UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the
Securities Exchange Act of 1934
(Amendment No.  )

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Filed by a Partyparty other than the Registrant  ☐

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Definitive Proxy Statement
Definitive Additional Materials
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Phillips 66
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Phillips 66

 (Name of Registrant as Specified in its Charter)

 (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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From Our Chairman



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At Phillips 66, our people are bonded by our vision of the Board

LOGO

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Dear Fellow Shareholders,

Over the past year, we were faced with a number of unprecedented challenges. When it mattered the most, the employees of Phillips 66 rose to the challenge. Our employees delivered exceptional performance and achieved record safety results for the year. Management and the Board were highly engaged, focusing on the health and safety of our people and our communities. We also focused on our strategy - not just to weather the current environment - but on how we plan to thrive in a lower-carbon future. In 2020, we made progress executing our strategic priorities of growth, returns and distributions supported by a strong foundation of operating excellence and a high-performing organization:

As a company in a critical infrastructure sector, we continued providing energy to our communities where we live and work. We implemented procedures and put measures in place to keep our employees safeimproving lives and our facilities on-line. We reconfigured work areas, provided protective equipment and put policies in place to support employees with underlying conditions or children at home, among others. We did this while achieving our best ever rate for personal safety at the Company.

We took swift action to secure liquidity and maintain our dividend. We suspended our share repurchases, identified projects that could be deferred while still meeting our commitment to personal and process safety, and implemented measures to reduce our controllable costs.

We focused on the future, announcing further investments in a lower-carbon economy and continuing to expand our participation in the energy transition. Our Rodeo Renewed project will convert our San Francisco Refinery into onecore values of the world’s largest renewable fuels facilities and is expected to reduce the facility’s greenhouse gas emissions by 50%. We formed a new organization within the Company, Emerging Energy, that is dedicated to working on a lower-carbon business platform and opportunities within our portfolio to commercialize emerging energy technologies.

We completed major growth projects and progressed milestones on others. We completed the Gray Oak Pipeline and the Sweeny Hub Phase 2 expansion. We also added a fourth dock at our Beaumont Terminal, and two docks began crude oil export operations at the South Texas Gateway Terminal during 2020.

We added two new directors to our Board. We continued our Board refreshment, adding two new directors in 2020 who bring diverse experience to our Board. The addition of these directors adds to our Board’s industry expertise, further increases our Board’s gender diversity, and broadens the depth and breadth of the skills and experiences our directors bring to the Board.

Finally, I would like to note that we are optimistic about the impact of the COVID-19 vaccines on economic recovery and longer term, the opportunities for value creation across our portfolio. To ensure everyone’s health and well-being, the 2021 Annual Meeting will be held exclusively online. You can find information about how to attend in the attached Proxy Statement.

Thank you for your continued support and investment in Phillips 66.

In safety, honor, and commitment,


Greg C. Garland
Chairmancommitment.

Our Energy In Action is how we bring our vision and CEO
March    , 2021

values to life.


We Work Together, We Get It Done

In a year full of challenges and uncertainty, the people of Phillips 66 stayed committed, determined and resilient. They worked safer than ever before and looked out for one another, their families and communities. As essential workers in a critical infrastructure industry, they kept our refineries, pipelines, terminals and businesses going, helping to fuel the response against COVID-19 and the economic recovery.

Nowhere was that more apparent than in Southwest Louisiana, home to hundreds of Phillips 66 employees and several Company assets — and ground zero for two destructive hurricanes in 2020. Hurricane Laura struck the Lake Charles area in late August and Hurricane Delta tested the community’s resolve once more six weeks later.

GRAPHIC 

The Lake Charles Manufacturing Complex in Southwest Louisiana was still without utility power in early September because

Work for
the greater
good.
Create an
environment
of Hurricane Laura, but workers attrust.
Seek
different
perspectives.
Achieve
excellence.
We embrace our values as a common bond.We depend on each other to do our jobs.We create space for possibilities.We challenge ourselves and never settle.
Be a good neighbor and use resources wisely.
Prioritize the site made sure to hoist a U.S. flag in remembrance of 9/11 victims on the 19th anniversarybig picture interests of the attacks.

company.
Work across teams, business units and functions.
Hold ourselves accountable for our words, work and actions.

“That’s just

Build relationships by understanding the way people are down here in Louisiana,” said Jerry Lemons,experience of others.
Provide and welcome real-time feedback.
Treat everyone as a senior safety consultant atcontributing team member.
Resolve differences quickly and move forward.
Examine the Lake Charles Manufacturing Complex in Westlake. “We work together,risks and we just get it done.” 

Like Lemons, most Phillips 66 employees inchallenge the area endured significant damagestatus quo.

Be open to their homes and property from the storms. Many were displaced. Some suffered unimaginable losses. Yet, they suited up, showednew ways of thinking.
Speak up and displayed exemplary focus in helping Phillips 66 repair, rebuildshare our unique expertise.
Listen and restart operations as soon as it was safemake sure everyone is heard.
Acknowledge and rebound from our mistakes.
Embrace change and adapt quickly.
Be curious and pursue lifelong learning.
Leave things better for the next person.
Don't let self-interest come first.Don't say one thing and do another.Don't simply accept the "way we have always done things."Don't avoid difficult decisions.
Living our values earns us the confidence of our business partners, communities and co-workers.Trusting each other makes us more productive and agile.Championing inclusion enables us to do so.

Phillips 66 did what was neededinnovate and thrive.

Continuing to take care of its people. Right after Hurricane Laura, it set up a distribution center with essentials, including portable generators and A/C units, carbon monoxide detectors, roof repair supplies, water and ice. The Company also expedited financial hardship, benefits and claims assistance to employees, and it secured temporary housing for many of those who were displaced. The Lake Charles complex donated fuel to local law enforcement and supplies to first responders volunteering to tarp roofs. Phillips 66 donated $750,000 to the American Red Cross in support of relief efforts. But it was the people of Phillips 66 who led by example.

“We’re going to rebuild,” Lemons said. “We’re grateful we’ve got a place to work that’s open and running, and we’ll just work through it, likeimprove ensures we always do.”

deliver extraordinary performance.




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Notice of 20212023 Annual
Meeting of Shareholders

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2331 CityWest Blvd.

Houston, Texas 77042

DATE

VOTING ITEMS
Date and time
Wednesday, May 12, 2021

TIME

10, 2023

9:00 a.m. Central Daylight Time

PLACE

Place
virtualshareholdermeeting.com/PSX2021

The 2021 Annual Meeting will be held exclusively online at www.virtualshareholdermeeting.com/PSX2021. To join as a shareholder, you must enter the 16-digit control number on your proxy card, voting instruction form, or Notice of Internet Availability you previously received. During the meeting shareholders may ask questions, examine our shareholder list and vote their shares (other than shares held through employee benefit plans, which must be voted prior to the meeting). Other interested parties may join the meeting as a guest, in which case no control number is required. For more information, please see the section entitled ADDITIONAL INFORMATION in this Proxy Statement. We are making the Proxy Statement and the form of proxy first available beginning on March     , 2021.

At the meeting, shareholders will be asked toPSX2023

Who can vote on:

The election of two directors

A management proposal for the annual election of directors

The ratification of Ernst & Young LLP as independent auditors

An advisory proposal to approve executive compensation

Two shareholder proposals contained in this Proxy Statement, if properly presented

Any other business that is properly raised at the meeting

Shareholders of record at the close of business on March 17, 2021,15, 2023, may vote at the meeting or any postponements or adjournments of the meeting.
HOW TO CAST YOUR VOTE:
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How to cast your vote:
Online

before the meeting

www.proxyvote.com

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By phone

(800) 690-6903

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Proxy card

or voting instruction form

Complete, sign and return your proxy card

GRAPHIC

At the meeting

You also may vote online during the annual meeting by following the instructions provided on the meeting website during the annual meeting. To vote at the meeting, visit www.virtualshareholdermeeting.com/PSX2021

card. If you are a beneficial owner and received a voting instruction form, please follow the instructions provided by your bank or broker to vote your shares.
Online at the meeting
You may also vote online during the annual meeting by following the instructions provided on the meeting website during the annual meeting.
To vote at the meeting, visit virtualshareholdermeeting.com/PSX2023
ProposalsBoard Vote RecommendationFor Further Details
1
Election of five Class II Directors
to hold office until the 2026
Annual Meeting
FOR” each
director nominee
Page 13
2Management proposal to approve the declassification of our Board of Directors
FOR
Page 37
3
Approval, on an advisory
basis, of compensation paid to
our named executive officers
FOR
Page 38
4
Ratification of the appointment
of our independent registered
public accounting firm
FOR
Page 85
 5-6Two shareholder proposals, if
properly presented
AGAINST” each proposal
Page 88
Shareholders will also vote on any other business that is properly brought before the meeting.
The 2023 Annual Meeting will be held exclusively online at www.virtualshareholdermeeting.com/PSX2023. To join as a shareholder, you must enter the 16-digit control number printed on your proxy card, voting instruction form, Notice of Internet Availability, or legal proxy provided to you by the broker that holds your shares. During the meeting shareholders may ask questions and vote their shares (other than shares held through employee benefit plans, which must be voted prior to the meeting). Other interested parties may join the meeting as a guest, in which case no control number is required. For more information, please see the section entitled ADDITIONAL INFORMATION in this Proxy Statement. We are making the Proxy Statement and the form of proxy first available beginning on March  , 2023.
For the Board of Directors,
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING

TO BE HELD ON MAY 12, 2021

The Notice of 2021

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Vanessa Allen Sutherland
Executive Vice President, Government Affairs, General Counsel and Corporate Secretary
March , 2023
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 10, 2023:The Notice of 2023 Annual Meeting of Shareholders, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2020 are available at www.proxyvote.com

Paula A. Johnson

Corporate Secretary

March     , 2021

Table of Contents

The Company will provide the Notice of Internet Availability, electronic delivery of the proxy materials or mailing of this Proxy Statement, the Annual Report on Form 10-K for the year ended December 31, 2020, and a proxy card to shareholders beginning on March     , 2021.

2022 are available at www.proxyvote.com.
1


TABLE OF CONTENTS
Table of Contents4
INFORMATION REGARDING THE BOARD OF DIRECTORS5
BOARD LEADERSHIP STRUCTURE5
BOARD'S ACTIVE ROLE IN RISK OVERSIGHT9
RELATED PARTY TRANSACTIONS
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10Proposal 1: Election of Five Class II Directors to Hold Office until the 2026 Annual Meeting
DIRECTOR QUALIFICATIONS AND NOMINATION PROCESS10
BENEFICIAL OWNERSHIP OF PHILLIPS 66 SECURITIESBoard Composition and Assessment
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS18
PROPOSAL 4:   ADVISORY APPROVAL OF EXECUTIVE COMPENSATION26
COMPANY PERFORMANCE SUMMARY27
EXECUTIVE COMPENSATION PROGRAM SUMMARY
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EXECUTIVE COMPENSATION PROGRAM DETAILS32
OTHER BENEFITS AND PERQUISITES
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EXECUTIVE COMPENSATION GOVERNANCE45
HUMAN RESOURCES AND COMPENSATION COMMITTEE REPORT48
SUMMARY COMPENSATION TABLE50
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END54
PENSION BENEFITS AS OF DECEMBER 31, 202056
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL59
CEO PAY RATIO
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TABLE OF CONTENTS

63
OBJECTIVES AND PRINCIPLES63
EQUITY COMPENSATION PLAN INFORMATION65
SHAREHOLDER PROPOSALS
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ADDITIONAL INFORMATION73
ABOUT THE ANNUAL MEETING
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VIRTUAL MEETING INFORMATION77
HOUSEHOLDING79
Appendix A: Certificate of Amendment to the Amended and Restated Certificate of Incorporation

CAUTIONARY NOTE & INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

References in this Proxy Statement to materials available on our website are for informational purposes only, and the information available on our website is not a part of, nor incorporated by reference into, this Proxy Statement.
This Proxy Statement includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current facts made in this report are forward-looking, including statements regarding our sustainability plans and goals and statements about our future financial performance and business. Forward-looking statements may be identified by the use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “targets,” “estimates” or other words of similar meaning. Forward-looking statements are based on certain assumptions and expectations of future events which may not prove accurate or be realized, and involve risks and uncertainties, many of which are beyond Phillips 66’s control. Risks and uncertainties that could cause our actual results to differ significantly from management’s expectations are described in our 2022 Annual Report on Form 10-K. In addition, our sustainability goals are aspirational and may change. Statements regarding our goals are not guarantees or promises of future performance. We undertake no duty to update any forward-looking statement that we may make, whether as a result of new information, future events or otherwise, except as may be required by applicable law.
NON-GAAP FINANCIAL MEASURES
This Proxy Statement contain references to “Adjusted VCIP EBITDA," “Adjusted PSP ROCE,” “net debt-to-capital ratio,” and “Adjusted Controllable Costs.” These are not measures of financial performance under generally accepted accounting principles (GAAP) and may not be defined and calculated by other companies using the same or similar terminology. Please see Appendix B, Non-GAAP Financial Measures, for the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure.

PROXY SUMMARY

2
Phillips 66 2023 Proxy Statement

PROXY SUMMARY



Letters from Leadership
From our Executive Chairman and President and Chief Executive Officer
Dear Fellow Shareholders,
This past year, as the world saw major disruptions in energy supplies, our employees stepped up to provide the products fundamental to human progress, executing on our vision of providing energy and improving lives. In rising to this challenge, Phillips 66 delivered strong operating and financial results. During the year, we returned $3.3 billion to shareholders through dividends and share repurchases, paid down $2.4 billion of debt and increased our year-end cash balance by $3.0 billion. At our Investor Day in November, we outlined the strategic priorities that we believe will best position us to reward you — our shareholders — now and into the future.
Deliver shareholder returns. In 2022, we announced a target to return between $10 billion to $12 billion to our shareholders through dividends and share repurchases in the period from July 2022 through year-end 2024. To help us achieve our target, the Board increased our share repurchase authorization by $5 billion in November and, in the first quarter of 2023, raised the quarterly dividend for the twelfth time, continuing our trend of delivering a secure, competitive and growing dividend.
Improve refining performance. We achieved 90% crude capacity utilization in 2022.Looking ahead, we aim to increase market capture and crude capacity availability and meaningfully reduce our operating costs. We will seek these improvements while maintaining our unwavering commitment to safety.
Capture value from wellhead to market. Through the acquisition of Phillips 66 Partners, LP and our increasing stake in DCP Midstream, LP, we built out our NGL wellhead-to-market strategy, and are well positioned to grow earnings attributable to our shareholders and capture commercial and operating synergies.
Execute our Business Transformation. In 2022, we launched a Business Transformation to sustainably lower our cost structure, and we captured run-rate savings in excess of $500 million by year-end. Our Business Transformation will better position us to compete and win as energy markets evolve. With a target to deliver $1 billion in run-rate savings by year-end 2023, our organization is challenging the status quo and leveraging technology to improve the ways we work.
Maintain financial strength and flexibility. We believe that disciplined capital allocation and maintaining a strong balance sheet are fundamental to our success. We are targeting a 25-30% net debt-to-capital ratio and will continue to prioritize our investment grade credit ratings, which enhance our ability to compete long-term.
Drive disciplined growth and returns. We will selectively pursue growth opportunities that offer high returns. As we evaluate lower-carbon opportunities, we will seek to leverage our core competencies and existing assets. Our Rodeo Renewed refinery conversion is a great example, which achieved final investment decision last year. Upon completion, Rodeo Renewed will be one of the world's largest renewable fuels production facilities.
Last year, we committed to working with our joint venture, Chevron Phillips Chemical Company LLC (CPChem), to enhance its sustainability report to include a discussion of how CPChem tests its plastics portfolio and assesses its strategy under potential future plastics demand scenarios. In August 2022, CPChem released its eleventh sustainability report, Accelerating Change for a Sustainable Future, which includes an analysis of its business model and production profile under three plastic demand outlooks. The report is available on CPChem's website, and described more fully in this Proxy Statement.
Our mission is clear, and we are energized and optimistic about the future as we focus on rewarding you, our shareholders. Thank you for your continued support and investment in Phillips 66.
In safety, honor and commitment,
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Greg C. Garland
Executive Chairman
March , 2023
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Mark E. Lashier
President and Chief Executive Officer
March , 2023
3


From Our Lead Independent Director
Dear Fellow Shareholders,
The independent directors and I join Greg and Mark in inviting you to attend our 2023 annual meeting of shareholders virtually. As the Board’s Lead Independent Director, I had the opportunity to sit down with many of our shareholders during the year. At these meetings, I learned more about the priorities of our shareholders and I was able to share the Board's perspectives on these topics. I discussed the input that I received in these meetings with the entire Board, which considered these viewpoints in our discussions and decisions.
This past year, many of these conversations touched upon the energy transition and matters of energy security, the Company's sustainability initiatives, greenhouse gas emissions reduction target-setting, and our approach to human capital management matters. You also expressed an interest in learning more about our ongoing director refreshment efforts and governance in the boardroom, including our oversight of the recent CEO transition. This Proxy Statement includes discussion of these matters that I hope you will find informative.
Another recurring topic of interest was the classification of our Board. In response to your feedback, we are asking shareholders again this year to support our proposal to declassify the Board so that our directors will be elected annually beginning in 2026. Your vote is important, so we are offering an incentive this year to encourage you to vote. Phillips 66 will make a $1 charitable donation for every shareholder account that votes. Contributions will be made to Project Lead The Way, a non-profit organization that empowers students to thrive in an evolving world by providing teachers with the training, resources and support they need in classrooms across the United States. Please make your voice heard, and join us in supporting Project Lead The Way.
I encourage you to read this Proxy Statement and our 2022 Annual Report on Form 10-K before you make your voting decisions. I also encourage you to read the Company's latest Sustainability Report, Lobbying Activities Report and Human Capital Management Report that are available to you on the Company's website.
Our Board remains committed to building long-term value in the Company and returning capital to our shareholders. We are also committed to guiding our Company to help address climate change through setting impactful, attainable and measurable emissions reduction targets, and investing in technologies and projects that deliver lower-carbon solutions and high returns.
On behalf of the Board, I join Greg, Mark and the entire executive leadership team in thanking you for choosing to invest in Phillips 66. It is a great pleasure to serve as your Lead Independent Director, and I look forward to hearing from many of you in the coming year.
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Sincerely,
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Glenn Tilton
Lead Independent Director
March , 2023
4
Phillips 66 2023 Proxy Statement


Proxy Summary
This summary highlights information contained elsewhere in this Proxy Statement, but does not contain all of the information that you should consider. You should read the entire Proxy Statement before you vote.

YOUR COMPANY

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AGENDA ITEMS AND VOTING RECOMMENDATIONS
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PROPOSAL 1
Election of 5 Class II Directors to Hold Office until the 2026 Annual Meeting
The Board recommends that you vote “FOR” the five Class II director nominees named in this Proxy Statement. psx-20230315_g15.jpg See page 13
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PROPOSAL 2
Management Proposal to Approve the Declassification of the Board of Directors
The Board recommends that you vote “FOR” the declassification of the Board of Directors. psx-20230315_g15.jpg See page 37
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PROPOSAL 3
Advisory Approval of Executive Compensation
The Board recommends that you vote “FOR” the advisory approval of the compensation of the Company’s named executive officers. psx-20230315_g15.jpg See page 38
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PROPOSAL 4
Ratification of the Appointment of Ernst & Young
The Board recommends that you vote “FOR” the proposal to ratify the appointment of Ernst & Young LLP. psx-20230315_g15.jpg See page 85
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PROPOSAL 5-6
Two Shareholder Proposals, if properly presented
The Board recommends that you vote “AGAINST” each of the shareholder proposals. psx-20230315_g15.jpg See page 88
YOUR VOTE IS IMPORTANT — This year, Phillips 66 will make a $1 charitable donation for every shareholder account that votes. Contributions will be made to Project Lead The Way, a non-profit organization that empowers students to thrive in an evolving world by providing teachers with the training, resources and support they need in classrooms across the United States.

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BUSINESS OVERVIEW AND PERFORMANCE HIGHLIGHTS
Phillips 66 is amanufactures, transports and markets products that drive the global economy. The diversified energy manufacturingcompany’s portfolio includes Midstream, Chemicals, Refining, and logistics company. With a unique portfolio of assetsMarketing and investments in the midstream, chemicals, refining, and marketing and specialties businesses, we process, transport, store and market fuels and products globally.Specialties businesses. At Phillips 66, we provide energy that improves lives and contributes to meeting the world’s growing energy needs. Affordable, reliableThrough our Emerging Energy organization, we also invest in, and abundant energy is essential to sustaining human health and well-being and improving the global standard of living.

VOTING MATTERS

research for, solutions supporting a lower-carbon future.
ProposalsBoard
Recommendation
Item5


2022 FINANCIAL AND OPERATING RESULTS
In 2022, we delivered strong results while maintaining our focus on achieving operating excellence. At our 2022 Investor Day, our executive leadership team reiterated Phillips 66’s returns-focused strategy and disciplined approach to capital allocation. The 2022 performance highlights shown below underpin our executive compensation. For information regarding how these achievements impacted our executive compensation outcomes, please see Compensation Discussion and Analysis beginning on page 39.
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Achieve Operating Excellence
Prioritizing safety, environmental stewardship, sustainability, reliability and cost efficiency while protecting shareholder value
Tied best-ever Tier 1 and 2 process safety event rate
Expanded Greenhouse Gas emissions reduction targets to include a 2050 emissions intensity reduction target for Scope 1 and Scope 2 emissions
Recognized by American Fuel and Petrochemical Manufacturers for exemplary safety performance
Awarded American Petroleum Institute’s large operator Distinguished Pipeline Safety Award for the second consecutive year
Election
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Drive Disciplined Growth
Enhancing our portfolio by growing our integrated Midstream and Chemicals businesses, as well as executing our returns-focused lower-carbon strategy
Completed the acquisition of Phillips 66 Partners, LP
Increased ownership and further integrated DCP Midstream to enhance our wellhead-to-market strategy
Reached a final investment decision to convert our San Francisco Refinery into one of the world’s largest renewable fuels production facilities
Reached a final investment decision at CPChem, our 50-50 joint venture, in early 2023 for the construction of two director nominees

FOR

(each nominee)

world-scale petrochemical facilities that are expected to be self-funded
Item 2Management proposal regarding annual election
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Deliver Shareholder Returns
Rewarding shareholders through continued dividend growth and share repurchases
Increased the dividend by 5% in May 2022 and returned $1.8 billion in dividends in 2022
Resumed share repurchases in the second quarter and repurchased $1.5 billion of shares in 2022
Announced a $5 billion increase to the share repurchase authorization in November 2022
Announced a target to return $10 billion to $12 billion to shareholders through dividends and share repurchases between July 2022 and year-end 2024
psx-20230315_g20.jpg
Maintain Financial Strength & Flexibility
Maintaining financial strength and disciplined capital allocation strategy to enhance resiliency
Generated $10.8 billion of operating cash flow
Ended the year with a cash balance of $6.1 billion
Paid down $2.4 billion of debt and ended the year with a net-debt-to-capital ratio of 24%
Implemented Business Transformation initiatives to sustainably lower our cost structure, and captured a run-rate savings in excess of $500 million by year-end
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Cultivate a High-Performing Organization
Building capability, pursuing excellence, and doing the right thing
Responded to employee feedback by enhancing workplace benefits
Contributed $27 million to support the communities where we operate and donated over $7 million through matching gifts and volunteer grant programs
Logged 88,000 employee volunteer hours
Received six external top employer recognition awards as a great place to work
6
Phillips 66 2023 Proxy Statement


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SPOTLIGHT ON EMERGING ENERGY
Our Emerging Energy organization is focused on developing a lower-carbon sustainable business platform by leveraging our existing assets and capabilities and advancing investments in new energy technologies. The team collaborates across business units and with experts in Energy Research & Innovation, concentrating on renewable fuels and other complementary energy technologies. Renewable fuels like renewable diesel, sustainable aviation fuel and renewable naphtha are an extension of our current business and will allow us to use existing infrastructure in new ways to meet energy needs. We are pursuing opportunities in batteries, carbon capture, hydrogen and EV charging, which are strategic complements to our core businesses.
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SPOTLIGHT ON OUR BUSINESS TRANSFORMATION
As part of our commitment to deliver long-term competitiveness and value creation for our shareholders, we began a Business Transformation in 2022 to identify and implement sustainable cost reductions across the enterprise, which we expect to realize by year-end 2023. We are enhancing our digital capabilities, innovating our processes and advancing the ways we work in order to decrease complexities and create efficiencies. The organization design changes that we are implementing are intended to provide us with more resiliency during turbulent times and the ability to maximize value capture in any market conditions.
$800MM
Cost Reduction Target
Sustainably Transform Our Operating Cost Structure
Working to reduce operating, SG&A and freight costs
Restructuring the organization to optimize our ways of working
Establishing culture of transformation and cost discipline
$200MM
Lower Sustaining Capital Target
Capital Discipline Supports a Sustainable, Competitive Future
Centralizing project execution to drive greater capital efficiency
Empowering innovation and agility mindset
Realizing portfolio risk optimization
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SHAREHOLDER OUTREACH AND ENGAGEMENT
2022 Shareholder Engagement by the Numbers
57% of shares outstanding
contacted
47% of shares outstanding
engaged
26% of shares outstanding engaged with Lead Independent Director
Responding to Annual Meeting Results and Shareholder Feedback
Our shareholder engagement program is year round. At shareholder engagements following the Company's 2022 Annual Meeting, we discussed the Company's responsiveness to a shareholder proposal that requested a report from our 50-50 joint venture, Chevron Phillips Chemical Company ("CPChem"), a manufacturer and marketer of petrochemicals and plastics worldwide. The proposal requested a report describing how CPChem could shift its plastic resin business model from virgin to recycled polymer production as a means of reducing plastic pollution. In August 2022, CPChem released its eleventh annual sustainability report, Accelerating Change for a Sustainable Future, featuring the details of a scenario analysis undertaken by CPChem to test the resilience of its portfolio. During engagement meetings, our shareholders commented favorably on CPChem’s scenario planning efforts and these enhanced disclosures.
For more information on our shareholder engagement program and responsiveness to shareholder concerns, please see Shareholder Outreach and Responsiveness on page 29.
Proxy Summary7


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CORPORATE GOVERNANCE AND BOARD HIGHLIGHTS
Majority voting and resignation policy for directorsFOR
Item 3

Ratification of the appointment of our independent registered public accounting firmFOR
Item 4Approval, on an advisory basis, of compensation paid to our named executive officersFOR
Items 5-6Two shareholder proposals, if properly presentedAGAINST

CORPORATE GOVERNANCE HIGHLIGHTS

  Majority voting for directors

  Demonstrated commitment to Board refreshment

  Director retirement age policy of 75

  Meaningful director and executive stock ownership guidelines

  Annual evaluation of the Board and committees

  Board level oversight of corporate culture and human capital management

Shareholder right to proxy access (3% for
3 years, up to 20% of the Board)

  Robust Lead Director duties

  Clawback policy for incentive compensation

  Commitment

Committed to diverse candidate pools

  Policy prohibiting pledging and hedging of Company stock

thoughtful Board refreshment


Annual evaluation of CEO by independent directors

Independent director participation in our
shareholder engagement program

Clawback policies for incentive compensation
Meaningful director and executive stock
ownership guidelines

Commitment to consider director candidates from a
diverse candidate pool
Annual evaluation of the Board and its committees

Policy prohibiting pledging and hedging of
Company stock
Board level oversight of ESG efforts, including
sustainability initiatives, corporate culture and
human capital management

Robust Lead Independent Director duties and
regularly scheduled executive sessions of
independent directors

SHAREHOLDER ENGAGEMENT

Ongoing engagement with our shareholders is important

Demonstrated Commitment to us. We communicate with our shareholders through a variety of means, including meetings, investor presentations, our website, and publications we issue. As part of our engagement program, we reach out to shareholders for dialogue concerning their priorities – which in 2020 generally included environmental, human capital and Board governance matters. During 2020, we solicited feedback from investors representing approximately 48% of our outstanding shares and engaged with nearly 20 global institutional investors, representing over 39% of our outstanding shares. Our Lead Director and the Chair of

PHILLIPS 66 PROXY STATEMENT 2021     1

Refreshment

PROXY SUMMARY

our Public Policy and Sustainability Committee also have participated in our engagements with shareholders. More information about our engagement process can be found under CORPORATE RESPONSIBILITY.

BOARD HIGHLIGHTS

We currently have a classified Board, meaning our Board is divided into three classes of directors, with each class elected for a three-year term. This year, as we did in 2015, 2016 and 2018, we are submitting a proposal to shareholders to amend our organizational documents to declassifySince 2019, the Board overhas appointed seven new directors to the next three years. If shareholders approve the proposal, beginning with the annual meeting in 2024, all directors will be elected annually. For more information, see PROPOSAL 2: MANAGEMENT PROPOSAL REGARDING THE ANNUAL ELECTION OF DIRECTORS.

Summarized information about our continuing directors and the nominees for election at this Annual Meeting is shown below. Earlier this year, Harold W. McGraw III and Victoria J. Tschinkel, eachBoard, six of whom had served on ourare independent, and increased the gender and racial/ethnic diversity of the Board. The Board’s recent refreshment activities have resulted in the Board since 2012, decided to retire in March and not stand for reelection atpossessing an average tenure of approximately 5 years. These actions demonstrate the Annual Meeting. As a result, Lisa A. Davis, who originally was appointed to the class of directors whose terms expire in 2023, will stand for election at this meeting in order to have the classes of directors as nearly equal as possible.

Current NomineesDirector
Since
IndependentCommittee MembershipsOther
Public
Boards
AFCHRCCNGCPPSCEC
Julie L. Bushman2020l  l 2
Lisa A. Davis2020 l l 3
Directors whose terms expire in 2022      
Greg C. Garland2012     GRAPHIC2
Gary K. Adams2016 l l 1
John E. Lowe2012GRAPHIC lll2
Denise L. Ramos2016l lGRAPHICl2
Directors whose terms expire in 2023      
Charles M. Holley2019l  l 2
Glenn F. Tilton2012 lGRAPHICll2
Marna C. Whittington2012 GRAPHIClll2

AFC = Audit and Finance Compensation                               HRCC = Human Resources and

NGC = Nominating and Governance                                      PPSC = Public Policy and Sustainability

EC = Executive

l = Member    GRAPHIC= Chair
          

Our Board seeksBoard’s desire to achieve a diverse and broadly inclusive membership. Our directors bring varying perspectivesmembership with individuals that collectively possess the skills and experiences that the company will need to succeed now and into the Board by virtue of their backgrounds and experiences. The Board views diversity in terms of skills, as well as gender, age, race, ethnicity, background, tenures, professional experience and perspectives. In late 2019, Charles Holley was appointed to the Board and in 2020, Julie Bushman and Lisa Davis were both appointed. We believe these new directors add to the breadth of experience and perspective of our Board. Our Nominating and Governance Committee is focused on Board refreshment and evaluates directors’ skills in the context of our Company’s evolving business and prioritizes diversity to ensure effective Board oversight.future. To more completely convey our Board’sBoard's composition, we have included a skills matrix under Board Skills and Experience on page 21.

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Active Board Oversight of Strategy and Recent Management Transitions
During the INFORMATION REGARDING THE BOARD OF DIRECTORS sectionspring and fall, the Board heard directly from our shareholders through the Lead Independent Director's participation in meetings with many of this Proxy Statement that our Nominatinglargest investors. In October, the Board continued its practice of conducting an annual in-depth review of our strategy. Throughout the year, directors interacted with members of management and Governance Committee useshigh potential employees in formal and informal settings and received periodic briefings on topics such as our sustainability program and approach to reviewhuman capital management. The Board also received updates from internal and identifythird-party experts on matters such as cybersecurity and long-term scenario planning.
The Board also oversaw transitions within management, including the competenciespromotion of directorsMark Lashier to the role of CEO. Of the Company's 12-member executive leadership team, seven members took on new or restructured roles in 2022 and compositionthe team added two new external hires. These changes increased the gender and racial diversity of the Board as a whole.

team and broadened the team's range of experiences, skills and backgrounds to better position the Company for long-term success.

2     PHILLIPS 66 PROXY STATEMENT 2021

PROXY SUMMARY

8 of 9 directors are independentAverage tenure of 4 years45% gender diversityAverage age of 65
PIE CHART8PIE CHARTPIE CHARTPIE CHART
Phillips 66 2023 Proxy Statement

2020 PERFORMANCE HIGHLIGHTS



BOARD OVERVIEW
Director
Since
Committee MembershipsOther
Public
Boards
Name and Primary OccupationIndependentAFCHRCCNGCPPSCEC
Class II Directors, Current Nominees
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Gregory J. Hayes, 62
Chairman and Chief Executive Officer
of Raytheon Technologies
2022
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1
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Charles M. Holley, 66
Former Executive Vice President and
Chief Financial Officer of Walmart Inc.
2019
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2
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Denise R. Singleton, 60
Executive Vice President,
General Counsel and
Secretary of WestRock Company
2021
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1
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Glenn F. Tilton, 74
Former Chairman and Chief Executive
Officer of UAL Corporation
2012
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2
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Marna C. Whittington, 75
Former Chief Executive Officer of
Allianz Global Investors Capital
2012
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2
Class III Directors, Whose Terms Expire in 2024
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Julie L. Bushman, 62
Former Executive Vice President of
International Operations of 3M
2020
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2
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Mark E. Lashier, 61
President and CEO of Phillips 66
2022
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0
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Lisa A. Davis, 59
Former member of Managing Board
of Siemens AG and CEO for Siemens
Gas and Power
2020
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3
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Douglas T. Terreson, 61
Former Head of Energy Research
at Evercore ISI
2021
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0
Class I Directors, Whose Terms Expire in 2025
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Greg C. Garland, 65
Executive Chairman and Former CEO
of Phillips 66
2012
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1
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Gary K. Adams, 72
Former Chief Advisor -
Chemicals for IHS Markit
2016
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0
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John E. Lowe, 64
Former Senior Executive Advisor to
Tudor, Pickering, Holt & Co.
2012
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1
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Denise L. Ramos, 66
Former Chief Executive Officer,
President and Director of ITT Inc.
2016
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2

GRAPHIC

Operating Excellence

GRAPHIC

Growth

GRAPHIC

Returns

GRAPHIC

Distributions

GRAPHIC

High-Performing Organization

AFCAudit and Finance
PPSC Public Policy and Sustainability 
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Chair

Company best

HRCCHuman Resources and industry leading safetyCompensation 
EC Executive
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Member
NGC Nominating and environmental performance

Advanced digital innovation across business segments

Governance

Gray Oak Pipeline and Sweeny Hub Phase 2 expansion completed

Established Emerging Energy organization and announced Rodeo Renewed project

Generated over $2 billion of operating cash flow

On target to achieve AdvantEdge 66 program value targets

Expanded retail presence through West Coast joint venture

Maintained competitive dividend, distributing $1.6 billion in 2020

Preserved liquidity through cost reductions and suspension of share repurchases

Accelerated efforts to advance inclusion and diversity

Supported our people and communities through volunteerism and financial assistance

Proxy Summary9


EXECUTIVE COMPENSATION HIGHLIGHTS

PROGRAM OVERVIEW

Our executive compensation programs areprogram is designed to pay for performance. We link compensation to Company performance and use metrics we believe will drive long-term shareholder value and that are aligned with Companyour strategy. The majority of executive compensation is provided in the form of long-term incentives with multi-year performance periods. We also align the interests of our executives with our shareholders through equity compensation.

Our executives’ compensation, includes base salary, anand we align all employees' interests with the execution of short-term priorities through our annual cash bonus, opportunity under ourthe Variable CompensationCash Incentive Program (“VCIP”),.

Following extensive outreach with shareholders after our 2021 Annual Meeting, the Human Resources and equity-basedCompensation Committee (the "Compensation Committee") implemented a series of executive compensation including stock options, restricted stock units (“RSUs”)program changes for 2022 that are described in detail in the Compensation and awardsDiscussion Analysis section of this Proxy Statement. The Compensation Committee was pleased to see the solid shareholder support for the say-on-pay vote at our 2022 Annual Meeting, which received support from 88% of votes cast.
Elements of the Executive Compensation Program
The key elements of pay under our Performance Share Program (“PSP”). The illustrationsexecutive compensation program are described in the table below, showwhich also shows the percentage each pay element comprises of our CEO and other named executive officers’ (“NEOs’”) target total direct compensation for 2020.

2022 for our current Chief Executive Officer ("CEO") and other named executive officers (“NEOs”).

PHILLIPS 66 PROXY STATEMENT 2021     3

Key Elements of PayDelivered via
Performance Drivers(1) and Weightings
CEOOther
NEOs
Base SalaryCash
Annual fixed cash compensation to attract and retain NEOs
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Annual IncentiveVariable Cash Incentive Program (VCIP)Operational Sustainability 50%
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Safety & Operating Excellence (25%)
Environment (15%)
High-Performing Organization (10%)
Financial Sustainability 50%
Adjusted VCIP EBITDA (40%)
Adjusted Controllable Costs (10%)
Long-Term IncentivesPerformance Share Program (PSP)
Adjusted PSP ROCE (50%)
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Relative total shareholder return (50%)
Stock Option Program
Long-term stock price appreciation
Restricted Stock Unit (RSU)
Long-term stock price appreciation

PROXY SUMMARY

   CEO Target MixOther NEOs Target Mix   

PIE CHART

The(1)Adjusted VCIP is designed to align annual bonus awards with shareholder interestsEBITDA, Adjusted Controllable Costs and execution of our corporate strategy. Performance under the VCIP is based on operational andAdjusted PSP ROCE are non-GAAP financial metrics. In 2020, 45% of VCIP was weighted to operational metrics − operating excellence and high-performing organization − and 55% was weighted to financial metrics – adjusted EBITDA and controllable costs. For 2021, the weighting has changed, and two new metrics were added – Low Carbon Priorities and Greenhouse Gas Priorities. These changes were made to reinforce our commitmentmeasures. See Appendix B for reconciliations to the energy transition and further alignnearest GAAP financial measures.


Consistent with our philosophy that executive compensation program with shareholder interests. be linked to Company performance, our NEO's compensation mix ensures that a significant portion of compensation is at risk. More information can be found in the COMPENSATION DISCLOSURE AND ANALYSISCompensation Discussion and Analysis section of this Proxy Statement.

10
Phillips 66 2023 Proxy Statement


SUSTAINABILITY AND CORPORATE RESPONSIBILITY AND SUSTAINABILITY

Our visionOVERVIEW

Sustainability is integral to provide energy in ways that improve lives, which we reinforce through our core Company valuescorporate strategy and enhances the resiliency of safety, honor and commitment. Operational, economic, social and environmentalour portfolio. At Phillips 66, our sustainability is at the heart of how we deliverprograms are focused on our vision. By maintaining strongfinancial performance, operating excellence, we are committed to safety, reliability and environmental stewardship, while delivering shareholder value.

We also are committed to achieving a high-performing organization that is focused on culture, inclusionsocial responsibility and diversity, as well as building community through volunteerism, financial support, and engagement, including community awareness and education.

Moregovernance. For information can be found in the CORPORATE RESPONSIBILITY sectionregarding how our Board oversees sustainability matters, see pages 31-32 of this Proxy Statement.

The VCIP opportunity for our executive officers includes an environmental performance component (currently weighted at 15% of target), and a review of our high-performing organization (currently weighted at 10% of target), which is how we incorporate our sustainability and corporate responsibility performance into our executive compensation program. For more information on our VCIP, see pages 53-57 of this Proxy Statement.
Highlights of our commitments in action during 2022 included:

4     PHILLIPS 66 PROXY STATEMENT 2021

Sustainability and
Transition to Lower-
Carbon Future
Reached a final investment decision on Rodeo Renewed, which will convert our San Francisco refinery into one of the world's largest renewable fuels production facilities.
Continued to conduct research on energies of the future, including renewable fuels and current and next generation batteries at our Bartlesville Innovation Center.
Announced a 2050 GHG emissions intensity reduction target to further reduce Scope 1 and Scope 2 emissions intensity by 50%, as compared to 2019 levels.
Leveraged existing infrastructure, digital investments, supply networks and capabilities to participate in lower-carbon opportunities.
Community Involvement
and Engagement
Helped students prepare for the workforce by contributing $9.6 million to education and literacy programs supporting 16 local schools and school districts, 29 colleges and universities and 196 scholarship recipients.
Supported community safety and preparedness by donating $3.9 million, including $1.3 million in disaster relief, supporting 40 local emergency responder departments and 9 food banks.
Contributed $3.1 million supporting environmental and sustainability programs at 27 community parks and 26 conservation projects.
Donated $3 million toward civic enrichment through 9 United Way campaigns and 11 inclusion and diversity programs.
Political and
Lobbying Activities
Received “Trendsetter” ranking by the 2022 CPA-Zicklin Index of Corporate Political Disclosure and Accountability. This is the second consecutive year we have received this recognition for the transparency and accountability of our corporate political spending.
Continued participating in the political process to educate policymakers and stakeholders in support of laws and regulations that meet societal and business needs while promoting federal, state and local economies.


INFORMATION REGARDING THE BOARD OF DIRECTORS

Proxy Summary11

INFORMATION REGARDING THE BOARD OF DIRECTORS

DIRECTOR INDEPENDENCE



STAKEHOLDER ENGAGEMENT
Ongoing engagement with all of our stakeholders is important to us. Our Corporate Governance Guidelines contain director independence standards, which arestakeholders include employees, shareholders, customers, the communities where we operate, indigenous people, legislators, financial institutions, and energy consumers. We approach our stakeholder engagement from a position of mutual respect, respecting human rights, demonstrating our values through our actions and being a good neighbor. We conduct our operations in accordance with our Company values and policies, and consistent with the listing standardsspirit of the NYSE. These standards assist the Board in determining the independenceUnited Nations’ Universal Declaration of the Company's directors. The Board of Directors has affirmatively determined that each director, other than Mr. Garland, meets our independence standards. Mr. Garland is not considered independent because he is an executive officer of the Company.

In making independence determinations, the Board specifically considered the fact that many of our directors are directors of companies with which we may conduct business. Additionally, some of our directors may purchase products, such as gasoline from our retail sites, from the Company. In all cases, it was determined that there are no relationships or transactions that are material to the Company or the director and accordingly, there are no relationships that would affect the independence of any director other than Mr. Garland.

Executive Sessions of Independent Directors

The independent directors hold regularly scheduled executive sessions of the Board and its committees without Company management present. These executive sessions are chaired by the Lead Director at Board meetings or by the committee chairs at committee meetings.

BOARD LEADERSHIP STRUCTURE

Chairman and CEO Roles

The Board of Directors believes that currently, it is in the best interests of the Company and shareholders to combine the roles of Chairman and CEO. However, there is no Company policy regarding whether the roles should be combined or separated, and our Corporate Governance Guidelines state that the Board will retain flexibility and periodically consider whether the roles should be separated and, if so, the Chairman should be an independent director or an employee. The Board believes that Mr. Garland’s extensive industry experience and direct, day-to-day involvement in managing the Company as the CEO makes him best suited to also serve as Chairman and guide the Board in setting Company priorities and addressing Company risks and challenges.

Independent Director Leadership

Our Corporate Governance Guidelines state that when the Chairman of the Board is an employee of the Company, the non-employee directors will name a Lead Director. Glenn Tilton was appointed to serve as our Lead Director in 2016. As Lead Director, Mr. Tilton chairs executive sessions, coordinates the activities of the non-employee directors and performs other duties and responsibilities as determined by the Board, including:

advising the Chairman on Board meeting schedules, seeking to ensure that the non-employee directors can perform their duties responsibly without interfering with operations;

providing the Chairman with input on agendas for Board meetings to assure there is sufficient time for discussions;

advising the Chairman on the quality, quantity and timeliness of the flow of information from management to allow directors to perform their duties effectively and responsibly, including specifically requesting certain materials be provided to the Board;

recommending to the Chairman the retention of consultants who report directly to the Board of Directors;

interviewing Board candidates and making nomination recommendations;

PHILLIPS 66 PROXY STATEMENT 2021     5

Human Rights.

INFORMATION REGARDING THE BOARD OF DIRECTORS

assisting in assuring compliance with and implementation of the Corporate Governance Guidelines;

ensuring that he, or another appropriate director, is available for engagement with shareholders when warranted;

calling meetings of the non-employee directors as needed, developing the agenda for and chairing any such meetings and executive sessions;

acting as principal liaison between the non-employee directors and the Chairman on sensitive issues;

participating with the Human Resources and Compensation Committee in the periodic discussion of CEO performance;

leading the Board’s annual self-assessment, which includes individual interviews with each director, and meeting with the CEO to discuss the results of the annual self-assessment; and

working with the Nominating and Governance Committee to recommend Board committee membership and committee chairs.

The Board of Directors believes that its current structure and processes encourage its non-employee directors to be actively involved in guiding its work. The chairs of the Board's committees review their respective agendas and committee materials in advance of each meeting, communicating directly with other directors and members of management as each deems appropriate. Moreover, each director may suggest agenda items and raise matters that are not on the agenda at Board and committee meetings.

BOARD MEETINGS, COMMITTEES AND MEMBERSHIP

The Board of Directors met six times in 2020. In addition to the regularly scheduled meetings of the Board, in October of each year, the Board holds a two-day strategy session with members of management to provide deep dives into the Company’s operating segments and corporate functions. All of our directors attended at least 75% of the meetings of the Board and committees on which they served. Recognizing that director attendance at the Company's annual meeting can provide the Company's shareholders with an opportunity to communicate with the directors about issues affecting the Company, the Company actively encourages directors to attend the annual meetings of shareholders. All of our directors who were serving as such as of the date of our 2020 Annual Meeting attended virtually.

BOARD COMMITTEES AND MEMBERSHIP

The Board has five standing committees, as described below. The charters for each of the committees may be found in the “Investors” section on the Phillips 66 website (www.phillips66.com) under the “Corporate Governance” caption. Shareholders may also request printed copies of these charters by following the instructions located under ADDITIONAL INFORMATION. Other than our Executive Committee, all members of our Board’s committees meet the independence standards under our Corporate Governance Guidelines, the NYSE listing standards, and SEC rules or regulations, as applicable. The tables below show the composition of the committees as of March 15, 2021; as disclosed elsewhere in this Proxy Statement, Mr. McGraw and Ms. Tschinkel retired from the Board at the end of March 2021 and will not continue to serve as members of the committees.

6     PHILLIPS 66 PROXY STATEMENT 2021

INFORMATION REGARDING THE BOARD OF DIRECTORS

Audit and Finance Committee
(the “Audit Committee”)

Members: John E. Lowe (Chair), Julie L. Bushman, Charles M. Holley, Denise L. Ramos, Victoria J. Tschinkel

Met 11 times in 2020

Primary Responsibilities:

·     Oversee the integrity of the Company's accounting policies, internal controls, financial statements, and financial reporting practices, and certain financial matters covering the Company's capital structure, complex financial transactions, financial risk management, retirement plans and tax planning.

·     Review significant risk exposures and management’s monitoring, control and reporting of such exposures.

·     Monitor our compliance with legal and regulatory requirements, including our Code of Business Ethics and Conduct; the qualifications and independence our independent auditors; and the performance of our internal audit function and independent auditors.

Financial Expertise and Financial Literacy of Audit Committee Members

The Board has determined that each of Mr. Lowe, Mr. Holley and Ms. Ramos satisfies the SEC's criteria for “audit committee financial experts.” Additionally, the Board has determined that each member is financially literate within the meaning of the NYSE listing standards.

Human Resources and Compensation Committee
(the “Compensation Committee”)

Members: Marna C. Whittington (Chair), Gary K. Adams, Lisa A. Davis, Harold W. McGraw III, Glenn F. Tilton

Met 6 times in 2020

Primary Responsibilities:

·     Oversee our executive compensation programs, policies and strategies and approve metrics, goals and objectives under incentive compensation programs, including those relevant to executive officers.

·     Approve goals and objectives relevant to CEO compensation, evaluate CEO performance in light of those goals and objectives, and determinate the CEO’s overall compensation.

·     Oversee initiatives and strategies in the areas of inclusion and diversity, management succession planning, talent management and human capital.

Additional information about the Compensation Committee can be found in the COMPENSATION DISCUSSION AND ANALYSIS.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee during fiscal year 2020 or as of the date of this Proxy Statement is or has been an officer or employee of Phillips 66 and no executive officer of Phillips 66 served on the compensation committee or board of any company that employed any member of Phillips 66’s Compensation Committee or Board.

PHILLIPS 66 PROXY STATEMENT 2021     7

INFORMATION REGARDING THE BOARD OF DIRECTORS

Nominating and Governance Committee

Members: Glenn F. Tilton (Chair), John E. Lowe, Denise L. Ramos, Marna C. Whittington

Met 4 times in 2020

Primary Responsibilities:

·     Identify individuals to become Board members, recommend nominees for election and Board committee assignments.

·     Review and recommend compensation and benefits policies for our non-employee directors.

·     Recommend appropriate corporate governance policies and procedures for our Company.

·     Oversee Board’s annual self-evaluation of performance and monitor Board composition.

·     Jointly with Compensation Committee evaluate potential successors for the CEO.

Public Policy and Sustainability Committee

Members: Denise L. Ramos (Chair), Gary K. Adams, Julie L. Bushman, Lisa A. Davis, Charles M. Holley, John E. Lowe, Harold W. McGraw III, Glenn F. Tilton, Victoria J. Tschinkel, Marna C. Whittington

Met 4 times in 2020

Primary Responsibilities:

·     Review policies, programs and practices regarding health, safety and environmental protection; social impact and corporate responsibility matters.

·     Review the Company’s sustainability program and oversee progress of sustainability initiatives.

·     Review and approve budget for charitable contributions and for political contributions and independent expenditures, and oversee all such expenditures and the administration of any political action committees.

Executive Committee

Members: Greg C. Garland (Chair), John E. Lowe, Denise L. Ramos, Glenn F. Tilton, Marna C. Whittington

Met 1 time in 2020

Primary Responsibilities:

·Exercise the authority of the full Board, if needed, in intervals between regularly scheduled Board meetings, other than (1) those matters expressly delegated to another committee of the Board, (2) the adoption, amendment or repeal of any of our By-Laws, and (3) those matters that cannot be delegated to a committee under statute, our Certificate of Incorporation, or our Bylaws.

To ensure continued Board effectiveness, the Nominating and Governance Committee periodically considers committee rotations, including in the event of a change in the composition of the Board. In 2020, J. Brian Ferguson, who previously had served as Chair of the Audit Committee, retired and the Nominating and Governance Committee recommended, and the Board approved, the appointment of Mr. Lowe as Chair of the Audit Committee and Ms. Ramos as Chair of the Public Policy and Sustainability Committee.

Additionally, in 2020 the Public Policy Committee changed its name to the Public Policy and Sustainability Committee. This name change was in connection with revisions to the committee’s charter that broadened the scope of its responsibilities to specifically include oversight of the Company’s sustainability program and initiatives.

8     PHILLIPS 66 PROXY STATEMENT 2021

INFORMATION REGARDING THE BOARD OF DIRECTORS

BOARD'S ACTIVE ROLE IN RISK OVERSIGHT

The Company's management is responsible for the day-to-day conduct of our businesses and operations, including management of risks the Company faces. To fulfill this responsibility, our management has established an enterprise risk management (“ERM”) program. The program is designed to identify and facilitate the management of significant risks facing the Company as well as the approaches to addressing risks.

The Board of Directors has broad oversight responsibility over the Company's ERM program and receives management updates on its development and implementation. In this oversight role, the Board is responsible for satisfying itself that the risk management processes designed and implemented by the Company's management are functioning as intended, and that necessary steps are taken to foster a culture of risk-adjusted decision making throughout the organization.

The Board exercises its oversight responsibility for risk assessment and risk management directly and through its committees. However, the full Board maintains responsibility for oversight of strategic risks. Setting the strategic course of the Company and providing oversight of strategic risks involves a high level of constructive engagement between management and the Board. The Board regularly discusses the strategic priorities of the Company and the risks to the Company's successful execution of its strategy, including global economic and other significant trends, as well as changes in the energy industry and regulatory initiatives.

The Board of Directors receives regular updates from its committees on individual areas of risk falling within each committee's area of oversight and expertise, as outlined below.

Committee Risk Oversight Responsibilities

Audit Committee

The Audit Committee has primary responsibility for overseeing Phillips 66’s ERM program. The Audit Committee discusses the guidelines and policies to govern the process by which ERM is handled, and has been delegated responsibility to facilitate coordination among the Board's committees with respect to the Company's risk management programs. The Audit Committee’s meeting agendas throughout the year include discussions of individual risk areas, as well as an annual summary of the ERM process. The Audit Committee also oversees the Company’s information security (including cybersecurity) and technology risk management programs, which are fully integrated into the overall ERM program.

Public Policy and Sustainability Committee

The Public Policy and Sustainability Committee assists the Board in identifying, evaluating and reviewing social, political and environmental trends and related risks. It also reviews management's proposed actions to anticipate and adjust to such trends and manage risks to achieve the Company's long-term business goals. The Public Policy and Sustainability Committee considers risks relating to: (i) the health, safety and environmental matters; (ii) the Company’s lobbying priorities and activities; (iii) Company issues related to public policy, including political spending policies and practices; (iv) Company issues related to corporate social responsibility and sustainability; and (v) emerging issues potentially affecting the reputation of the energy industry and the Company.

