An activist investor's battle for influence at downstream energy giant Phillips 66 (PSX 0.74%) is heating up, and it's pushing up the share price. The company's share price was up by nearly 13% week to date as of Thursday night, according to data compiled by S&P Global Market Intelligence, largely as a result of the latest development in that struggle.
Squaring off
The activist firm is Elliott Investment Management, a corporate gadfly with years of experience in the activist game. It and Phillips 66 are locked in a proxy battle for control of the company, and have both put forth a slate of directors for its board. A vote on those directors will take place at Phillips 66's annual meeting next Wednesday, May 21.
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On Monday, Elliott won the support of proxy advisor International Shareholder Services (ISS), which recommended that shareholders vote for all four of the director candidates Elliott has put forth, rather than Phillips 66's slate. This follows a pair of earlier endorsements from other proxy advisors, specifically Egan-Jones and Glass Lewis (which recommended three of the four individuals).
The following day, unsurprisingly, Phillips 66 issued a press release vehemently disagreeing with those recommendations, and touting its own quartet of candidates.
The oil company has a so-called "classified" board, in that only a portion of that body is elected at any one time, rather than its entirety.
A $2.5 billion commitment
Over the years, Elliott has proven to be a disciplined and determined opponent in proxy fights. It's betting big on this one, disclosing in February that it had amassed a Phillips 66 stake of over $2.5 billion. It is advocating for the company to divest certain assets, among other measures.
Investors usually get excited about the involvement of activists because they usually push to make a company more efficient and profitable. Oftentimes proxy votes end in a compromise at best, however, so I don't think anyone should be trading Phillips 66 stock on the basis of this one alone.
