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
Filed by the Registrant
Check the appropriate box:
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☐ | Definitive Proxy Statement |
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Marathon Petroleum Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
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Proposal No. 2 Ratification of Independent Auditor for 2018 |
31 | |||
32 | ||||
33 | ||||
34 | ||||
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Independent Registered Public Accounting Firms Fees, Services and Independence |
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65 | ||||
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Ratio of Annual Compensation for the CEO to our Median Employee |
66 | |||
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I-1 | ||||
II-1 |
March 15, 2018
Dear Fellow Marathon Petroleum Corporation Shareholder:
On behalf of the Board of Directors and management team, I am pleased to invite you to attend Marathon Petroleum Corporations Annual Meeting of Shareholders to be held in the Auditorium of Marathon Petroleum Corporation, 539 South Main Street, Findlay, Ohio 45840 on Wednesday, April 25, 2018, at 10 a.m. Eastern Daylight Time.
Marathon Petroleum Corporation delivered strong operational and financial performance across the business in 2017. Early in the year, we announced a series of strategic actions to enhance shareholder value. We are pleased to have completed the last of those actions in February 2018. |
Our Refining and Marketing segment turned in an exceptional year, with monthly process unit and production records driving us to become the second-largest U.S. refiner on a crude-throughput basis. Additionally, our Galveston Bay and Garyville refineries are now the nations second- and third-largest refineries, respectively.
Since acquiring the Galveston Bay refinery five years ago, not only have we improved the environmental and safety performance of the facility, we have also advanced operational excellence and taken significant steps to lower operating costs.
Speedway continues to excel as a leader in the retail market with its sixth straight record-setting year. We remain committed to aggressively growing the business through significant high-return investments.
MPCs Midstream segment, which primarily reflects the results of our sponsored master limited partnership, MPLX LP, delivered a record-setting performance in 2017, driven largely by gathered, processed and fractionated volume growth. When we formed MPLX in 2012, it was with the vision to strengthen and grow our Midstream segment. With our commitment to organic growth, the addition of MarkWest Energy Partners in 2015, and strategic actions that have nearly doubled the size of the partnership and improved its cost of capital, we are proud to be delivering on that vision.
These accomplishments are delivering results for you, our shareholders. We returned over $3 billion of capital to MPC investors via dividends and share repurchases in the year, supported in part by proceeds from dropdown transactions. In addition, the MPC Board of Directors announced a 15 percent increase in the quarterly dividend paid in March following an 11 percent increase in 2017. This represents a 26.5 percent compound annual growth rate in the dividend since becoming an independent company nearly seven years ago, demonstrating continued confidence in the cash-flow generation of the business, as further supported by tax reform.
Since MPCs formation in 2011, we have generated more than $16.9 billion in net income and returned more than $13 billion to shareholders. We have tremendous momentum going into 2018 and believe we are well positioned to benefit from a solid global and U.S. macroeconomic picture and strong demand for our products.
We have included a Proxy Summary at the beginning of our Proxy Statement. The Proxy Summary is intended to provide highlights of the Proxy Statement, including facts regarding our corporate governance and our 2017 company performance. We hope you find the Proxy Summary beneficial.
In addition, we invite you to read our Perspectives on Climate-Related Scenarios report, available on our corporate website, www.marathonpetroleum.com. We are proud of this new report, which enhances our disclosures around climate-related strategies, risks and opportunities.
We thank you for investing in MPC, for sharing in our vision and for contributing to our success.
Sincerely,
Gary R. Heminger
Chairman and Chief Executive Officer
In accordance with Rule 14a-6(d) under Regulation 14A of the Securities Exchange Act of 1934, as amended, please be advised that Marathon Petroleum Corporation intends to release definitive copies of the proxy statement to security holders on or about March 15, 2018.
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NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS
Wednesday, April 25, 2018
10 a.m. EDT |
The Auditorium of Marathon Petroleum Corporation
539 South Main Street, Findlay, Ohio 45840
Purpose of the Meeting:
and, transact any other business that properly comes before the meeting.
Who can vote: Stockholders of record at the close of business on February 26, 2018.
How to Vote:
Via Internet You can access the proxy materials online at www.proxyvote.com
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By Telephone Call 1-800-690-6903 toll free 24/7. You will need the control number on your proxy card or Notice.
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By Mail Send your completed and signed proxy card in the envelope provided.
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In Person Attend the annual meeting and vote in person if you meet the criteria outlined below.
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Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope you will authorize your proxy as soon as possible. You are entitled to vote at the meeting if you were an owner of record of Marathon Petroleum Corporation common stock at the close of business on February 26, 2018. Owners of record will need to have a valid form of identification to be admitted to the meeting. If your ownership is through a broker or other intermediary, then, in addition to a valid form of identification, you will also need to have proof of your share ownership to be admitted to the meeting. A recent account statement, letter or proxy from your broker or other intermediary will suffice. In order to vote at the Annual Meeting, if you are not an owner of record, you must first obtain a legal proxy form from the broker or other organization that holds your shares. Please see the Questions and Answers section of this Proxy Statement for more information.
You can find directions to the location of the Annual Meeting on the back cover of this Proxy Statement.
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By order of the Board of Directors,
Molly R. Benson Vice President, Corporate Secretary and Chief Compliance Officer
March 15, 2018 |
1 Election of Three Class I Directors 2 Ratification of Independent Auditor for 2018 3 Approval, on an Advisory Basis, of Named Executive Officer Compensation 4 Recommendation, on an Advisory Basis, of the Frequency of an Advisory Vote on Executive Compensation 5 Board Proposal Seeking Approval of Amendments to our Restated Certificate of Incorporation to Eliminate the Supermajority Voting Requirement applicable to Bylaw Amendments 6 Board Proposal Seeking Approval of Amendments to our Restated Certificate of Incorporation to Eliminate Supermajority Voting Requirements applicable to Certificate Amendments and the Removal of Directors 7 Shareholder Proposal Seeking Alternative Shareholder Right to Call a Special Meeting Provision
This summary highlights information contained elsewhere in the Proxy Statement. This summary does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting.
2018 ANNUAL MEETING OF SHAREHOLDERS
Date: |
April 25, 2018 | |
Time: |
10 a.m. EDT | |
Place: |
The Auditorium of Marathon Petroleum Corporation 539 South Main Street, Findlay, Ohio 45840 | |
Record Date: |
February 26, 2018 | |
Voting: |
You are entitled to vote at the meeting if you were an owner of record of Marathon Petroleum Corporation common stock at the close of business on February 26, 2018. Owners of record will need to have a valid form of identification to be admitted to the meeting. If your ownership is through a broker or other intermediary, then, in addition to a valid form of identification, you will also need to have proof of your share ownership to be admitted to the meeting. A recent account statement, letter or proxy from your broker or other intermediary will suffice. In order to vote at the Annual Meeting, if you are not an owner of record, you must first obtain a legal proxy form from the broker or other organization that holds your shares. Please see the Questions and Answers section of this Proxy Statement for more information. | |
Regardless of whether you plan to attend the Annual Meeting, we hope you will authorize your proxy as soon as possible. You may vote by proxy using the internet. Alternatively, if you receive the proxy materials by mail, you may vote by proxy using the internet, by calling a toll-free telephone number or by completing and returning a proxy card or voting instruction form in the mail. Your vote will ensure your representation at the Annual Meeting. |
MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
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Item
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Description
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Page | ||||
1 |
Election of Class I Directors
Board Recommendation: FOR each nominee |
24 | ||||
2 |
Ratification of Independent Auditor for 2018
Board Recommendation: FOR |
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31 |
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3 |
Approval, on an Advisory Basis, of Named Executive Officer Compensation
Board Recommendation: FOR |
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32 |
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4 |
Recommendation, on an Advisory Basis, of the Frequency of an Advisory Vote on Executive Compensation
Board Recommendation: vote EVERY YEAR (1 Year) |
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33 |
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5 |
Approval of Amendments to our Restated Certificate of Incorporation to Eliminate the Supermajority Voting Requirement applicable to Bylaw Amendments
Board Recommendation: FOR |
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34, 35 |
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6 |
Approval of Amendments to our Restated Certificate of Incorporation to Eliminate the Supermajority Voting Requirements applicable to Certificate Amendments and the Removal of Directors
Board Recommendation: FOR |
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34, 36 |
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7 |
Shareholder Proposal: Alternative Shareholder Right to Call a Special Meeting Provision
Board Recommendation: AGAINST |
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37 |
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Marathon Petroleum Corporation Proxy Statement / page 1
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GOVERNANCE HIGHLIGHTS
New Shareholder Right to Call a Special Meeting
On January 27, 2018, the Board adopted an amendment to our Amended and Restated Bylaws (which we refer to as our Bylaws) extending to shareholders owning in the aggregate 25 percent of MPCs outstanding common stock and complying with other requirements set forth in our Bylaws the right to request that the Company call a special meeting of shareholders. The Board believes the 25 percent ownership threshold strikes the appropriate balance between allowing shareholders to vote on important matters that may arise between annual meetings and protecting against the risk that a single shareholder or small group of shareholders could call a special meeting that serves only a narrow agenda. MPCs 25 percent ownership threshold is a common threshold among large public companies offering shareholders this right and helps protect shareholder rights without the expense and risk associated with a lower special meeting threshold.
Responsiveness to Majority-Supported Shareholder Proposal
At our 2017 Annual Meeting of Shareholders, MPC placed on the ballot a nonbinding, shareholder-sponsored proposal requesting that the Board take the steps necessary to eliminate each shareholder voting requirement in our Restated Certificate of Incorporation and our Amended and Restated Bylaws that calls for a greater than simple majority vote. This proposal received the support of a majority of the votes cast at the meeting. The Board has acknowledged the support for the proposal as expressed by our shareholders and has placed on the ballot for the Annual Meeting two binding proposals to address supermajority provisions within our Certificate. The Board has also committed to make conforming amendments to our Bylaws, as applicable, should the Certificate amendments receive the requisite vote for passage.
Published Inaugural Report: Perspectives on Climate-Related Scenarios: Risks and Opportunities
In October 2017, MPC published the Perspectives on Climate-Related Scenarios: Risks and Opportunities report modeled on the disclosures recommended by the Financial Stability Boards Task Force on Climate-related Financial Disclosures (or TCFD) and providing a detailed look at our Boards risk management oversight, climate-related scenario analyses, asset optimization and portfolio management. As conveyed in the report, MPC is well positioned to remain a successful company into the future, even under the carbon-constrained future modeled in the International Energy Agencys hypothetical 450 Scenario. MPC has invested billions of dollars in energy efficiency, emissions reductions, diversifying our business and hardening our facilities against extreme weather events. Our refineries are among the most energy efficient in North America. Our facilities have earned more of the U.S. EPAs ENERGY STAR awards recognizing refineries than all other refining companies combined, and we also apply this focus on energy efficiency to our transport trucks and our inland marine fleet, as well as to our research efforts.
page 2 / Marathon Petroleum Corporation Proxy Statement
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In addition, MPC annually publishes its Citizenship Report (what many companies refer to as a sustainability report), disclosing the Companys achievements and stewardship in the areas of our core values Health and Safety, Environmental Stewardship, Integrity, Corporate Citizenship and Inclusive Culture.
The Perspectives on Climate-Related Scenarios report, the Citizenship Report and our Code of Business Conduct can be found on our website at http://www.marathonpetroleum.com by selecting Corporate Citizenship. Through this portion of our website, our shareholders and others may also visit our Health, Environment, Safety & Security web pages, which include voluntary disclosures of emissions data and energy efficiency statistics.