Other Board Committees

The Board’s other committees oversee risks associated with their respective areas of responsibility. For example:

•  The Compensation Committee considers the risks associated with our compensation policies and practices for both executive compensation and compensation generally, as well as corporate culture and human capital risks generally.

•  The Nominating and Governance Committee reviews policies and practices in the areas of corporate governance and is responsible for overseeing Board composition and director qualifications through the nomination process. Additionally, the Nominating and Governance Committee is responsible for CEO succession planning.

PHILLIPS 66 PROXY STATEMENT 2021     9

INFORMATION REGARDING THE BOARD OF DIRECTORS

RELATED PARTY TRANSACTIONS

Our Code of Business Ethics and Conduct requires all directors and executive officers to promptly report any transactions or relationships that reasonably could be expected to constitute a related party transaction. The transaction or relationship is reviewed by the Company's management and the appropriate committee of the Board to ensure that it does not constitute a conflict of interest and is appropriately disclosed.

Additionally, the Nominating and Governance Committee conducts an annual review of related party transactions between each director and the Company and its subsidiaries in making recommendations to the Board regarding the continued independence of each director. Since January 1, 2020, there have been no related party transactions in which the Company or a subsidiary was a participant and in which any director, executive officer, or any of their immediate family members had a direct or indirect material interest.

The Nominating and Governance Committee also considered relationships that, while not constituting related party transactions where a director had a direct or indirect material interest, nonetheless involved transactions between the Company and an organization with which a director is affiliated, either directly or as a partner, shareholder or officer. The Nominating and Governance Committee determined that there were no transactions impairing the independence of any member of the Board.

DIRECTOR QUALIFICATIONS AND NOMINATION PROCESS

Director Skills and Qualifications Aligned with Company Strategy

In evaluating potential candidates for nomination to the Board, as well as evaluating the Board's overall composition, the Nominating and Governance Committee and the Board consider several factors. First, all directors are expected to possess the highest personal and professional ethics, integrity and values and be committed to representing the long-term interests of the Company's shareholders. Additionally, directors are expected to devote sufficient time and effort to their duties as a director.

The Nominating and Governance Committee believes that the Board should reflect a range of talents, ages, skills, experiences, diversity, and expertise sufficient to provide sound and prudent guidance with respect to the Company's strategic and operational objectives. The Board has committed to seeking women and minority candidates, as well as candidates with diverse backgrounds, skills and experiences, as part of the search process for new directors.

The core skills and qualifications considered in evaluating director nominees and Board composition as a whole are described below.

C-Suite experience

Executive management experience provides valuable insights and practical understanding of companies, and the methods to drive change and growth within an organization

Industry experience

Energy experience brings pertinent background and knowledge to provide perspective on issues specific to the Company’s industry, business, operations and strategy

Risk management experience

Experience in managing risk ensures capabilities necessary for risk oversight responsibilities, bringing background and experience that increase directors’ effectiveness

Financial experience

Finance and financial reporting experience provide knowledge necessary to evaluate our performance by reference to financial targets and to oversee financial reporting

Global experience

Global business or international experience provides valuable perspectives on our operations and enables the oversight of our strategic initiatives

Environmental experience

Experience in environmental regulation helps in effective evaluation and oversight of our strategy to provide energy and improve lives while securing a healthy environment

10     PHILLIPS 66 PROXY STATEMENT 2021

INFORMATION REGARDING THE BOARD OF DIRECTORS

Board Refreshment

The Board strives to maintain an appropriate balance of tenure, turnover, diversity, skills and experience. Our average director tenure is five years, representing an appropriate balance of tenures. The Board does not maintain term limits, as the Board believes that continuity of service can provide stability and valuable insight. Our Corporate Governance Guidelines include a mandatory retirement that provides that no director may serve past the annual meeting immediately following his or her 75th birthday. The average age of our continuing directors is 65.

The Board ensures refreshment and continued effectiveness through evaluation, nomination, and other policies, processes and practices. For example:

The Nominating and Governance Committee annually reviews with the Board the qualifications for Board members and the composition of the Board as a whole.
The Nominating and Governance Committee annually reviews each director nominee's continuation on the Board and makes recommendations to the full Board.
The Company's Corporate Governance Guidelines provide that any director whose principal outside responsibilities have changed since election to the Board should volunteer to resign to give the Board the opportunity to review the appropriateness of continued Board membership under the circumstances.
Each committee of the Board performs an annual self-assessment, and the Nominating and Governance Committee and Lead Director oversee an annual self-assessment of the full Board. The self-assessment includes an evaluation survey and individual discussions between the Lead Director and each other director. A summary of the results of each committee's self-assessment is presented to the committee and discussed in executive session. The Lead Director presents a summary of the results of the Board evaluation to the Board in executive session. Any matters requiring further action are identified and action plans developed to address the matter.

Recent Board Refreshment

In 2020, the Board appointed Julie L. Bushman and Lisa A. Davis. These directors’ skills and perspectives further enhance our diversity and expertise in the boardroom. Their appointments were informed by the Board’s continued focus on its composition, as well as insights provided through the Board’s annual self-evaluation process. In March of this year, Harold W. McGraw III and Victoria J. Tschinkel, who have served on our Board since 2012, informed us that they would be retiring from the Board and not standing for reelection at this Annual Meeting.

How We Select Our Director Nominees

The Board is responsible for nominating directors and filling vacancies that may occur between annual meetings, based upon the recommendation of the Nominating and Governance Committee. The Nominating and Governance Committee considers the Company’s current needs and long-term and strategic plans to determine the skills, experience and characteristics needed by our Board. The Nominating and Governance Committee identifies, considers and recommends director candidates to the Board of Directors with the goal of creating a balance of knowledge, experience and diversity. Generally, the Nominating and Governance Committee identifies candidates through the use of a search firm or the business and organizational contacts of directors and management. In 2018, the Board amended our Corporate Governance Guidelines to formalize its commitment to ensuring that the pool of candidates in any search process for new directors includes diverse candidates.

Shareholder Recommendation of Candidates

The Nominating and Governance Committee will consider director candidates recommended by shareholders. A shareholder wishing to recommend a candidate for nomination by the Nominating and Governance Committee should follow the procedures described under SUBMISSION OF FUTURE SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS. In addition, the shareholder should provide such other information deemed relevant to the Nominating and Governance Committee's evaluation. Candidates recommended by the Company's

PHILLIPS 66 PROXY STATEMENT 2021     11

INFORMATION REGARDING THE BOARD OF DIRECTORS

shareholders are evaluated on the same basis as candidates recommended by the Company's directors, management, third-party search firms or other sources.

BOARD SKILLS AND EXPERIENCE

Throughout the year, the Board continued its proactive assessment of board succession planning and refreshment. The Nominating and Governance Committee and full Board works to ensure we maintain a Board that embodies a broad and diverse set of experiences, qualifications, attributes and skills to provide effective oversight of management and the Company. When seeking new candidates, the Board considers a diverse pool of qualified candidates who could potentially serve as Board members. We view diversity in terms of skills, as well as gender, age, race, ethnicity, background, professional experience and perspectives.

As the needs of the Company change, the Board revisits the skills and experiences it seeks. Included in the matrix below are the core skills and experiences of C-suite, environmental, risk management, international/global and industry experience, as well as additional skills and experiences the Board currently considers, for our continuing directors.

TABLE 

*As of March 15, 2021

12     PHILLIPS 66 PROXY STATEMENT 2021

INFORMATION REGARDING THE BOARD OF DIRECTORS

Directors Whose Terms Expire at the 2022 Annual Meeting


PHOTO

Greg C. Garland, 63 – Director since 2012

Chairman and CEO of Phillips 66 (2012 to present)

Experience: Mr. Garland brings extensive knowledge of all aspects of our business and industry, having served in executive positions at ConocoPhillips, as president and chief executive officer of Chevron Phillips Chemical Company, and currently as the chairman and chief executive officer of Phillips 66 Partners. Through his more than 35 years of service and experience in the energy industry, Mr. Garland brings to the Board each of the key skills we seek in a director.

Committees: Executive (Chair)Key Skills: C-Suite, Finance, Global Business, Risk Management, Environmental, IndustryOther current directorships: Amgen and Phillips 66 Partners

PHOTO

Gary K. Adams, 70 – Director since 2016

Former Chief Advisor - Chemicals for IHS Markit (2011 to 2017), Director of Westlake Chemical Partners LP (2014 to 2016) and Director of Phillips 66 Partners LP (2013 to 2016)

Experience: Mr. Adams has over 40 years of experience in the petrochemicals and plastics industries, including 15 years at Union Carbide, where he began his career. Through various management positions, including as president, chief executive officer and chairman of Chemical Markets Associates Inc. (“CMAI”) before its acquisition by IHS, Mr. Adams also has leadership experience with operating responsibilities, and financial and risk oversight for a global business.

Committees: Compensation
and Public Policy and Sustainability
Key Skills: Industry, Finance, Global Business, Risk ManagementOther current directorships: Trecora Resources

PHOTO

John E. Lowe, 62 – Director since 2012

Senior Executive Advisor to Tudor, Pickering, Holt & Co. (2012 to present) and Director of Agrium Inc. (2010 to 2015)

Experience: Mr. Lowe had a 30-year career with ConocoPhillips and Phillips Petroleum Company, including several executive positions with ConocoPhillips, providing him extensive industry experience. Mr. Lowe also has financial and risk oversight, international and environmental experience through the series of executive positions he has held and his service on the boards of publicly traded oil and gas and energy companies.

Committees: Audit (Chair), Nominating and Governance, Public Policy and Sustainability, and ExecutiveKey Skills: C-Suite, Finance, Global Business, Risk Management, Environmental, IndustryOther current directorships: TC Energy, Apache (Non-Executive Chairman)

PHILLIPS 66 PROXY STATEMENT 2021     13

INFORMATION REGARDING THE BOARD OF DIRECTORS

PHOTO

Denise L. Ramos, 64 – Director since 2016

Former Chief Executive Officer, President and director of ITT Inc. (2011 to 2018) and Director of Praxair, Inc. (2014 to 2016)

Experience: Ms. Ramos has experience in the oil and gas industry, including more than 20 years in various finance positions at Atlantic Richfield Company. Having also served as CEO of ITT and chief financial officer at ITT as well as Furniture Brands International and Yum! Brands, Ms. Ramos brings extensive senior leadership, risk management and global business expertise to the Board.

Committees: Audit, Nominating and Governance, Public Policy and Sustainability (Chair) and ExecutiveKey Skills: C-Suite, Finance, Global Business, Risk Management, EnvironmentalOther current directorships: Bank of America and Raytheon Technologies

Directors Whose Terms Expire at the 2023 Annual Meeting

PHOTO

Charles M. Holley, 64 – Director since 2019

Former Executive Vice President and Chief Financial Officer of Walmart Inc. (2010 to 2015)

Experience: Mr. Holley served as chief financial officer at one of the largest U.S. corporations, providing him with expertise in finance, senior management, risk and asset management, strategic planning and capital markets. He also has extensive experience in international operations and technology platforms.

Committees: Audit and Public Policy and SustainabilityKey Skills: C-Suite, Finance, Global Business, Risk ManagementOther current directorships: Amgen and Carrier Global

PHOTO

Glenn F. Tilton, 72 – Director since 2012

Experience: Mr. Tilton previously served as chairman and chief executive officer of UAL Corporation, the parent company of United Air Lines as well as chairman of the Midwest of JPMorgan Chase & Co. Mr. Tilton’s career has provided him with strong management experience overseeing complex multinational businesses operating in highly regulated industries as well as expertise in finance and capital markets matters. He also has extensive experience in the energy industry through his more than 30 years in increasingly senior roles with Texaco Inc., including chairman and chief executive officer.

Committees: Compensation, Nominating and Governance (Chair), Public Policy and Sustainability, ExecutiveKey Skills: C-Suite, Finance, Global Business, Risk Management, Environmental, IndustryOther current directorships: Abbot Laboratories and  AbbVie Inc. (Lead Director)

14     PHILLIPS 66 PROXY STATEMENT 2021

INFORMATION REGARDING THE BOARD OF DIRECTORS

PHOTO

Marna C. Whittington, 73 – Director since 2012

Experience: Dr. Whittington has many years of leadership experience and expertise as a former senior executive in the investment management industry, including as chief executive officer of Allianz Global Investors Capital. She has extensive knowledge of and substantial experience in management, and in financial, investment and banking matters and provides valuable insight from her previous experience serving as a public company board member.

Committees: Compensation (Chair), Nominating and Governance, Public Policy and Sustainability, ExecutiveKey Skills C-Suite, Finance, Global Business, Risk ManagementOther current directorships: Macy’s, Inc and Oaktree Capital Group LLC

PHILLIPS 66 PROXY STATEMENT 2021     15

PROPOSAL 1: ELECTION OF DIRECTORS

The Board has nominated Julie L. Bushman and Lisa A. Davis to stand for election for a term that expires at the annual meeting of shareholders in 2024. Mr. McGraw and Ms. Tschinkel previously served in this class of directors, but both decided to retire in March of this year and not stand for reelection. Although Ms. Davis originally was appointed to the Board to serve in the class whose term ends at the annual meeting in 2023, the Board determined that Ms. Davis should stand for election at this meeting to make the classes of directors as nearly equal as possible.

Each nominee requires the affirmative vote of a majority of the votes cast in person or by proxy at the meeting. Directors are elected to serve until their successor is duly elected and qualified. If a nominee is unavailable for election, proxy holders may vote for another nominee proposed by the Board or the Board may reduce the number of directors to be elected at the Annual Meeting. No family relationship exists among any of our directors, director nominees or executive officers. There is no arrangement between any director or director nominee and any other person pursuant to which he or she was, or is to be, selected as a director or director nominee.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE FOLLOWING DIRECTOR
NOMINEES.

PHOTO

Julie L. Bushman, 60 – Director since 2020

Former Executive Vice President of International Operations of 3M (2017 to 2020) and Senior Vice President of Business Transformation and Information Technology of 3M (2013 to 2017); Director of Johnson Controls (2012 to 2016)

Experience: As a former executive of 3M, Ms. Bushman brings executive management experience, as well as experience in international business, risk management and financial oversight. Ms. Bushman also brings environmental experience through her roles leading occupational health and environmental safety divisions at 3M.

Committees: Audit and Public Policy and SustainabilityKey Skills: C-Suite, Finance, Global Business, Risk Management, EnvironmentalOther current directorships: Adient plc and Bio-Techne Corporation

PHOTO

Lisa A. Davis, 57 – Director since 2020

Former member of Managing Board of Siemens AG and CEO for Siemens Gas and Power (2014 to 2020)

Experience: Ms. Davis brings significant industry experience to the Board through her roles at Siemens, as well as over 25 years in engineering and management roles at large integrated oil companies including ExxonMobil, Texaco and Shell, including executive vice president strategy and portfolio at Shell. Ms. Davis’s career has provided her with each of the skills sought by the Board.

Committees:Compensation and Public Policy and SustainabilityKey Skills: C-Suite, Finance, Global Business, Risk Management, IndustryOther current directorships: Air Products and Chemicals, Kosmos Energy and Penske Automotive Group

16     PHILLIPS 66 PROXY STATEMENT 2021

PROPOSAL 2: MANAGEMENT PROPOSAL REGARDING ANNUAL ELECTION OF DIRECTORS

PROPOSAL 2: MANAGEMENT PROPOSAL REGARDING ANNUAL ELECTION OF DIRECTORS

Currently, the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) of the Company provides for a staggered Board, divided into three classes of directors, with each class elected for a three-year term.

After considering the advantages and disadvantages of declassification, including the opinion of our shareholders, the Board has determined it is in the best interests of the Company and its shareholders to amend the Certificate of Incorporation and the By-Laws of the Company to declassify the Board over the next three years. This will result in a fully declassified Board by the 2024 Annual Meeting of Shareholders.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSAL TO AMEND THE
CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS.

The affirmative vote of the holders of 80% of the outstanding shares of stock entitled to vote is required to approve this proposal. We submitted this proposal in 2015, 2016 and 2018 and, while it received significant support, it did not receive the 80% vote required for adoption. Because brokers may not cast a vote on this proposal without your instruction, it is very important that you vote your shares.

The proposed amendment to the Certificate of Incorporation would eliminate the classification of the Board over a three-year period and provide for the annual election of all directors beginning at the 2024 Annual Meeting of Shareholders. The proposed amendment to the Certificate of Incorporation would become effective upon the filing of a Certificate of Amendment with the Secretary of State of the State of Delaware, which the Company would file promptly following the Annual Meeting if our shareholders approve the amendment. Board declassification would be phased-in over a three-year period, beginning at the 2022 Annual Meeting of Shareholders, as follows:

·Nominees at this Annual Meeting will be elected to serve a three-year period ending at the 2024 Annual Meeting.

·Directors whose terms end at the 2022 Annual Meeting will continue to serve until that meeting. At the 2022 Annual Meeting, they will be elected for one-year terms ending at the 2023 Annual Meeting.

·Directors whose terms end at the 2023 Annual Meeting will be elected for one-year terms ending at the 2024 Annual Meeting.

·At the 2024 Annual Meeting, all nominees presented for election to the Board at the 2024 Annual Meeting will be elected to one-year terms.

Beginning with the 2024 Annual Meeting of Shareholders, all directors will stand for election at each annual meeting of shareholders for a one-year term expiring at the subsequent annual meeting of shareholders. The proposed amendment does not change the number of directors or the Board's authority to change that number and to fill any vacancies or newly created directorships.

Delaware law provides, unless otherwise addressed in the certificate of incorporation, that members of a board that is classified may be removed only for cause. The proposed amendment provides that, once the Board is fully declassified as of the 2024 Annual Meeting of Shareholders, directors may be removed with or without cause. Before that time, directors serving in a class elected at any annual meeting between 2019 through 2021 may be removed only for cause. Directors elected for a one-year term at each annual meeting between 2022 through 2023 may be removed with or without cause.

The proposed Certificate of Amendment to the Certificate of Incorporation is attached to this Proxy Statement as Appendix A. If our shareholders approve the proposed amendment to the Certificate of Incorporation, the Board will make certain conforming changes to the Company’s By-Laws.

PHILLIPS 66 PROXY STATEMENT 2021     17

BENEFICIAL OWNERSHIP OF PHILLIPS 66 SECURITIES

BENEFICIAL OWNERSHIP OF PHILLIPS 66 SECURITIES

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth information regarding persons who we know to be the beneficial owners of more than five percent of our issued and outstanding common stock as of December 31, 2020. The information is based on reports filed by such person with the SEC:

NAME AND ADDRESSNUMBER OF SHARESPERCENT OF CLASS

The Vanguard Group(1)

100 Vanguard Blvd.

Malvern, PA 19335

42,759,2639.79%

BlackRock, Inc.(2)

55 East 52nd Street

New York, NY 10055

32,908,4547.5%

State Street Corporation(3)

One Lincoln Street

Boston, MA 02111

26,710,734

 

6.12%
     
(1)Based solely on an Amendment to Schedule 13G filed with the SEC on February 10, 2021, by The Vanguard Group on behalf of itself, Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Australia Ltd, Vanguard Investments Canada Inc., Vanguard Investments Hong Kong Limited and Vanguard Investments UK, Limited. The Amendment to Schedule 13G reports sole voting power for no shares of common stock, shared voting power for 694,259 shares of common stock, sole dispositive power for 40,851,991 shares of common stock and shared dispositive power for 1,907,272 shares of common stock.
(2)Based solely on an Amendment to Schedule 13G filed with the SEC on January 29, 2021, by BlackRock, Inc. on behalf of itself, BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, FutureAdvisor, Inc., BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited and BlackRock Fund Managers Ltd. The Amendment to Schedule 13G reports sole voting power for 27,404,629 shares of common stock, no shared voting power for shares of common stock, sole dispositive power for 32,908,454 shares of common stock and no shared dispositive power for shares of common stock.
(3)Based solely on a Schedule 13G filed with the SEC on February 9, 2021, by State Street Corporation on behalf of itself, State Street Bank And Trust Company, SSGA Funds Management, Inc, State Street Global Advisors Limited (UK), State Street Global Advisors Ltd (Canada), State Street Global Advisors, Australia Limited, State Street Global Advisors (Japan) Co., Ltd, State Street Global Advisors Asia Ltd, State Street Global Advisors Singapore Ltd, State Street Global Advisors GmbH, State Street Global Advisors Ireland Limited, and State Street Global Advisors Trust Company. The Schedule 13G reports sole voting power for no shares of common stock, shared voting power for 24,362,349 shares of common stock, sole dispositive power for no shares of common stock and shared dispositive power for 26,680,953 shares of common stock.

SECURITIES OWNERSHIP OF OFFICERS AND DIRECTORS

This table lists the beneficial ownership of our common stock as of February 15, 2021, by all directors and nominees, the executive officers named in the Summary Compensation Table, and by all of our directors and executive officers as a group. Together these individuals beneficially own less than one percent of our common stock.

18     PHILLIPS 66 PROXY STATEMENT 2021

BENEFICIAL OWNERSHIP OF PHILLIPS 66 SECURITIES

 NUMBER OF SHARES OR UNITS
NAME OF BENEFICIAL OWNER

SHARES
BENEFICIALLY
OWNED

RESTRICTED OR
DEFERRED
STOCK UNITS(1)

OPTIONS
EXERCISABLE
WITHIN 60 DAYS(2)

Mr. Garland532,974109,8851,111,733
Mr. Herman39,76075,762169,866
Ms. Johnson77,41626,787193,333
Mr. Mitchell49,04739,777172,599
Mr. Roberts11,36729,491122,166
Mr. Adams12,984----
Ms. Bushman--4,305--
Ms. Davis3,646----
Mr. Holley775,775--
Mr. Lowe40,00030,403--
Mr. McGraw(3)87352,122--
Ms. Ramos--12,773--
Mr. Tilton5,90030,403--
Ms. Tschinkel51,7579,303--
Dr. Whittington2,50030,403--
Directors and Executive Officers as a Group (17 Persons)858,259488,4371,882,529
(1)Includes RSUs or deferred stock units that may be voted or sold only upon passage of time.
(2)Includes beneficial ownership of shares of common stock which may be acquired within 60 days of February 15, 2021, through stock options awarded under compensation plans.
(3)Includes 373 shares for which Mr. McGraw disclaims beneficial ownership. These shares are held in a foundation and in various trusts for which Mr. McGraw serves on the board or as trustee, as applicable.

PHILLIPS 66 PROXY STATEMENT 2021     19

CORPORATE RESPONSIBILITY

CORPORATE RESPONSIBILITY

At Phillips 66, we believe that we succeed together as a team, leveraging our diverse experiences and thoughts in an environment that thrives on collaboration. We embrace engagement as an important tenet of good governance, and value the views of our shareholders and other stakeholders. We believe that positive dialogue builds informed relationships that promote transparency and accountability. Although our Lead Director or other members of the Board are available to participate in meetings with shareholders as appropriate, management has the principal responsibility for shareholder communication.

SHAREHOLDER ENGAGEMENT

For several years, Phillips 66 has conducted a formal shareholder outreach program to listen to investor perspectives on our business strategy; corporate governance; executive compensation programs; environmental, social and governance (“ESG”); and other matters that are important to our investors. Information and feedback received through our engagement activities are shared with our executive leadership team and the Board of Directors, which help inform their decisions and oversight, respectively. In 2020, we engaged with representatives of many of our top institutional shareholders and discussed the energy transition and our sustainability efforts; board composition, refreshment and tenure; inclusion and diversity; our response to COVID-19; and executive compensation. Our year-round focus on investor engagement is described below:

April to June

Meet with shareholders about annual meeting matters, including any management and shareholder proposals

PIE CHART

July to September

Plan engagements, topics for discussion and any changes for upcoming year; assess feedback and share with Board


January to March

Complete meetings, review feedback and share with management, discuss any proposals with proponents


October to December

Meet with shareholders, modify meeting content based on early feedback, and identify areas of interest or concern

This year, we heard that our investors are interested in, and supportive of, our Board refreshment efforts, as well as our work towards setting targets for greenhouse gas emissions reductions. We also heard that investors are interested in additional disclosures on human capital management and our efforts to declassify our Board. We are committed to continued shareholder engagement. Highlights of some of the actions we have taken in response to our engagements over the last several years are shown below:

2015201620172018201920202021

Adopted proxy access bylaw

Sought shareholder approval of declassification

Refreshed sustainability information on website

Added two new independent directors

Sought shareholder approval of declassification

 

Expanded sustainability disclosures from website to report

 

Committed to diverse director candidate pools

Sought shareholder approval of declassification

Initial TCFD*-informed sustainability report

Added new independent director

 

Incorporated TCFD* and SASB* into sustainability report

Added two new independent directors

Enhanced lobbying disclosures

Seeking shareholder approval of declassification

Published Human Capital Management Report

 

*TCFD is the Task Force on Climate-Related Financial Disclosures and SASB is the Sustainability Accounting Standards Board.

20     PHILLIPS 66 PROXY STATEMENT 2021

CORPORATE RESPONSIBILITY

HUMAN CAPITAL MANAGEMENT

Our Board recognizes the importance of our human capital practices in creating value and supporting our vision. Our ability to attract, retain and develop talented employees, and create a workplace where they can innovate and thrive, is an integral part of our competitive strategy to drive long-term value and mitigate risk.

To that end, our Board routinely engages with senior leadership on matters such as talent pipeline, turnover, workplace culture, and inclusion and diversity. Results of employee surveys and metrics on talent and diversity initiatives are reviewed by the Board on a regular basis. This oversight responsibility sits with the full Board. In addition, certain human capital metrics have been and continue to be measured, reviewed and managed as part of our compensation program and are discussed by the Compensation Committee in its regular meetings. The table below provides an overview of certain of our human capital practices. More information regarding our human capital practices can be found in our Human Capital Management Report on our website at www.phillips66.com.

Corporate Culture and Employee
Engagement
Inclusion and Diversity

Our culture is built on our values of safety, honor and commitment. After learning how our employees experience our culture, we developed a set of behaviors called “Our Energy in Action.” 

We value inclusion and diversity (I&D) — concepts that are interdependent and equally important. They are essential to who we are, what we believe and how we do business.

·Work for the Greater Good: We embrace our values as a common bond. Living our values earns us the confidence of our business partners, communities and co-workers.

·Create an Environment of Trust: We depend on each other to do our jobs. Trusting each other makes us more productive and agile.

·Seek Different Perspectives: We create space for possibilities. Championing inclusion enables us to innovate and thrive.

·Achieve Excellence: We challenge ourselves and never settle. Continuing to improve ensures we deliver extraordinary performance.

·Employee Engagement Survey: We conduct biennial confidential employee engagement surveys to gather employee perspectives on their experience working at Phillips 66. Results are available to all employees and are made available to our Board. Management analyzes findings to identify progress on previous recommendations and areas of continued opportunity.

·Commitment to Diversity: We foster a culture of inclusion because in its absence, diversity cannot thrive. We enhance representation through attraction and retention, and promote environments free of biases where all employees feel valued, respected and belonging.

·Executive Inclusion and Diversity Council (I&D Council): an advisory group committed to building an inclusive and diverse workplace. Established in 2019, the I&D Council sets the strategic vision from the top and throughout our organization for I&D efforts that drive innovation and enhance business outcomes.

·Employee Resource Groups (ERGs): Designed to be forums for sharing ideas and raising awareness around identity and belonging, our nine ERGs have over 50 chapters throughout the Company.

·Inclusive Benefits: We offer various benefits to eligible employees and their families including parental leave; adoption assistance; flex time; family, personal, military & disability leave; gender transition support; and natural disaster financial support.

Health, Safety and WellnessTalent Retention and Development
We are proud to be one of the energy industry’s safest and most reliable companies. We also inspire life-long healthy choices, educating and supporting employees through fitness programs and services.We regularly provide opportunities for employees to deepen expertise and further enhance foundational skills like communication and team building. We are also building our pipeline of talent through recruiting diverse internship classes.

·Safety Performance: Our safety culture, comprehensive HSE policies, management systems and the commitment of employees and contractors who

·Attracting and Retaining the Best People: We recognize that executing our corporate strategy depends on the talents of our high-performing

PHILLIPS 66 PROXY STATEMENT 2021     21

CORPORATE RESPONSIBILITY

work for us resulted in a total recordable incident rate (TRR) of 0.11 in 2020, which is 30 times lower than the overall U.S. manufacturing average in 2019.

·Technology to Create Community: We are using technology, including apps that allow employees to share information such as safety learnings and report near misses in real time. Our cloud-based solutions promote collaboration and teamwork, including a Parent’s Hub for our working parents and a Pandemic Prevention Control Team hub to keep our employees informed about COVID-19 safe practices.

·Employee Wellness: Our fitness centers offer a variety of services, including group classes, personal training, and fitness assessments, where members can focus on becoming healthier. We also provide on-site medical and dental at some of our locations, as well as an Employee Assistance Program to all employees.

organization. We are committed to attracting and retaining the best talent for our business.

·Investing in our People: We offer employees various opportunities for career growth, including on-demand professional development for employees through digital learning platforms; specialized training for employees in operator roles, engineering, sales and finance; “Lunch and Learn” sessions on a variety of topics and more.

·Leadership Development Programs: “Leading the Vision” and “Leading for Success” programs advance continuous coaching skills for our people leaders.

·Internships: We provide paid internships at every major U.S. job location, offering students opportunities to learn and play a role in our organization’s success. In 2020, we honored our intern commitments by pivoting to a virtual experience.

COMMUNITY INVOLVEMENT AND ENGAGEMENT

We are committed to creating value for our communities through economic development, philanthropy, volunteerism and advocacy, and by operating our business in a socially and environmentally responsible way. In 2020, much of our focus was on helping those impacted by COVID-19, as well as by hurricanes in the Gulf Coast and wildfires on the West Coast. We contributed $6 million to COVID-19 and natural disaster relief efforts across the U.S. and the U.K. Through our matching gift program, we contributed over $5 million to over 2,000 organizations supported by employees. Additionally, we awarded over $1.5 million in volunteer grants to over 600 organizations where our employees and their families volunteer.

The communities in which our assets are located and where our employees live are critical stakeholders. We consistently and regularly engage with our local communities and seek their feedback. Our refining operations have community advisory councils or panels that include both Company representatives and community members. Many panels include adjacent operations from our midstream and lubricants businesses. These panels meet at least quarterly with refinery management to provide feedback, discuss topics of local concern and share insights on plans and activities. Our pipeline business units have year-round community awareness, education and listening panels to stay connected with those involved with and living near our extensive pipeline network.

POLITICAL ACTIVITIES

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SPOTLIGHT ON OUR GHG EMISSIONS REDUCTION TARGETS
Phillips 66 supports the ambitions of the Paris Agreement and is active in the energy transition while continuing to provide affordable, reliable, and abundant energy that drives human progress. In 2021, we set impactful and measurable targets to reduce the GHG emissions intensity of its operations and energy products. By 2030, we plan to reduce the Scope 1 and Scope 2 emissions intensity of our operations by 30% and the Scope 3 emissions intensity of our energy products by 15%, as measured against 2019 levels. In 2022, we announced a 2050 GHG emissions intensity target to further reduce Scope 1 and Scope 2 emissions intensity by 50%, as measured against 2019 levels.
We expect that we can achieve our 2030 targets with projects currently underway and projects that are planned or under development consistent with our disciplined approach to capital allocation and focus on returns. Meeting our 2050 target will require changes beyond our sphere of influence and control, such as advancements enabling broader commercialization of lower-carbon technologies, global policies to fund and incentivize the lower-carbon energy system, changes in consumer behavior and available materials throughout the supply chain. Further details regarding our GHG emissions reduction targets and the projects planned and in development to achieve these targets can be found in our Sustainability Report available on our website.
30%
15%
50%
Manufacturing-related emissions intensity
Scope 1 and 2 from operated assets by 2030
Products manufactured and sold emissions intensity
Scope 3 from operated assets by 2030
Manufacturing-related emissions intensity
Scope 1 and 2 from operated assets by 2050
12
Phillips 66 2023 Proxy Statement


PROPOSAL 1
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Election of 5 Class II Directors to hold office until the 2026 Annual Meeting
The Board recommends that you vote “FOR” the election of the five Class II director nominees.
Our Board is currently composed of 13 members. In accordance with our Certificate of Incorporation, as currently in effect, our Board is divided into three classes of directors. At the 2023 Annual Meeting, we are seeking shareholder approval to declassify our Board of directors, as described in “Proposal 2: Management Proposal to Approve the Declassification of the Board of Directors.” If that proposal receives sufficient shareholder support, starting in 2024, directors will stand for one-year terms and the full Board will stand for annual election starting in 2026.
The Board has nominated Gregory J. Hayes, Charles M. Holley, Denise R. Singleton, Glenn F. Tilton and Marna C. Whittington to stand for election as Class II directors for a three-year term that expires at the annual meeting of shareholders held in 2026 or until such director’s successor has been duly elected or appointed and qualified, or until their earlier resignation or removal. Each nominee requires the affirmative vote of a majority of the votes cast in person or by proxy at the meeting. Each director nominee has consented to serving as a director if elected and the Board expects that the five nominees will be available to serve as directors. However, if a nominee is unavailable for election, proxy holders may vote for another nominee proposed by the Board or the Board may reduce the number of directors to be elected at the Annual Meeting. No family relationship exists among any of our directors, director nominees or executive officers. There is no arrangement between any director or director nominee and any other person pursuant to which he or she was, or is to be, selected as a director or director nominee.
The business experience, core skills and qualifications of each director nominee and continuing director are set forth below. Further skills and qualifications considered in evaluating director nominees and Board composition as a whole are described in Board Skills and Experience beginning on page 21.
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CORE DIRECTOR SKILLS
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C-Suite Experience
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Financial
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Global Business
C-suite experience provides valuable insights and practical understanding of companies, and the methods to drive change and growth within an organizationFinance and financial reporting experience provide knowledge necessary to evaluate our performance by reference to financial targets and to oversee financial reportingGlobal business or international experience provides valuable perspectives on our operations and enables the oversight of our strategic initiatives
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Risk Management
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Environmental
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Industry Experience
Experience in managing risk ensures capabilities necessary for risk oversight responsibilities, bringing background and experience that increase directors’ effectivenessExperience in environmental regulation helps in effective evaluation and oversight of our strategy to provide energy and improve lives while ensuring a healthy and safe environmentEnergy experience brings pertinent background and knowledge to provide perspective on issues specific to the Company’s industry, business, operations and strategy
13


CLASS II DIRECTOR NOMINEES STANDING FOR ELECTION
Gregory J. Hayes

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Age: 62
Director since: 2022
Committees: Compensation;
Nominating and Governance;
Public Policy and Sustainability
Career Highlights:
Chairman and Chief Executive Officer, Raytheon Technologies Corporation (since June 2021)
Former President, Chief Executive Officer and Director, Raytheon Technologies Corporation (April 2020 to June 2021)
Former Chairman and Chief Executive Officer, United Technologies Corporation (2016 to April 2020)
Former director of Nucor Corporation (2014 to 2018)
Experience and Key Skills:
Mr. Hayes is the chairman and chief executive officer of Raytheon Technologies Corporation, responsible for leading an aerospace and defense company of 174,000 employees and $64 billion in annual sales. During his career, Mr. Hayes has held senior leadership roles across finance, corporate strategy and business development. Mr. Hayes brings substantial experience in executive leadership, finance, strategic planning, mergers and acquisitions, business development, and global operations and management to the Board.
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C-Suite Experience
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Financial
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Global
Business
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Risk
Management

Other Current Public Company Directorships:
Raytheon Technologies Corporation
Charles M. Holley

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Age:66
Director since:2019
Committees:
Audit;
Public Policy
and Sustainability
Career Highlights:
Former Executive Vice President and Chief Financial Officer of Walmart Inc. (2010 to 2015)
Experience and Key Skills:
Mr. Holley served as Executive Vice President and Chief Financial Officer at one of the largest U.S. corporations, providing him with expertise in finance, senior management, risk and asset management, strategic planning and capital markets. From 2016 to 2019, Mr. Holley served as an independent senior advisor, U.S. CFO Program, Deloitte LLP. He also has extensive experience in international operations and technology platforms.
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C-Suite Experience
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Financial
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Global
Business
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Risk
Management

Other Current Public Company Directorships:
Amgen
Carrier Global
14
Phillips 66 2023 Proxy Statement


Denise R. Singleton

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Age: 60
Director since: 2021
Committees:
Audit;
Public Policy
and Sustainability
Career Highlights:
Executive Vice President, General Counsel and Secretary of WestRock Company (since March 2022)
Former Senior Vice President, General Counsel and Corporate Secretary of IDEX Corporation (2015 to March 2022)
Experience and Key Skills:
Ms. Singleton was named Executive Vice President, General Counsel and Secretary of WestRock Company in March 2022. Ms. Singleton has extensive legal and corporate governance experience. Previously, she was Senior Vice President, General Counsel and Corporate Secretary of IDEX Corporation, a position she held from 2015 to 2022. Prior to joining IDEX, Ms. Singleton served as Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer at SunCoke Energy, Inc. and its controlled company SunCoke Energy Partners, L.P., where she was on the board of directors, from 2011 to 2015. Prior to joining SunCoke Energy, Ms. Singleton held several positions at PPG Industries, Inc., and was a partner at Shaw Pittman LLP, a law firm.
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C-Suite
Experience
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Financial
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Global
Business
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Risk
Management
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Environmental
Other Current Public Company Directorships:
Teledyne Technologies Incorporated
Glenn F. Tilton

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Age: 74
Director since: 2012
Committees:
Compensation; Nominating and Governance (Chair); Public Policy and Sustainability; Executive
Career Highlights:
Former Chairman of the Midwest, JPMorgan Chase (2011 to 2014)
Former Non-Executive Chairman, United Continental Holdings (2010 to 2012)
Former Chairman and Chief Executive Officer of UAL Corporation (2002 to 2010)
Experience and Key Skills:
Mr. Tilton previously served as chairman and chief executive officer of UAL Corporation, the parent company of United Air Lines, as well as chairman of the Midwest of JPMorgan Chase & Co. Mr. Tilton’s career has provided him with strong management experience overseeing complex multinational businesses operating in highly regulated industries as well as expertise in finance and capital markets matters. He also has extensive experience in the energy industry through his more than 30 years in increasingly senior roles with Texaco Inc., including chairman and chief executive officer.
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C-Suite
Experience
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Financial
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Global
Business
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Risk
Management
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Environmental
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Industry
Experience
Other Current Public Company Directorships:
Abbott Laboratories
AbbVie Inc.
Proposal 1: Election of Directors15


Marna C. Whittington
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Age: 75
Director since: 2012
Committees:
Compensation (Chair);
Nominating and Governance;
Public Policy and
Sustainability;
Executive
Career Highlights:
Former Chief Executive Officer of Allianz Global Investors Capital (2002 to 2012)
Former director of Macy's Inc. (1993 to 2022)
Experience and Key Skills:
Dr. Whittington has many years of leadership experience and expertise as a former senior executive in the investment management industry, including as chief executive officer of Allianz Global Investors Capital. She has extensive knowledge of and substantial experience in management, and in financial, investment and banking matters and provides valuable insight from her previous experience serving as a public company board member.
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C-Suite
Experience
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Financial
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Global
Business
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Risk
Management
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Industry
Experience
Other Current Public Company Directorships:
Oaktree Capital Group LLC
Ocugen Inc.
CONTINUING DIRECTORS
Gary K. Adams
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Age: 72
Director since:2016
Committees:
Compensation;
Public Policy and Sustainability
Career Highlights:
Former Chief Advisor — Chemicals for IHS Markit (2011 to 2017)
Former director of Westlake Chemical Partners LP (2014 to 2016)
Former director of Phillips 66 Partners LP (2013 to 2016)
Former director of Trecora Resources (2012 to 2022)
Experience and Key Skills:
Mr. Adams has over 40 years of experience in the petrochemicals and plastics industries, including 15 years at Union Carbide, where he began his career. Through various management positions, including as president, chief executive officer and chairman of Chemical Markets Associates Inc. (“CMAI”) before its acquisition by IHS, Mr. Adams also has leadership experience with operating responsibilities, and financial and risk oversight for a global business.
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C-Suite
Experience
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Financial
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Global
Business
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Risk
Management
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Industry
Experience
16
Phillips 66 2023 Proxy Statement


Julie L. Bushman

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Age:62
Director since: 2020
Committees:
Audit;
Public Policy
and Sustainability
Career Highlights:
Former Executive Vice President of International Operations of 3M (2017 to 2020) and Senior Vice President of Business Transformation and Information Technology of 3M (2013 to 2017)
Former director of Johnson Controls (2012 to 2016)
Experience and Key Skills:
As a former executive of 3M, Ms. Bushman brings executive management experience, as well as experience in international business, risk management and financial oversight to the Board. Ms. Bushman also brings environmental experience through her roles leading occupational health and environmental safety divisions at 3M.
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C-Suite
Experience
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Financial
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Global
Business
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Risk
Management
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Environmental
Other Current Public Company Directorships:
Adient plc
Bio-Techne Corporation
Lisa A. Davis

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Age: 59
Director since: 2020
Committees:
Compensation;
Public Policy and
Sustainability
Career Highlights:
Former member of Managing Board of Siemens AG and CEO for Siemens Gas and Power (2014 to 2020)
Former director of Kosmos Energy (2019 to 2022)
Experience and Key Skills:
Ms. Davis brings significant industry experience to the Board through her roles at Siemens, as well as over 25 years in engineering and management roles at large integrated oil companies including ExxonMobil, Texaco and Shell, including executive vice president strategy and portfolio at Shell.
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C-Suite
Experience
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Financial
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Global
Business
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Risk
Management
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Industry
Experience
Other Current Public Company Directorships:
Air Products and Chemicals 
Penske Automotive Group 
C3.ai
Proposal 1: Election of Directors17


Greg C. Garland
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Age: 65
Director since: 2012
Committees:
Executive (Chair)
Career Highlights:
Executive Chairman of Phillips 66 (July 2022 to present)
Former President, Chief Executive Officer and Chairman of Phillips 66 (2012 to July 2022)
Experience and Key Skills:
Mr. Garland brings extensive knowledge of all aspects of our business and industry to the Board, having served as our president and chief executive officer from 2012 to July 2022, in executive positions at ConocoPhillips, as president and chief executive officer of Chevron Phillips Chemical Company, and as the chairman and chief executive officer of Phillips 66 Partners. Through his more than 35 years of service and experience in the energy industry, Mr. Garland brings to the Board each of the key skills we seek in a director.
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C-Suite
Experience
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Financial
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Global
Business
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Risk
Management
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Environmental
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Industry
Experience
Other Current Public Company Directorships:
Amgen
Mark E. Lashier

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Age: 61
Director since: 2022
Committees:
Executive
Career Highlights:
President and Chief Executive Officer of Phillips 66 (since July 2022)
President and Chief Operating Officer of Phillips 66 (2021 to 2022)
President and Chief Executive Officer of Chervon Phillips Chemical Company LLC (2017 to 2021)
Experience and Key Skills:
Mr. Lashier brings extensive knowledge of our business and industry to the Board, as he serves as our President and Chief Executive Officer and has previously served as president and chief executive officer of Chevron Phillips Chemical Company (CPChem). Prior to that, he held several leadership positions at CPChem, including Executive Vice President of Olefins and Polyolefins; Senior Vice President of Specialties, Aromatics and Styrenics; Vice President of Corporate Planning and Development; Project Director for Saudi Arabia; and Regional Manager in Asia. Mr. Lashier began his career at Phillips Petroleum in 1989 as an Associate Research Engineer.
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C-Suite
Experience
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Financial
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Global
Business
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Risk
Management
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Industry
Experience

18
Phillips 66 2023 Proxy Statement


John E. Lowe
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Age:64
Director since: 2012
Committees:
Audit (Chair); Nominating and Governance; Public Policy and Sustainability; Executive
Career Highlights:
Former Senior Executive Advisor to Tudor, Pickering, Holt & Co.
(2012 to 2022)
Former director of APA Corporation (2013 to 2022) and non-executive Chairman (2015 to 2022)
Former director of Agrium Inc. (2010 to 2015)
Experience and Key Skills:
Mr. Lowe had a 30-year career with ConocoPhillips and Phillips Petroleum Company, including several executive positions with ConocoPhillips, providing him extensive industry experience. Mr. Lowe also has financial and risk oversight, international and environmental experience through the series of executive positions he has held and his service on the boards of publicly traded oil and gas and energy companies.
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C-Suite
Experience
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Financial
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Global
Business
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Risk
Management
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Environmental
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Industry
Experience
Other Current Public Company Directorships:
TC Energy 
Denise L. Ramos

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Age: 66
Director since: 2016
Committees:
Audit;
Nominating and Governance;
Public Policy and Sustainability (Chair); Executive
Career Highlights:
Former Chief Executive Officer, President and director of ITT Inc. (2011 to 2018)
Former director of Praxair, Inc. (2014 to 2016)
Experience and Key Skills:
Ms. Ramos has experience in the oil and gas industry, including more than 20 years in various finance positions at Atlantic Richfield Company. Having also served as CEO of ITT and chief financial officer at ITT as well as Furniture Brands International and Yum! Brands, Ms. Ramos brings extensive senior leadership, risk management and global business expertise to the Board.
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C-Suite
Experience
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Financial
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Global
Business
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Risk
Management
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Environmental
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Industry
Experience
Other Current Public Company Directorships:
Bank of America 
Raytheon Technologies
Proposal 1: Election of Directors19


Douglas T. Terreson
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Age: 61
Director since:2021
Committees:
Compensation;
Public Policy and Sustainability
Career Highlights:
Former Head of Energy Research at Evercore ISI (2016 to 2021)
Experience and Key Skills:
Mr. Terreson is a former Senior Advisor at Evercore, a position he held from April 2021 through July 2021. He previously served as the Head of Global Energy at Evercore ISI, from 2016 until April 2021. Mr. Terreson joined International Strategy & Investment Group (ISI), which was acquired by Evercore in 2014, in 2009, after 15 years at Morgan Stanley, where he managed the Global Energy Group. Prior to that, he managed Putnam Investments’ energy mutual fund. Mr. Terreson began his career as an engineer with Schlumberger Limited.
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Financial
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Global
Business
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Risk
Management
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Industry
Experience
20
Phillips 66 2023 Proxy Statement


BOARD SKILLS AND LOBBYING ACTIVITIES

EXPERIENCE

Throughout the year, the Board continued its proactive assessment of board succession planning and refreshment. The Nominating and Governance Committee and full Board work to ensure we maintain a Board that embodies a broad and diverse set of experiences, qualifications, attributes and skills to provide effective oversight of management and the Company. When seeking new candidates, the Board considers a diverse pool of qualified candidates who could potentially serve as Board members. We believe that engagementview diversity in terms of skills, as well as gender, age, race, ethnicity, background, professional experience and good governance involves participatingperspectives.
As the needs of the Company change, the Board revisits the skills and experiences it seeks. Included in political or public policy activities that advancethe matrix below are the core skills the Board seeks in director candidates, as well as additional competencies and experiences the Board currently prioritizes in evaluating director nominees.
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Age(1)
72625965626661646660617475
Tenure73311141117221111
GenderMFFMMMMMFFMMF
Independence
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Other Public Company Boards0231120121022
C-Suite Experience
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Financial Experience
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International/Global Business
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Risk Management
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Environmental
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Industry
Energy
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Pipeline/Transportation/Logistics
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Refining
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Chemicals
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Midstream
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Information Technology
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Business Transformation
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Investment Banking/Finance
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Public Affairs
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Government Affairs
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(1) As of March 15, 2023.
Proposal 1: Election of Directors21


BOARD COMPOSITION AND ASSESSMENT
Composition of the Board
The Board strives to maintain an appropriate balance of tenure, turnover, diversity, skills and experience. Our average director tenure is approximately 5 years, representing an appropriate balance of tenures. The average age of our directors is approximately 65.
After careful deliberation, the Board recently removed the retirement age guideline from the Company's goals,Corporate Governance Guidelines. The Board's current Corporate Governance Guidelines do not impose director term limits or mandate a retirement age. The Board believes that directors may continue to provide meaningful, independent oversight and advice past an arbitrary age limit. A mandatory retirement age comes with the disadvantage of losing the contribution of directors who have developed significant knowledge of the Company’s business, strategy, risk profile, operations and financial position and who remain active and contributing members of the Board. The Board also determined that a mandatory retirement age may inhibit the Board’s ability to maintain a balanced mix of shorter- and longer-tenured directors, which is necessary for the Board to maintain a mix of fresh perspectives and a deep understanding of the Company.
Annual Board Assessment
The Board ensures its continued effectiveness through its self-assessment and nomination processes. These processes have resulted in the board's recent refreshment efforts.
The Nominating and Governance Committee annually reviews the qualifications it prioritizes for director recruitment and director nomination to ensure that these qualifications reflect the evolving needs of the Company. During 2022, the Nominating and Governance Committee retained a third-party search firm to assist it in the process of identifying and evaluating potential director candidates.
The Nominating and Governance Committee annually reviews each director nominee’s continuation on the Board, taking into account their contributions, qualifications and outside time commitments, and the composition of the Board as a whole, and makes recommendations to the full Board.
In addition, the Corporate Governance Guidelines provide that any director whose principal outside responsibilities have changed since election to the Board should volunteer to resign to give the Board the opportunity to review the appropriateness of continued Board membership under the circumstances.
2022 Board Self Assessment
Oversight of annual evaluation processEach committee of the Board performed an annual self-assessment, and the Nominating and Governance Committee and Lead Independent Director oversaw an annual self-assessment of the full Board.
Survey and one-on-one discussionsThe self-assessment included an evaluation survey, which provided an opportunity for candid feedback on the Board's performance, followed by one-on-one conversations between the Lead Independent Director and each other director. During these conversations, the Lead Independent Director sought input on the effectiveness of the Board, its committees, and the individual directors, among other topics.
Presentation and discussion of resultsA summary of the results of each committee’s self-assessment was presented to the Committee and discussed in executive session. The Lead Independent Director presented a summary of the results of the Board evaluation to the Nominating and Governance Committee and to the Board in executive session.
Incorporation of feedbackAny matters requiring further action that may enhance the Board's performance are identified and action plans developed to address the matter.
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Phillips 66 2023 Proxy Statement


Recent Board Refreshment
In 2022, the Board appointed Mark Lashier and Gregory Hayes to the Board. Mr. Lashier’s board appointment was in connection with his promotion to the position of chief executive officer, and he brings significant knowledge of the Company’s operations to the Board. Mr. Hayes brings significant c-suite, financial, global business, information technology, regulatory, risk management and environmental experience to the Board.
These appointments were informed by the Board’s continued focus on its composition, as well as insights provided through the Board’s annual self-evaluation process. Our current board composition provides a diversity of thought and a broad range of skills and perspectives aligned with our strategy.
Board changes since 2019:
Seven new highly-skilled directors have joined the Board, six of whom are independent
Increased gender and racial/ethnic diversity of the Board
Enhanced the skill set of the Board by adding directors with skills critical to supporting our strategy, including skills in industry, information technology, environmental, finance, and government affairs
Identification and Consideration of New Nominees
The Board is responsible for nominating directors and filling vacancies that may occur between annual meetings, based upon the recommendation of the Nominating and Governance Committee. The Nominating and Governance Committee process for identifying and recommending candidates includes:
1 ReviewThe Nominating and Governance Committee considers the Company’s current and long-term needs and strategic plans to determine the skills, experience and characteristics that may enhance the Board's composition and effectiveness.
2 IdentifyThe Nominating and Governance Committee identifies a pool of diverse candidates through a variety of methods, including the use of third-party search firms and the business and organizational contacts of directors and management.
3 Evaluate
In evaluating potential candidates for nomination to the Board, the Nominating and Governance Committee and the Board consider several factors:
all directors are expected to possess the highest personal and professional ethics, integrity and values and be committed to representing the long-term interests of the Company’s shareholders;
candidates should possess skills and experience complementary to those of existing directors; and
additionally, directors are expected to devote sufficient time and effort to their duties as a director.
4 RecommendThe Nominating and Governance Committee recommends director candidates to the Board of Directors with the goal of creating a balance of knowledge, experience and diversity.
Proposal 1: Election of Directors23


Commitment to Board Diversity
The Nominating and Governance Committee believes that the Board should reflect a range of talents, ages, skills, experiences, diversity, and expertise sufficient to provide sound and prudent guidance with respect to the Company’s strategic and operational objectives. The Board has committed to seeking women and underrepresented groups, as well as candidates with diverse backgrounds, skills and experiences, as part of the search process for new directors, and assesses the effectiveness of its commitment in this regard as part of the annual board and director evaluation process. We have incorporated this commitment into our Corporate Governance Guidelines.
Shareholder Recommendation of Candidates
The Nominating and Governance Committee will consider director candidates recommended by shareholders. A shareholder wishing to recommend a candidate for nomination by the Nominating and Governance Committee should follow the procedures described under Submission of Future Shareholder Proposals and Director Nominations beginning on page 105. In addition, the shareholder should provide such other information it deems relevant to support the Nominating and Governance Committee’s evaluation of the candidate. Candidates recommended by the Company’s shareholders are evaluated on the same basis as candidates recommended by the Company’s directors, management, third-party search firms or other sources.
Proxy Access for Shareholder-Nominated Candidates
Our By-Laws also permit a group of up to 20 shareholders owning 3% or more of our outstanding common stock continuously for at least three years to nominate and have included in our proxy materials, director nominees constituting up to two individuals or 20% of the Board, whichever is greater, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in our By-Laws. Additional information is described under Submission of Future Shareholder Proposals and Director Nominations beginning on page 105.
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Phillips 66 2023 Proxy Statement


