Elliott Survey Reveals Major Concerns Among Phillips 66 Shareholders About Company Performance and Strategy

Elliott's Insights on Phillips 66's Shareholder Concerns

Elliott Investment Management L.P., which holds a significant stake in Phillips 66 (NYSE: PSX), has published the results of a recent survey showcasing the discontent of shareholders regarding the company's operational performance and strategic vision. Conducted about two months ago, this comprehensive survey captured responses from institutional investors who collectively own over 60% of Phillips 66's shares. The findings reveal widespread frustration over the company's underperformance and an apparent lack of coherent strategic direction.

Key Findings

Among the survey's findings, Phillips 66 was rated the lowest in comparison to its peers on various critical metrics, including operational execution, CEO effectiveness, and capital allocation strategies. Investors have expressed a strong desire for the company to prioritize divesting non-core assets to eliminate its so-called 'conglomerate discount' and thereby unlock hidden value.

Moreover, there is significant support among investors for the potential sale of the company's midstream assets, alongside a wish to streamline its overall portfolio by divesting other unrelated businesses. Generally, shareholders perceive Phillips 66 as failing to engage proactively with its operational challenges, leading to a notable undervaluation that breeds investor uncertainty.

As one shareholder candidly noted, despite management's repeated assertions of a successful strategy, there seems to be a glaring discrepancy between talk and action. Investors have indicated that while talks of a clearly defined strategic direction exist, execution on the ground does not match that narrative.

The Need for Action

Shareholders have openly voiced their frustration over Phillips 66 management's inability to achieve stated financial and operational objectives. Even in light of these challenges, many investors still recognize the company’s substantial growth potential. They see value in Phillips 66’s considerable market position but stress the urgent need for a more focused, strategic approach that emphasizes its core strengths in integrated refining.

To illustrate this sentiment, one investor highlighted the necessity for a more independent board and a commitment to continue offloading underperforming and non-core businesses. This perspective is echoed by several shareholders, who believe that the current conglomerate structure hinders long-term sustainability and growth.

Elliott Investment Management has laid out a detailed three-part roadmap titled