Phillips 66 Appoints Industry Veteran Robert Pease as New Director

(Reuters) — Phillips 66 said on Tuesday it has appointed energy industry veteran Robert Pease to its board after activist investor Elliott Investment Management urged the U.S. oil refiner and pipeline operator to overhaul its board.

Phillips 66 had come under fire from Elliott for its refining operations, in a letter in November in which it revealed a $1 billion stake in the company. The activist investor criticized the company's refining operations and urged it to add directors with refining experience.

On Tuesday, the company, which is valued at $64 billion, said Pease will join the board immediately and that it will work with Elliott to identify a second director that both sides are happy with in the coming months. The board now has 14 directors, including 12 who are independent.

Its stock price inched up modestly to trade at $144.62 on a day the broader stock market was falling.

Before Elliott's letter, made public in late November, Phillips 66 stock was up 8.3% from a year earlier, compared with a 21.5% gain at larger rival Marathon Petroleum during the same period.

To address concerns, Phillips 66 executives had already laid out a plan to boost returns by cutting costs. The refiner is expected to sell or spin off $3 billion in assets.

"We have worked collaboratively with Phillips 66 on the board's appointment of Bob, who will bring extensive experience in refining and the energy industry more broadly," Elliott partner John Pike and senior portfolio Manager Mike Tomkins said in a statement.

Pease's "refining experience, leadership and energy expertise will add to the board's oversight of the company as we advance our strategic priorities and deliver long-term, sustainable value," Greg Garland, executive chairman of the board said in a statement.

Phillips 66 CEO Mark Lashier has set ambitious targets for the company and its stock price has climbed 23% since November. Elliott said in November that it could see the share price climbing to $200 a share, with improvements.

Elliott, meanwhile, has not been restricted in trading the company's stock and could, in theory add to its position.

The hedge fund has a history of making long-term bets on energy companies, including at Marathon Petroleum where Elliott first pushed for changes in a letter released in 2016.

Pease has nearly four decades of experience in the energy industry. At Cenovus Energy, he was the president of its U.S. downstream business.

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