Activist investment firm Elliott Management has received a significant endorsement from Institutional Shareholder Services (ISS) for its four nominees in a contentious proxy battle against Phillips 66, the Houston-based oil refiner. This backing positions Elliott strategically ahead of the annual shareholder meeting, set for May 21.

Details of the Proxy Fight

According to a report published by the Financial Times, ISS—a prominent adviser for major institutional investors like BlackRock and State Street—recommended that Phillips 66 shareholders vote to support Elliott’s candidates as opposed to the company’s own nominees. The nominees from Elliott’s slate include:

• Brian Coffman, former executive at ConocoPhillips
• Sigmund Cornelius, also a former executive at ConocoPhillips
• Michael Heim, ex-Targa Resources executive
• Stacy Nieuwoudt, a former analyst at Citadel

ISS’s Rationale and Broader Context

In its recommendation, ISS expressed concerns regarding the current board’s capacity for effective oversight, noting that crucial industry insights may have been overlooked despite previous restructuring efforts since the pandemic. “There is strong evidence that the board is not willing to exercise independent oversight of management,” the report indicated.

Previous Proxy Fights and Future Implications

Elliott Management’s push for change at Phillips 66 reflects its strategy of advocating for asset sales, performance improvements in refining operations, and enhanced corporate governance. The rising tension marks one of the firm’s most prominent confrontations in recent years.

This proxy battle follows the trend of Elliott’s past campaigns, including notable disputes with Hess and Southwest Airlines, which were resolved just before voting commenced. ISS’s recommendation comes closely after Glass Lewis, another key proxy advisory firm, endorsed three of Elliott’s nominees, further bolstering support for the activist investor’s agenda.

Next Steps

As the date of the annual meeting approaches, the focus remains on how shareholders will respond to the differing board nominations. It remains to be seen whether Elliott will manage to secure the necessary backing to implement its agenda within Phillips 66’s operations.