from Lashier that the two sides would continue working to find a mutually agreeable second candidate. The proxy war was temporarily averted.

The decision to hold fire was consistent with Elliott’s general preference for avoiding expensive and time-consuming proxy battles. In fact, according to Elliott’s May 2, 2025, letter, during the past 15 years, Elliott has “collaborated” with more than 200 companies to find mutually beneficial solutions. The proxy fight with Phillips is only its fourth during that time, and the first since its battle with Arconic, an aluminum manufacturer, in 2017, “making Phillips 66 an extreme outlier,” Elliott asserted. Still, Lashier delayed the appointment of the second director until October 2024, according to the proxy statement Elliott filed with the S.E.C. last month, and then appointed Grace Puma Whiteford, a former executive at companies such as PepsiCo, Kraft, Motorola, and United Airlines. She was not one of Elliott’s many suggested candidates, and lacked the oil and gas experience they desired. The appointment seemed like a stick in the eye to Elliott, especially on the heels of Lashier’s ascent to chairman—which Elliott also opposed, believing it gave Lashier too much power at a time when the Phillips board should be pushing for changes—such as meaningful divestitures—to achieve a higher stock price, and not consolidating Lashier’s power. According to Elliott, Phillips stock has been languishing compared to its peers and the broader market. During the past 10 years, Elliott said, Phillips’ stock has underperformed competitors like Valero (by 138 percent) and Marathon (by 188 percent). Worse, according to Elliott, Pease had told the hedge fund that he wouldn’t support Lashier for chairman, but then, a month later, voted in favor. A proxy fight suddenly seemed increasingly inevitable. This February, in a public letter to the Phillips board of directors, Elliott expressed its frustration with Lashier over what it perceived as his power grab, as well as the company’s operating failures. (Elliott released an accompanying PowerPoint presentation on a new website, Streamline66.com.) In the letter, Elliott criticized Phillips’ “conglomerate structure,” its poor operating performance, and its “damaged credibility.” The activist investor urged Lashier to sell or spin off Phillips’ “midstream” business, which it believed could fetch $40 billion alone. Elliott also advocated for a sale of its chemical joint venture with Chevron, the offloading of its retail operations in Germany and Austria, and the addition of new, independent directors to the Phillips board. “A transformation of Phillips is long overdue,” Elliott wrote, and requested an in-person meeting with Lashier to review the company’s latest thinking. At that meeting, on March 3, Lashier stuck to his guns, saying that the company would keep its conglomerate structure and pursue its stated strategic initiatives—not the ones Elliott recommended. The next day, “given the large gap between Elliott’s and the Company’s expressed views,” Elliott filed its preliminary proxy statement, indicating the battle with Lashier was officially on, although Elliott also claimed it remained open to a compromise.

Since then, the two sides’ positions have only hardened. Elliott has reiterated that Phillips should sell assets and has nominated a slate of four new independent directors for shareholders to vote on at Phillips’ annual meeting on May 21. On March 26, Phillips filed its proxy statement with the S.E.C., indicating it would be nominating four directors, including two new ones, and opposing Elliott’s nominees, along with its proposals for reform. Since Lashier’s ascent to C.E.O., in July 2022, the company claims to have returned nearly $14 billion to shareholders through dividends and share repurchases. Phillips also claims to have nearly doubled EBITDA at its midstream operations since 2021; sold $3.5 billion of assets; closed its Los Angeles refinery; and committed to reducing costs. Since Lashier’s appointment was announced, in April 2022, Phillips 66’s stock is up nearly 27 percent, while Valero’s stock is up 15 percent during the same time period. (The broader S&P 500 is up 32 percent in the past three years.) As part of its defense, Phillips has hired a slew of big-gun advisors, including Wachtell Lipton on the legal front; Evercore and Goldman Sachs for M&A advisory; and FTI Consulting, plus the infamous Declan Kelly, one of the founders of Teneo, who was forced out of the firm for various (well-documented) misadventures, and has since founded The Consello Group, a corporate advisory and investment business. Kelly, you will recall, played a key role in the boardroom coup at GE that resulted in the ouster of then-C.E.O. John Flannery by Larry Culp, who proceeded to break up the conglomerate and appoint himself C.E.O. of GE Aerospace. Kelly knows how to play corporate hardball. Meanwhile, the lengthy letters and PowerPoints have proliferated, with both sides continuing to launch fusillades against the other. Just in the last week or so, there was Elliott’s latest missive to Phillips shareholders, and a 98-page PowerPoint that Phillips filed with the S.E.C., seeking to counter many of Elliott’s arguments and claiming that its “views are intentionally deceptive.” Said one Elliott advisor, “Elliott just asked for two board seats, and these guys jerked them around on the second one. It’s like killing John Wick’s dog—you’ve antagonized the toughest people on Wall Street for the dumbest of all possible reasons.”

It’s anyone’s guess at this point how Phillips’ biggest shareholders—including The Vanguard Group, State Street, and BlackRock—will vote two weeks from today, which is what makes this particular fight so interesting. Unlike the Peltz-Disney imbroglio last year, in which it was obvious with two weeks to go that Iger would win, this could go either way. Both sides are awaiting the recommendations of Institutional Shareholder Services and Glass Lewis, the powerful proxy-voting services that often sway voting shareholders one way or the other in these contests. The fact is, not much is at stake here, except for, you know, a whole lot of money and power. But according to an editorial by Michael McKenna published last week in the conservative Washington Times, apparently nothing less than the future of the republic rests on the outcome. “It is not an exaggeration to say Phillips 66 symbolizes American industrial might,” McKenna wrote. “Its efforts and innovation and those of its brethren oil and gas companies helped American soldiers, sailors and airmen win multiple wars. The products the company makes have sent generations rumbling across this land and helped farmers grow food for a hungry nation. Nowadays, through the export of liquefied natural gas, the company helps power the world.” At this point, McKenna was truly fired up. “In a world of uncertainty, the United States should not weaken its industrial energy base, especially not for something as transitory as fleeting financial gain that is likely to be concentrated in a few bank accounts in New York,” he continued. “Keeping companies such as Phillips 66 intact and healthy is a matter of national interest.” We’ll know the outcome of this existential battle soon enough.

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