Any proxy fight that results in nominees from the outside getting appointed is a loss and an indictment of management. That's IR 101. The outcome says the institutional investors don't think Elliott's plan is necessarily the right track but something has got to give. That is the message. You don't arrive at this outcome without that being the clear intention of the institutional investors. Based on ownership levels, that's the only way for the outcome. So perhaps to the ELT, this feels like a bit of a reprieve, but they will have to deliver because next time the coalition will be bigger. Had Elliott put up some stronger nominees, this would have been a very different story. I for one am ok with this outcome because I don't think breaking the company apart is the right course.
Mark posts today: "I would like to extend a heartfelt thank you to all Phillips 66 employees and our retiree community for the continued faith in our company and leadership team. Your commitment to our culture of safety, efficiency, and operational excellence is what drives us forward.
I am proud of the fact that 82% of shares from our employee plan voted in favor of our nominees at yesterday’s annual meeting. I share your confidence that we have the right strategy in place to continue achieving our vision of being the leading integrated downstream energy provider."
This is interesting because he did almost nothing to appeal to those stakeholders. Zero on the hearts and minds there because he didn't think it mattered. Had he attempted that, even surface-level, this should have been a slam dunk for management. But he didn't because he doesn't seem to know the workings of company he runs. Analyst analysis of Lashier's earnings and conference engagements routinely put him in the bottom 25 percent of energy CEOs in terms of competency and depth of knowledge of his company and the markets in which it operates; something IR has been working hard to improve. Easier said than done, as evidenced by how he bungled a simple question on fuel demand in a Bloomberg interview and failed to bring it back to the company's value proposition. Now, some have said that may be on the staff supporting him not prepping him properly but ultimately the buck stops there.
The concerning thing is that they are trying to frame this as a win, rather than an eye-opening moment where they need to kick into high-gear to re-earn trust and confidence. They don't seem to think they have to.
There is a lot of vitriol on this page - that is not my intent. Rather, objectively, I hope that leadership wakes up and takes the necessary steps and recognizes the need to do things a bit differently. The business model is clunky, there have been some random M&A activities and their integrations have been poorly articulated in the investor presentations for how the systems work and what they provide in terms of runway - it's impossible to value what you can't articulate.
It seems delusional to say, "[Phillips 66 is] the leading integrated downstream energy provider" when it has quite literally been in third place amongst its core peers for the last several years. It could be "a leading" but is not "the." If that is the aspiration, that's good, but that is not where the company is at present. Rather than instilling confidence, Mark's post merely comes across as misplaced hubris at best.
To be fair, perhaps it is a reprieve of sorts but this is not one that is a victory, it's more a stay of execution and you need to make a better case. The opportunity is there but only if it is taken. The status quo to date will not suffice.
I love this company and my roots in it run deep. It needs to evolve or it will drift - not die - drift and that hurts shareholders and employees who will have to continue to suffer through more unclear and unending transformation.
Here's hoping this was a wakeup call.