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. )

☑ Filed by the Registrant ☐ Filed by a party other than the Registrant

CHECK THE APPROPRIATE BOX:
☐	Preliminary Proxy Statement
☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☑	Definitive Proxy Statement
☐	Definitive Additional Materials
☐	Soliciting Material under §240.14a-12

Phillips 66

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

PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY):
☑	No fee required
☐	Fee paid previously with preliminary materials
☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

WHO WE ARE

Phillips 66 is a diversified energy manufacturing and logistics company. With a unique portfolio of assets and investments in the midstream, chemicals, refining, and marketing and specialties businesses, we process, transport, store and market fuels and products globally. At Phillips 66, we provide energy that improves lives and contributes to meeting the world’s growing energy needs. We also invest in, and research for, solutions supporting a lower-carbon future. Our focus areas include solid oxide fuel cells, photovoltaic polymers, next generation battery materials and renewable fuels.

	Midstream
	22,000+	miles of U.S. pipeline systems
	Provides crude oil and refined product transportation, terminaling, processing and export services, as well as NGL transportation, storage, processing and marketing services, mainly in the United States. This segment includes our 50% equity investment in DCP Midstream, LLC and our 16% investment in NOVONIX Limited.

	Chemicals
	28	global manufacturing facilities	2	research and development centers in the U.S.
	Consists of our 50% joint venture interest in Chevron Phillips Chemical Company LLC (“CPChem”), which manufactures and markets petrochemicals and plastics worldwide. CPChem has cost-advantaged assets concentrated in North America and the Middle East.

	Refining
	2.0	million BPD of crude throughput capacity
	Refines crude oil and other feedstocks into petroleum products such as gasoline, distillates and aviation fuels, as well as renewable fuels, at 12 refineries in the United States and Europe.

	Marketing and Specialties
	7,110	branded U.S. outlets	1,700	branded international outlets
	Markets refined petroleum products and renewable fuels, mainly in the United States and Europe. The segment also includes the manufacturing and marketing of specialty products such as base oils and lubricants.

As of Dec. 31, 2021

Notice of 2022 Annual Meeting
of Shareholders

Date and Time
Wednesday,
May 11, 2022

9:00 a.m.
Central Time

Place
virtualshareholdermeeting.com/
PSX2022

Who Can Vote
Shareholders of record at the close of business on March 15, 2022, may vote at the meeting or any postponements or adjournments of the meeting.

How to cast your vote:

Online
www.proxyvote.com

By phone
(800) 690-6903

Proxy card
Complete, sign and return your proxy card

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/PSX2022

VOTING ITEMS

Proposals		Board Vote Recommendation	For Further Details
1	Election of four director nominees	“FOR” each director nominee	Page 17
2	Approval, on an advisory basis, of compensation paid to our named executive officers	“FOR”	Page 40
3	Ratification of the appointment of our independent registered public accounting firm	“FOR”	Page 83
4	Approval of our 2022 Omnibus Stock and Performance Incentive Plan	“FOR”	Page 86
5-6	Twoshareholderproposals,if properly presented	“AGAINST” each proposal	Page 93

Shareholders will also vote on any other business that is properly raised at the meeting.

The 2022 Annual Meeting will be held exclusively online at www.virtualshareholdermeeting.com/PSX2022. 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 31, 2022.

For the Board of Directors,

 

Vanessa Allen Sutherland

Corporate Secretary
March 31, 2022

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.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 11, 2022

The Notice of 2022 Annual Meeting of Shareholders, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2021 are available at www.proxyvote.com.

1

TABLE OF CONTENTS

Notice of 2022 Annual Meeting of Shareholders	1
Letters from Leadership	3
Performance Highlights	5
2021 Operational and Financial Highlights	5
Corporate Responsibility and Sustainability	7
Human Capital Management	9
Proxy Summary	10
Corporate Governance Highlights	10
Shareholder Outreach and Responsiveness	11
Board Highlights	12
Pay for Performance	14
Responding to Shareholder Feedback on Pay	14
Compensation Snapshot	15
Proposal 1: Election of Directors	17
Directors Standing for Election	17
Continuing Directors	19
Board Skills and Experience	23
Director Qualifications and Nomination Process	24
Board Independence	26
Corporate Governance	27
Board Leadership Structure	27
Board Committees	28
Shareholder Outreach and Responsiveness	30
Board Oversight of Our Company	33
Community Involvement and Engagement	35
Meetings and Attendance	36
Board Education	36
Related Party Transactions	36
Director Compensation	37
Objectives and Principles	37
Director Compensation Table	39
Proposal 2: Advisory Approval of Executive Compensation	40
Compensation Discussion and Analysis	41

Executive Compensation Tables	69
Summary Compensation Table	69
Grants of Plan-Based Awards	72
Outstanding Equity Awards at Fiscal Year End	73
Option Exercises and Stock Vested for 2021	75
Pension Benefits as of December 31, 2021	75
Nonqualified Deferred Compensation	77
Potential Payments Upon Termination or Change in Control	78
CEO Pay Ratio	81
Equity Compensation Plan Information	82
Proposal 3: Ratification of the Appointment of Ernst & Young	83
Ernst & Young LLP Fees	83
Audit and Finance Committee Report	84
Proposal 4: Approval of 2022 Omnibus Stock and Performance Incentive Plan of Phillips 66	86
Shareholder Proposals	93
Proposal 5: Shareholder Proposal Regarding GHG Emissions Targets	94
Proposal 6: Shareholder Proposal Regarding Report on Shift to Recycled Polymer for Single Use Plastics	98
Beneficial Ownership of Phillips 66 Securities	102
Securities Ownership of Certain Beneficial Owners	102
Securities Ownership of Officers and Directors	103
Additional Information	105
About the Annual Meeting	105
Virtual Meeting Information	109
General Information	110
Proxy Solicitation	110
Householding	111
Submission of Future Shareholder Proposals and Director Nominations	111
Appendices	112

2          Phillips 66 2022 Proxy Statement

Letters from Leadership

From Our Chairman of the Board and CEO

Dear Fellow Shareholders,

Phillips 66 continued recovering from the impacts of the pandemic in 2021 and made significant progress advancing lower-carbon initiatives. We continued to honor our vision and values by keeping our people safe, providing energy and improving lives. We remained focused on our strategic priorities: growth, returns and distributions supported by a strong foundation of operating excellence and a high-performing organization. We take great pride in maintaining our commitments:

· We are committed to disciplined capital allocation with an emphasis on returns. In 2021, we raised the quarterly dividend, continuing our trend to deliver a secure, competitive and growing dividend. Our strong cash flow generation allowed us to invest $1.9 billion back into the business, return $1.6 billion to shareholders and pay down $1.5 billion of debt. We continued to prioritize a strong balance sheet and our investment grade credit ratings.

· We are committed to environmental responsibility. In 2021, we developed meaningful and achievable targets for reducing greenhouse gas emissions intensity that are tied to viable plans and specific projects consistent with our disciplined approach to capital allocation. We also expanded our commitment to environmental responsibility, setting a goal for all our refining sites to achieve top-third energy efficiency by 2030.

· We are committed to being part of the solution for a lower-carbon future. Throughout the nearly 150- year history of Phillips 66, energy has been a business of transition and the people of Phillips 66 have been problem solvers. That spirit continues to this day and is reflected in opportunities we are pursuing toward a lower-carbon future. At our San Francisco Refinery, we began renewable diesel production and advanced the Rodeo Renewed project. We invested in NOVONIX to support the development of the U.S. battery supply chain and Shell Rock Soy Processing to secure feedstock for our growing portfolio of renewable fuels projects. We are collaborating with multiple parties to further develop sustainable aviation fuel, batteries, carbon capture and hydrogen opportunities.

· We are committed to listening to our stakeholders. Last year, our shareholders asked us to set and publish GHG emissions reduction targets and report on climate lobbying. We responded by setting impactful, attainable and measurable targets to reduce GHG emissions intensity from our operations and energy products by 2030, and earlier this year we announced targets for 2050. We published our Lobbying Activities Report, which details our governance, compliance processes, policy development and transparent reporting on our climate-related lobbying activities. We also responded by incorporating two new and meaningful metrics to our annual bonus program: Low Carbon Priorities and Greenhouse Gas Priorities, which are explained in more detail in the Proxy Statement.

· We are committed to inclusion and diversity. I encourage you to read our recently published 2021 Human Capital Management Report in which we provide data and insights on resilience through another year of the pandemic while reinforcing our commitment to inclusion and diversity and aligning benefits that meet the needs of today’s workforce. We also continued our Board refreshment by adding two new directors in 2021. These new directors add to our Board’s industry expertise, further increase our Board’s diversity, and broaden the depth and breadth of the skills and experiences our directors bring to the Board.

On a final note, we believe as economic conditions show signs of improving there will be further opportunities for value creation across our traditional business lines and emerging energy opportunities. To ensure everyone’s health and well-being, the 2022 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
Chairman and CEO
March 31, 2022

3

From Our Lead Director

Dear Fellow Shareholders,

The independent directors and I join Greg in inviting you to attend our Company’s 2022 annual meeting of shareholders. The Board values input from our shareholders as the Company continues to execute our long-term strategy. As the Board’s Lead Independent Director, I meet regularly with investors. During most of those meetings, I am joined by the chair of our Human Resources and Compensation Committee, Dr. Marna Whittington. The input and feedback we receive from our investors are shared with the entire Board, which considers these viewpoints in our discussions and decisions.

We appreciate the diversity of concerns that are of interest to you, our shareholders. We heard interesting perspectives on the compensation of our executives and the metrics used in our compensation programs, GHG emissions reduction and other environmental issues, and human capital matters, among others. We think you will see in our various public disclosures that we take these perspectives seriously and attempt to address them through changes to our compensation programs and providing additional disclosures.

I encourage you to read our 2022 Proxy Statement, our 2021 Annual Report on Form 10-K, and the other proxy materials. I also encourage you to read our 2021 Sustainability Report and our 2021 Human Capital Management Report, both of which are available on the Company website.

Our Board remains committed to building long-term value in the Company and returning excess 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 that deliver lower-carbon solutions. On behalf of the directors, I join Greg and the entire executive management 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.

  Sincerely, Glenn Tilton
Lead Director
March 31, 2022

4          Phillips 66 2022 Proxy Statement

Performance Highlights

2021 OPERATIONAL AND FINANCIAL HIGHLIGHTS 

In 2021, Phillips 66’s management and employees exemplified the Company’s commitment to Operating Excellence, enabling the Company to recover following the uncertainties and challenging market conditions caused by COVID-19. Phillips 66 maintained its commitment to long-term capital discipline and was able to invest in the business, return cash to shareholders, and pay down debt as the Company experienced increased recovery in the back half of the year. A significant portion of 2022 growth capital invested in our business supports lower carbon opportunities, and we will continue to prioritize our investments in lower-carbon opportunities as we strive to meet the world’s changing energy needs.