Corporate Governance
BOARD LEADERSHIP STRUCTURE
Recent Separation of the Chairman and CEO Roles
The Board of Directors believes that it is in the best interests of the Company and its shareholders to retain flexibility in determining whether to combine the roles of Chairman and CEO. Our Corporate Governance Guidelines provide that the Board will periodically consider whether the roles should be separated and, if so, whether the Chairman should be an independent director or an employee.
Upon Mr. Garland's retirement as CEO in July 2022, the Board asked Mr. Garland to continue to serve as Executive Chairman of the Board. The Board believes that separating the roles of Chairman and CEO are appropriate at this time to promote an effective CEO transition, allowing Mr. Lashier to focus on executing the Company's strategy while Mr. Garland focuses on Board governance. Going forward, the Board will continue to periodically evaluate the appropriateness of its leadership structure. The Board welcomes and takes under consideration any input received from our shareholders regarding the Board’s leadership structure, and informs shareholders of any change in the Board’s leadership structure by updates to our corporate website and in disclosures in our annual proxy statements.
Duties and Responsibilities of the Executive Chairman
As Executive Chairman of the Board, Mr. Garland is responsible for chairing meetings of the Board, presiding at meetings of our shareholders, overseeing agenda preparation in consultation with the Lead Independent Director, and fostering a collegial and collaborative environment in the boardroom. As our former CEO, Mr. Garland is a valuable resource to the executive leadership team on operational and strategic matters.
Duties and Responsibilities of the Lead Independent Director
Our Corporate Governance Guidelines state that when the Chairman of the Board is an employee of the Company, the non-employee directors will name a Lead Independent Director. Since 2016, the non-employee directors have elected Glenn Tilton to serve as Lead Independent Director. The Board believes Mr. Tilton is qualified to serve as lead independent director in light of his experience as the lead independent director for AbbVie and his recent service as chairman of the Midwest for JPMorgan Chase & Co. and non-executive chairman of the board of United Continental Holdings, Inc. Through these roles and other executive positions he has held, Mr. Tilton has demonstrated strong leadership skills that well-position him to lead our independent directors. Mr. Tilton also has vast management experience in overseeing complex multinational businesses operating in highly regulated industries, as well as expertise in finance and capital markets matters.
As Lead Independent Director, Mr. Tilton chairs executive sessions, coordinates the activities of the non-employee directors and performs other duties and responsibilities as determined by the Board, including:
advising the Executive Chairman on Board meeting schedules, seeking to ensure that the non-employee directors can perform their duties responsibly without interfering with operations;
providing the Executive Chairman with input on agenda preparation for Board and committee meetings;
advising the Executive Chairman on the quality, quantity and timeliness of the flow of information from management to allow directors to perform their duties effectively and responsibly, including specifically requesting certain materials be provided to the Board;
25


recommending to the Executive Chairman the retention of consultants who report directly to the Board;
interviewing Board candidates and making nomination recommendations to the Nominating and Governance Committee;
assisting in assuring compliance with and implementation of the Corporate Governance Guidelines;
ensuring that he, or another appropriate director, is available for engagement with shareholders when warranted;
calling meetings of the non-employee directors as needed, developing the agenda for and chairing any such meetings and executive sessions;
acting as principal liaison between the non-employee directors and the Executive Chairman on sensitive issues;
participating with the Human Resources and Compensation Committee in the periodic discussion of CEO performance;
leading the Board’s annual self-assessment; and
working with the Nominating and Governance Committee to recommend Board committee membership and committee chair rotation.
The Board of Directors believes that its current structure and processes encourage its non-employee directors to be actively involved in guiding its work. The chairs of the Board’s committees review their respective agendas and committee materials with management in advance of each meeting, and communicate directly with other directors and members of management as each deems appropriate. Moreover, each director may suggest agenda items and raise matters that are not on the agenda at all Board and committee meetings.
BOARD INDEPENDENCE
Our Corporate Governance Guidelines contain director independence standards, which are consistent with the listing standards of the New York Stock Exchange ("NYSE"). These standards assist the Board in determining the independence of the Company’s directors. The Board of Directors has affirmatively determined that each director, other than Messrs. Garland and Lashier, meets our independence standards. Messrs. Garland and Lashier are not considered independent because they are employed by the Company.
In making independence determinations, the Board specifically considered the fact that many of our directors are directors of companies with which we may conduct business. Additionally, some of our directors may purchase products from the Company, such as gasoline from our retail sites. In all cases, it was determined that there are no relationships or transactions that are material to the Company or the director and accordingly, there are no relationships that would affect the independence of any director other than Messrs. Garland and Lashier.
BOARD COMMITTEES
The Board has five standing committees. The charter for each committee may be found in the “Investors” section on the Phillips 66 website (www.phillips66.com) under the "Corporate Governance"caption. Shareholders may also request printed copies of these charters by following the instructions in Additional Information beginning on page 99.
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Phillips 66 2023 Proxy Statement


OVERVIEW OF BOARD COMMITTEES & RESPONSIBILITIES
Other than our Executive Committee, all committees of the Board are composed entirely of independent directors. To ensure continued Board effectiveness, the Nominating and Governance Committee periodically considers committee membership and chair rotations. The composition and primary responsibilities of the committees are described below.
Audit and Finance Committee
(the “Audit Committee”)
Members:
John E. Lowe (Chair)
Julie L. Bushman
Charles M. Holley
Denise L. Ramos
Denise R. Singleton
Number of meetings
in 2022: 9
Primary Responsibilities:
Oversee the integrity of accounting policies, internal controls, financial statements, and financial reporting practices, and certain financial matters covering the Company’s capital structure, complex financial transactions, financial risk management, retirement plans and tax planning.
Review significant risk exposures and management’s monitoring, control and reporting of such exposures.
Monitor compliance with legal and regulatory requirements, including our Code of Business Ethics and Conduct; the qualifications and independence of independent auditors; and the performance of the internal audit function and independent auditors.
Financial Expertise and Financial Literacy of Audit Committee Members
The Board has determined that each of Mr. Lowe, Mr. Holley and Ms. Ramos satisfies the SEC’s criteria for “audit committee financial experts.” Additionally, the Board has determined that each member is financially literate within the meaning of the NYSE listing standards.
Human Resources and Compensation Committee
(the “Compensation Committee”)
Members:
Marna C. Whittington (Chair)
Gary K. Adams
Lisa A. Davis
Gregory J. Hayes
Douglas T. Terreson
Glenn F. Tilton
Number of meetings
in 2022: 6
Primary Responsibilities:
Oversee executive compensation programs, policies and strategies and approve metrics, goals and objectives under incentive compensation programs, including those relevant to senior officers.
Approve goals and objectives relevant to CEO compensation, evaluate CEO performance in light of those goals and objectives, and determine the CEO’s overall compensation.
Oversee initiatives of our human capital strategies, including in the areas of inclusion and diversity, management succession planning and talent management.
Additional information about the Compensation Committee can be found in Compensation Discussion and Analysis beginning on page 39.
Corporate Governance27


Nominating and Governance Committee
Members:
Glenn F. Tilton (Chair)
Gregory J. Hayes
John E. Lowe
Denise L. Ramos
Marna C. Whittington
Number of meetings
in 2022: 5
Primary Responsibilities:
Identify and recommend nominees for election to the Board.
Recommend committee assignments and periodic rotation of committee assignments and committee chairs.
Review and recommend compensation and benefits policies for non-employee directors.
Review and recommend appropriate corporate governance guidelines and procedures.
Oversee the Board’s annual self-evaluation of performance and monitor Board composition.
Evaluate potential CEO successors jointly with Compensation Committee.
Public Policy and Sustainability Committee
Members:
Denise L. Ramos (Chair)
Gary K. Adams
Julie L. Bushman
Lisa A. Davis
Charles M. Holley
John E. Lowe
Denise R. Singleton
Douglas T. Terreson
Glenn F. Tilton
Marna C. Whittington
Number of meetings
in 2022: 5
Primary Responsibilities:
Review policies, programs and practices regarding health, safety and environmental protection; health and safety performance; social impact and corporate responsibility matters.
Review the sustainability program and oversee progress of sustainability initiatives.
Review and approve budget for charitable contributions and for political contributions and independent expenditures, and oversee such expenditures.
Review the administration of any political action committees.
Review and approve the Company’s budgets for political candidate contributions and independent expenditures, and receive reports from management on such candidate contributions, independent expenditures and other political expenditures.
Executive Committee
Members:
Greg C. Garland (Chair)
Mark Lashier
John E. Lowe
Denise L. Ramos
Glenn F. Tilton
Marna C. Whittington
Number of meetings in 2022: None
Primary Responsibilities:
Exercise the authority of the full Board, if needed, in intervals between regularly scheduled Board meetings, other than (1) those matters expressly delegated to another committee of the Board, (2) the adoption, amendment or repeal of any By-Laws, and (3) those matters that cannot be delegated to a committee under statute, the Certificate of Incorporation, or By-Laws.
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Phillips 66 2023 Proxy Statement


SHAREHOLDER OUTREACH AND RESPONSIVENESS
Phillips 66 maintains a year-round shareholder engagement program to listen to investor perspectives on our business strategy, executive compensation program and sustainability and environmental, social and governance (“ESG”) matters that are important to our investors. Our engagement program is focused on identifying and understanding shareholder concerns and demonstrating responsiveness to these concerns.
In the lead-up to the 2022 Annual Meeting, we undertook a significant effort to speak with our shareholders and gather their feedback on our executive compensation program, which had recently evolved in response to shareholder input. We continued to engage with shareholders after the 2022 Annual Meeting to discuss our strategic priorities and a variety of ESG-related topics, including enhancements in CPChem's latest sustainability report in response to shareholder interest in the resiliency of our plastics business under potential future virgin plastic demand scenarios.
Many of these conversations were led by Mr. Tilton, our Lead Independent Director. These conversations provided management and the Board with insight into our investors’ varying perspectives on the energy transition and energy security issues, climate-related metrics and targets, human capital management matters, executive compensation and Board governance topics.
This year, shareholders expressed support for our executive compensation program and disclosures, particularly as a result of the enhancements that the Compensation Committee implemented in 2022 after an extensive engagement effort. Shareholders also indicated support for our GHG emissions reduction targets and remarked favorably on our human capital management report. Shareholders were interested in learning more about the work of our Emerging Energy organization and the strategic priorities that management announced during our 2022 Investor Day. With respect to governance matters, shareholders were supportive of our Board refreshment and our recent attempts to declassify the Board.
In addition, shareholders expressed satisfaction with our responsiveness to a shareholder proposal presented at the 2022 Annual Meeting that requested a report describing how our joint venture CPChem could shift its plastic resin business model from virgin to recycled polymer production as a means of reducing plastic pollution. In August 2022, CPChem's eleventh annual sustainability report, Accelerating Change for a Sustainable Future, detailed a scenario analysis undertaken by CPChem to test the resilience of its portfolio under three polyethylene demand outlooks that incorporated factors such as presumed GDP growth, customer demand for circular polymers, and regulatory and technological advancements, including CPChem's own target to produce 1 billion pounds of circular polyethylene by 2030. CPChem’s assets showed long-term resilience under these scenarios and increased revenue growth. During engagement meetings, our shareholders commented favorably on CPChem’s scenario planning efforts and these enhanced disclosures.
Corporate Governance29


Highlights of some of the actions we have taken in response to our engagements over the last several years are shown below:
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(1)TCFD is the Task Force on Climate-Related Financial Disclosures.
Communications with the Board
Shareholders and interested parties may communicate with the Board of Directors in care of our Corporate Secretary. Communications to the non-employee directors should be addressed to “Board of Directors (independent members).” Communications are distributed to the Board or to any individual director, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Board has requested that items unrelated to its duties and responsibilities not be distributed.
Mailing Address:
Attn: Corporate Secretary
Phillips 66
2331 City West Blvd.
Houston, TX 77042
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Phillips 66 2023 Proxy Statement


BOARD OVERSIGHT OF OUR COMPANY
Strategic Oversight
Setting the strategic course of the Company and providing oversight of strategic risks involves a high level of constructive engagement between management and the Board. The Board regularly discusses the strategic priorities of the Company and the risks to the Company’s successful execution of its strategy, including global economic and other significant trends, as well as changes in the energy industry and regulatory initiatives. Each year, the Board holds a multi-day strategy session with the Company's senior leaders to review the Company's short-term and long-term strategic plans and priorities, as well as challenges and opportunities that may develop under various future scenarios.
Risk Oversight
The Company’s management is responsible for the day-to-day conduct of our business and operations, including risk management. To help it fulfill this responsibility, our management has established an enterprise risk management (“ERM”) program. The ERM program is designed to identify and facilitate the management of significant and emerging risks facing the Company. The Board is responsible for satisfying itself, in its oversight role, that the risk management processes designed and implemented by the Company’s management are functioning as intended, and that necessary steps are taken to foster a culture of risk-adjusted decision making throughout the organization. The Board has delegated authority to its standing committees to manage various aspects of risk management, discussed below. The Board has empowered the Audit and Finance Committee to facilitate appropriate coordination among the Board's committees with respect to oversight of the Company's risk management. The Audit and Finance Committee meets on a periodic basis with management (and no less than annually) to discuss the Company's major risk exposures and policies and the steps management has taken to ensure appropriate processes are in place to identify, manage and control business risks.
RISK OVERSIGHT AT THE BOARD LEVEL
Exercises its oversight responsibility for risk assessment and risk management directly and through its committees.
Receives regular updates from its committees on individual areas of risk that fall within each committee’s area of oversight and expertise.
KEY ASPECTS OF RISK OVERSIGHT AT THE COMMITTEE LEVEL
Audit and Finance
Committee
Human Resources and Compensation
Committee
Nominating and
Governance Committee
Public Policy and
Sustainability
Committee
Financial and accounting risks
Overall ERM program and the guidelines and policies that govern the process by which ERM is handled
Information technology security (including cybersecurity) and technology risk management programs
Risks associated with compensation policies and practices for executive compensation and company-wide compensation practices generally
Corporate culture and human capital risks, including management succession planning
Risks associated with corporate governance policies and practices and compliance with guidelines
Board composition and Board succession matters
CEO succession planning
Social and political risks and trends, including lobbying activities and political spending
Operational health, safety and environmental risks
Corporate social responsibility and sustainability programs
Corporate Governance31


Corporate Responsibility and Sustainability Oversight
Our Board regularly reviews trends in corporate governance and sustainability best practices, changing regulatory requirements and feedback from our shareholders to evolve our corporate responsibility and sustainability programs and practices in ways that the Board believes are in the best interest of Phillips 66 and its shareholders. Recognizing the growing importance of sustainable business practices, the Board expanded the remit of the public policy committee in 2020 and named it the Public Policy and Sustainability Committee ("PPSC"). The Board expanded the committee's oversight responsibilities to include the Company's sustainability programs and initiatives that support a lower-carbon future. In furtherance of our commitment to help the world address climate change, the Board and the PPSC jointly oversee climate-related risks and opportunities to our business, and the PPSC regularly receives updates on management's progress against our sustainability goals.
Human Capital Management Oversight
Our Board recognizes the importance of our human capital practices in creating value and supporting our vision. The ability of Phillips 66 to attract, retain and develop high-performing employees, and create a workplace where they can innovate and thrive, is an integral part of our competitive strategy to drive long-term value and mitigate risk. Through its committees, the Board routinely engages with senior leadership on matters such as succession planning, retention and turnover, workplace culture, and inclusion and diversity.
The Board’s engagement across the breadth of human capital management topics, including its oversight of our Human Capital Management Report, demonstrates the value Phillips 66 places on our people. Results of employee surveys and metrics on talent and diversity initiatives are reviewed by the Board on a regular basis. Board members also periodically visit our sites and meet with employees to stay connected to our corporate culture.
Each Board committee collaborates with senior leadership to stay informed, measure progress against goals, identify potential risks and develop meaningful solutions for the components of human capital management that are within their purview. For example, certain human capital metrics have been and continue to be measured, reviewed and managed as part of our compensation program and are discussed by the Compensation Committee in its regular meetings.
Succession Oversight
Management succession planning is critical to ensuring business continuity and performance. Our Compensation Committee has responsibility to oversee our management succession planning and the Nominating and Governance Committee oversees CEO succession planning. Our succession planning activities include sessions with executives to monitor and guide leadership development for our executive leadership team. The Compensation Committee provides the oversight necessary to ensure we develop corporate leaders who are prepared for their roles in both the ordinary course of business and in unexpected circumstances.
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Phillips 66 2023 Proxy Statement


MEETINGS AND ATTENDANCE
Board Meetings
psx-20230315_g89.jpg
The Board of Directors met seven times in 2022. All of our directors attended more than 75% of the meetings of the Board and committees on which they served. Recognizing that director attendance at the Company’s annual meeting can provide the Company’s shareholders with an opportunity to communicate with the directors about issues affecting the Company, the Company actively encourages directors to attend the annual meetings of shareholders. All of our directors then serving attended our 2022 Annual Meeting.
Executive Sessions
The independent directors hold regularly scheduled executive sessions of the Board and its committees without Company management present. These executive sessions are chaired by the Lead Director at Board meetings or by the committee chairs at committee meetings.
BOARD EDUCATION
Our Board recognizes the need to stay informed about current developments that affect the Company and the role of the Board and individual directors. Accordingly, the Board and each committee regularly receive educational updates from internal and third-party subject matter experts on a variety of topics, including legal and regulatory changes, governance practices, sustainability practices, cybersecurity and political activity. Our director onboarding program includes an intensive two-day immersion into the Company’s business at the Company’s headquarters, including a detailed review of each business segment, sustainability programs and human capital management practices, as well as the Board’s expectations of each director. At meetings throughout the year, board members also have opportunities to meet informally with members of management and high performers to learn more about our business.
RELATED PERSON TRANSACTIONS
Our Code of Business Ethics and Conduct requires all directors and executive officers to promptly report any transactions or relationships that reasonably could be expected to constitute a related person transaction under Item 404 of Regulation S-K. The transaction or relationship is reviewed by the Company’s management and the appropriate committee of the Board to ensure that it does not constitute a conflict of interest and is appropriately disclosed.
Additionally, the Nominating and Governance Committee conducts an annual review of any related person transactions between each director, their family members and controlled entities and the Company and its subsidiaries in making recommendations to the Board regarding the continued independence of each director. Since January 1, 2022, there have been no related person transactions (as defined under Item 404 of Regulation S-K) in which the Company or a subsidiary was a participant and in which any director, director nominee, executive officer, a greater than 5% beneficial owner of the Company at the time of the applicable transaction, or any of their immediate family members had a direct or indirect material interest.
The Nominating and Governance Committee also considered relationships that, while not constituting related person transactions where a director had a direct or indirect material interest, nonetheless involved transactions between the Company and an organization with which a director is affiliated, either directly or as a partner, shareholder or officer. The Nominating and Governance Committee determined that there were no transactions impairing the independence of any member of the Board, excluding Messrs. Garland and Lashier.
Corporate Governance33


Director Compensation
OBJECTIVES AND PRINCIPLES
Compensation for non-employee directors is reviewed annually by the Nominating and Governance Committee and set by action of the Board. The Nominating and Governance Committee may from time to time receive the assistance of a third-party consultant in reviewing director compensation, as it deems advisable.
The director compensation program provides a competitive package that enables the Board to attract and retain highly skilled individuals that possess the talent and skills required to oversee a complex, multinational corporation. The Board seeks to provide sufficient flexibility in the form of payment to meet individual needs while ensuring that a substantial portion of director compensation is linked to the long-term success of the Company. In furtherance of our commitment to be a socially responsible member of the communities in which we operate, the Board also extends the Phillips 66 matching gift program to charitable contributions made by our directors.
The primary elements of our non-employee director compensation program are equity compensation and cash compensation.
NON-EMPLOYEE DIRECTOR COMPENSATIONADDITIONAL ANNUAL CASH COMPENSATION
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psx-20230315_g91.jpg
psx-20230315_g92.jpg
Equity Compensation
In 2022, each non-employee director received a grant of RSUs with an aggregate value of $200,000 on the date of grant. Restrictions on the units issued to a non-employee director will lapse in the event of retirement, disability, death, or a change of control, unless the director has elected to receive the underlying shares after an earlier stated period of time. Directors forfeit the units if, prior to the lapse of restrictions, the Board finds sufficient cause for forfeiture (although no such finding can be made after a change in control). Before the restrictions lapse, directors cannot sell or otherwise transfer the units, but the units are credited with dividend equivalents in the form of additional RSUs. When restrictions lapse, directors will receive unrestricted shares of Company stock as settlement of the RSUs.
Cash Compensation
In 2022, each non-employee director received $125,000 in cash compensation for service as a director. Non-employee directors serving in specified committee or leadership positions also received additional cash compensation as indicated in the chart above.
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Phillips 66 2023 Proxy Statement


The total annual cash compensation is payable in monthly cash installments. Directors may elect, on an annual basis, to receive all or part of their cash compensation in unrestricted stock or in RSUs (such unrestricted stock or RSUs are issued on the first business day of the month and valued using the average of the high and low prices of Phillips 66 common stock as reported on the NYSE on such date), or to have the amount credited to the director’s deferred compensation account as described below. The RSUs issued in lieu of cash compensation are subject to the same restrictions as the annual RSUs described above.
Deferral of Compensation
Non-employee directors can elect to defer their cash compensation under the Phillips 66 Deferred Compensation Program for Non-Employee Directors (the “Director Deferral Plan”). Deferred amounts are deemed to be invested in various mutual funds and similar investment choices (including Phillips 66 common stock) selected by the director from a list of available investment choices. Amounts deferred under the Director Deferral Plan may be funded through a grantor trust designed for this purpose.
Directors’ Matching Gift Program
All active and retired non-employee directors are eligible to participate in the Directors’ Annual Matching Gift Program. This program provides a dollar-for-dollar match of gifts of cash or securities, up to an annual maximum of $15,000 per donor for active directors and $7,500 per donor for retired directors, to charities and educational institutions (excluding certain religious, political, fraternal, or collegiate athletic organizations) that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code ("IRC") or meet similar requirements under the applicable law of other countries. These matching contributions are reflected in the “All Other Compensation” column of the Director Compensation Table.
Other Compensation
The Board believes that it is important for significant others of directors and executives to attend certain meetings to enhance the collegiality of the Board. The cost of such attendance is treated by the Internal Revenue Service as income and is taxable to the recipient. The Company reimburses directors for the cost of resulting income taxes. These reimbursements are reflected in the “All Other Compensation” column of the Director Compensation Table.
Stock Ownership
Each director is expected to own an amount of Company stock with a value equal to at least the aggregate value of the annual equity grants during their first five years on the Board. Directors are expected to reach this level of target ownership within five years of joining the Board. Shares of stock owned outright, Restricted Stock and RSUs, including deferred stock units, may be counted in satisfying the stock ownership guidelines.
All directors are in compliance, or are on track to comply, with the stock ownership guidelines.
Director Compensation35


DIRECTOR COMPENSATION TABLE
The Nominating and Governance Committee benchmarks non-employee director compensation design and pay levels against Phillips 66's compensation peer companies. The Nominating and Governance Committee targets the median of this peer group for all elements of non-employee director compensation.
The following table summarizes the compensation for our non-employee directors in 2022 (for compensation paid to our employee directors, Messrs. Garland and Lashier, please see Executive Compensation Tables).
Name
Fees Earned
or Paid in Cash(1)
($)
Stock Awards(2)
($)
All Other
Compensation(3)
($)
Total
($)
Gary K. Adams135,000 200,01049,954 384,964 
Julie L. Bushman135,000 200,010— 335,010 
Lisa A. Davis135,000 200,01016,172 351,182 
Gregory J. Hayes63,508 94,091— 157,599 
Charles M. Holley135,000 200,010— 335,010 
John E. Lowe150,000 200,01078 350,088 
Denise L. Ramos155,000 200,010— 355,010 
Denise R. Singleton135,000 200,01039,089 374,099 
Douglas T. Terreson135,000 200,01016,999 352,009 
Glenn F. Tilton205,000 200,01015,250 420,260 
Marna C. Whittington150,000 200,01024,220 374,230 
(1)Reflects base cash compensation of $125,000 payable to each non-employee director and additional cash compensation payable to directors serving in specified committee positions as described on page 34. Amounts shown include any amounts that were voluntarily deferred to the Director Deferral Plan or received in Phillips 66 common stock or RSUs in lieu of cash. Mr. Hayes was elected to the Board on July 12, 2022 and his compensation was prorated for the year.
(2)Amounts represent the grant date fair market value of RSUs. Pursuant to our non-employee director compensation program, non-employee directors received a 2022 grant of RSUs with an aggregate value of $200,000 on the date of grant, based on the average of the high and low prices for Phillips 66 common stock as reported on the NYSE on the grant date. These grants are made in whole shares with fractional share amounts rounded up, resulting in shares with a value of $200,010 being granted on January 14, 2022 for our non-employee directors other than Mr. Hayes. Mr. Hayes joined the Board on July 12, 2012 and received a prorated award of RSUs with a grant date fair market value of $94,091, based on the average of the high and low prices for Phillips 66 common stock as reported on the NYSE on the grant date.
(3)All Other Compensation is made up primarily of certain gifts by directors to charities and educational institutions under our Matching Gifts Program (Mr. Adams $15,000; Ms. Davis $15,000; Ms. Singleton $15,000; Mr. Terreson $15,000; Mr. Tilton $15,000; and Dr. Whittington $15,000). For active directors, the program matches up to $15,000 with regard to each program year. The amounts shown reflect the actual payments made by us in 2022. All Other Compensation also includes the aggregate incremental cost to the Company for flights from Board meetings when a director requests to be dropped off at a different location for personal reasons, and tax assistance when we request family members or other guests to accompany a director to a Company function (and, as a result, the director incurs imputed income).
36
Phillips 66 2023 Proxy Statement


PROPOSAL 2
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Management Proposal to Approve the Declassification of the Board
The Board recommends that you vote “FOR” the proposal to declassify the Board of Directors.
Currently, the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) of the Company provides for a staggered Board, divided into three classes of directors, with each class elected for a three-year term.
After considering the advantages and disadvantages of declassification, including input from our shareholders, the Board continues to believe that it is in the best interests of the Company and its shareholders to amend the Certificate of Incorporation and the By-Laws of the Company to declassify the Board over the next three years. This will result in a fully declassified Board by the 2026 Annual Meeting of Shareholders.
The Board recommends that you vote FOR the proposal to amend the certificate of incorporation to declassify the Board of Directors.
The affirmative vote of the holders of 80% of the outstanding shares of stock entitled to vote is required to approve this proposal. We submitted this proposal in 2015, 2016, 2018 and 2021, and, while it received significant support, it did not receive the 80% vote required for adoption. Because brokers may not cast a vote on this proposal without your instruction, it is very important that you vote your shares.
The proposed amendment to the Certificate of Incorporation would eliminate the classification of the Board over a three-year period and provide for the annual election of all directors beginning at the 2026 Annual Meeting of Shareholders. The proposed amendment to the Certificate of Incorporation would become effective upon the filing of a Certificate of Amendment with the Secretary of State of the State of Delaware, which the Company would file promptly following the Annual Meeting if our shareholders approve the amendment. Board declassification would be phased-in over a three-year period, beginning at the 2024 Annual Meeting of Shareholders, as follows:
Nominees at this Annual Meeting will be elected to serve a three-year term ending at the 2026 Annual Meeting.
Directors whose terms end at the 2024 Annual Meeting will continue to serve until that meeting. At the 2024 Annual Meeting, they will be elected for one-year terms ending at the 2025 Annual Meeting.
Directors whose terms end at the 2025 Annual Meeting will be elected for one-year terms ending at the 2026 Annual Meeting.
At the 2026 Annual Meeting, all nominees presented for election to the Board at the 2026 Annual Meeting will be elected to one-year terms.
Beginning with the 2026 annual meeting of shareholders, all directors will stand for election at each annual meeting of shareholders for a one-year term expiring at the subsequent annual meeting of shareholders. The proposed amendment does not change the present number of directors or the Board's authority to change that number and to fill any vacancies or newly created directorships. While the declassification of our Board is being phased in, any director selected to fill a vacancy on the Board will serve for the same term as the remainder of the class to which the director is elected
Delaware law provides, unless otherwise addressed in the certificate of incorporation, that members of a board that is classified may be removed only for cause. The proposed amendment provides that, once the Board is fully declassified as of the 2026 Annual Meeting of Shareholders, directors may be removed with or without cause. Before that time, directors serving in a class elected at any annual meeting held from 2021 through 2023 may be removed only for cause. Directors elected for a one-year term at each annual meeting between 2024 through 2025 may be removed with or without cause.
The proposed Certificate of Amendment to the Certificate of Incorporation is included in this Proxy Statement as Appendix A. If our shareholders approve the proposed amendment to the Certificate of Incorporation, the Board will make certain conforming changes to the Company’s By-Laws.

37


PROPOSAL 3
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Advisory Approval of Executive Compensation
The Board recommends that you vote “FOR” the advisory approval of the compensation of the Company’s named executive officers.
In accordance with Section 14A of the Securities Exchange Act of 1934, as amended, shareholders are being asked to vote on the following advisory (non-binding) resolution:
RESOLVED, that the shareholders approve the compensation of Phillips 66’s Named Executive Officers (NEOs) as described in this Proxy Statement in the Compensation Discussion and Analysis section and in the Executive Compensation Tables (together with the accompanying narrative disclosures).
Approval of this proposal requires the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal.
As required by SEC rules, Phillips 66 is providing shareholders with the opportunity to vote on an advisory, non-binding resolution, commonly known as “Say-on-Pay,” considering approval of the compensation of its NEOs. We currently provide our shareholders the opportunity to vote on this proposal annually. Our next vote to determine the frequency with which we will provide Say-on-Pay votes is expected to take place in 2025.
The Compensation Committee, which is responsible for the compensation of our Chairman, CEO and executive officers, oversees the development of compensation programs designed to attract, retain and motivate executives who enable us to achieve our strategic and financial goals. The Compensation Discussion and Analysis and the Executive Compensation Tables, together with the accompanying narrative disclosures, allow you to view the trends in compensation and application of our compensation philosophies and practices for the years presented.
The Board believes that the Phillips 66 executive compensation programs align the interests of our executives with those of our shareholders. Our compensation programs are guided by the philosophy that the Company’s ability to provide value is driven by superior individual performance. The Board believes that a company must offer competitive compensation to attract and retain experienced, talented and motivated employees. In addition, the Board believes employees in leadership roles within the organization are motivated to perform at their highest levels when performance-based pay represents a significant portion of their compensation. The Board believes that our philosophy and practices have resulted in executive compensation decisions that are aligned with Company and individual performance, are appropriate in value, and have benefited the Company and its shareholders.
Because your vote is advisory, it will not be binding upon the Board. Nevertheless, the Compensation Committee and the Board will consider the outcome of the vote when evaluating future executive compensation arrangements. However, votes for or against our compensation programs will not necessarily inform the Compensation Committee and the Board about which elements of those programs shareholders approve or disapprove. For this reason, the Board encourages shareholders to engage with us to allow the Compensation Committee to understand shareholders’ views and consider that feedback when making decisions.
38
Phillips 66 2023 Proxy Statement


CompensationDiscussionandAnalysis
Our Named Executive Officers (“NEOs”) for 2022 were:
Table of Contents
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Mark Lashier
President and
Chief Executive Officer
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Greg Garland
Executive Chairman and
former Chief Executive Officer
39
43
47
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Kevin Mitchell
Executive Vice President and Chief Financial Officer
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Vanessa Allen Sutherland
Executive Vice President, Government Affairs, General Counsel & Corporate Secretary
Participants in
Compensation Setting
58
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Brian Mandell
Executive Vice President, Marketing & Commercial
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Tim Roberts
Executive Vice President, Midstream & Chemicals
Additional
Compensation Practices
61
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EXECUTIVE SUMMARY
Our Approach to Executive Compensation
Since our inception in 2012, we have maintained the same clear objectives which are reflected throughout our approach to compensation. Our people are committed to achieving the highest standards of performance and safety while executing a corporate strategy focused on generating returns and growing distributions in a competitive and sustainable way. As a result of our foundational operating excellence, we have built a company that demonstrates resilience during turbulent times and maximizes value capture in favorable market conditions.
Consistent with our philosophy that executive compensation should be linked to Company performance and directly aligned with shareholder value creation, a significant portion of NEO compensation is at risk and based on performance metrics aligned with the execution of our corporate strategy.

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“Our executive compensation programs, which are linked to our strategy, align pay and performance, and help us attract and retain executives. The thoughtful approach we bring to our compensation program was crucial as we implemented our succession planning and leadership transition efforts, in an effort to ensure we have the right leaders in place and that they are properly incentivized to pursue our strategic goals.”
– Marna Whittington, Chair, Human Resources and Compensation Committee
39


Recent Leadership Transitions
The Company's executive leadership team evolved in 2022, with seven members of the 12-member leadership team taking on new or restructured roles and the hiring of two new members from outside of the organization. These changes included the planned succession of Greg Garland, who stepped down as Chief Executive Officer on July 1, 2022 after 10 years of leading the Company. At that time, Mr. Garland was appointed to serve as the Executive Chairman of the Board until his planned retirement in 2024. Mark Lashier, who previously served as our President and Chief Operating Officer since April 2021, assumed the President and Chief Executive Officer role on July 1, 2022. Mr. Lashier has a long history with the Company, having started his career at Phillips Petroleum Company more than 30 years ago and having previously served as President and Chief Executive Officer of CPChem from 2017 to 2021. The Board believes that Mr. Lashier is the right leader at a critical time in the Company’s history. The Board selected him for this role based on his exceptional leadership experience, his significant expertise in the industry, and his ability to motivate others to achieve the Company’s goals. The roles of Chief Executive Officer, Executive Chairman, and Lead Independent Director are discussed in greater detail under Board Leadership Structure on page 25.
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Greg Garland
Chairman & CEO,
March 2012 – June 2022
Executive Chairman, July 2022
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Mark Lashier
President & COO,
April 2021 – June 2022
President & CEO, July 2022
Qualifications include: industry leadership in safety, reliability and environmental stewardship and pioneering disciplined capital allocation in the energy businessQualifications include: more than 30 years of experience in the energy and petrochemicals industry, track record of managerial success and demonstrated ability to lead
COMPENSATION COMMITTEE'S COMPENSATION DECISIONS FOR MR. LASHIER AS CEO
Increase in base salary to $1,500,000
Target opportunity under the Variable Cash Incentive Program ("VCIP") increased from 110% to 150% of base salary (prorated for the time he spent in each position in 2022), with actual payouts, if any, to be based on performance relative to the performance goals established under the VCIP
2022 long-term incentive ("LTI") award target of $8,970,417 in the form of restricted stock units (“RSUs”), stock options, and performance share plan ("PSP")
Supplemental LTI grants of $2,466,667 comprised of $462,500 in the form of RSUs, $462,500 in the form of stock options, and $1,541,667 in performance shares for the 2022-2024 PSP, which grant was intended to adjust Mr. Lashier's 2022 LTI award commensurate with his promotion, as his initial LTI grant was awarded based on his prior position of President and COO
COMPENSATION COMMITTEE'S COMPENSATION DECISIONS FOR MR. GARLAND AS EXECUTIVE CHAIRMAN
Base salary of $1,000,000, reduced from $1,675,008
Target opportunity under the VCIP remained at 160% of base salary, with actual payouts, if any, to be based on performance relative to the performance goals established under the VCIP
Reduction in LTI target from $12,562,500 to $7,500,000 in the form of 25% RSUs, 25% stock options, and 50% PSP
Total target direct compensation reduced from $16.9 million to $10.1 million
Mr. Garland's overall level of compensation for 2022 reflected his service as CEO until July and his continued leadership throughout the remainder of the year pursuant to the CEO transition plan, including his responsibilities as Executive Chairman.
40
Phillips 66 2023 Proxy Statement


MAKE-WHOLE EQUITY GRANT FOR VANESSA ALLEN SUTHERLAND
Vanessa Allen Sutherland joined the Company in January 2022 as our Executive Vice President, Government Affairs, General Counsel and Corporate Secretary. Ms. Sutherland received a sign-on RSU award valued at approximately $3.0 million in order to replace equity forfeited by Ms. Sutherland when she left her former employer. These RSUs are supplemental to her normal annual compensation package. The RSUs vest on the third anniversary of the grant date and are reflected in the "Stock Awards" column of the Summary Compensation Table.
Shareholder Engagement on 2022 Say-on-Pay Vote Outcome
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“2022 was an important year for the Compensation Committee in terms of demonstrating our responsiveness to shareholder feedback regarding our recent executive compensation program changes. I greatly valued opportunities I had to hear directly from our shareholders, and shareholder insights from our engagement program are brought back to the full Board. We are proud to share that the feedback we received in recent months has been overwhelmingly positive.”
– Glenn Tilton, Lead Independent Director & Member, Human Resources and Compensation Committee
2022 Say-on-Pay Outcome and Engagement Efforts
The Compensation Committee implemented a set of compensation program changes for 2022, following extensive discussions with shareholders in 2021. We were pleased to see the solid shareholder support of our 2022 say-on-pay vote, which received support from 88% of votes cast.
We continued our robust shareholder engagement program following the 2022 Annual Meeting to solicit further feedback from our shareholders on executive compensation and a variety of ESG-related topics, and are pleased to share that the feedback related to executive compensation was overwhelmingly positive in light of our recent compensation program improvements and disclosure enhancements. Shareholders were particularly supportive of our recent changes to our performance-based programs (PSP and VCIP) and disclosure enhancements, which were directly informed by prior shareholder feedback.
2022 Shareholder Engagement by the Numbers
57%
of shares outstanding
contacted
47%
of shares outstanding
engaged
26%
of shares outstanding engaged with
Lead Independent Director
Compensation Discussion and Analysis41


Taking Action in Response to Investor Feedback
In last year’s proxy statement, we disclosed a series of changes to our executive compensation program to directly address feedback we heard from shareholders. The table below details the responsive actions we have taken over the last two years.
What We HeardActions Taken in ResponseYear of Implementation
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Individual VCIP
Modifier
Individual VCIP modifier allows for too much discretion
Removed positive individual performance modifier from VCIP for all executive officers
2021
Disclosure
of Rigorous
Performance Goals &
Metric Selection
Explain how performance goals are set each year to ensure goals remain rigorous even if targets decrease on absolute terms
Provide more explanation around the weighting and selection of VCIP metrics and rationale for payouts
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
2021
2021
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Consider
Absolute TSR
Relative TSR drives 50% of the PSP, but there is no cap on payouts in the event of negative absolute TSR performance
Capped payout at 100% on the TSR portion of PSP if absolute TSR is negative
2021
Rigor of Relative TSR Goal
Relative TSR pays at target for median performance
Required performance above the 50th percentile relative to peer group to achieve target payout
PSP
2022 - 2024
Adjustments
to Metrics
Limited disclosure of rationale for significant ROCE adjustment in FY 2020
Enhanced disclosures of rationale for any adjustments to results
2021
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Selection &
Rationale
Provide more explanation for the use of two peer groups and how the peers are determined
Enhanced disclosure about the peer group utilization and peer selection
2021
42
Phillips 66 2023 Proxy Statement


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EXECUTIVE COMPENSATION PROGRAM SUMMARY
Due to our use of performance- and equity-based awards, the compensation realized by our executives is directly linked to our performance. In order for NEOs to earn and sustain competitive compensation, the Company must meet its strategic objectives, perform well relative to peers, and deliver market-competitive returns to shareholders.
Compensation Program Mix
The CEO’s target compensation mix is 89% at risk and 71% performance based. Based on its evaluation of performance, the Compensation Committee has authority to reduce, and even award nothing for, the performance-based payouts. Stock options can expire with zero value if the Company stock price does not appreciate above the grant date price over the 10-year term of the options. RSUs may lose value depending on stock price performance. The average target mix for the other NEOs is 82% at risk and 66% performance based. Further, LTI awards make up 72% of the CEO and 66% of other NEOs target compensation mix. The target mix of the compensation program for the CEO and other NEOs is shown below. The charts outline the relative size, in percentage terms, of each element of the 2022 annualized target compensation.
Key Elements of Pay
CEO
Other NEOs(1)
Delivered viaPerformance Drivers and Weightings
Base SalaryCash
Annual fixed cash compensation to attract and retain NEOs
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Annual IncentiveVariable Cash Incentive Program (VCIP)50% Operational Sustainability
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Safety & Operating Excellence (25%)
Environment (15%)
High-Performing Organization (10%)
50% Financial Sustainability
Adjusted VCIP EBITDA (40%)
Adjusted Controllable Costs (10%)
Long-Term Incentives 
Performance Share Program (PSP)
50% of LTI Target
3-year performance period
Adjusted PSP ROCE (50%)
Relative TSR (50%)
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Stock Option Program(2)
25% of LTI Target
3-year ratable vesting period
Long-term stock price appreciation
Restricted Stock Unit (RSU) Program
25% of LTI Target
3-year cliff vesting
Long-term stock price appreciation
(1)Adjusted VCIP EBITDA, Adjusted Controllable Costs and Adjusted PSP ROCE are non-GAAP financial measures. See Appendix B for reconciliations to the nearest GAAP financial measures.
(2)Excludes Mr. Garland as his compensation as Executive Chairman materially differs from the other NEOs. Mr. Garland's 2022 target compensation mix as Executive Chairman was 10% base salary, 15% annual incentive, and 75% long-term incentives.
(3)The Compensation Committee believes that stock options are inherently performance based, as options have no initial value and grantees only realize benefits if the value of our stock increases after the date of grant.
Compensation Discussion and Analysis43


2022 Operating, Financial and Company Highlights that Impacted Pay Outcomes
We improved our performance in 2022 across a range of operating and financial performance measures. These results reflect our management team’s ongoing efforts and strategic decisions to navigate the wide range of macroeconomic and geopolitical challenges of the past few years. We are proud to have maintained our industry-leading personal safety performance in 2022, with injury rates among the best in Company history as we tied our best-ever Tier 1 and Tier 2 combined process safety event rate of 0.13. Additionally, improved market conditions and our maintained focus on operating excellence led to significant improvements in financial performance in 2022.
Our 2022 results are built upon our sustained operating and financial performance over prior years. Our total shareholder return since inception reflects the cyclical nature of our industry and the resilience of our business over the long term. Our diversified, integrated portfolio provides us with the ability to maximize value throughout the commodity cycles.
Operating Performance
COMBINED TOTAL RECORDABLE RATE (TRR)TIER 1 AND 2 PROCESS SAFETY EVENT RATE
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Financial Performance
NET INCOME (LOSS)
ADJUSTED VCIP EBITDA(1)
ADJUSTED PSP ROCE(1)
($MM)($MM)(%)
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TOTAL SHAREHOLDER RETURN(2)
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(1)Adjusted VCIP EBITDA and Adjusted PSP ROCE are non-GAAP financial measures. See Appendix B for reconciliations to GAAP.
(2)Presented on a simple average basis using the 2022 Performance Peer Group. Dividends assumed to be reinvested in stock. Phillips 66 common stock initiated trading on the NYSE in May 2012. Source: Bloomberg.
44
Phillips 66 2023 Proxy Statement


Company Highlights
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Achieve Operating Excellence
Prioritizing safety, environmental stewardship, sustainability, reliability and cost efficiency while protecting shareholder value
Tied best-ever Tier 1 and 2 process safety event rate
Expanded Greenhouse Gas emissions reduction targets to include a 2050 emissions intensity reduction target for Scope 1 and Scope 2 emissions
Recognized by American Fuel and Petrochemical Manufacturers for exemplary safety performance
Awarded American Petroleum Institute’s large operator Distinguished Pipeline Safety Award for the second consecutive year
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Drive Disciplined Growth
Enhancing our portfolio by growing our integrated Midstream and Chemicals businesses, as well as executing our returns-focused lower-carbon strategy
Completed the acquisition of Phillips 66 Partners, LP
Increased ownership and integration of DCP Midstream to enhance our wellhead-to-market strategy
Reached a final investment decision to convert our San Francisco Refinery into one of the world’s largest renewable fuels facilities
Reached a final investment decision at CPChem, our 50-50 joint venture, in early 2023 for the construction of two world-scale petrochemical facilities that are expected to be self-funded
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Deliver Shareholder Returns
Rewarding shareholders through continued dividend growth and share repurchases
Increased the dividend by 5% in May 2022 and returned $1.8 billion in dividends to shareholders in 2022
Resumed share repurchases in the second quarter and repurchased $1.5 billion of shares in 2022
Authorized a $5 billion increase to the share repurchase authorization in November 2022
Announced a target to return $10 billion to $12 billion to shareholders through dividends and share repurchases between July 2022 and year-end 2024
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Maintain Financial Strength & Flexibility
Maintaining financial strength and disciplined capital allocation strategy to enhance resiliency
Generated $10.8 billion of operating cash flow
Ended the year with a cash balance of $6.1 billion
Paid down $2.4 billion of debt and ended the year with a net-debt-to-capital ratio of 24%
Implemented Business Transformation initiative to sustainably lower our cost structure, and captured a run-rate savings in excess of $500 million by year-end
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Cultivate a High-Performing Organization
Building capability, pursuing excellence, and doing the right thing
Responded to employee feedback by enhancing workplace benefits
Contributed $27 million to support the communities where we operate and donated over $7 million through matching gifts and volunteer grant programs
Logged 88,000 employee volunteer hours
Received six external top employer recognition awards as a great place to work
Compensation Discussion and Analysis45


2022 Performance-Based Compensation Outcomes
2020-2022 PSP Payout
Our PSP awards directly link our performance on an absolute and relative basis to the experience of our shareholders. The 2020-2022 PSP results reflected the dynamic nature of our business over the performance period, with a challenging economic environment early in the period offset by favorable market conditions and strong results in 2022. Ultimately, performance over the 2020-2022 PSP performance period resulted in a payout of 100% of target, as absolute non-GAAP Adjusted PSP ROCE performance was above maximum, and our relative TSR performance was below threshold.
2020 - 2022 PSP Metrics and WeightingsPerformance ResultWeightPayout
Adjusted Return on Capital Employed (50% Weighting)(1)
Adjusted PSP ROCE performance above maximum
Above Maximum50%200%
Total Shareholder Return (50% Weighting)
Relative TSR performance below threshold
Below Threshold50%0%
Total 2020 - 2022 PSP Payout100%
(1)Adjusted PSP ROCE is a non-GAAP financial measure. See Appendix B for a reconciliation to the nearest GAAP financial measure.
2022 VCIP Payout
In 2022, we remained focused on our financial and operational performance while pursuing a variety of lower-carbon priorities aligned with our long-term strategy. Overall payout of the 2022 VCIP reflected our strong operational and financial performance across our established metrics. The individual performance modifier for all executive officers was removed beginning in 2021 based on shareholder feedback. No additional compensation above the formulaic payout was delivered.
Our financial and operational performance in 2022 resulted in a payout of 166% of target for our 2022 VCIP due to strong results across most metrics, particularly Safety & Operating Excellence and non-GAAP Adjusted VCIP EBITDA. Non-GAAP Adjusted Controllable Costs was the only metric to pay out below target.
Payout
2022 VCIP Metrics and WeightingsThresholdTarget
100% Payout
Maximum
200% Payout
Operational Sustainability Metrics (50% Weighting)
Safety & Operating Excellence (25%)
Environment (15%)
High-Performing Organization (10%)
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Financial Sustainability Metrics (50% Weighting)
Adjusted Controllable Costs (10%)(1)
Adjusted VCIP EBITDA (40%)(1)
(1)Adjusted Controllable Costs and Adjusted VCIP EBITDA are non-GAAP financial measures. See Appendix B for a reconciliation to the nearest GAAP financial measures.
For more details regarding the Company's performance relative to the 2022 VCIP performance metrics, see Variable Cash Incentive Program (VCIP) - 2022 Payout beginning on page 57, and for more details regarding the 2020-2022 PSP payout, see Performance Share Program 2020 - 2022 Payout on page 51.
46
Phillips 66 2023 Proxy Statement


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EXECUTIVE COMPENSATION PROGRAM DETAILS
Total Rewards Philosophy and Guiding Principles
Our executive compensation program is built upon the company-wide Total Rewards Philosophy and Guiding Principles, which are aligned with our corporate vision, strategy and values. The Compensation Committee regularly reviews our Philosophy and Guiding Principles. Our programs are designed to attract, retain, develop and reward a high-performing workforce to successfully execute our corporate strategy by:
Compensating all employees equitably regardless of race, gender, or other personal characteristics
Paying for performance and driving the actions and behaviors of our employees, consistent with shareholder value creation, prudent risk-taking and a long-term perspective
Providing competitive total compensation aligned with market practice
Responding to the priorities of our evolving workforce
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“Our compensation program is an outgrowth of our Company’s business strategy, values and culture. As we cultivate a high-performing organization, we are working to meet the world’s growing energy needs and ensure that all of our team members can reach their full potential. These are the building blocks for financial results that translate into shareholder returns.”
– Sonya Reed, SVP, Chief Human Resources Officer
2022 Target-Setting Methodology
The Compensation Committee establishes targets and goals that demand strong performance relative to peers, are aligned with corporate strategy, and protect and create shareholder value. In addition, our compensation program is used to educate, reinforce and focus our employees on areas important to key stakeholders — shareholders, customers, directors, management and our local communities.
Our target-setting process reflects changes in our operational and financial environment, so targets may vary year-over-year and relative to prior year performance while still representing a comparable level of challenge for our executive team.
EMPHASIZING THE IMPORTANCE OF RETURNS – EMBEDDING WACC IN OUR TARGET SETTING PROCESS
We use Weighted Average Cost of Capital (WACC) as part of our target-setting for the VCIP to set the non-GAAP Adjusted VCIP EBITDA targets and in our PSP to set the non-GAAP Adjusted PSP ROCE targets. WACC represents our blended cost of capital across our businesses. Results above our WACC reflect the ability of our executives to effectively manage capital and capture market opportunities, which results in value creation for our shareholders. Our executives must deliver results that are at least 1.5 percentage points above our WACC to receive a target payout for either the non-GAAP Adjusted VCIP EBITDA metric or the non-GAAP Adjusted PSP ROCE metric.
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“Our anchoring of metrics used in our compensation program around the company’s WACC reflects the Compensation Committee’s commitment to upholding shareholder value creation principles. This metric provides a point of reference to incentivize our executives throughout changing macroeconomic environments and strategic business needs.”
– Lisa Davis, Member, Human Resources and Compensation Committee
Compensation Discussion and Analysis47


Elements of Executive Compensation
Base Salary
% OF TARGET COMPENSATION
CEO
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Other NEOs
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Base salary is designed to provide a competitive and fixed rate of pay recognizing employees’ different levels of responsibility and performance. As the majority of our NEO compensation is performance based and tied to long-term programs, base salary represents a less significant component of total compensation.
Below is a summary of the annualized base salary for each NEO for 2022. In making salary decisions in 2022, the Compensation Committee considered factors including, but not limited to, the responsibility level for the position held by each NEO, market data from the compensation peer group for comparable roles, the individual's experience, expertise, and performance review, internal pay equity, and recent business results.
Because these amounts reflect each NEO’s base salary as of the dates indicated, this information may vary from the information provided in the Summary Compensation Table, which reflects actual base salary earnings in 2022, including the effect of salary changes during the year.
NameSalary as of
1/1/2022
($)
Salary as of
12/31/2022
($)
Mark Lashier1,100,000 1,500,000
Greg Garland1,675,008 1,000,000
Kevin Mitchell903,432 961,704
Vanessa Allen Sutherland— 750,000
Brian Mandell750,000 820,050
Tim Roberts887,424 940,226
48
Phillips 66 2023 Proxy Statement


Long-Term Incentives - 2022 Program Design
% OF TARGET COMPENSATION
CEO
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Other NEOs
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Restricted Stock Units (RSUs)
The number of RSUs granted is determined based on the fair market value of Company stock on the date of grant. RSUs awarded to our NEOs in February 2022 cliff vest after three years. RSUs do not carry voting rights but do earn dividend equivalents during the vesting period.
RSUs are typically granted in February each year. The Compensation Committee assesses the individual performance of each NEO and based on that assessment, may adjust an award by up to +/–30% of the target amount at grant.
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Stock Options
These awards are inherently performance based, as the stock price must increase before the executive can realize any value. We believe stock options drive behaviors and actions that enhance long-term shareholder value.
Stock options are typically granted in February each year. The number of stock options awarded is calculated based on the Black-Scholes-Merton model. The exercise price of stock options is set at 100% of the fair market value of our common stock on the date of grant. Stock options granted to our NEOs in February 2022 vest ratably over a three-year period and have a ten-year term. Stock options do not have voting rights and are not entitled to receive dividends.
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Performance Share Program (PSP)
Each PSP has a three-year performance period, and therefore three overlapping PSPs are in progress at any given time. Programs in effect during 2022 were PSP 2020-2022, PSP 2021-2023, and PSP 2022-2024.
The target number of shares is determined by dividing the target value by the average of the stock’s fair market value for the 20 trading days prior to the start of the performance period, less anticipated dividends during the performance period.
The Compensation Committee assesses the individual performance of each NEO and based on that assessment, may adjust an award by up to +/–30% of the target amount at grant. Performance adjustments to the number of target shares are applied at the beginning of the performance period, rather than the end, so that performance-adjusted compensation is subject to Company performance and market volatility throughout the performance period, aligning executive compensation with shareholder interests.
Target shares may be adjusted during the performance period for promotions that occur during the performance period.
Executives hired after the start of the performance period may receive prorated target shares in ongoing PSP cycles, at the discretion of the Compensation Committee, so that their interests are immediately aligned with the Company’s long-term goals and shareholder interests.
Awards under the PSP programs are denominated in shares but are paid in cash using the average stock fair market value for the last 20 trading days of the performance period.
Compensation Discussion and Analysis49


Performance Share Program - Metrics and Targets
% OF TARGET COMPENSATION
CEO
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Other NEOs
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The performance metrics used for the 2020-2022 PSP are non-GAAP absolute adjusted return on capital employed (Adjusted PSP ROCE) and relative total shareholder return (TSR) based on a 20-trading day average closing price.
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Relative TSR
The Compensation Committee recognizes that relative TSR is the most common performance metric for comparisons to peers. Our performance is assessed as compared to our Performance Peer Group and the S&P 100 Index. Starting with the 2019-2021 PSP program, we added a cap on the portion of the PSP earned based on relative TSR if absolute TSR is negative. Additionally, starting with the 2022-2024 PSP program, the portion of the PSP earned based on relative TSR requires performance above the 50th percentile relative to the peer group to achieve a target payout (this is not reflected in the target listed below, which reflects the 2020-2022 PSP). We made these changes in response to shareholder input and in order to better align pay with corporate performance and shareholder experience.
ThresholdAbove 10th percentile of Performance Peers
Target50th percentile of Performance Peers
MaximumAbove 90th percentile of Performance Peers
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Adjusted PSP ROCE (non-GAAP)
The Compensation Committee considers Adjusted PSP ROCE an important measure of Company growth, shareholder value creation and overall performance.
Threshold3.4% Delivers sustaining capital and dividend payments over 3-year performance period
Target8.3% Delivers WACC +1.5% over 3-year performance period
Maximum9.8% Delivers WACC +3.0% over 3-year performance period
Aligned with other peers’ practices, we have historically adjusted ROCE for “special items” that are not representative of our underlying operating performance. The Compensation Committee carefully evaluates all such adjustments to understand the impacts the adjustment would have on compensation outcomes and how the item factored into the Company’s operating and financial outcomes.
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Phillips 66 2023 Proxy Statement


Performance Share Program – 2020 - 2022 Payout
The Compensation Committee considered the following results when approving the payout of the 2020-2022 PSP at 100% of target. The Compensation Committee certified the results of the 2020-2022 PSP in February 2023, and payout of the award is described further below and in the footnotes to the Summary Compensation Table.
2020 - 2022 PSP Metrics and WeightingsPerformance ResultWeightPayout
Adjusted Return on Capital Employed (50% Weighting)(1)
Adjusted PSP ROCE performance above maximum
Above Maximum50%200%
Total Shareholder Return (50% Weighting)
Relative TSR performance below threshold
Below Threshold50%0%
Total 2020 - 2022 PSP Payout100%
(1)Adjusted PSP ROCE is a non-GAAP financial measure. See Appendix B for a reconciliation to the nearest GAAP financial measure.

