Elliott Management has intensified its activist campaign against US oil refiner Phillips 66, formally launching a proxy battle and nominating four directors to the company’s board in a bid to accelerate sweeping operational and governance changes, according to a report by the Financial Times.

In a proxy filing submitted Thursday, the $60bn activist hedge fund firm is calling on fellow shareholders to support a plan that includes divesting non-core assets such as Phillips 66’s midstream business, enhancing performance in its refining segment, and dismantling entrenched governance structures.

Elliott, which holds a $2.5bn stake in Phillips 66, is among its five largest shareholders. The firm has doubled down on its position this year after first investing in 2023, arguing that the company has failed to follow through on previous commitments to improve oversight and unlock value for shareholders.

“This is not a case of marginal underperformance. It’s a case of strategic drift and missed opportunities,” Elliott said in its letter to shareholders. “After 18 months of patient engagement, it’s clear the time has come for structural change – in the company’s portfolio, operations, and boardroom.”

Elliott’s slate includes industry veterans such as Sigmund Cornelius and Brian Coffman, both former executives at ConocoPhillips (from which Phillips 66 was spun out in 2012), Michael Heim, founder of Targa Resources, and Stacy Nieuwoudt, a former Citadel energy analyst. The hedge fund says their collective experience would significantly strengthen board oversight in refining, midstream, and corporate strategy.

The move marks one of Elliott’s few full-fledged proxy fights at a US corporate giant, following similar campaigns at Hess (2013) and Arconic (2017), both of which were settled before shareholder votes. The firm is also currently active in other high-profile energy campaigns, including at BP and RWE.

Phillips 66 has faced mounting scrutiny from investors as its share price lags peers such as Valero Energy and Marathon Petroleum. Despite a recent uptick, shares are still down 38% over the past year, underperforming the broader S&P 500, which is up 3.6%.

Elliott has taken particular issue with CEO and Chairman Mark Lashier’s dual role and Phillips 66’s staggered board structure, which it argues undermines accountability. The hedge fund is pushing to declassify the board, putting all 14 directors up for annual election.

It is also advocating for the sale of non-core businesses, including the company’s European retail division and its Chevron-linked chemicals joint venture. According to Elliott, these assets distract from Phillips 66’s core refining operations and offer limited synergies, while monetisation could free up capital and sharpen strategic focus.

Tensions between the company and Elliott have been building for months. Elliott had previously backed director Bob Pease, who last week publicly criticised the hedge fund for “inconsistent engagement.” In turn, Elliott claims Phillips 66 failed to deliver on commitments to appoint independent board members and has misrepresented its asset base, citing CEO Lashier’s comments that the business is “fairly valued.”

Phillips 66 maintains it is executing on a clear strategy to enhance shareholder value. In a letter to investors last month, the company pointed to $13.6bn in share repurchases, improved refining margins, and cost-cutting initiatives as evidence of progress.