	Operating Excellence
	Committed to safety, environmental stewardship, sustainability, reliability and cost efficiency while protecting shareholder value ·   Maintained strong industry-leading personal safety performance ·   Achieved best-ever Tier 1 and 2 process safety event rate ·   Established Greenhouse Gas emissions reduction targets

Growth

Enhancing our portfolio by growing our integrated Midstream and Chemicals businesses, as well as executing our returns-focused low-carbon strategy in Emerging Energy ·   Delivered record Midstream and CPChem pre-tax income ·   Completed C2G Ethane Pipeline project and advanced construction of Sweeny Frac 4 ·   Began production of renewable diesel at the San Francisco Refinery ·   Invested in renewable feedstocks and the battery value chain

	Returns
	Improving returns by investing to optimize and enhance existing assets ·   Delivered record Marketing & Specialties pre-tax income ·   Acquired approximately 200 retail sites via US JV; upgraded 1,000+ sites globally ·   Advanced renewable fuels placement strategy

	Distributions
	Committed to maintaining financial strength and disciplined capital allocation to reward shareholders through continued dividend growth and share repurchases ·   Returned $1.6 B in dividends to shareholders ·   Increased dividend ·   Paid down $1.5 B of debt

High-Performing Organization

Building capability, pursuing excellence, and doing the right thing ·   Realized improvements in employee engagement, manager effectiveness and performance enablement ·   Advanced leader-led Inclusion & Diversity efforts ·   Recognized externally as a great place to work ·   Continued to support local communities where we operate ·   Continued to leverage digital advancements enabling the work force of the future

5

EARNINGS PERFORMANCE Record results in Midstream, Chemicals, and Marketing and Specialities STRONG CASH FLOW GENERATION  

SUSTAINED COMMITMENT TO CAPITAL DISCIPLINE

$1.5BRepaid Debt	·   In 2021, we paid down approximately $1.5 billion of debt. ·   Total debt at year-end was $14.4 billion, with a net debt-to-capital ratio of 34%. ·   As cash flow improves further, we will prioritize debt repayment and shareholder returns. We are on a path toward pre-COVID debt levels.
$1.9BCapital Spending 2021	·   Within our capital allocation framework, we target a long-term 60/40 ratio, reinvesting 60% back into our business and returning 40% to shareholders. It can vary from year to year, and we will continue to adjust depending on the opportunities available. ·   Disciplined capital allocation and achieving strong returns on our investments are fundamental to our strategy.
$1.9BCapital Budget 2022	·   Our 2022 capital program of $1.9 billion reflects our commitment to capital discipline. ·   Approximately 45% of our 2022 growth capital will support lower-carbon opportunities, including Rodeo Renewed, which is expected to initially have over 50,000 barrels per day of renewable fuel production capacity. ·   The 2022 capital budget includes $426 million for Midstream growth and $490 million to support Refining and Marketing growth projects, primarily related to the Rodeo Renewed project. Our proportionate share of capital spending by our major joint ventures is expected to be $1.1 billion, most of which is by CPChem, DCP Midstream, LLC (DCP Midstream), and WRB Refining LP and is expected to be self-funded.

NON-GAAP FINANCIAL MEASURES

Please note that the discussion of our results in this proxy statement contains references to “adjusted earnings,” “adjusted EPS,” “adjusted EBITDA - as used in VCIP,” “Absolute ROCE,” “relative ROCE,” “adjusted ROCE - as used in PSP,” “net debt-to-capital ratio,” and “adjusted controllable costs as used in VCIP.” These are not measures of financial performance under GAAP and may not be defined and calculated by other companies using the same or similar terminology. Please see Appendix B for the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure.”

6          Phillips 66 2022 Proxy Statement

CORPORATE RESPONSIBILITY AND SUSTAINABILITY

Our vision is to provide energy and improve lives, which we reinforce through our core Company values of safety, honor and commitment. Operational, financial, social and environmental sustainability is at the heart of how we deliver on our vision, all of which is anchored on a strong foundation of corporate governance. These tenets define our approach to progressing a sustainable future. Through strong 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, inclusion and diversity, as well as strengthening community through volunteerism, financial support, and engagement, including community awareness and education. Examples of our commitment in action during 2021 include:

Community Involvement and Engagement	·   Contributing $10.5 million to education and literacy programs supporting 16 local schools and school districts, 30 colleges and universities and 212 scholarship recipients ·   Donating $4.1 million, including $1.5 million in disaster relief, for community safety and preparedness supporting 38 local emergency responder departments and 11 food banks ·   Contributing $3.3 million supporting environmental and sustainability programs at 15 community parks and 37 conservation projects ·   Donating $3 million toward civic enrichment through 9 United Way campaigns and 14 inclusion and diversity programs ·   Volunteering 67,000 hours working in our communities through 1,800 employees
Political Activities and Lobbying Activities	·   We are committed to transparent, ethical and responsible engagement complying with all laws and regulations. We actively participate in the political process with the goal of educating policymakers and stakeholders in support of laws and regulations that meet societal and business needs while promoting federal, state and local economies.
Sustainability and Transition to Lower-Carbon Future	·   We continued advancing our Emerging Energy organization to focus on lower-carbon business opportunities. ·   We are conducting research on energies of the future, including renewable fuels, photovoltaic polymers, current and next generation batteries, and solid oxide fuel cells. ·   We have a portfolio of renewable fuel projects in development that advance low carbon fuel standards. ·   We are leveraging our existing infrastructure, digital investments, supply network and capabilities to participate in lower-carbon opportunities.

Performance Highlights          7

Our Approach to Sustainability

Sustainability is integral to our corporate strategy and designed to ensure a resilient portfolio. Our strategy is clear and consistent: operating excellence, growth, returns, distributions delivered through a high-performing organization. This strategy ensures a sustainable, viable business and creates long-term shareholder value.

SUSTAINABILITY SUPPORTS LONG-TERM RESILIENCE

 

Stakeholder Engagement

Stakeholder relationships have always been a priority for us. They enable us to fulfill our purpose and execute our strategy. Our stakeholders include employees, shareholders, investors, customers, communities where we operate, indigenous people, legislators 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 compliance with all applicable laws, in accordance with our Company values and policies, and consistent with the spirit of the United Nations’ Universal Declaration of Human Rights. Our processes provide a measured and responsive approach to stakeholder engagement.

Spotlight on Climate Change/Energy Transition

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, Phillips 66 announced its intention to reduce greenhouse gas (GHG) emissions intensity from our operations and energy products by 2030, setting impactful, attainable and measurable targets. The Company plans to reduce Scope 1 and Scope 2 emissions intensity from operations by 30% and Scope 3 emissions intensity of its energy products by 15%, below 2019 levels. Earlier this year, we announced a 2050 target to further reduce Scope 1 and Scope 2 emissions intensity by 50% below 2019 levels. Details on the projects planned and in development to achieve these targets can be found on the sustainability section of our website.

In furtherance of the evolving energy economy, the Company formed an Emerging Energy organization that is focused on developing a lower-carbon sustainable business platform by leveraging our existing assets and capabilities and advancing investments in new energy technologies. Our Emerging Energy

8          Phillips 66 2022 Proxy Statement

focus areas are renewable fuels, batteries, carbon capture and hydrogen. We are progressing our goal to become a leading producer of renewable fuels through our Rodeo Renewed project and alliances with Southwest Airlines and British Airways to supply sustainable aviation fuel. We are extending participation in the battery value chain through our investment in NOVONIX to advance the production and commercialization of next-generation anode materials for lithium-ion batteries. We have established a competitive position and scale in the high potential carbon capture market and are also pursuing opportunities in hydrogen fueling. These commercial ventures are supported by our Energy Research and Innovation group where research is focused on opportunities in renewable fuels, photovoltaic polymers, next generation batteries, and solid oxide fuel cells.

Our Company’s commitment to sustainability is aligned with our compensation programs. The variable compensation incentive program (VCIP) is the annual bonus program that has 50% weighting on Operational Sustainability and 50% weighting on Financial Sustainability performance metrics. VCIP applies to all employees, from the CEO and NEOs throughout the workforce. In 2021, we increased the weighting of environmental factors in VCIP to 15 percent from 5 percent, and in doing so, added performance metrics for (1) advancing lower-carbon investments, optimization, and innovation and (2) reducing manufacturing emissions intensity and setting GHG emissions reduction targets.

HUMAN CAPITAL MANAGEMENT

Our Board of Directors recognizes the importance of human capital management practices to the long-term success of the Company. They advise senior leadership on our key principles of human capital management and the executive leadership team is responsible for the deployment of our high-performing organization to deliver exceptional performance on a sustainable basis. Below are the key principles of our human capital management strategy. More information regarding how we operationalize our strategy can be found in our Human Capital Management Report on our website at www.phillips66.com/our-people.

• Our people are bonded by our vision of providing energy and improving lives and our core values of safety, honor and commitment

• Our Company strategy depends on our high-performing organization, which is defined by our culture, capability and performance

• Our commitment to safety and operating excellence makes us an industry leader in safety performance

• Our inclusive environment attracts and retains exceptional and diverse talent

• Our investments in development and career growth start from the moment an employee joins Phillips 66 to when they retire

• Our incentives and benefits are competitive and appeal to our evolving workforce

• Our Energy In Action (OEIA) sets behavioral expectations that preserve what makes Phillips 66 great and challenge us to evolve in ways that make us better

• Our employees, shareholders and communities are critical stakeholders with whom we proactively engage

• Our passion for innovation is a catalyst for growth and profitability

For more information on how our Board of Directors oversees Corporate Responsibility, Sustainability and Human Capital Management, see pp. 33-35 of this Proxy Statement.

Performance Highlights          9

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.

	Election of Directors The Board recommends that you vote "FOR” the four director nominees.
PROPOSAL 1

→  See page 17

Our 11-member Board continued to be highly engaged in overseeing our strategy, strong governance practices, and human capital management, especially in light of the continuing COVID-19 pandemic. The Board continued its robust shareholder engagement dialogue and remained committed to being responsive to shareholder concerns. The addition of two new members in 2021 further added to the breadth of skills, perspectives, and diverse backgrounds represented on our Board. 

CORPORATE GOVERNANCE HIGHLIGHTS

Majority voting for directors	Shareholder right to proxy access (3% for 3 years, up to 20% of the Board)
Demonstrated commitment to Board refreshment	Robust Lead Director duties
Director retirement age policy of 75	Clawback policy for incentive compensation
Meaningful director and executive stock ownership guidelines	Commitment to diverse candidate pools
Annual evaluation of the Board and committees	Policy prohibiting pledging and hedging of Company stock
Board level oversight of corporate culture and human capital management	Annual evaluation of CEO by independent directors

10          Phillips 66 2022 Proxy Statement

SHAREHOLDER OUTREACH AND RESPONSIVENESS

Significant Shareholder Engagement

Ongoing engagement with our shareholders is important 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 annual engagement program, we regularly reach out to shareholders for dialogue concerning their priorities. This year we significantly expanded the scope of our stockholder outreach regarding executive compensation and ESG topics.