Adjusted PSP ROCE Performance
MetricThreshold (3.4%)Target (8.3%)Maximum (9.8%)
Adjusted PSP ROCE
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Relative TSR Performance
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Performance Results
ADJUSTED RETURN ON CAPITAL EMPLOYED
Non-GAAP Adjusted PSP ROCE paid out at a maximum of 200% of target as the average Adjusted PSP ROCE for the performance period of 11.2% exceeded the maximum performance level of 9.8%.
RELATIVE TOTAL SHAREHOLDER RETURN
Our TSR performance of 4.5% was below the threshold level relative to our 15 peers, including 13 peer companies, the S&P 100 Index and Phillips 66. This resulted in a payout of 0% of target for relative TSR performance, weighted at 50% of the target 2020-2022 PSP award.
Compensation Discussion and Analysis51


PSP Developments in 2022:
psx-20230315_g128.jpg  Based on shareholder input and in order to create more challenging goals, starting with 2022-2024 PSP, we require relative TSR performance above the 50th percentile relative to the peer group to achieve a target payout
psx-20230315_g128.jpg  For non-GAAP Adjusted PSP ROCE, the threshold achievement level is set at the historical average Adjusted PSP ROCE of 3.5% to cover sustaining capital and dividends
psx-20230315_g128.jpg  Target and maximum achievement levels for non-GAAP Adjusted PSP ROCE is set at 1.5 and 3.0 percentage points above historical average WACC of 7%
psx-20230315_g128.jpg  The historical average WACC is reviewed on an annual basis by senior management to determine if it needs to be adjusted for current market conditions
New PSP Developments in 2023:
psx-20230315_g128.jpg  We narrowed the potential adjustment for target PSP award grants based on individual performance from +/-50% to +/-30%, which aligns with our RSU and Stock Option awards
Long-Term Incentives
The Compensation Committee considers individual performance when determining the target LTI to be granted to each of the NEOs. After considering individual achievements, the Compensation Committee approved the following LTI target award values for the NEOs for 2022. These values may not match the accounting values presented in the Grants of Plan-Based Awards table.
Name
2022-2024
PSP
($)
Stock
Options
($)
RSUs
($)
Total
Target(1)
($)
Mark Lashier4,869,167 1,975,000 2,126,250 8,970,417 
Greg Garland5,000,000 2,500,000 2,500,000 10,000,000 
Kevin Mitchell2,493,472 1,038,947 1,246,736 4,779,155 
Vanessa Allen Sutherland(2)
1,200,000 600,000 600,000 2,400,000 
Brian Mandell1,620,000 675,000 810,000 3,105,000 
Tim Roberts1,916,836 798,682 958,418 3,673,936 
(1)2022 – 2024 PSP and improveRSU targets include individual performance adjustments for Mr. Lashier (+10%), Mr. Mitchell (+20%), Mr. Mandell (+20%), and Mr. Roberts (+20%). No adjustments were made to stock option targets.
(2)Amounts shown do not include Ms. Sutherland's sign-on equity grant described under Make-Whole Equity Grant for Vanessa Allen Sutherland on page 41.
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Phillips 66 2023 Proxy Statement


Variable Cash Incentive Program (VCIP) – Program Design
% OF TARGET COMPENSATION
CEO
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Other NEOs
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The VCIP, which is our annual incentive program, is designed to provide payout variability and differentiation based on corporate performance. Through our operational and financial metrics, we designed our VCIP program to align annual awards with shareholder interests and execution of our corporate strategy. The metrics are weighted to balance operational sustainability considerations and financial sustainability considerations, which we believe is appropriate in light of the annual nature of the VCIP and relatively smaller value of the VCIP versus the LTI program. We do not link executive officer VCIP awards to the performance of any individual business unit. We believe this structure serves the best interests of shareholders as it promotes collaboration across the organization.
Eligible earnings, defined as base salary earned during the year, are multiplied by a VCIP target percentage that is based on each NEO’s salary grade level to derive the NEO’s target VCIP award. At the end of the performance period, the Compensation Committee reviews the Company’s performance against established metrics to determine the payout percentage, which may range from 0% to 200% of target.
2022 Variable Cash Incentive Program – Payout Formula
$
Eligible
Earnings
×
%
Target
Percentage
×
%
Payout
Percentage
=
$
Total
VCIP Payout
2022 Variable Cash Incentive Program – Metrics and Weightings
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Compensation Discussion and Analysis53


Variable Cash Incentive Program (VCIP) – Metrics and Targets
Operational Sustainability 50%:Half of our VCIP is based on Operational performance because strong safety, reliability and operating excellence are fundamental to our business success. It also enables the Company to maximize market opportunities, generate higher returns and create shareholder value.
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High-Performing Organization
Maintaining and enhancing a high-performing organization is critical to our success and is part of our human capital management strategy. Our employees promote our culture and are integral to achieving our strategic goals and maximizing long-term shareholder value. We measure our High-Performing Organization performance relative to the following:
Culture: foster behaviors that promote our unique culture
Capability: build depth and breadth in our skills
Performance: deliver exceptional, sustainable results
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Environment
For environmental performance, we set targets based on our historical performance for Agency Reportable Environmental Events and Spill Volumes normalized for throughput. Targets are expected to become more challenging each year to drive continuous performance improvement.
Starting in 2021, we enhanced the environmental component to include two new metrics: Lower-Carbon Priorities and Greenhouse Gas Priorities. These priorities reflected efforts to advance lower-carbon investments, optimization, and innovation as well as efforts to reduce manufacturing emissions intensity and setting GHG emissions intensity reduction targets. For 2022, these metrics were combined into one metric – Lower-Carbon / GHG Priorities – weighted at 10% of the target VCIP opportunity.
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Safety & Operating Excellence
For personal and process safety performance, we measure ourselves against the top performing companies in our industry. Generally, these companies fall within the top two quartiles of all companies reported. We then establish our threshold, target, and maximum goals based on the performance (25th, 50th, and 75th percentiles) of this group of companies.
For asset availability, for which comparative data is not available, we establish our threshold, target, and maximum goals based on our operating plan and historical performance with the goal of continuous improvement, incorporating the segments of our business and weighting them by adjusted EBITDA.
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Phillips 66 2023 Proxy Statement


Financial Sustainability 50%: The other half of our VCIP is based on Financial performance to ensure our executives effectively manage costs and deliver financial results above our WACC.
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Adjusted Controllable Costs (non-GAAP)
For Adjusted Controllable Costs, we measure our effectiveness in managing costs and set our threshold, target, and maximum based on our annual budget.
Threshold$5.093 billion
Target$4.851 billion
Maximum$4.608 billion
The 2022 Adjusted Controllable Costs target excludes turnarounds and utilities expenses, and includes $200 million in cost reductions as part of our Business Transformation.
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Adjusted VCIP EBITDA (non-GAAP)
Adjusted VCIP EBITDA measures our ability to create shareholder value. Our threshold is the Adjusted VCIP EBITDA required to cover our budgeted sustaining capital and annualized common stock dividend payment, and target and maximum are set at Adjusted VCIP EBITDA levels that equate to ROCE levels 1.5 and 3.0 percentage points above our WACC.
Threshold$4.094 billion
TargetAdjusted VCIP EBITDA equivalent to ROCE of WACC + 1.5 percentage points ($6.333 billion)
MaximumAdjusted VCIP EBITDA equivalent to ROCE of WACC + 3.0 percentage points ($7.044 billion)
The 2022 Adjusted VCIP EBITDA target increased from $5.4 billion in 2021 to approximately $6.3 billion in 2022 as a result of the Company's WACC increasing to 7.0%.
Variable Cash Incentive Program (VCIP) – 2022 Payout
The Company's 2022 actual performance resulted in a payout of 166% of target.
WeightThresholdTargetMaximum2022 Actual 
Payout
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Safety & Operating Excellence
Total Recordable Rate (TRR)7.5 %0.320.210.160.11190 %
Process Safety Event Rate – Tier 1 & 27.5 %0.240.150.140.13200 %
Asset Availability10 %93.2 %94.7 %96.2 %97.4 %200 %
Environment
Lower-Carbon / GHG Priorities10 %----100 %
Environmental Performance%0.0880.0770.0650.071150 %
High-Performing Organization10 %----120 %
 psx-20230315_g138.jpg

Adjusted Controllable Costs ($MM)(1)
10 %$5,093$4,851$4,608$4,99371 %
Adjusted VCIP EBITDA ($MM)(1)
40 %$4,094$6,333$7,044$15,090200 %
TOTAL166 %
(1)Adjusted Controllable Costs and Adjusted VCIP EBITDA are non-GAAP financial measures. See Appendix B for a reconciliations to the nearest GAAP financial measure.
Compensation Discussion and Analysis55


2022 VCIP Performance Results by Metric
SAFETY & OPERATING EXCELLENCE 
Total Recordable Rate: Performance of 0.11 tied our 2020 performance, which was the best in the Company's history. The Compensation Committee applied negative discretion to reduce the award as a result of contractor incidents in 2022.
Tier 1 and 2 Process Safety Rate: Performance of 0.13 was tied for the best in Company history.
Asset Availability: Average full-year availability of 97.4% was above our maximum performance level. The availability to run metric is weighted at 60% of Refining, 30% Pipelines and Terminals and 10% Fractionation assets.
Payout
Metric and WeightingThresholdTargetMaximum
Safety & Operating Excellence (25%)
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ENVIRONMENT
Lower-Carbon / GHG Priorities: In 2022, we progressed efforts in support of the energy transition and a lower-carbon future by advancing our projects in renewable fuels, including Rodeo Renewed, continuing our partnership with NOVONIX, establishing our market position in carbon capture, progressing our projects in hydrogen, and securing renewable power supply at key sites.
Environmental Performance: Our performance was 8% improved over target.
Payout
Metric and WeightingThresholdTargetMaximum
Environment (15%)
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HIGH-PERFORMING ORGANIZATION 
Provided $27 million to support the communities where we operate.
Recorded 88,000 employee volunteer hours and $7.4 million in matching gifts and volunteer grants.
Maintained an engaged workforce with 93% retention of high performers, saw a significant increase in the hiring of underrepresented minorities and enhanced workplace benefits.
Received six external top employer recognition awards.
Implemented Business Transformation initiatives totaling approximately $0.6 billion of run-rate value at year-end.
Continued to progress Digital Innovation across the enterprise.
Payout
Metric and WeightingThresholdTargetMaximum
High-Performing Organization (10%)
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Phillips 66 2023 Proxy Statement


ADJUSTED CONTROLLABLE COSTS
In 2022, non-GAAP Adjusted Controllable Costs were slightly above 2021 levels and 3% impaired versus target, mainly due to inflationary pressure.
Payout
Metric and WeightingThresholdTarget
100% Payout
Maximum
Adjusted Controllable Costs (10%)
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ADJUSTED VCIP EBITDA
In 2022, non-GAAP Adjusted VCIP EBITDA significantly exceeded our maximum performance level, as well as 2021 Adjusted VCIP EBITDA ($5.921 billion) attributable to favorable market conditions and strong operating performance.
Payout
Metric and WeightingThresholdTarget
100% Payout
Maximum
Adjusted VCIP EBITDA (40%)
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VCIP Developments for 2021:
Removed the individual performance modifier for all NEOs.
New VCIP Developments for 2022:
Continued to weight the target VCIP toward 50% operational and 50% financial sustainability metrics, but changes to the individual metric weightings were made to reinforce our commitment to best-in-class safety performance and progress of lower-carbon initiatives:
Safety & Operating Excellence: Total Recordable Rate and Process Safety Event Rate were weighted equally at 7.5% and Process Safety Event Rate included both Tier 1 and Tier 2 safety events.
Environmental: GHG Priorities and Lower-Carbon Priorities were combined into a single metric weighted at 10%. Environment Performance continues at a 5% weighting. We redesigned this metric in 2022 to include Agency Reportable Events and Spills normalized for throughput.
The total VCIP payout for each of our NEOs is shown in the table below.
Name
2022 Eligible
Earnings
($)
Target VCIP
Percentage
(%)
VCIP
Payout
Percentage
(%)

Total
Payout
($)
Mark Lashier(1)
1,314,667130 %166 %2,837,051
Greg Garland1,337,504160 %166 %3,552,411
Kevin Mitchell951,992100 %166 %1,580,306
Vanessa Allen Sutherland718,75085 %166 %1,014,156
Brian Mandell808,37590 %166 %1,207,712
Tim Roberts931,42690 %166 %1,391,550
(1) Mr. Lashier's target represents a weighted average as a result of his promotion in July 2022.
Compensation Discussion and Analysis57


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PARTICIPANTS IN COMPENSATION-SETTING
Role of the Compensation Committee
The Compensation Committee reviews and determines all elements of compensation for the Company's executive officers with input from its independent compensation consultant, consideration of compensation peer group pay levels and practices, and feedback from our shareholders. In fulfilling its duties, the Compensation Committee is supported by the Company's Chief Human Resources Officer and receives recommendations from the CEO and Executive Chairman regarding the performance and compensation of other executive officers. No member of management has any role in determining his or her own compensation.
Authority and
Responsibility of the Compensation Committee
Provides independent, objective oversight of our executive compensation programs and determines the compensation for our senior officers.
Acts as plan administrator of the compensation programs and benefit plans for our senior officers and as an avenue of appeal for current and former executive officers regarding disputes over compensation and benefits.
Oversees the Company’s executive compensation philosophy, policies, plans and programs for our executive officers.
Assists the Board in its oversight of the integrity of the Company’s Compensation Discussion and Analysis.
Compensation Determination Process
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FEBRUARY
Approve VCIP and PSP payouts at the end of the performance period
Approve VCIP and PSP performance goals for the performance period
Review individual executive officer performance and compensation levels
JULY
Review of compensation peer group proxies (disclosing previous compensation program)
Review compensation and performance peer groups
Receive a VCIP and PSP Performance Update
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Compensation Committee Oversight
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DECEMBER
Approve VCIP and LTI program design, award terms and conditions, and metrics and weightings for the following year
Review of VCIP and PSP performance goals for the following year
Approve executive salary structure (including LTI targets) for following year
Receive a VCIP and PSP Performance Update
OCTOBER
Approve compensation and performance peer groups
Review of VCIP program design/terms & conditions, and metrics and weightings
Review of RSU and Stock Options program design/terms & conditions
Review of PSP program design/terms & conditions, and metrics and weightings
Receive a VCIP and PSP Performance Update
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Phillips 66 2023 Proxy Statement


The Compensation Committee is committed to a process of continuous improvement in exercising its responsibilities. To that end, the Compensation Committee:
Receives updates regarding evolving best practices in executive compensation.
Regularly reviews its responsibilities and compensation governance practices in light of ongoing legal and regulatory changes.
Annually reviews its charter and proposes any desired changes to the Board.
Annually conducts a self-assessment of its performance and effectiveness, and seeks ideas to improve its processes and oversight.
Regularly reviews and assesses whether the Company’s executive compensation program is having the desired effects without encouraging an inappropriate level of risk.
Regularly reviews all of its activities, including its self-assessment and a compensation risk assessment, with the full Board.
Role of the Independent Compensation Consultant
In 2022, the Compensation Committee retained Mercer as its independent executive compensation consultant.
Independent
Compensation
Consultant
Advises the Compensation Committee on:
Compensation program design and processes relative to external corporate governance standards.
Appropriateness of our executive compensation program in comparison to those of our peers.
Effectiveness of the compensation program in accomplishing the objectives set by the Compensation Committee.
The Compensation Committee evaluated whether Mercer’s work raised any conflict of interest and live. A numberdetermined that no such conflict existed. During 2022, fees paid to Mercer in its role as the independent compensation consultant for the Compensation Committee totaled $130,990. In reviewing Mercer's independence, the Compensation Committee considered fees paid by the Company to Mercer totaling $1.5 million during 2022 for services performed for the Company. These services can be broken down as 37% related to administration of federal, statepension liabilities in international locations that have been sold, 27% related to administration of ongoing international benefit plans, 30% related to human resources consulting engagements, and local laws govern corporate involvement6% related to insurance and surety bonds.
Role of our Peer Companies
Peer Group Selection & Rationale
Due to the size and complexity of our Company and diversification of assets, the Compensation Committee utilizes both (1) a compensation peer group and (2) a performance peer group. The Compensation Committee thoughtfully selects the peers in sucheach peer group, evaluates their inclusion on an annual basis, and makes adjustments as necessary. The Compensation Committee uses the compensation peer group to evaluate and determine compensation levels for our NEOs, including base salary levels and targets for our annual bonus and LTI programs. The Compensation Committee uses the performance peer group to evaluate our relative TSR performance under our PSP program.
Compensation Discussion and Analysis59


2022 COMPENSATION PEER GROUP2020 - 2022 PERFORMANCE PEER GROUP
Used to evaluate and determine compensation levels for our NEOs, including base salary levels and targets for our annual bonus and LTI programsUsed to evaluate our relative TSR performance for our 2020 – 2022 Performance Share Program
Companies
Archer-Daniels-Midland Company
Chevron Corporation
ConocoPhillips
Dow Inc.
Ford Motor Company
General Motors Company
Halliburton Company
Honeywell International Inc.
LyondellBasell Industries N.V.
Marathon Petroleum Corporation
Occidental Petroleum Corporation
Schlumberger Limited
The Williams Companies, Inc.
Valero Energy Corporation
Companies
Refining and Marketing
Delek US Holdings, Inc.
HF Sinclair Corporation(1)
Marathon Petroleum Corporation
PBF Energy Inc.
Valero Energy Corporation
Midstream
Magellan Midstream Partners, L.P.
MPLX LP
ONEOK, Inc.
Targa Resources Corp.
The Williams Companies, Inc.
Chemicals
Dow Inc.
LyondellBasell Industries N.V.
Westlake Corporation
Criteria for Selection
Our compensation peer group includes companies that are comparable to Phillips 66 based on three primary criteria — assets, market capitalization, and business operations. Revenue is an additional, secondary criterion. The compensation peer group primarily consists of large companies with which we compete for talent. While some of our compensation peers fall outside our industry, the Compensation Committee believes their size, significant capital investments, and similarly complex international operations make them appropriate peers against which to benchmark our compensation levels and practices. At the time the compensation peer group was determined, Phillips 66 was at the 41st percentile in assets, 43rd percentile in market value, and 66th percentile in revenue.
Criteria for Selection
To reflect our unique portfolio of assets, we include companies operating in each of our three major segments – Refining and Marketing, Midstream and Chemicals. The performance peer group is used in the PSP program to assess relative TSR performance. We believe that our performance peer group is representative of the companies that investors use for relative performance comparisons.
In addition to our performance peer group, we include the S&P 100 Index in the assessment of our relative TSR performance. The Compensation Committee believes the S&P 100 is an appropriate comparison as the index reflects companies with which we compete for capital in the broader market.
Changes from 2021 to 2022 Compensation Peer Group
To better position our peer group to accurately reflect businesses of our size, Exxon Mobil Corporation was removed from the compensation peer group.
Changes from 2019-2021 to 2020-2022 Performance Peer Group
In order to better reflect our operating segments, Magellan Midstream Partners, L.P., MPLX LP, The Williams Companies, Inc., and Dow Inc. were added to the performance peer group and Celanese Corporation, Eastman Chemical Company, Huntsman Corporation, and Enterprise Products Partners L.P. were removed.
(1)In March 2022, HF Sinclair Corporation became the parent company of HollyFrontier Corporation.
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Phillips 66 2023 Proxy Statement


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ADDITIONAL COMPENSATION PRACTICES
Other Benefits and Perquisites
Below is a summary of other compensation elements available to our NEOs:
BROAD-BASED EMPLOYEE BENEFIT PROGRAMS
NEOs participate in the same basic benefits package available to our other U.S. salaried employees. This package includes qualified pension; 401(k) plan; medical, dental, vision, life, and accident insurance plans, as well as flexible spending arrangements for health care and dependent care expenses; and our matching gift program.
ADDITIONAL EXECUTIVE PERQUISITES
Consistent with our compensation philosophy to provide compensation and benefits aligned with market practice, we provide our NEOs financial planning and executive health benefits. These benefits were imputed to the executives and included in All Other Compensation in the Summary Compensation Table. We did not provide a tax gross-up for these benefits.
COMPREHENSIVE SECURITY PROGRAM
The Board has adopted a comprehensive security program to address the increased security risks for certain senior executives. Messrs. Garland and Lashier were the only NEOs in 2022 designated by the Board as requiring increased security under this program. The program allows for certain additional security measures in specific situations when the senior executive is traveling by car or airplane. An additional security review of the NEO’s personal residences is also included. Any additional costs to the Company for these activities are reported as All Other Compensation and included in the Summary Compensation Table.
EXECUTIVE RETIREMENT PLANS
We maintain the following supplemental retirement plans for our NEOs:
Phillips 66 Key Employee Deferred Compensation Plan (KEDCP) — This voluntary deferred compensation plan provides tax-efficient retirement savings by allowing executives to voluntarily defer both the receipt and taxation of a portion of their base salary and annual bonus until a specified date or when they leave the Company. Further information is provided in the Nonqualified Deferred Compensation table and accompanying narrative.
Phillips 66 Defined Contribution Make-Up Plan (DCMP) — This defined contribution restoration plan restores benefits capped under our qualified defined contribution plan due to Internal Revenue Code (IRC) limits. Further information is provided in the Nonqualified Deferred Compensation table and accompanying narrative.
Phillips 66 Key Employee Supplemental Retirement Plan (KESRP) — This defined benefit restoration plan restores Company-sponsored benefits capped under the qualified defined benefit pension plan due to IRC limits. Further information is provided in the Pension Benefits as of December 31, 2022 table and accompanying narrative.
EXECUTIVE LIFE INSURANCE
We provide life insurance policies to all U.S.-based employees with a face value approximately equal to their annual base salary. For our NEOs, the face value of this coverage is approximately two times their annual base salary.
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL PLANS
We do not maintain individual severance or change in control agreements with our executives. However, we maintain policies, proceduresthe Phillips 66 Executive Severance Plan (ESP) and programsthe Phillips 66 Change in Control Severance Plan (CICSP) to accomplish several specific objectives, including:
Ensuring shareholder interests are protected during business transactions by providing benefits that promote senior management stability;
Providing and preserving an economic motivation for participating executives to consider a business combination that might result in an executive’s job loss; and
Compensation Discussion and Analysis61


Competing effectively in attracting and retaining executives in an industry that features frequent acquisitions and divestitures.
Executives may not receive benefits under both plans as a result of the same severance event. Among other benefits, the ESP provides a payment equal to one and one-half or two times the executive’s base salary, depending on the executive's salary grade level, and the executive’s current target annual bonus if he or she is involuntarily terminated without cause. The CICSP provides a payment equal to two or three times the sum of the executive’s base salary and the greater of his or her target bonus or average of the last two bonus payments, depending on salary grade level, and accelerated vesting of equity awards. The executive must be involuntarily terminated without cause in connection with a change in control or terminate employment for good reason within two years after the change in control to be eligible for a CICSP payment. We believe this “double trigger” requirement is in the best interest of shareholders and is considered a best practice.
Details of potential payments under these plans are outlined in the Potential Payments Upon Termination or Change in Control section. These plans do not provide any excise tax gross-up protections.
PERSONAL USE OF COMPANY AIRCRAFT
The primary purpose of our corporate aircraft is to facilitate Company business. In the course of conducting Company business, executives may occasionally invite a family member or other personal guest to travel with them to attend a meeting or function. When such travel is deemed taxable to the executive, we provide further payments to reimburse the costs of the inclusion of this item in his or her taxable income.
Executive Compensation Governance
CLAWBACK PROVISIONS
Short- and long-term compensation, deferred compensation and nonqualified retirement benefits received by any executive are subject to clawback provisions if financial or other data is materially misstated due to negligence or misconduct on the part of the executive, as determined by the Compensation Committee and the Audit and Finance Committee. We intend to adopt a clawback policy consistent with the requirements of Exchange Act Rule 10D-1 prior to the effectiveness of final New York Stock Exchange listing standards implementing the rule.
STOCK OWNERSHIP
The Compensation Committee believes requiring executives to retain shares of Phillips 66 common stock helps align executive performance with shareholder value creation and mitigates compensation risk. Our stock ownership guidelines require executives to own Phillips 66 common stock, valued as a multiple of the executive’s base salary, within five years from the date the executive becomes subject to the guidelines. The multiple applicable to each NEO is shown below:
ExecutiveRequired Salary Multiple
Mark Lashier6x
Greg Garland6x
Kevin Mitchell4x
Vanessa Allen Sutherland3x
Brian Mandell4x
Tim Roberts4x
Shares of Phillips 66 common stock owned outright and RSUs are counted when determining whether an executive has met the required ownership levels. Compliance with the stock ownership guidelines is reviewed annually by the Compensation Committee. All NEOs currently comply with these laws. stock ownership guidelines or are on track to comply within the applicable five-year period.
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Phillips 66 2023 Proxy Statement


TRADING POLICY
Our insider trading policy contributionsprohibits employees and disclosures aboutdirectors from trading in the Company's securities while in possession of material, non-public information. This policy requires executive officers and directors to follow certain pre-clearance procedures before entering into transactions involving our involvementsecurities.
HEDGING OR PLEDGING OF COMPANY STOCK
Our insider trading policy also prohibits hedging transactions and pledging of our common stock. These prohibitions apply to all employees and directors of the Company, and cover any transactions in politicalour common stock, whether acquired pursuant to our compensation plans, owned directly, or public policy activitiesotherwise. The prohibitions on hedging transactions include purchasing any financial instruments, or otherwise engaging in any transactions, that hedge or offset any decrease in the market value of our stock or limit an employee or director’s ability to profit from an increase in the market value of our stock. The prohibition on pledging includes holding Phillips 66 stock in a margin account or pledging our stock as collateral for a loan.
COMPENSATION RISK ASSESSMENT
The Compensation Committee oversees management’s risk assessment of all elements of our compensation programs, policies and practices for all employees. Management has concluded that our compensation programs, policies and practices are availablenot reasonably likely to have a material adverse effect on the Company. Relevant provisions of our website.

SUSTAINABILITY AND TRANSITION TO LOWER-CARBON FUTURE

We recognizeprograms include, but are not limited to:

VCIP and LTI metrics are aligned with our corporate strategy to ensure continued focus on actions that drive shareholder value.
VCIP and LTI compensation targets increase with each pay grade, further emphasizing long-term value creation and alignment with shareholder interests.
Maximum payouts under VCIP and PSP programs are appropriately limited to balance risk-taking with long-term strategic goals.
Maintaining a level of discretion in the climate challenge and are making investmentsperformance-based programs, which enables the Compensation Committee to award zero payouts to executives who perform poorly or when warranted by Company performance.
Clawback provisions that advance a lower carbon future. We are focused on implementing sustainability practices today and are seeking solutionsallow for tomorrow’s energy needs. We formed a new organization, Emerging Energy, withinreduction in awards for executives who expose the Company to focus onundue risk.
LTI design that provides incentives for executive retention and Company and individual performance.
Stock ownership guidelines, anti-pledging policies, and anti-hedging policies that align executive interests with those of shareholders.
The Compensation Committee considers senior management succession planning a lower-carbon business platform. We are conducting research on energiescore part of the future,Company’s risk management program. The Compensation Committee regularly reviews with the CEO succession planning for senior leadership positions (other than the CEO position, for which succession planning is reviewed by the Nominating and Governance Committee), and the timing and development required to ensure continuity of leadership over the short- and long-terms, to manage risk in this area.
Compensation Discussion and Analysis63


Our Compensation Programs are Aligned with Best Practices
psx-20230315_g5.jpg We Do…
psx-20230315_g148.jpg We Do Not…
psx-20230315_g149.jpg Target the majority of NEO compensation to be performance based and at risk
psx-20230315_g149.jpg Apply multiple performance metrics aligned with our corporate strategy
psx-20230315_g149.jpg Cap maximum payouts for VCIP and PSP
psx-20230315_g149.jpg Cap payout at 100% on the TSR portion of the PSP if absolute TSR is negative
psx-20230315_g30.jpg Require TSR performance above the 50th percentile relative to peer group to achieve target payout
psx-20230315_g149.jpg Employ a “double trigger” for change in control severance benefits and equity award acceleration
psx-20230315_g149.jpg Include absolute and relative metrics in our LTI programs
psx-20230315_g149.jpg Maintain robust stock ownership guidelines for executives — CEO and Executive Chairman 6x base salary; other NEOs 3-4x base salary
psx-20230315_g149.jpg Balance, monitor and manage compensation risk through regular assessments and robust clawback provisions
psx-20230315_g149.jpg Have extended vesting periods on stock awards, with a minimum one-year vesting period required for stock and stock option awards
psx-20230315_g149.jpg Maintain a fully independent compensation committee
psx-20230315_g149.jpg Retain an independent compensation consultant
psx-20230315_g149.jpg Hold an annual Say-on-Pay vote and consider shareholder feedback in the design of our compensation program
psx-20230315_g150.jpg Provide excise tax gross-ups to our NEOs under our CICSP
psx-20230315_g150.jpg Reprice stock options without shareholder approval
psx-20230315_g150.jpg Price stock option exercise prices below grant date fair market value
psx-20230315_g150.jpg Allow share recycling for stock options under our equity plan
psx-20230315_g150.jpg Include evergreen provisions in our active equity plans
psx-20230315_g150.jpg Allow hedging or pledging of Company stock
psx-20230315_g150.jpg Pay dividends during the performance period on unearned PSPs
psx-20230315_g150.jpg Allow transfer of equity awards (except in the case of death)
psx-20230315_g150.jpg Provide separate supplemental executive retirement benefits for individual NEOs
psx-20230315_g150.jpg Maintain individual change-in-control agreements
psx-20230315_g150.jpg Have an employment agreement with the CEO
psx-20230315_g150.jpg Provide excessive perquisites
64
Phillips 66 2023 Proxy Statement


Human Resources and Compensation Committee Report
Review with Management. The Human Resources and Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis presented in this Proxy Statement.
Discussions with Independent Executive Compensation Consultant. The Compensation Committee has discussed with Mercer, its independent executive compensation consultant, the executive compensation programs of the Company, as well as specific compensation decisions made by the Compensation Committee for 2022. Mercer was retained directly by the Compensation Committee, independent of the management of the Company.
Recommendation to the Phillips 66 Board of Directors. Based on its review and discussions noted above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Phillips 66 Proxy Statement on Schedule 14A and the Phillips 66 Annual Report on Form 10-K for the year ended December 31, 2022.
HUMAN RESOURCES AND COMPENSATION COMMITTEE
Dr. Marna C. Whittington, Chair
Gary K. Adams
Lisa A. Davis
Gregory J. Hayes
Douglas T. Terreson
Glenn F. Tilton
Compensation Discussion and Analysis65


Executive Compensation Tables
The following tables and accompanying narrative disclosures provide information concerning total compensation earned by our CEO and other NEOs for 2022, for services to Phillips 66 or any of our subsidiaries during 2022, 2021 and 2020.
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation for our NEOs for fiscal years 2022, 2021 and 2020.
Name,
Position,
Year
Salary(1)
($)
Stock
Awards
(2)
($)
Option
Awards
(3)
($)
Non-Equity
Incentive Plan
Compensation
(4)
($)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
(5)
($)
All Other
Compensation
(6)
($)
Total
($)
Total
Without
Change
in Pension
Value
(7)
($)
Mark Lashier(8)
President and Chief Executive Officer
20221,314,667 9,260,117 1,976,406 2,837,051 231,983 668,646 16,288,870 16,056,887 
2021825,000 6,830,884 1,513,217 1,406,625 71,546 230,816 10,878,088 10,806,542 
Greg Garland
Executive Chairman and former Chief Executive Officer
20221,337,504 9,825,510 2,500,700 3,552,411 — 1,013,792 18,229,917 18,229,917 
20211,675,008 11,318,245 3,140,920 4,154,020 — 665,013 20,953,206 20,953,206 
20201,675,008 9,237,623 3,351,180 3,082,015 6,851,884 791,664 24,989,374 18,137,490 
Kevin Mitchell
Executive Vice President and Chief Financial Officer
2022951,992 4,899,887 1,040,400 1,580,306 144,483 328,542 8,945,610 8,801,127 
2021903,432 4,493,056 1,039,424 1,400,320 164,332 216,301 8,216,865 8,052,533 
2020897,360 3,024,331 998,560 1,256,304 258,546 245,367 6,680,468 6,421,922 
Vanessa Allen Sutherland(8)
Executive Vice President, Government Affairs, General Counsel & Corporate Secretary
2022718,750 5,358,106 600,100 1,014,156 — 109,181 7,800,293 7,800,293 
Brian Mandell(8)
Executive Vice President, Marketing & Commercial
2022808,375 3,183,449 676,600 1,207,712 — 266,584 6,142,720 6,142,720 
Tim Roberts
Executive Vice President, Midstream & Chemicals
2022931,426 3,766,815 799,000 1,391,550 191,842 289,679 7,370,312 7,178,470 
2021887,424 3,453,979 799,832 1,237,956 342,146 182,659 6,903,996 6,561,850 
2020881,188 2,531,427 766,300 1,110,297 297,744 204,254 5,791,210 5,493,466 
(1)Includes any amounts that were voluntarily deferred under our KEDCP.
(2)Amounts shown represent the aggregate grant date fair value of RSU and PSP awards determined in accordance with U.S. GAAP. Assumptions used in calculating these amounts are included in Note 22—Share-Based Compensation
66
Phillips 66 2023 Proxy Statement


Plans in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022 (our “2022 Form 10-K”).
The PSP award included in 2020 has a performance period that ended on December 31, 2022. The PSP award included in 2021 has a performance period that ends on December 31, 2023. The PSP award included in 2022 has a performance period that ends on December 31, 2024. The PSP awards are shown target because target was determined to be the probable outcome for the applicable performance period at the time of grant of each award, consistent with the accounting treatment under GAAP. If the maximum payout were used for the PSP awards, the amounts shown relating to PSP would double, although the value of the actual payout would depend on the share price at the time of the payout. If the minimum payout were used, the amounts for PSP awards would be reduced to zero. Actual payouts with regard to the targets set for the performance period that ended in 2022 were approved by the Compensation Committee at its February 2023 meeting. Those payouts were as follows: Mr. Lashier, $2,087,811; Mr. Garland, $6,748,093; Mr. Mitchell, $2,209,258; Mr. Mandell, $1,495,664; and Mr. Roberts, $1,849,227.
Earned payouts under the 2020-2022 PSP have been, and under the 2021-2023 PSP and 2022-2024 PSP are expected to be, made in cash at the end of the applicable performance period and will be forfeited if the NEO is terminated prior to the end of the performance period (other than for death or following disability or after a change in control). If the NEO retires after age 55 and with five years of service, the NEO is entitled to a prorated award for any ongoing program in which he or she participated for at least 12 months.
(3)Amounts shown represent the aggregate grant date fair value of awards determined in accordance with GAAP. Assumptions used in calculating these amounts are included in Note 20—Share-Based Compensation Plans in the Notes to Consolidated Financial Statements in our 2022 Form 10-K.
(4)These are amounts paid under our VCIP, including renewable fuels, organic photovoltaics, currentamounts that were voluntarily deferred under our KEDCP. These amounts were paid in February 2023, following the performance year.
(5)Reflects the actuarial increase in the present value of the benefits under our pension plans determined using interest rate and next generation batteries,mortality rate assumptions consistent with those used in our financial statements. There are no deferred compensation earnings reported in this column, as our nonqualified deferred compensation plans do not provide above-market or preferential earnings.
(6)We offer limited perquisites to our NEOs, which, together with Company contributions to our qualified savings and solid oxide fuel cells.nonqualified defined contribution plans, are reflected in the All Other Compensation column as summarized below:
Name
Company
Contributions
to Nonqualified
Defined
Contribution
Plans
(a)
($)
Executive
Group Life
Insurance
Premiums
(b)
($)

Executive
Health
Physical
(c)
($)
Financial
Counseling
(d)
($)
Matching
Contributions
under the
Tax-Qualified
Savings
Plan
(e)
($)
Matching
Gift
Program
(f)
($)
Miscellaneous
Perquisites
and Tax
Protection
(g)
($)
Personal
Use of
Company
Aircraft
(h)
($)
M. Lashier298,155 10,412 2,183 16,280 24,400 — 50,866 266,350 
G. Garland641,333 20,384 1,860 16,270 24,400 15,000 41,851 252,694 
K. Mitchell257,295 4,912 1,860 16,270 24,400 15,000 8,805 — 
V. A. Sutherland54,350 1,898 — 12,258 24,400 15,000 1,275 — 
B. Mandell197,455 4,171 1,860 16,270 24,400 7,500 14,928 — 
T. Roberts235,398 7,377 1,860 — 24,400 15,000 5,644 — 
(a)Under the terms of our nonqualified defined contribution plans, we make contributions to the accounts of all eligible employees, including the NEOs. See the Nonqualified Deferred Compensation table and accompanying narrative and notes for more information.
(b)We maintain life insurance policies and/or death benefits for all our U.S.-based salaried employees (at no cost to the employee) with a face value approximately equal to the employee’s annual salary. We maintain group life insurance policies on each of our NEOs equal to approximately two times his or her annual salary. The amounts shown are for premiums paid by us to provide the additional group life insurance above what is provided to the broad-based employees.
(c)Costs associated with executive physicals.
(d)Costs associated with financial counseling and estate planning services with approved provider.
(e)Under the terms of our tax-qualified defined contribution plans, we make contributions to the accounts of all eligible employees, including the NEOs.
(f)We maintain a Matching Gift Program under which certain gifts by employees to qualified educational or charitable institutions are matched by the Company. The program matches up to $15,000 annually. The amounts shown reflect the actual payments made by us in 2022, which due to processing delays can include contributions in 2021 that were matched by the Company in 2022 and are therefore reported in this Proxy Statement.
Executive Compensation Tables67


(g)The amounts shown primarily reflect payments by us relating to certain taxes incurred by the NEOs. We provide tax assistance when we request family members or other guests to accompany an NEO to a Company function and, as a result, the NEO is deemed to make personal use of Company assets such as Company aircraft and thereby incurs imputed income. We believe this type of expense is appropriately characterized as a business expense and, if the NEO incurs imputed income in accordance with applicable tax laws, we will generally reimburse the NEO for any increased tax costs (Mr. Lashier $11,483; Mr. Garland $20.834; Mr. Mitchell $8,805; Ms. Allen Sutherland $1,275; Mr. Mandell $14,928; and Mr. Roberts $5,644).
Also included are gifts and their tax reimbursement (Mr. Lashier $317) and benefits required for employees covered under our Comprehensive Security Program, which currently includes Mr. Lashier ($39,066) and Mr. Garland ($21,017). Under the Comprehensive Security Program, Mr. Lashier and Mr. Garland are provided with the use of a car and driver when security deems it required and home security fees that are in excess of the cost of a system typical for homes in their neighborhoods.
(h)The Phillips 66 Comprehensive Security Program requires in certain circumstances that Mr. Lashier and Mr. Garland fly on Company aircraft. The amount presented above represents the approximate incremental cost to Phillips 66 for personal use of the aircraft. Approximate incremental cost has been determined by calculating the variable costs for each aircraft during the year, dividing that amount by the total number of miles flown by that aircraft, and multiplying the result by the miles flown for personal use during the year. Incremental costs for flights to the hangar or other locations without passengers, commonly referred to as “deadhead” flights, are included in the calculation.
(7)To show how year-over-year changes in pension value impact total compensation, as determined under SEC rules, we included this column to show total compensation without pension value changes. The amounts reported in this column are calculated by subtracting the change in pension value, as described in footnote 6 to this table, from the amounts reported in the Total column. The amounts reported in this column are not a substitute for the amounts reported in the Total column.
(8)Mr. Lashier joined the Company in April 2021 and Ms. Sutherland joined the Company in January 2022. Mr. Mandell was not a NEO for 2020 or 2021.
68
Phillips 66 2023 Proxy Statement


GRANTS OF PLAN-BASED AWARDS
The following table provides additional information about plan-based compensation disclosed in the Summary Compensation Table. This table includes both equity and non-equity awards.
Estimated Future Payouts under Non-Equity
Incentive Plan Awards
(2)
Estimated Future Payouts
under Equity Incentive Plan
Awards
(3)
All other
Stock
Awards:
Number
of Shares
of Stock
or Units
(4)
(#)
All other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
Exercise
or Base
Price of
Option
Awards
($/SH)
Grant
Date Fair
Value of
Stock and
Option
Awards
(5)
($)
Name
Grant
Date
(1)
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
($)
Maximum
($)
Mark Lashier— 1,709,067 3,418,134 — — — — — — — 
2/8/2022— — — — — — 18,683 — — 1,663,721 
7/1/2022— — — — — — 5,594 — — 462,512 
2/8/2022— — — — 80,111 160,222 — — — 7,133,884 
2/8/2022— — — — — — — 89,000 89.05 1,513,000 
7/1/2022— — — — — — — 26,300 82.68 463,406 
Greg Garland— 2,140,006 4,280,012 — — — — — — — 
2/8/2022— — — — — — 28,074 — — 2,499,990 
2/8/2022— — — — 82,263 164,526 — — — 7,325,520 
2/8/2022— — — — — — — 147,100 89.05 2,500,700 
Kevin
Mitchell
— 951,992 1,903,984 — — — — — — — 
2/8/2022— — — — — — 14,000 — — 1,246,700 
2/8/2022— — — — 41,024 82,048 — — — 3,653,187 
2/8/2022— — — — — — — 61,200 89.05 1,040,400 
Vanessa Allen Sutherland— 610,938 1,221,876 — — — — — — — 
1/17/2022— — — — — — 34,258 — — 2,999,973 
2/8/2022— — — — — — 6,738 — — 600,019 
2/8/2022— — — — 19,743 39,486 — — — 1,758,114 
2/8/2022— — — — — — — 35,300 89.05 600,100 
Brian Mandell— 727,538 1,455,076 — — — — — — — 
2/8/2022— — — — — — 9,096 — — 809,999 
2/8/2022— — — — 26,653 53,306 — — — 2,373,450 
2/8/2022— — — — — — — 39,800 89.05 676,600 
Tim
Roberts
— 838,283 1,676,566 — — — — — — — 
2/8/2022— — — — — — 10,763 — — 958,445 
2/8/2022— — — — 31,537 63,074 — — — 2,808,370 
2/8/2022— — — — — — — 47,000 89.05 799,000 
(1)The grant date shown is the date on which the Compensation Committee approved the target awards.
(2)Threshold and maximum awards are based on the provisions in the VCIP. Actual awards earned can range from 0% to 200% of the target award. Actual payouts under the annual bonus program for 2022 are calculated using base salary earned in 2022 and reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
(3)Threshold and maximum awards are based on the provisions of the PSP. Actual awards earned range from 0% to 200% of the target. Performance periods under the PSP cover a three-year period, and because a new three-year period commences each year, there could be three overlapping performance periods ongoing. In addition, we2022, targets were set with respect to an award for the performance period beginning in 2022 and ending in 2024. The Compensation Committee retains authority to make awards under the PSP using its judgment, including making awards greater than the maximum payout shown in the table above, provided the award does not exceed amounts permitted under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66.
(4)RSUs were granted in 2022 and will vest in 2025. For Mr. Lashier, includes an RSU grant on July 1, 2022 upon his promotion to CEO and for Ms. Sutherland, includes an RSU grant on January 17, 2022 upon her commencement of employment with the Company.
(5)For equity incentive plan awards, these amounts represent the grant date fair value at target level under the PSP as determined in accordance with GAAP. For Stock Option awards, these amounts represent the grant date fair value of the option awards using a Black-Scholes-Merton-based methodology. Actual value realized upon option exercise depends on market prices at the time of exercise. For other stock awards, these amounts represent the grant date fair value of the RSU awards determined in accordance with GAAP. See Note 20—Share-Based Compensation Plans in the Notes to Consolidated Financial Statements in our 2022 Form 10-K, for a discussion of the relevant assumptions used in this determination.
Executive Compensation Tables69


OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table lists outstanding Phillips 66 equity grants for each NEO as of December 31, 2022.
Option Awards(1)
Stock Awards
NameGrant
Date
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(2)
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Option
Exercise
Price
($)
Option
Expiration
Date
Number
of Shares
or Units
of Stock
that
Have not
Vested(3)
(#)
Market
Value of
Shares
or Units
of Stock
that
Have not
Vested
($)
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights that
Have not
Vested(4)
(#)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights that
Have not
Vested ($)
Mark Lashier4/1/202136,366 72,734 81.910 4/1/2031— — — — 
2/8/2022— 89,000 89.050 2/8/2032— — — — 
7/1/2022— 26,300 82.680 7/1/2032— — — — 
— — — — 47,592 4,953,375 297,908 31,006,265 
Greg Garland2/2/2016169,400 — 78.62 2/2/2026— — — — 
2/7/2017174,000 — 78.475 2/7/2027— — — — 
2/6/2018147,000 — 94.850 2/6/2028— — — — 
2/5/2019178,700 — 94.968 2/5/2029— — — — 
2/4/2020141,400 70,700 89.570 2/4/2030— — — — 
2/9/202187,833 175,667 74.700 2/9/2031— — — — 
2/8/2022— 147,100 89.050 2/8/2032— — — — 
— — — — 103,505 10,772,801 383,472 39,911,767 
Kevin Mitchell2/3/20159,900 — 74.135 2/3/2025— — — — 
2/2/201630,800 — 78.620 2/2/2026— — — — 
2/7/201731,700 — 78.475 2/7/2027— — — — 
2/6/201843,600 — 94.850 2/6/2028— — — — 
2/5/201953,300 — 94.968 2/5/2029— — — — 
2/4/202042,133 21,067 89.570 2/4/2030— — — — 
2/9/202129,066 58,134 74.700 2/9/2031— — — — 
2/8/2022— 61,200 89.050 2/8/2032— — — — 
— — — — 41,665 4,336,493 168,964 17,585,773 
Vanessa Allen Sutherland2/8/2022— 35,300 89.050 2/8/2032— — — — 
— — — — 40,996 4,266,864 66,210 6,891,137 
Brian Mandell2/3/20153,000 — 74.135 2/3/2025— — — — 
2/2/20169,800 — 78.620 2/2/2026— — — — 
2/7/201714,100 — 78.475 2/7/2027— — — — 
2/6/201812,100 — 94.850 2/6/2028— — — — 
2/5/201925,500 — 94.968 2/5/2029— — — — 
2/4/202028,533 14,267 89.570 2/4/2030— — — — 
2/9/202118,900 37,800 74.700 2/9/2031— — — — 
2/8/2022— 39,800 89.050 2/8/2032— — — — 
— — — — 26,305 2,737,824 105,068 10,935,478 
Tim Roberts2/6/201825,900 — 94.850 2/6/2028— — — — 
2/5/201931,500 — 94.968 2/5/2029— — — — 
2/4/202032,333 16,167 89.570 2/4/2030— — — — 
2/9/202122,366 44,734 74.700 2/9/2031
2/8/2022— 47,000 89.050 2/8/2032— — — — 
— — — — 32,578 3,390,718 129,890 13,518,951 
70
Phillips 66 2023 Proxy Statement


(1)All options shown in the table have a portfoliomaximum term for exercise of renewable fuel projectsten years from the grant date. Under certain circumstances, the terms for exercise may be shorter, and in developmentcertain circumstances, the options may be forfeited and cancelled. All awards shown in the table have associated restrictions upon transferability.
(2)The options shown in this column vested and became exercisable in 2022 or prior years (although under certain termination circumstances, the options may still be forfeited). Options become exercisable in one-third increments on the first, second and third anniversaries of the grant date.
(3)Awards are subject to forfeiture if, prior to the lapsing of restrictions, the NEO separates from service for a reason other than death, disability, layoff, retirement after reaching age 55 with five years of service, or after a change of control, although the Compensation Committee has the authority to waive forfeiture. The awards have no voting rights, but do entitle the holder to receive dividend equivalents in cash. The value of the awards reflects the closing price of our common stock, as reported on the NYSE, on December 30, 2022 ($104.08).
(4)Reflects potential awards from ongoing performance periods under the PSP for performance periods ending December 31, 2023 and December 31, 2024. These awards are shown at maximum; however, there is no assurance that complyawards will be granted at, below or above target after the end of the relevant performance periods, as the determination to make a grant and the amount of any grant is within the judgment of the Compensation Committee. Until an actual grant is made, these unearned awards pay no dividend equivalents. The value of these unearned awards reflects the closing price of our common stock, as reported on the NYSE, on December 30, 2022 ($104.08).
Executive Compensation Tables71


OPTION EXERCISES AND STOCK VESTED FOR 2022
The following table summarizes the value received from stock option exercises and stock grants vested during 2022:
Option Awards
Stock Awards(1)
NameNumber of Shares
Acquired on Exercise
(#)
Value Realized
Upon Exercise
($)
Number of Shares
Acquired on Vesting
(#)
Value Realized
Upon Vesting
($)
Mark Lashier— — 27,139 2,671,478 
Greg Garland273,000 7,265,523 98,617 9,660,109 
Kevin Mitchell— — 32,480 3,178,973 
Vanessa Allen Sutherland— — — — 
Brian Mandell— — 20,358 2,007,564 
Tim Roberts59,100 1,662,629 24,827 2,451,756 
(1)Stock awards include RSUs that vested during the year, as well as the 2020-2022 PSP award that vested on December 31, 2022 and was paid out in cash in early 2023. The 2020-2022 PSP awards were earned as follows: Mr. Lashier, 20,337 units valued at $2,087,811; Mr. Garland, 65,732 units valued at $6,748,093; Mr. Mitchell, 21,520 units valued at $2,209,258; Mr. Mandell, 14,569 units valued at $1,495,664; and Mr. Roberts, 18,013 units valued at $1,849,227.
72
Phillips 66 2023 Proxy Statement


PENSION BENEFITS AS OF DECEMBER 31, 2022
Our defined benefit pension plan, the Phillips 66 Retirement Plan (the "Retirement Plan"), consists of multiple titles with low-carbon fuel standards. Wedifferent terms. NEOs are leveraging our existing infrastructure, supply network and capabilitiesonly eligible to participate in lower carbon businesses. Moreone title at any time but may have frozen benefits under one or more other titles.
Title I
Title II(1)
Title IV
Current EligibilityMr. GarlandMr. Lashier, Mr. Mitchell, Ms. Sutherland, Mr. RobertsMr. Mandell
Normal RetirementAge 65Age 65Age 65
Early Retirement(2)
Age 55 with five years of service or if laid off during or after the year in which the participant reaches age 50Executives may receive their vested benefit upon termination of employment at any ageAge 50 with ten years of service
Benefit Calculation(2)
Calculated as the product of 1.6% times years of credited service multiplied by the final average eligible earningsBased on monthly pay and interest credits to a nominal cash balance account created on the first day of the month after an executive’s hire date. Pay credits are equal to a percentage of total salary and annual bonus.Calculated as the product of 1.6% times years of credited service multiplied by the final average eligible earnings
Final Average
Earnings
Calculation
Calculated using the three highest compensation years in the last ten calendar years before retirement plus the year of retirementN/ACalculated using the higher of the highest three years of compensation or the highest 36 months of compensation
Eligible Pension
Compensation
(3)
Includes salary and annual bonusIncludes salary and annual bonusIncludes salary and annual bonus
Benefit VestingAll participants are vested in this titleEmployees vest after three years of serviceAll participants are vested in this title
Payment TypesAllows payments in the form of several annuity types or a single lump sum
IRS limitationsBenefits under all Titles are limited by the IRC. In 2022, the compensation limit was $305,000. The IRC also limits the annual benefit available under these Titles expressed as an annuity. In 2022, that limit was $245,000 (reduced actuarially for ages below 62).
(1)NEOs whose combined years of age and service total less than 44 receive a 6% pay credit, those with a total of 44 through 65 receive a 7% pay credit and those with a total of 66 or more receive a 9% pay credit. Interest credits are applied to the cash balance account each month. This credit is calculated by multiplying the value of the account by the interest credit rate, based on 30-year U.S. Treasury security rates adjusted quarterly.
(2)An early benefit reduction is calculated on Title I by reducing the benefit 5% for each year before age 60 that benefits are paid. Title IV early benefit reduction is calculated by reducing the benefit by 5% per year for each year before age 57 that benefits are paid and 4% per year for benefits that are paid between ages 57 and 60. The benefit calculation for Titles I and IV is reduced by the product of 1.5% of the annual primary social security benefit multiplied by years of credited service, although a reduction limit of 50% of the primary Social Security benefit may apply.
(3)Under Title I, if an executive receives layoff benefits, then the eligible compensation calculation also includes the annualized salary for the year of layoff (rather than the actual salary for that year) and years of service are increased by any period for which layoff benefits are calculated.
Executive Compensation Tables73


The following table lists the pension program participation and actuarial present value of each NEO’s defined benefit pension as of December 31, 2022.
NamePlan Name
Number of Years
Credited Service(1)
(#)
Present Value of
Accumulated Benefit
($)
Payments During
Last Fiscal Year
($)
Mark LashierRetirement Plan - Title II33 51,371 — 
KESRP(2)
252,157 — 
Greg GarlandRetirement Plan - Title I33 1,716,484 — 
KESRP(2)
40,272,369 — 
Kevin MitchellRetirement Plan - Title II204,082 — 
KESRP(2)
1,047,610 — 
Vanessa Allen SutherlandRetirement Plan - Title II— — — 
KESRP(2)
— — 
Brian MandellRetirement Plan - Title IV32 1,714,995 — 
KESRP(2)
9,226,348 — 
Tim RobertsRetirement Plan - Title II30 182,876 — 
KESRP(2)
900,730 — 
(1)Years of credited service include service recognized under the predecessor ConocoPhillips plans from which these plans were spun off effective May 1, 2012. Credited Service displays the number of years the NEO was in each applicable formula. Mr. Lashier’s and Mr. Roberts’ tenure with Phillips 66 is 2 years and 7 years, respectively. Their credited years of service calculations include 33 years and 30 years of prior service recognition, respectively.
(2)The Phillips 66 Key Employee Supplemental Retirement Plan ("KESRP") restores Company-sponsored benefits capped under the qualified defined benefit pension plan due to IRC limits. All employees, including our NEOs, are eligible to participate in the plan.
Understanding the Annual Change in Pension Value
No modifications to pension
There were no modifications to our existing pension program in 2022
Change in value
The value of traditional pension plans is particularly sensitive to interest rate movement, which is outside of the Company's control
While our short-term and long-term incentive programs are based entirely on performance, pension value is not performance based and does not reflect or reward Company performance
Pension plan going forward
The Compensation Committee will continue to assess our pension program to ensure viability as an attraction and retention tool
74
Phillips 66 2023 Proxy Statement


NONQUALIFIED DEFERRED COMPENSATION
Our NEOs are eligible to participate in two nonqualified deferred compensation plans, the KEDCP and the DCMP.
The KEDCP allows NEOs to defer up to 50% of their salary and up to 100% of their VCIP. The default distribution option is a lump sum payment paid at least six months after separation from service. NEOs may elect to defer payments from one to five years, and to receive annual, semiannual or quarterly payments for a period of up to fifteen years. NEOs may also elect to defer their VCIP to a specified date in the future.
The DCMP is a nonqualified restoration plan for employer contributions that cannot be made to our 401(k) plan either due to an NEO’s salary deferral under the KEDCP or due to the IRC annual limit on compensation that may be taken into account under a qualified plan. Distributions are made as a lump sum six months after separation from service, unless the NEO elects to receive one to fifteen annual payments beginning at least one year after separation from service.
Each NEO directs investments of his or her individual accounts under the KEDCP and DCMP. Both plans provide a broad range of market-based investments that may be changed daily. No investment provides above-market returns. The aggregate performance of these investments is reflected in the Nonqualified Deferred Compensation table below.
Benefits due under these plans are paid from our general assets, although we also maintain rabbi trusts that may be used to pay benefits. The trusts and the funds held in them are Company assets. In the event of our bankruptcy, NEOs would be unsecured general creditors.
The following table provides information on the Company sustainability strategy and programs isNEO's nonqualified deferred compensation as of December 31, 2022:
Name
Applicable Plan(1)
Beginning
Balance
($)
Executive
Contributions
in Last
Fiscal Year
($)
Company
Contributions
in the Last
Fiscal Year
(2)
($)
Aggregate
Earnings (Loss) in
Last Fiscal
Year
(3)
($)
Aggregate
Withdrawals/
Distributions
($)
Aggregate
Balance at
Last Fiscal
Year End
(4)
($)
Mark LashierDCMP43,606 — 298,155 (13,998)— 327,763 
KEDCP— — — — — — 
Greg GarlandDCMP3,610,490 — 641,333 (188,039)— 4,063,784 
KEDCP1,360,786 — — 560,857 — 1,921,643 
Kevin MitchellDCMP1,036,805 — 257,295 (153,219)— 1,140,881 
KEDCP— — — — — — 
Vanessa Allen SutherlandDCMP— — 54,350 1,355 — 55,705 
KEDCP— — — — — — 
Brian MandellDCMP863,962 — 197,455 (166,545)— 894,871 
KEDCP4,689,190 — (1,101,515)— 3,587,675 
Tim RobertsDCMP739,012 — 235,398 (149,420)— 824,990 
KEDCP1,377,453 1,188,085 — (416,517)— 2,149,020 
(1)As of December 31, 2022, participants in these plans had 34 investment options – 26 of the options were the same as those available in our sustainability report401(k) plan and the remaining options were other mutual funds approved by the plan administrator.
(2)These amounts represent Company contributions under the DCMP. These amounts are also included in the “All Other Compensation” column of the Summary Compensation Table.
(3)These amounts represent earnings or losses on our website.

plan balances, as applicable, from January 1 to December 31, 2022. These amounts are not included in the
 Summary Compensation Table.