New Human Rights and Core Values Disclosures on Corporate Website
Our shareholders may also access a new tab on our website at http://www.marathonpetroleum.com by selecting Corporate Citizenship and clicking on Human Rights and Core Values. Here, shareholders will find a link to our most pertinent publications and information on the topics of human rights and corporate citizenship, including our commitment to the fair treatment and meaningful involvement of all people, including indigenous people, regardless of race, color, national origin or income level.
Express Commitment to Board Diversity
On January 27, 2018, the Board adopted an amendment to our Corporate Governance Principles to expressly affirm its commitment to actively seek in its director recruitment efforts women candidates and candidates of diverse ethnic and racial backgrounds who possess the skills and characteristics identified within our Corporate Governance Principles. This express commitment is in addition to the emphasis on a diversity of director backgrounds and experiences already found within our Corporate Governance Principles.
Marathon Petroleum Corporation Proxy Statement / page 3
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MPC Board of Directors at a Glance
Tenure | CEO Experience |
Finance |
Industry Expertise |
Govt / Regulatory | ||||||
Gary R. Heminger, Chairman |
6 | |||||||||
David A. Daberko (Ind.)(1), Lead Director |
6 | |||||||||
Abdulaziz F. Alkhayyal (Ind.) |
1 | |||||||||
Evan Bayh (Ind.) |
6 | |||||||||
Charles E. Bunch (Ind.) |
2 | |||||||||
Steven A. Davis (Ind.) |
4 | |||||||||
Donna A. James (Ind.) |
6 | |||||||||
James E. Rohr (Ind.) |
4 | |||||||||
Frank M. Semple |
2 | |||||||||
J. Michael Stice (Ind.) |
1 | |||||||||
John P. Surma (Ind.)
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6
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(1) Independent, as described in the Board and Committee Independence section on Page 14 of this Proxy Statement. |
9 of 11 Directors are Independent |
6 new directors since 2013, adding midstream, MLP, refining, large cap manufacturing, petroleum industry, financial services and global markets experience |
Diverse mix of financial, industry and government/ regulatory skills
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Average tenure of 4.6 years |
99% attendance at all Board and committee meetings in 2017
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8 of 11 Directors are current or former CEOs
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Mandatory retirement age for directors
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Shareholder Engagement
In addition to our regular dialogue with a wide variety of investors on an array of topics, since our last Annual Meeting, we again undertook an outreach effort focused on corporate governance matters and met with shareholders representing over 30 percent of our shares outstanding. In addition to corporate governance matters, we discussed MPCs priorities for long-term value creation and the Boards risk management oversight, and we specifically elicited feedback on our named executive officer (or NEO) compensation program. In many of these engagements, our Chairman and Chief Executive Officer (who we may refer to as our Chairman and CEO) participated, and our independent Compensation Committee Chair also joined, to answer shareholder questions. The feedback shared during these discussions was positive. Our Board and its committees highly value the feedback we receive from our shareholders.
page 4 / Marathon Petroleum Corporation Proxy Statement
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Additional Corporate Governance Highlights
Marathon Petroleum Corporation Proxy Statement / page 5
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BOARD OF DIRECTORS
The Marathon Petroleum Corporation Board of Directors is divided into three classes. Directors are elected for three-year terms. The following table provides summary information about each director nominee standing for election to the Board as a Class I director for a three-year term expiring in 2021, each of the directors continuing to serve as a Class II or Class III director and one director who will be retiring at the conclusion of the 2018 Annual Meeting pursuant to our mandatory retirement policy.
Name | Age | Director Since |
Occupation | Independent | Committees | Other Public Company Boards(1) |
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Nominees for Class I Directors |
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Abdulaziz F. Alkhayyal |
64 | 2016 | Retired Senior Vice President, Industrial Relations, Saudi Aramco |
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Audit Comp(2) |
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1 | ||||||||
Donna A. James |
60 | 2011 | Managing Director, Lardon & Associates, LLC |
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Audit Comp |
|
2 | |||||||||
James E. Rohr |
69 | 2013 | Retired Chairman and CEO, The PNC Financial Services Group, Inc. |
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Audit Comp (Chair) |
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3 | |||||||||
Continuing Class II and Class III Directors |
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Evan Bayh |
62 | 2011 | Senior Advisor, Apollo Global Management; Partner, McGuireWoods LLP |
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|
Audit CG&N(3) |
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3 | ||||||||
Charles E. Bunch |
68 | 2015 | Retired Chairman and CEO, PPG Industries, Inc. |
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Comp CG&N |
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3 | |||||||||
Frank M. Semple |
66 | 2015 | Retired Chairman, President and CEO, MarkWest Energy Partners, L.P. |
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Steven A. Davis |
59 | 2013 | Former Chairman and CEO, Bob Evans Farms, Inc. |
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Comp CG&N |
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2 | |||||||||
Gary R. Heminger |
64 | 2011 | Chairman and CEO, Marathon Petroleum Corporation |
2 | ||||||||||||
J. Michael Stice |
58 | 2017 | Dean, Mewbourne College of Earth & Energy, University of Oklahoma | |
Audit CG&N |
|
1 | |||||||||
John P. Surma |
63 | 2011 | Retired Chairman and CEO, United States Steel Corporation |
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Audit (Chair) CG&N (Chair) |
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2 | |||||||||
Retiring Class I Director(4) |
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David A. Daberko |
72 | 2011 | Lead Director, Marathon Petroleum Corporation |
Audit | 1 |
(1) | For purposes of this disclosure, Other Public Company Boards does not include the board of directors of MPLX GP LLC, a wholly owned indirect subsidiary of Marathon Petroleum Corporation. |
(2) | Compensation Committee. |
(3) | Corporate Governance and Nominating Committee. |
(4) | Retirement effective upon conclusion of the 2018 Annual Meeting of Shareholders. |
page 6 / Marathon Petroleum Corporation Proxy Statement
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PERFORMANCE AND COMPENSATION HIGHLIGHTS
Pursuant to Section 14A of the Securities Exchange Act of 1934 (or the Exchange Act), Marathon Petroleum Corporation is seeking your approval, on an advisory basis, of the compensation of named executive officers as disclosed in this Proxy Statement. Executive compensation decisions are made to attract, motivate, retain and reward talented executives, with a focus on delivering business results and value to our shareholders.
2017 Say-on-Pay Vote Results
At the Annual Meeting held in April 2017, approximately 93 percent of votes cast were in support of the compensation of our named executive officers (or NEOs) as described in our 2017 Proxy Statement. In an outreach effort focused on corporate governance matters, we met with shareholders representing over 30 percent of our shares outstanding since our last Annual Meeting. During these meetings, we specifically elicited feedback on our NEO compensation program. In many of these engagements, our Chairman and CEO and our independent Compensation Committee Chair were available, and the feedback shared during these engagements was provided to our Compensation Committee. For 2018, the Compensation Committee altered the mix of long-term compensation awarded to our NEOs by decreasing the proportion of stock options to 30 percent from 40 percent and increasing the proportion of performance units awarded to 50 percent from 40 percent. In addition, the minimum threshold for payouts on performance units awarded in 2018 was increased. The Compensation Committee believes these changes reinforce its commitment to compensate NEOs in a manner designed to enhance shareholder value. The Compensation Committee appreciates the strong support for our executive compensation programs as evidenced by the 2017 say-on-pay vote results and believes the referenced adjustments it has made in early 2018 will similarly be recognized as promoting long-term financial performance to drive shareholder value.
2017 Company Performance
Our net income attributable to MPC increased to $3.43 billion, or $6.70 per diluted share, in 2017 from $1.17 billion, or $2.21 per diluted share, in 2016. Earnings in 2017 included a tax benefit of approximately $1.5 billion (or $2.93 per diluted share) related to tax reform legislation enacted in the fourth quarter of 2017. |
We increased our quarterly dividend by 11 percent to $0.40 per share from $0.36 per share in 2017, and again increased the dividend by 15 percent to $0.46 per share in the first quarter of this year, representing a 26.5 percent compound annual growth rate from the dividend established when we became an independent company on June 30, 2011. |
We continued to focus on returning capital to shareholders by returning $3.1 billion through dividends and share repurchases in 2017. |
We have now completed strategic initiatives announced by MPC and MPLX in early 2017, including the execution of accelerated dropdowns to MPLX, and the exchange of MPCs economic general partner interests in MPLX, including its incentive distribution rights (or IDRs), for a non-economic general partner interest and MPLX common units. |
MPC Total Shareholder Return (or TSR) for 2017 was 34.6 percent compared with median TSR of 26.7 percent for its performance unit peer group. |
MPLX Total Unitholder Return (or TUR) for 2017 was 17.5 percent compared with median TUR of 0.4 percent for its performance unit peer group. |
Our Refining and Marketing businesss earnings increased by $1 billion compared with 2016. Refining and Marketing operated exceptionally well capturing strong crack spreads and wider crude differentials; and achieving multiple refining process unit rate records, including monthly records for crude throughput, and gasoline and distillate production. |
Speedway achieved record performance building on several years of segment earnings growth. These results were driven by strong earnings from light product sales, an increase of 1.2 percent in same-store merchandise sales, lower operating costs and contributions from its travel center joint venture. |
MPLX reported record financial results on record volume growth across the gathering and processing business. MPLX delivered on its 12.1 percent distribution growth guidance for 2017 distributions and has increased its quarterly cash distribution for 20 consecutive quarters, representing an 18.3 percent compound annual growth rate over the minimum quarterly distribution established at its formation in late 2012. |
Marathon Petroleum Corporation Proxy Statement / page 7
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Cumulative Total Shareholder Return
12/31/12
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12/31/13
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12/31/14
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12/31/15
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12/31/16
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12/31/17
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Marathon Petroleum Corporation
|
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100.00
|
|
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148.57
|
|
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149.21
|
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175.07
|
|
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176.26
|
|
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237.51
|
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S&P 500 Index
|
|
100.00
|
|
|
132.39
|
|
|
150.51
|
|
|
152.59
|
|
|
170.84
|
|
|
208.14
|
| ||||||
Peer Group Index |
100.00 | 120.73 | 112.36 | 98.99 | 122.05 | 135.09 |
The performance graph above compares the cumulative total return, assuming the reinvestment of dividends, of a $100 investment in our common stock from December 31, 2012, to December 31, 2017, compared to the cumulative total value return of a $100 investment in the S&P 500 Index and an index of peer companies (selected by us) for the same period. Our peer group consists of the following companies that engage in domestic refining operations: Andeavor (Tesoro prior to August 1, 2017), BP p.l.c., Royal Dutch Shell plc, Chevron Corporation, HollyFrontier Corporation, Phillips 66 (ConocoPhillips prior to May 1, 2012), ExxonMobil Corporation and Valero Energy Corporation.
GENERAL INFORMATION
page 8 / Marathon Petroleum Corporation Proxy Statement
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Marathon Petroleum Corporation Proxy Statement / page 9
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page 10 / Marathon Petroleum Corporation Proxy Statement
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Marathon Petroleum Corporation Proxy Statement / page 11
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Marathon Petroleum Corporation Proxy Statement / page 13
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page 14 / Marathon Petroleum Corporation Proxy Statement
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Marathon Petroleum Corporation Proxy Statement / page 15
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page 16 / Marathon Petroleum Corporation Proxy Statement
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Marathon Petroleum Corporation Proxy Statement / page 17
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page 18 / Marathon Petroleum Corporation Proxy Statement
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The federal lobbying reports and itemized corporate and PAC contributions available on our website are included for a period of five years. We have included a representative sample of our voluntary disclosures below.