Following the outcome of our 2021 Annual Meeting, our Board sought to engage in meaningful discussions with our shareholders to understand their voting decisions, provide insight regarding Phillips 66’s practices, and preview potential responsive enhancements to the compensation programs. We conducted two rounds of engagement in fall 2021 to augment the conversations we held with shareholders leading up to the 2021 Annual Meeting. These conversations provide us with valuable feedback that directly informed Board deliberations.

In September 2021, we spoke with investors representing 40% of shares outstanding with a focus on our compensation program design and the relative degree of alignment between Company performance and rewards. Many of these conversations were led by two of our independent directors. In November 2021, we had a second round of conversations with many of the same shareholders, including investors representing 40% of shares outstanding. This second round of conversations provided opportunity to discuss investor perspectives on climate and the Company’s approach to the energy transition, in addition to capturing any further perspectives regarding compensation matters. Additional detail regarding our outreach effort and the feedback we received can be found on page 30.

Responsive to Shareholder Feedback

This year, in direct response to the shareholder feedback we received through our significant engagement effort, the Compensation Committee implemented meaningful changes to our executive compensation program and related disclosures for 2022, as discussed on page 42.

In connection with our 2021 Annual Meeting, our shareholders expressed their interest in the Company setting and publishing GHG emissions reduction targets. We responded in September by setting impactful, attainable and measurable targets to reduce GHG emissions intensity from our operations and energy products by 2030. Our targets are to reduce Scope 1 and Scope 2 emissions intensity from operations by 30% and Scope 3 emissions intensity of our energy products by 15%, below 2019 levels.

Our shareholders also requested that we report on climate lobbying, and we responded by publishing our Lobbying Activities Report, which details our governance, compliance processes, policy development and transparent reporting on our climate-related lobbying activities. Additional detail about our ESG efforts can be found on page 30. 

Proxy Summary          11

BOARD HIGHLIGHTS

Our certificate of incorporation requires a classified Board, meaning our Board is divided into three classes of directors, with each class elected for a three-year term.

		Director Since		Committee Memberships					Other Public Boards
	Name and Primary Occupation		Independent	AFC	HRCC	NGC	PPSC	EC
	Current Nominees
	Greg C. Garland, 64 Chairman and CEO of Phillips 66	2012							1
	Gary K. Adams, 71 Former Chief Advisor - Chemicals for IHS Markit	2016							1
	John E. Lowe, 63 Senior Executive Advisor to Tudor, Pickering, Holt & Co.	2012							2
	Denise L. Ramos, 65 Former Chief Executive Officer, President and Director of ITT Inc.	2016							2
	Directors Whose Terms Expire in 2023
	Charles M. Holley, 65 Former Executive Vice President and Chief Financial Officer of Walmart Inc.	2019							2
	Denise R. Singleton, 59 Executive Vice President, General Counsel and Secretary of WestRock Company	2021							1
	Glenn F. Tilton, 73 Former Chairman and Chief Executive Officer of UAL Corporation	2012							2
	Marna C. Whittington, 74 Former Chief Executive Officer of Allianz Global Investors Capital	2012							2
	Directors Whose Terms Expire in 2024
	Julie L. Bushman, 61 Former Executive Vice President of International Operations of 3M	2020							2
	Lisa A. Davis, 58 Former member of Managing Board of Siemens AG and CEO for Siemens Gas and Power	2020							4
	Douglas T. Terreson, 60 Former Head of Energy Research at Evercore ISI	2021							0

AFC Audit and Finance	PPSC Public Policy and Sustainability	Chair
HRCC Human Resources and Compensation	EC Executive	Member
NGC Nominating and Governance

12          Phillips 66 2022 Proxy Statement

Our Board seeks to achieve a diverse and broadly inclusive membership. Our Corporate Governance Guidelines reflect our commitment to an annual assessment of board member characteristics including diversity of skills, gender, age, ethnicity, background, professional experience and board tenures. Our directors bring varying perspectives to the Board based on their distinct backgrounds and experiences. In 2021, Denise Singleton and Douglas Terreson joined the Board. We believe that these new directors add to the breadth of experience and perspectives of our Board. As we recruit new members for our Board, we will adhere to our Corporate Governance Guidelines by actively seeking women and underrepresented candidates as well as candidates with diverse backgrounds, skills and experience to serve on our Board. We disclose the characteristics of our current Board members in this report with their consent. Our Nominating and Governance Committee is focused on Board refreshment and evaluates directors’ perspectives in the context of our Company’s evolving business and prioritizes diversity to ensure effective Board oversight. To more completely convey our Board’s composition, we have included a skills matrix under the Board Skills and Experience section of this Proxy Statement that our Nominating and Governance Committee uses to review and identify the competencies of directors and composition of the Board as a whole.

 

Proxy Summary          13

	Advisory Approval of Executive Compensation
PROPOSAL 2
	The Board recommends that you vote “FOR” the advisory approval of the compensation of the Company’s named executive officers.

→ See page 40

PAY FOR PERFORMANCE

Our executive compensation programs are 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 Company strategy. We align the interests of our executives with our shareholders through equity compensation, and we align execution of short-term priorities with all employees through annual cash bonus.

RESPONDING TO SHAREHOLDER FEEDBACK ON PAY

Management and members of our Board engaged extensively with shareholders in 2021 to understand their perspectives on our executive compensation practices and programs. As a result of the insights and feedback we received from our shareholders, we implemented the following actions in 2021:

Compensation Changes	Proxy Disclosure Enhancements
VCIP
•Removed positive individual modifier from VCIP for all NEOs (started in 2021 program)	•Rigor of VCIP and PSP goal-setting process
PSP	•Weighting and selection of VCIP metrics
•Capped payout at 100% on TSR portion of PSP if absolute TSR is negative (started in 2019-2021 program)	•Rationale for adjustments to PSP financial results
•Require above median relative TSR performance for target payout (starts in 2022-2024 program)	•Peer groups and peer selection

14          Phillips 66 2022 Proxy Statement

COMPENSATION SNAPSHOT

Our executives’ compensation includes base salary, an annual bonus opportunity under our Variable Compensation Incentive Program (“VCIP”), and equity-based compensation, including stock options, restricted stock units (“RSUs”) and awards under our Performance Share Program (“PSP”). The illustration below summarizes the principal elements of our executive compensation programs and the performance drivers of each element and shows the percentage each pay element comprises of target total direct compensation for 2021 for our CEO and other named executive officers (“NEOs”). 

Key Elements of Pay
CEO	Other NEOs	Delivered via	Performance Drivers (and Weightings)
Base Salary		Cash	•   Annual fixed cash compensation to attract and retain NEOs
Annual Incentive		Variable Cash Incentive	Operational Sustainability 50%
		Program (VCIP)	•   Safety & Operating Excellence (25%) •   Environment (15%) •   High-Performing Organization (10%)
			Financial Sustainability 50%
			•   Adjusted EBITDA (40%) •   Adjusted Controllable Costs (10%)
Long-Term Incentives (LTI)		Performance Share	•   Return on Capital Employed (50%)
		Program (PSP)	•   Relative TSR (50%)
		Restricted Stock Unit (RSU)	•   Long-term stock price appreciation
		Restricted Stock Unit (RSU)	•   Long-term stock price appreciation

As outlined, equity compensation accounts for roughly 70% of our executives’ pay, and PSP accounts for roughly 50% of that total. The PSP is designed to align the interests of our leaders with that of our shareholders through TSR and ROCE, and share price appreciation or depreciation over the 3 year- performance period. The metrics defined in 2019-2021 PSP delivered results below target, resulting in a below-target payout of 61%. The share price depreciated over that same performance period, which resulted in our executives realizing 56% of the initial target value.

The VCIP, which accounts for roughly 15% of our executives’ pay, is designed to create line-of-sight from our corporate strategy to execution of short-term priorities and align payouts with corporate results. Performance under the VCIP is equally weighted between operational sustainability and financial sustainability. New in 2021 was the addition of two new metrics to the program: Low Carbon Priorities and Greenhouse Gas Priorities. These changes were made to reinforce our commitment to the energy transition and further align our compensation program with shareholder interests. The metrics defined in the 2021 program delivered a combined result above target, resulting in a payout of 155%. The individual performance modifier for all NEOs was removed in 2021, and therefore no additional compensation above the Company payout was delivered to the NEOs.

More information can be found in the Compensation Discussion and Analysis section of this Proxy Statement. 

Proxy Summary          15

	Ratification of the Appointment of Ernst & Young The Board recommends that you vote “FOR” the proposal to ratify the appointment of Ernst & Young LLP
PROPOSAL 3
	→  See page 83
	Approval of the 2022 Omnibus Stock and Performance Incentive Plan The Board recommends that you vote “FOR” the proposal to approve the 2022 Omnibus Stock and Performance Incentive Plan.
PROPOSAL 4
→  See page 86
	Two Shareholder Proposals, if properly presented The Board recommends that you vote “AGAINST” each shareholder proposal.
PROPOSALS 5 - 6
→  See page 93

16 Phillips 66 2022 Proxy Statement

	Election of Directors The Board recommends that you vote "FOR” the following director nominees.
PROPOSAL 1

The Board has nominated Greg C. Garland, Gary K. Adams, John E. Lowe, and Denise L. Ramos to stand for election for a term that expires at the annual meeting of shareholders in 2025.

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.

DIRECTORS STANDING FOR ELECTION

Greg C. Garland  

Age: 64 Director since: 2012 Committees: Executive (Chair)	Career Highlights:
	•	Chairman and CEO of Phillips 66 (2012 to present)
	Experience and Key Skills: 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 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.
	C-Suite experience		Financial experience	Global experience	Risk Management experience	Environmental experience	Industry experience
	Other Current Public Company Directorships:
	•	Amgen

17

Gary K. Adams  

Age: 71 Director since: 2016 Committees: Compensation; Public Policy and Sustainability	Career Highlights:
	•	Former Chief Advisor — Chemicals for IHS Markit (2011 to 2017)
	•	Director of Westlake Chemical Partners LP (2014 to 2016)
	•	Director of Phillips 66 Partners LP (2013 to 2016)
	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.
	C-Suite experience		Financial experience	Global experience	Risk Management experience	Industry experience
	Other Current Public Company Directorships:
	•	Trecora Resources

John E. Lowe  

Age: 63 Director since: 2012 Committees: Audit (Chair); Nominating and Governance; Public Policy and Sustainability; Executive	Career Highlights:
	•	Senior Executive Advisor to Tudor, Pickering, Holt & Co. (2012 to present)
	•	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.
	C-Suite experience		Financial experience	Global experience	Risk Management experience	Environmental experience	Industry experience
	Other Current Public Company Directorships:
	•	TC Energy
	•	APA Corporation (Non-Executive Chairman)

18 Phillips 66 2022 Proxy Statement

Denise L. Ramos  

Age: 65 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)
	•	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.
	C-Suite experience		Financial experience	Global experience	Risk Management experience	Environmental experience	Industry experience
	Other Current Public Company Directorships:
	•	Bank of America
	•	Raytheon Technologies