22     PHILLIPS 66 PROXY STATEMENT 2021

Executive Compensation Tables75



(4)The total reflects contributions by our NEOs, contributions by us, and earnings on balances prior to 2022; plus contributions by our NEOs, and earnings (or losses) from January 1, 2022, through December 31, 2022 (shown in the appropriate columns of this table, with amounts that are included in the Summary Compensation Table). The total includes all contributions by our NEOs and by us reported in this Proxy Statement and our proxy statements from prior years as follows: $341,255 for Mr. Lashier; $3,110,603 for Mr. Garland; $993,371 for Mr. Mitchell; $54,350 for Ms. Allen Sutherland; $197,455 for Mr. Mandell, and $3,236,602 for Mr. Roberts.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Our programs are designed to pay out amounts earned during employment unless the employee voluntarily resigns prior to becoming retirement-eligible or is terminated for cause. Although normal retirement age under our benefit plans is 65, early retirement provisions allow receipt of benefits at earlier ages if vesting requirements are met. For our incentive compensation programs (VCIP, RSU, Stock Options, and PSP), early retirement is generally defined as termination at or after the age of 55 with five years of service.
As of December 31, 2022, Messrs. Lashier, Garland, Mitchell, Mandell and Roberts were each retirement-eligible under our benefit plans and our compensation programs. Therefore, as of December 31, 2022, a voluntary resignation of Messrs. Lashier, Garland, Mitchell, Mandell or Roberts, would have been treated as a retirement, and each would have retained all awards earned under the current and earlier programs. As such, awards under these programs are not included in the amounts reflected in the table below. Please see the Outstanding Equity Awards at Fiscal Year End table for more information.
Our compensation programs provide for the following upon retirement:
Cash Payments. Cash payments include VCIP earned during the fiscal year, amounts contributed and vested under our defined contribution plans, and amounts accrued and vested under our pension plans.
Equity. Equity considerations include grants under the PSP for ongoing performance periods in which the executive participated for at least one year, previously granted restricted stock and RSUs, and previously granted stock option awards exercisable through the original term if the awards were granted at least six months prior.
As of December 31, 2022, Ms. Sutherland was not retirement-eligible under our benefits plans and compensation programs. Therefore, as of December 31, 2022, upon a voluntary resignation of Ms. Sutherland, she would have forfeited all unvested awards.
The table at the end of this section summarizes the potential additional value of the benefits to be received by each NEO as of December 31, 2022, through the Phillips 66 ESP due to an involuntary termination without cause or through the Phillips 66 CICSP due to a change in control event. Benefits that would be available generally to all or substantially all salaried employees on the U.S. payroll are not included in the amounts shown. Executives are not entitled to receive benefits under both the ESP and the CICSP as a result of the same event. These two plans have the following in common:
Amounts payable under both are offset by any severance payments or benefits payable under any of our other plans;
Benefits under both may also be reduced in the event of willful and bad faith conduct demonstrably injurious to the Company; and
Both are Company plans under which awards and payments are subject to clawback provisions and to forfeiture or recoupment, in whole or in part, under applicable law, including the Sarbanes-Oxley Act and the Dodd-Frank Act.

PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG

76
Phillips 66 2023 Proxy Statement

PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG



Executive Severance Plan
The ESP provides that if a NEO separates due to an involuntary termination without cause, the executive will receive the following benefits, which may vary depending on salary grade level, subject to the executive's execution of a release of claims.
Cash Severance Payments. ESP cash severance payments include:
A lump sum payment equal to one and one-half or two times the sum of the executive’s base salary and current target annual bonus;
A lump sum payment equal to the present value of the increase in pension benefits that would result from crediting the executive with an additional one and one-half or two years of age and service under the pension plan; and
A lump sum payment generally equal to the Company contribution for active employees toward the cost of certain welfare benefits for an additional one and one-half or two years.
Accelerated Equity. Layoff treatment under our compensation plans generally allows the executive to retain a prorated portion of grants held for more than six months but less than one year and the full award for grants held for one year or more of restricted stock, RSUs, and stock options, and maintain eligibility for prorated PSP awards for ongoing periods in which he or she participated for at least one year, subject to the executive's execution of a release of claims.
Change in Control Severance Plan
The CICSP provides that if, within two years of a change in control of the Company, an executive’s employment is terminated by the employer other than for cause, or by the executive for good reason, the executive will receive the following benefits, which may vary depending on salary grade level. CICSP benefits include:
Cash Severance Payments. CICSP cash severance payments include:
A lump sum payment equal to two or three times the sum of the executive’s base salary and the higher of the current target annual bonus or the average of the annual bonuses paid for the previous two years;
A lump sum payment equal to the present value of the increase in pension benefits that would result from crediting the executive with an additional two or three years of age and service under the pension plan; and
A lump sum payment generally equal to the Company contribution for active employees toward the cost of certain welfare benefits for an additional two or three years.
Accelerated Equity. CICSP benefits also include the vesting of all equity awards and lapsing of any restrictions.
Executive Compensation Tables77


Estimated Potential Payments
The following table presents, for each of the NEOs, the estimated payments and benefits that would have been payable to each of the NEOs as of December 31, 2022, for each of the circumstances described below.
Executive Benefits and Payments Upon Termination
Involuntary Not-For-
Cause Termination
(Not CIC)
($)
Involuntary or
Good Reason
Termination (CIC)
($)
Death
($)
Disability
($)
Mark Lashier
Severance Payment8,404,649 12,606,974 — — 
Accelerated Equity— — 5,213,304 5,213,304 
Life Insurance— — 3,000,000 — 
TOTAL8,404,649 12,606,974 8,213,304 5,213,304 
Greg Garland
Severance Payment7,850,876 17,830,366 — — 
Accelerated Equity— — 5,707,955 5,707,955 
Life Insurance— — 2,000,000 — 
TOTAL7,850,876 17,830,366 7,707,956 5,707,955 
Kevin Mitchell
Severance Payment4,225,966 7,438,774 — — 
Accelerated Equity— — 2,372,092 2,372,092 
Life Insurance— — 1,923,407 — 
TOTAL4,225,966 7,438,774 4,295,499 2,372,092 
Vanessa Allen Sutherland
Severance Payment2,806,248 4,209,371 — — 
Accelerated Equity4,302,762 4,797,423 6,762,079 6,762,079 
Life Insurance— — 1,500,000 — 
TOTAL7,109,010 9,006,794 8,262,079 6,762,079 
Brian Mandell
Severance Payment4,444,343 7,022,671 — — 
Accelerated Equity— — 1,541,125 1,541,125 
Life Insurance— — 1,640,100 — 
TOTAL4,444,343 7,022,671 3,181,225 1,541,125 
Tim Roberts
Severance Payment3,927,165 6,874,518 — — 
Accelerated Equity— — 1,823,541 1,823,541 
Life Insurance— — 1,880,452 — 
TOTAL3,927,165 6,874,518 3,703,993 1,823,541 
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Phillips 66 2023 Proxy Statement


CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the annual total compensation, calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, of our median employee and the annual total compensation of our CEO, Mr. Lashier.
For 2022, the annual total compensation of our CEO was 91 times that of the median of the annual total compensation of all employees, based on annual total compensation of $16,314,212 for the CEO and $179,184 for the median employee.
This ratio is based on an October 1, 2020, employee population of 14,215, which excluded 413 non-U.S. employees in Germany (260), Singapore (75), Austria (42), Canada (32), China (3), and the United Arab Emirates (1). The median employee was identified using annual base pay, overtime pay, annual bonus, and target LTI compensation using data as of September 30, 2020. The annual total compensation for our CEO includes both the amount reported in the “Total” column of the Summary Compensation Table of $16,288,870 and the estimated value of our CEO’s health and welfare benefits of $25,342.
The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
79


Pay versus Performance
We are required by SEC rules to disclose the following information regarding compensation paid to our NEOs. The amounts set forth below under the headings “Compensation Actually Paid” ("CAP") have been calculated in a manner consistent with Item 402(v) of Regulation S-K. The methodology for calculating the CAP, including details regarding the amounts that were deducted from, and added to, the Summary Compensation Table totals to arrive at the values presented for CAP, are provided in the footnotes to the table.
Year
Summary
Compensation
Table Total for
First PEO1
($)
Summary
Compensation
Table Total for Second
PEO1
($)
Compensation
Actually Paid
to First
PEO2
$)
Compensation
Actually Paid
to Second
PEO2
($)
Average
Summary
Compensation
Table Total for Non-PEO
NEOs3
($)
Average
Compensation
Actually Paid
to Non-PEO
NEOs2,3
($)
Value of Initial Fixed $100
Investment Based On:
GAAP
Net
Income
($ MM)
Annual
Adjusted PSP
ROCE5
(%)
Total
Shareholder
Return4
($)
Peer Group
Total
Shareholder
Return4
($)
(a)(b)(b)(c)(c)(d)(e)(f)(g)(h)(i)
202218,229,917 16,288,870 36,488,607 24,349,594 7,564,734 12,019,418 108.84 140.02 11,391 24.5 
202120,953,206 — 21,535,633 — 8,163,303 7,817,258 72.45 106.53 1,594 8.5 
202024,989,374 — 2,700,837 — 6,290,976 2,618,978 66.45 78.79 (3,714)0.8 
(1)The first Principal Executive Officer (PEO) reflected in column (b) refers to Mr. Garland, Chairman and Chief Executive Officer until June 30, 2022 and Executive Chairman beginning July 1, 2022. The second Principal Executive Officer (PEO) reflected in column (b) refers to Mr. Lashier, President and Chief Operating Officer until June 30, 2022, and President and Chief Executive Officer beginning July 1, 2022.
(2)To calculate CAP, the following adjustments were made to Summary Compensation Table total compensation, in accordance with SEC rules:
Compensation Actually Paid to PEO2022
(Mr. Garland)
2022
(Mr. Lashier)
2021
(Mr. Garland)
2020
(Mr. Garland)
Summary Compensation Table Total18,229,917 16,288,870 20,953,206 24,989,374 
Less, value of “Stock Awards” and “Option Awards” reported in
Summary Compensation Table
(12,326,210)(11,236,523)(14,459,165)(12,588,803)
Less, Change in Pension Value reported in Summary
Compensation Table
— (231,983)— (6,851,884)
Plus, year-end fair value of outstanding and unvested equity
awards granted in the year
15,794,483 14,260,576 14,662,552 9,514,060 
Plus, fair value as of vesting date of equity awards granted and
vested in the year(a)
89,225 59,342 114,921 85,470 
Plus (less), year over year change in fair value of outstanding
and unvested equity awards granted in prior years
9,650,492 4,073,013 470,710 (6,371,181)
Plus (less), year over year change in fair value of equity awards granted in prior years that vested in the year3,803,161 910,182 (1,835,338)(7,136,027)
Plus, the value of dividends or other earnings paid on equity awards in the year398,405 178,639 394,928 357,826 
Plus, pension service cost for services rendered during the year849,133 47,478 1,233,818 702,002 
Compensation Actually Paid to PEO36,488,607 24,349,594 21,535,633 2,700,837 
(a) Represents value of RSUs withheld to satisfy Federal Insurance Contributions Act (FICA) tax obligations.
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Phillips 66 2023 Proxy Statement


Average Compensation Actually Paid to Non-PEO NEOs202220212020
Summary Compensation Table Total7,564,734 8,163,303 6,290,976 
   Less, value of “Stock Awards” and “Option Awards” reported in Summary Compensation Table(5,081,089)(5,575,650)(3,332,826)
   Less, Change in Pension Value reported in Summary Compensation Table(84,081)(196,955)(765,023)
   Plus, year-end fair value of outstanding and unvested equity awards granted in the year6,388,526 5,407,971 2,531,727 
   Plus, fair value as of vesting date of equity awards granted and vested in the year(a)
26,925 38,733 16,332 
   Plus (less), year over year change in fair value of outstanding and unvested equity awards granted in prior years2,188,370 102,802 (1,578,875)
   Plus (less), year over year change in fair value of equity awards granted in prior years that vested in the year735,558 (359,892)(821,489)
   Plus, the value of dividends or other earnings paid on equity awards in the year135,895 150,681 133,668 
   Plus, pension service cost for services rendered during the year144,581 86,265 144,488 
Compensation Actually Paid to Non-PEO NEOs12,019,418 7,817,258 2,618,978 
(a) Represents value of RSUs withheld to satisfy FICA tax obligations.
(3)The Non-PEO NEOs reflected in columns (d) and (e) represent the following individuals: For 2022, Mr. Mitchell, Ms. Allen Sutherland, Mr. Mandell, and Mr. Roberts; for 2021, Mr. Lashier, Mr. Mitchell, Mr. Roberts, and Mr. Herman; and for 2020, Mr. Mitchell, Mr. Roberts, Mr. Herman, and Ms. Johnson.
(4)The Peer Group TSR in column (g) represents the weighted average market capitalization of our peer group used for purposes of Item 201(e) of Regulation S-K, which are: Delek US Holdings, Inc.; HF Sinclair Corporation; Marathon Petroleum Corporation; PBF Energy Inc.; Valero Energy Corporation; CVR Energy Inc.; Dow Inc.; Westlake Chemical Corporation; LyondellBasell Industries N.V; ONEOK, Inc.; Targa Resources Corp.; and The Williams Companies, Inc.
(5)See Appendix B for a reconciliation of Adjusted PSP ROCE to the nearest GAAP financial measure.

RELATIONSHIP BETWEEN COMPENSATION ACTUALLY PAID AND PERFORMANCE
The charts that follow depict the relationship of "compensation actually paid" (CAP) to our PEOs and other NEOs to (i) the TSR of the Company and its peer group (as described in Footnote 4 above), (ii) the Company's net income, and (iii) the Company's annual non-GAAP Adjusted PSP ROCE. Pursuant to Item 402(v) of Regulation S-K, CAP reflects adjustments to the fair value of equity awards during the years presented. Changes in our stock price and the projected and actual achievement of our performance goals greatly impact the total CAP reported for each year presented. For example, our annual TSR performance of -37%, 3%, and 44% for 2020, 2021, and 2022, respectively, contributed to significant changes in CAP values reported for each year.









Pay versus Performance81


CAP versus Total Shareholder Return
The chart below shows the alignment between the PEO and other NEOs’ CAP amounts and the Company’s TSR. This is primarily due to the Company’s use of equity incentives, which are tied directly to stock price performance and the Company’s financial performance.
psx-20230315_g151.jpg
CAP versus Net Income (Loss)
As shown in the chart below, the Company’s net income has significantly increased since 2020 primarily as a result of improved market conditions and strong operating results. In 2020, the pandemic challenged our operational and financial environment and we reported a net loss of approximately $3.7 billion. In 2021 and 2022, we realized strong performance and reported net income of approximately $1.6 billion and $11.4 billion, respectively. The recovery has positively impacted our stock price and therefore the PEO and other NEOs’ CAP amounts increased in 2021 and 2022 as equity incentives are sensitive to changes in stock price.
psx-20230315_g152.jpg
82
Phillips 66 2023 Proxy Statement


CAP versus Annual Adjusted PSP ROCE
The chart below shows the correlation between annual non-GAAP Adjusted PSP ROCE and CAP. Because CAP values both vested and outstanding equity using either the value of the award as of the vesting date or the change in value of the award with respect to the prior year end, we consider annual Adjusted PSP ROCE a better measure to show the correlation of company performance to CAP rather than the three-year performance period average non-GAAP Adjusted PSP ROCE we use to determine final payout of our PSP.
psx-20230315_g153.jpg
Most Important Measures Linking NEO Compensation to Performance
The items listed below represent the most important metrics we used to determine CAP for all fiscal years reported as further described in our Compensation Discussion and Analysis within the sections titled “Annual Incentive Compensation” and “Long-Term Incentive Compensation.”
Most Important Performance Measures
Adjusted EBITDA
Adjusted Controllable Costs
Adjusted PSP ROCE
3-Year Relative TSR
Pay versus Performance83


Equity Compensation Plan Information
The following table sets forth information about Phillips 66 common stock that may be issued under all existing equity compensation plans as of December 31, 2022:
Plan Category
Number of Securities to
be Issued upon Exercise
of Outstanding Options,
Warrants and Rights
(1,2)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(3)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a)
(4)
Equity compensation plans approved by security holders10,266,486$84.9714,867,234
Equity compensation plans not approved by security holders
Total10,266,486$84.9714,867,234
(1)Includes awards issued under the Omnibus Stock and Performance Incentive Plan of Phillips 66, awards issued under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66 and awards issued under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66 .
(2)Includes an aggregate of 5,842,915 Stock Options issued to employees and 703,169 PSUs. The number of securities to be issued includes 3,720,402 RSUs, of which 169,520 were issued to non-employee directors. Some awards held by ConocoPhillips employees at our spin-off were adjusted or substituted with a combination of ConocoPhillips and Phillips 66 equity. Awards representing a total of 13,071,435 shares were issued to ConocoPhillips employees, of which 804,199 remain outstanding as of December 31, 2022. The awards issued to ConocoPhillips employees are included in the outstanding awards listed above.
(3)The weighted-average exercise price reflects the weighted-average price for outstanding Incentive Stock Options and Nonqualified Stock Options only. It does not include stock awards outstanding which do not have an exercise price.
(4)Total includes forfeited shares under the Omnibus Stock and Performance Incentive Plan of Phillips 66 that are now available for grant under the 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66.
84
Phillips 66 2023 Proxy Statement


PROPOSAL 4
psx-20230315_g14.jpg
Ratification of the Appointment of Ernst & Young
The Board recommends that you vote “FOR” the proposal to ratify the appointment of Ernst & Young LLP for fiscal year 2023.
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company'sCompany’s financial statements. The Audit Committee has appointed Ernst & Young LLP to serve as the Company'sCompany’s independent registered public accounting firm for fiscal year 2021.2023. Ernst & Young has acted as the Company'sCompany’s independent registered public accounting firm continuously since 2011.

The Audit Committee annually considers the independence of the Company’s independent auditors prior to the firm’s engagement, and periodically considers whether a regular rotation of the independent auditors is necessary to assure continuing independence. The Audit Committee and its Chair are directly involved in the selection of Ernst & Young’s lead engagement partner.

The Audit Committee and the Board of Directors believe that the continued retention of Ernst & Young is in the best interests of the Company and its shareholders. We are asking you to vote on a proposal to ratify the appointment of Ernst & Young.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP.

One or more representatives of Ernst & Young are expected to be present at the Annual Meeting. The representatives will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions from shareholders.
The submission of this matter for approval by shareholders is not legally required, but the Board and the Audit Committee believe it provides an opportunity for shareholders to vote on an important aspect of corporate governance. If the shareholders do not ratify the selection of Ernst & Young, the Audit Committee will reconsider the selection of that firm as the Company’s independent registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.

ERNST & YOUNG LLP FEES

Audit services of Ernst & Young for fiscal year 20202022 included an audit of our consolidated financial statements, an audit of the effectiveness of the Company'sCompany’s internal control over financial reporting, and services related to periodic filings made with the SEC. Additionally, Ernst & Young provided certain other services as described below. In connection with the audit of the 20202022 consolidated financial statements, we entered into an engagement agreement with Ernst & Young that set forth the terms by which Ernst & Young performed audit services for us.

Proposal 4: Ratification of the Appointment of Ernst & Young85


The Audit Committee is responsible for negotiating the audit fee associated with its retention of Ernst & Young. Ernst & Young'sYoung’s fees for professional services totaled $12.7$13.1 million for 20202022 and $14.5$12.2 million for 2019,2021, which consisted of the following:

Fees (in millions)20202019
Audit Fees(1)$11.4$13.0
Audit-Related Fees(2)1.01.2
Tax Fees(3)0.10.1
All Other Fees0.20.2

Total

$12.7$14.5

(1)Fees for audit services related to the fiscal year consolidated audit, the audit of the effectiveness of internal controls over financial reporting, quarterly reviews, registration statements, comfort letters, statutory and regulatory audits and accounting consultations. Includes audit fees of Phillips 66 Partners LP of $0.9 million for 2020 and $1.3 million for 2019, which were approved by the Audit Committee of the General Partner of Phillips 66 Partners LP.

PHILLIPS 66 PROXY STATEMENT 2021     23

Fees (in millions)20222021
Audit Fees(1)
$12.2 $11.4 
Audit-Related Fees(2)
$0.5 $0.6 
Tax Fees(3)
$0.3 $— 
All Other Fees$0.1 $0.2 
Total$13.1 $12.2 

PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG

(2)Fees for audit-related services related to audits in connection with proposed or consummated dispositions, benefit plan audits, other subsidiary audits, special reports, and accounting consultations.
(3)Fees for tax services related to tax compliance services and tax planning and advisory services.

(1)Fees for audit services related to the fiscal year consolidated audit, the audit of the effectiveness of internal controls over financial reporting, quarterly reviews, registration statements, comfort letters, statutory and regulatory audits and accounting consultations.
(2)Fees for audit-related services related to audits in connection with proposed or consummated acquisitions or dispositions, benefit plan audits, other subsidiary audits, special reports, and accounting consultations.
(3)Tax fees relate to tax compliance services and tax planning and advisory services.
(4)All other fees primarily include audit-related software and advisory services.
The Audit Committee has considered whether the non-audit services provided to Phillips 66 by Ernst & Young impaired the independence of Ernst & Young and concluded they did not.

Pre-Approval Policy
The Audit Committee has adopted a pre-approval policy that provides guidelines for the audit, audit-related, tax and other non-audit services that Ernst & Young may provide to the Company. All of the fees in the table above were approved in accordance with this policy. The policy (a) identifies the guiding principles that the Audit Committee must consider in approving services to ensure that Ernst & Young'sYoung’s independence is not impaired; (b) describes the audit, audit-related, tax and other services that may be provided and the non-audit services that are prohibited; and (c) sets forth pre-approval requirements for all permitted services. Under the policy, the Audit Committee must pre-approve all services to be provided by Ernst & Young. The Audit Committee has delegated authority to approve permitted services to its Chair. Such approval must be reported to the entire Audit Committee at its next scheduled meeting.

One or more representatives of Ernst & Young are expected to be present at the Annual Meeting. The representatives will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions from shareholders.

24     PHILLIPS 66 PROXY STATEMENT 2021

PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG

AUDIT AND FINANCE COMMITTEE REPORT

The Audit Committee assists the Board of Directors in fulfilling its responsibility to provide independent, objective oversight of the financial reporting functions and internal control systems of Phillips 66.
The Audit Committee currently consists of five non-employee directors. The Board has determined that each member of the Audit Committee satisfies the requirements of the NYSE as to independence, financial literacy and expertise. The Board has further determined that each of Charles M. Holley, John E. Lowe, and Denise L. Ramos is an audit committee financial expert as defined by the SEC.
The responsibilities of the Audit Committee are set forth in the written charter adopted by the Board of Directors, which is available in the InvestorsInvestors” section of the Company'sCompany’s website under the caption “Corporate Governance.Governance. One of the Audit Committee'sCommittee’s primary responsibilities is to assist the Board in its oversight of the integrity of the Company'sCompany’s financial statements. The following report summarizes certain of the Audit Committee'sCommittee’s activities in this regard for 2020.

2022.

Review with Management.The Audit Committee has reviewed and discussed with management the audited consolidated financial statements of Phillips 66 included in the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, 2020,2022, and management'smanagement’s assessment of the effectiveness of the Company'sCompany’s internal control over financial reporting as of December 31, 2020,2022, included therein.

86
Phillips 66 2023 Proxy Statement


Discussions with Independent Registered Public Accounting Firm.The Audit Committee has discussed with Ernst & Young LLP, independent registered public accounting firm for Phillips 66, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. The Audit Committee has received the written disclosures and the letter from Ernst & Young required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant'saccountant’s communications with the Audit Committee concerning independence, and has discussed with that firm its independence from Phillips 66.

Recommendation to the Phillips 66 Board of Directors.Based on its review and discussions noted above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements of Phillips 66 be included in the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, 2020.

2022.

AUDIT AND FINANCE COMMITTEE

John E. Lowe, Chairman

Julie L. Bushman

Charles M. Holley

Denise L. Ramos

Victoria J. Tschinkel

PHILLIPS 66 PROXY STATEMENT 2021     25

COMPENSATION DISCUSSION AND ANALYSIS

PROPOSAL 4: ADVISORY APPROVAL OF EXECUTIVE COMPENSATION

In accordance with Section 14A of the Securities Exchange Act of 1934, as amended, shareholders are being asked to vote on the following advisory (non-binding) resolution:

RESOLVED, that the shareholders approve the compensation of Phillips 66's Named Executive Officers (NEOs) as described in this Proxy Statement in the COMPENSATION DISCUSSION AND ANALYSIS section and in the EXECUTIVE COMPENSATION TABLES (together with the accompanying narrative disclosures).

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY APPROVAL OF THE
COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS.

Approval of this proposal requires the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal.

As required by SEC rules, Phillips 66 is providing shareholders with the opportunity to vote on an advisory resolution, commonly known as “Say-on-Pay,” considering approval of the compensation of its NEOs.

The Compensation Committee, which is responsible for the compensation of our CEO and Senior Officers (as defined in ROLE OF THE HUMAN RESOURCES AND COMPENSATION COMMITTEE), has overseen the development of compensation programs designed to attract, retain and motivate executives who enable us to achieve our strategic and financial goals. The COMPENSATION DISCUSSION AND ANALYSIS and the EXECUTIVE COMPENSATION TABLES, together with the accompanying narrative disclosures, allow you to view the trends in compensation and application of our compensation philosophies and practices for the years presented.

The Board of Directors believes that the Phillips 66 executive compensation programs align the interests of our executives with those of our shareholders. Our compensation programs are guided by the philosophy that the Company's ability to provide value is driven by superior individual performance. The Board believes that a company must offer competitive compensation to attract and retain experienced, talented and motivated employees. In addition, the Board believes employees in leadership roles within the organization are motivated to perform at their highest levels when performance-based pay represents a significant portion of their compensation. The Board believes that our philosophy and practices have resulted in executive compensation decisions that are aligned with Company and individual performance, are appropriate in value, and have benefited the Company and its shareholders.

Because your vote is advisory, it will not be binding upon the Board of Directors. Nevertheless, the Compensation Committee and the Board will consider the outcome of the vote when evaluating future executive compensation arrangements. However, votes for or against our compensation programs will not necessarily inform the Compensation Committee and the Board about which elements of those programs shareholders approve or disapprove. For this reason, the Board encourages shareholders to engage with us to allow the Compensation Committee to understand shareholders' views and consider that feedback when making decisions.

26     PHILLIPS 66 PROXY STATEMENT 2021

Denise R. Singleton

PROPOSAL 4: ADVISORY APPROVAL OF EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

COMPANY PERFORMANCE SUMMARY

Our performance results and strategic highlights are presented below. The compensation decisions reflected in this Compensation Discussion and Analysis (“CD&A”) demonstrate the Compensation Committee’s disciplined and rigorous application of the Phillips 66 compensation philosophy, program structure and performance standards relative to the 2020 performance of Phillips 66 and the named executive officers. Some of these results are not measures of financial performance under U.S. generally accepted accounting principles (GAAP), for which more information is available in Appendix B.

GRAPHIC

Operating
Excellence

Top
Performance
Industry leading and Company-best performance for personal and process safety metrics – combined Total Recordable Rate of 0.11, combined Lost Workday Case Rate of 0.02 and Tier 1 Process Safety Event Rate of 0.02.

34%
Improved

Lowest number of Agency Reportable Environment Events in Company history – 34% improved versus 2019 performance.
Digital
Innovation
Advanced digital innovation efforts across Refining, Midstream, and Marketing and Specialties segments.
Record
Production
Produced record ethylene and polyethylene volumes through our joint venture, Chevron Phillips Chemical Company.

GRAPHIC

Growth

+900,000
BPD

Completed Gray Oak Pipeline which runs 845 miles from the Permian and Eagle Ford to the Texas Gulf Coast and has capacity to transport 900,000 BPD.

+300,000
BPD

Added two new 150,000 BPD fractionators at our Sweeny Hub, bringing the site’s total fractionation capacity to 400,000 BPD – quadrupling our output.
Emerging
Energy
Established Emerging Energy organization dedicated to commercializing renewable, lower-carbon technologies for a sustainable future.

+50,000
BPD

Announced plans for Rodeo Renewed – projected production of 50,000 BPD of renewable diesel with >30% forecasted returns – which will reconfigure our San Francisco Refinery into one of the largest renewable transportation fuels production facilities in the world.

GRAPHIC

Returns

$2.1 B
Cash Flow

Generated $2.1 B operating cash flow, demonstrating the strength of our diversified portfolio despite the unprecedented demand decrease.

$1.2
billion

On target to achieve AdvantEdge66 program value targets, sustain self-funding status, and initiate next phase of digital transformation.
Product
Placement
Expanded retail presence through addition of 95 sites to our West Coast joint venture; upgraded 1,257 sites globally.

GRAPHIC

Distributions

Preserved
Liquidity
Reduced costs by over $500 million and suspended share repurchases in March 2020 to manage and preserve liquidity.
$1.6 BMaintained competitive dividend – distributions to shareholders through dividends totaled $1.6 billion in 2020.

(-33%)
2020 TSR

Total Shareholder Return (TSR) since 2012 of 178%, which outperformed our peers but underperformed the S&P 100. TSR for 2020 was (-33.2%).

GRAPHIC

High-
Performing
Organization

Inclusion &
Diversity
Strengthened commitment and accelerated efforts to advance Inclusion and Diversity in light of the social unrest events during 2020.
Community
Response
Our employees volunteered over 52,000 hours and Phillips 66 provided $32 million in financial support to our communities.

PHILLIPS 66 PROXY STATEMENT 2021     27

COMPENSATION DISCUSSION AND ANALYSIS

COVID-19 Response

COVID-19 has had significant, far-reaching impacts on the global economy and its citizens. Our top priority has been the health and safety of our Company, our employees and their families, and the communities in which we live and work. Highlights of our efforts are presented below:

GRAPHIC

Our People

üNo Company-wide reductions in workforce, furloughs, or salary or benefit reductions

üProvide personal protective equipment (e.g., masks, sanitizer, etc.)

üRequire temperature checks, face coverings in common areas and pre-screening questionnaire for employees working onsite

üReconfigured site and work areas to ensure social distancing

üIn-house medical services provide guidance and lead contact tracing protocols

GRAPHIC 

Our
Communities

üContinued to provide energy as an essential business to our communities

üContributed $6 million to COVID-19 and natural disaster relief efforts across the U.S. and U.K.

üDelivered 18,000 pieces of personal protective equipment to front-line workers

üHonored our commitment to host virtual internship program and provide university and dependent scholarships

 GRAPHIC

Our Business
Operations

üExceeded $500 million in cost reductions and cut capital spending by more than $700 million

üSuspended share repurchases in March 2020

üAdded debt with repayment flexibility, positioning us to navigate uncertain environment

üOperated safely and reliably, providing critical energy products to our customers

No Change to Compensation Programs Related to COVID-19

This year tested the resilience and effectiveness of our compensation program design and targets, particularly in a challenging economic environment. As the year progressed, the Compensation Committee monitored the Company’s performance relative to the originally approved targets and determined that the programs were functioning as intended and no adjustments were warranted. Specifically, we are pleased to highlight that we did not:

хMake any one-time special awards
Proposal 4: Ratification of the Appointment of Ernst & Young87



хChange or modify the targets or metrics for the 2020 Variable Cash Incentive Program

хChange or modify the terms, conditions, targets or metrics for any in-process long-term incentive compensation programs

The payouts for our 2020 VCIP and Performance Share Program 2018 – 2020 described in this CD&A were based on the Company’s performance relative to the originally approved metrics with no adjustments.

EXECUTIVE COMPENSATION PROGRAM SUMMARY

Since our inception in 2012, our strategy is unchanged and we have operated with clear objectives − enable our high-performing workforce to execute our corporate strategy efficiently and effectively, while remaining vigilant and focused on safety and operating excellence, in order to deliver profitable growth, enhance returns, and provide a secure, competitive and growing dividend. 

We operate in a volatile industry and the events of 2020, including the COVID-19 pandemic, social unrest and natural disasters, challenged the resiliency of our diversified portfolio, our strategy and our employees. Through our

28     PHILLIPS 66 PROXY STATEMENT 2021

COMPENSATION DISCUSSION AND ANALYSIS

disciplined approach to capital management, we took measures to secure additional liquidity and reduce our controllable costs.

Our Named Executive Officers (“NEOs”) for 2020 were:

NameTitle
Greg GarlandChairman and Chief Executive Officer
Kevin MitchellExecutive Vice President, Finance and Chief Financial Officer
Robert HermanExecutive Vice President, Refining
Paula JohnsonExecutive Vice President, Legal and Government Affairs, General Counsel and Corporate Secretary
Tim RobertsExecutive Vice President, MidstreamShareholder Proposals

Compensation and Benefits Philosophy and Guiding Principles

Our Compensation and Benefits Philosophy and Guiding Principles form the foundation upon which our compensation and benefits programs are developed in alignment with our corporate vision, strategy and values. The Compensation Committee regularly reviews our Compensation Philosophy and Guiding Principles. Our programs are designed to attract, retain, develop and reward a high-performing workforce to successfully execute our corporate strategy. Embedded in our talent management strategy is the longstanding commitment to equal opportunity in all aspects of employment.

üOur programs drive the actions and behaviors of our employees, consistent with shareholder value creation, prudent risk-taking and a long-term perspective.

üOur programs form a critical part of the Company’s employment relationship, which also includes challenging and rewarding work, growth and career development opportunities and being part of a leading company with a unique, inclusive culture and diverse workforce.

üOur programs have a pay for performance focus – payouts are differentiated based on performance relative to targets and peers.

üOur programs target reasonable, affordable and competitive compensation and benefits, aligned with market median levels.

üOur programs are fair and equitable, irrespective of gender, race or other personal characteristics.

Executive Compensation Best Practices

üOur executive compensation structure delivers a significant portion of compensation tied to the achievement of annual and long-term goals that promote shareholder value creation.

üWe emphasize Phillips 66 stock ownership by requiring stock ownership levels for our executives.

üWe limit executive perquisites to items that serve a reasonable business purpose and are common among our peer group.

üWe regularly engage with shareholders on executive compensation.

üWe provide executives the same group benefit programs as we provide other employees, on substantially the same terms.

PHILLIPS 66 PROXY STATEMENT 2021     29

COMPENSATION DISCUSSION AND ANALYSIS

New Executive Compensation Developments For 2021

üWe have enhanced our annual incentive program to increase the weighting of our Environment metric from 5% to 15% to include two new metrics: Low Carbon Priorities and Greenhouse Gas Priorities.

üWe reduced 2021 total target pay for our Chairman and CEO by approximately 5%.

Compensation Programs

The following table summarizes the principal elements of our executive compensation program and the performance drivers of each element.

KEY ELEMENTS OF PAYDELIVERED VIATARGET AMOUNT

PERFORMANCE DRIVERS
(AND WEIGHTINGS)

Base SalaryCashBenchmarked to compensation peer group median; adjusted for experience, responsibility, performance and potential

Annual fixed cash compensation

to attract and retain NEOs

Annual IncentiveVariable Cash Incentive Program (VCIP)

Percentage of base salary

benchmarked to peer group

Adjusted EBITDA (40%)

Operating Excellence (35%)
Adjusted Controllable Costs (15%)
High-Performing Organization (10%)

Individual Modifier (+/- 50% of target)

Long-Term Incentives (LTI)

Performance Share Program (PSP)(1)

(3-year performance period)

50% of LTI Target

Percentage of base salary

benchmarked to peer group

Absolute ROCE (25%)

Relative ROCE (25%)
Relative TSR (50%)

Stock Option Program(2)

25% of LTI Target

Long-term stock price appreciation

Restricted Stock Unit (RSU) Program

25% of LTI Target

Long-term stock price appreciation
(1)Beginning with the PSP 2020-2022, the performance drivers and weightings are Absolute ROCE (50%) and Relative TSR (50%).
(2)The Compensation Committee believes that stock options are inherently performance-based, as options have no initial value and grantees only realize benefits if the value of our stock increases after the date of grant. This practice is intended to ensure that the interests of our NEOs are aligned with those of our shareholders.

Compensation Mix Puts Significant Pay at Risk

Consistent with our philosophy that executive compensation should be linked to Company performance and directly aligned with shareholder value creation, a significant portion of NEO compensation is at risk and based on performance metrics tied to our corporate strategy. "At risk" means there is no guarantee that the target value of the awards will be realized. Based on its evaluation of performance, the Compensation Committee has authority to reduce, and even award nothing for, the performance-based payouts and individual performance adjustments under each of the VCIP and PSP. Stock options can expire with zero value if the Company stock price does not appreciate above the grant date price over the 10-year term of the options. RSUs may lose value depending on stock price performance. Therefore, for NEOs to earn and sustain competitive compensation, the Company must meet its strategic objectives, perform well relative to peers, and deliver market-competitive returns to shareholders. Further detail on the alignment of compensation and shareholder outcomes is described in CEO PAY ALIGNED WITH COMPANY PERFORMANCE.

CEO target compensation mix is 91% at risk and 74% performance-based. The average target mix for the other NEOs is 84% at risk and 69% performance-based. Further, LTI awards make up 76% of the CEO and 69% of other NEOs target compensation mix. For both the CEO and other NEOs, target mix percentages are commensurate with their levels of responsibility. Further detail on these programs is provided in EXECUTIVE COMPENSATION PROGRAM DETAILS.

30     PHILLIPS 66 PROXY STATEMENT 2021

COMPENSATION DISCUSSION AND ANALYSIS

The target mix of the compensation program elements for the CEO and other NEOs is shown below. The charts outline the relative size, in percentage terms, of each element of target compensation.


CEO Target Mix
Other NEOs Target Mix

PIE CHART

Aligned with Best Practices

The following best practices are reflected in our executive compensation programs:

WE DO ...
üTarget the majority of NEO compensation to be performance-based

ü

Link NEO compensation to shareholder value creation by having a significant portion of compensation at risk

ü

Apply multiple performance metrics aligned with our corporate strategy to measure our performance

ü

Cap maximum payouts under our VCIP and PSP

ü

Employ a "double trigger" for severance benefits and equity awards under our Key Employee Change in Control Severance Plan (CICSP)

ü

Include absolute and relative metrics in our LTI programs

ü

Maintain stock ownership guidelines for executives -- CEO 6x base salary; other NEOs 3-5x base salary

ü

Balance, monitor and manage compensation risk through regular assessments and robust clawback provisions

ü

Have extended vesting periods on stock awards, with a minimum one-year vesting period required for stock and stock option awards

ü

Maintain a fully independent Compensation Committee

ü

Retain an independent compensation consultant

ü

Hold a Say-on-Pay vote annually and consider shareholder feedback in the design of our compensation programs
WE DO NOT ...
ûProvide excise tax gross-ups to our NEOs under our CICSP

û

Reprice stock options without shareholder approval

û

Price stock options below grant date fair market value

û

Allow share recycling for stock options

û

Include evergreen provisions in our active equity plans

û

Allow hedging or pledging of Phillips 66 stock

û

Pay dividends during the performance period on unearned PSPs

û

Allow transfer of equity awards (except in the case of death)

û

Provide separate supplemental executive retirement benefits for individual NEOs

PHILLIPS 66 PROXY STATEMENT 2021     31

COMPENSATION DISCUSSION AND ANALYSIS

û

Maintain individual change-in-control agreements

û

Have an employment agreement with the CEO

û

Provide excessive perquisites

EXECUTIVE COMPENSATION PROGRAM DETAILS

Base Salary

Base salary is designed to provide a competitive and fixed rate of pay recognizing employees' different levels of responsibility and performance. As the majority of our NEO compensation is performance-based and tied to long-term programs, base salary represents a less significant component of total compensation. In setting each NEO's base salary, the Compensation Committee considers factors including, but not limited to, the responsibility level for the position held, market data from the compensation peer group for comparable roles, experience and expertise, individual performance and business results.

Below is a summary of the annualized base salary for each NEO for 2020. Because these amounts reflect each NEO's annualized salary as of the dates indicated, this information may vary from the information provided in the SUMMARY COMPENSATION TABLE, which reflects actual base salary earnings in 2020, including the effect of salary changes during the year.

NameSalary as of 1/1/2020
($)
Salary as of 12/31/2020
($)
Greg Garland1,675,008 1,675,008(1)
Kevin Mitchell867,000 903,432 
Robert Herman850,008 870,432 
Paula Johnson805,416 836,040 
Tim Roberts850,008 887,424 
(1)Mr. Garland’s base salary has remained unchanged since March 1, 2017.

Annual base salary increases were effective March 1, 2020, as part of the annual merit cycle for all employees. Base salary increases realign the NEO with the respective compensation peer group levels and reflect each NEO's achievement of established performance objectives corresponding to his or her role. The Compensation Committee determined the adjustments that were made were appropriate to maintain our competitiveness in the market.

Variable Cash Incentive Program (VCIP)

The VCIP, which is our annual incentive program, is designed to provide variability and differentiation based on corporate and individual performance. Through our operational and financial metrics, we designed our VCIP program to align annual awards with shareholder interests and execution of our corporate strategy. We do not tie NEO VCIP awards to the performance of any individual business unit. We believe this structure serves the best interests of shareholders as it promotes collaboration across the organization.

Eligible earnings, which is base salary earned during the year, are multiplied by a VCIP target percentage that is based on each NEO's salary grade level to derive the NEO's target VCIP award. At the end of the performance period, the Compensation Committee reviews the Company's performance to determine the Corporate Payout Percentage. This percentage is based on a mix of operational and financial metrics, the details and weighting of which are described below. The Compensation Committee can award a Corporate Payout Percentage of zero up to the maximum of 200%.

The target award is multiplied by the Corporate Payout Percentage, after which the Compensation Committee takes into account the individual accomplishments of each NEO when determining applicable Individual Performance Adjustments. Individual Performance Adjustments can range from +/–50% of the target award. Adjustments are based on measurable performance of the individual NEO that drives shareholder value.

32     PHILLIPS 66 PROXY STATEMENT 2021

COMPENSATION DISCUSSION AND ANALYSIS

$×%×%++/-=$

Eligible

Earnings

Target

Percentage

Corporate Payout

Percentage

Individual

Adjustments

Total VCIP

Payout

The Compensation Committee reviews metric selection annually to ensure continued alignment with our strategy. For 2020, the Committee used the same metrics as it has in prior years as they believe these metrics were the most appropriate to align compensation with our corporate strategy at this time. This mix of financial and operational metrics, and the rigorous goals set annually by the Compensation Committee, is designed to ensure a balanced view of the Company performance and drive results and continued improvement over the near term.

2020 VCIP METRICS

PIE CHART 

Adjusted EBITDA

We believe Adjusted EBITDA is effective in evaluating our annual core operating performance and is how we determine enterprise value. Our threshold represents the Adjusted EBITDA required to cover our sustaining capital and shareholder dividend commitments. To ensure we continue to deliver on our growth strategy, the target and maximum for Adjusted EBITDA represent returns that are 1.5% and 3.0% above our Weighted Average Cost of Capital (WACC), respectively.

Based on actual Company performance being 68% below target and below threshold, the Compensation Committee determined that no payout was earned for this metric. Adjusted EBITDA, as used for VCIP, is a non-GAAP financial measure. See Appendix B for additional information.

BAR CHART

Operating Excellence

Operating excellence, including personal and process safety, environmental stewardship and asset availability, is foundational in meeting our corporate strategy of growth, returns and distributions. Strong operating excellence is essential in demonstrating our focus on Environment, Social and Governance matters, which we view as driving shareholder value creation. We measure ourselves against other companies in our industry for personal and process safety metrics and target sustained performance in environmental stewardship and effective management of unplanned downtime for asset availability.

For metrics for which comparative data was available, like Total Recordable Rate (TRR), Lost Workday Case Rate (LWCR), and Process Safety Event (PSE) Rate, we benchmarked ourselves against companies with the strongest

PHILLIPS 66 PROXY STATEMENT 2021     33

COMPENSATION DISCUSSION AND ANALYSIS

safety records in our industry. Generally, these companies fall within the top two quartiles of all companies reported. We then established our threshold, target, and maximum goals based on the 25th, 50th, and 75th percentiles of this group of companies.

Where comparative data was not available, like for asset availability and environmental events, we established our threshold, target, and maximum goals based on our own historical performance, with the goal of continuous improvement. For asset availability, we incorporate the lines of our business and weight them by EBITDA.

In 2020, we exceeded or tied our previously best performance for TRR, LWCR, PSE Rate, and Environmental Events. For Asset Availability, we exceeded our target level of performance. As a result, the Compensation Committee approved an overall payout for Operating Excellence of 194% of target.

Combined TRR and LWCR: Our industry-leading performance for TRR was 31% better than our maximum goal, achieving a payout of 200% of target. Our industry-leading performance in LWCR was 60% better than maximum, achieving a payout of 200% of target.

PSE Rate:Our industry-leading PSE Rate was 50% better than maximum, achieving a payout of 200% of target.

Environmental Events: The Compensation Committee considered that in the industries in which we operate there is increasingly stringent regulation and scrutiny on environmental performance. Our performance was 31% better than maximum, achieving a payout of 200% of target.

Asset Availability:Our availability of 96.8% across our lines of business was 1.5 percentage points above target, which resulted in a payout of 188% of target.