Marathon Petroleum Corporation Proxy Statement / page 19
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page 20 / Marathon Petroleum Corporation Proxy Statement
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Marathon Petroleum Corporation Proxy Statement / page 21
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Our Board of Directors determines annual retainers and other compensation for non-employee directors. Directors who are employees of MPC and its subsidiaries receive no compensation for their service on the Board. For 2017, the annual retainers and other compensation were established at the levels set forth below.
Form of Compensation
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Lead Director ($)
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Audit Committee Chair ($)
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Compensation Committee Chair ($)
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Corporate Governance and Nominating Committee Chair ($)
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All Other Directors(1) ($)
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Cash Retainer
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175,000
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150,000
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150,000
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150,000
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150,000
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Committee Chair Fees
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15,000
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15,000
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10,000
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Deferred Equity Awards
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150,000
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150,000
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150,000
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150,000
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|
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150,000
|
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Total
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325,000
|
|
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315,000
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315,000
|
|
|
310,000
|
|
|
300,000
|
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(1) | Each member of the Special Committee received a one-time cash retainer of $25,000 in 2017. |
page 22 / Marathon Petroleum Corporation Proxy Statement
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2017 Director Compensation Table
The following table and footnotes provide information regarding the compensation earned by or paid to the Companys non-employee directors in the 12 months ended December 31, 2017.
Name
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Fees Earned or Paid in Cash(1) ($)
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Stock Awards(2) ($)
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Option Awards ($)
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Non-Equity Incentive Plan Compensation ($)
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Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)
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All Other Compensation(3) ($)
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Total ($)
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Abdulaziz F. Alkhayyal
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150,000
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|
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150,000
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|
|
|
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|
|
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300,000
|
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Evan Bayh
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150,000
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150,000
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|
|
|
|
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|
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300,000
|
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Charles E. Bunch
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175,000
|
|
|
150,000
|
|
|
|
|
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10,000
|
|
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335,000
|
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David A. Daberko
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|
287,500
|
|
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237,500
|
|
|
|
|
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2,500
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|
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527,500
|
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Steven A. Davis
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|
175,000
|
|
|
150,000
|
|
|
|
|
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5,000
|
|
|
330,000
|
| ||||||||||||||||||||
Donna A. James
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|
165,000
|
|
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150,000
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|
|
|
|
|
|
|
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315,000
|
| ||||||||||||||||||||
James E. Rohr
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|
190,000
|
|
|
150,000
|
|
|
|
|
|
10,000
|
|
|
350,000
|
| ||||||||||||||||||||
Frank M. Semple
|
|
237,500
|
|
|
237,500
|
|
|
|
|
|
2,947
|
|
|
477,947
|
| ||||||||||||||||||||
John W. Snow(4)
|
|
48,214
|
|
|
48,214
|
|
|
|
|
|
|
|
|
96,428
|
| ||||||||||||||||||||
J. Michael Stice(5)
|
|
128,333
|
|
|
128,333
|
|
|
|
|
|
10,000
|
|
|
266,666
|
| ||||||||||||||||||||
John P. Surma
|
|
272,500
|
|
|
237,500
|
|
|
|
|
|
|
|
|
510,000
|
|
(1) | The amounts shown in this column reflect the non-employee director and Lead Director cash retainers, one-time cash retainers for Special Committee service and committee chair fees earned or paid for Board service from January 1, 2017, through December 31, 2017. Directors are eligible to defer up to 100 percent of their annual cash compensation. For Messrs. Daberko, Semple and Surma, the amounts shown in this column include cash retainers earned or paid for MPLX GP LLC Board service from January 1, 2017, through December 31, 2017. |
(2) | The amounts shown in this column reflect the aggregate grant date fair value, as calculated in accordance with provisions of the Financial Accounting Standards Board Accounting Standards Codification 718, Compensation - Stock Compensation (FASB ASC Topic 718), for MPC restricted stock unit awards and MPLX phantom unit awards granted to the non-employee directors in 2017. All MPC restricted stock unit awards and MPLX phantom unit awards are deferred until departure from the Board, and dividend and distribution equivalents, as applicable, in the form of additional MPC restricted stock unit awards and additional MPLX phantom unit awards are credited to non-employee director deferred accounts as and when dividends and distributions are paid on MPC common stock and MPLX common units, respectively. The aggregate number of MPC restricted stock unit awards credited for MPC Board service and outstanding as of December 31, 2017, for each non-employee director, is as follows: Mr. Alkhayyal, 3,172; Mr. Bayh, 30,076; Mr. Bunch, 6,850; Mr. Daberko, 146,853; Mr. Davis, 14,321; Ms. James, 30,076; Mr. Rohr, 14,321; Mr. Semple, 3,144; Mr. Stice, 2,225; and Mr. Surma, 30,076. For Mr. Daberko, the aggregate number of MPC restricted stock unit awards outstanding as of December 31, 2017, includes replacement awards received for prior service on the Board of Directors of Marathon Oil. The aggregate number of MPLX phantom unit awards credited for MPC Board service and outstanding as of December 31, 2017, for each non-employee director is as follows: Ms. James and Mr. Bayh, 2,105 each; Messrs. Davis and Rohr, 1,801 each; Mr. Bunch, 1,075; Mr. Alkhayyal, 535; and Mr. Stice, 373. For Messrs. Daberko, Semple and Surma, who also serve on the MPLX GP LLC Board of Directors, the aggregate number of MPLX phantom unit awards credited for MPC Board service and MPLX GP LLC Board service and outstanding as of December 31, 2017, is as follows: Messrs. Daberko and Surma, 12,722 each; and Mr. Semple, 3,490. |
(3) | The amounts shown in this column reflect contributions made on behalf of Messrs. Bunch, Daberko, Davis, Rohr, Semple and Stice to educational institutions under our matching gifts program. This column does not include perquisites or personal benefits provided to our non-employee directors. To the extent provided, the aggregate amount of perquisites and personal benefits provided to any non-employee director in 2017 was less than $10,000. |
(4) | Mr. Snow served on the Board until his retirement effective at the conclusion of our 2017 Annual Meeting held on April 26, 2017. In July 2017, Mr. Snow received a distribution of MPC common stock from his deferred equity account valued at $4,153,748, cash in lieu of a fractional share of MPC common stock in the amount of $36, MPLX common units from his deferred equity account valued at $59,817, and cash in lieu of a fractional MPLX common unit in the amount of $5. |
(5) | Mr. Stice joined the Board on February 22, 2017. |
Marathon Petroleum Corporation Proxy Statement / page 23
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 1 - ELECTION OF CLASS I DIRECTORS
Our Board will present the following proposals at the Annual Meeting:
Proposal No. 1 Election of Class I Directors
|
Our Board of Directors recommends you vote FOR the Nominees for Class I Director in Proposal No. 1.
|
page 24 / Marathon Petroleum Corporation Proxy Statement
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 1 - ELECTION OF CLASS I DIRECTORS
|
Our Board of Directors recommends you vote for the Nominees for Class I Director in Proposal No. 1.
|
Nominees for Class I Directors Current Terms Expiring in 2018:
Donna A. James
|
MPC Director since: 2011 Age 60
| |||||||
Managing Director, Lardon & Associates, LLC
Ms. James is managing director of |
leading several U.S. and internationally based subsidiary companies, a venture capital fund and new business development teams with responsibility for emerging opportunities in financial services. Ms. James graduated from North Carolina Agricultural and Technical State University with a Bachelor of Science degree in accounting. She is a non-practicing CPA.
As a former senior executive in the insurance industry, Ms. James has expertise in finance, accounting, public company financial reporting requirements and business development. She also draws upon her broad executive experience in providing insight on matters of corporate management and talent acquisition. As a current and former member of other public company boards of directors, and as one of our named audit |
committee financial experts, Ms. James brings to her service on our Board a valuable perspective on many of the topics impacting our business, including financial reporting, risk management, business strategy and human resources.
Other Current Public Company Directorships: Boston Scientific Corp. L Brands, Inc.
Recent Past Directorships: Coca-Cola Enterprises, Inc. Time Warner Cable Inc. |
James E. Rohr
|
MPC Director since: 2013 Age 69
| |||||||
Retired Chairman and CEO, The PNC Financial Services Group, Inc.
Mr. Rohr serves on the boards of |
service with the company, he retired as chief executive officer in April 2013 and as executive chairman of the board in April 2014. Mr. Rohr earned a Bachelor of Arts degree from the University of Notre Dame in 1970 and a masters degree in business administration from The Ohio State University in 1972.
As the former chairman and chief executive officer of a large diversified financial services company, Mr. Rohr has proven leadership abilities in managing a complex business. His understanding of financial markets and his strategic vision are of particular value to the Company. Mr. Rohr serves on other public company boards of directors across a diverse range of business and industry sectors. He is uniquely positioned to offer guidance on the risk management oversight function of the Board, as well as in areas such as capital allocation, the evaluation of the capital structure of the Company and shareholder |
relations. Mr. Rohr brings considerable financial acumen and leadership ability to his service on our Board and as the Chair of our Compensation Committee and our Lead Director-elect.
Other Current Public Company Directorships: Allegheny Technologies Incorporated EQT Corporation General Electric Company*
Recent Past Directorships: BlackRock, Inc. The PNC Financial Services Group, Inc.
* Mr. Rohr is currently serving his last term on this board and will not stand for reelection in 2018. |
Marathon Petroleum Corporation Proxy Statement / page 25
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 1 - ELECTION OF CLASS I DIRECTORS
Nominee for Class I Director Reclassification from Class II:
Abdulaziz F. Alkhayyal
|
MPC Director since: 2016 Age 64
| |||||||
Retired Senior Vice President, Industrial Relations, Saudi Aramco
Mr. Alkhayyal serves on the boards of directors of Halliburton Company, one of the worlds largest providers of products and services to the energy industry, Saudi Electricity Company and the International Youth Foundation. Mr. Alkhayyal joined Saudi Aramco, the Saudi Arabian national petroleum and natural gas company, in 1981, where he served in various company field operations. From 1993 to 1996, he served as a member of general management, and was then named vice president, Sales and Marketing in 1996, vice president Employee Relations and Training in 1997 and vice president, Corporate Planning in 1998. He was appointed senior vice president, International Operations in 2000, where he was responsible for the development of Saudi Aramcos downstream international business. Mr. Alkhayyal was named senior vice president, Refining, Marketing and International in 2001 and senior vice president Industrial Relations in 2007. |
He served in this position until his retirement from Saudi Aramco in 2014. Mr. Alkhayyal received a bachelors degree in mechanical engineering in 1977, and a masters degree in business administration in 1979, both from the University of California, Irvine. He attended the Advanced Management Program at the University of Pennsylvania in 1995.