CONTINUING DIRECTORS

Julie L. Bushman  

Age: 61 Director since: 2020 Committees: Audit; Public Policy and Sustainability Term Expires 2024	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)
	•	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. Ms. Bushman also brings environmental experience through her roles leading occupational health and environmental safety divisions at 3M.
	C-Suite experience		Financial experience	Global experience	Risk Management experience	Environmental experience	Information Technology
	Other Current Public Company Directorships:
	•	Adient plc
	•	Bio-Techne Corporation

Proposal 1: Election of Directors 19

Lisa A. Davis  

Age: 58 Director since: 2020 Committees: Compensation; Public Policy and Sustainability Term Expires 2024	Career Highlights:
	•	Former member of Managing Board of Siemens AG and CEO for Siemens Gas and Power (2014 to 2020)
	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.
	C-Suite experience		Financial experience	Global experience	Risk Management experience	Industry experience
	Other Current Public Company Directorships:
	•	Air Products and Chemicals
	•	Kosmos Energy
	•	Penske Automotive Group
	•	C3.ai

Charles M. Holley  

Age: 65 Director since: 2019 Committees: Audit; Public Policy and Sustainability Term Expires 2023	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.
	C-Suite experience		Financial experience	Global experience	Risk Management experience	Information Technology
	Other Current Public Company Directorships:
	•	Amgen
	•	Carrier Global

20 Phillips 66 2022 Proxy Statement

Denise R. Singleton  

Age: 59 Director since: 2021 Committees: Audit; Public Policy and Sustainability Term Expires 2023	Career Highlights:
	•	Executive Vice President, General Counsel and Secretary of WestRock Company (since March 2022)
	•	Senior Vice President, General Counsel and Corporate Secretary of IDEX Corporation (2015 to March 2022)
	•	Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer at SunCoke Energy, Inc. (2011 to 2015)
	Experience and Key Skills:
	Ms. Singleton was named Executive Vice President, General Counsel and Secretary of WestRock Company in March 2022. 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.
	C-Suite experience		Financial experience	Global experience	Risk Management experience	Environmental experience
	Other Current Public Company Directorships:
	•	Teledyne Technologies Incorporated

Douglas T. Terreson  

Age: 60 Director since: 2021 Committees: Compensation; Public Policy and Sustainability Term Expires 2024	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.
	Financial experience		Global experience	Risk Management experience	Industry experience

Proposal 1: Election of Directors 21

Glenn F. Tilton  

Age: 73 Director since: 2012 Committees: Compensation; Nominating and Governance (Chair); Public Policy and Sustainability; Executive Term Expires 2023	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.
	C-Suite experience		Financial experience	Global experience	Risk Management experience	Environmental experience	Industry experience
	Other Current Public Company Directorships:
	•	Abbott Laboratories
	•	AbbVie Inc. (Lead Director)

Marna C. Wllittington  

Age: 74 Director since: 2012 Committees: Compensation (Chair); Nominating and Governance; Public Policy and Sustainability; Executive Term Expires 2023	Career Highlights:
	•	Former Chief Executive Officer of Allianz Global Investors Capital (2002 to 2012)
	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.
	C-Suite experience		Financial experience	Global experience	Risk Management experience	Industry experience
	Other Current Public Company Directorships:
	•	Macy's, Inc
	•	Oaktree Capital Group LLC

22 Phillips 66 2022 Proxy Statement

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 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 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.  

	Adams	Bushman	Davis	Garland	Holley	Lowe	Ramos	Singleton	Terreson	Tilton	Whittington
Age*	71	61	58	64	65	63	65	59	60	73	74
Gender	M	F	F	M	M	M	F	F	M	M	F
Independence	●	●	●		●	●	●	●	●	●	●
Other Public Company Boards	1	2	4	1	2	2	2	1	0	2	2
C-Suite Experience	●	●	●	●	●	●	●	●		●	●
Financial Experience	●	●	●	●	●	●	●	●	●	●	●
International/Global Business	●	●	●	●	●	●	●	●	●	●	●
Risk Management	●	●	●	●	●	●	●	●	●	●	●
Environmental		●		●		●	●	●		●
Industry
Energy	●		●	●		●	●		●	●
Pipeline/Transportation/Logistics	●			●		●				●
Refining			●	●		●	●			●
Chemicals	●			●		●				●	●
Midstream	●			●		●				●
Information Technology		●			●
Business Transformation		●	●	●	●	●	●	●	●	●
Investment Banking/Finance	●		●	●	●	●	●	●	●	●	●
Public Affairs			●	●	●	●	●	●		●
Government Affairs			●	●	●	●	●			●

* As of March 15, 2022

Proposal 1: Election of Directors          23

DIRECTOR QUALIFICATIONS AND NOMINATION PROCESS

Annual Assessment of Size, Composition and Structure

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 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 directors is 64.8.

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.

Self Assessment
1 Oversight of annual evaluation	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.
2 Survey and individual discussions	The self-assessment includes an evaluation survey and/or individual discussions between the Lead Director and each other director.
3 Presentation of results	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.
4 Incorporation of feedback	Any matters requiring further action are identified and action plans developed to address the matter.

RECENT BOARD REFRESHMENT

In 2021, the Board appointed Denise R. Singleton and Douglas T. Terreson to the Board. Ms. Singleton brings significant c-suite, financial, global, risk management and environmental experience to the Board. Mr. Terreson brings significant financial, global, risk management and industry experience. 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. 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:
●	Five new highly-skilled directors have joined the Board	●	Skills enhanced:
●	Increased gender and racial/ethnic diversity of the Board		●	Environmental
			●	Industry
			●	Information Technology
			●	Finance

24          Phillips 66 2022 Proxy Statement

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 Review	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.
2 Identify	The Nominating and Governance Committee identifies candidates through the use of a search firm or 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 Recommend	The Nominating and Governance Committee recommends director candidates to the Board of Directors with the goal of creating a balance of knowledge, experience and diversity.

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

	C-Suite experience		Financial experience		Global experience
Executive management experience provides valuable insights and practical understanding of companies, and the methods to drive change and growth within an organization		Finance and financial reporting experience provide knowledge necessary to evaluate our performance by reference to financial targets and to oversee financial reporting		Global business or international experience provides valuable perspectives on our operations and enables the oversight of our strategic initiatives
	Risk management experience		Environmental experience		Industry experience
Experience in managing risk ensures capabilities necessary for risk oversight responsibilities, bringing background and experience that increase directors’ effectiveness		Experience in environmental regulation helps in effective evaluation and oversight of our strategy to provide energy and improve lives while ensuring a healthy and safe environment		Energy experience brings pertinent background and knowledge to provide perspective on issues specific to the Company’s industry, business, operations and strategy

Proposal 1: Election of Directors          25

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

BOARD INDEPENDENCE

Our Corporate Governance Guidelines contain director independence standards, which are consistent with the listing standards of the 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 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.

26          Phillips 66 2022 Proxy Statement

Corporate Governance

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, whether 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;

● 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 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.

27

CONSIDERATIONS IN SELECTING THE CURRENT LEAD DIRECTOR

Mr. Tilton has been elected annually as the lead independent director since February 2016 and was re-elected by our Board on February 9, 2022, to continue to serve as lead independent director. The Board believes Mr. Tilton is imminently qualified to serve as our 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.

BOARD COMMITTEES

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, 2022.

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 2021: 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.

28          Phillips 66 2022 Proxy Statement

Human Resources and Compensation Committee

(the "Compensation Committee”)

Members: Marna C. Whittington (Chair), Gary K. Adams, Lisa A. Davis, Douglas T. Terreson, Glenn F. Tilton Number of meetings in 2021: 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 the Compensation Discussion and Analysis.
	Compensation Committee Interlocks and Insider Participation
	None of the members of the Compensation Committee during fiscal year 2021 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.

Nominating and Governance Committee

Members: Glenn F. Tilton (Chair), John E. Lowe, Denise L. Ramos, Marna C. Whittington Number of meetings in 2021: 5	Primary Responsibilities:
	●	Identify individuals to become Board members, recommend nominees for election and Board committee assignments.
	●	Review and recommend compensation and benefits policies for non-employee directors.
	●	Recommend appropriate corporate governance policies and procedures.
	●	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, Denise R. Singleton, Douglas T. Terreson, Glenn F. Tilton, Marna C. Whittington Number of meetings in 2021: 5	Primary Responsibilities:
	● ● ●	Review policies, programs and practices regarding health, safety and environmental protection; 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 all such expenditures and the administration of any political action committees.

Corporate Governance          29

Executive Committee

Members: Greg C. Garland (Chair), John E. Lowe, Denise L. Ramos, Glenn F. Tilton, Marna C. Whittington Number of meetings in 2021: 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.

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 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.

SHAREHOLDER OUTREACH AND RESPONSIVENESS

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. We have a year-round shareholder engagement program focused on understanding and being responsive to shareholders.

In 2021, we engaged with representatives of many of our top institutional shareholders and discussed executive compensation, the energy transition and our sustainability efforts, among other ESG topics of importance.

Our multi-phase engagement effort in 2021 was a year-long process that involved three distinct rounds of engagement:

(1) Lead-Up to the 2021 Annual Meeting

(2) Compensation-Focused Engagement (September 2021)

(3) Broader ESG Engagement (November 2021)

In the lead-up to the 2021 Annual Meeting, we undertook a significant effort to speak with our shareholders and hear their feedback on our compensation program, among other topics of interest. We leveraged those valuable insights to help build a set of potential compensation programs changes for 2022. Following the outcome of the 2021 Annual Meeting, we conducted extensive engagement to better understand shareholder perspectives and solicit feedback on our compensation programs and the potential enhancements under consideration. In November 2021, we followed up with a second round of engagement focused on broader ESG topics, including climate and our approach to the energy transition. Outreach in the second round of engagement included nearly all investors contacted in the first round of engagement. This approach enabled us to meet twice with a number of our shareholders during fall 2021 for discussions that provided us with valuable feedback that informed board deliberations. 

30          Phillips 66 2022 Proxy Statement

Glenn Tilton (Lead Director and member of the Compensation Committee) and Marna Whittington (Chair of the Compensation Committee) led select engagements with shareholders representing a combined 34% of shares outstanding. Members of management participated in all shareholder engagements. More information on Shareholder Outreach and Responsiveness can be found in the Compensation Discussion and Analysis.

Lead-Up to 2021 Annual Meeting	Compensation-Focused Engagement (September 2021)	Broader ESG Engagement (November 2021)	Lead-Up to 2022 Annual Meeting
Contacted	Contacted	Contacted
59%	49%	48%
of shares outstanding	of shares outstanding	of shares outstanding	Significant shareholder engagement ongoing
Engaged	Engaged	Engaged
31%	40%	40%
of shares outstanding	of shares outstanding	of shares outstanding

Our significant multi-phase engagement effort in 2021 is described below: 

Corporate Governance          31

This year, we heard that our shareholders were generally supportive of the planned changes made to our executive compensation program and disclosures, GHG emissions reductions targets, and climate lobbying disclosures, all of which were responsive to feedback received over the last year. Shareholders were interested in and supportive of our Board refreshment efforts and our attempts to declassify the Board. We also heard that investors are interested in additional disclosures on human capital management.

