The Phillips 66 Share Incentive Plan EXPLANATORY BOOKLET

Transcription

1 The Phillips 66 Share Incentive Plan EXPLANATORY BOOKLET June 2015

2 Contents Page 1. Introduction 1 2. Summary of how the Plan works 2 3. Eligibility and joining the Plan 4 4. Shares of Common Stock 5 5. Partnership Shares 6 6. Matching Shares 8 7. Example 9 8. Free Shares Dividend Shares Your tax position Selling or transferring your Shares Leaving the Phillips 66 Group of Companies How is the Plan managed? 18 Glossary of terms 19

3 1. Introduction The Phillips 66 Share Incentive Plan provides employees with a tax advantageous means of acquiring Shares in Phillips 66, thereby increasing your involvement with Phillips 66 and sharing in its future. The Plan is managed by Computershare Plan Managers and your Shares are held in the Plan by EES Trustees Limited (the Trustees ). The Trustees use amounts deducted from your pay to buy Shares on your behalf in the market. In addition, you may be allocated further Shares which are paid for by your employing Participating Company. This booklet outlines the main aspects of the Plan but is only a general guide. The Trust Deed and Rules is the formal document governing the Plan and sets out the rights and obligations of all participants. This document is available for inspection on the Company intranet. In the event of any dispute, the Trust Deed and Rules will be binding on all concerned to the exclusion of any conflicting document, including this booklet. There is a glossary of terms at the back of this document which defines certain terms used throughout this booklet. Financial warning The Plan allows you to acquire Partnership Shares with your contributions and to receive Matching Shares and Free Shares from your employing Participating Company. It must always be remembered that the price of Shares can go down as well as up. The price of Shares can also be affected by factors other than the performance of Phillips 66, such as the US dollar/uk pound exchange rate for UK shareholders. You should take care not to commit more than you can afford to the Plan. There is no guaranteed gain and the Plan involves a degree of risk. Any reference to taxation consequences in this booklet is for guidance only. Please note that neither the Participating Companies nor the Trustees are authorised to give any taxation or investment advice on the Plan. If you need further information on any aspect of the Plan, please contact HR Connections. 1

4 2. Summary of how the Plan works The Share Incentive Plan allows for employees to accumulate Phillips 66 Shares in four different ways. Partnership Shares - Shares purchased by employees out of monthly pay before deduction of income tax and NICs. Matching Shares - Shares given to employees who purchase Partnership Shares, on a 2 for 1 match basis Free Shares - Shares which may be given to employees as an annual award Dividend Shares - Shares acquired through the reinvestment of dividends received in respect of Shares held in the Plan. Partnership Shares Each month, you can contribute between 10 and 125 (or 10% of your PAYE Earnings if that is lower) out of your pay before deduction of income tax and NICs. Your contributions will be used by the Trustees to buy Partnership Shares in Phillips 66 on your behalf each month. If your contributions do not buy an exact whole number of Shares, a whole number of Shares plus a fractional Share entitlement will be allocated to you. Your monthly contributions to purchase Partnership Shares can be on two different bases: Part 1 - contributions up to 2.5% of Base Salary. These contributions will be eligible for company matching. Part 2 if your Part 1 contributions are below your personal monthly limit of 125 (or 10% of PAYE Earnings if lower), you can buy additional Partnership Shares up to that limit. Part 2 contributions will not be eligible for company matching. This is explained in more detail in Section 5 of this booklet. Partnership Shares must normally be left in the Plan for five years to qualify for full income tax and NICs relief. Matching Shares For every Partnership Share purchased with your Part 1 contributions, your employing Participating Company will pay for two extra Matching Shares for you. Matching Shares must normally be left in the Plan for five years to qualify for full income tax and NICs relief. Free Shares Subject to satisfying legislative requirements, your employing Participating Company may buy a number of Free Shares for you. Free Shares are subject to an individual maximum of 3,000 worth per tax year. 2