Mr. Alkhayyal has exceptional oil and gas knowledge, including significant international business experience in the energy industry. He served as an executive with the worlds largest producer of crude oil, which has given him unique insight into global energy markets. In addition, Mr. Alkhayyals service on another public company board, where he is a member of the Health, Safety and Environment and the Nominating and Corporate Governance Committees, provides him with additional insight that informs his service on our Board.
|
Other Current Public Company Directorships: Halliburton Company
Recent Past Directorships: None |
page 26 / Marathon Petroleum Corporation Proxy Statement
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 1 - ELECTION OF CLASS I DIRECTORS
Continuing Class II Directors Current Terms Expiring in 2019:
Evan Bayh
|
MPC Director since: 2011 Age 62
| |||||||
Senior Advisor, Apollo Global Management; Partner, McGuireWoods LLP
Senator Bayh is a senior advisor with Apollo Global Management, a leading global alternative asset management firm, and a partner with McGuireWoods LLP, a global diversified law firm. He is also a member of the boards of directors of Berry Plastics Group, Inc., Fifth Third Bancorp and RLJ Lodging Trust. As a former U.S. senator and the governor of Indiana, Senator Bayh has held numerous leadership positions. He was elected as Indianas secretary of state in 1986 and as its governor in 1988. After two terms as governor, Mr. Bayh was elected to the U.S. Senate where he served for 12 years. Senator Bayhs committee assignments included Banking, Housing and Urban Affairs; Armed Services; Energy and Natural Resources; the Select Committee on Intelligence; Small Business and Entrepreneurship; and the Special Committee on Aging. During his time in office, he focused on job creation, national security, small business |
growth and many other critical domestic issues. Senator Bayh graduated with a bachelors degree in business economics from Indiana University in 1978 and a juris doctor degree from the University of Virginia in 1981.
Senator Bayh served as an elected official at the statewide or federal level for more than two decades, first as the governor of the state of Indiana and later as a U.S. senator. As Indianas governor, Senator Bayh led large organizations with thousands of employees and oversaw budgets in the billions of dollars. During his time in the U.S. Senate, he served on the Banking Committee and as chairman of the International Trade and Finance Subcommittee. He now leverages his professional expertise as an advisor in private equity markets. His service on other public company boards of directors also exposes him to various industries and management approaches. Senator Bayh brings to our |
Board a depth of public and private sector experience and offers a unique perspective on matters of government regulation, risk management, finance, corporate governance and leadership.
Other Current Public Company Directorships: Berry Plastics Group, Inc. Fifth Third Bancorp RLJ Lodging Trust
Recent Past Directorships: None |
Charles E. Bunch
|
MPC Director since: 2015 Age 68
| |||||||
Retired Chairman and CEO, PPG Industries, Inc.
Mr. Bunch serves on the boards of directors of ConocoPhillips, Mondelez International, Inc. and The PNC Financial Services Group, Inc. Mr. Bunch joined PPG Industries, a global supplier of paints, coatings and other materials, in 1979, and held various positions in finance and planning, marketing, and general management in the United States and Europe. He later served as senior vice president of strategic planning and corporate services and executive vice president, Coatings. He was named president, chief operating officer and a board member in 2002, and chairman and CEO in 2005. He retired as chief executive officer in 2015, and as chairman of the board in 2016. Mr. Bunch received a bachelors degree in international affairs from Georgetown University and a masters degree in business administration from the Harvard University Graduate School of Business Administration. |
As the former chairman and chief executive officer of a large, multinational company, and a member of the boards of directors of ConocoPhillips, PNC and Mondelez, Mr. Bunchs areas of expertise include an in-depth knowledge of the petroleum industry, the financial services industry, organizational and operational management, capital allocation and manufacturing. In addition, Mr. Bunch has a deep understanding of the U.S. economy and corporate finance. His current and former service on other boards of directors of public companies, including in the petroleum industry and the financial industry, have also provided him exposure to varying approaches to governance and leadership across several industry sectors. |
Other Current Public Company Directorships: ConocoPhillips Mondelez International, Inc. The PNC Financial Services Group, Inc.
Recent Past Directorships: H.J. Heinz Company PPG Industries, Inc. |
Marathon Petroleum Corporation Proxy Statement / page 27
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 1 - ELECTION OF CLASS I DIRECTORS
Frank M. Semple
|
MPC Director since: 2015 Age 66
| |||||||
Retired Chairman, President and CEO, MarkWest Energy Partners, L.P.
Mr. Semple serves on the board of directors of MPLX GP LLC, a wholly owned indirect subsidiary of MPC. He was appointed to our Board in fulfillment of our commitment under the merger agreement between MPLX and MarkWest to appoint one director to our Board effective at the close of the merger. Mr. Semple served as vice chairman of MPLX GP LLC from the time of the MPLX/MarkWest Merger in 2015, until his retirement in 2016. He joined MarkWest in 2003, as president and chief executive officer, and was elected chairman of the board in 2008. Prior to joining MarkWest, Mr. Semple completed a 22-year career with The Williams Companies, Inc. and WilTel Communications. He served as the chief operating officer of WilTel Communications, senior vice president/general manager of Williams Natural Gas Company, vice president of operations and engineering for Northwest Pipeline |
Company and division manager for Williams Pipe Line Company. Prior to his time with Williams, Mr. Semple served in the United States Navy. Mr. Semple earned a bachelors degree in mechanical engineering from the United States Naval Academy and has completed the Program for Management Development at Harvard Business School.
As the former chairman and chief executive officer of MarkWest, the master limited partnership acquired by MPLX, Mr. Semple has proven leadership abilities in managing a complex business and a deep understanding of the midstream sector. Mr. Semple has significant experience regarding operations, strategic planning, finance and corporate governance matters. |
Other Current Public Company Directorships: MPLX GP LLC
Recent Past Directorships: MarkWest Energy GP, L.L.C. |
Continuing Class III Directors Current Terms Expiring in 2020:
Steven A. Davis
|
MPC Director since: 2013 Age 59
| |||||||
Board Member; Former Chairman and CEO, Bob Evans Farms, Inc.
Mr. Davis serves on the boards of directors of Sonic Corporation, the largest chain of drive-in restaurants in America, Legacy Acquisition Corp., a business focused on the consumable goods and restaurant sector, and Albertsons Companies, Inc., the second largest retail grocery chain in the United States. Mr. Davis served as the chairman and chief executive officer of Bob Evans Farms, Inc., a foodservice and consumer products company, from May 2006 to December 2014. He previously served on the board of directors of Walgreens Boots Alliance, Inc., a global retail pharmacy and healthcare company from 2009 to 2015. Prior to joining Bob Evans Farms in 2006, Mr. Davis served in a variety of restaurant and consumer packaged goods leadership positions, including president of Long John Silvers and A&W All-American Food Restaurants. In addition, he held senior executive |
and operational positions at Yum! Brands Pizza Hut division and at Kraft General Foods. Mr. Davis holds a Bachelor of Science degree in business administration from the University of Wisconsin at Milwaukee and a masters degree in business administration from the University of Chicago.
As the former chairman and chief executive officer of a large foodservice and consumer products company, Mr. Davis has a wealth of experience in marketing products, managing a network of branded retail locations and dealing with the operational challenges presented by a customer service-oriented line of business. He also has expertise in mergers and acquisitions, management development, operations and sales and marketing. His current and former service on other boards of directors of public companies also informs his perspective. As a former |
chairman and corporate chief executive, Mr. Davis brings to our Board a relevant skill set developed through his direct responsibilities in overseeing the operations and financial performance of a large public company and his diverse board experience on multiple Fortune 250 companies.
Other Current Public Company Directorships: Sonic Corp. Legacy Acquisition Corp.
Recent Past Directorships: Bob Evans Farms, Inc. Walgreens Boots Alliance, Inc. |
page 28 / Marathon Petroleum Corporation Proxy Statement
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 1 - ELECTION OF CLASS I DIRECTORS
Gary R. Heminger
|
MPC Director since: 2011 Age 64
| |||||||
Chairman and CEO, Marathon Petroleum Corporation
Mr. Heminger is chairman of the board and chief executive officer of Marathon Petroleum Corporation. He has served as chairman of the board since April 2016 and as chief executive officer since 2011. Mr. Heminger also served as president from 2011 to 2017. He is also chairman of the board and chief executive officer of MPLX GP LLC, a wholly owned indirect subsidiary of MPC, and a member of the boards of directors of Fifth Third Bancorp and PPG Industries, Inc. Mr. Heminger serves on the boards of directors and executive committees of the American Petroleum Institute (API) and the American Fuel and Petrochemicals Manufacturers (AFPM) and on the board of directors of JobsOhio. He is also a member of the Oxford Institute for Energy Studies. He is past chairman of the board of trustees of Tiffin University. Mr. Heminger joined Marathon in 1975. Early in his career, he served in various finance and administration roles, as well as in Auditing and Marketing. From 1995 to 1996, he served as president of Marathon Pipe Line Company. |
He assumed the position of manager, Business Development and Joint Interest of Marathon Oil Company in November 1996. Mr. Heminger was named vice president of Business Development for Marathon Ashland Petroleum LLC upon its formation in 1998, and senior vice president, Business Development in 1999. In January 2001, he was named executive vice president, Supply, Transportation and Marketing. Mr. Heminger was appointed president of Marathon Petroleum Company LLC, a wholly owned subsidiary of Marathon, in September 2001. In addition, he was named executive vice president Downstream of Marathon Oil Corporation in September 2001. Mr. Heminger earned a bachelors degree in accounting from Tiffin University in 1976. He earned a masters degree in business administration from the University of Dayton in 1982. He is a graduate of the Wharton School Advanced Management Program at the University of Pennsylvania.
Mr. Heminger has extensive knowledge of all aspects of our business. As our chief executive officer, he leverages that |
expertise in advising on the strategic direction of the Company and apprising our Board on issues of significance to both our Company and our industry. Through his many years of service with the Company in numerous leadership roles, he is also specifically qualified to speak to the Companys history and culture, which is useful to the Boards understanding for long-term planning and opportunities for growth. Mr. Heminger also serves on two outside public company boards of directors, which affords him a fresh perspective on management and governance. Mr. Heminger brings to our Board energy industry expertise, a great breadth of transactional experience and an intimate knowledge of our Company.
Other Current Public Company Directorships: Fifth Third Bancorp PPG Industries, Inc. MPLX GP LLC
Recent Past Directorships: None |
J. Michael Stice
|
MPC Director since: 2017 Age 58
| |||||||
Dean of the Mewbourne College of Earth & Energy, The University of Oklahoma
Mr. Stice has served as the Dean of the Mewbourne College of Earth & Energy at The University of Oklahoma since August 2015. He also serves on the board of directors of U.S. Silica Holdings, Inc., a leading silica sand supplier. Mr. Stice retired as the chief executive officer of Access Midstream Partners L.P., a gathering and processing master limited partnership, in 2014 and from its board of directors in 2015. He had served as Access Midstreams and Chesapeake Midstream Partners, L.P.s chief executive officer since 2009, and as president and chief operating officer of Chesapeake Midstream Development, L.P., a wholly owned subsidiary of Chesapeake Energy Corporation, and as senior vice president of natural gas projects of Chesapeake Energy Corporation since 2008. Mr. Stice began his career in 1981 with Conoco, working in a variety of positions of |
increasing responsibility. He was named president of ConocoPhillips Qatar in 2003. Mr. Stice holds a bachelors degree in chemical engineering from the University of Oklahoma, a masters degree in business from Stanford University and a doctorate in education from George Washington University.
Mr. Stice has extensive experience with MLPs, including as the chief executive officer of one of the largest publicly traded gathering and processing MLPs, and previously served on the board of directors of MarkWest, which was acquired by MPLX in 2015. He has 35 years of experience in the upstream and midstream gas businesses. Additionally, Mr. Stice has served on other public company boards of directors. |
Other Current Public Company Directorships: U.S. Silica Holdings, Inc.