Highlights of some of the actions we have taken in response to our engagements over the last several years are shown below:

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

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 Blvd. 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.

32          Phillips 66 2022 Proxy Statement

BOARD OVERSIGHT OF OUR COMPANY

Key Areas of Board Oversight

The Board provides oversight and advice in the following key areas:

Strategy   Risk Oversight   Corporate Responsibility/ Sustainability Human Capital Management   Succession Planning

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.

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.

BOARD OF DIRECTORS

● Has broad oversight responsibility over the ERM program and receives management updates on the development and implementation of the program.

● Responsible for satisfying itself, in this 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.

● 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 falling within each committee’s area of oversight and expertise.

● Responds to the increasingly important aspect of cybersecurity to the Board’s risk oversight role by adding two members with information technology expertise and appointing them to the Audit Committee, which oversees cybersecurity risk management.

Corporate Governance          33

BOARD COMMITTEES

Audit Committee	●     Has primary responsibility for overseeing the ERM program.
	●     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.
	●    Throughout the year, the Audit Committee's meeting agendas, include discussions of individual risk areas, as well as an annual summary of the ERM process.
	●    Oversees information security (including cybersecurity) and technology risk management programs, which are fully integrated into the overall ERM program.
Compensation Committee	●    Considers the risks associated with compensation policies and practices for both executive compensation and compensation generally, as well as corporate culture and human capital risks generally.
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.
Public Policy and Sustainability Committee	●     Assists the Board in identifying, evaluating and reviewing social, political and environmental trends and related risks.
	●     Reviews management's proposed actions to anticipate and adjust to such trends and manage risks to achieve the Company's long-term business goals.
	●     Considers risks relating to: (i) health, safety and environmental matters; (ii) lobbying priorities and activities; (iii) public policy, including political spending policies and practices; (iv) corporate social responsibility and sustainability; and (v) emerging issues potentially affecting the reputation of the energy industry and the Company.

Corporate Responsibility/Sustainability Oversight

Corporate responsibility and ethics are the foundation at every level and aspect of our organization. Rigorous, consistent corporate governance practices contribute positively to shareholder value. Sustainability is integral to our corporate strategy and designed to ensure a resilient portfolio that creates long-term shareholder value.

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 periodically participate in meetings with shareholders as appropriate, management has the principal responsibility for shareholder communication.

Our board regularly reviews evolving corporate governance best practices, changing regulatory requirements and feedback from shareholders and makes changes it believes are in the best interest of Phillips 66 and its shareholders. Recognizing the growing importance of sustainable business practices, the public policy committee, which includes all independent members of the Board, changed its name in 2020 to the Public Policy and Sustainability Committee (PPSC). It also revised its charter to include the review of the Company’s sustainability program and initiatives to further emphasize oversight of these matters and the transition to a lower-carbon future.

In furtherance of our commitment to help the world address climate change, both the PPSC and Board actively oversee climate and other environmental matters and regularly receive updates on progress 

34          Phillips 66 2022 Proxy Statement

against our ESG goals. Over the last year, our Board was involved in the target-setting process of our new company-wide GHG emissions reduction targets. The Board was also involved in the publication of our new climate Lobbying Activities Report, which details our governance, policy development and transparent reporting on climate-related lobbying activities.

We believe that engagement and good governance involve participating in political or public policy activities that advance the Company’s goals, are consistent with Company values, and improve the communities where we work and live. The PPSC also oversees political contributions, independent expenditures and the administration of any political action committees, including the publication of our Lobbying Activities Report.

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 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. Each committee collaborates with senior leadership to stay informed, measure progress against goals, identify potential risks and develop meaningful solutions. 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.

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.

This human capital management oversight responsibility sits with the full Board. The full Board’s engagement across the breadth of human capital management topics demonstrates the value Phillips 66 places on our people.

Succession Oversight

Management succession planning is critical to ensuring business continuity and performance. Our Compensation Committee has responsibility to oversee our management succession planning, a role it shares with the Nominating and Governance Committee in the case of CEO succession. Our succession planning includes quarterly sessions with executives to monitor and guide leadership development for our key corporate positions. 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 unexpected circumstances.

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. 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.

Corporate Governance          35

MEETINGS AND ATTENDANCE

Board Meetings

The Board of Directors met seven times in 2021. 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 review the impact of different economic scenarios and strategic options on the long-term direction of the Company. 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 2021 Annual Meeting attended the 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 subject matter experts on a variety of topics, including legal and regulatory changes, governance practices, sustainability practices, and political activity. Our director onboarding program provides information on the Company and its business as well as the responsibilities of board members.

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, 2021, 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.

36          Phillips 66 2022 Proxy Statement

Director 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.

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

Equity Compensation

In 2021, 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 2021, 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.

37

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.

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 stock ownership guidelines.

38          Phillips 66 2022 Proxy Statement

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 2021 (for compensation paid to our sole employee director, Mr. Garland, please see Executive Compensation Tables).

	Fees Earned or Paid in Cash(1)	Stock Awards(2)	All Other Compensation(3)	Total
Name	($)	($)	($)	($)
Gary K. Adams	135,000	200,045	20,742	355,787
Julie L. Bushman	135,000	200,045	15,036	350,081
Lisa A. Davis	135,000	200,045	494	335,539
Charles M. Holley	135,000	200,045	2,951	337,996
John E. Lowe	150,000	200,045	—	350,045
Harold W. McGraw III(5)	33,750	200,045	—	233,795
Denise L. Ramos	155,000	200,045	30	355,075
Denise R. Singleton(4)	62,782	93,028	16,339	172,149
Douglas T. Terreson(4)	62,782	93,028	15,169	170,979
Glenn F. Tilton	205,000	200,045	28,484	433,529
Victoria J. Tschinkel(5)	33,750	200,045	28,168	261,963
Marna C. Whittington	150,000	200,045	16,990	367,035

⁽¹⁾ Reflects 2021 base cash compensation of $125,000 payable to each non-employee director. In 2021, non-employee directors serving in specified committee positions also received the additional cash compensation described previously. 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, received in Phillips 66 common stock, or received in RSUs.

⁽²⁾ Amounts represent the grant date fair market value of RSUs. Under our non-employee director compensation program, non- employee directors received a 2021 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 $200,045 being granted on January 15, 2021 ($93,028 granted on July 14, 2021 for Ms. Singleton’s and for Mr. Terreson’s prorated 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 $12,500; Ms. Bushman $15,000; Ms. Singleton $15,000; Mr. Terreson $14,500; 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 2021. 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. Singleton and Mr. Terreson following election to the Board in July 2021.

⁽⁵⁾ Amounts shown represent compensation paid to Mr. McGraw and Ms. Tschinkel prior to retiring from the Board in March 2021.

Director Compensation          39

	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.
PROPOSAL 2

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 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 CEO and Senior Officers (as defined in Role of the Compensation Committee), 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 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.

40          Phillips 66 2022 Proxy Statement

Compensation Discussion and Analysis

Table of Contents
Executive Summary	41
Executive Compensation Program Summary	43
Executive Compensation Program Details	50
CEO Pay Aligned with Company Performance	62
Additional Compensation Practices	63
Role of the Compensation Committee	67

Our Named Executive Officers (“NEOs”) for 2021 were:

	Greg Garland Chairman and Chief Executive Officer		Mark Lashier President and Chief Operating Officer
	Kevin Mitchell Executive Vice President, Finance and Chief Financial Officer		Robert Herman Executive Vice President, Refining
	Tim Roberts Executive Vice President, Midstream

EXECUTIVE SUMMARY  

	"The Board values opportunities to hear directly from our shareholders. Over the past year, the Chair of the Compensation Committee and I engaged with our shareholders, and the committee has made changes to Phillips 66's executive compensation programs informed by the feedback we gathered.”
	- Glenn Tilton, Lead Director and Member of the Compensation Committee

Our Approach to Compensation and Governance  

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. As a result, we have built a resilient company, positioned for long-term performance even in the midst of difficult market conditions.

Pay-For- Performance	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 remains at risk and based on performance metrics aligned with the execution of our corporate strategy.
Shareholder Engagement	After reviewing the results of the 2021 Annual Meeting, our Compensation Committee sought to better understand shareholder perspectives on our executive compensation program and practices. We have a well-established shareholder engagement program, including more in-depth conversations following the Annual Meeting to ensure a clear understanding of key considerations driving our shareholders' votes.
Responsive Changes	The Compensation Committee leveraged specific insights from shareholders to build a set of potential executive compensation program changes that we discussed in depth with them in the fall of 2021. In those conversations, we solicited additional perspectives on our executive compensation practices and found that our shareholders strongly supported the proposed changes.

41

Stakeholder Engagement on 2021 Say-on-Pay Vote Outcome

	“We integrate shareholder perspectives in the design and delivery of our executive compensation programs, which are linked to our strategy, align pay and performance, and help us attract and retain executives. In addition to evaluating our executive compensation program design, we reviewed and enhanced our disclosures to align with shareholder feedback and expectations.”
	– Marna Whittington, Chair, Human Resources and Compensation Committee

Responding to the 2021 Say-on-Pay Vote Outcome

The Compensation Committee viewed the results of the 2021 say-on-pay vote as an opportunity to have more in-depth conversations with shareholders to understand their perspectives on our executive compensation practices and programs, and the Company’s approach to GHG emissions reduction targets and Climate Lobbying Disclosures. We leveraged those valuable insights to help build a set of potential compensation programs changes for 2022. Following the 2021 Annual Meeting two separate rounds of engagement discussions took place, the first of which was in September 2021 and focused on our compensation program design, the relative degree of alignment between Company performance and rewards, and potential program enhancements in response to shareholder feedback. The second round of engagement discussions, which took place in November 2021, provided opportunity to discuss investor perspectives on climate and the Company’s approach to the energy transition, in addition to capturing any further perspectives regarding compensation matters.

SPRING 2021 Lead-Up to the
2021 Annual
Meeting In the lead-up to the 2021 Annual Meeting, we undertook a significant effort to speak with our shareholders and hear their feedback on our compensation program, among other topics of interest. We contacted 59% of shares outstanding and engaged with shareholders representing a combined 31% of shares outstanding. We leveraged those valuable insights to help build a set of potential compensation program changes for 2022.

SPRING 2021 Annual Meeting
SEPTEMBER 2021 Compensation-Focused Engagement: Gathered investor feedback on compensation programs and previewed potential enhancements				Evaluating
				Investor Feedback
49% of shares outstanding contacted	40% of shares outstanding engaged	34% of shares outstanding engaged with Lead Director and Chair of the Compensation Committee		The Compensation Committee reviewed shareholder feedback and approved a slate of meaningful executive compensation program changes outlined on page 43.
Shareholders were supportive of our proposed changes to our performance-based programs (PSP and VCIP), which were meaningful, and planned disclosure enhancements, including around goal-setting, metric selection, and peer group selection. See Taking Action in Response to Investor Feedback for additional detail. The feedback we heard directly informed the Compensation Committee’s decision-making regarding program changes for 2022.