5 You may choose not to receive these Free Shares. If so, you may receive a cash payment outside the Plan, at the discretion of your employing Participating Company, subject to the usual income tax and NICs deductions. Dividend Shares Any dividends received on your Shares acquired through the Plan will be automatically reinvested to purchase additional Dividend Shares. Dividend Shares are free of UK income tax after they have been held in the Plan for three years. Amounts deducted from your pay before deduction of income tax and NICs between 10 and 125 each month (or 10% of PAYE Earnings if lower) are used to buy Shares Your employing Participating Company provides 2 Shares for every Share bought with your Part 1 contributions Your employing Participating Company may provide Shares on an annual basis Dividends paid on the Shares you hold in the Plan are reinvested to buy more Shares. Part 1 contributions up to 2.5% of Base Salary Part 2 balance of contributions in excess of Part 1 up to 125 p.m. Partnership Shares Matching Shares Free Shares Dividend Shares May be sold or transferred at any time, but income tax and NICs will be payable under PAYE unless the Shares have been held in the Plan for at least five years Must normally be kept in the Plan for three years from the date of allocation. May then be sold or transferred. Income tax and NICs will be payable under PAYE unless the Shares have been held in the Plan for at least five years Must normally be kept in the Plan for three years from the date of allocation. May then be sold or transferred. Income tax and NICs will be payable under PAYE unless the Shares have been held in the Plan for at least five years Must normally be kept in the Plan for three years from the date of allocation. May then be sold or transferred without any tax charge 3

6 3. Eligibility and joining the Plan You can join the Plan and continue to participate if you are an employee of a Participating Company. Participation is voluntary. It is up to you if and when you join. The following is currently the only Participating Company: Phillips 66 Limited If you transfer to a subsidiary company of Phillips 66 that is not a Participating Company, you will not be eligible to receive further awards of Shares in the Plan. You will, however, be permitted to leave your existing shareholdings in the Plan for as long as you are employed by Phillips 66 or an associated company, collectively referred to in this booklet as the Phillips 66 Group of Companies. Dividends will continue to be paid on your Shares and reinvested in the Plan in accordance with the Plan rules. If you go on expatriate assignment you will normally be able to continue making contributions to the Plan provided that your employment contract remains with a Participating Company and subject to local securities laws and exchange control regulations. The Phillips 66 Share Incentive Plan is a UK tax advantaged plan. The equivalent tax relief is unlikely to apply overseas. However, your employing Participating Company will not apply a TEF/Hypothetical Tax deduction to the portion of salary used to buy Partnership Shares. If you return to live in the UK at a later date and sell or transfer Shares from the Plan before they have been held for five years, you will not pay any UK income tax or NICs upon the sale or transfer of Shares awarded to you whilst you were resident abroad. However, it should be noted that if you also hold older Shares within the Plan that were allocated to you when you were based in the UK, these older Shares must be disposed of first even though they may give rise to a UK tax liability. The capital gains tax relief on Shares held within the Plan will apply in relation to your UK capital gains tax position. Joining the Plan You can join the Plan at any time after commencing employment with a Participating Company. If you wish to purchase Partnership Shares (and to be awarded Matching Shares) you must complete and return a SIP Participation Form and a Partnership Share Agreement which constitute your application to join the Plan. Your application will be processed and contributions to the Plan will commence in the first available payroll after your Participation Form and Partnership Share Agreement have been received and processed. The Partnership Share Agreement binds you to certain contractual undertakings that must be made to enable the Plan to qualify for the tax benefits. Free Shares Phillips 66 will determine each year whether and to what extent it is possible to provide an allocation of Free Shares within the terms of the statutory requirements governing the allocation of Free Shares. If applicable, the procedure for allocating Free Shares will be communicated at that time. 4