Recent Past Directorships: Access Midstream Partners GP, L.L.C. MarkWest Energy GP L.L.C. SandRidge Energy, Inc. Williams Partners GP LLC |
Marathon Petroleum Corporation Proxy Statement / page 29
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 1 - ELECTION OF CLASS I DIRECTORS
John P. Surma
|
MPC Director since: 2011 Age 63
| |||||||
Retired Chairman and CEO, United States Steel Corporation
Mr. Surma is a member of the boards of directors of MPLX GP LLC, a wholly owned indirect subsidiary of MPC, Ingersoll-Rand plc and Concho Resources Inc. He is on the boards of directors of the National Safety Council and the University of Pittsburgh Medical Center. He formerly served as the chair of the board of directors of the Federal Reserve Bank of Cleveland. At the appointment of President Barack Obama, Mr. Surma served on the Presidents Advisory Committee for Trade Policy and Negotiations from September 2010 to September 2014, and was its vice chairman. Mr. Surma retired as the chief executive officer of United States Steel Corporation, an integrated steel producer, in September 2013, and as executive chairman in December 2013. Prior to joining United States Steel, Mr. Surma served in several executive positions with Marathon Oil Corporation. He was named senior vice president, Finance & Accounting |
of Marathon Oil Company in 1997, president, Speedway SuperAmerica LLC in 1998, senior vice president, Supply & Transportation of Marathon Ashland Petroleum LLC in 2000 and president of Marathon Ashland Petroleum LLC in 2001. Prior to joining Marathon, Mr. Surma worked for Price Waterhouse LLP where he was admitted to the partnership in 1987. In 1983, Mr. Surma participated in the Presidents Executive Exchange Program in Washington, D.C., where he served as executive staff assistant to the vice chairman of the Federal Reserve Board. Mr. Surma earned a Bachelor of Science degree in accounting from Pennsylvania State University in 1976.
As the retired chairman and chief executive officer of a large industrial firm, Mr. Surma has direct insight into many of the same opportunities, risks and challenges faced by our Company. His public accounting background also equips him with an understanding of public company financial reporting requirements that is useful in |
carrying out his oversight function as a member of our Board, as Chair of our Audit Committee and as one of our named audit committee financial experts. His current and former service on other public company boards of directors, including in the energy sector, affords him a perspective that is particularly valuable and informs his service as Chair of our Corporate Governance and Nominating Committee. Mr. Surma brings to our Board his significant experience in public accounting and in executive leadership in the energy and steel industries.
Other Current Public Company Directorships: Concho Resources Inc. Ingersoll-Rand plc MPLX GP LLC
Recent Past Directorships: United States Steel Corporation |
Retiring Director:
David A. Daberko, Lead Director and a member of our Audit Committee, will retire from the Board effective April 25, 2018. Mr. Daberko has served as a director of our Board since Marathon Petroleums inception as an independent company in 2011. Mr. Daberko was appointed to the board of directors of Marathon Oil in 2002, and served in that capacity until our Spinoff. We are grateful for his leadership and vision and thank him for his distinguished service.
David A. Daberko
|
Lead Director, Marathon Petroleum Corporation Age 72 | |||
Mr. Daberko serves as the Lead Director of Marathon Petroleum Corporation and on the boards of directors of MPLX GP LLC, a wholly owned indirect subsidiary of MPC, and RPM International Inc. Mr. Daberko joined National City Bank in 1968, and went on to hold a number of management positions with National City. In 1987, Mr. Daberko was elected deputy chairman of National City Corporation, a financial services corporation, which is now a part of The PNC Financial Services Group, Inc., and president of National City Bank in Cleveland. He served as president and chief operating officer of National City Corporation from 1993 until 1995, when he was named chairman of the board and chief executive officer. He retired as chief executive officer in June 2007 and as chairman of the board in December 2007.
Mr. Daberko holds a bachelors degree from Denison University and a masters degree in business administration from Case Western Reserve University.
With nearly 40 years of experience in the banking industry, including 12 years as the chairman and chief executive officer of a large financial services corporation, Mr. Daberko has extensive knowledge of the financial services and investment banking sectors. He draws upon the depth of his expertise in accounting and financial management processes in his role on our Audit Committee and in serving as one of our named audit committee financial experts. He also has considerable experience from his service as a member of other public company boards of directors, including within the energy industry. Mr. Daberko brings to his role as our Lead Director his knowledge of public company financial reporting requirements and an understanding of the energy business.
Other public company directorships during the past five years: MPLX GP LLC; RPM International; Williams Partners GP LLC. |
page 30 / Marathon Petroleum Corporation Proxy Statement
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE COMPANYS NAMED EXECUTIVE OFFICERS
Proposal No. 3 Approval, on an Advisory Basis, of the Compensation of the Companys Named Executive Officers
Our Board of Directors recommends you vote FOR Proposal No. 3.
|
page 32 / Marathon Petroleum Corporation Proxy Statement
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 4 RECOMMENDATION, ON AN ADVISORY BASIS, OF THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
Proposal No. 4 Recommendation, on an Advisory Basis, of the Frequency of an Advisory Vote on Executive Compensation
Our Board of Directors recommends you vote for the option of EVERY YEAR (1 Year) as the frequency with which shareholders are asked to provide approval, on an advisory basis, of the compensation of the Companys named executive officers.
|
Marathon Petroleum Corporation Proxy Statement / page 33
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 5 AND PROPOSAL NO. 6 APPROVAL OF AMENDMENTS TO OUR RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY VOTING REQUIREMENTS
Proposal No. 5 and Proposal No. 6 Approval of Amendments to our Restated Certificate of Incorporation to Eliminate the Supermajority Voting Requirements
page 34 / Marathon Petroleum Corporation Proxy Statement
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 5 APPROVAL OF AMENDMENTS TO OUR CERTIFICATE TO ELIMINATE THE SUPERMAJORITY VOTING REQUIREMENT APPLICABLE TO BYLAW AMENDMENTS
Proposal No. 5 Approval of Amendments to our Certificate to Eliminate the Supermajority Voting Requirement applicable to Bylaw Amendments
Our Board of Directors recommends you vote FOR Proposal No. 5.
|
Marathon Petroleum Corporation Proxy Statement / page 35
|
PROPOSAL OF THE BOARD / PROPOSAL NO. 6 APPROVAL OF AMENDMENTS TO OUR CERTIFICATE TO ELIMINATE THE SUPERMAJORITY VOTING REQUIREMENTS APPLICABLE TO CERTIFICATE AMENDMENTS AND THE REMOVAL OF DIRECTORS
Proposal No. 6 Approval of Amendments to our Certificate to Eliminate the Supermajority Voting Requirements applicable to Certificate Amendments and the Removal of Directors
Our Board of Directors recommends you vote FOR Proposal No. 6.
|
page 36 / Marathon Petroleum Corporation Proxy Statement
|
PROPOSAL OF SHAREHOLDER / PROPOSAL NO. 7 SHAREHOLDER PROPOSAL SEEKING ADOPTION OF AN ALTERNATIVE SHAREHOLDER RIGHT TO CALL A SPECIAL MEETING PROVISION
Proposal No. 7 Shareholder Proposal Seeking Adoption of an Alternative Shareholder Right to Call a Special Meeting Provision
Marathon Petroleum Corporation Proxy Statement / page 37
|
PROPOSAL OF SHAREHOLDER / PROPOSAL NO. 7 - SHAREHOLDER PROPOSAL SEEKING ADOPTION OF AN ALTERNATIVE SHAREHOLDER RIGHT TO CALL A SPECIAL MEETING PROVISION
|
OUR BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST THIS SHAREHOLDER PROPOSAL SEEKING ADOPTION OF AN ALTERNATIVE SHAREHOLDER RIGHT TO CALL A SPECIAL MEETING PROVISION. MPC SHAREHOLDERS HAVE THE RIGHT TO CALL SPECIAL MEETINGS.
|
For the reasons stated above, our Board of Directors recommends you vote AGAINST Proposal No. 7.
|
page 38 / Marathon Petroleum Corporation Proxy Statement
|
The Audit Committee has reviewed and discussed Marathon Petroleums audited financial statements and its report on internal control over financial reporting for 2017 with Marathon Petroleums management. The Audit Committee discussed with the independent auditors, PricewaterhouseCoopers LLP, the matters required to be discussed by the Public Company Accounting Oversight Boards standard, Auditing Standard No. 1301. The Committee has received the written disclosures and the letter from PricewaterhouseCoopers LLP required by the applicable requirements of the Public Company Accounting Oversight Board for independent auditor communications with audit committees concerning independence and has discussed with PricewaterhouseCoopers LLP its independence. Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements and the report on internal control over financial reporting for Marathon Petroleum be included in the Companys Annual Report on Form 10-K for the year ended December 31, 2017, for filing with the SEC.
Audit Committee
John P. Surma, Chair
Abdulaziz F. Alkhayyal
Evan Bayh
David A. Daberko
Donna A. James
James E. Rohr
J. Michael Stice
Independent Registered Public Accounting Firms
Fees, Services and Independence
Marathon Petroleum Corporation Proxy Statement / page 39
|
page 40 / Marathon Petroleum Corporation Proxy Statement
|
Security Ownership of Directors and Executive Officers
The following table sets forth the number of shares of MPC common stock beneficially owned as of January 31, 2018, except as otherwise noted, by each director, by each named executive officer and by all directors and executive officers as a group. The address for each person named below is c/o Marathon Petroleum Corporation, 539 South Main Street, Findlay, Ohio 45840.