NOVEMBER 2021 Follow Up Engagement:

Solicited additional investor perspectives on a full range of ESG topics

Following the compensation-focused discussions, we held conversations with over 20 shareholders representing a combined 40% of outstanding shares to discuss the Company’s business and ESG strategy, continuing Phillips 66’s long-standing shareholder engagement program. Outreach in this round of engagement included nearly all investors contacted in the compensation-focused engagement, and because of this, we met with a number of investors twice in fall 2021. Shareholders were supportive of responsive actions taken on climate matters, including setting robust GHG emissions reduction targets and publishing a climate lobbying report.

42          Phillips 66 2022 Proxy Statement

Taking Action in Response to Investor Feedback  

The table below details feedback we heard from our shareholders and the actions the Compensation Committee took to address shareholders’ views on our executive compensation program. The changes implemented in 2021 reflect our Board’s strong commitment to shareholder engagement. 

		What We Heard		Actions Taken in Response		Implemented for 2021 Performance Year
	Individual VCIP Modifier	●	Individual VCIP modifier allows for too much discretion	●	Removed positive individual performance modifier from VCIP for all NEOs
	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
	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 TSR portion of PSP if absolute TSR is negative
	Rigor of Relative TSR Goal	●	Relative TSR pays at target for median performance	●	Require performance above the 50th percentile relative to peer group to achieve target payout	Changed for PSP 2022 - 2024
	Adjustments to Metrics	●	Limited disclosure of rationale for significant ROCE adjustment in FY20	●	Enhanced disclosures in proxy of rationale for any adjustments to financial results
	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

EXECUTIVE COMPENSATION PROGRAM SUMMARY  

	“The compensation programs for our senior officers reflect the approach we have taken throughout the Company: we set well-defined goals that drive execution of our strategy and reward results.”
	– Sonya Reed, SVP, Human Resources and Corporate Communications

Consistent with our philosophy that executive compensation be linked to Company performance and aligned with shareholder value creation, the compensation mix ensures that a significant portion of NEO compensation is at risk and based on performance metrics tied to our corporate strategy. Based on its evaluation of performance, the Compensation Committee has authority to reduce, and even award

Compensation Discussion and Analysis          43

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. 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.

Compensation Program Mix  

The CEO’s target compensation mix is 90% at risk and 71% performance-based. The average target mix for the other NEOs is 84% at risk and 67% performance-based. Further, LTI awards make up 74% of the CEO and 69% of other NEOs target compensation mix. 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.

	Key Elements of Pay
	CEO	Other NEOs	Delivered via	Performance Drivers (and Weightings)
	Base Salary		Cash	●	Annual fixed cash compensation to attract and retain NEOs
	Annual Incentive		Variable Cash Incentive Program (VCIP)	50% Operational Sustainability
				●	Safety & Operating Excellence (25%)
				●	Environment (15%)
				●	High-Performing Organization (10%)
				50% Financial Sustainability
				●	Adjusted EBITDA (40%)
				●	Adjusted Controllable Costs (10%)
	Long-Term Incentives (LTI)		Performance Share Program (PSP)	●	Return on Capital Employed (50%)
			50% of LTI Target	●	Relative TSR (50%)
			3-year performance period
			Stock Option Program(1) 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 vest	●	Long-term stock price appreciation

⁽¹⁾ 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.

44          Phillips 66 2022 Proxy Statement

2021 Operating, Financial and Company Highlights  

Demonstrating Resilience in the Face of Challenging Market Conditions

Our improved performance results for 2021 reflect our management team’s significant efforts and strategic decisions to navigate the current market environment. Although the pandemic challenged our operational and financial environment, we demonstrated our resilience as a company. During the past two years, we maintained our focus on operating excellence, while also acting swiftly to improve liquidity and manage controllable costs, and as a result, we have returned to profitability. In 2021, we strengthened our balance sheet, leveraged the value of our diverse portfolio, and advanced major projects, all with a focus on a lower-carbon future.

Our 2021 results, illustrated by the blue bars, build on our sustained operating and financial performance over the past years.

 

⁽¹⁾ Dividends assumed to be reinvested in stock. Source: Bloomberg.

⁽²⁾ Peer average includes Performance Peer Group for 2021

⁽³⁾ Company stock initiated trading in May 2012.

Compensation Discussion and Analysis          45

Company Performance

	Operating Excellence
	●	Maintained strong industry-leading personal safety performance; injury rate of 0.12 is second best in Company history
	●	Best-ever Tier 1 + Tier 2 combined process safety event rate at 0.13
	●	Advanced sustainability efforts: Established greenhouse gas emissions intensity reduction targets for Scope 1, 2, and 3
	●	On target to achieve AdvantEdge66 program value targets; unlocked value through digital transformation
	Growth
	●	Midstream delivered record pre-tax income; completed C2G Ethane Pipeline project; advancing construction of Sweeny Frac 4
	●	Reached agreement to buy-in public ownership of Phillips 66 Partners LP
	●	Chemicals delivered record pre-tax income; continued to advance USGC II and RLPP
	●	Began production of renewable diesel at the San Francisco Refinery
	●	Developed Emerging Energy strategy, made investments in renewable feedstocks and battery value chain
	Returns
	●	Marketing & Specialties delivered record pre-tax income; acquired approximately 200 sites via US JV, upgraded over 1,000 sites globally
	●	Converted almost 600 California marketing sites to sell Renewable Diesel (RD), acquired a mobile RD refueler
	●	Expanded roll out of the Value Chain Supply Optimization engine to enhance general interest decision making
	Distributions
	●	Returned $1.6 billion in dividends to shareholders
	●	Increased dividend by 2%; first increase since the beginning of the pandemic and the ninth consecutive year with a higher annual dividend payout
	●	Paid down $1.5 billion of debt, progressing towards pre-pandemic debt levels
	High-Performing Organization
	●	Improvements in employee engagement, manager effectiveness and performance enablement; established baseline metrics for Our Energy In Action and inclusive culture
	●	Advanced leader-led I&D efforts by increasing engagement and transparency through metrics that will drive sustainable results
	●	Recognized externally as a great place to work
	●	Continued to support the local communities where we operate through Company and employee-led volunteerism and contributions

46          Phillips 66 2022 Proxy Statement

2021 Compensation Decisions  

PSP 2019-2021 Payout

Aligning Performance Outcomes and Executive Pay with Shareholder Experience

Our Company’s performance against rigorous targets, both absolute and relative, reflect our commitment to link pay and performance of our NEOs with the experience of our shareholders.

% OF TARGET COMPENSATION
CEO	Other NEOs	Results under our long-term program, reflect the challenging environment that existed during the 2019-2021 performance period — for both our shareholders and our Company. As a result, a below-target payout of 61% was earned.

	Payout
	Threshold	Target 100% Payout	Maximum
Return on Capital Employed (50% Weighting)
Absolute ROCE (25%)
Relative ROCE (25%)
Total Shareholder Return (50% Weighting)
TSR

PSP 2019-2021 REALIZED VALUE

56%
of Initial Target Value

Due to the combined impact of the below target payout of the PSP program and the share price depreciation over the 3-year performance period, our NEOs realized 56% of the initial target value.

Compensation Discussion and Analysis          47

2021 VCIP Payout

Demonstrating Resilience and Delivering Improved Performance

In 2021, we remained focused on our financial and operating performance, including navigating the pandemic and thinking long-term about the energy transition. While we realized a strong recovery year, actual results were scrutinized relative to prior year performance, and negative discretion was applied to the payout. The individual performance modifier for all NEOs was removed in 2021 based on shareholder feedback, therefore, no additional compensation above company payout was delivered to the NEOs.

% OF TARGET COMPENSATION
CEO	Other NEOs	Our financial and operating performance in 2021 resulted in a 155% of target payout of our VCIP due to strong safety and operating excellence performance that positioned us to deliver strong financial performance as market conditions improved.

		Payout
	Threshold	Target 100% Payout	Maximum
Operational Sustainability Metrics (50% Weighting)
Safety & Operating Excellence (25%)
Environment (15%)
High-Performing Organization (10%)
Financial Sustainability Metrics (50% Weighting)
Adjusted Controllable Costs (10%)
Adjusted EBITDA (40%)

48          Phillips 66 2022 Proxy Statement

Peer Group Overview  

Peer Group Selection & Rationale

Due to the size and complexity of our Company and diversification of assets, we utilize both (1) a compensation peer group and (2) a performance peer group. The Compensation Committee thoughtfully selects the peers in each peer group, evaluates their inclusion on an annual basis, and makes adjustments as necessary.

2021 COMPENSATION PEER GROUP	2019 - 2021 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 programs	Used to evaluate our relative ROCE and relative TSR performance for our 2019 – 2021 Performance Share Program
Companies ●  Archer-Daniels-Midland Company ●  Chevron Corporation ●  ConocoPhillips ●  Dow Inc. ●  Exxon Mobil Corporation ●  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. ●  HollyFrontier Corporation ●  Marathon Petroleum Corporation ●  PBF Energy Inc. ●  Valero Energy Corporation Midstream ●  Enterprise Products Partners L.P. ●  ONEOK, Inc. ●  Targa Resources Corp. Chemicals ●  Celanese Corporation ●  Eastman Chemical Company ●  LyondellBasell Industries N.V. ●  Huntsman Corporation ●  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 thoughtfully determined, Phillips 66 was at the 43rd percentile in assets, 63rd percentile in market value, and 65th percentile in revenue.	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 operations. 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 to assess relative ROCE and 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 for performance purposes as the index reflects companies with which we compete for capital in the broader market.

Compensation Discussion and Analysis          49

EXECUTIVE COMPENSATION PROGRAM DETAILS  

Total Rewards Philosophy and Guiding Principles  

Our Total Rewards Philosophy and Guiding Principles form the foundation upon which our programs are developed in alignment 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 Rewards aligned with market practice

● Responding to the priorities of our evolving workforce

Base Salary  

% OF TARGET COMPENSATION
CEO	Other NEOs	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 2021. 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 2021, including the effect of salary changes during the year.

Name	Salary as of 1/1/2021 ($)		Salary as of 12/31/2021 ($)
Greg Garland		1,675,008		1,675,008	(1)
Mark Lashier		N/A		1,100,000
Kevin Mitchell		903,432		903,432
Robert Herman		870,432		870,432
Tim Roberts		887,424		887,424

⁽¹⁾ Mr. Garland’s base salary has remained unchanged since March 1, 2017.

The Executive Leadership Team deferred the annual merit increase for all eligible employees in 2021 in response to challenging market conditions due to the ongoing impacts of the COVID-19 pandemic.