7 4. Shares of Common Stock The ownership of corporations like Phillips 66 is divided into shares. These shares are owned by individuals, trusts and corporations - all called "shareholders". Shareholders are the owners of Phillips 66, the size of each shareholder's participation depending on the number of shares owned. Each shareholder receives a part of Phillips 66's profit when it is paid as a dividend. Phillips 66 common stock is listed on the New York Stock Exchange. It may be bought and sold through stockbrokers throughout the world, who do of course charge a fee for their services. Share prices vary according to whether people want to buy or sell them. They reflect a company's performance and future prospects. They are also sensitive to general economic circumstances, world political events and other factors outside the control of Phillips 66. The Shares are quoted in US dollars; therefore their value to a UK shareholder is also affected by the exchange rate between the US dollar and the UK pound. 5

8 5. Partnership Shares Level of employee contributions Part 1 contributions You may choose to contribute up to 2.5% of your Base Salary each month (subject to a minimum of 10 and a maximum of 125 per month) to purchase Partnership Shares. These contributions will be deducted directly from your pay before income tax and NICs. Partnership Shares purchased from Part 1 contributions will be matched by the Participating Company in which you are employed on the basis of two Matching Shares for each Partnership Share. Part 2 contributions If you wish, you may contribute an additional fixed UK pound amount from your pay before income tax and NICs which, when added to your Part 1 contributions, does not exceed the maximum of 125 per month or 10% of your PAYE Earnings (whichever is lower). Partnership Shares purchased from Part 2 contributions will not be matched by your employing Participating Company. Application of employee contributions Your contributions are transferred to the Trustees who will use them to purchase Partnership Shares (Part 1 and/or Part 2 as applicable), including fractions of a Share, on your behalf. The purchase will normally take place on the second business day of the month following deduction provided that day is a working day in both the US and the UK. This is called the Acquisition Date. On each Acquisition Date, the Trustees will calculate the number of Partnership Shares that can be bought out of your contributions. The Trustees obtain a Share price in UK pounds, based on the current US dollar Share price converted at the prevailing exchange rate, and buy that number of Partnership Shares through the New York Stock Exchange. Your entire contribution will be invested each month on the Acquisition Date in whole Shares and fractions of a Share. Changes in employee contributions You may change your Part 1 and/or Part 2 contribution levels at any time (subject to the Plan rules) by completing and returning a Plan Change of Contribution form with your revised instructions. The changes will normally be effective in the current month s payroll if the completed form is received by the 7 th business day, or if received later, from the next monthly payroll. Contributions during periods of leave During periods of leave of absence (e.g. maternity leave or long-term disability leave) you will be able to continue Part 1 contributions from 10 up to 2.5% of your then reduced Base Salary up to a maximum of 125 per month, whichever is lower. If you wish, you will also be able to make Part 2 contributions as long as the monthly contributions when added to Part 1 do not exceed 125 per month or 10% of your then reduced PAYE Earnings (whichever is lower). 6

9 If you do not earn enough in a particular month to make the minimum 10 contribution, you will not be able to contribute to the Plan and will not subsequently be able to make up any missed contributions. Cessation of employee contributions If you wish to suspend your contributions you should indicate this on the Plan Change of Contribution form. If at some future date you decide to resume your contributions, you will be required to complete a new Partnership Share Agreement. 7

10 6. Matching Shares Employer contribution Your employing Participating Company will pay the Trustees the amount necessary to buy Matching Shares for each Partnership Share bought with your Part 1 contributions on a 2:1 ratio (including fractions of a Share). These Matching Shares are purchased at the same time and in the same manner as Partnership Shares. There are no income tax or NICs charges on the receipt of Matching Shares. For your Matching Shares to remain free of income tax and NICs, you will normally have to leave them in the Plan for 5 years. Holding period Your Matching Shares must normally be held by the Trustees for a period of 3 years from each purchase date whilst you remain in employment with the Phillips 66 Group of companies. This is known as the Holding Period. 8

