Phillips 66: Despite High Opposition to Pay at Last Year’s Meeting, Few Substantive Changes are Made

May 11

Total compensation for Phillips 66 CEO Greg Garland was $20,953,206. This actually represents an increase from the prior year if change in pension values are not considered. Last year 49.3 percent of shareholders voted against pay at the company.

Like many companies there’s considerable disclosure about engagement, with data sliced and diced in many ways. The company also included a table with two columns, “What we heard” and “Actions Taken in Response.” Here are the “actions” the company says it took:

Removed positive individual performance modifier from VCIP for all NEOs

Enhanced disclosures on goal setting, particularly where targets decrease on a year-over-year basis

Enhanced disclosures of the weighting and selection of VCIP metrics and the rationale for payouts

Capped payout at 100% on TSR portion of PSP if absolute TSR is negative

For 2022-2024 Require performance above the 50th percentile relative to peer group to achieve target payout

Enhanced disclosures in proxy of rationale for any adjustments to financial results

Enhanced disclosure about the peer group utilization and peer selection

Obviously enhancing disclosure is not in itself a true reform, just more verbiage. Of the actual changes note that capping payout at 100% on TSR portion of PSP if absolute TSR is negative also means that full payout can be made with the stock price actually going down as long as shareholder return at the company’s peers was worse.

Another change won’t occur until 2022 grants. The change is weak as it is -- requiring performance above the 50th percentile relative to peer group to achieve target payout – and executives at Phillips will continue to be rewarded at full target through 2023 for performing at the median. 

Phillips 66 has made As You Sow’s list of 100 Most Overpaid CEOs six times, including being number 46 on that list in 2021. It is likely they will be on the list in our next report as well.