50          Phillips 66 2022 Proxy Statement

2021 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 operating and financial environment, so targets may decline 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 practice in our VCIP to set the Adjusted EBITDA targets and in our PSP to set the Adjusted ROCE targets. WACC represents our blended cost of capital across our businesses. Performance or 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 in either the EBITDA metric in VCIP or the ROCE metric in PSP.

Compensation Discussion and Analysis          51

Long-Term Incentives – Program Design  

% OF TARGET COMPENSATION
CEO	Other NEOs

50%	25%	25%
		Restricted Stock Units 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 2021 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.
	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 2021 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.
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 2021 were PSP 2019-2021, PSP 2020-2022, and PSP 2021-2023. The 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 +/–50% 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. ● 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’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.

52          Phillips 66 2022 Proxy Statement

Performance Share Program - Metrics and Target  

% OF TARGET COMPENSATION
CEO	Other NEOs	The performance metrics used for the PSP 2019-2021 are after-tax return on capital employed (ROCE) and total shareholder return (TSR) based on a 20-trading day average closing price.

25%	25%	50%
		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 program, we added a cap on the portion of the PSP earned based on relative TSR if absolute TSR is negative. We made this change in response to shareholder input and in order to better align pay with corporate performance and shareholder experience. Threshold Above 10th percentile of Performance Peers Target Median of Performance Peers Maximum Above 90th percentile of Performance Peers
	Relative ROCE Relative ROCE complements the Absolute ROCE metric by measuring the Company’s performance relative to ROCE of Performance Peers. Threshold Above 10th percentile of Performance Peers Target Median of Performance Peers Maximum Above 90th percentile of Performance Peers
Absolute ROCE The Compensation Committee considers ROCE an important measure of Company growth, shareholder value creation and overall performance. Threshold 3.2% Delivers sustaining capital and shareholder dividend commitments over 3-year period Target 8.6% Delivers WACC +1.5% over 3-year period Maximum 10.1% Delivers WACC +3.0% over 3-year 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 what impacts the adjustment would have on compensation outcomes and how the item factored into the Company’s operating and financial outcomes.

Compensation Discussion and Analysis          53

Performance Share Program – 2019 to 2021 Payout  

Stock price depreciation over the performance period, coupled with the 61% performance multiplier, resulted in a realized value of 56% of the initial target value, consistent with our pay for performance philosophy. This represents the lowest payout in Company history and reflects the challenging market conditions in which we have operated for the past two years.

The Compensation Committee considered the following results when approving the payout of 61% of target.

RELATIVE ROCE (25% WEIGHTING)

RELATIVE TSR (50% WEIGHTING)

ABSOLUTE ROCE (25% WEIGHTING)

 

PSP 2019-2021 PAYOUT

Metric	Weight	Payout
Relative ROCE	25%	86%
Absolute ROCE	25%	79%
Relative TSR	50%	40%
Payout (as a percent of target)		61%

Key Highlights

RETURN ON CAPITAL EMPLOYED

● The Compensation Committee determined that it was appropriate to increase the Company’s 2021 ROCE earnings used in the ROCE calculations by $1 billion after-tax. This increase primarily relates to removing the after-tax impact of asset impairment charges partially offset by removing the after-tax unrealized increase in value of our investment in NOVONIX. ROCE, as used in our PSP program, is a non-GAAP financial measure.

54          Phillips 66 2022 Proxy Statement

RELATIVE TSR

● Relative TSR performance for the three-year performance period was -6.1% and 12th of 15 peers, including 13 peer companies, the S&P 100 Index and Phillips 66. This resulted in a payout of 40% of target for relative TSR performance, weighted at 50%.

The Compensation Committee approved payouts for our NEOs for PSP 2019-2021. The payment was made in February 2022 and is described further below and in the footnotes of the Summary Compensation Table.

New PSP Developments for 2021

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

New PSP Developments for 2022

	Based on shareholder input and in order to create more challenging goals, starting with PSP 2022-2024, we will require relative TSR performance above the 50th percentile relative to peer group to achieve target payout
	For Absolute ROCE, threshold achievement level will be set as historical average ROCE of 3.5% to cover sustaining capital & dividends
	Target and maximum achievement levels for Absolute ROCE will be set at 1.5 and 3.0 percentage points above historical average WACC of 7.0%
	The historical average WACC will be reviewed on an annual basis by senior management to determine if it needs to be adjusted for current market conditions

Long-Term Incentives  

The Compensation Committee approved the following LTI for the NEOs for 2021. 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.

Name	PSP 2021-2023 ($)	Stock Options ($)	RSUs ($)	Total Target(1) ($)
Greg Garland	6,281,280	3,140,640	3,140,640	12,562,560
Mark Lashier	3,025,000	1,512,500	1,512,500	6,050,000
Kevin Mitchell	2,493,472	1,038,947	1,246,736	4,779,155
Robert Herman	1,880,133	783,389	940,067	3,603,589
Tim Roberts	1,916,836	798,682	958,418	3,673,936

⁽¹⁾ PSP 2021 – 2023 and RSU targets include individual adjustments for Mr. Mitchell (+20%), Mr. Herman (+20%), and Mr. Roberts (+20%). The Compensation Committee did not approve any adjustments to stock option targets. Mr. Garland’s LTI target decreased approximately $800,000 or 5% in 2021 to better align with our compensation peer group and the challenging market conditions.

Compensation Discussion and Analysis          55

Variable Cash Incentive Program (VCIP) – Program Design  

% OF TARGET COMPENSATION
CEO	Other NEOs	The VCIP, which is our annual incentive program, is designed to provide 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. 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%.

$
Eligible
Earnings x %
Target
Percentage x %
Corporate
Payout Percentage = $
Total
VCIP Payout

Variable Cash Incentive Program – Metrics and Weighting

 

56          Phillips 66 2022 Proxy Statement

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 protecting shareholder value. It also enables the Company to maximize market opportunities, generate higher returns and create shareholder value.

25%	15%	10%
		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
	Environment For Environment, we set Agency Reportable Environmental Events targets based on historical performance with the goal of continuous improvement. It is important to note that targets will fluctuate year over year due to Company growth and regulatory changes. For 2021, we enhanced Environment to include two new metrics: Low-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.
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.

Compensation Discussion and Analysis          57

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

40%	10%
	Adjusted Controllable Costs For Adjusted Controllable Costs, we measure our effectiveness in managing costs and set our threshold, target, and maximum based on our annual budget. Threshold Adjusted Controllable Costs should not exceed budget by more than 3% Target Adjusted Controllable Costs should achieve budget Maximum Adjusted Controllable Costs should be 3% under budget For 2021, the adjusted controllable cost target was above actual performance in 2020 as the budget in 2021 assumed partial return to normal operations after a strong response of cutting costs in 2020 due to challenging market conditions. The increase in the 2021 target vs. actual performance in 2020 is mainly the result of increased maintenance expenses and growth.
Adjusted EBITDA Adjusted EBITDA measures our ability to create shareholder value. Our threshold is the EBITDA required to cover sustaining capital and shareholder dividend commitments, and target and maximum are set at EBITDA levels that equate to ROCE levels 1.5 and 3.0 percentage points above our WACC. Threshold Adjusted EBITDA required to cover our sustaining capital and shareholder dividend commitments Target Adjusted EBITDA equivalent to ROCE of WACC + 1.5 percentage points. Maximum Adjusted EBITDA equivalent to ROCE of WACC + 3.0 percentage points The 2021 adjusted EBITDA target decreased from $6.3 billion to $5.4 billion as a result of the Company’s WACC decreasing from 7.3% to 6.2% at the end of 2020 mainly as a result of lower risk-free rates and changes in our capital structure. Although the target decreased, the level of performance rigor required of management remained stable year over year.

58          Phillips 66 2022 Proxy Statement

Variable Cash Incentive Program (VCIP) – 2021 Payout  

The formulaic result of the individual metrics less negative discretion applied resulted in a payout of 155%.

		Weight	Threshold	Target	Maximum	2021 Actual	Formulaic Payout	Final Payout (Discretion Applied)
	Safety & Operating Excellence
	Total Recordable Rate (TRR)	5%	0.32	0.21	0.16	0.12	200%	180%
	Lost Workday Case Rate (LWCR)	5%	0.10	0.06	0.04	0.04	200%	150%
	Process Safety Event Rate – Tier 1	5%	0.06	0.05	0.04	0.05	100%	80%
	Availability	10%	93.9%	95.4%	96.9%	96.0%	140%	140%
	Environment
	Low Carbon Priorities	5%	-	-	-	-	100%	100%
	GHG Priorities	5%	-	-	-	-	100%	100%
	Environmental Events	5%	< 121	114	< 105	115	93%	93%
	High Performing Organization	10%	-	-	-	-	175%	175%
	Adjusted Controllable Costs($MM)	10%	$6,946	$6,743	$6,541	$6,566	188%	150%
	Adjusted EBITDA ($MM)	40%	$3,468	$5,389	$6,027	$5,921	183%	183%
						TOTAL	163%	155%

Key Highlights

SAFETY & OPERATING EXCELLENCE

● Total Recordable Rate: Performance of 0.12 was the second best in Company history. Negative discretion was applied given performance was impaired versus 2020.

● Lost Workday Case Rate: Negative discretion was applied given performance was impaired versus 2020.

● Process Safety Event Rate: Negative discretion was applied given performance was impaired versus 2020.

		Payout
	Threshold	Target 100% Payout	Maximum
Safety & Operating Excellence (25%)

Compensation Discussion and Analysis          59

ENVIRONMENT

Low Carbon / GHG Priorities: In 2021, we progressed efforts in support of the energy transition and a low-carbon future including: establishing our Emerging Energy organization and developing its long-term strategy, executing several investment, supply and collaboration arrangements for key initiatives (e.g. Shell Rock, NOVONIX, Southwest Airlines and British Airways), progressing Rodeo Renewed activities, progressing UK renewable activities, and building renewable feedstock supply and product placement capability, and setting GHG emission intensity reduction targets for 2030 for Scope 1, 2 and 3 emissions.

		Payout
	Threshold	Target 100% Payout	Maximum
Environment (15%)

HIGH-PERFORMING ORGANIZATION

● Progressed several AdvantEdge66 initiatives with multiple successful go-lives in Digital Operations and Maintenance

● Advanced I&D efforts including Executive I&D Council, Organization Assessments, and ERG expansion

● Published inaugural Human Capital Management Report, Lobbying Activities Report and enhanced Sustainability Report

● Received external recognition as a great place to work

		Payout
	Threshold	Target 100% Payout	Maximum
High-Performing Organization (10%)

ADJUSTED CONTROLLABLE COSTS

● In 2021, Adjusted Controllable Costs were 3% improved versus our target but above 2020 levels. As a result, negative discretion was applied.

● Adjusted Controllable Costs as used in VCIP is a non-GAAP financial measure.

		Payout
	Threshold	Target 100% Payout	Maximum
Adjusted Controllable Costs (10%)

60          Phillips 66 2022 Proxy Statement

ADJUSTED EBITDA

● In 2021, despite challenging market conditions for our industry, we achieved record adjusted EBITDA in Midstream, Marketing & Specialties, and Chemicals.