11 7. Example For illustrative purposes, assume that an employee joining the Plan wishes to contribute the maximum amounts to both Part 1 and Part 2 and has the following salary package: Base Salary: Allowances: PAYE Earnings: 25,440 per annum ( 2,120 per month) 4,560 per annum 30,000 per annum ( 2,500 per month) The maximum permitted contribution to the Plan is 10% of PAYE Earnings, or 125 if lower. 10% of 2,500 is 250; therefore the lower limit of 125 per month applies. Part 1 contributions will be 2.5% of Base Salary Part 2 contributions will be the balance between the Part 1 contributions and the maximum permitted contribution of 125 p.m. Part 1: 2.5% x 2,120 (Base Salary) = 53 per month Part 2: (Part 1) = 72 per month Total: = 125 per month The following example shows how the above contributions are applied to purchase Partnership and Matching Shares over a three-month period (Share prices used are for example purposes only): Employee Contribution Share price Partnership Shares purchased Matching Shares allocated Total Shares Part 1 Part 2 Part 1 Part 2 (Part 1 Shares x 2) Month Month Month Total number of Shares:

12 8. Free Shares Each year, Phillips 66 may decide to make an allocation of Free Shares to eligible employees equal in value to a percentage of your annual salary. The total value of the Free Shares award to any employee must not exceed 3,000 per tax year. Details of the procedure for allocating Free Shares and the rules governing the purchase and holding of these Shares will be communicated at the time that an award is determined. 10

13 9. Dividend Shares Phillips 66 may declare a quarterly dividend which is payable to shareholders. A dividend is a share in the profits of Phillips 66 expressed as so many US cents per Share, and the Board of Directors of Phillips 66 determines the amount of the dividend. Dividends may be paid on the Partnership, Matching, Free and Dividend Shares that are held for you in the Plan. The Trustees receive these net of the appropriate rate of US withholding tax. The Trustees will automatically reinvest any dividends received on your Shares in order to purchase Dividend Shares through the Plan. Such Dividend Shares will themselves qualify for dividends enabling you to further increase your holding under the Plan. Dividends reinvested in this way are still subject to US withholding tax but are not subject to UK income tax. You should complete a W-8BEN form to ensure that US withholding tax is only deducted at 15% (or other appropriate rate for expatriate employees), rather than 30%. Dividend Shares must normally be held by the Trustees for 3 years (the Holding Period ) after which they may be sold or transferred free of income tax. NICs do not apply to dividends or Dividend Shares. If you leave the Phillips 66 Group of Companies, HM Revenue & Customs rules require that all your Shares are removed from the Plan. If any Dividend Shares come out of the Plan within three years of the date of allocation, you will be liable to pay UK income tax on the original amount of the cash dividend applied to acquire those Shares. You will be entitled to a credit for US tax withholding deducted when the dividends were originally received. Based on current tax rules the credit for the US tax withholding would fully cover any UK tax liability for a basic rate taxpayer who would therefore have no additional UK income tax to pay. A higher or additional rate taxpayer would have an additional liability. However, if you leave under any of the Special Circumstances described in Section 12, there is no extra income tax to pay on the Dividend Shares. 11