 Payout Levels Based on Performance

2020

Results

Payout

%

 0%50%100%200%
Combined TRR> 0.370.370.210.160.11200%
Combined LWCR> 0.130.130.060.050.02200%
Process Safety Event Rate> 0.090.090.070.040.02200%
Environmental Events> 122122115< 10975200%
Asset Availability< 93.6%93.6%95.3%97.0%96.8%188%
Combined Operating Excellence     194%

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Adjusted Controllable Costs

Adjusted Controllable Costs focuses on maintaining or reducing costs. We operate in an industry where a substantial portion of operating costs are market driven and this metric drives a culture of cost discipline. Our targets for threshold, target, and maximum are based on our budget for the year. For threshold performance, Adjusted Controllable Costs could not exceed budget by more than 3%, target performance was based on achieving budget, and maximum performance required Adjusted Controllable Costs to be 3% under budget.

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COMPENSATION DISCUSSION AND ANALYSIS

Given the economic environment during 2020, we quickly adapted to the market conditions and reduced our adjusted controllable costs by 6% versus our approved budget, resulting in a payout of 200%. Adjusted Controllable Costs is a non-GAAP financial measure. See Appendix B for additional information.

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High-Performing Organization (HPO)

We believe maintaining and enhancing a high-performing organization is critical to our success and is part of our human capital management strategy. Our employees promote our culture and are integral to achieving our strategic goals and maximizing long-term shareholder value. We measure our High-Performing Organization performance relative to the following:

Culture

foster behaviors that promote

our unique culture

Capability

build depth and breadth

in our skills

Performance
deliver exceptional,

sustainable results

ü     Continued to embed Our Energy in Action, our leadership behaviors, in talent and business practices

ü     Strengthened our commitment and accelerated our efforts to advance Inclusion and Diversity

ü     Recognized by Forbes as a Best Employer for Diversity, and a Best Place to Work for Vets by Military Times

ü     Sharpened managerial skills through our internal development programs

ü     Deployed new technologies and implemented new ways of working to drive efficiency and improve performance

ü     Implemented virtual intern and recruiting programs and leveraged national diversity partnerships to expand recruiting reach

ü     Realized strong retention of top talent, and recruitment and promotions for diverse groups

ü     Continued to enhance the performance management process and experience

ü     Deployed “Your Personal Priorities” survey to inform our global Total Rewards strategy

ü     Enhanced 2021 VCIP design to incorporate metrics that demonstrate our commitment to a lower-carbon economy

ü     Significant progress made on AdvantEdge66 initiatives by leveraging technology, process improvements, and data analytics

ü     Responded to COVID-19 with measured protocols to ensure a safe workplace for employees and support for our communities 

We strive for continuous improvement of our high-performing organization, as we believe it is our employees that differentiate us in the market. Based on our superior performance, the Compensation Committee determined that 180% of target was earned for High-Performing Organization.

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COMPENSATION DISCUSSION AND ANALYSIS

Total Corporate Payout

The formulaic result of our individual metrics was a Total Corporate Payout of 115%, as summarized in the following table.

MetricPayout PercentageWeightCorporate Amount
Adjusted EBITDA0%40%0%
Operating Excellence194%35%67%
Adjusted Controllable Costs200%15%30%
High-Performing Organization180%10% 18%
Total Corporate Payout  115%

Individual Performance Highlights

The Compensation Committee has the authority to adjust our NEOs' individual VCIP payouts by +/–50% of the formula-based target payout. The Compensation Committee may apply an individual performance adjustment to reflect project-based accomplishments that drove or detracted from shareholder value or for market-based considerations to more closely align the payout with shareholder returns. This flexibility allows us to reflect our unique business strategy and portfolio of assets as well as differentiate individual executive performance. The Compensation Committee adjusted the individual VCIP payouts for NEOs based on their responsibility for the success of projects and initiatives that led to the execution of our strategy. These projects and initiatives, as shown in the following table, contributed to the execution of our strategy and produced the results as shown in our Company Performance Summary.

TABLE 

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COMPENSATION DISCUSSION AND ANALYSIS

Total VCIP payouts for each of our NEOs are shown in the table below.

 2020 Eligible Earnings
($)
Target VCIP Percentage
(%)
Corporate Payout Percentage
(%)
Individual Performance Adjustment
(%)
Total Payout
($)
Greg Garland1,675,008 160%115%0%3,082,015 
Kevin Mitchell897,360 100%115%25%1,256,304 
Robert Herman867,028 90%115%25%1,092,455 
Paula Johnson830,936 90%115%15%972,195 
Tim Roberts881,188 90%115%25%1,110,297 

The Compensation Committee concluded that, due to the challenging economic environment and our TSR performance, it was not appropriate to make a positive individual performance adjustment on Mr. Garland’s 2020 VCIP award despite significant achievements during the year.

Variable Cash Incentive Program – Increased Focus on Sustainable Performance in 2021

At Phillips 66, we provide energy that improves lives and meets the world’s growing needs. At the same time, we know that climate change is a complex, global issue that requires long-term commitment, action by every segment of society, technology development and free-markets solutions.

Our commitment to providing energy and improving lives includes advancing the global effort to transition to a lower-carbon economy. To demonstrate this commitment, we have enhanced our 2021 VCIP design to increase the weighting of our Environment metric from 5% to 15% to include two new metrics, each weighted 5%:

Low-Carbon Priorities: 2021 priorities will reflect efforts to advance lower-carbon investments, optimization and innovation

Greenhouse Gas Priorities: 2021 priorities will reflect efforts to reduce manufacturing emissions intensity and setting GHG reduction targets

PIE CHART 

These enhancements deliver a VCIP design that equally weights our Operational Sustainability and Financial Sustainability performance – both essential as we execute our corporate strategy and maximize shareholder value.

Long-Term Incentive Programs Link Pay Outcomes to Company Performance

We deliver 50% of long-term target value as awards from our Performance Share Program, 25% in the form of stock options, and 25% in the form of RSUs.

We believe this mix of awards is aligned with our compensation philosophy, reflects the cyclical nature of our

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COMPENSATION DISCUSSION AND ANALYSIS

business, promotes retention of our high-performing talent, supports succession planning and is consistent with market practice.

PIE CHART 

Performance Share Program (PSP)

Each PSP has a three-year performance period, and therefore three PSPs are in progress at any time. Programs in effect during 2020 were PSP 2018-2020, PSP 2019-2021, and PSP 2020-2022. By delivering 50% of LTI through the PSP, a significant portion of NEO compensation is tied to long-term Company performance, incentivizing continued outperformance relative to peers and aligning management interests with those of shareholders.

Target Shares at Beginning of Performance Period. The Compensation Committee uses the Compensation Peer Group to benchmark LTI and establish base salary multiples for similar roles at peer organizations. The number of target shares is determined by dividing the multiple by the average of the stock's fair market value for the 20 days prior to the start of the performance period, less anticipated dividends during the performance period.

The Compensation Committee assesses the individual performance of each NEO and, based on that assessment, may adjust an award by up to +/–30% of the target amount at grant. The CEO provides input regarding awards made to all NEOs (other than himself) and the Compensation Committee evaluates the individual performance of the CEO. The Compensation Committee believes in applying performance adjustments to the number of target shares at the beginning of the performance period, rather than the end, so that performance-adjusted compensation is subject to Company performance and market volatility throughout the performance period, aligning executive compensation with shareholder interests.

Target shares may be adjusted during the performance period for promotions that occur during the performance period.

NEOs hired after the start of the performance period may receive prorated target shares in ongoing PSP cycles, at the discretion of the Compensation Committee, so that their interests are immediately aligned with the Company long-term goals and shareholder interests.

Performance Metrics. The performance metrics used for all three current PSP programs are after-tax return on capital employed (ROCE) and total shareholder return (TSR) based on a 20-day average closing price. After-tax ROCE accounts for 50% and is equally weighted between absolute and relative performance (for the PSP 2020-2022, only absolute ROCE is used). The remaining 50% is our TSR performance relative to peers.

The Compensation Committee considers ROCE an important measure of Company growth and overall performance. When establishing the Absolute ROCE performance metrics, the Compensation Committee reviews the corporate strategy, operating targets, and past performance to set metrics that are expected to be rigorous, demand strong performance, and reward for delivering results above the Company’s WACC.

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COMPENSATION DISCUSSION AND ANALYSIS

The absolute ROCE threshold is a return percentage equivalent to the adjusted EBITDA required to cover our sustaining capital and shareholder dividend commitments during the three-year performance period.

The absolute ROCE target delivers 1.5 percentage points above our WACC over the performance period.

The absolute ROCE maximum delivers 3.0 percentage points above WACC over the performance period.

The Compensation Committee also recognizes that relative TSR is the most common standard for relative comparisons to peers. Our performance is evaluated as compared to our Performance Peer Group and the S&P 100 Index. Further information regarding our Performance Peer Group is provided in Peer Group Comparisons.

These metrics translate into the following goals:

Performance Share Program 2018-2020
MetricWeightThreshold (1)Target (2)Maximum (3)
Absolute ROCE25%

2.9%

average of 2018 (2.4%),

2019 (2.8%), and 2020 (3.6%)

delivers sustaining capital and shareholder dividend commitments over 3-year period

9.1%

average of 2018 (9.4%),

2019 (9.2%), and 2020 (8.8%)

delivers WACC +1.5%

over 3-year period

10.6%

average of 2018 (10.9%),

2019 (10.7%), and 2020 (10.3%)

delivers WACC +3.0%

over 3-year period

Relative ROCE25%

above 10th percentile

of Performance Peers

median

of Performance Peers

above 90th percentile

of Performance Peers

Relative TSR50%

above 10th percentile

of Performance Peers

median

of Performance Peers

above 90th percentile

of Performance Peers

(1)Threshold for PSP 2019-2021 will be an average of 2019 (2.8%), 2020 (3.6%), and 2021 (3.2%). Threshold for PSP 2020-2022 will be an average of 2020 (3.6%), 2021 (3.2%), and the ROCE necessary to deliver sustaining capital and dividend commitments in 2022. The 2022 number will be known by end of 2021.

(2)Target for PSP 2019-2021 will be an average of 2019 (9.2%), 2020 (8.8%), and 2021 (7.7%). Target for PSP 2020-2022 will be an average of 2020 (8.8%), 2021 (7.7%), and the ROCE necessary to deliver WACC plus 1.5% in 2022. The 2022 number will be known by end of 2021.

(3)Maximum for PSP 2019-2021 will be an average of 2019 (10.7%), 2020 (10.3%), and 2021 (9.2%). Maximum for PSP 2020-2022 will be an average of 2020 (10.3%), 2021 (9.2%), and the ROCE necessary to deliver WACC plus 3.0% in 2022. The 2022 number will be known by end of 2021.

Settlement. Awards under the PSP programs are denominated in shares but are paid in cash at the end of their respective performance periods. Performance can range from 0-200% of target.

PSP 2018-2020 Payout. After the close of the PSP 2018-2020, the Compensation Committee considered the following results when approving the payout of 125% of target.

Absolute ROCE: Absolute ROCE performance for the three-year performance period was 10.0%, or 0.9 percentage points above target, resulting in a payout of 160% of target, weighted at 25%. ROCE, as used in our PSP program, is a non-GAAP financial measure. See Appendix B for additional information.

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Relative ROCE: Relative ROCE performance for the three-year performance period was 4th of 14 peers, including 13 peer companies and Phillips 66. This resulted in a payout of 160% of target for relative ROCE performance, weighted at 25%.

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COMPENSATION DISCUSSION AND ANALYSIS

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Relative TSR: Relative TSR performance for the three-year performance period was -14.7% and 9th of 15 peers, including 13 peer companies, the S&P 100 Index and Phillips 66. This resulted in a payout of 85% of target for relative TSR performance, weighted at 50%.

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The Compensation Committee approved payouts for our NEOs for PSP 2018-2020. The payment was made in February 2021 and is described further below and in the footnotes of the SUMMARY COMPENSATION TABLE.

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Stock Option Program

In 2020, 25% of the LTI target value was delivered to executives in the form of stock options. These awards are inherently performance-based, as the stock price must increase before the executive can realize any value. We believe stock options drive behaviors and actions that enhance long-term shareholder value.

Stock options are typically granted in February each year. The number of options awarded is calculated based on the Black-Scholes-Merton model. The exercise price of stock options is set at 100% of the fair market value of our common stock on the date of grant. Stock options granted to our NEOs in February 2020 vest ratably over a three-year period and have a ten-year term. Stock options do not have voting rights and are not entitled to receive dividends.

Restricted Stock Units (RSUs)

In 2020, 25% of the LTI target value was delivered to executives in the form of RSUs. The Compensation Committee believes maintaining RSUs in our LTI program complements the overall compensation mix by:

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COMPENSATION DISCUSSION AND ANALYSIS

driving the right behaviors and actions consistent with creating shareholder value;

providing diversification of compensation in recognition of the cyclical nature of our industry;

resulting in actual share ownership aligned with our stock ownership guidelines; and

supporting executive retention.

RSUs are typically granted in February each year. The Compensation Committee assesses the individual performance of each NEO and based on that assessment, may adjust an award by up to +/–30% of the target amount at grant. The CEO provides input regarding awards made to all NEOs (other than himself). The Compensation Committee evaluates the individual performance of the CEO. The number of RSUs is determined based on the fair market value of Company stock on the date of grant. RSUs awarded to our NEOs in February 2020 cliff vest after three years. RSUs do not carry voting rights but do earn dividend equivalents during the vesting period.

2020 LTI Compensation

The Compensation Committee approved the following LTI for the NEOs for 2020. The Compensation Committee considered the individual performance of each NEO as outlined above when determining the target values. These values may not match the accounting values presented in the GRANTS OF PLAN-BASED AWARDS table.

NAMEPSP 2020-2022
($)
STOCK OPTIONS
($)
RSUs
($)
TOTAL TARGET (1)
($)
Greg Garland6,700,032 3,350,016 3,350,016 13,400,064 
Kevin Mitchell2,193,510 997,050 1,096,755 4,287,315 
Robert Herman1,683,016 765,007 841,508 3,289,531 
Paula Johnson1,594,724 724,874 797,362 3,116,960 
Tim Roberts1,836,017 765,007 918,009 3,519,033 
(1)PSP 2020 – 2022 and RSU targets include individual adjustments Mr. Mitchell (+10%), Mr. Herman (+10%), Ms. Johnson (+10%), and Mr. Roberts (+20%). The Compensation Committee did not approve any adjustments to stock option targets.

CEO Pay Aligned with Company Performance

A significant portion of CEO pay is delivered in long-term incentives, which are designed to tie share price performance and achievement of our long-term financial goals. Mr. Garland’s pay as reported in the SUMMARY COMPENSATION TABLE (“SCT”) reflects the accounting value of long-term incentives at the time of grant and not the actual value received from these grants. When evaluating the compensation program each year, the Compensation Committee reviews outstanding awards and the value earned under the long-term incentive program in prior periods to confirm that the payouts are aligned with performance and intended incentives. As such, we believe it is useful to compare Mr. Garland’s “Adjusted SCT Pay” in the context of his “Realized Pay” to provide a clear picture of the value being delivered to Mr. Garland and how it relates to Company performance.

For purposes of the information in this section, we define:

·“Adjusted SCT Pay” as the compensation disclosed in the SUMMARY COMPENSATION TABLE, adjusted to exclude “Changes in Pension Value and Nonqualified Deferred Compensation Earnings.”
·“Realized Pay” as the sum of (a) base salary and VCIP paid; (b) the amount reported as W-2 taxable earnings for the vesting of RSUs, exercise of any stock options, and vesting of PSPs with performance periods that ended in the applicable year (i.e., PSP 2016-2018 for 2018, PSP 2017-2019 for 2019, and PSP 2018-2020 for 2020).

As demonstrated in the chart below, Adjusted SCT Pay and Realized Pay differ meaningfully and demonstrate the intended link between our compensation program and outcomes for shareholders. During periods of strong stock price performance, our equity-linked long-term incentives may deliver more value to executives than is rendered in

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COMPENSATION DISCUSSION AND ANALYSIS

the Summary Compensation Table. When stock price declines, the value of our executive’s equity-linked long-term compensation declines and realized compensation may lag the value rendered in the Summary Compensation Table, consistent with the intended alignment between investor outcomes and compensation outcomes.

The charts and information included below are not substitutes for the information included in the SUMMARY COMPENSATION TABLE, but are meant to provide additional insight into our CEO pay:

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(1) We have not included the Performance Share Programs that had a 5-year restriction period after the performance period for Realized Pay purposes. Specifically, we did not include the lapsing of restrictions of PSP 2010-2012 in 2018, PSP 2011-2013 in 2019, and PSP 2012-2014 in 2020.

2021 Chairman and Chief Executive Officer Compensation

At its February 4, 2021 meeting, the Compensation Committee approved a reduction to the 2021 target compensation for Greg Garland, Chairman and Chief Executive Officer to better align with our compensation peer group and the changing market conditions. The Compensation Committee also decided not to increase Mr. Garland’s base salary, which has remained unchanged since March 1, 2017.

YEAR

BASE SALARY

($)

VCIP

($)

PSP
($)

STOCK OPTIONS

($)

RSUs

($)

TOTAL TARGET

($)

20201,675,0082,680,0136,700,0323,350,0163,350,01617,755,085
20211,675,0082,680,0136,281,2803,140,6403,140,64016,917,581

The reduction in total target compensation is approximately $800,000 or 5%.

Peer Group Comparisons

We utilize both a compensation peer group and a performance peer group due to the size of our Company and diversification of assets. The Compensation Committee reviews these peer groups annually and adjusts as necessary. We benchmark against large companies, as measured by asset value and market capitalization, to set target compensation using the compensation peer group. We assess our relative performance against peers in the industries in which we operate using the performance peer group. While our unique portfolio of assets provides an advantage to investors, it does necessitate using two peer groups to appropriately align compensation and assess performance.


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COMPENSATION DISCUSSION AND ANALYSIS


Compensation Peer Group


Relative analysis. We use the compensation peer group to evaluate and determine compensation levels for our NEOs, including base salary adjustments and targets for our annual bonus and LTI programs.

Criteria for selection. Our compensation peer group consists of companies that have similar jobs and job scope as our NEOs. The compensation peer group primarily consists of large companies with significant capital investments and complex international operations.

Our compensation peer group includes companies that are comparable to Phillips 66 based on three primary criteria – assets, market capitalization, and business operations. Revenue is a secondary criterion due to the nature of our operations. The Compensation Committee believes each of these criteria is necessary to fully reflect the complex nature of our business and determine the optimal group of companies with which to compare Phillips 66.

Companies included. The table below shows the companies in our 2020 compensation peer group. At the time the compensation peer group was determined, we were at the 43rd percentile in assets, 63rd percentile in market value, and 65th percentile in revenue.

2020 Compensation Peer Group
Archer-Daniels-Midland CompanyFord Motor CompanyMarathon Petroleum Corporation
Chevron CorporationGeneral Motors CompanyOccidental Petroleum Corporation

ConocoPhillips

Halliburton CompanySchlumberger Limited

Dow Inc.

Honeywell International Inc.The Williams Companies, Inc.
Exxon Mobil CorporationLyondellBasell Industries N.V.Valero Energy Corporation

Performance Peer Group

Relative analysis. The performance peer group is used to evaluate relative business results in our Performance Share Program. This includes both relative TSR and relative ROCE. We also evaluate our relative TSR performance against the S&P 100 Index, which the Compensation Committee believes is an appropriate comparison for performance purposes because the index reflects the companies with which we compete for capital in the broader market.

Criteria for selection. Phillips 66 is uniquely positioned in the energy industry, with a large refining and marketing base, a growing midstream NGL business and significant petrochemical exposure. To reflect our unique portfolio of assets, we include companies operating in each of our three major businesses. We believe that our performance peer group is representative of the companies that investors use for relative performance comparisons.

Companies included. The table below shows the performance peer group that was established for evaluating both relative TSR and relative ROCE for the three-year performance period ended December 31, 2020.

Refining and MarketingMidstreamChemicals
AndeavorEnterprise Products Partners L.P.Celanese Corporation
Delek US Holdings, Inc.ONEOK, Inc.Eastman Chemical Company
HollyFrontier CorporationTarga Resources Corp.LyondellBasell Industries N.V.
Marathon Petroleum CorporationHuntsman Corporation
PBF Energy Inc.Westlake Chemical Corporation
Valero Energy Corporation

Marathon Petroleum Corporation acquired Andeavor during the performance period. Each of Marathon Petroleum Corporation and Andeavor was previously in our performance peer group; after the acquisition we included the combined company.

Changes for 2020. For performance periods beginning in 2020, the Compensation Committee reviewed the current performance peers and approved the following changes:

replace Celanese, Eastman, and Huntsman with Dow Inc.

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COMPENSATION DISCUSSION AND ANALYSIS

replace Enterprise Products Partners L.P. with Magellan Midstream Partners, MPLX LP, and The Williams Companies, Inc.

OTHER BENEFITS AND PERQUISITES

Below is a summary of other compensation elements available to our NEOs:

Broad-Based Employee Benefit Programs

NEOs participate in the same basic benefits package available to our other U.S. salaried employees. This package includes qualified pension; 401(k) plan; medical, dental, vision, life, and accident insurance plans, as well as flexible spending arrangements for health care and dependent care expenses; and our matching gift program.

Additional Executive Perquisites

Consistent with our compensation philosophy to provide compensation and benefits aligned with market practice, we provide our NEOs financial planning and executive health benefits. These benefits were imputed to the executives and included in All Other Compensation in the SUMMARY COMPENSATION TABLE. We did not provide a gross-up for these benefits.

Comprehensive Security Program

The Board has adopted a comprehensive security program to address the increased security risks for certain senior executives. Mr. Garland was the only NEO in 2020 designated by the Board as requiring increased security under this program. The program allows for certain additional security measures in specific situations when the senior executive is traveling by car or airplane. An additional security review of the NEO's personal residences is also included. Any additional costs to the Company for these activities are reported as All Other Compensation and included in the SUMMARY COMPENSATION TABLE.

Executive Retirement Plans

We maintain the following supplemental retirement plans for our NEOs.

Phillips 66 Key Employee Deferred Compensation Plan (KEDCP) — This voluntary deferred compensation plan provides tax-efficient retirement savings by allowing executives to voluntarily defer both the receipt and taxation of a portion of their base salary and annual bonus until a specified date or when they leave the Company. Further information is provided in the NONQUALIFIED DEFERRED COMPENSATION table.

Phillips 66 Defined Contribution Make-Up Plan (DCMP) — This defined contribution restoration plan restores benefits capped under our qualified defined contribution plan due to Internal Revenue Code (IRC) limits. Further information is provided in the NONQUALIFIED DEFERRED COMPENSATION table.

Phillips 66 Key Employee Supplemental Retirement Plan (KESRP) — This defined benefit restoration plan restores Company-sponsored benefits capped under the qualified defined benefit pension plan due to IRC limits. Further information is provided in the PENSION BENEFITS AS OF DECEMBER 31, 2020 table.

Executive Life Insurance

We provide life insurance policies to all U.S.-based employees with a face value approximately equal to their annual base salary. For our NEOs, the face value of this coverage is approximately two times their annual base salary.

Executive Severance and Change in Control Plans

We do not maintain individual severance or change in control (CIC) agreements with our executives. However, we maintain the Phillips 66 Executive Severance Plan (ESP) and the Phillips 66 CICSP to accomplish several specific objectives, including:

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COMPENSATION DISCUSSION AND ANALYSIS

ensuring shareholder interests are protected during business transactions by providing benefits that promote senior management stability;

providing and preserving an economic motivation for participating executives to consider a business combination that might result in an executive's job loss; and

competing effectively in attracting and retaining executives in an industry that features frequent acquisitions and divestitures.

Executives may not participate in both plans as a result of the same severance event. Among other benefits, the ESP provides a payment equal to one and one-half or two times the executive's base salary, depending on salary grade level, and the executive's current target annual bonus if he or she is involuntarily terminated without cause. The CICSP provides a payment equal to two or three times the sum of the executive's base salary and the greater of his or her target bonus or average of the last two bonus payments, depending on salary grade level. The executive must be involuntarily terminated without cause in connection with a change in control or terminate employment for good reason within two years after the change in control to be eligible for a CICSP payment. We believe this "double trigger" requirement is in the best interest of shareholders and is considered a best practice.

Details of potential payments under these plans are outlined in the POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL section. These plans do not provide any excise tax gross-up protections.

Personal Use of Company Aircraft

The primary purpose of our corporate aircraft is to facilitate Company business. In the course of conducting Company business, executives may occasionally invite a family member or other personal guest to travel with them to attend a meeting or function. When such travel is deemed taxable to the executive, we provide further payments to reimburse the costs of the inclusion of this item in his or her taxable income.

EXECUTIVE COMPENSATION GOVERNANCE

Clawback Provisions

Short- and long-term compensation, deferred compensation and nonqualified retirement benefits received by any executive are subject to clawback provisions if financial or other data is materially misstated due to negligence or misconduct on the part of the executive, as determined by the Compensation and Audit Committees.

Stock Ownership

The Compensation Committee believes requiring executives to retain shares of Phillips 66 common stock helps align executive performance with shareholder value creation and mitigates compensation risk. Our stock ownership guidelines require executives to own Phillips 66 common stock, valued as a multiple of the executive's base salary, within five years from the date the executive becomes subject to the guidelines, as shown below:

EXECUTIVE LEVELSALARY MULTIPLE
Chairman and CEO6
Executive Vice President3-5

Shares of Phillips 66 common stock owned and RSUs are included when determining whether an executive has met the required ownership levels. Compliance with the stock ownership guidelines is reviewed annually. All NEOs currently comply with these stock ownership guidelines or are on track to comply within the applicable five-year period.

Tax Considerations—Internal Revenue Code Section 162(m)

IRC Section 162(m) places a $1 million limit on compensation that we may deduct for federal income tax purposes in any one year with respect to certain “covered employees.” Prior to the passage of the Tax Cuts and Jobs Act in

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COMPENSATION DISCUSSION AND ANALYSIS

December 2017, such covered employees included our chief executive officer and our three other most highly compensated executive officers (excluding our chief financial officer). The $1 million deduction limitation was subject to an exemption for performance-based compensation.

With the enactment of the Tax Cuts and Jobs Act, the Section 162(m) performance-based compensation exemption has been repealed and the $1 million deduction limit now applies to our chief financial officer, as well as our chief executive officer and our three other most highly compensated executive officers. Further, once an executive officer becomes a “covered employee” the $1 million deduction limit continues to apply to compensation paid to such executive officer at any time, including any future roles within the Company, any termination or retirement payments, and payments occurring after their death. The Tax Cuts and Jobs Act rules generally applied to us starting with our taxable year that commenced January 1, 2018, but do not apply to compensation provided pursuant to written binding contracts in effect on November 2, 2017, that are not materially modified after that date.

We monitor the application of Section 162(m) and the associated Treasury regulations on an ongoing basis and the advisability of qualifying executive compensation for deductibility. Notwithstanding the repeal of the exemption for "performance-based compensation," the Compensation Committee intends to maintain its commitment to structuring the Company's executive compensation programs in a manner designed to align pay with performance.

Trading Policies

Our insider trading policy prohibits all employees and directors from trading Company stock while in possession of material, non-public information. This policy requires executives and directors, as well as employees with regular access to insider information, to follow specific pre-clearance procedures before entering into transactions in our stock.

Hedging or Pledging of Company Stock

Our insider trading policy also prohibits hedging transactions and pledging of our stock. These prohibitions apply to all employees and directors of the Company, and cover any transactions in our stock, whether acquired pursuant to our compensation plans, owned directly, or otherwise. The prohibitions on hedging transactions include purchasing any financial instruments, or otherwise engaging in any transactions, that hedge or offset any decrease in the market value of our stock or limit an employee or director’s ability to profit from an increase in the market value of our stock. The prohibition on pledging includes holding Phillips 66 stock in a margin account or pledging our stock as collateral for a loan.

Independent Compensation Consultant

The primary role of the independent executive compensation consultant retained by the Compensation Committee is to advise the Compensation Committee on:

our compensation programs and processes relative to external corporate governance standards;

the appropriateness of our executive compensation programs in comparison to those of our peers; and

the effectiveness of the compensation programs in accomplishing the objectives set by the Compensation Committee with respect to executives.

In 2020, the Compensation Committee retained Mercer as its independent executive compensation consultant. The Compensation Committee evaluated whether Mercer's work raised any conflict of interest and determined that no such conflict existed. During 2020, fees paid to Mercer in its role as the independent compensation consultant for the Compensation Committee totaled $222,528. In addition, the Company paid fees to Mercer totaling $1,890,075 during 2020 for all other services performed for the Company. These services can be broken down as 32% related to administration of pension liabilities in international locations that have been sold, 18% related to administration of ongoing international benefit plans, 11% related to Human Resources consulting engagements, and 39% related to insurance and surety bonds.

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COMPENSATION DISCUSSION AND ANALYSIS

Compensation Risk Assessment

The Compensation Committee oversees management's risk assessment of all elements of our compensation programs, policies and practices for all employees. Management has concluded that our compensation programs, policies and practices are not reasonably likely to have a material adverse effect on the Company. Relevant provisions of our programs include, but are not limited to:

VCIP and LTI metrics are aligned with our corporate strategy to ensure continued focus on actions that drive shareholder value.
VCIP and LTI compensation targets increase with each pay grade, further emphasizing long-term value creation and alignment with shareholder interests.
Maximum payouts under VCIP and PSP programs are appropriately limited to balance risk-taking with long-term strategic goals.
Maintaining a level of discretion in the performance-based programs, which enables the Compensation Committee to award zero payouts to executives who perform poorly or when warranted by Company performance.
Clawback provisions that allow for reduction in awards for executives who expose the Company to undue risk.
LTI design that provides incentives for executive retention and Company and individual performance.
Stock ownership guidelines, anti-pledging policies, and anti-hedging policies that align executive interests with those of shareholders.

The Compensation Committee considers senior management succession planning a core part of the Company’s risk management program. The Compensation Committee regularly reviews with the CEO succession planning for senior leadership positions (other than the CEO position itself, for which succession planning is reviewed by the Nominating and Governance Committee), and the timing and development required to ensure continuity of leadership over the short- and long-terms, to manage risk in this area.

ROLE OF THE HUMAN RESOURCES AND COMPENSATION COMMITTEE

Authority and Responsibilities

The Compensation Committee is responsible for providing independent, objective oversight of our executive compensation programs and determining the compensation for our CEO and anyone who meets our definition of a Senior Officer. Currently, our internal guidelines define a Senior Officer as an officer of the Company who reports directly to the CEO or any other officer of the Company who is either a Senior Vice President or above or a reporting officer under Section 16(b) of the Exchange Act. As of December 31, 2020, we had 10 Senior Officers. In addition, the Compensation Committee acts as plan administrator of the compensation programs and benefit plans for our CEO and Senior Officers and as an avenue of appeal for current and former Senior Officers regarding disputes over compensation and benefits.

The Compensation Committee oversees the Company's executive compensation philosophy, policies, plans and programs for our CEO and Senior Officers to ensure:

alignment of our executive compensation programs with the long-term economic interests of shareholders;
competitiveness of compensation within the markets in which Phillips 66 competes for talent;
retention of top talent; and,
development of a diverse talent pool with respect to CEO and Senior Officer succession planning.

PHILLIPS 66 PROXY STATEMENT 2021     47

COMPENSATION DISCUSSION AND ANALYSIS

One of the Compensation Committee's responsibilities is to assist the Board in its oversight of the integrity of the Company's COMPENSATION DISCUSSION AND ANALYSIS. The HUMAN RESOURCES AND COMPENSATION COMMITTEE REPORT summarizes certain Compensation Committee activities concerning compensation earned during 2020 by our NEOs.

A complete listing of the authority and responsibilities of the Compensation Committee is set forth in its written charter adopted by the Board of Directors, which is available in the "Investors" section of our website under the caption "Corporate Governance."

Members

The Compensation Committee consists of five members who meet all requirements for "non-employee," "independent" and "outside" director status under the Exchange Act, NYSE listing standards, and the IRC, respectively. The members of the Compensation Committee and the member to be designated as Chair, like the members and Chairs of all the Board committees, are reviewed periodically by the Nominating and Governance Committee, which recommends committee appointments to the full Board. The Board of Directors has final approval of the committee structure of the Board.

Meetings

The Compensation Committee holds regularly scheduled meetings in association with regular Board meetings and meets by teleconference between such meetings as necessary to discharge its duties. The Compensation Committee reserves time at each regularly scheduled meeting to review matters in executive session without management present except as specifically requested by the Compensation Committee. In 2020, the Compensation Committee had five regularly scheduled meetings and one additional telephonic meeting. More information regarding the Compensation Committee's activities at such meetings can be found in the COMPENSATION DISCUSSION AND ANALYSIS.

Continuous Improvement

The Compensation Committee is committed to a process of continuous improvement in exercising its responsibilities. To that end, the Compensation Committee:

receives ongoing training regarding best practices for executive compensation;
regularly reviews its responsibilities and governance practices in light of ongoing changes in the legal and regulatory arena and trends in corporate governance;
annually reviews its charter and proposes any desired changes to the Board of Directors;
annually conducts a self-assessment of its performance that evaluates the effectiveness and seeks ideas to improve its processes and oversight;
regularly reviews and assesses whether the Company's executive compensation programs are having the desired effects without encouraging an inappropriate level of risk; and
regularly reviews all its activities, including its self-assessment and a compensation risk assessment, with the full Board of Directors.

HUMAN RESOURCES AND COMPENSATION COMMITTEE REPORT

Review with Management. The Human Resources and Compensation Committee has reviewed and discussed with management the COMPENSATION DISCUSSION AND ANALYSIS presented in this proxy statement.

Discussions with Independent Executive Compensation Consultant. The Human Resources and Compensation Committee has discussed with Mercer, an independent executive compensation consulting firm, the executive compensation programs of the Company, as well as specific compensation decisions made by the Human Resources and Compensation Committee for 2020. Mercer was retained directly by the Human Resources and

48     PHILLIPS 66 PROXY STATEMENT 2021

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Committee, independent of the management of the Company. The Human Resources and Compensation Committee has received written disclosure from Mercer confirming the consultant's independence, has discussed with Mercer its independence from Phillips 66, and believes Mercer to be independent of management.

Recommendation to the Phillips 66 Board of Directors. Based on its review and discussions noted above, the Human Resources and Compensation Committee recommended to the Board of Directors that the COMPENSATION DISCUSSION AND ANALYSIS be included in the Phillips 66 proxy statement on Schedule 14A and the Phillips 66 Annual Report on Form 10-K for the year ended December 31, 2020.

HUMAN RESOURCES AND COMPENSATION COMMITTEE

Dr. Marna C. Whittington, Chair

Gary K. Adams

Lisa A. Davis

Harold W. McGraw III

Glenn F. Tilton

PHILLIPS 66 PROXY STATEMENT 2021     49

EXECUTIVE COMPENSATION TABLES

EXECUTIVE COMPENSATION TABLES

The following tables and accompanying narrative disclosures provide information concerning total compensation earned by our CEO and other NEOs as of December 31, 2020, for services to Phillips 66 or any of our subsidiaries during 2020, 2019 and 2018.

SUMMARY COMPENSATION TABLE

The following table summarizes the compensation for our NEOs for fiscal years 2020, 2019 and 2018.

NAME, POSITION,
YEAR

SALARY

(1) ($)

 

STOCK
AWARDS

(2) ($)

 OPTION
AWARDS
(3) ($)
 NON-EQUITY
INCENTIVE PLAN
COMPENSATION
(4) ($)
 

CHANGE IN
PENSION VALUE
AND
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS

(5) ($)

 ALL OTHER
COMPENSATION
(6) ($)
 TOTAL
($)
 

TOTAL
WITHOUT
CHANGE IN
PENSION
VALUE

(7) ($)

Greg Garland

Chairman and Chief Executive Officer

20201,675,008 9,237,623 3,351,180 3,082,015 6,851,884 791,664    24,989,374 18,137,490
20191,675,008 10,806,257 3,141,546 5,226,025 9,936,893 1,115,149 31,900,878 21,963,985
20181,675,008 9,353,917 3,041,430 4,958,024  249,956 19,278,335 19,278,335

Kevin Mitchell

Executive Vice President, Finance and Chief Financial Officer

2020897,360 3,024,331 998,560 1,256,304 258,546 245,367 6,680,468 6,421,922
2019861,172 3,542,763 937,014 1,722,344 264,245 354,754 7,682,292 7,418,047
2018826,696 3,046,107 902,084 1,777,396 138,280 116,580 6,807,143 6,668,863

Robert Herman

Executive Vice President, Refining

2020867,028 2,320,490 766,300 1,092,455 318,450 214,446 5,579,169 5,260,719
2019781,558 2,575,994 553,770 1,293,153 340,714 441,201 5,986,390 5,645,676
2018710,820 1,819,033 537,940 1,299,024 124,871 652,145 5,143,833 5,018,962

Paula Johnson

Executive Vice President, Legal and Government Affairs, General Counsel and Corporate Secretary

2020830,936 2,198,675 725,220 972,195 2,185,352 200,680 7,113,058 4,927,706
2019800,500 2,422,811 641,670 1,440,900 2,108,413 272,165 7,686,459 5,578,046
2018771,544 2,093,245 618,631 1,388,779 368,541 81,585 5,322,325 4,953,784

Tim Roberts

Executive Vice President, Midstream

2020881,188 2,531,427 766,300 1,110,297 297,744 204,254 5,791,210 5,493,466
2019781,558 2,385,489 553,770 1,395,244 29,621 275,030 5,420,712 5,391,091
2018710,260 1,810,213 535,871 1,298,000 107,410 75,521 4,537,275 4,429,865

(1) Includes any amounts that were voluntarily deferred under our KEDCP.

(2) Amounts shown represent the aggregate grant date fair value of RSU and PSP awards determined in accordance with U.S. GAAP. Assumptions used in calculating these amounts are included in Note 20—Share-Based Compensation Plans in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020 (our "2020 Form 10-K").

The PSP target award included in 2018 has a performance period that ended on December 31, 2020. The PSP target award included in 2019 has a performance period that ends in 2021. The PSP target award included in 2020 has a performance period that ends in 2022.

50     PHILLIPS 66 PROXY STATEMENT 2021

EXECUTIVE COMPENSATION TABLES

Amounts shown relating to PSP are targets because target is the probable outcome for the applicable performance period, consistent with the accounting treatment under GAAP. If the maximum payout were used for the PSP awards, the amounts shown relating to PSP would double, although the value of the actual payout would depend on the stock price at the time of the payout. If the minimum payout were used, the amounts for PSP awards would be reduced to zero. Actual payouts with regard to the targets set for the performance period that ended in 2020 were approved by the Compensation Committee at its February 2021 meeting. Those payouts were as follows (with values shown at fair market value on the date of payout): Mr. Garland, $5,672,888; Mr. Mitchell, $1,847,329; Mr. Herman, $1,247,575; Ms. Johnson, $1,269,459; and Mr. Roberts, $1,244,507.

Earned payouts under the PSP 2018-2020 have been, and under the PSP 2019-2021 and PSP 2020-2022 are expected to be, made in cash at the end of the applicable performance period and will be forfeited if the NEO is terminated prior to the end of the performance period (other than for death or following disability or after a change in control). If the NEO retires after age 55 and with five years of service, the NEO is entitled to a prorated award for any ongoing program in which he or she participated for at least 12 months.

(3) Amounts shown represent the aggregate grant date fair value of awards determined in accordance with GAAP. Assumptions used in calculating these amounts are included in Note 20—Share-Based Compensation Plans in the Notes to Consolidated Financial Statements in our 2020 Form 10-K.

(4) These are amounts paid under our annual bonus program (VCIP), including bonus amounts that were voluntarily deferred under our KEDCP. These amounts were paid in February 2021, following the performance year.

(5) Reflects the actuarial increase in the present value of the benefits under our pension plans determined using interest rate and mortality rate assumptions consistent with those used in our financial statements. There are no deferred compensation earnings reported in this column, as our nonqualified deferred compensation plans do not provide above-market or preferential earnings.

(6) We offer limited perquisites to our NEOs, which, together with Company contributions to our qualified savings and nonqualified defined contribution plans, are reflected in the All Other Compensation column as summarized below:

NAME COMPANY
CONTRIBUTIONS
TO
NONQUALIFIED
DEFINED
CONTRIBUTION
PLANS
 (a)($)
 EXECUTIVE
GROUP
LIFE
INSURANCE
PREMIUMS
(b)($)
 WELLNESS
PROGRAMS
AND
EXECUTIVE
HEALTH
PHYSICAL
(c)($)
 FINANCIAL
COUNSELING
(d)($)
 MATCHING
CONTRIBUTIONS
UNDER THE TAX-
QUALIFIED
SAVINGS PLAN
(e)($)
 MATCHING
GIFT
PROGRAM
(f)($)
 MISCELLANEOUS
PERQUISITES
AND TAX
PROTECTION
(g)
($)
 PERSONAL
USE OF
COMPANY
AIRCRAFT
 (h)($)
Greg Garland 534,983 13,266  16,270 14,250 15,000 22,017 175,878
Kevin Mitchell 192,294 2,477 732 16,270 17,100 15,000 1,494 
Robert Herman 155,612 6,867 787 16,270 17,100 15,000 2,810 
Paula Johnson 164,494 4,288   17,100 10,000 4,798 
Tim Roberts 164,827 4,547   17,100 15,000 2,780 

(a) Under the terms of our nonqualified defined contribution plans, we make contributions to the accounts of all eligible employees, including the NEOs. See the NONQUALIFIED DEFERRED COMPENSATION table and accompanying narrative and notes for more information.

(b) We maintain life insurance policies and/or death benefits for all our U.S.-based salaried employees (at no cost to the employee) with a face value approximately equal to the employee's annual salary. We maintain group life insurance policies on each of our NEOs equal to approximately two times his or her annual salary. The amounts shown are for premiums paid by us to provide the additional group life insurance above what is provided to the broad-based employees.

(c) Costs associated with executive physicals.

(d) Costs associated with financial counseling and estate planning services with approved provider.

(e) Under the terms of our tax-qualified defined contribution plans, we make contributions to the accounts of all eligible employees, including the NEOs.

(f) We maintain a Matching Gift Program under which certain gifts by employees to qualified educational or charitable institutions are matched by the Company. The program matches up to $15,000 annually. The amounts shown reflect the actual payments made by us in 2020, which due to processing delays can include contributions in 2019 that were matched by the Company in 2020 and are therefore reported in this proxy statement.

(g) The amounts shown primarily reflect payments by us relating to certain taxes incurred by the NEOs. Mr. Herman received tax assistance after he exercised stock options that he had been granted while an expatriate employee prior

PHILLIPS 66 PROXY STATEMENT 2021     51

EXECUTIVE COMPENSATION TABLES

to becoming an NEO ($1,237). All expatriate employees receive this tax assistance. We also provide tax assistance when we request family members or other guests to accompany an NEO to a Company function and, as a result, the NEO is deemed to make personal use of Company assets such as Company aircraft and thereby incurs imputed income. We believe this type of expense is appropriately characterized as a business expense and, if the NEO incurs imputed income in accordance with applicable tax laws, we will generally reimburse the NEO for any increased tax costs (Mr. Garland $5,131; Mr. Mitchell $1,494; Mr. Herman $1,494; Ms. Johnson $4,798; and Mr. Roberts $2,701). We also occasionally provide small gifts with tax assistance (such as duffel bags, jackets, and ornaments received as a member of the Board or the Executive Leadership Team) and companion travel expenses. The total cost of these benefits and their tax assistance are as follows: Mr. Garland $79; Mr. Herman $79; and Mr. Roberts $79.

Also included are benefits required for employees covered under our Comprehensive Security Program, which currently includes only Mr. Garland. Under the Comprehensive Security Program, Mr. Garland is provided with the use of a car and driver when security deems it required and home security fees that are in excess of the cost of a system typical for homes in his neighborhood ($16,807).

(h) The Phillips 66 Comprehensive Security Program requires in certain circumstances that Mr. Garland fly on Company aircraft. The amount presented above represents the approximate incremental cost to Phillips 66 for personal use of the aircraft. Approximate incremental cost has been determined by calculating the variable costs for each aircraft during the year, dividing that amount by the total number of miles flown by that aircraft, and multiplying the result by the miles flown for personal use during the year. Incremental costs for flights to the hangar or other locations without passengers, commonly referred to as "deadhead" flights, are included in the calculation.

(7)To show how year-over-year changes in pension value impact total compensation, as determined under SEC rules, we included this column to show total compensation without pension value changes. The amounts reported in this column are calculated by subtracting the change in pension value, as described in footnote 6 to this table, from the amounts reported in the Total column. The amounts reported in this column differ substantially from, and are not a substitute for, the amounts reported in the Total column.

52     PHILLIPS 66 PROXY STATEMENT 2021

EXECUTIVE COMPENSATION TABLES

GRANTS OF PLAN-BASED AWARDS

The following table provides additional information about plan-based compensation disclosed in the SUMMARY COMPENSATION TABLE. This table includes both equity and non-equity awards.

  ESTIMATED FUTURE PAYOUTS
UNDER NON-EQUITY INCENTIVE
PLAN AWARDS (2)
ESTIMATED FUTURE PAOUTS
UNDER EQUITY INCENTIVE
PLAN AWARDS (3)
ALL
OTHER
STOCK

AWARDS:
NUMBER
OF
SHARES

OF
STOCK
OR
UNITS
(4) (#)
ALL OTHER
OPTION
AWARDS:
NUMBER OF

SECURITIES
UNDERLYING
OPTIONS
(#)

EXERCISE
 OR BASE

PRICE OF
OPTION
AWARDS
($/SH)

GRANT
DATE
FAIR

VALUE
OF
STOCK

AND
OPTION
AWARDS
(5) ($)
NAMEGRANT
DATE (1)
THRESHOLD
($)
TARGET
($)
MAXIMUM
($)
THRESHOLD
(#)
TARGET
(#)
MAXIMUM
(#)
Greg Garland 2,680,0136,700,033
2/4/202037,4013,350,008
2/4/202065,732131,4645,887,615
2/4/2020212,10089.573,351,180
Kevin Mitchell 897,3602,243,400
2/4/202012,2451,096,785
2/4/202021,52043,0401,927,546
2/4/202063,20089.57998,560
Robert Herman 780,3251,950,813
2/4/20209,395841,510
2/4/202016,51233,0241,478,980
2/4/202048,50089.57766,300
Paula Johnson 747,8421,869,605
2/4/20208,902797,352
2/4/202015,64531,2901,401,323
2/4/202045,90089.57725,220
Tim Roberts 793,0691,982,673
2/4/202010,249918,003
2/4/202018,01336,0261,613,424
2/4/202048,50089.57766,300

(1) The grant date shown is the date on which the Compensation Committee approved the target awards.

(2) Threshold and maximum awards are based on the provisions in the VCIP. Actual awards earned can range from 0 to 200% of the target awards, with a further possible adjustment of +/–50% of the target award depending on individual performance. The Compensation Committee retains the authority to make awards under the program and to use its judgment in adjusting awards, including making awards greater than the amounts shown in the table above, provided the award does not exceed amounts permitted under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66. Actual payouts under the annual bonus program for 2020 are calculated using base salary earned in 2020 and reflected in the "Non-Equity Incentive Plan Compensation" column of the SUMMARY COMPENSATION TABLE.

(3) Threshold and maximum awards are based on the provisions of the PSP. Actual awards earned range from 0 to 200% of the target. Performance periods under the PSP cover a three-year period, and because a new three-year period commences each year, there could be three overlapping performance periods ongoing. In 2020, targets were set with respect to an award for the performance period beginning in 2020 and ending in 2022. The Compensation Committee retains authority to make awards under the PSP using its judgment, including making awards greater than the maximum payout shown in the table above, provided the award does not exceed amounts permitted under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66.

(4) RSUs were granted in 2020 and will vest in 2023.

PHILLIPS 66 PROXY STATEMENT 2021     53

EXECUTIVE COMPENSATION TABLES

(5)   For equity incentive plan awards, these amounts represent the grant date fair value at target level under the PSP as determined in accordance with GAAP. For Stock Option awards, these amounts represent the grant date fair value of the option awards using a Black-Scholes-Merton-based methodology. Actual value realized upon option exercise depends on market prices at the time of exercise. For other stock awards, these amounts represent the grant date fair value of the RSU awards determined in accordance with GAAP. See Note 20—Share-Based Compensation Plans in the Notes to Consolidated Financial Statements in our 2020 Form 10-K, for a discussion of the relevant assumptions used in this determination.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table lists outstanding Phillips 66 equity grants for each NEO as of December 31, 2020.

  OPTION AWARDS (1)STOCK AWARDS
NAMEGRANT DATENUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
EXERCISABLE
(2)(#)
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
UNEXERCISABLE(#)
OPTION
EXERCISE
PRICE ($)
OPTION
EXPIRATION
DATE
NUMBER OF
SHARES OR
UNITS OF
STOCK
THAT HAVE
NOT VESTED
(3)(#)
MARKET
VALUE OF
SHARES
OR UNITS
OF
STOCK
THAT
HAVE
NOT
VESTED
($)
EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER OF
UNEARNED
SHARES,
UNITS OR
OTHER
RIGHTS
THAT HAVE
NOT VESTED
(4) (#)
EQUITY
INCENTIVE
PLAN
AWARDS:
MARKET OR
PAYOUT
VALUE
OF UNEARNED
SHARES, UNITS
OR OTHER
RIGHTS THAT
HAVE NOT
VESTED
($)
Greg Garland2/7/2013158,500  62.170 2/7/2023
2/6/2014126,300  72.255 2/6/2024
2/3/2015146,700  74.135 2/3/2025
2/2/2016169,400  78.620 2/2/2026
2/7/2017174,000  78.475 2/7/2027
2/6/201898,000 49,000 94.850 2/6/2028
2/5/201959,566 119,134 94.968 2/5/2029
2/4/2020 212,100 89.570 2/4/2030
     98,6986,902,938292,90020,485,426
Kevin Mitchell2/3/20159,900  74.135 2/3/2025
2/2/201630,800  78.620 2/2/2026
2/7/201731,700  78.475 2/7/2027
2/6/201829,066 14,534 94.850 2/6/2028
2/5/201917,766 35,534 94.968 2/5/2029
2/4/2020 63,200 89.570 2/4/2030    
     33,5252,344,73995,9666,711,862
Robert Herman2/7/201312,300  62.170 2/7/2023
2/6/201411,400  72.255 2/6/2024
2/3/201523,500  74.135 2/3/2025
2/2/201628,800  78.620 2/2/2026
2/7/201730,700  78.475 2/7/2027
2/6/201817,333 8,667 94.850 2/6/2028
2/5/201910,500 21,000 94.968 2/5/2029
2/4/2020 48,500 89.570 2/4/2030    
     69,1774,838,23973,2845,125,483
Paula Johnson2/7/201312,000  62.170 2/7/2023
2/6/201419,600  72.255 2/6/2024
2/3/201525,100  74.135 2/3/2025
2/2/201632,800  78.620 2/2/2026
2/7/201734,300  78.475 2/7/2027
2/6/201819,933 9,967 94.850 2/6/2028
2/5/201912,166 24,334 94.968 2/5/2029
2/4/2020 45,900 89.570 2/4/2030    
     22,6121,581,48367,4844,719,831
Tim Roberts4/4/201628,400  85.973 4/4/2026
2/7/201730,700  78.475 2/7/2027
2/6/201817,266 8,634 94.850 2/6/2028
2/5/201910,500 21,000 94.968 2/5/2029
2/4/2020 48,500 89.570 2/4/2030    
     22,8641,599,10873,4405,136,394
               

54     PHILLIPS 66 PROXY STATEMENT 2021

EXECUTIVE COMPENSATION TABLES

(1)All options shown in the table have a maximum term for exercise of ten years from the grant date. Under certain circumstances, the terms for exercise may be shorter, and in certain circumstances, the options may be forfeited and cancelled. All awards shown in the table have associated restrictions upon transferability.
(2)The options shown in this column vested and became exercisable in 2020 or prior years (although under certain termination circumstances, the options may still be forfeited). Options become exercisable in one-third increments on the first, second and third anniversaries of the grant date.
(3)These amounts include unvested restricted stock and RSUs awarded under the PSP for performance periods that ended on or before December 31, 2014. All awards for performance periods that ended on or before December 31, 2014, continue to have restrictions upon transferability. Restrictions on PSP awards for performance periods that ended on or before December 31, 2010, lapse upon separation from service. Restrictions on PSP awards for later performance periods lapse five years from the grant date unless the NEO elected prior to the beginning of the performance period to defer lapsing of the restrictions until separation from service. Awards are subject to forfeiture if, prior to lapsing, the NEO separates from service for a reason other than death, disability, layoff, retirement after reaching age 55 with five years of service, or after a change of control, although the Compensation Committee has the authority to waive forfeiture. The awards have no voting rights, but do entitle the holder to receive dividend equivalents in cash. The value of the awards reflects the closing price of our common stock, as reported on the NYSE, on December 31, 2020 ($69.94).
(4)Reflects potential awards from ongoing performance periods under the PSP for performance periods ending December 31, 2021 and December 31, 2022. These awards are shown at maximum; however, there is no assurance that awards will be granted at, below or above target after the end of the relevant performance periods, as the determination to make a grant and the amount of any grant is within the judgment of the Compensation Committee. Until an actual grant is made, these unearned awards pay no dividend equivalents. The value of these unearned awards reflects the closing price of our common stock, as reported on the NYSE, on December 31, 2020 ($69.94).