● Adjusted EBITDA includes a $370 million downward adjustment attributable to removing the unrealized increase in value of our investment in NOVONIX as part of our Emerging Energy strategy.

● Adjusted EBITDA used for VCIP is a non-GAAP financial measure.

		Payout
	Threshold	Target 100% Payout	Maximum
Adjusted EBITDA (40%)

New VCIP Developments for 2021
	Removed positive individual performance modifier for all NEOs
New VCIP Developments for 2022
	The corporate metrics used in the VCIP will continue to reflect 50% operational sustainability metrics and 50% financial sustainability metrics, but the Compensation Committee has approved changes to the individual metric weightings to reinforce our commitment to best-in-class safety and achievement of low-carbon initiatives:
		Within the Safety & Operating Excellence component, Total Recordable Rate and Process Safety Event Rate will now each be weighted at 7.5% of the total VCIP, and Process Safety Event Rate will include both Tier 1 and Tier 2 events
		GHG Priorities and Low Carbon Priorities will be combined into a singular metric weighted at 10% to properly reflect how the Company progresses its low carbon initiatives (Agency Reportable Environmental Events will remain at 5% weighting, for a total of 15% Environmental Metrics)

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

Name	2021 Eligible Earnings ($)	Target VCIP Percentage (%)	Corporate Payout Percentage (%)	Total Payout ($)
Greg Garland	1,675,008	160%	155%	4,154,020
Mark Lashier	825,000	110%	155%	1,406,625
Kevin Mitchell	903,432	100%	155%	1,400,320
Robert Herman	870,432	90%	155%	1,214,253
Tim Roberts	887,424	90%	155%	1,237,956

Compensation Discussion and Analysis          61

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” and “Other Compensation.”

● 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 2017-2019 for 2019, PSP 2018-2020 for 2020, and PSP 2019-2021 for 2021).

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 the Summary Compensation Table. When our share 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:

⁽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 2011-2013 in 2019, and PSP 2012-2014 in 2020.

62          Phillips 66 2022 Proxy Statement

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. Mr. Garland and Mr. Lashier were the only NEOs in 2021 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, 2021 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 agreements with our executives. However, we maintain the Phillips 66 Executive Severance Plan (ESP) and the 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

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

Compensation Discussion and Analysis          63

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 Committee and the Audit and Finance Committee.

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 Level	Salary Multiple
Chairman and CEO	6
Executive Vice President	3-5

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 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

64          Phillips 66 2022 Proxy Statement

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 Committee intends to maintain its commitment to structuring the Company’s executive compensation programs in a manner designed to align pay with performance.

TRADING POLICY

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.

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.

Compensation Discussion and Analysis          65

Our Compensation Programs are Aligned with Best Practices

We Do…

We Do Not…

Target the majority of NEO compensation to be performance-based and at-risk Apply multiple performance metrics aligned with our corporate strategy Cap maximum payouts for VCIP and PSP Cap payout at 100% on TSR portion if absolute TSR is negative Employ a “double trigger” for severance benefits and equity awards Include absolute and relative metrics in our LTI programs Maintain stock ownership guidelines for executives — CEO 6x base salary; other NEOs 3-5x base salary Balance, monitor and manage compensation risk through regular assessments and robust clawback provisions Have extended vesting periods on stock awards, with a minimum one-year vesting period required for stock and stock option awards Maintain a fully independent compensation committee Retain an independent compensation consultant Hold a Say-on-Pay vote annually and consider shareholder feedback in the design of our compensation program

Provide excise tax gross-ups to our NEOs under our CICSP Reprice stock options without shareholder approval Price stock options below grant date fair market value Allow share recycling for stock options Include evergreen provisions in our active equity plans Allow hedging or pledging of Company stock Pay dividends during the performance period on unearned PSPs Allow transfer of equity awards (except in the case of death) Provide separate supplemental executive retirement benefits for individual NEOs Maintain individual change-in-control agreements Have an employment agreement with the CEO Provide excessive perquisites

66          Phillips 66 2022 Proxy Statement

ROLE OF THE COMPENSATION COMMITTEE  

Compensation Determination Process  

Authority and Responsibility	●	Provides independent, objective oversight of our executive compensation programs and determines the compensation for our CEO and anyone who meets our definition of a Senior Officer.
	●	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.
	●	Oversees the Company’s executive compensation philosophy, policies, plans and programs for our CEO and Senior Officers.
	●	Assists the Board in its oversight of the integrity of the Company’s Compensation Discussion and Analysis.

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;

Compensation Discussion and Analysis          67

● 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 program is 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.

Independent
Compensation
Consultant Advises the Compensation Committee on: ● our compensation program and processes relative to external corporate governance standards; ● the appropriateness of our executive compensation program in comparison to those of our peers; and ● the effectiveness of the compensation program in accomplishing the objectives set by the Compensation Committee with respect to executives.

In 2021, 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 2021, fees paid to Mercer in its role as the independent compensation consultant for the Compensation Committee totaled $168,815. In addition, the Company paid fees to Mercer totaling $3.5 million during 2021 for all other services performed for the Company. These services can be broken down as 17% related to administration of pension liabilities in international locations that have been sold, 55% related to administration of ongoing international benefit plans, 7% related to Human Resources consulting engagements, and 21% related to insurance and surety bonds.

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 2021. Mercer was retained directly by the Human Resources and 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, 2021.

HUMAN RESOURCES AND COMPENSATION COMMITTEE

Dr. Marna C. Whittington, Chair
Gary K. Adams
Lisa A. Davis
Douglas T. Terreson
Glenn F. Tilton

68          Phillips 66 2022 Proxy Statement

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, 2021, for services to Phillips 66 or any of our subsidiaries during 2021, 2020 and 2019.

SUMMARY COMPENSATION TABLE

The following table summarizes the compensation for our NEOs for fiscal years 2021, 2020 and 2019.

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
2021	1,675,008	11,318,245	3,140,920	4,154,020	—	665,013	20,953,206	20,953,206
2020	1,675,008	9,237,623	3,351,180	3,082,015	6,851,884	791,664	24,989,374	18,137,490
2019	1,675,008	10,806,257	3,141,546	5,226,025	9,936,893	1,115,149	31,900,878	21,963,985
Mark Lashier President and Chief Operating Officer
2021	825,000	6,830,884	1,513,217	1,406,625	71,546	230,816	10,878,088	10,806,542
2020	—	—	—	—	—	—	—	—
2019	—	—	—	—	—	—	—	—
Kevin Mitchell Executive Vice President, Finance and Chief Financial Officer
2021	903,432	4,493,056	1,039,424	1,400,320	164,332	216,301	8,216,865	8,052,533
2020	897,360	3,024,331	998,560	1,256,304	258,546	245,367	6,680,468	6,421,922
2019	861,172	3,542,763	937,014	1,722,344	264,245	354,754	7,682,292	7,418,047
Robert Herman Executive Vice President, Refining
2021	870,432	3,387,870	784,336	1,214,253	209,797	187,575	6,654,263	6,444,466
2020	867,028	2,320,490	766,300	1,092,455	318,450	214,446	5,579,169	5,260,719
2019	781,558	2,575,994	553,770	1,293,153	340,714	441,201	5,986,390	5,645,676
Tim Roberts Executive Vice President, Midstream
2021	887,424	3,453,979	799,832	1,237,956	342,146	182,659	6,903,996	6,561,850
2020	881,188	2,531,427	766,300	1,110,297	297,744	204,254	5,791,210	5,493,466
2019	781,558	2,385,489	553,770	1,395,244	29,621	275,030	5,420,712	5,391,091

(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, 2021 (our “2021 Form 10-K”).
	The PSP target award included in 2019 has a performance period that ended on December 31, 2021. The PSP target award included in 2020 has a performance period that ends in 2022. The PSP target award included in 2021 has a performance period that ends in 2023.

69

	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 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 2021 were approved by the Compensation Committee at its February 2022 meeting. Those payouts were as follows (with values shown at fair market value on the date of payout): Mr. Garland, $3,536,303; Mr. Mitchell, $1,159,328; Mr. Herman, $881,885; and Mr. Roberts, $819,545.
	Earned payouts under the PSP 2019-2021 have been, and under the PSP 2020-2022 and PSP 2021-2023 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 2021 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 2022, 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	363,162	13,266	—	16,270	17,400	15,000	163,312	76,603
Mark Lashier	43,100	6,534	—	—	17,400	—	47,732	116,050
Kevin Mitchell	155,379	4,662	2,150	16,270	17,400	15,000	5,440	—
Robert Herman	139,631	6,894	2,150	16,270	17,400	—	5,230	—
Tim Roberts	142,418	7,029	—	—	17,400	15,000	812	—

(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 2021, which due to processing delays can include contributions in 2020 that were matched by the Company in 2021 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. 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. Garland $2,723; Mr. Lashier $211; Mr. Mitchell $5,440; Mr. Herman $5,230; and Mr. Roberts $812).

70          Phillips 66 2022 Proxy Statement

		Also included are benefits required for employees covered under our Comprehensive Security Program, which currently includes Mr. Garland ($160,589) and Mr. Lashier ($47,521). Under the Comprehensive Security Program, Mr. Garland and Mr. Lashier 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. Garland and Mr. Lashier 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.

Executive Compensation Tables          71

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 ($)
Greg Garland		—	2,680,013	5,360,026	—	—	—	—	—	—	—
	2/9/2021	—	—	—	—	—	—	42,043	—	—	3,140,612
	2/9/2021	—	—	—	—	109,473	218,946	—	—	—	8,177,633
	2/9/2021	—	—	—	—	—	—	—	263,500	74.70	3,140,920
Mark Lashier		—	907,500	1,815,000	—	—	—	—	—	—	—
	4/1/2021	—	—	—	—	—	—	30,674	—	—	2,512,507
	4/1/2021	—	—	—	—	52,721	105,442	—	—	—	4,318,377
	4/1/2021	—	—	—	—	—	—	—	109,100	81.91	1,513,217
Kevin Mitchell		—	903,432	1,806,864	—	—	—	—	—	—	—
	2/9/2021	—	—	—	—	—	—	16,690	—	—	1,246,743
	2/9/2021	—	—	—	—	43,458	86,916	—	—	—	3,246,313
	2/9/2021	—	—	—	—	—	—	—	87,200	74.70	1,039,424
Robert Herman		—	783,389	1,566,778	—	—	—	—	—	—	—
	2/9/2021	—	—	—	—	—	—	12,585	—	—	940,100
	2/9/2021	—	—	—	—	32,768	65,536	—	—	—	2,447,770
	2/9/2021	—	—	—	—	—	—	—	65,800	74.70	784,336
Tim Roberts		—	798,682	1,597,364	—	—	—	—	—	—	—
	2/9/2021	—	—	—	—	—	—	12,830	—	—	958,401
	2/9/2021	—	—	—	—	33,408	66,816	—	—	—	2,495,578
	2/9/2021	—	—	—	—	—	—	—	67,100	74.70	799,832

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