14 10. Your tax position The table below gives a summary of the likely taxation implications when Shares cease to be subject to the Plan. For active employees, Shares cease to be subject to the Plan on the date of the sale or the date your transfer request is received by the Trustees. For leavers, all Shares cease to be subject to the Plan on the date you leave the Phillips 66 Group of Companies or, if later, the last date on which Shares are allocated to you under the Plan. Year 1 Year 2 Year 3 Year 4 Year 5 After Year 5 Partnership Shares Shares can be sold or transferred out of the Plan at any time. Income tax and NICs are payable on the value of the Shares when they cease to be subject to the Plan.* Shares can be sold or transferred out of the Plan at any time. Income tax and NICs are payable on the lower of the initial cost or the value of the Shares when they cease to be subject to the Plan.* Shares can be sold or transferred out of the Plan at any time. No income tax or NICs to pay Matching Shares and Free Shares Active employees cannot sell Shares or transfer Shares out of the Plan during this period. For leavers, Shares must be removed from the Plan. Income tax and NICs are payable on the value of the Shares when they cease to be subject to the Plan.* Shares can be sold or transferred out of the Plan at any time. Income tax and NICs are payable on the lower of the value of the Shares on the allocation date or the value of the Shares when they cease to be subject to the Plan.* Dividend Shares Active employees cannot sell Shares or transfer Shares out of the Plan during this period. For leavers, Shares must be removed from the Plan. If you are a higher or additional rate taxpayer, you will have to pay additional UK income tax on the original value of the dividend in the year the Shares cease to be subject to the Plan. NICs are not payable on dividends or Dividend Shares.* Shares can be sold or transferred out of the Plan at any time. No income tax or NICs to pay. * If you leave under Special Circumstances (i.e. because of injury, disability, redundancy, retirement, death or if the business or subsidiary company in which you are employed is sold), there is no income tax or NICs to pay when any of your Shares cease to be subject to the Plan. 12

15 Capital gains tax There is no capital gains tax to pay on the growth in value of the Shares whilst they remain in the Plan. If you can leave your Shares in the Plan for all the time you are employed by the Phillips 66 Group of Companies, there need not be capital gains tax to pay on any growth in value of your Shares in the Plan over your period of employment. If you subsequently transfer the Shares into your own name they will become subject to capital gains tax in the same way as any other investment. The base cost for calculating capital gains tax going forward will be the market value of the Shares when they leave the Plan. For leavers, the base cost for calculating capital gains tax for all your Shares will be the market value of the Shares on the date on which you leave employment or, if later, the last date on which Shares are allocated to you under the Plan. When you make any disposal of Phillips 66 Shares that are held outside the Plan, you need to be aware of the identification rules that apply for capital gains tax purposes. When a shareholder sells part of a holding of shares of a particular class, special rules apply to identify which shares from that shareholding are to be treated as sold and which are to be treated as retained (this procedure is important since it determines which costs can be taken into account in calculating the gain or loss arising on a particular disposal). You should seek independent advice on the application of the identification rules when you make any disposals of Phillips 66 Shares that are held outside the Plan. Note: Tax law changes from time to time and you should confirm the position before Shares are sold or transferred. The Trustees and the Participating Companies cannot give tax advice and you may wish to consult an appropriate professional adviser. 13

16 11. Selling or transferring your Shares Selling Shares Real Time Trading (RTT) You can sell some or all of your available Shares at any time online via the Computershare Employee Plan Members website If you submit a sale request during trading hours of the New York Stock Exchange (NYSE) this will be traded in Real Time and you will receive an confirmation of the sale price achieved. If you submit a request outside the NYSE trading hours your instruction will be held over until the market reopens. The Shares will then be traded and you will receive an confirmation of the Share price achieved. The trade will be reflected in your online account three working days after the Shares are sold. Limit orders You can place a limit order to sell a specific number of Phillips 66 Shares if they reach a pre-determined price in US dollars. The limit order will be held for 30 days. If the market price of Phillips 66 Shares reaches the limit order price you have specified within the 30- day period, the Shares will be sold automatically at that market price. If the market price does not reach your limit order price during the 30-day period, then the order will lapse and no Shares will be sold. Commission payable on sales Stockbroker s commission of 0.75% (minimum 20.00) will be deducted from the sale proceeds for this service. The above charge is correct at the time of production of this booklet. Paying tax on sales If you instruct the Trustees to sell Shares on your behalf before the end of the five-year period referred to above, some or all of the proceeds may be liable to income tax and NICs. The taxable proceeds will be forwarded to your employing Participating Company, which will deduct income tax and NICs through the PAYE system and pay the balance to you. The Trustees will pay to you directly any amount that is not subject to income tax and NICs. Transferring Shares If you wish to transfer your tax-free Shares into your own name in the form of a DRS Statement (similar to a share certificate), or to a broker account, you can request this online. The transfer administration fee of will need to be paid online by credit or debit card before you can enter your transfer instruction. When you select Transfer via the Transact link you will be taken through the fee payment and transfer process. On completion you will receive confirmation via . A transfer of Shares may be expected to take up to six weeks to complete. Should you subsequently decide to sell the Shares, you will probably be unable to do so until the transfer process is concluded. A fraction of a Share cannot be transferred to you. If on leaving the Phillips 66 Group of Companies you ask for all your Shares to be transferred to you, any fraction will be sold and the proceeds paid to you, less any income tax and NICs that may be due. Please note the following if you decide to transfer your Shares into your own name: 14

