Phillips 66 mentioned Wednesday it can make its personal proposal for board declassification because it warned in opposition to the same proposal by investor Elliott Funding Administration LP.
Elliott, which has a declared funding of over $2.5 billion within the Texas-based refiner, had mentioned it will put ahead a non-binding proposal earlier than Phillips 66’s yearly assembly of shareholders for the corporate to introduce annual board elections.
“Elliott’s proposal requests that the Board undertake a company governance coverage below which every incumbent director can be required to decide to a one-year time period at every annual assembly making all Board seats open yearly”, Elliott mentioned in a web based assertion March 4.
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“The coverage is a sensible strategy to reinforce Board accountability to shareholders, align with governance finest practices and reply to the recurring sturdy help from Phillips stockholders for annual director elections in response to an onerous supermajority voting requirement to amend the Firm’s Constitution”.
On Wednesday Phillips 66 issued a press launch about its agenda for the assembly. The assertion mentioned the corporate will request shareholders “to approve the declassification of the Board by amending the Firm’s certificates of incorporation and by-laws, because it has performed 5 occasions earlier than over the previous decade”.
“Elliott is in search of shareholder approval of a request for the Board to undertake a coverage to implement a required annual resignation of all administrators”, Phillips 66 mentioned. “Elliott’s proposal is merely a distraction and contravenes a number of parts of the Firm’s organizational paperwork, in violation of well-established ideas of Delaware company regulation.
“The Board strongly urges shareholders who want to correctly declassify the Board in accordance with the Firm’s governing paperwork to vote AGAINST Elliott’s proposal and in help of administration’s proposal”.
Elliott has but to answer to a request for remark emailed by Rigzone.
Phillips 66’s previous declassification proposals failed to achieve the 80 p.c vote threshold, in response to the corporate.
Wednesday’s assertion additionally revealed Phillips 66 will make 4 nominations for the board election on the assembly, together with one already appointed final yr on Elliott’s insistence.
Elliott has been calling for a revamp of the board to treatment what it sees as persistent underperformance. Early final yr Phillips 66 agreed to call Robert W. Pease, who had held senior roles in numerous corporations together with Shell Buying and selling (U.S.) Co., to its board and to work along with Elliott to establish a second mutually agreed director, in response to an organization assertion February 13, 2024.
On Tuesday Elliott complained earlier than Delaware’s Courtroom of Chancery to pressure Phillips 66 to open at the very least 4 director seats for election on the assembly.
“Regardless of Elliott privately requesting affirmation, Phillips has nonetheless not disclosed what number of seats shall be up for election or who its nominees shall be, requiring Elliott to file a criticism with the intention to protect its shareholder rights”, Elliott mentioned in a web based assertion. “The Firm’s present gamesmanship round its administrators follows the Firm’s earlier failure to honor its representations made to Elliott – courting again to February 2024 – that it will appoint a mutually agreed-upon director with vitality expertise.
“In its criticism, Elliott states that if the Firm ends its defensive maneuvers and confirms that at the very least 4 director seats shall be up for election on the 2025 Annual Assembly, Elliott intends to withdraw the criticism and not proceed with the litigation”.
Elliott added, “This desire for gamesmanship and disrespect for stockholder rights demonstrated by Phillips reinforces why change is urgently wanted on the Board to ensure that the Firm to realize its full value-creation potential”.
Elliott has nominated seven candidates with the “best-in-class expertise in refining and midstream operations”, together with an Elliott accomplice, for the election, as revealed in Elliott’s March 4 assertion.
Two of Phillips 66’s 14 seating administrators, 13 of whom are impartial in response to the corporate, have determined to not stand for re-election, in response to a disclosure with the Securities and Trade Fee (SEC) February 12.
In a reply to a request by Rigzone for touch upon Elliott’s go well with, a Phillips 66 spokesperson pointed to the corporate assertion launched Wednesday.
In a letter to shareholders March 5, Phillips 66 expressed confidence in its board, highlighted its progress towards operational targets and mentioned it’s dedicated to transparency and accountability.
“However, we stay absolutely dedicated to constructive engagement and discovering a path ahead with Elliott that can profit all shareholders”, acknowledged the letter, revealed on the Securities and Trade Fee portal.
“The Board constantly and aggressively evaluates the portfolio and different options with a view to maximizing long-term shareholder worth – and is prepared to take decisive motion to realize this purpose”, the letter added.
To contact the creator, e mail jov.onsat@rigzone.com