OPTION EXERCISES AND STOCK VESTED FOR 2020

The following table summarizes the value received from stock option exercises and stock grants vested during 2020:

 OPTION AWARDSSTOCK AWARDS (1)
NAME
NUMBER OF SHARES ACQUIRED
ON EXERCISE
(#)
VALUE REALIZED
UPON EXERCISE
($)
NUMBER OF SHARES ACQUIRED ON VESTING
(#)
VALUE REALIZED UPON VESTING
($)
Greg Garland319,29226,857,890
Kevin Mitchell33,9312,461,625
Robert Herman25,6181,895,314
Paula Johnson54,0354,443,795
Tim Roberts24,8711,839,209

(1) Stock awards include RSUs that vested during the year, as well as the PSP 2018-2020 award that vested on December 31, 2020 and was paid out in cash in early 2021. The PSP awards were as follows: Mr. Garland, 83,208 units valued at

PHILLIPS 66 PROXY STATEMENT 2021     55

EXECUTIVE COMPENSATION TABLES

$5,672,888; Mr. Mitchell, 27,096 units valued at $1,847,329; Mr. Herman, 18,299 units valued at $1,247,575; Ms. Johnson, 18,620 units valued at $1,269,459; and Mr. Roberts, 18,254 units valued at $1,244,507.

PENSION BENEFITS AS OF DECEMBER 31, 2020

Our defined benefit pension plan covering NEOs, the Phillips 66 Retirement Plan, consists of multiple titles with different terms. NEOs are only eligible to participate in one title at any time but may have frozen benefits under one or more other titles.

TITLE ITITLE II (1)TITLE IV
Current EligibilityMr. GarlandMr. Herman (4), Mr. Mitchell, Mr. RobertsMs. Johnson
Normal RetirementAge 65Age 65Age 65
Early Retirement (2)Age 55 with five years of service or if laid off during or after the year in which the participant reaches age 50Executives may receive their vested benefit upon termination of employment at any ageAge 50 with ten years of service
Benefit Calculation (2)Calculated as the product of 1.6% times years of credited service multiplied by the final average eligible earningsBased on monthly pay and interest credits to a nominal cash balance account created on the first day of the month after an executive's hire date. Pay credits are equal to a percentage of total salary and annual bonus.Calculated as the product of 1.6% times years of credited service multiplied by the final average eligible earnings
Final Average Earnings CalculationCalculated using the three highest compensation years in the last ten calendar years before retirement plus the year of retirementN/ACalculated using the higher of the highest three years of compensation or the highest 36 months of compensation
Eligible Pension Compensation (3)Includes salary and annual bonusIncludes salary and annual bonusIncludes salary and annual bonus
Benefit VestingAll participants are vested in this titleEmployees vest after three years of serviceAll participants are vested in this title
Payment TypesAllows payments in the form of several annuity types or a single lump sum
IRS limitationsBenefits under all Titles are limited by the IRC. In 2020, the compensation limit was $285,000. The IRC also limits the annual benefit available under these Titles expressed as an annuity. In 2020, that limit was $230,000 (reduced actuarially for ages below 62).
(1)NEOs whose combined years of age and service total less than 44 receive a 6% pay credit, those with 44 through 65 receive a 7% pay credit and those with 66 or more receive a 9% pay credit. Interest credits are applied to the cash balance account each month. This credit is calculated by multiplying the value of the account by the interest credit rate, based on 30-year U.S. Treasury security rates adjusted quarterly.
(2)An early benefit reduction is calculated on Title I by reducing the benefit 5% for each year before age 60 that benefits are paid. An early benefit reduction is calculated on Title III by reducing the benefit 6.67% for each year before age 60 that benefits are paid, unless the participant has at least 85 points awarded, with one point for each year of age and one point for each year of service. Title IV early benefit reduction is calculated by reducing the benefit by 5% per year for each year before age 57 that benefits are paid and 4% per year for benefits that are paid between ages 57 and 60. The benefit calculation for Titles I, III and IV is reduced by the product of 1.5% of the annual primary social security benefit multiplied by years of credited service, although a reduction limit of 50% of the primary Social Security benefit may apply.
(3)Under Title I, if an executive receives layoff benefits, then the eligible compensation calculation also includes the annualized salary for the year of layoff (rather than the actual salary for that year) and years of service are increased by any period for which layoff benefits are calculated.
(4)Mr. Herman has a frozen benefit under Title III from prior years of service with predecessor companies. Under Title III, normal retirement is age 65 and early retirement is age 55 with 10 years of service. Title III is similar to Title I, except that bonus is not eligible pension compensation and payout is made in the form of an annuity.

56     PHILLIPS 66 PROXY STATEMENT 2021

EXECUTIVE COMPENSATION TABLES

The following table lists the pension program participation and actuarial present value of each NEO's defined benefit pension as of December 31, 2020.

NAMEPLAN NAMENUMBER OF YEARS CREDITED SERVICE (1) (#)PRESENT VALUE OF ACCUMULATED BENEFIT ($)PAYMENTS DURING LAST FISCAL YEAR
($)
Greg GarlandPhillips 66 Retirement Plan - Title I312,076,817
 Phillips 66 Key Employee Supplemental Retirement Plan (2)51,817,577
Kevin MitchellPhillips 66 Retirement Plan - Title II7165,494
 Phillips 66 Key Employee Supplemental Retirement Plan (2)777,384
Robert HermanPhillips 66 Retirement Plan - Title II15431,255
 Phillips 66 Retirement Plan - Title III23716,291
 Phillips 66 Key Employee Supplemental Retirement Plan (2)1,244,447
Paula JohnsonPhillips 66 Retirement Plan - Title IV181,115,296
 Phillips 66 Key Employee Supplemental Retirement Plan (2)8,042,831
Tim RobertsPhillips 66 Retirement Plan - Title II596,489
 Phillips 66 Key Employee Supplemental Retirement Plan (2)453,129

(1)Years of credited service include service recognized under the predecessor ConocoPhillips plans from which these plans were spun off effective May 1, 2012. Credited Service displays the number of years the NEO was in each applicable formula.

(2) The Phillips 66 Key Employee Supplemental Retirement Plan restores Company-sponsored benefits capped under the qualified defined benefit pension plan due to IRC limits. All employees, including our NEOs, are eligible to participate in the plan.

Understanding the Annual Change in Pension Value

No modifications to pension
ü
There were no modifications to our existing pension program in 2020
Change in value
ü
The value of traditional pension plans is particularly sensitive to interest rate movement, which is outside of Company control
ü
While our short-term and long-term incentive programs are based entirely on performance, pension value is not performance based and does not reflect or reward Company performance
Pension plan going forward
ü
The Compensation Committee will continue to assess our pension program to ensure viability as an attraction and retention tool

NONQUALIFIED DEFERRED COMPENSATION

Our NEOs are eligible to participate in two nonqualified deferred compensation plans, the Phillips 66 KEDCP and the Phillips 66 DCMP.

The KEDCP allows NEOs to defer up to 50% of their salary and up to 100% of their VCIP. The default distribution option is a lump sum payment paid at least six months after separation from service. NEOs may elect to defer payments from one to five years, and to receive annual, semiannual or quarterly payments for a period of up to fifteen years. NEOs may also elect to defer their VCIP to a specific date in the future.

The DCMP is a nonqualified restoration plan for employer contributions that cannot be made to our 401(k) plan either due to an NEO's salary deferral under the KEDCP or due to the IRC annual limit on compensation that may be taken into account under a qualified plan. Distributions are made as a lump sum six months after separation

PHILLIPS 66 PROXY STATEMENT 2021     57

EXECUTIVE COMPENSATION TABLES

from service, unless the NEO elects to receive one to fifteen annual payments beginning at least one year after separation from service.

Each NEO directs investments of his or her individual accounts under the KEDCP and DCMP. Both plans provide a broad range of market-based investments, that may be changed daily. No investment provides above-market returns. The aggregate performance of these investments is reflected in the NONQUALIFIED DEFERRED COMPENSATION table below.

Benefits due under these plans are paid from our general assets, although we also maintain rabbi trusts that may be used to pay benefits. The trusts and the funds held in them are Company assets. In the event of our bankruptcy, NEOs would be unsecured general creditors.

The following table provides information on nonqualified deferred compensation as of December 31, 2020:

NAMEAPPLICABLE PLAN (1)BEGINNING
BALANCE
(2) ($)
EXECUTIVE
CONTRIBUTIONS
IN LAST
FISCAL YEAR
($)
COMPANY
CONTRIBUTIONS
IN THE LAST
FISCAL YEAR
(3) ($)
AGGREGATE
EARNINGS
IN LAST
FISCAL YEAR
(4) ($)
AGGREGATE
WITHDRAWALS/
DISTRIBUTIONS
($)
AGGREGATE
BALANCE
AT LAST
FISCAL
YEAR END
(5) ($)
Greg GarlandPhillips 66 Defined Contribution
Make-Up Plan
2,385,595534,98324,0022,944,579
Phillips 66 Key Employee
Deferred Compensation Plan
1,435,135(383,312)1,051,822
Kevin MitchellPhillips 66 Defined Contribution
Make-Up Plan
471,936192,29482,716746,937
Phillips 66 Key Employee
Deferred Compensation Plan
Robert HermanPhillips 66 Defined Contribution
Make-Up Plan
740,799155,612(4,175)892,236
Phillips 66 Key Employee
Deferred Compensation Plan
2,525,254362,3662,887,620
Paula JohnsonPhillips 66 Defined Contribution
Make-Up Plan
609,842164,49467,150841,486
Phillips 66 Key Employee
Deferred Compensation Plan
Tim RobertsPhillips 66 Defined Contribution
Make-Up Plan
333,783164,82764,577563,188
Phillips 66 Key Employee
Deferred Compensation Plan
697,62258,845756,467

(1) We have two defined contribution deferred compensation programs for our executives -- the DCMP and the KEDCP. As of December 31, 2020, participants in these plans had 36 investment options -- 28 of the options were the same as those available in our 401(k) plan and the remaining options were other mutual funds approved by the plan administrator.

(2) The beginning balance includes the final Company contribution of fiscal year 2019 (DCMP $6,792 and KEDCP $4,542 for Mr. Garland; DCMP $7,779 for Mr. Mitchell; DCMP $5,051 and KEDCP $22,806 for Mr. Herman; DCMP $6,495 for Ms. Johnson; and DCMP $5,907 for Mr. Roberts).

(3) These amounts represent Company contributions under the DCMP. These amounts are also included in the "All Other Compensation" column of the SUMMARY COMPENSATION TABLE.

(4) These amounts represent earnings on plan balances from January 1 to December 31, 2020. These amounts are not included in the SUMMARY COMPENSATION TABLE.

(5) The total reflects contributions by our NEOs, contributions by us, and earnings on balances prior to 2020; plus contributions by our NEOs, and earnings from January 1, 2020, through December 31, 2020 (shown in the appropriate columns of this table, with amounts that are included in the SUMMARY COMPENSATION TABLE). The total includes all contributions by our NEOs and by us reported in this proxy statement and our proxy statements from prior years as follows: $2,106,109 for Mr. Garland; $580,697 for Mr. Mitchell; $466,016 for Mr. Herman; $750,079 for Ms. Johnson; and $1,115,552 for Mr. Roberts.

58     PHILLIPS 66 PROXY STATEMENT 2021

EXECUTIVE COMPENSATION TABLES

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

Our programs are designed to pay out amounts earned during employment unless the employee voluntarily resigns prior to becoming retirement-eligible or is terminated for cause. Although normal retirement age under our benefit plans is 65, early retirement provisions allow receipt of benefits at earlier ages if vesting requirements are met. For our incentive compensation programs (VCIP, RSU, Stock Options, and PSP), early retirement is generally defined as termination at or after the age of 55 with five years of service.

As of December 31, 2020, Mr. Garland, Mr. Herman, and Ms. Johnson were retirement-eligible under both our benefit plans and our compensation programs. Therefore, as of December 31, 2020, a voluntary resignation of Mr. Garland, Mr. Herman, or Ms. Johnson, would have been treated as a retirement, and each would have retained all awards earned under the current and earlier programs. As such, awards under these programs are not included in the amounts reflected in the table below. Please see the OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END table for more information. Our compensation programs provide for the following upon retirement:

Cash Payments. Cash payments include VCIP earned during the fiscal year, amounts contributed and vested under our defined contribution plans, and amounts accrued and vested under our pension plans.

Equity. Equity considerations include grants under the PSP for ongoing performance periods in which the executive participated for at least one year, previously granted restricted stock and RSUs, and previously granted stock option awards exercisable through the original term.

The table at the end of this section summarizes the potential additional value of the benefits to be received by each NEO as of December 31, 2020, through the Phillips 66 ESP due to an involuntary termination without cause or through the Phillips 66 CICSP due to a change in control event. Benefits that would be available generally to all or substantially all salaried employees on the U.S. payroll are not included in the amounts shown. Executives are not entitled to receive benefits under both the ESP and the CICSP as a result of the same event. These two plans have the following in common:

amounts payable under both are offset by any payments or benefits payable under any of our other plans;
benefits under both may also be reduced in the event of willful and bad faith conduct demonstrably injurious to the Company; and
both are Company plans under which awards and payments are subject to clawback provisions and to forfeiture or recoupment, in whole or in part, under applicable law, including the Sarbanes-Oxley Act and the Dodd-Frank Act.

Executive Severance Plan

The ESP provides that if a NEO separates due to an involuntary termination without cause, the executive will receive the following benefits, which may vary depending on salary grade level.

Cash Severance Payments. ESP cash severance payments include:

a lump sum payment equal to one and one-half or two times the sum of the executive's base salary and current target annual bonus;
a lump sum payment equal to the present value of the increase in pension benefits that would result from crediting the executive with an additional one and one-half or two years of age and service under the pension plan; and
a lump sum payment generally equal to the Company contribution for active employees toward the cost of certain welfare benefits for an additional one and one-half or two years.

PHILLIPS 66 PROXY STATEMENT 2021     59

EXECUTIVE COMPENSATION TABLES

Accelerated Equity. Layoff treatment under our compensation plans generally allows the executive to retain a prorated portion of grants held less than one year and full grants held for one year or more of Restricted Stock, RSUs, and Stock Options, and maintain eligibility for prorated PSP awards for ongoing periods in which he or she had participated for at least one year.

Change in Control Severance Plan

The CICSP provides that if, within two years of a change in control of the Company, an executive's employment is terminated by the employer other than for cause, or by the executive for good reason, the executive will receive the following benefits, which may vary depending on salary grade level. CICSP benefits include:

Cash Severance Payments. CICSP cash severance payments include:

a lump sum payment equal to two or three times the sum of the executive's base salary and the higher of the current target annual bonus or the average of the annual bonuses paid for the previous two years;
a lump sum payment equal to the present value of the increase in pension benefits that would result from crediting the executive with an additional two or three years of age and service under the pension plan; and,
a lump sum payment generally equal to the Company contribution for active employees toward the cost of certain welfare benefits for an additional two or three years.

Accelerated Equity. CICSP benefits include the vesting of all equity awards and lapsing of any restrictions.

60     PHILLIPS 66 PROXY STATEMENT 2021

EXECUTIVE COMPENSATION TABLES

Death or Disability

For completeness, payments that would be payable to each NEO upon separation as a result of disability or to each NEO’s estate as a result of death are likewise provided.

 EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION
 INVOLUNTARY
NOT-FOR-CAUSE
TERMINATION
(NOT CIC)
($)
INVOLUNTARY OR
GOOD REASON
TERMINATION
(CIC)
($)
DEATH
($)
DISABILITY
($)
Greg Garland    
Severance Payment12,303,06625,690,632
Accelerated Equity
Life Insurance3,350,016
TOTAL12,303,06625,690,6323,350,016
Kevin Mitchell    
Severance Payment3,970,4218,494,946
Accelerated Equity (1)6,006,4096,074,9236,006,4096,006,409
Life Insurance1,806,864
TOTAL9,976,83014,569,8697,813,2736,006,409
Robert Herman    
Severance Payment3,635,8786,991,915
Accelerated Equity
Life Insurance1,740,864
TOTAL3,635,8786,991,9151,740,864
Paula Johnson    
Severance Payment5,367,2089,803,192
Accelerated Equity
Life Insurance1,672,080
TOTAL5,367,2089,803,1921,672,080
Tim Roberts    
Severance Payment3,638,9647,102,266
Accelerated Equity (1)4,251,5834,308,9284,251,5834,251,583
Life Insurance1,774,848
TOTAL7,890,54711,411,1946,026,4314,251,583

(1)For the PSP, amounts for PSP 2018-2020 are shown based on the cash amount received in February 2021, while amounts for other periods are prorated to reflect the portion of the performance period completed by the end of 2020 and shown at target payout levels. These amounts reflect the closing price of our common stock as reported on the NYSE on December 31, 2020 ($69.94).

Restricted Stock and RSU amounts reflect the closing price of our common stock as reported on the NYSE on December 31, 2020 ($69.94).

Stock Option amounts reflect the intrinsic value as if the options had been exercised on December 31, 2020, but only for options the NEO would have retained for the specific termination event.

PHILLIPS 66 PROXY STATEMENT 2021     61

EXECUTIVE COMPENSATION TABLES

CEO PAY RATIO

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the annual total compensation, calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, of our median employee and the annual total compensation of our CEO.

For 2020, the annual total compensation of our CEO was 149 times that of the median of the annual total compensation of all employees, based on annual total compensation of $25,016,843 for the CEO and $167,382 for the median employee.

This ratio is based on an October 1, 2020, employee population of 14,316, which excluded 413 non-U.S. employees in Germany (260), Singapore (75), Austria (42), Canada (32), China (3), and the United Arab Emirates (1). The median employee was identified using annual base pay, overtime pay, annual bonus, and target LTI compensation using data as of September 30, 2020. The annual total compensation for our CEO includes both the amount reported in the “Total” column of the SUMMARY COMPENSATION TABLE of $24,989,374 and the estimated value of our CEO’s health and welfare benefits of $27,469.

The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

62     PHILLIPS 66 PROXY STATEMENT 2021

DIRECTOR COMPENSATION

DIRECTOR COMPENSATION

The primary elements of our non-employee director compensation program are equity compensation and cash compensation.

OBJECTIVES AND PRINCIPLES

Compensation for non-employee directors is reviewed annually by the Nominating and Governance Committee, with the assistance of such third-party consultants as the Nominating and Governance Committee deems advisable, and set by action of the Board of Directors. The Board's goal in designing such compensation is to provide a competitive package that will enable it to attract and retain highly skilled individuals with relevant experience and reflects the time and talent required to serve on the board of a complex, multinational corporation. The Board seeks to provide sufficient flexibility in the form of payment to meet individual needs while ensuring that a substantial portion of director compensation is linked to the long-term success of the Company. In furtherance of our commitment to be a socially responsible member of the communities in which we participate, the Board believes that it is appropriate to extend the Phillips 66 matching gift program to charitable contributions made by individual directors.

Equity Compensation

In 2020, each non-employee director received a grant of RSUs with an aggregate value of $200,000 on the date of grant. Restrictions on the units issued to a non-employee director will lapse in the event of retirement, disability, death, or a change of control, unless the director has elected to receive the underlying shares after a stated period of time. Directors forfeit the units if, prior to the lapse of restrictions, the Board finds sufficient cause for forfeiture (although no such finding can be made after a change in control). Before the restrictions lapse, directors cannot sell or otherwise transfer the units, but the units are credited with dividend equivalents in the form of additional RSUs. When restrictions lapse, directors will receive unrestricted shares of Company stock as settlement of the RSUs.

Cash Compensation

In 2020, each non-employee director received $125,000 in cash compensation for service as a director. Non-employee directors serving in specified committee or leadership positions also received the following additional cash compensation:

 LEAD / CHAIRMEMBER
Lead Director$50,000N/A
Audit and Finance Committee$25,000$10,000
Human Resources and Compensation Committee$25,000$10,000
All Other Committees$20,000N/A

The total annual cash compensation is payable in monthly cash installments. Directors may elect, on an annual basis, to receive all or part of their cash compensation in unrestricted stock or in RSUs (such unrestricted stock or RSUs are issued on the first business day of the month valued using the average of the high and low prices of Phillips 66 common stock as reported on the NYSE on such date), or to have the amount credited to the director's deferred compensation account as described below. The RSUs issued in lieu of cash compensation are subject to the same restrictions as the annual RSUs described above.

Deferral of Compensation

Non-employee directors can elect to defer their cash compensation under the Phillips 66 Deferred Compensation Program for non-Employee Directors (the “Director Deferral Plan”). Deferred amounts are deemed to be invested in various mutual funds and similar investment choices (including Phillips 66 common stock) selected by the director from a list of investment choices available under the Director Deferral Plan.

PHILLIPS 66 PROXY STATEMENT 2021     63

DIRECTOR COMPENSATION

The future payment of any compensation deferred by non-employee directors of Phillips 66 may be funded in a grantor trust designed for this purpose.

Directors' Matching Gift Program

All active and retired non-employee directors are eligible to participate in the Directors' Annual Matching Gift Program. This provides a dollar-for-dollar match of gifts of cash or securities, up to a maximum during any one calendar year of $15,000 per donor for active directors and $7,500 per donor for retired directors, to charities and educational institutions (excluding certain religious, political, fraternal, or collegiate athletic organizations) that are tax-exempt under Section 501(c)(3) of the IRC or meet similar requirements under the applicable law of other countries. Amounts representing these matching contributions are contained in the “All Other Compensation” column of the DIRECTOR COMPENSATION TABLE.

Other Compensation

The Board believes that it is important for significant others of directors and executives to attend certain meetings to enhance the collegiality of the Board. The cost of such attendance is treated by the Internal Revenue Service as income and is taxable to the recipient. The Company reimburses directors for the cost of resulting income taxes. Amounts representing this reimbursement are contained in the “All Other Compensation” column of the DIRECTOR COMPENSATION TABLE.

Stock Ownership

Each director is expected to own an amount of Company stock equal to at least the aggregate value of the annual equity grants during their first five years on the Board. Directors are expected to reach this level of target ownership within five years of joining the Board. Actual shares of stock, Restricted Stock, or RSUs, including deferred stock units, may be counted in satisfying the stock ownership guidelines. All current directors are in compliance, or on track to comply, with the guidelines.

DIRECTOR COMPENSATION TABLE

Phillips 66 benchmarks its non-employee director compensation design and pay levels against a group of peer companies. The Company targets the median of this peer group for all elements of non-employee director compensation.

The following table summarizes the compensation for our non-employee directors for 2020 (for compensation paid to our sole employee director, Mr. Garland, please see EXECUTIVE COMPENSATION TABLES).

NAMEFEES EARNED OR PAID IN CASH
 (1) ($)
STOCK AWARDS
(2) ($)

ALL OTHER COMPENSATION

(3) ($)

TOTAL
($)
Gary K. Adams135,000200,07315,000350,073
Julie L. Bushman (4)64,96096,25516,241177,456
Lisa A. Davis (4)31,21046,25377,463
J. Brian Ferguson87,500200,0734,836292,409
Charles M. Holley135,000200,07312,498347,571
John E. Lowe152,917200,0731,515354,505
Harold W. McGraw III135,000200,073335,073
Denise L. Ramos143,333200,073343,406
Glenn F. Tilton205,000200,07315,870420,943
Victoria J. Tschinkel135,000200,07320,527355,600
Marna C. Whittington150,000200,07315,925365,998

(1) Reflects 2020 base cash compensation of $125,000 payable to each non-employee director. In 2020, non-employee directors serving in specified committee positions also received the additional cash compensation described previously.

64     PHILLIPS 66 PROXY STATEMENT 2021

DIRECTOR COMPENSATION

Compensation amounts reflect adjustments related to various changes in committee assignments by Board members throughout the year, if any. Amounts shown include any amounts that were voluntarily deferred to the Director Deferral Plan.

(2) Amounts represent the grant date fair market value of RSUs. Under our non-employee director compensation program, non-employee directors received a 2020 grant of RSUs with an aggregate value of $200,000 on the date of grant, based on the average of the high and low prices for Phillips 66 common stock, as reported on the NYSE, on such date. These grants are made in whole shares with fractional share amounts rounded up, resulting in shares with a value of $200,073 being granted on January 15, 2020 ($96,255 granted on July 8, 2020 for Ms. Bushman's pro-rated grant and $46,253 granted on October 8, 2020 for Ms. Davis’ pro-rated grant).

(3) All Other Compensation is made up primarily of certain gifts by directors to charities and educational institutions (excluding certain religious, political, fraternal, or collegiate athletic organizations) that are tax-exempt under Section 501(c)(3) of the IRC or meet similar requirements under the applicable law of other countries that we match under our Matching Gifts Program (Mr. Adams $15,000; Ms. Bushman $15,000; Mr. Holley $10,000; Ms. Tschinkel $15,000; and Dr. Whittington $15,000). For active directors, the program matches up to $15,000 with regard to each program year. The amounts shown reflect the actual payments made by us in 2020. All Other Compensation also includes any personal flights, automobile transportation expenses, smaller gifts (such as books, ornaments, and jackets) as well as associated tax protection, and tax assistance when we request family members or other guests to accompany a director to a Company function and, as a result, the director is deemed to make personal use of Company assets such as Company aircraft and thereby incurs imputed income.

(4) Amounts shown represent compensation paid to Ms. Bushman and Ms. Davis following election to the Board in July 2020 and October 2020, respectively.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information about Phillips 66 common stock that may be issued under all existing equity compensation plans as of December 31, 2020:

PLAN CATEGORY

NUMBER OF SECURITIES
TO BE ISSUED UPON
EXERCISE OF
OUTSTANDING OPTIONS,

WARRANTS AND RIGHTS (1,2)

WEIGHTED-AVERAGE

EXERCISE PRICE OF

OUTSTANDING OPTIONS,

WARRANTS AND
RIGHTS(3)

NUMBER OF SECURITIES
REMAINING

AVAILABLE FOR FUTURE ISSUANCE
UNDER EQUITY COMPENSATION
PLANS (EXCLUDING SECURITIES
REFLECTED IN COLUMN (a) (4)

Equity compensation plans approved by security holders9,700,13178.4929,010,540
Equity compensation plans not approved by security holders   
Total9,700,13178.4929,010,540

(1)Includes awards issued under the Omnibus Stock and Performance Incentive Plan of Phillips 66 and awards issued under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66.
(2)Includes an aggregate of 5,433,988 Incentive Stock Options and Nonqualified Stock Options issued to employees, 4,093 Restricted Stock Awards granted under historical LTI plans, and 959,768 PSUs. The number of securities to be issued includes 3,302,282 RSUs, of which 199,315 were issued to non-employee directors. Some awards held by ConocoPhillips employees at our spin-off were adjusted or substituted with a combination of ConocoPhillips and Phillips 66 equity. Awards representing a total of 13,071,435 shares were issued to ConocoPhillips employees, of which 1,389,126 remain outstanding as of December 31, 2020. The awards issued to ConocoPhillips employees are included in the outstanding awards listed above.
(3)The weighted-average exercise price reflects the weighted-average price for outstanding Incentive Stock Options and Nonqualified Stock Options only. It does not include stock awards outstanding.
(4)Total includes forfeited shares under the Omnibus Stock and Performance Incentive Plan of Phillips 66 that are now available for grant under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66.

PHILLIPS 66 PROXY STATEMENT 2021     65

SHAREHOLDER PROPOSALS

SHAREHOLDER PROPOSALS

We communicate proactively and transparently on issues of interest to the Company and our shareholders, including the topics presented in the shareholder proposals on the following pages. You can read more about our engagement with our shareholders under the CORPORATE RESPONSIBILITY section of this Proxy Statement.Shareholder Outreach and Responsiveness. As discussed in that section, we communicate with shareholders throughout the year to gather feedback and enhance our disclosures or other practices on an ongoing basis. When we receive shareholder proposals, our process includes contacting the proponent to discuss the proposal, the concerns raised, and whether additional engagements could resolve the proponent’s concerns. This engagement seeks to understand the proponent’s interests and how the Company can address or alleviate concerns raised in the proposal, either by discussion of actions and efforts the Company has planned or underway, or by providing information of which the proponent may not be aware. We followed our normal practice of engagement with the proponents of the proposals included on the following pages.

The following are shareholder proposals that will be voted on at the Annual Meeting only if properly presented by or on behalf of the shareholder proponent. These proposals contain certain assertions that we believe are incorrect, and we have not attempted to refute all of the inaccuracies.

The proposals we received relate to environmental, sustainability, or governance issues, and request that we take particular action, which may include preparing a report. We share some of the concerns addressed in the proposals, and we have taken actions that we believe address many of the underlying concerns of the proposals. However, we disagree with how the proposal seeks to prescribe the manner in which we approach or report on the issue. The Board generally opposes proposals requesting specially developedspecially-developed reports or initiatives as theythat it believes are overly prescriptive, since these do not necessarily add shareholder value and may not reflect the actions we are already taking to address such issues, the decisions we have made in prioritizing our initiatives, or the unique and evolving nature of our operations. Additionally, producing special reports is often not a good use of our resources when the issues are addressed through existing communications. Moreover, we believe that shareholders benefit from reading about these issues in the context of Phillips 66’s other activities rather than in isolation.limited company resources. Many of the issues raised in the following proposals are already discussed in the sustainability report issued by our 50-50 joint venture CPChem, our Sustainability Report, our Annual Report on Form 10-K, this Proxy Statement and other information on our website at www.phillips66.com.

We encourage you to read Information on our website is not incorporated by reference into this Proxy Statement, ourStatement.

88
Phillips 66 2023 Proxy Statement


PROPOSAL 5
psx-20230315_g16.jpg
Shareholder Proposal Requesting Audited Report on Impact to Chemicals Business under the System Change Scenario
The Board recommends that you vote “AGAINST” proposal 5.
As You Sow, located at 2020 Milvia Street, Suite 500, Berkeley, California, has notified Phillips 66 that it intends to present the following proposal on behalf of Handlery Hotels, Inc. and Meyer Memorial Trust (S) at the 2023 Annual Report on Form 10-K, our Sustainability ReportMeeting. As You Sow has indicated that Meyer Memorial Trust (S) holds 1,944 shares of Phillips 66 common stock and Handlery Hotels, Inc. holds 9,888 shares of Phillips 66 common stock in accordance with the other information presented on our website.

We will promptly provide each shareholder proponent’s name, address,requirements of Rule 14a-8.

WHEREAS: Plastics, with a lifecycle social cost at least ten times higher than its market price, actively threaten the world’s oceans, wildlife, and public health.1 Concern about the growing scale and impact of global plastic pollution has elevated the issue to our knowledge, share ownership upon a shareholder’s request.

66     PHILLIPS 66 PROXY STATEMENT 2021

SHAREHOLDER PROPOSALS

PROPOSAL 5: SHAREHOLDER PROPOSAL REGARDING GHG EMISSIONS TARGETS

WHEREAS: We,crisis levels.2 Of particular concern are single-use plastics (SUPs),3 which make up the shareholders, must protect our assets against devastating climate change, and therefore support companies to substantially reduce greenhouse gas (GHG) emissions.

RESOLVED: Shareholders request the Company to set and publish emissions reduction targets covering the greenhouse gas (GHG) emissionslargest component of the Company’s operations11 million metric tons of plastic ending up in waterways annually.4 Without drastic action, this amount could triple by 2040.5

In response to the plastic pollution crisis, countries and energy products.

You have our support.

SUPPORTING STATEMENT:

The policiesmajor packaging brands are beginning to drive reductions in virgin plastic use.6,7 Several studies demonstrate that a shift away from virgin plastic production is critical to curbing the flow of plastic into oceans.8 One of the energy industry are crucial to curbing climate change. Therefore, shareholders support oil and gas companies to change course; to substantially reduce emissions and invest accordinglymost robust pathways is presented in the energy transition.

Fiduciary duty

As shareholders, we understand this supportwidely respected Breaking the Plastic Wave report, which finds that plastic leakage into the ocean can be reduced 80 percent under its System Change Scenario (SCS), which includes a significant absolute reduction of virgin SUPs.9,10

BP has recognized the potential disruption that global SUP reductions could have on the oil industry in its 2019 Outlook, finding that a global SUP ban by 2040 would reduce oil demand growth by 60 percent.11
The future under the SCS – built partially on recycled plastics and circular business models – looks drastically different than today’s linear take-make-waste production model. Several implications of the SCS, including a one-third absolute demand reduction (mostly of virgin SUPs) and immediate reduction of new investment in virgin production, are at odds with the Company’s planned investments.
Chevron Phillips Chemical Company (CPChem), jointly owned by Phillips 66 and Chevron, is estimated to be partthe 15th largest global producer of our fiduciary duty to protect all assetsSUP-bound polymers, with 1.8 million metric tons produced in the global economy2019, an estimated 42 percent of total production.12 The Company’s core business model of producing virgin plastics from devastating climate change.

Afossil fuels is rapidly expanding. As partial owner of CPChem, Phillips 66 faces growing international consensus has emerged among financial institutions that climate-related risks are a source of financial risk and therefore limiting global warming is essential to risk management and responsible stewardship of the economy.

We therefore support the company to set emissions reduction targets for all emissions: the emissions of the company’s operations and the emissions of its energy products (Scope 1, 2, and 3). Reducing emissions from the use of energy products (Scope 3) is essential to limiting global warming.

Increasing number of investors insists on targets for all emissions

Shell, BP, Equinor, and Total have already adopted Scope 3 ambitions. Backing from investors that insist on targets for all emissions continues to gain momentum;CPChem’s continued investment in 2020, an unprecedented number of shareholders voted for climate targets resolutions. It is evident that a growing group of investors across the energy sector unites behind visible and unambiguous support for targets for all emissions.

virgin plastic production infrastructure.

RESOLVED: Shareholders request that Philips 66 issue an audited report addressing whether and how a significant reduction in virgin plastic demand, as set forth in Breaking the companyPlastic Wave’s System Change Scenario to reduce ocean plastic pollution, would affect the Company’s financial position and the assumptions underlying its financial statements. The report on the strategy and underlying policies for reaching these targets and on the progress made, at least on an annual basis,should be at reasonable cost and omittingomit proprietary information.

Nothing in this resolution shall limit

Shareholder Proposals89


SUPPORTING STATEMENT: Proponents recommend that, at Board discretion, the company’s powersreport include:
Quantification of the Company’s polymer production for SUP markets;
A summary of the Company’s existing and planned investments that may be materially impacted by the SCS;
Plans or goals to setshift its business model from virgin to recycled plastics and vary their strategy or take any action which they believe in good faith would best contribute to reaching these targets.

We believe that the company could lead and thrive in the energy transition. We therefore encourage you to set targetsuse recycling technologies that are inspirational for society, employees, shareholders,cost-effective, process and the energy sector, allowing the company to meet an increasing demand for energy while reducing GHG emissions to levels consistent with the curbing climate change.

You have our support.

efficient, and environmentally sound.
__________________________
(1)https://wwfint.awsassets.panda.org/downloads/wwf_pctsee_report_english.pdf
(2)https://www.unep.org/resources/pollution-solution-global-assessment-marine-litter-and-plastic-pollution
(3)https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019L0904&from=EN#page=8
(4)https://www.minderoo.org/plastic-waste-makers-index/findings/executive-summary/
(5)https://www.nationalgeographic.com/science/article/plastic-trash-in-seas-will-nearly-triple-by-2040-if-nothing-done
(6)https://www.pbs.org/newshour/science/bold-single-use-plastic-ban-kicks-europes-plastic-purge-into-high-gear
(7)https://www.edie.net/news/5/Ellen-MacArthur-Foundation--Plastic-use-by-big-businesses-likely-to-peak-in-2021/
(8)https://www.theguardian.com/environment/2021/jul/01/call-for-global-treaty-to-end-production-of-virgin-plastic-by-2040
(9)https://www.pewtrusts.org/-/media/assets/2020/07/breakingtheplasticwave_report.pdf
(10)https://www.science.org/doi/full/10.1126/science.aba9475
(11)https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/energy-outlook/bpenergy-outlook-2019.pdf#page=18
(12)https://www.minderoo.org/plastic-waste-makers-index/data/flows/#/sankey/global/10

PHILLIPS

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Phillips 66 PROXY STATEMENT 2021     67

2023 Proxy Statement



SHAREHOLDER PROPOSALS

BOARD OF DIRECTOR’SDIRECTORS’ RESPONSE TO SHAREHOLDER PROPOSAL 5

REQUESTING AUDITED REPORT ON IMPACT TO CHEMICALS BUSINESS UNDER THE BOARD RECOMMENDS THAT YOU VOTE “AGAINST” PROPOSAL 5.

SYSTEM CHANGE SCENARIO

The Board has carefully considered this proposal and, for the reasons set forth below, does not believe that it is in the best interests of the Company and its shareholders, and unanimously recommends a vote “AGAINST” the proposal.

This proposal is already substantially addressed by recent analysis from CPChem, the findings of which are publicly available in its Sustainability Report released in August 2022, Accelerating Change for a Sustainable Future, and its Climate Risk Report.
CPChem conducts and discloses scenario analysis considering various demand outlooks to test its portfolio, assess its strategy, and evaluate financial impacts. In contrast to the range of scenarios CPChem evaluates, the proposal asks for a single, specific scenario that implies certainty about the future of the plastics market that we believe do not exist.
The range of scenarios1 evaluated by CPChem include:
“Business as usual” considering GDP and middle-class growth as drivers for polyethylene production investment,
“Increased Recycling” driven by demand for circular plastics by consumer goods companies and regulatory mandates and
“Advanced Circular Economy” resulting from increased legislation, carbon emission reductions and advancements in circular technology.
CPChem’s assets show long-term resilience under multiple market conditions through increased revenue growth. This analysis is detailed in CPChem’s Sustainability Report and Climate Risk Report, both available on www.cpchem.com/sustainability.
Relevant business risks are already disclosed in the Company’s financial information and presenting a singular scenario that the Company does not deem informative can create confusion for investors regarding the Company’s views of relevant business risks.
An audited report will divert money and people resources from Phillips 66 and CPChem, that would be better spent on advancing recycling, operating excellence, and environmental stewardship.
CPChem has targets to increase its circular polymer production and its resources are better focused on executing on this commitment.
CPChem has set a meaningful target to annually produce 1 billion pounds of Marlex® Anew™ Circular Polyethylene by 2030. It is working toward this goal by becoming the first company to announce commercial-scale production of polymers in the U.S. using advanced recycling technology, achieving its first commercial sales of circular polymers, and securing long-term agreements for circular feedstocks.
We are working toward setting attainable targetsfocused on realistic, actionable solutions to eliminate plastic waste from our operations.
Plastics are part of modern life and provide value to society now and for GHG reductiondecades to come. CPChem’s plastics are converted into products that serve healthcare, agriculture, transportation, construction, and other industries. As the world continues to work through the energy transition, plastics are tieda key solution for businesses seeking to identified projects.

Earlier this year we announced that we are working towards setting GHG reduction targets tiedlower emissions and participate in circular solutions.2, 3, 4

As a founding member of the Alliance to identified projects, information that was sharedEnd Plastic Waste, CPChem collaborates with more than 90 companies to support organizations to eliminate plastic waste via investments in infrastructure, cleanup, education, engagement, and innovation. Members have collectively committed to $1.5 billion over five years to design and scale realistic solutions.



Shareholder Proposals91


The Company and CPChem have engaged with the proponent during our engagement. and could not agree to a resolution. CPChem already analyzes and discloses a range of scenarios considering various demand outlooks that provides decision-useful information to shareholders.
Accordingly, the Board of Directors recommends voting AGAINST this proposal.
_________________
(1)Bloomberg BNEF May 5, 2020, Circular Economy Series, CPChem “Climate Impact of Plastics"
(2)"Climate Impact of Plastics", McKinsey & Company, July 2022. https://www.mckinsey.com/industries/chemicals/our-insights/climate-impact-of-plastics
(3)"Global Energy and Natural Resources Report 2022", Bain & Company https://www.bain.com/globalassets/noindex/2022/bain_report_global-energy-and-natural-resources-2022.pdf
(4)"The plastics industry must go under the knife for a more sustainable future", Wood Mackenzie, Nov, 18, 2021, https://www.woodmac.com/press-releases/the-plastics-industry-must-go-under-the-knife-for-a-more-sustainable-future/
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Phillips 66 2023 Proxy Statement


PROPOSAL 6
psx-20230315_g16.jpg
Shareholder Proposal Requesting Audited Report on Asset Retirement Obligations of Assets with Indeterminate Lives
The Board recommends that you vote “AGAINST” proposal 6.
The State of New Jersey Common Pension Fund D, located at P.O. Box 290, Trenton, NJ 08625, has notified Phillips 66 that it intends to present the following proposal at the Annual Meeting. The State of New Jersey Common Pension Fund D has indicated that it holds 260,940 shares of Phillips 66 common stock in accordance with the requirements of Rule 14a-8.
Oil and gas companies are legally required to decommission certain long-lived tangible assets at the end of their useful life. The obligations associated with doing so are recognized as Asset Retirement Obligations (AROs) by the Financial Accounting Standards Board. The demand for refined products such as gasoline is anticipated to decline as alternative sources of energy become more widely adopted, whether because of consumer demand, government directives, or other forces. As a result, the time to decommission refineries will likely come sooner than anticipated. Yet, investors have little insight into the associated costs of such decommissioning.
AROs are critical accounting estimates, yet useful detail on midstream and downstream AROs is not included in the Company's financial reports due to uncertainty about the timing of decommissioning. According to the Company's most recent annual report, it owns 12 refineries in the U.S. and Europe, which have a new crude throughput capacity of approximately 2 million barrels per day. We appreciate that the Company discloses some information in its most recent annual report about its recognized AROs. However, for those unrecognized AROs, the Company states "[w]e believe that generally these assets have no expected retirement dates for purposes of estimating asset retirement obligations since the dates or ranges of dates upon which we would retire these assets cannot be reasonably estimated at this time.”
Rising climate transition risks and responsive corporate climate strategies make it reasonably possible that near-term changes in legal or economic conditions could materially accelerate realization of these liabilities. If companies choose not to recognize the fair value of AROs on grounds that assets have a dual challengeindeterminate lives, it is imperative that they disclose the undiscounted costs to settle these material off-balance sheet liabilities. Absent this information, investors cannot assess the true risk-adjusted value of providing affordable, abundant, reliable energy to the world and also addressing the global climate challenge. Phillips 66 is committed to doing both while continuing to deliver shareholder returns.

The Company manages GHG emissions, use of renewable energy, energy efficiency andtheir investment nor deploy capital investments on a facility-by-facility basis. The array of assets within our diversified portfolio makes this management approach most efficient. Experience with each facilities’ configuration is an important factor in determining the best way to reduce emissions. Over the last several years, local facility management has integrated a variety of energy efficiency practices into operations to reduce energy consumption and reduce GHG emissions. 

For example, at our refineries, we capitalize on opportunities such as improvements in heat exchange or recovery, furnace controls and steam optimization. Over the last five years, five of our refineries have received U.S. Environmental Protection Agency ENERGY STAR® certifications for being among the most energy-efficient plants in our industry. Seven of our refineries have associated cogeneration units. Cogeneration is the use of a single fuel source to produce both electricity and heat simultaneously. The process helps us meet our manufacturing needs and convert heat that would otherwise be lost to the environment into thermal energy to power our process equipment. We also voluntarily achieved Leadership in Energy & Environmental Design (LEED) Platinum certification, the highest level of such certification, for our headquarters building in Houston, Texas, demonstrating energy savings, carbon dioxide emissions reduction, and water efficiency.

We believe that setting a company-wide goal for the reduction of GHG emissions, as requested by the proposal, does not allow local facility management the full flexibility that is necessary to reduce environmental impact, increase energy efficiency and employ renewable energy at their facilities in an economic and efficient manner. We believe that our current approach, which allows local management to institute the best initiatives for their facilities and is focused on specific projects that will lower emissions, is more meaningful than setting aspirational and possibly arbitrary company-wide targets.

Our commitment to advancing a lower-carbon future is reflected in changes to our compensation programs.

As described in the Compensation Discussion and Analysis beginning on page 27, the Compensation Committee of our Board introduced two new metrics into our annual compensation program, “Low-Carbon Priorities” and “GHG Priorities.” The first metric is focused on lower-carbon investments, optimization and innovation, while the second metric is focused on manufacturing emissions intensity. These changes were made to reinforce our focused efforts to advance a lower-carbon economy. Our compensation programs are designed to drive desired behaviors and results, and we believe that including these metrics in our Variable Compensation Incentive Program, including for 2021 performance, demonstrates our commitment in these areas.

We are making investments that advance a lower carbon future and are focusing on technologies that support energy transition.

We agree with the proponent that action by companies is needed and that Phillips 66 can thrive in the energy transition. To that end, we have already acted and invested, with plans to continue and build on what we have already done. Earlier in 2021, we announced a new organization within Phillips 66, Emerging Energy, tasked with establishing a lower-carbon, sustainable business platform. The organization is meant to coordinate on an

68     PHILLIPS 66 PROXY STATEMENT 2021

effectively.

SHAREHOLDER PROPOSALS

enterprise-wide basis all of our existing investments, work with our Energy Research and Innovation team to commercialize and implement energy technology within our operations and portfolio of assets, and build on those efforts. Outlined below are examples of our work to support the energy transition and lower our Scope 1, Scope 2 or Scope 3 emissions that are already completed or underway.

Operations:

·We are converting our San Francisco Refinery to a renewable fuels facility that, upon completion, is expected to have 800 million gallons per year of renewable fuel production capacity, reduce the facility’s GHG emissions by 50%, and be one of the world’s largest renewable fuels facilities
·We are progressing an industrial scale renewable hydrogen project at Humber Refinery
·We are jointly developing a carbon capture project to capture emissions from the Humber Refinery and associated local industry
·We are evaluating solar and wind energy to power our pipelines and refineries
·We are developing energy improvement projects and evaluating construction of cogeneration units to achieve ENERGY STAR® certification at all our refineries
·We have piloted solid oxide fuel cells technology in Wyoming to power cathodic protection through pipelines to maintain asset integrity
·We are utilizing GHG offsets, such as forestry protocols, to support projects designed to mitigate carbon dioxide emissions

Products:

·We are producing renewable diesel from used cooking oil at our Humber Refinery, with plans to further expand capacity by 2024
·We have entered into agreements for supply and offtake at two third-party renewable diesel facilities under construction in Nevada
·We have increased marketing of low carbon fuels on the U.S. West Coast
·We installed a hydrogen pump station in Switzerland, with plans to annually add more stations
·We produce and supply feedstock that is used to make anodes and lithium-ion batteries for electric vehicles (EVs) and electronic devices, which also is used to increase productivity of steel recycling
·We have developed and are manufacturing fluids and lubricants for motors and battery packs in EVs and are producing low viscosity heavy duty engine oil to improve fuel economy

Implementing the proposal would not provide incremental benefits to the Company or its shareholders.

Phillips 66 recognizes the climate challenge and agrees with the proponent that the reduction of GHG emissions is an important issue. The Company maintains its commitment to the reduction of GHG emissions by (i) making investments and growing our business to support a lower carbon future; (ii) pursuing internal efforts to reduce emissions through energy efficiency; (iii) including new metrics in our annual compensation program that support low carbon and GHG priorities; (iv) continuing to develop innovative technologies that can play a role in the energy transition; and (v) voluntarily reporting our Scope 1 and Scope 2 GHG emissions.

In light of our evidenced continuing commitment to GHG reductions and reporting, the Board believes implementing the proposal would not be additive to the work already underway and is unnecessary to further these efforts. The Board recommends a vote “AGAINST” this proposal.

PHILLIPS 66 PROXY STATEMENT 2021     69

SHAREHOLDER PROPOSALS

PROPOSAL 6:  SHAREHOLDER PROPOSAL REGARDING REPORT ON CLIMATE LOBBYING

Resolved: Shareholders request that the Board of Directors conductissue an evaluationaudited report that describes the undiscounted expected value to settle obligations for AROs with indeterminate settlement dates. The Board should obtain and issue aensure publication of the report within the next year (atby February 2024 at reasonable cost and omitting proprietary information) describing if, and how, Phillips 66’s lobbying activities (direct and through trade associations) align withinformation. To allow maximum flexibility, nothing in this resolution shall serve to micromanage the goal of limiting average global warmingCompany by seeking to well below 2 degrees Celsius (the Paris Climate Agreement’s goal). The report should also address the risks presented by any misaligned lobbying and the company’s plans, if any, to mitigate these risks.

Supporting Statement: According to the November 2019 “Emissions Gap Report” issued by the United Nations Environment Programme, critical gaps remain between the commitments national governments have made and the actions required to prevent the worst effects of climate change. Companies have an important and constructive role to playimpose methods for implementing complex policies in enabling policy- makers to close these gaps.

Corporate lobbying activities that are inconsistent with meeting the goalsplace of the Paris Climate Agreement, however, present regulatory, reputational, legal and financial risks to investors. These efforts also exacerbate systemic risks to our economies,ongoing judgement of management as delays in implementationoverseen by its Board of the Paris Climate Agreement increase the physical risks of climate change - as we have seen in abundance in 2020 with wildfires and severe storms - and introduce uncertainty and volatility into our portfolios. We believe that Paris Climate Agreement-aligned climate lobbying helps to mitigate these risks, and contributes positively to the long-term value of our investment portfolios.

Of particular concern are the trade associations and other politically active organizations that speak for business but, unfortunately, too often present forceful obstacles to progress in addressing the climate crisis.

As investors, we view fulfillment of the Paris Climate Agreement’s agreed goal—to hold the increase in the global average temperature to “well below” 2°C above preindustrial levels, and to pursue efforts to limit the temperature increase to 1.5°C—as an imperative. We are convinced that unabated climate change will have a devastating impact on our clients, plan beneficiaries, and the value of their portfolios. We see future “business as usual” scenarios of a 3-4°C or greater increase in the global average temperature as both unacceptable and uninvestable.

Directors.

Supporting Statement:In 2019, two hundred institutional investors managing $6.5 trillion wrote to Phillips 66, seeking information on how the company is managing this critical governance issue. Insufficient information is presently available to help investors understand whether Phillips 66 works to ensure that its lobbying activities, directly, in the company’s name, and indirectly, through trade associations, align with the Paris Climate Agreement’s goals, and whether Phillips 66 takes any action to address any misalignments it has found. We believe Philips 66’s reply was not responsive to this request.

Thus, we urge the Board and managementmanagement’s reasonable discretion we recommend such report also include: (1) a range of potential settlement dates based on each asset’s estimated economic life, (2) probabilities associated with the potential settlement dates, with due consideration given to assess the company’s climate related lobbyingpotential impact of the energy transition away from fossil fuels, and report to shareholders.

(3) whether, based on known information, it is reasonably possible that these assumptions and estimates will change in the near term.

70     PHILLIPS 66 PROXY STATEMENT 2021

Shareholder Proposals93



SHAREHOLDER PROPOSALS

BOARD OF DIRECTOR’SDIRECTORS' RESPONSE TO SHAREHOLDER PROPOSAL 6

THE BOARD RECOMMENDS THAT YOU VOTE “AGAINST” PROPOSAL 6.

REQUESTING AUDITED REPORT ON ASSET RETIREMENT OBLIGATIONS OF ASSETS WITH INDETERMINATE LIVES

The Board has carefully considered this proposal and, for the reasons set forth below, does not believe that it is in the best interests of the Company and its shareholders, and unanimously recommends a vote “AGAINST” the proposal.

Phillips 66’s governance policies provide for effective oversight of its political activities.

The Board fully supports accountability, appropriate transparency, and disclosure of lobbying activities and expenditures. Our Board’s Public Policy and Sustainability Committee (PPSC), which oversees our polices, programs and practices regarding environmental protection and our sustainability programs and initiatives, also has oversightbelieves the audited report requested in this proposal is not in the best interests of our lobbying and political engagements. These matters are under the purview of the PPSC as part of its oversight responsibility forshareholders because it:
Directly conflicts with the Company’s global reputationaccounting policy for its asset retirement obligations, which complies with US GAAP and political trendsis consistent with industry practice for companies with similar assets
Is potentially misleading to shareholders because asset retirement costs ultimately to be incurred for assets with indeterminate lives, and risks.

The Company follows an internal review and oversight process to ensure its public policy positions are aligned with its lobbying activities. Regular reviews of public policy issues of significance are provided to senior management and to the PPSC. Company positionstimeframe in which such costs will be incurred, depend on key issues are made public through a variety of sources, including our Sustainability Report, with climate change disclosures and analysis, SEC filings, and press releases, allfactors, many of which are available on our websiteoutside of management’s control and indeterminable at www.phillips66.com. Our lobbyingthis time

Disregards how the impact of the Company’s commitment to the energy transition may extend the useful lives of certain assets beyond what may be currently conceivable
The requested report would directly conflict with the Company’s accounting policy for its asset retirement obligations, which complies with US GAAP and political contributions supportis consistent with industry practice for companies with similar assets.
This proposal seeks to require the Company strategyto account for its asset retirement obligations (AROs) in a manner that is contrary to management’s accounting policies, judgments, and conclusions with respect to its AROs, which are consistent with publicly available positions.