17 If your DRS Statement is lost in transit between being issued in the USA and reaching you, or you lose your DRS Statement, you may incur expenses to obtain a replacement. You may incur brokerage fees and it may be expensive for you to sell a small number of Shares through a broker. The Trustees may be able to obtain a better brokerage rate for dealing in Shares than you could individually. You may incur expenses upon the conversion of US dollar proceeds to UK pounds on the sale of Shares and receipt of dividends. Capital gains tax may apply on a subsequent sale. Capital gains tax does not apply to Shares that are held in the Plan. Paying tax on transfers Unless you have left employment with the Phillips 66 Group of Companies, any income tax due will be calculated at your marginal rate, plus applicable NICs. If you have already left employment with the Phillips 66 Group of Companies the income tax due may be calculated using a 0T code, plus applicable NICs. In the case of higher or additional rate taxpayers, you should declare the taxable value of the Shares on your annual tax return: HM Revenue & Customs will adjust the amount of income tax if necessary after the end of the tax year. If you leave employment under one of the Special Circumstances outlined in Section 12, then no income tax or NICs will be payable. If you are not liable to income tax, you may be able to claim a rebate at the end of the tax year. 15

18 12. Leaving the Phillips 66 Group of Companies If you leave the Phillips 66 Group of Companies for any reason, all your Shares cease to be subject to the Plan and must be sold or transferred to you. HM Revenue & Customs rules provide that, for tax purposes, all your Shares will come out of the Plan on the date you leave employment or, if later, the date of your final Share allocation. This will be the key date in determining any income tax or NICs liability that may arise and in determining the base cost of the Shares for capital gains tax purposes. You must then instruct the Trustees within 30 days of leaving to sell your Shares or to transfer them to your own name, or to transfer them to the Phillips 66 Vested Share Account (Phillips 66 stock). The Trustees will write to you to obtain your instructions. If you opt to sell your Shares, this will be a sale of Shares that are held outside the Plan so the capital gains tax rules will apply to the sale. Special Circumstances Leaving because of injury, disability, redundancy, or retirement If you leave because of injury, disability, redundancy, or retirement, your Shares cease to be subject to the Plan and must be sold or transferred to you. There will be no income tax or NICs to pay. What happens if I die? In the event of your death, your Shares will be sold or transferred in accordance with instructions from your legal personal representatives. There will be no income tax, NICs or capital gains tax to pay. For inheritance tax purposes the value of your Shares will be their market value at the date of your death. What happens if the business, part of the business or subsidiary company in which I am employed is sold? If the business, part of the business or subsidiary company in which you are employed is sold, then your Shares cease to be subject to the Plan and must be sold or transferred to you. There will be no income tax or NICs to pay. Leaving for any other reason If you leave employment with the Group (other than in one of the Special Circumstances set out above) your Shares will cease to be subject to the Plan and must be sold or transferred to you. There will be an income tax and NICs liability on any Shares that have been held for less than five years (in the case of Partnership, Matching and Free Shares) and less than three years (in the case of Dividend Shares). There may also be a capital gains tax liability if you decide to have your Shares transferred to you and subsequently sell (see Section 10 for details). What happens if Phillips 66 is taken over or reorganised? Takeovers and mergers can take many forms and the Trustees will send you the relevant documentation when necessary. 16