Name of Beneficial Owner Directors / Named Executive Officers |
Amount and Nature of Beneficial Ownership(1) |
Percent of Total Outstanding | ||||||
Gary R. Heminger
|
|
2,859,765
|
|
(2)(4)(5)(7)(8)(9)
|
*
| |||
Abdulaziz F. Alkhayyal
|
|
3,674
|
|
(3)
|
*
| |||
Evan Bayh
|
|
41,678
|
|
(2)(3)
|
*
| |||
Charles E. Bunch
|
|
11,353
|
|
(2)(3)
|
*
| |||
David A. Daberko
|
|
151,356
|
|
(2)(3)
|
*
| |||
Steven A. Davis
|
|
23,324
|
|
(3)(7)
|
*
| |||
Timothy T. Griffith
|
|
221,662
|
|
(2)(4)(8)(9)
|
*
| |||
Donna A. James
|
|
31,128
|
|
(2)(3)
|
*
| |||
Anthony R. Kenney
|
|
450,409
|
|
(2)(4)(5)(8)(9)
|
*
| |||
C. Michael Palmer
|
|
306,284
|
|
(2)(4)(5)(6)(8)(9)
|
*
| |||
James E. Rohr
|
|
29,824
|
|
(3)(7)
|
*
| |||
Frank M. Semple
|
|
3,646
|
|
(3)
|
*
| |||
J. Michael Stice
|
|
2,727
|
|
(3)
|
*
| |||
John P. Surma
|
|
40,578
|
|
(3)(7)
|
*
| |||
Donald C. Templin
|
|
528,677
|
|
(2)(4)(8)(9)
|
*
| |||
All Directors and Executive Officers as a group
|
|
5,213,620
|
|
(2)(3)(4)(5)(6)(7)(8)(9)
|
1.09%
|
(1) | None of the shares of common stock reported in this column are pledged as security. |
(2) | Includes shares of common stock directly or indirectly held in registered or beneficial form. |
(3) | Includes restricted stock unit awards granted pursuant to the Second Amended and Restated Marathon Petroleum Corporation 2011 Incentive Compensation Plan and/or the Amended and Restated Marathon Petroleum Corporation 2012 Incentive Compensation Plan, and credited within a deferred account pursuant to the Marathon Petroleum Corporation Deferred Compensation Plan for Non-Employee Directors. The aggregate number of restricted stock unit awards credited as of January 31, 2018, for each of the non-employee directors is as follows: Mr. Alkhayyal, 3,674; Mr. Bayh, 30,578; Mr. Bunch, 7,353; Mr. Daberko, 147,356; Mr. Davis, 14,824; Ms. James, 30,578; Mr. Rohr, 14,824; Mr. Semple, 3,646; Mr. Stice, 2,727; and Mr. Surma, 30,578. |
(4) | Includes shares of restricted stock issued pursuant to the Amended and Restated Marathon Petroleum Corporation 2012 Incentive Compensation Plan, which are subject to limits on sale and transfer, and may be forfeited under certain conditions. |
(5) | Includes shares of common stock held within the Marathon Petroleum Thrift Plan. |
(6) | Includes shares of common stock held within the Marathon Petroleum Corporation Dividend Reinvestment and Direct Stock Purchase Plan. |
(7) | Includes shares of common stock indirectly beneficially owned in trust. The number of shares held in trust as of January 31, 2018, by each applicable director or named executive officer is as follows: Mr. Heminger, 21,228; Mr. Davis, 8,500; Mr. Rohr, 15,000; and Mr. Surma, 10,000. |
(8) | Includes stock options exercisable within 60 days of January 31, 2018. |
(9) | Includes shares of common stock issued in settlement of performance units within 60 days of January 31, 2018. |
* | The percentage of shares beneficially owned by each director or each executive officer does not exceed 1% of the common shares outstanding, and the percentage of shares beneficially owned by all directors and executive officers of the Company as a group is 1.09% of the common shares outstanding. |
Marathon Petroleum Corporation Proxy Statement / page 41
|
Security Ownership of Directors and Executive Officers
The following table sets forth the number of MPLX common units beneficially owned as of January 31, 2018, except as otherwise noted, by each director, by each named executive officer and by all directors and executive officers as a group. The address for each person named below is c/o Marathon Petroleum Corporation, 539 South Main Street, Findlay, Ohio 45840.
Name of Beneficial Owner Directors / Named Executive Officers |
Amount and Nature of Beneficial Ownership(1) |
Percent of Total Outstanding | ||||||
Gary R. Heminger
|
|
206,186
|
|
(2)(5)(6)(7)
|
*
| |||
Abdulaziz F. Alkhayyal
|
|
639
|
|
(3)
|
*
| |||
Evan Bayh
|
|
26,210
|
|
(2)(3)
|
*
| |||
Charles E. Bunch
|
|
3,609
|
|
(2)(3)
|
*
| |||
David A. Daberko
|
|
23,433
|
|
(2)(3)(4)
|
*
| |||
Steven A. Davis
|
|
34,405
|
|
(3)(6)
|
*
| |||
Timothy T. Griffith
|
|
23,752
|
|
(2)(5)(7)
|
*
| |||
Donna A. James
|
|
5,960
|
|
(2)(3)
|
*
| |||
Anthony R. Kenney
|
|
9,939
|
|
(2)(5)(7)
|
*
| |||
C. Michael Palmer
|
|
27,939
|
|
(2)(5)(7)
|
*
| |||
James E. Rohr
|
|
7,101
|
|
(3)(6)
|
*
| |||
Frank M. Semple
|
|
580,495
|
|
(2)(3)(4)(6)
|
*
| |||
J. Michael Stice
|
|
2,005
|
|
(3)(6)
|
*
| |||
John P. Surma
|
|
20,933
|
|
(2)(3)(4)
|
*
| |||
Donald C. Templin
|
|
84,154
|
|
(2)(5)(7)
|
*
| |||
All Directors and Executive Officers as a group
|
|
1,091,432
|
|
(2)(3)(4)(5)(6)(7)
|
*
|
(1) | None of the common units reported in this column are pledged as security. |
(2) | Includes common units directly or indirectly held in beneficial form. |
(3) | Includes phantom unit awards granted pursuant to the MPLX LP 2012 Incentive Compensation Plan and credited within a deferred account pursuant to the Marathon Petroleum Corporation Deferred Compensation Plan for Non-Employee Directors. The aggregate number of phantom unit awards credited as of January 31, 2018, for the non-employee directors is as follows: Ms. James and Messrs. Bayh, Daberko and Surma, 2,210 each; Messrs. Davis and Rohr, 1,905 each; Mr. Alkhayyal, 639; Mr. Bunch, 1,179; Mr. Semple, 624; and Mr. Stice 477. |
(4) | Includes phantom unit awards granted pursuant to the MPLX LP 2012 Incentive Compensation Plan and credited within a deferred account pursuant to the MPLX GP LLC Amended and Restated Non-Management Director Compensation Policy and Director Equity Award Terms. The aggregate number of phantom unit awards credited as of January 31, 2018, for each of Messrs. Daberko and Surma is 11,223; and Mr. Semple, 3,577. |
(5) | Includes phantom unit awards granted pursuant to the MPLX LP 2012 Incentive Compensation Plan, which may be forfeited under certain conditions. |
(6) | Includes common units indirectly beneficially owned in trust. The number of common units held in trust as of January 31, 2018, by each applicable director or named executive officer is as follows: Mr. Heminger, 35,750; Mr. Davis, 32,500; Mr. Rohr, 5,196; Mr. Semple, 527,517; and Mr. Stice, 1,528. |
(7) | Includes common units issued in settlement of performance units within 60 days of January 31, 2018. |
* | The percentage of common units beneficially owned by each director or each executive officer does not exceed 1% of MPLX common units outstanding, and the percentage of common units beneficially owned by all directors and executive officers of the Company as a group does not exceed 1% of the MPLX common units outstanding. |
page 42 / Marathon Petroleum Corporation Proxy Statement
|
The Compensation Committee has reviewed and discussed Marathon Petroleums Compensation Discussion and Analysis for 2017 with Marathon Petroleums management. Based on its review and discussions, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis report be included in this Proxy Statement and incorporated by reference into the Annual Report on Form 10-K for the year ended December 31, 2017.
Compensation Committee
James E. Rohr, Chair
Abdulaziz F. Alkhayyal
Charles E. Bunch
Steven A. Davis
Donna A. James
Compensation Discussion and Analysis
In this section, we describe the material elements of our executive compensation program for our named executive officers (or NEOs). We also provide an overview of our compensation philosophy and objectives and explain how and why the Compensation Committee made its 2017 compensation decisions for our NEOs. We recommend that this section be read in conjunction with the tabular and narrative disclosures in the Executive Compensation section of this Proxy Statement.
Named Executive Officers
Our NEOs for 2017 consist of our principal executive officer, our principal financial officer and the three most highly compensated executive officers, all of whom held a position as an executive officer as of December 31, 2017:
Name
|
Title (as of December 31, 2017)
| |
Gary R. Heminger | Chairman and Chief Executive Officer | |
Timothy T. Griffith | Senior Vice President and Chief Financial Officer | |
Donald C. Templin | President, Marathon Petroleum Corporation | |
Anthony R. Kenney | President, Speedway LLC | |
C. Michael Palmer | Senior Vice President, Supply, Distribution and Planning |
Changes Affecting our Named Executive Officers in 2017
| Donald C. Templin became the President of Marathon Petroleum Corporation on July 1, 2017, having previously served as Executive Vice President and President, MPLX. |
| Gary R. Hemingers title reflects the appointment of Mr. Templin to the role of President. Mr. Heminger continues to serve as Chairman and Chief Executive Officer. |
Marathon Petroleum Corporation Proxy Statement / page 43
|
Executive Summary
Our Business
We are the second-largest independent petroleum products refining, marketing, retail and transportation business in the United States. Our operations consist of three business segments:
| Refining and Marketing refines crude oil and other feedstocks at our six refineries in the Gulf Coast and Midwest regions of the United States, purchases refined products and ethanol for resale, and distributes refined products through various means, including pipeline and marine transportation, terminals and storage services provided by our Midstream segment. We sell refined products to wholesale marketing customers domestically and internationally, buyers on the spot market, our Speedway® business segment and to independent entrepreneurs who operate Marathon® retail outlets. |
| Speedway sells transportation fuels and convenience products in the retail market in the Midwest, East Coast and Southeast regions of the United States. |
| Midstream gathers, processes and transports natural gas; gathers, transports, fractionates, stores and markets NGLs; and transports and stores crude oil and refined products principally for the Refining and Marketing segment via pipelines, terminals, towboats and barges. The Midstream segment primarily reflects the results of MPLX, our sponsored master limited partnership. |
2017 Financial and Operational Highlights
| Our net income attributable to MPC increased to $3.43 billion, or $6.70 per diluted share, in 2017 from $1.17 billion, or $2.21 per diluted share, in 2016. Earnings in 2017 included a tax benefit of approximately $1.5 billion (or $2.93 per diluted share) related to tax reform legislation enacted in the fourth quarter of 2017. |
| We increased our quarterly dividend by 11 percent to $0.40 per share from $0.36 per share in 2017, and again increased the dividend by 15 percent to $0.46 per share in the first quarter of this year, representing a 26.5 percent compound annual growth rate from the dividend established when we became an independent company on June 30, 2011. |
| We continued to focus on returning capital to shareholders by returning $3.1 billion through dividends and share repurchases in 2017. |
| We have now completed strategic initiatives announced by MPC and MPLX in early 2017, including the execution of accelerated dropdowns to MPLX, and the exchange of MPCs economic general partner interests in MPLX, including its incentive distribution rights (or IDRs), for a non-economic general partner interest and MPLX common units. |
| MPC Total Shareholder Return (or TSR) for 2017 was 34.6 percent compared with median TSR of 26.7 percent for its performance unit peer group. |
| MPLX Total Unitholder Return (or TUR) for 2017 was 17.5 percent compared with median TUR of 0.4 percent for its performance unit peer group. |
| Our Refining and Marketing businesss earnings increased by $1 billion compared with 2016. Refining and Marketing operated exceptionally well capturing strong crack spreads and wider crude differentials; and achieving multiple refining process unit rate records, including monthly records for crude throughput, and gasoline and distillate production. |
| Speedway achieved record performance building on several years of segment earnings growth. These results were driven by strong earnings from light product sales, an increase of 1.2 percent in same-store merchandise sales, lower operating costs and contributions from its travel center joint venture. |
| MPLX reported record financial results on record volume growth across the gathering and processing business. MPLX delivered on its 12.1 percent distribution growth guidance for 2017 distributions and has increased its quarterly cash distribution for 20 consecutive quarters, representing an 18.3 percent compound annual growth rate over the minimum quarterly distribution established at its formation in late 2012. |
After reviewing these highlights, the performance metrics outlined in the Annual Cash Bonus Program section of this Proxy Statement and MPCs relative TSR performance, the Compensation Committee approved 2017 cash bonuses for our NEOs eligible to receive such awards averaging 187.5 percent of target and a performance unit grant payout at 121.42 percent of target.
page 44 / Marathon Petroleum Corporation Proxy Statement
|
Shareholder-Friendly Features of Our Executive Compensation Program
Our executive compensation program contains the following shareholder-friendly features that we believe align with contemporary governance practices, promote alignment with our pay-for-performance philosophy and mitigate risk to our shareholders.