Our Political Giving and Activities Policy, which also is publicly available on our website, clearly provides that only certain employees are authorized to execute the Company’s political activities, including lobbying. Our well-established processes provide effective oversight of our political activities, including lobbying. 

Phillips 66 already provides comprehensive political and lobbying disclosure.

Phillips 66 publicly reports, on a quarterly basis, to the U.S. Congress its federal lobbying expenses and the specific issues lobbied. The total figure reported in Phillips 66’s public Lobbying Disclosure Act (LDA) filings includes expenses associated with the costs of employee federal lobbying, as well as those portions of payments to trade associations, coalitions and think tanks that are spent on federal lobbying. The LDA filings disclose Phillips 66’s lobbying expenditures, describe legislation and general issues that were the topic of communication, and identify the individual who lobbied on behalf of Phillips 66. All of these filings are accessible to the general public on the U.S. Senate website at www.senate.gov. Phillips 66 also files similar periodic reports with state agencies and publicly provides links to Company filings or state search tools if direct links are not possible. Furthermore, Phillips 66, and its employees involved in lobbying, file lobby disclosure reports at the federal, state and local level,made in accordance with generally accepted accounting principles (“US GAAP”) as established and interpreted by the Financial Accounting Standards Board (“FASB”) and consistent with industry practice.

Management makes accounting judgments and conclusions with oversight of the Board and its Audit and Finance Committee. The proposal seeks to change management’s accounting policy, which complies with US GAAP, and require the Company to prepare and provide information that is inconsistent with its annual audited consolidated financial statements. The Company provides financial disclosures to its shareholders that are both informative and compliant with US GAAP, including its AROs, in its annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”). The Company’s annual consolidated financial statements are audited by an independent registered public accounting firm. That firm has opined that the Company’s consolidated financial statements present fairly, in all applicable disclosure laws.

As partmaterial respects, its consolidated financial position and the consolidated results of its operations and its cash flows in conformity with US GAAP.

With respect to accounting for AROs, the FASB Accounting Standards Codification (“ASC”) Topic 410, Asset Retirement and Environmental Obligations (“ASC 410”) is the source of authoritative US GAAP guidance. The Company uses this guidance to account for and make disclosures about its AROs, including disclosures about its assets with indeterminate settlement dates (such as certain refining assets), for which a reasonable estimate of fair value cannot be made of the AROs. The Company cannot determine the fair value of AROs for such refining assets because a retirement date or range of retirement dates cannot be reasonably determined. In accordance with US GAAP, the Company will recognize a liability for the AROs with respect to these assets when it has enough information to reasonable estimate a retirement date or range of retirement dates. Therefore, the proposal requests an alternate presentation of AROs that is inconsistent with the Company’s application of US GAAP and its consolidated financial statements.
In developing the US GAAP guidance on AROs, the FASB understood that the information necessary to record an ARO may not be available until a future date. Accordingly, US GAAP provides guidance on when to recognize AROs and disclosures to make when sufficient information is not available to make a reasonable estimate of an ARO. In developing such guidance, we believe the FASB was promulgating accounting standards with a view towards enhancing the accuracy, transparency and comparability of financial reporting. Yet this proposal seeks to require the Company to estimate the timing and cost of future asset retirements. This estimation would require the Company to make significant assumptions as
94
Phillips 66 2023 Proxy Statement


to the scope and extent of remediation activities that may be required if and when a removal event actually occurs. The Board concluded that engaging in such an estimation exercise would not add shareholder value and would result in the presentation of information that is not comparable to our peers. The Board believes that changes to accounting guidance should be led by standard-setters such as FASB, rather than through shareholder proposals.
The requested report would cloud shareholder’s understanding of potential liabilities since future ARO costs depend on a variety of factors, many of which are outside of management’s control and indeterminable at this time.
The Board believes that the audited report requested by the proponent would be inherently misleading to shareholders, as the timing and ultimate costs to settle AROs for assets with indeterminate lives will depend on a variety of factors, many of which are both outside of management’s control and unknown at this time, such as (i) investments to maintain and modernize assets, (ii) the extent to which existing assets may be utilized in the energy transition, (iii) the regulations in effect at the time of decommissioning, (iv) the speed and extent to which the energy transition develops, and (v) the future land usage, among others. These factors will influence the useful life of the underlying assets and the magnitude and timing of costs that will ultimately be borne by the company to satisfy its AROs. Put simply, the requested report ignores the importance and complexity of making accurate determinations regarding settlement timing in calculating AROs. The report sought in this proposal risks being misinterpreted as reflecting the Company’s views of its AROs and being misused in comparison with peers.
Corporate financial reporting and the application of accounting guidance is intended to provide the market with clear, comparable information so that informed investment decisions can be made. Providing alternative information about the Company’s AROs which is inconsistent with the Company’s accounting policies, judgments and conclusions would cloud, rather than clarify, an investor’s understanding of the Company’s liabilities. Moreover, the requested estimation deviates from industry practice for ARO recognition, which could confuse shareholders, as it may be interpreted as an estimate of liability, and would create a lack of comparability in reporting among peers to the detriment of our overall effort to promote political transparency and accountability, Phillips 66 publishes a semiannual voluntary report of political contributions. Included in this report are (i) contributions to section 527 organizations; (ii) contributions to individual candidates for state and local office; (iii) portions of dues or similar payments to trade associations, 501(c)(3) organizations that develop model legislation and section 501(c)(4) organizationsshareholders.
The Company’s commitment to the extentenergy transition may extend the dues or other payments equal or exceed $50,000 and are attributable to political purposes; and (iv) a link to all contributions by Phillips 66 for the prior five years.

Requiring additional disclosure would hold Phillips 66 to a different standard than other groups engaging in similar lobbying activities.

Phillips 66 participation in the political process is in the best interestuseful lives of shareholders.

We recognize that among trade association members there cancertain assets beyond what may be viable viewpoints that differ from ours. When this occurs, we seek to workcurrently conceivable.

In taking issue with the association membershipCompany’s GAAP-compliant disclosures regarding AROs, the proponent cites climate transition risks as a basis to promote reasonable compromise on major initiatives affecting usask shareholders to vote to change management’s accounting policy for its AROs. The Company recognizes the need to address climate change and our stakeholders. Company contribution to or participation in trade associations, including membership on a trade association board, does not mean that the Company agrees with every position a

PHILLIPS 66 PROXY STATEMENT 2021     71

SHAREHOLDER PROPOSALS

trade association takes on an issue and from time to time our corporate positions may differ from those of the trade association of which we are members. Annually, the Company reviews the merits of each organization in which it is involved and assesses whether to sustain or withdraw support.

Phillips 66 is committed to adheringparticipating in the energy transition. This commitment includes the Company’s investment in technology to increase the highest standardsefficiency of ethicsits operations, lower the emissions intensity of its operations, and enhance the resiliency of its assets.

The Company is using its existing infrastructure and capabilities along with its research into emerging energies and renewable fuels to participate in engagingthe energy transition. A prime example of this is the Company’s San Francisco refining complex that is currently being transformed into one of the world’s largest renewable fuels facilities, Rodeo Renewed. When complete, Rodeo Renewed is expected to extend the economic life of the Rodeo refining facility, help meet growing demand for lower-carbon fuels, preserve jobs and support the US in any government relations activities. Phillips 66achieving its climate goals. By repurposing certain assets like the San Francisco refining complex in support of the energy transition, the Company is highly regulated and significantly impacted by public policy decisions atfurther extending their economic lives.This further supports the local, state, and federal levels. As such,Company’s assertion that our assets have no expected retirement dates for the purpose of estimating AROs, as the dates or ranges of dates upon which we would retire these assets cannot reasonably be estimated.
For the reasons set forth above, the Board believes that Phillips 66's public policy engagementthe Company’s resources are better spent pursuing our strategic priorities. Because the requested report would be inconsistent with management’s accounting policies, judgments, and conclusions, require estimations that are arbitrary, and have the potential to confuse and mislead shareholders with discrepancies between our audited financial statements and peer disclosures, the Board of Directors recommends voting AGAINST this proposal.
Shareholder Proposals95


Beneficial Ownership of
Phillips 66 Securities
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding persons who we know to be the beneficial owners of more than five percent of our issued and outstanding common stock as of March 15, 2023. The information is essentialbased on reports filed by such person with the SEC:
Name and AddressNumber of SharesPercent of Class
The Vanguard Group(1)
100 Vanguard Blvd.
Malvern, PA 19335
50,216,13110.62 %
BlackRock, Inc.(2)
55 East 52nd Street
New York, NY 10055
37,326,0497.90 %
State Street Corporation(3)
One Lincoln Street
Boston, MA 02111
32,689,1206.92 %
(1)Based solely on an Amendment to protectSchedule 13G filed with the interestsSEC on February 9, 2023, by The Vanguard Group. The Amendment to Schedule 13G reports sole voting power for no shares of common stock, shared voting power for 670,300 shares of common stock, sole dispositive power for 48,243,781 shares of common stock and shared dispositive power for 1,972,350 shares of common stock.
(2)Based solely on an Amendment to Schedule 13G filed with the SEC on February 3, 2023, by BlackRock, Inc. on behalf of itself, BlackRock Life Limited; BlackRock International Limited; BlackRock Advisors, LLC; Aperio Group, LLC; BlackRock (Netherlands) B.V.; BlackRock Institutional Trust Company National Association; BlackRock Asset Management Ireland Limited; BlackRock Financial Management, Inc.; BlackRock Japan Co., Ltd.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; FutureAdvisor, Inc.; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock (Luxembourg) S.A.; BlackRock Investment Management (Australia) Limited; BlackRock Advisors (UK) Limited; BlackRock Fund Advisors; BlackRock Asset Management North Asia Limited; BlackRock (Singapore) Limited; and BlackRock Fund Managers Ltd. The Amendment to Schedule 13G reports sole voting power for 33,911,002 shares of common stock, no shared voting power for shares of common stock, sole dispositive power for 37,326,049 shares of common stock and no shared dispositive power for shares of common stock.
(3)Based solely on an Amendment to Schedule 13G filed with the SEC on February 3, 2023, by State Street Corporation on behalf of itself, State Street Bank And Trust Company; SSGA Funds Management, Inc.; State Street Global Advisors Europe Limited; State Street Global Advisors Limited; State Street Global Advisors Trust Company; State Street Global Advisors, Australia, Limited; State Street Global Advisors (Japan) Co., Ltd.; State Street Global Advisors Asia Limited; State Street Global Advisors, Ltd.; State Street Global Advisors Singapore Limited; and State Street Saudi Arabia Financial Solutions Company. The Amendment to Schedule 13G reports sole voting power for no shares of common stock, shared voting power for 30,551,010 shares of common stock, sole dispositive power for no shares of common stock and shared dispositive power for 32,658,855 shares of common stock.
96
Phillips 66 2023 Proxy Statement


SECURITIES OWNERSHIP OF OFFICERS AND DIRECTORS
This table lists the beneficial ownership of our customers, employees, shareholders,common stock as of February 15, 2023, by all directors and communities. Participationnominees, the executive officers named in public policy dialogues includes contributing to organizations that advocate positions that support the interestsSummary Compensation Table, and by all of Phillips 66, our customers, employees, shareholders,directors and communities. These organizations include industry trade associations that serve important non-political purposes, including helping to address business, technical,executive officers as a group. Together these individuals beneficially own less than one percent of our common stock.
Number of Shares or Units
Name of Beneficial OwnerShares Beneficially Owned
Restricted or Deferred Stock Units(1)
Options Exercisable within 60 Days(2)
Mr. Garland597,06686,1691,105,899
Mr. Lashier7,18577,46266,032
Mr. Mandell19,30827,143158,366
Mr. Mitchell68,04841,657311,033
Mr. Roberts21,46332,822166,299
Ms. Sutherland47,56711,766
Mr. Adams18,596
Ms. Bushman9,005
Ms. Davis7,859
Mr. Hayes10,2504,049
Mr. Holley7712,146
Mr. Lowe40,00037,476
Ms. Ramos18,243
Ms. Singleton5,544
Mr. Terreson5,544
Mr. Tilton28,40037,476
Dr. Whittington10,00037,476
Directors and Executive Officers as a
Group (20 Persons)
852,699528,66319,700,694
(1)Includes RSUs and standard-setting issues. We believe it is important to participate in trade organizations' public policy discussions so that important decisionsdeferred stock units that may affectbe voted or sold only upon the passage of time.
(2)Includes beneficial ownership of shares of common stock which may be acquired within 60 days of February 15, 2023, through stock options awarded under compensation plans.
Beneficial Ownership of Phillips 66 Securities97


Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our business, customers,directors and shareholders are not made withoutexecutive officers and persons who own more than 10% of a registered class of our position being heard.

Phillips 66 is fully compliantequity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with all statethe SEC and federal laws governing corporate lobbying activities. In addition to the disclosures weNYSE. Such executive officers, directors and stockholders also are required by SEC rules to provide by law, Phillips 66 also voluntarily discloses additional information semiannually in a report which is posted directlyfurnish us with copies of all Section 16(a) forms that they file.

To our knowledge, based solely on our website. In 2020, in responsereview of the copies of such reports furnished to feedback we received during our shareholder engagements, Phillips 66 increased its disclosures regarding contributions to candidates, political parties,us and 527 Committees, including disclosure of multiple years of Company contributions. In 2020, the Center for Political Accountability’s Zicklin Index of Corporate Political Accountability and Disclosure, which benchmarks the political disclosure and accountability policies and practices of leading U.S. companies, recognized the quality of our disclosures and ranked Phillips 66 among the “Trendsetters” of S&P 500 companies. Disclosing this information in one report allows the informationwritten representations that no other reports were required to be more easily accessedfiled during the year ended December 31, 2022, we believe that for 2022, all required reports were filed on a timely basis under Section 16(a), except:
A Form 4 was filed on April 5, 2022, reporting the withholding of 383 shares to satisfy FICA withholding taxes for Mr. Roberts. The withholding of the shares should have occurred on August 4, 2020, but did not occur until February 4, 2022. The delay in processing and viewed by our shareholders. Providingreporting the transaction was due to an administrative error.
A Form 4 was filed on June 22, 2022, reporting a separategrant of 34,258 RSUs to Ms. Sutherland on January 17, 2022. This report that reflects trade association positions at a particular moment in time is not efficient use of Company resources.

Existing disclosure laws provide consistent transparency for all parties involved in the political process. As such, the Board believes the proponent’s specific requests regarding lobbying disclosures are more appropriately addressedwas filed late due to the federal or state governmental branches that regulate these disclosures. 

an administrative error.

72     PHILLIPS

Beneficial Ownership of Phillips 66 PROXY STATEMENT 2021

Securities
98

ADDITIONAL INFORMATION

ADDITIONAL INFORMATION



Additional Information
ABOUT THE ANNUAL MEETING

Why am I receiving these proxy materials?

We have made these materials available to you or delivered paper copies to you by mail because you are a Phillips 66 shareholder of record as of March 17, 2021,15, 2023, and Phillips 66’s Board of Directors is soliciting your proxy to vote your shares at the 20212023 annual meeting of shareholders. This Proxy Statement includes information that we are required to provide to you under SEC rules and is designed to assist you in voting your shares.

What is a proxy?

A proxy is your legal designation of another person to vote the shares you own. The person you designate is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. By submitting your proxy (either by voting electronically on the Internet or by telephone or by signing and returning a proxy card), you authorize Greg C. Garland,Mark E. Lashier, our ChairmanPresident and CEO,Chief Executive Officer, and Paula A. Johnson,Vanessa Allen Sutherland, our Executive Vice President, Legal and Government Affairs, General Counsel and Corporate Secretary, to represent you and vote your shares at the meeting in accordance with your instructions. They also may vote your shares to adjourn the meeting and will be authorized to vote your shares at any postponements or adjournments of the meeting.

What is included in the proxy materials?

The proxy materials for our 20212023 Annual Meeting include the Notice of 20212023 Annual Meeting of Shareholders (the “Annual Meeting Notice”), this Proxy Statement (the “Proxy Statement”), and Phillips 66’s Annual Report on Form 10-K for the year ended December 31, 20202022 (the “Annual Report”). If you receive a paper copy of the proxy materials, a proxy card or voting instruction form and pre-paid return envelope are also included. The Annual Meeting Notice (which is included in the Proxy Statement), Proxy Statement and Annual Report are being made available at www.proxyvote.com and are being mailed, along with the accompanying proxy card or voting instruction form, to applicable shareholders beginning on or about March , 2021.

2023.

Why did I receive a notice regarding the internet availability of proxy materials instead of a full set of proxy materials?

We are furnishing proxy materials to our shareholders primarily through notice-and-access delivery pursuant to SEC rules. As a result, we are mailing to many of our shareholders a Notice Regarding the Internet Availability of Proxy Materials (the “Notice of Internet Availability”) containing instructions on how to access the proxy materials on the Internet. Shareholders who have affirmatively requested electronic delivery of our proxy materials will receive instructions via email regarding how to access these materials electronically. All other shareholders, including shareholders who have previously requested to receive a paper copy of the materials, will receive a full paper set of the proxy materials by mail. Using the notice-and-access method of proxy delivery expedites receipt of proxy materials by our shareholders, reduces the cost of producing and mailing the full set of proxy materials and helps us contribute to sustainable practices.

If you receive a Notice of Internet Availability by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the notice instructs you on how to access the proxy materials and vote on the Internet. If you received a notice by mail and would like to receive paper copies of our proxy materials in the mail, you may call 1-800-579-1639 or send an email to sendmaterial@proxyvote.com to request a printed copy of our proxy materials.

99


Who is entitled to vote at the meeting?

The record date for the meeting is March 17, 2021.15, 2023. Only shareholders of record as of the close of business on that date are entitled to vote at the meeting. Each share of common stock is entitled to one vote for all matters before

PHILLIPS 66 PROXY STATEMENT 2021     73

ADDITIONAL INFORMATION

the meeting. At the close of business on March 15, 2023, the record date, there were shares of common stock outstanding.

What is the difference between holding shares as a shareholder of record and as a beneficial owner? Am I entitled to vote if my shares are held in “street name”?

If your shares are registered in your name with our transfer agent, Computershare Trust Company, N.A., you are the “shareholder of record” (or “registered holder”) of those shares, and the Notice of Internet Availability or proxy materials have been provided directly to you by Phillips 66.

If your shares are held by a bank, brokerage firm or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If your shares are held in street name, the Notice of Internet Availability or proxy materials (including a voting instruction form) are being forwarded to you by your bank, brokerage firm or other nominee (the “bank or broker”). As the beneficial owner, you have the right to direct your bank or broker how to vote your shares by following the instructions on the Notice of Internet Availability or voting instruction form for voting on the Internet or by telephone (if made available by your bank or broker with respect to any shares you hold in street name), or by completing and returning the voting instruction form, and the bank or broker is required to vote your shares in accordance with your instructions.

If you do

Brokers are not give voting instructions, your broker will nevertheless be entitledpermitted to vote your shares in its discretion on the ratificationcertain proposals and may not vote on any of the appointment of the independent registered public accounting firm (Proposal 3). Absent your instructions, the broker will not be permitted, however, to vote your shares on the election of directors (Proposal 1), the management proposal regarding the annual election of directors (Proposal 2), the advisory vote to approve named executive officer compensation (Proposal 4), or adoption of the two shareholder proposals (Proposals 5 and 6), andunless you provide voting instructions. Voting your shares will be considered “broker non-votes” on those proposals.help to ensure that your interests are represented at the meeting. See “— How will broker non-votes be treated?” below.

What does it mean if I receive more than one Notice of Internet Availability, proxy card or voting instruction form?

If you receive more than one Notice of Internet Availability, proxy card or voting instruction form that means your shares are registered differently and are held in more than one account. To ensure that all of your shares are voted, please vote each account over the Internet or by telephone (if made available by the bank or broker with respect to any shares you hold in street name), or sign and return by mail all proxy cards and voting instruction forms.

How can shareholders help Phillips 66 reduce mailing costs?

If you vote on the Internet, you may elect to have next year’s proxy materials delivered to you electronically. We strongly encourage you to enroll in electronic delivery. Opting to receive your proxy materials electronically will reduce the cost of producing and mailing documents and help us contribute to sustainable practices.

How many shares must be present to hold the meeting?

A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person (online) or represented by proxy, of the holders of a majority of the shares of outstanding common stock on the record date will constitute a quorum. Proxies received but marked as abstentions or treated as broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.

100
Phillips 66 2023 Proxy Statement


How do I vote?

You can vote either in person at the meeting or by proxy.

proxy.

This Proxy Statement, the accompanying proxy card and the Annual Report are being made available to shareholders on the internet at www.proxyvote.comw ww.proxyvote.com through the notice and access process. The Annual Report contains consolidated financial statements and reports of the independent registered public accounting firm, management'smanagement’s discussion and analysis of

74     PHILLIPS 66 PROXY STATEMENT 2021

ADDITIONAL INFORMATION

financial condition and results of operations, information concerning the quarterly financial data for the past two fiscal years, and other information.

To vote by proxy, you must do one of the following:

Vote over the internetInternet (instructions are on the proxy card).
Vote by telephone (instructions are on the proxy card).
If you elected to receive a hard copy of your proxy materials, fill out the enclosed proxy card, date and sign it, and return it in the enclosed postage-paid envelope.

If you hold your Phillips 66 stock in a brokerage account (that is, in “street name”), your ability to vote by telephone or over the internet depends on your broker'sbroker’s voting process. Please follow the directions on your proxy card or voter instruction form carefully.

Even if you plan to attend the Annual Meeting, we encourage you to vote your shares by proxy.

How do I vote if I hold my stock through a Phillips 66 employee benefit plan?

If you hold your stock through a Phillips 66 employee benefit plan, you must either:

Vote over the internet (instructions are in the email sent to you or on the notice and access form).
Vote by telephone (instructions are on the notice and access form).
If you elected to receive a hard copy of your proxy materials, fill out the enclosed voting instruction form, date and sign it, and return it in the enclosed postage-paid envelope.

You will receive a separate voting instruction form for each employee benefit plan in which you hold Phillips 66 stock. Please pay close attention to the deadline for returning your voting instruction form to the plan trustee. The voting deadline for each plan is set forth on the voting instruction form. Please note that different plans may have different deadlines.

Do I have to register in advance to attend the meeting?

Due to continuing concerns relating to COVID-19, we

We will have a virtual-only annual meeting of shareholders in 2021.2023. The meeting will be conducted exclusively via live audio webcast. You do not have to register in advance to attend the virtual meeting. To participate in the virtual meeting, please visit www.virtualshareholdermeeting.com/PSX2021w ww.virtualshareholdermeeting.com/PSX2023 and enter the 16-digit control number included in your Notice of Internet Availability, on your proxy card, or on the voting instruction form that accompanied your proxy materials. You may begin to log into the meeting platform beginning at 8:45 a.m. Central Time on May 12, 2021.10, 2023. The meeting will begin promptly at 9:00 a.m. Central Time on May 12, 2021.10, 2023. See below for additional details.

If the Notice of Internet Availability or voting instruction form that you received does not indicate that you may vote your shares through the www.proxyvote.com website, you should contact your bank, broker or other nominee (preferably at least 5 days before the meeting) and obtain a “legal proxy” (which will contain a 16-digit control number that will allow you to attend, participate in or vote at the meeting).

Who can attend the Annual Meeting?

Shareholders of record and “street name” holders at the close of business on March 17, 202115, 2023 can attend the meeting by accessing www.virtualshareholdermeeting.com/PSX2021w ww.virtualshareholdermeeting.com/PSX2023 and entering the 16-digit control number included in the proxy materials previously received.materials. Please note that the www.virtualshareholdermeeting.com/PSX2021PSX2023 website will not be active until approximately two weeks before the meeting date.

Additional Information101


If you do not have a 16-digit control number, you may still attend the meeting as a guest in listen-only mode. To attend as a guest, please access www.virtualshareholdermeeting.com/PSX2021w ww.virtualshareholdermeeting.com/PSX2023 and enter the information requested on the screen to register as a guest. Please note that you will not have the ability to ask questions vote or examine the list of shareholders during the meetingvote if you participate as a guest. See “Virtual Meeting Information” below for additional details.

PHILLIPS 66 PROXY STATEMENT 2021     75

ADDITIONAL INFORMATION

How can I revoke my proxy?

You can revoke your proxy by sending written notice of revocation of your proxy to our Corporate Secretary so that it is received prior to 5:00 p.m., Central Daylight Time, on May 11, 2020.

9, 2023.

If you hold your Phillips 66 stock in street name, you may revoke any voting instructions by contacting the bank, brokerage firm, or other nominee holding the shares or you may also attend the virtual annual meeting and vote online during the meeting, which will replace any previous votes (however, attending the meeting virtually, without voting, will not revoke a proxy).
Can I change my vote after I submit my proxy?

Yes. You can change your vote at any time before the polls close at the Annual Meeting, which will void any earlier vote. You can change your vote by:

voting again by telephone or over the internetInternet prior to 11:59 p.m., Eastern Daylight Time, on May 11, 2021;9, 2023;
signing another proxy card with a later date and returning it to us prior to the meeting; or
voting again at the meeting.

If you hold your Phillips 66 stock in street name, you must contact your brokerbank, brokerage firm, or other nominee holding the shares to obtain information regarding changing your voting instructions.

Who counts the votes?

We hired Broadridge Financial Solutions, Inc. to count the votes represented by proxies and cast by ballot, and appointed Jim GaughanNatalie Hairston of GaughanADRAmerican Election Services to act as Inspector of Election.

Will my shares be voted if I don'tdon’t provide my proxy and don'tdon’t attend the Annual Meeting?

For shares held in your name, if you do not provide a proxy or vote your shares at the Annual Meeting, those shares will not be voted.

If you hold shares in street name (i.e., you own your shares through a brokerage, bank, or other institutional account), you are considered the beneficial owner of those shares, but not the record holder. This means that you vote by providing instructions to your broker rather than directly to Phillips 66. Brokers are not permitted to vote on certain proposals and may not vote those shares for routine matters even ifon any of the proposals unless you do not provide the broker with voting instructions. OnlyTherefore, unless you provide specific voting instructions, your shares may not be represented or voted at the ratificationmeeting.
Voting your shares will help to ensure that your interests are represented at the meeting.
What are the votes required to elect each director nominee and approve the other proposals?
For Proposal 1, as required by Phillips 66’s By-Laws, each nominee requires the affirmative vote of Ernst & Young LLPa majority of the votes cast in person or by proxy at the meeting.
For Proposal 2, as our independent registered public accounting firm for fiscal year 2021,required by Phillips 66’s Certificate of Incorporation, the affirmative vote of the holders of 80% of the outstanding shares of stock entitled to vote is consideredrequired to beapprove Proposal 2.
Proposals 3, 4, 5 and 6 require approval of the affirmative vote of a routine matter.

majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal.

If you do not give your broker instructions on how to vote your shares, the broker will return the proxy card without voting on proposals that are non-routine. This is a broker non-vote. Without instructions from you, the broker may not vote on any proposals other than the ratification of Ernst & Young LLP as our independent registered public accounting firm for 2021.

2023.

102
Phillips 66 2023 Proxy Statement


How will abstentions be treated?

Abstentions will have no effect on the election of directors (Proposal 1). For each of the other proposals (Proposals 2, 3, 4, 5 and 6), abstentions will be treated as shares present for quorum purposes and entitled to vote, so they will have the same practical effect as votes against the proposal.

How will broker non-votes be treated?

If your shares are held in street name, in order to ensure your shares are voted in the way you would like, you must provide voting instructions to your bank or broker by the deadline provided in the materials you receive from your bank or broker.

Brokers holding shares must vote according to specific instructions they receive from the beneficial owners of those shares. If you hold yourbrokers do not receive specific instructions, brokers may in some cases vote the shares in street nametheir discretion, but are not permitted to vote on certain proposals and may elect not vote on any of the proposals unless you provide voting instructions. If you do not instruct yourprovide voting instructions and the broker howelects to vote your shares youron some but not all matters, it will result in a “broker non-vote” for the matters on which the broker may vote your shares in its discretion on the ratification of the appointment of the independent registered public accounting firm (Proposal 3). Your shares will be treated as broker non-votes on all the other proposals.

does not vote.

Broker non-votes will be treated as shares present for quorum purposes, but they are not considered as votes cast or entitled to vote. Thus, absent voting instructions from you, your broker mayvote and will not be counted in determining the outcome of the vote your shares on the election of directors (Proposal 1), the management proposal regarding the annual election of directors (Proposal 2), the advisory vote to approve named

76     PHILLIPS 66 PROXY STATEMENT 2021

ADDITIONAL INFORMATION

executive officer compensation (Proposal 4), or the adoption of the two shareholder proposals (Proposalson Proposals 3, 4, 5 and 6). A broker non-vote will not affect the outcome of any of the matters other than Proposal 2.or 6. Proposal 2 requires the affirmative FOR“FOR” vote of 80% of outstanding shares entitled to vote. Therefore, a broker non-vote has the same effect as a vote against this proposal.

Will the meeting be webcast?

The 20212023 Annual Meeting will be a virtual meeting, conducted exclusively via live audio webcast at www.virtualshareholdermeeting.com/PSX2021,PSX2023, and is available to Philips 66’s shareholders as of the record date. Guests may also attend the virtual meeting. A replay of the annual meeting will be available on the Events and Presentations page of the Investor Relations section of our website (investors.Phillips66.com) approximately 24 hours after the meeting ends and will remain available on our website for at least one month following the meeting.

What if I return my proxy but don'tdon’t vote for some of the matters listed on my proxy card?

If you return a signed proxy card without indicating your vote, your shares will be voted FORFOR” the director nominees listed on the card; the management proposal regardingdeclassification of the annual electionBoard of directors;Directors; the approval of the compensation of our named executive officers; and the ratification of Ernst & Young LLP as the independent registered public accounting firm for Phillips 66 for fiscal year 2021; and the approval of the compensation of our named executive officers.2023. Your shares will be voted AGAINST”AGAINST the shareholder proposals.

Could other matters be decided at the Annual Meeting?

We are not aware of any other matters to be presented at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the persons named in your proxy will vote in accordance with their best judgment. Discretionary authority to vote on other matters is included in the proxy.

Will my vote be kept confidential?

The Board of Directors has a policy that shareholder proxies, ballots, and tabulations that identify shareholders are to be maintained in confidence. No such document will be available for examination, and the identity and vote of any shareholder will not be disclosed, except as necessary to meet legal requirements and allow the inspectors of election to certify the results of the shareholder vote. The policy also provides that inspectors of election must be independent and cannot be employees of the Company. Occasionally, shareholders provide written comments on their proxy card that may be forwarded to management.

Additional Information103


VIRTUAL MEETING INFORMATION

Due to continuing concerns relating to COVID-19, the

The 2023 Annual Meeting in 2021 will be a virtual meeting, conducted exclusively via live audio webcast at www.virtualshareholdermeeting.com/PSX2021.PSX2023. There will not be a physical location for the annual meeting,2023 Annual Meeting, and you will not be able to attend the meeting2023 Annual Meeting in person.

To participate in the virtual meeting, please visit www.virtualshareholdermeeting.com/PSX2021w ww.virtualshareholdermeeting.com/PSX2023 and enter the 16-digit control number included in your Notice of Internet Availability, on your proxy card, or on the voting instruction form that accompanied your proxy materials. You may begin to log into the meeting platform beginning at 8:45 a.m. Central Time on May 12, 2021.10, 2023. The meeting audio webcast will begin promptly at 9:00 a.m. Central Time on May 12, 2021.

10, 2023.

The virtual meeting platform is fully supported across browsers and devices running the most updated version of applicable software and plug-ins. Please ensure that you have a strong Wi-Fiinternet connection wherever you intend to participate in the meeting. Please also give yourself sufficient time to log-in and ensure you can hear the streaming audio before the meeting starts.

Shareholders will be able to submit questions live during the virtual meeting by typing the question into the “Ask a Question” field and clicking submit. We will answer questions that comply with the meeting rules of conduct during the annual meeting, of shareholders,

PHILLIPS 66 PROXY STATEMENT 2021     77

ADDITIONAL INFORMATION

subject to time constraints. If we receive substantially similar questions, we will group such questions together. Questions that we do not have time to answer during the meeting will be addressed by direct response or posted to our website following the meeting, depending on the subject matter. Questions regarding personal matters or matters not relevant to meeting matters will not be answered.

If you do not have a 16-digit control number, you may still attend the meeting as a guest in listen-only mode. To attend as a guest, please access www.virtualshareholdermeeting.com/PSX2021w ww.virtualshareholdermeeting.com/PSX2023 and enter the information requested on the screen to register as a guest. Please note that you will not have the ability to ask questions, vote, or examine the list of shareholders during the meeting if you participate as a guest. An archived copy of the audio webcast will be made available on our website (investors.phillips66.com)(investor.phillips66.com) after the meeting and will remain available for at least one month following the meeting.

If you encounter any technical difficulties with the virtual meeting website on the meeting day, please call the technical support number that will be posted on the virtual meeting log-in page. Technical support will be available starting at 8:45 a.m. Central Time and until the meeting has finished.

At this time, we do not intend for this to be a permanent shift from in-person meetings.

COMMUNICATIONS WITH THE BOARD

Shareholders and interested parties may communicate with the Board of Directors in care of our Corporate Secretary. Communications to the non-employee directors should be addressed to “Board of Directors (independent members).”

Mailing Address:

Corporate Secretary

Phillips 66

2331 City West Bvld.

Houston, TX 77042

Phone: (281) 293-6600

Internet:Investors” section of the Company's website (www.phillips66.com) under the “Corporate Governance” caption

Communications are distributed to the Board or to any individual directors, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Board has requested that items unrelated to its duties and responsibilities not be distributed, such as: business solicitations or advertisements; junk mail and mass mailings; new product suggestions; product complaints or inquiries; résumés and other job inquiries; spam; and surveys. Material that is considered hostile, threatening, illegal or similarly unsuitable also will be excluded.

GENERAL INFORMATION

The principal executive offices of Phillips 66 are located at 2331 CityWest Blvd., Houston, Texas 77042.

Phillips 66’s Annual Report on Form 10-K for the year ended December 31, 2020, which includes our fiscal 2020 audited consolidated financial statements, accompanies this Proxy Statement. The Annual Report does not constitute a part of the proxy solicitation materials and is not incorporated by reference into this Proxy Statement.

Printed copies of our Corporate Governance Guidelines, Code of Business Ethics and Conduct, charters for each of the committees of the Board of Directors and our Annual Report on Form 10-K for the year ended December 31, 2020,2022, including the audited financial statements and the financial statement schedules, are available without charge to shareholders upon written request to Phillips 66, 411 S. Keeler, Bartlesville, Oklahoma, 74003 or via the internet at www.phillips66.com. We will furnish the exhibits to our Annual Report on Form 10-K upon payment of our copying and mailing expenses. In addition, the information on any website referenced in this Proxy Statement, including www.phillips66.comw ww.phillips66.com is not deemed to be part of or incorporated by reference into this Proxy Statement.

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Phillips 66 2023 Proxy Statement


PROXY SOLICITATION

We will bear all costs of this proxy solicitation. In addition to soliciting proxies by this distribution, our directors, officers and regular employees may solicit proxies personally or by mail, telephone, facsimile or other electronic means, for which solicitation they will not receive any additional compensation. We will reimburse brokerage firms,

78     PHILLIPS 66 PROXY STATEMENT 2021

ADDITIONAL INFORMATION

custodians, fiduciaries and other nominees for their out-of-pocket expenses in forwarding solicitation materials to beneficial owners upon our request. We have retained Alliance Advisors to assist in the solicitation of proxies for a fee of $15,000$20,000 plus reimbursement of certain disbursements and expenses.

HOUSEHOLDING

We have adopted a procedure approved by the SEC called “householding.” Under this procedure, shareholders of record who have the same address and last name and do not participate in electronic delivery will receive only one copy of the Notice of Internet Availability or proxy materials, unless contrary instructions have been received from one or more of these shareholders. This procedure will reduce our printing costs and postage fees.

Shareholders who participate in householding and receive full sets of the proxy materials will continue to receive separate proxy cards. Also, householding will not in any way affect dividend check mailings.

If your household only received a single set of proxy materials or you hold shares in more than one account and in either case you prefer to receive separate copies or you received multiple copies of the proxy materials and only wish to receive a single copy, please contact Broadridge by calling 800-579-1639, through the internet at www.proxyvote.com, or by email at sendmaterial@proxyvote.com.

Beneficial owners of shares held in street name can request information about householding from their banks, brokerage firms or other holders of record.

SUBMISSION OF FUTURE SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS

Shareholder Proposals for 2022the 2024 Annual Meeting

Shareholder proposals (other than director nominations) intended to be presented at Phillips 66’s 20222024 annual meeting must be received no later than December 1, 2021,2, 2023, and must comply with applicable SEC rules, including Rule 14a-8, to be eligible for inclusion in our proxy materials for next year’s meeting. Proposals should be addressed to Phillips 66, Attention: Corporate Secretary, 2331 CityWest Blvd., Houston, Texas 77042.

For any proposal that is not submitted for inclusion in next year’s proxy statement (as described in the preceding paragraph or in the proxy access director nominations section below), but is instead sought to be presented directly at the 20222024 annual meeting, including director nominations, our By-Laws require shareholders to give advance notice of such proposals. The required notice, which must include the information and documents set forth in the By-Laws (which includes information required under Rule 14a-19), must be given no more than 120 days and no less than 90 days in advance of the anniversary date of the immediately preceding annual meeting. Accordingly, with respect to our 20222024 annual meeting of shareholders, our By-laws require notice to be provideddelivered to or mailed and received by the Corporate Secretary at the address listed above, as early as January 12, 2022,11, 2024, but no later than February 11, 2022.

10, 2024.

Additional Information105


Proxy Access Director Nominations

Our proxy access bylaw permits up to 20 shareholders owning 3% or more of our outstanding shares continuously for at least three years to nominate and include in our proxy materials director nominees constituting up to two individuals or 20% of the Board, whichever is greater, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in the By-Laws.

Phillips 66’s By-Laws require shareholders to give advance notice of any proxy access director nomination. The required notice, which must include the information and documents set forth in the
By-Laws, must be given no more than 120 days and no less than 90 days prior to the anniversary of the date that Phillips 66 mailed its proxy statement for the prior year’s annual meeting. Accordingly, with respect to our 20222024 annual meeting, our By-Laws require notice to be provided toreceived by the Corporate Secretary at the address listed above, as early as January 12, 2022,11, 2024, but no later than February 11, 2022.

PHILLIPS 66 PROXY STATEMENT 2021     79

10, 2024.

ADDITIONAL INFORMATION

Additional Information

Our By-Laws are available under “Documents and Charters” on the Corporate Governance page of the Investors section of our website at investor.phillips66.com. Except as otherwise provided by law, the chairman of the meeting will declare out of order and disregard any nomination or other business proposed to be brought before the meeting by a shareholder that is not made in accordance with our By-Laws.

80     PHILLIPS

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Phillips 66 PROXY STATEMENT 2021

2023 Proxy Statement

Appendix A



Appendix A
Certificate of Amendment to the

Amended and Restated Certificate of Incorporation

of

Phillips 66

Phillips 66, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify:


1.That Article FIFTH of the Amended and Restated Certificate of Incorporation of the Corporation is hereby amended to read in its entirety as follows:


FIFTH: A. The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors. The total number of directors constituting the entire Board shall be not less than six nor more than twenty as determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors. The directors, other than those who may be elected by the holders of any series of Preferred Stock under specified circumstances, shall be divided, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as is reasonably possible, each with a term of office to expire at the third succeeding annual meeting of stockholders after their election, with each director to hold office until his or her successor shall have been duly elected and qualified. Unless otherwise required by law, any vacancy on the Board of Directors or newly created directorship may be filled only by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been appointed expires and until their successors are duly elected and qualified, or until their earlier death, resignation, removal or departure from the Board of Directors for other cause.


Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances:


(1)Commencing with the election of directors at the 20222024 annual meeting of stockholders, there shall be two classes of directors: (i) the directors in the class elected at the 20202022 annual meeting of stockholders and having a term that expires at the 20232025 annual meeting of stockholders, and (ii) the directors in the class elected at the 20212023 annual meeting of stockholders and having a term that expires at the 20242026 annual meeting of stockholders. Directors elected at the 20222024 annual meeting of stockholders shall be elected for a one-year term expiring at the 20232025 annual meeting of stockholders.

(2)Commencing with the election of directors at the 20232025 annual meeting of stockholders, there shall be one class of directors: those directors elected at the 20212023 annual meeting of stockholders and having a term that expires at the 20242026 annual meeting of stockholders. Directors elected at the 20232025 annual meeting of stockholders shall be elected for a one-year term expiring at the 20242026 annual meeting of stockholders.

(3)From and after the election of directors at the 20242026 annual meeting of stockholders, the Board of Directors shall cease to be classified and the directors elected at the 20242026 annual meeting of stockholders (and each annual meeting of stockholders thereafter) shall be elected for a term expiring at the following annual meeting of stockholders.


Unless otherwise required by law, in the event of any increase or decrease in the authorized number of directors at any time when the Board of Directors is divided into a class or classes, each director then serving as a member of a class of directors shall continue as a director of the class of

PHILLIPS 66 PROXY STATEMENT 2021     A-1

APPENDIX A

which he or she is a member until the expiration of the director’s term or the director’s death, retirement, resignation, or removal. Each newly created directorship on the Board of Directors that results from an increase in the number of directors and any vacancy occurring in the Board of Directors shall be filled only by a majority of the directors then in office, though less than a quorum,

107


or by a sole remaining director, pursuant to Section 223 of the DGCL. Any director elected to fill a newly created directorship that results from an increase in the number of directors shall be elected for a term expiring at the next annual meeting of stockholders and until their successor is duly elected and qualified, or until their earlier death, retirement, resignation, removal or departure from the Board of Directors for other cause, and any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of the predecessor director. Current directors serving in a class that was elected for a three-year term at the annual meetings of stockholders held from 20192021 through 20212023 may be removed only for cause. All other directors may be removed either with or without cause.

cause.


Notwithstanding the foregoing, whenever the holders of outstanding shares of one or more series of Preferred Stock are entitled to elect a director or directors of the Corporation separately as a series or together with one or more other series pursuant to a resolution of the Board of Directors providing for the establishment of such series, such director or directors shall not be subject to the foregoing provisions of this Article FIFTH, and the election, term of office, removal and filling of vacancies in respect of such director or directors shall be governed by the resolution of the Board of Directors so providing for the establishment of such series and by applicable law.


B. Subject to applicable law, any director or the entire Board of Directors may only be removed with cause, such removal to be by the affirmative vote of the shares representing at least a majority of the votes entitled to be cast by the Voting Stock.


Notwithstanding the foregoing, whenever holders of outstanding shares of one or more series of Preferred Stock are entitled to elect directors of the Corporation pursuant to theprovisions applicable in the case of arrearages in the payment of dividends or other defaults contained in the resolution or resolutions of the Board of Directors providing for the establishment of any such series, any such director of the Corporation so elected may be removed in accordance with the provisions of such resolution or resolutions.

CB. There shall be no limitation on the qualification of any person to be a director or on the ability of any director to vote on any matter brought before the Board or any Board committee, except (i) as required by applicable law, (ii) as set forth in this Certificate of Incorporation or (iii) any By-Law adopted by the Board of Directors with respect to the eligibility for election as a director or the qualification for continuing service as a director upon reaching a specified age or, in the case of employee directors, with respect to the qualification for continuing service of directors upon ceasing employment from the Corporation.

DC. Except as (i) required by applicable law or (ii) set forth in this Certificate of Incorporation, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors.

ED. The following provisions are inserted for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

(1)The By-Laws of the Corporation may be adopted, altered, amended or repealed (i) by the affirmative vote of the shares representing a majority of the votes entitled to be cast by the Voting Stock; PROVIDED, HOWEVER, that any proposed alteration, amendment or repeal of, or the adoption of any By-Law inconsistent with, Section 3, 7, 10, 11, 12 or 13 of Article II of the By-Laws or Section 1, 2 or 11 of Article III of the By-Laws or Section 4, 5 or 12 of Article IV of the By-Laws (in each case, as in effect on the date hereof), or the alteration, amendment or the repeal of, or the adoption of any provision inconsistent with, this sentence, by the stockholders shall require the affirmative vote of shares representing not less than 80% of the votes entitled to be cast by the Voting Stock; and PROVIDED, FURTHER, HOWEVER,

A-2     PHILLIPS 66 PROXY STATEMENT 2021

APPENDIX A

that in the case of any such stockholder action at a special meeting of stockholders, notice of the proposed alteration, amendment, repeal or adoption of the new By-Law or By-Laws must be contained in the notice of such special meeting, or (ii) by action of the Board of Directors of the Corporation; providedprovided, however, that in the case of any such action at a meeting of the Board of Directors, notice of the proposed alteration, amendment, repeal or adoption of the new By-Law or By-Laws must be given not less than two days prior to the

108
Phillips 66 2023 Proxy Statement


meeting. The Provisions of this paragraph (ED)(1) of this Article FIFTH are subject to Section 12 of ArticleIIIV of the By-Laws.

(2)In addition to the powers and authority hereinbeforeherein before or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, this Certificate of Incorporation, and any By-Laws adopted by the stockholders; PROVIDED, HOWEVER, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted.


2.The foregoing amendment to the Amended and Restated Certificate of Incorporation of the Corporation was duly adopted in accordance with the provisions of Section 242 of the Delaware General Corporation Law.


IN WITNESS WHEREOF,the Corporation has caused this Certificate of Amendment to the Amended and Restated Certificate of Incorporation to be executed by the undersigned officer, duly authorized, as of the day of 2021.

2023.


Phillips 66

By:
Name:
Title:
Phillips 66
Appendix ABy:
Name:
Title:

PHILLIPS 66 PROXY STATEMENT 2021     A-3

109

Appendix B



Appendix B
NON-GAAP FINANCIAL MEASURES

Adjusted PSP ROCE
We believe that Adjusted PSP ROCE is an important metric for evaluating the quality of capital allocation decisions, measuring portfolio value, and measuring the efficiency and profitability of capital investments. The discussionCompensation Committee uses this measure as a factor in its assessment of our results in this Proxy Statement includes referencesmanagement's performance. Adjusted PSP ROCE is a ratio, the numerator of which is net income (loss) adjusted for items management does not consider to our “adjusted EBITDA”;be representative of the Company's underlying operating performance plus after-tax interest expense, and the denominator of which is average adjusted total equity plus total debt. A reconciliation of ROCE as used in “absolute ROCE” and “relative ROCE”; and “adjusted controllable costs.” These measures are not measures of financial performance undercalculated using GAAP andamounts to Adjusted PSP ROCE is set forth below.
Millions of Dollars
(except as indicated)
Average
2020-2022
2022 20212020
Numerator
Net Income (Loss)$11,391 $1,594 $(3,714)
After-tax interest expense489 459 394 
ROCE earnings (loss) - GAAP11,880 2,053 (3,320)
Adjustments(1,787)956 3,598 
ROCE earnings (as used in PSP)$10,093 $3,009 $278 
Denominator
Average capital employed(1) - GAAP
43,691 36,751 38,174 
In-process capital and other(2,488)(1,339)(2,244)
Average capital employed - as used in PSP$41,243 $35,412 $35,930 
ROCE - GAAP8.0 %27.2 %5.6 %(8.7)%
Adjusted PSP ROCE(2)
11.2 %24.5 %8.5 %0.8%
(1)Total equity plus total debt.
(2)Average may not be defined and calculated by other companies using the same or similar terminology.

foot due to rounding.


Net Debt-to-Capital Ratio
Year Ended December 31, 2022Millions of Dollars
(except as Indicated)
Total Debt$17,190 
Total Equity$34,106 
Debt-to-Capital Ratio34%
Total Cash$6,133 
Net Debt-to-Capital Ratio24%



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Phillips 66 2023 Proxy Statement




Adjusted VCIPEBITDA

Adjusted VCIP EBITDA is a non-GAAP financial measure because it adjusts net income (loss) to exclude depreciation and amortization, net interest expense and income taxes, as well as certain items of expense or income that management does not consider representative of our core operating performance. Management uses this measure as a factor in its assessment of performance for the purposes of compensation decisions. A reconciliation of adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, to Adjusted VCIP EBITDA is set forth below.

YEAR ENDED DECEMBER 31, 2020MILLIONS OF DOLLARS
Net Loss$(3,714)
Plus:
Income tax benefit(1,250)
Net interest expense485
Depreciation and amortization (D&A)1,395
EBITDA(3,084)
Adjustments:
Impairments4,241
Impairments by equity affiliates15
Pending claims and settlements(37)
Pension settlement expense81
Lower-of-cost-or-market inventory adjustments(55)
Hurricane-related costs43
Asset dispositions(93)
Proportional share of selected equity affiliates income taxes, net interest and D&A1,291
Adjusted EBITDA attributable to joint venture partners’ non-controlling interests(37)
Adjusted EBITDA attributable to public ownership interest in PSXP(353)
Certain tax impacts(6)
Adjusted EBITDA – as used in PSP$2,006

PHILLIPS 66 PROXY STATEMENT 2021     B-1

Millions of Dollars
Year Ended December 31202220212020
Net Income (Loss)$11,391 $1,594 $(3,714)
Plus:
Income tax expense (benefit)3,248 146 (1,250)
Net interest expense537 583 485 
Depreciation and amortization (D&A)1,629 1,605 1,395 
EBITDA$16,805 $3,928 $(3,084)
Adjustments:
Impairments— 1,496 4,241 
Impairments by equity affiliates— — 15 
Pending claims and settlements— — (37)
Certain tax impacts— (11)(6)
Pension settlement expense— 77 81 
Lower-of-cost-or-market inventory adjustments— — (55)
Hurricane-related costs(21)45 43 
Asset dispositions— — (93)
Winter-storm-related costs— 51 — 
Alliance shutdown-related costs20 31 — 
Regulatory costs70 (88)— 
Restructuring costs177 — — 
Merger transaction costs13 — — 
Gain related to merger of businesses(3,013)— — 
Proportional share of selected equity affiliates income taxes, net
interest and D&A
1,106 1,236 1,291 
Adjusted EBITDA attributable to joint venture partners’ noncontrolling
interests
(427)(81)(37)
Adjusted EBITDA attributable to public ownership interest in PSXP(82)(393)(353)
NOVONIX unrealized gain(1)
442 (370)— 
Adjusted VCIP EBITDA$15,090 $5,921 $2,006 

APPENDIX B

ROCE

We believe after-tax ROCE is an important metric for evaluating

(1)Represents the qualitychange in value, including foreign exchange impacts, of capital allocation decisions, measuring portfolio value, and measuring the efficiency and profitability of capital investments. Management uses this measure as a factorour investment in its assessment of performance for the purposes of compensation decisions. After-tax ROCE is a ratio, the numerator of which is adjusted earnings plus after-tax interest expense, and the denominator of which is average adjusted total equity plus total debt. Our calculation of after-tax ROCE as used in the PSP, and its reconciliation to ROCE prepared using GAAP amounts, is set forth below.

 

MILLIONS OF DOLLARS

(except as indicated)

 

Average

2018-2020

 202020192018
Numerator     
Net Income (Loss) $(3,714)3,3775,873
After-tax interest expense  394362398
ROCE earnings (loss) - GAAP  (3,320)3,7396,271
Adjustments(1)  3,598581(45)
ROCE earnings - as used in PSP  2784,3206,226
Denominator     
Average capital employed(2) - GAAP  38,17438,62237,925
In-process capital and other  (2,244)(2,292)(1,634)
Average capital employed - as used in PSP $35,93036,33036,291
ROCE (percent) - GAAP5.8% (8.7)%
9.7%
16.5%
ROCE (percent) - as used in PSP
10.0% 0.8%
11.9%
17.2%
         
NOVONIX.
(1)Primarily related to impairments, certain tax impacts and asset disposition.
Appendix B111
(2)Total equity plus total debt.



Adjusted Controllable Costs

Adjusted controllable costsControllable Costs is a non-GAAP financial measure of how effectively we manage costs versus internal targets. Management uses this measure as a factor in its assessment of performance for the purposes of compensation decisions. Adjusted controllable costs is a non-GAAP financial measure because itControllable Costs excludes certain costs that management believes are not directly relevant to compensation decisions. A reconciliation of adjusted controllable costs to the sum of operating expenses and selling, general and administrative expenses, the most directly comparable GAAP measures, to Adjusted Controllable Costs is set forth below.

YEAR ENDED DECEMBER 31, 2020 MILLIONS OF DOLLARS
Operating Expenses$4,563 
Selling, General and Administrative Expenses 1,544 
Adjustments:  
Certain employee benefits (57) 
Foreign currency and other 270 
Turnaround timing impacts 156 
Adjusted Controllable Costs$6,476 

B-2     PHILLIPS 66 PROXY STATEMENT 2021

Year Ended December 31, 2022Millions of Dollars
Operating Expenses$6,111
Selling, General and Administrative Expenses$2,168
Less:
Utilities1,312
Turnarounds & Catalyst Change-Out771 
Bank Card Fees428
2022 Actuals5,768 
Less:
Certain employee benefits284 
Foreign currency(101)
DCP Controllable Costs483 
Alliance/Belle Chasse20 
Restructuring89 
Adjusted Controllable Costs$4,993



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