19 What is the Phillips 66 Vested Share Account? The Vested Share Account ( VSA ) is a facility for holding your Shares when they are transferred out of the Plan. The VSA also holds the one-off allocation of Phillips 66 Shares distributed to active employees who were participating in the ConocoPhillips Share Incentive Plan (and other ConocoPhillips share plans) prior to 1 May The VSA is not a tax advantaged plan. The Trustees will continue to manage your shareholding in the same way as within the Plan and dividends will be reinvested to buy more Shares. For more details of the VSA and the fees payable, please refer to the FAQs on the website. 17

20 13. How is the Plan managed? The Plan is administered in accordance with the Trust Deed and Rules, a legally binding document governing the Plan. Copies of the Trust Deed and Rules are available for inspection on the Company intranet. Notices given to the Participating Companies and the Trustees will only be effective when actually received by them and you are reminded that any dates and deadlines in the Plan must be strictly observed. Phillips 66 may vary or terminate the Plan. However, any such change will not affect your position with regard to Shares that have already been acquired. In the event of the Plan being terminated, the Plan Rules require Phillips 66 to continue to operate the closed Plan until all the Shares held on behalf of employees have become free from income tax and NICs. Phillips 66 has appointed Computershare Plan Managers to administer the Plan and EES Trustees Limited to undertake the Trustee duties. Computershare Plan Managers has considerable experience in handling such plans and is independent of Phillips 66. They can be contacted at: Computershare Plan Managers The Pavilions Bridgwater Road Bristol BS13 8AE Tel: +44(0) (Monday to Friday, 8.00am to 5.30pm UK time) phillips66@computershare.co.uk Participants Statements Statements summarising your contributions and Share purchases and providing details of your total shareholding under the Plan can be accessed online. Voting directions and shareholder information Once the Trustees have acquired Shares on your behalf, you are the beneficial owner of them although the Trustees are the registered holder of them. During the period that the Trustees hold Shares for you they will ask how you wish your vote to be cast at meetings of Phillips 66s shareholders. If you give them instructions in respect of your Shares they will vote accordingly. If the Trustees do not receive any voting direction from you, your Shares will not be voted. The Trustees will send you all the information sent to shareholders of common stock by Phillips 66 including details of any resolutions to be voted on. In addition you will be sent a voting instruction form to be completed and returned to the Trustees whenever Phillips 66 seeks the opinion of shareholders in general meetings. 18

21 Glossary of terms Acquisition Date Base Salary Dividend Shares Free Shares Holding Period Matching Shares NICs Participating Company The second business day of each month on which Shares are normally purchased provided that day is a working day in the UK and the US Your current base salary as specified in your contract of employment Shares bought by reinvesting the dividends paid on your Shares Shares bought by your employing Participating Company on an annual basis 3 years from the purchase date of Matching, Free or Dividend Shares Shares bought by your employing Participating Company at a 2:1 Ratio to match Partnership Shares bought by you with your Part 1 contributions National Insurance contributions Phillips 66 Limited Partnership Shares Shares bought with your monthly Part 1 and Part 2 contributions PAYE PAYE Earnings Phillips 66 Phillips 66 Group of Companies Plan Pay-As-You-Earn Your total pre-tax earnings that are subject to UK PAYE income tax (including Base Salary, offshore, shift or regional allowances, bonuses, overtime pay and other fixed and variable allowances) Our US parent company, whose Shares are acquired through the Plan Phillips 66 and any company that is an associated company of Phillips 66 The Phillips 66 Share Incentive Plan Share A share of common stock in Phillips 66 Special Circumstances Trustees The circumstances of leaving employment, specified in Section 12, in which there is an exemption from an income tax charge EES Trustees Limited 19