Say-on-Pay Vote Result and Engagement
The Compensation Committee has carefully considered the results of the 2017 annual shareholder advisory vote on our NEO compensation program (or Say-on-Pay), when approximately 93 percent of votes cast were in support of the program. The Compensation Committee interpreted this strong level of support as affirming the design and objectives of our NEO compensation program.
While the Compensation Committee is pleased with the results of the 2017 Say-on-Pay, we continue to maintain a regular dialogue with a wide variety of investors on numerous topics, including our NEO compensation program. In an effort to be responsive to shareholder feedback, and in light of more recent peer data indicating the proportion of performance units awarded by our peers to their NEOs is near or approximately 50 percent of the total LTI value awarded, in early 2018, our Compensation Committee decided to alter the mix of long-term compensation awarded to our NEOs. For LTI awarded in 2018, the Compensation Committee increased the proportion of performance units to 50 percent from 40 percent and decreased the proportion of stock options to 30 percent from 40 percent. In addition, the Compensation Committee and a committee of the MPLX GP LLC Board of Directors (or the MPLX Board), which includes the Chairman and the non-management directors of the MPLX Board (or the MPLX Committee) each increased the minimum TSR/TUR percentile for a payout on performance units awarded in 2018 to the 30th percentile from the 25th percentile. The Compensation Committee believes these changes align with its intent to compensate NEOs in a manner that is both market competitive and intended to enhance shareholder value. The Compensation Committee reaffirmed the other elements of our NEO compensation program, which have been designed with the same intent.
Since 2012, we have sought a shareholder advisory vote on NEO compensation on an annual basis. Our shareholders have the opportunity to vote at the Annual Meeting with respect to their preference regarding the frequency of Say-on-Pay votes. See Proposal No. 4 on Page 33 of this Proxy Statement.
Marathon Petroleum Corporation Proxy Statement / page 45
|
Significant 2017 Compensation Committee Actions
The Compensation Committee took the following significant actions in 2017:
Action
|
Reason for Action
| |
Added a new financial metric to the annual cash bonus (or ACB) program -Distributable Cash Flow (DCF) at MPLX
|
To maintain focus on growing DCF at MPLX | |
Added a new financial metric to the ACB program Asset Dropdown Readiness and Execution
|
To maintain focus on executing dropdown of MPC assets and services to MPLX
| |
Removed the metric focused on MPLX/MarkWest Commercial Synergies |
Expected synergies were identified and revenue enhancements or cost savings were realized in 2016
|
The Compensation Committee believes these changes were appropriate because they are consistent with:
| our business objectives; |
| the realities of our competitive situation; |
| the inherent uncertainties of our commodity-based business; and |
| the compensation programs of our peer group companies. |
Independent Consultant to the Compensation Committee
In order to help ensure objectivity in reviewing and analyzing market data and trends, the Compensation Committee uses Pay Governance LLC (or the Advisor) as its independent compensation consultant. The Advisor attended four Compensation Committee meetings in 2017 and provided independent analysis and advice on our executive compensation programs and the regulatory environment surrounding executive compensation.
The Advisor also maintains a set of internal policies that prohibit any of its consultants that advise the Compensation Committee from, among other things, owning shares of our common stock or engaging in personal or business relationships with our directors, NEOs or any other executive officers without prior disclosure to the Compensation Committee. Based on the above-mentioned procedures and policies, the Compensation Committee is confident the advice it receives from the Advisor is objective and not influenced by the Advisors working relationship with MPC or the Compensation Committee.
Furthermore, the Compensation Committee has assessed the independence of the Advisor as required by the rules of the NYSE and has determined that the Advisor satisfies the independence requirements of the NYSE.
Our management does not direct or oversee the activities of the Advisor. However, the Advisor does seek and receive information and input from our management on various executive compensation matters and works with management to formalize proposals for presentation to the Compensation Committee. Additionally, in determining executive compensation, the Compensation Committee considers recommendations from the Advisor as well as management. The Advisor did not perform any consulting services for us during 2017 that were not related to executive or director compensation, nor did the Advisor provide any services to our NEOs or other executive officers, individually, in 2017. The Compensation Committee has considered and assessed all relevant factors, including those required by the SEC that could give rise to a potential conflict of interest with respect to the Advisor in 2017. Based on this review, the Compensation Committee did not identify any conflicts of interest with respect to the work performed by the Advisor.
Executive Compensation Philosophy and Objectives
We believe our executive compensation program plays a critical role in maximizing long-term shareholder value. It supports our ability to attract, motivate, retain and reward the highest quality executives who we believe will create value for our shareholders by executing our business priorities, including strong operational performance and responsible corporate leadership.
After evaluating our year-to-date financial, operational and employee performance, considering shareholder feedback and comparing the compensation of our NEOs to that of executives of companies within our peer group, the Compensation
page 46 / Marathon Petroleum Corporation Proxy Statement
|
Committee decided to continue our existing compensation philosophy. Our existing philosophy generally targets the Total Direct Compensation (defined as base salary + target bonus + intended value of annual LTI awards) for our NEOs at the median (50th percentile) of the compensation for similar executives of companies in our peer group. In support of this philosophy, the decisions of the Compensation Committee are designed to:
| provide fair and competitive levels of compensation, after taking into account individual roles and responsibilities, while allowing for the discretion to place each NEO within the competitive range of each pay element; |
| align compensation programs with the performance of MPC, MPLX and the individual; |
| foster an ownership culture that aligns the interests of our NEOs with those of shareholders; |
| consider the cyclical commodity influences of the business; and |
| discourage excessive risk-taking and appropriately align risk with reward. |
Our executive compensation program allows the Compensation Committee to use both cash (base salary and annual cash bonus opportunities) and equity (performance units, stock options, restricted stock and phantom units) to encourage and motivate our NEOs to achieve both our short-term and long-term business objectives.
Marathon Petroleum Corporation Proxy Statement / page 47
|
Key Elements of 2017 Named Executive Officer Compensation
Our executive compensation program is comprised of the following three key elements. Each is designed to be market-competitive and help meet the objectives of our executive compensation program as established by the Compensation Committee:
What We Pay Our NEOs
|
Key Characteristics
|
Why We Pay Our NEOs This Way
| ||
Base Salary |
Fixed cash compensation component
Reviewed at least annually and adjusted as appropriate
Based on the scope and responsibility level of the position held, individual performance and experience, as well as peer group market data
|
To provide a competitive level of cash compensation upon which our NEOs may rely
To attract and retain executive talent
| ||
ACB Program |
Variable cash compensation component
Performance-based award opportunity
Determined based on both corporate and applicable operating organizations performance against pre-determined metrics, as well as the assessment of individual performance by our Chairman and CEO and the Compensation Committee
|
To motivate and reward our NEOs for achieving our annual business objectives that drive overall performance and shareholder value creation
To support our culture of aligning pay with company and executive performance
To encourage and reward responsible risk-taking and accountability
| ||
LTI Awards |
Variable equity-based compensation component
Performance-based awards in the form of annual grants
A combination of performance units, stock options*, time-based restricted stock and phantom unit awards
Stock option value realized solely on MPC common stock price appreciation
MPC performance units exceed target value only with above-median relative TSR ranking among our peers
MPLX performance units exceed target value only with above-median relative TUR ranking among our peers and DCF performance above targeted growth
Restricted stock / phantom unit value dependent on MPC common stock / MPLX common unit performance |
To motivate our executives to achieve our long-term business objectives by linking their compensation directly to the performance of MPC common stock / MPLX common units over the long term
To strengthen the alignment between the interests of our NEOs, and our shareholders / unitholders by promoting MPC common stock / MPLX common unit appreciation while building equity to help meet ownership guidelines
To encourage retention of executives |
* | The Compensation Committee believes our stock options are inherently performance-based as they have no initial value and grantees only realize value if the price of our common stock increases for all shareholders following the date of grant. |
In addition to these compensation elements, our employees, including our NEOs, are generally eligible to participate in our market-competitive health and life insurance plans, long-term and short-term disability programs, as well as retirement and severance programs. We also provide limited perquisites to our NEOs that are consistent with our business strategy and/or market-based trends. None of these additional programs are considered material by the Compensation Committee when making compensation decisions. For a detailed discussion of MPC-sponsored retirement plans and benefits, including the 2017 Pension Benefits Table, see the Post-Employment Benefits for 2017 section of this Proxy Statement.
page 48 / Marathon Petroleum Corporation Proxy Statement
|
Summary of 2017 Compensation Awarded
The table below summarizes our NEOs total direct compensation for 2017, which was approved by the Compensation Committee as part of our 2017 executive compensation program. This table is complementary to the Summary Compensation Table as it excludes the Change in Pension Value and Nonqualified Deferred Compensation Earnings and All Other Compensation columns and provides the intended value for LTI compensation on the date of grant rather than the accounting value required to be reported in the Summary Compensation Table. Please refer to the Summary Compensation Table within the Executive Compensation section of this Proxy Statement for more detail regarding our NEOs reportable compensation in 2017.
Name
|
2017 Year-End Base Salary ($)
|
Target Bonus
|
Actual 2017 Bonus Payment (Paid in 2018) ($)
|
Intended Value of MPC LTI Awards ($)
|
Intended Value of MPLX LTI Awards* ($)
|
Total Direct Compensation ($)
|
||||||||||||
G. R. Heminger |
1,650,000 | 2,640,000 | 5,000,000 | 9,600,000 | 2,400,000 | 18,650,000 | ||||||||||||
T. T. Griffith |
700,000 | 560,000 | 1,100,000 | 2,000,000 | 500,000 | 4,300,000 | ||||||||||||
D. C. Templin |
900,000 | 900,000 | 1,700,000 | 600,000 | 2,400,000 | 5,600,000 | ||||||||||||
A. R. Kenney |
725,000 | 616,250 | 1,100,000 | 1,980,000 | 220,000 | 4,025,000 | ||||||||||||
C. M. Palmer |
650,000 | 487,500 | 900,000 | 1,445,000 | 255,000 | 3,250,000 |
* | In 2017, our NEOs were also awarded MPLX LTI by the MPLX Committee. These awards were granted for services provided to MPLX and are included in this table to reflect the Total Direct Compensation our NEOs received in 2017 for their employment with MPC. |
The Compensation Committee has noted that Mr. Heminger currently has, excluding changes in pension values, a pay package of 4.31 times the average of our other NEOs. This difference is primarily a function of Mr. Hemingers 43-year tenure at MPC compared with an average of 24 years for our other NEOs. Mr. Heminger has also been a senior executive at MPC and its predecessors for more than 19 years.
The majority of our NEO compensation is performance-based, at-risk pay in the form of both short-term and long-term incentives. Based on data from peer group disclosures in 2017 and input from the Advisor, we believe our mix of pay elements is competitive with current market practices at our peer group companies as reflected in the charts below.
Compensation Mix
Mr. Heminger
|
CEO Peer Group
|
The Compensation Committee continues to believe our flexibility to mix cash and equity allows us to reward NEOs based on potentially very different business and strategic objectives across our business segments, recognizing that some of our organizations (such as retail and transportation) compete for talent with companies in industries that typically have compensation structures significantly different than those of our core business.
The Compensation Committee does not consider amounts earned from prior performance-based compensation, such as prior bonus awards or realized or unrealized stock option gains, in its decisions to increase or decrease compensation for a future year. The Compensation Committee believes that doing so would not be in the best interests of our shareholders and would not motivate, or promote retention of, our NEOs.
