Elliott Investment Management has taken a $1 billion stake in Phillips 66 and is seeking as many as two board seats in a push to improve the company’s performance, according to a Wednesday letter from the activist investor.

Phillips 66’s stock rose more than 4% in afternoon trading Wednesday. The crude refining company has a market cap of nearly $52 billion. CNBC’s David Faber originally broke the news.

Elliott’s push for the board seats comes as Phillips has underperformed its competitors Marathon Petroleum and Valero. The activist investor said in the letter to Phillips’ board that the company’s performance has declined in recent years because it has shifted its focus away from its refining segment.

“Over the past three years, as Phillips 66 has fallen further and further behind, its stock has meaningfully underperformed these peers,” wrote Elliott partner John Pike and portfolio manager Mike Tomkins in the letter.

Phillips shares are up about 13% year to date, while Marathon Petroleum has gained nearly 29% over the same period. Valero shares are flat year to date, but are up 124% over the past three years versus Phillips’ 88% gain.

The activist investor said Phillips’ operating expense per barrel has soared in recent years, “shaking investor confidence in the company’s ability to run its refining operations efficiently.”

Elliott backed CEO Mark Lashier’s plan to improve the company’s performance. Lashier is targeting $14 billion in earnings before interest, taxes, depreciation and amortization by 2025.

The CEO plans to do this through a more than $1 billion improvement in Phillips’ refining segment, selling $3 billion in noncore assets and increasing the company’s long-term capital return policy.

Elliott said Phillips 66’s stock has an upside of 75% from its last closing price of $118 if the company executes on these goals.

Lashier said in a statement Wednesday that the company has engaged in discussions with Elliott and is committed to acting in the best interest of shareholders.

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Phillips 66 shares year to date

But Elliott said achieving Lashier’s goals will require oversight given Phillips’ history of failed execution and investor skepticism that the company will succeed this time.

Elliott called for two new directors with experience in refining operations, contending they would enhance the board given current members’ limited experience in this segment.

“At present, we believe Mr. Lashier and the rest of the management team deserve investor support so long as they demonstrate meaningful progress against these targets,” Elliott wrote.

“At the same time, we find the market’s skepticism to be understandable, and we believe the Board must take several steps to reassure investors that Phillips 66 is in the best possible position to achieve its value-creation potential,” the activist investor wrote.

Should Phillips 66 fail to make real progress toward its goals over the next year, the company should pursue a path that mirrors Marathon’s recent transformation, according to Elliott.

Marathon’s transformation under Elliott’s pressure included transitioning to a new CEO.

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