Shareholder activism is on the rise despite, or perhaps because of, uncertainty and volatility in the market. Activity has picked up in the U.S., with 40 active campaigns in the first quarter 2025, a 43% rise year-on-year, after two years of shareholder doldrums.
Phillips 66 Feels the Wrath
Phillips 66 is besieged by activist hedge fund Elliott Investment Management, founded and led by curmudgeonly Paul Singer, who Disruption Banking wrote about here, back when Singer was bending nation-states and US territories to his will.
Now, Elliott Investment Management has a $2.5 billion stake in Phillips 66, with a plan to clean out the board.
The hedge fund said, “sweeping changes are needed – changes to the company’s structure, its operations and its board.” Elliott wants independent directors to oversee management and push internally to spin off or sell the midstream business and focus on refining.
Phillips 66, itself was spun off from ConocoPhillips in 2012. The split meant that ConocoPhillips would focus resources on upstream production of oil and gas. In contrast, the newly created Phillips 66 would focus resources on the downstream refining stage of the industry.
Interestingly, at the time of the split in 2012, Greg Garland, the new CEO of Phillips 66, explained that the splitting of the upstream and downstream divisions allowed Phillips 66 to focus on beefing up its midstream and chemical operations. Now, thirteen years later, those divisions are precisely what Elliott Investment Management is trying to force Phillips 66 to divest.
Singer’s S*”t List
Elliott has also recently targeted BP and Honeywell. In February of 2025, Honeywell announced it was splitting its aerospace and automation divisions into three separate companies. The move to break up one of America’s last remaining conglomerates came from pressure applied by Elliott Investment, which took a $5 billion activist stake in Honeywell in 2024.
Activist shareholders are thorns in the sides of many a corporate executive, but they play an important role in the market, keeping boards of directors honest and punishing their trespasses.
The hardest hit sectors are industrials, technology, and healthcare, which make up 66% of all activist shareholder campaigns, unsurprising when you think of the well-known corporate governance issues in each of those sectors.
Get On Board
Following a record number of activist investors throwing their weight around last year, 2025 might surpass those numbers. Worldwide unease over trade disputes and the decline in stock valuations has created opportunities for activist shareholders.
Fifty-one board seats have already been obtained in the first quarter, a 34% increase from last year. In the case of Phillips 66, Elliott Investment Management has pushed for the election of 4 members to join the board of Phillips 66 in late May.
However, Phillips 66 has sought to reduce the size of the board from fourteen to twelve, eliminating two potential seats Elliot wishes to occupy with like-minded individuals. In response,
Elliott filed a lawsuit in Delaware’s Court of Chancery against Phillips 66 in late March.
In response, Phillips 66 has accused Elliott of a troubling conflict of interest, citing Elliott’s concurrent bid via the shell company Amber Energy to buy rival refinery Citgo while trying to break up Phillips 66. Unsurprisingly, Elliott has responded, saying that no such conflict of interest exists.
The results of this increasingly hostile dispute will come to a head later in May at the annual shareholder meeting. Meanwhile, Mark Lashier, Chairman and CEO of Phillips 66, is making the rounds on business TV, stating his case to maintain the integrated business as it exists now.
Elliott, for their part, recently put out an extensive presentation for shareholders entitled Steamline 66. Within the presentation is a podcast, graphics and charts galore, and an unrelenting theme that the conglomerate structure at Phillips 66 is broken and the company is undervalued.
You Think You Know a Guy
Notably, Elliott did succeed in placing one board member in mid-February of 2024: Robert Pease, the former CEO of refiner Motiva Enterprises. However, Elliott was quick to sour on Pease, as he voted for Lashier to become Chairman and CEO, a dynamic which Pease allegedly told Elliott he was against.
Now, a little over a year later, Pease is among the four board members Elliott is trying to replace. Pease, for his part, has since soured on Elliot.
In Pease’s words: “We are committed to challenging management to deliver results. We are committed to acting, when necessary, but we are not a group that makes sweeping, irreversible, costly changes in response to short-term market fluctuations and speculative valuations.”
To Divest or Not to Divest
Ultimately, the fate of Phillips 66 depends on whether shareholders believe the company is more valuable in its current unified state or the summation of its parts. The case made by Phillips 66 management is basically “slow and steady wins the race.” It’s a long-term strategy that depends on synergy to weather future market fluctuations. Elliott’s position is to maximize profit now.
Which way shareholders lean on May 21st will largely reflect who controlled the narrative better. But, given market declines and uncertainty in the world, macro conditions might favor the activist hedge fund that promises to triple the share price.
Author: Laird Dilorenzo
#Activism #Shareholder #HedgeFunds
Laird Dilorenzo is a hatchet thrower and wordsmith.
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
See Also:
U.S. Private Enterprises versus The Republic of Argentina | Disruption Banking