Marathon Petroleum Corporation Proxy Statement / page 49
|
Setting Executive Compensation
Obtaining Market Data/Benchmarking
The Compensation Committee decided in 2017 to move away from a direct industry peer group of integrated and downstream oil companies to a peer group of large, diverse chemical and industrial companies. This change was made in order to increase the number of peer companies against which we benchmark.
Our new peer group is larger and more diverse; it is composed of oil and gas companies, as well as other industrial companies that are sensitive to fluctuations in commodity prices. Criteria used to select our peer group include:
| revenues generally greater than $10 billion; |
| heavy manufacturing operations; |
| commodity exposure; |
| safety and environmental focus; and |
| the availability of publicly reported information. |
Our new peer group is comprised of the following 20 companies:
3M Company |
The Dow Chemical Company |
Johnson Controls International plc | ||
Andeavor |
E. I. du Pont de Nemours and Company |
Phillips 66 | ||
The Boeing Company |
Eaton Corporation plc |
PPG Industries, Inc. | ||
Caterpillar Inc. |
The Goodyear Tire & Rubber Company |
United States Steel Corporation | ||
Chevron Corporation |
HollyFrontier Corporation |
United Technologies Corporation | ||
ConocoPhillips |
Honeywell International Inc. |
Valero Energy Corporation | ||
Deere & Company |
International Paper Company |
When the Compensation Committee approved the new peer group, MPC was at approximately the 23rd percentile of the group in terms of market capitalization and the 81st percentile in terms of revenue. The Compensation Committee believes the new peer group will reduce the volatility of changes in compensation data by increasing the sample size of the peer group.
In situations where there is insufficient peer-group data for benchmarking purposes, the Advisor reviews data from available survey sources encompassing a broader group of commodity-based manufacturing companies and provides recommendations to the Compensation Committee.
How We Use Market Data
The Advisor works with our Human Resources compensation team to identify key job responsibilities for each NEO and then matches the job responsibilities to comparable job descriptions of executives in our peer group. The Advisor then obtains market data based on these matches, which is used as a starting point for the evaluation of base salary, short-term incentive targets as a percentage of base salary and LTI awards. While the Compensation Committee targets Total Direct Compensation at the median of the market, factors such as those listed below may result in the actual level of compensation being above or below each NEOs respective market median:
| the size and complexity of each NEOs role; |
| an incumbents experience, contribution and demonstrated performance; |
| our current and future succession needs; |
| business results; |
| external competitiveness; and |
| internal equity. |
page 50 / Marathon Petroleum Corporation Proxy Statement
|
Analysis of 2017 Compensation Decisions and Actions
Base Salary
Base salary is a compensation component intended to provide a competitive, fixed level of income upon which our NEOs may rely so that we may attract and retain executive talent. At least annually, the Compensation Committee reviews each NEOs base salary utilizing the factors set forth on Page 50 of this Proxy Statement and makes adjustments at its discretion.
As a result of the Compensation Committees review, the following adjustments were made to the base salaries of our NEOs in 2017:
Name | Title |
Previous Base Salary ($) |
Base Salary Effective April 2017* ($) |
Increase (%) | ||||
G. R. Heminger |
Chairman and Chief Executive Officer | 1,600,000 | 1,650,000 | 3.1 | ||||
T. T. Griffith |
Senior Vice President and Chief Financial Officer | 625,000 | 700,000 | 12.0 | ||||
D. C. Templin |
President, Marathon Petroleum Corporation | 800,000 | 900,000 | 12.5 | ||||
A. R. Kenney |
President, Speedway LLC | 700,000 | 725,000 | 3.6 | ||||
C. M. Palmer |
Senior Vice President, Supply, Distribution and Planning | 650,000 | 650,000 | |
* Mr. | Templins base salary is as of July 1, 2017. |
The base salaries for Messrs. Heminger and Kenney were increased to maintain market competitiveness. Mr. Griffiths base salary was increased based on his continued strong performance and to bring him closer to the market median for his position. Mr. Palmer did not receive a base pay increase as the Compensation Committee concluded his salary was already market competitive. The Compensation Committee increased Mr. Templins salary by approximately 3.1% on April 1, 2017 as part of the annual merit program to maintain market competitiveness. In addition, the Compensation Committee increased Mr. Templins salary by approximately 9.1% on July 1, 2017, coincident with his promotion to President of MPC.
Annual Cash Bonus Program
The ACB program is a variable incentive program intended to motivate and reward NEOs for achieving short-term (annual) financial and operational business objectives that drive overall shareholder value while encouraging responsible risk-taking and accountability.
The Compensation Committee has approved the establishment of a Section 162(m) funding pool for the ACB program in the first quarter of each year to qualify payments from the program as performance-based compensation if certain metric levels are achieved. This is intended to maximize our tax deductibility opportunity with respect to the compensation paid from the ACB program for NEOs whose Section 162(m) compensation may otherwise exceed $1 million. The performance metrics used to determine the 2017 Section 162(m) funding pool were net income and mechanical availability. Net income was chosen as it measures MPCs profitability. Mechanical availability is an essential element in achieving our financial and operational objectives and a significant indicator of the success of our operations as it measures the availability and reliability of the processing equipment in our refinery and midstream operations. The funding pool for 2017 was established by the Compensation Committee as the greater of 2 percent of net income or $19.5 million if mechanical availability reached 92 percent.
Based on net income attributable to MPC of $3.43 billion, after adjusting for certain items, our pool for 2017 executive bonuses was $68.6 million. The Compensation Committee approved the actual incentive payments for each of our NEOs at levels less than what the pool would have otherwise permitted.
For the 2017 ACB program, the Compensation Committee elected to add a metric based on distributable cash flow (DCF) attributable to MPLX to increase focus on growing the midstream business we sponsor. In addition, a new metric intended to identify and prepare assets for dropdown into MPLX was added as this further diversifies MPLXs earnings and contributes substantially to the DCF base of MPLX. With the identification and revenue enhancements or cost savings realized between MarkWest and MPLX with regard to commercial synergies in 2016, the MPLX/MarkWest Commercial Synergies metric was removed for 2017.
These changes continue to support the Compensation Committees commitment to an annual incentive program in which a majority (70 percent) is funded by pre-established financial and operational (including environmental and safety) performance
Marathon Petroleum Corporation Proxy Statement / page 51
|
measures. The remaining 30 percent under the ACB program is driven by a number of discretionary factors, including business results in light of opportunities and challenges encountered during the year and adjustments due to the volatility in petroleum-related commodity prices throughout the year, which makes it difficult to establish reliable, pre-determined goals and individual performance achievements. Regardless of the funding generated by the ACB program, the Compensation Committee has discretion to generally award each of our NEOs up to the limits of any applicable Section 162(m) funding pool, or make no award at all.
page 52 / Marathon Petroleum Corporation Proxy Statement
|
The financial and operational performance metrics used for the 2017 ACB program were:
Performance Metric | Description | Type of Measure | ||
Operating Income Per Barrel(a) |
Measures domestic operating income per barrel of crude oil throughput, adjusted for unusual business items and accounting changes. This metric compares a group of nine integrated or downstream companies, including MPC. | Financial (relative) | ||
EBITDA(b) |
As derived from our consolidated financial statements and adjusted for certain items. | Financial (absolute) | ||
Mechanical Availability(c) |
Measures the mechanical availability and reliability of our operated Refining and Marketing and Midstream segment operations. | Operational (absolute) | ||
Selling, General and Administrative Costs (SG&A)(d) |
Our actual selling, general and administrative expenses adjusted for certain items. | Financial (absolute) | ||
Distributable Cash Flow (DCF) Attributable to MPLX(e)(f) |
As derived from MPLXs consolidated financial statements and disclosed to investors as part of the quarterly earnings materials. | Financial (absolute) | ||
Asset Dropdown Readiness and Execution(f) |
Actual readiness and execution of dropping assets and services generating a specified amount of EBITDA to MPLX. | Financial (absolute) | ||
Responsible Care(g) |
The metrics below measure our success in meeting our goals for the health and safety of our employees, contractors and neighboring communities, while continuously improving on our environmental stewardship commitment by minimizing our environmental impact. | |||
Marathon Safety Performance Index(h) |
Measurement of our success and commitment to employee safety. Goals are set annually at best-in-class industry performance, focusing on continual improvement. This includes common industry metrics such as Occupational Safety and Health Administration (or OSHA) Recordable Incident Rates and Days Away Rates. | Operational (absolute) | ||
Process Safety Events Rate |
Measures the success of our ability to identify, understand and control process hazards, which can be defined as unplanned or uncontrolled releases of highly hazardous chemicals or materials that have the potential to cause catastrophic fires, explosions, injury, plant damage and high-potential near misses or toxic exposures. | Operational (absolute) | ||
Designated Environmental Incidents |
Measures environmental performance and consists of tracking certain: a) releases of hazardous substances into air, water or land; b) permit exceedances; and c) government agency enforcement actions. | Operational (absolute) | ||
Quality |
Measures the impact of product quality incidents and cumulative costs to us (no Category 4 Incident, and costs of Category 3 Incidents).(i) | Operational (absolute) |
(a) | This is a per barrel measure of throughput U.S. downstream segment income adjusted for certain items. It includes a total of nine comparator companies (including MPC). Comparator company income is adjusted for special items or other like items as adjusted by MPC. The comparator companies for 2017 were: Andeavor, BP p.l.c.; Chevron Corporation; ExxonMobil Corporation; HollyFrontier Corporation; PBF Energy; Phillips 66; and Valero Energy Corporation. This is a non-GAAP performance metric which is calculated as income before taxes, as presented in our audited consolidated financial statements, as adjusted, divided by the total number of barrels of crude oil throughput at the peers respective U.S. refinery operations. To ensure consistency of this metric when comparing results to the comparator group, adjustments to our and peer company segment income before taxes are sometimes necessary to remove certain items, such as the gain/loss on asset sales and certain asset and goodwill impairment expenses. |
(b) | This is a non-GAAP performance metric. It is calculated as earnings before interest and financing costs, interest income, income taxes, depreciation and amortization expense adjusted to exclude the effects of impairment expense, pension settlement expense, inventory market valuation adjustments, EBITDA related to acquisitions and divestitures and certain other non-cash adjustments. |
(c) | Mechanical availability represents the percentage of capacity available for critical downstream and midstream equipment to perform its primary function for the full year. |
(d) | This represents SG&A expenses per our consolidated financial statements adjusted to exclude costs related to employee bonus program accruals, pension settlement expense, credit card processing fees, allocations of employee benefit expenses, inter-department cost allocations and expenses related to acquisitions and divestitures. |
(e) | This is a non-GAAP performance metric. DCF is defined as MPLXs adjusted EBITDA adjusted for (i) deferred revenue impacts; (ii) net interest and other financial costs; (iii) maintenance capital expenditures; and (iv) other non-cash items. MPLX makes a distinction between realized or unrealized gains and losses on derivatives. During the period when a derivative contract is outstanding, MPLX records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, MPLX reverses the previously recorded unrealized gain or loss and records the realized gain or loss of the contract. MPLX defines adjusted EBITDA as net income adjusted for (i) depreciation and amortization; (ii) provision (benefit) for income taxes; (iii) amortization of deferred financing costs; (iv) non-cash equity-based compensation; (v) impairment expense; (vi) net interest and other financial costs; |
Marathon Petroleum Corporation Proxy Statement / page 53
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(vii) loss (income) from equity investments; (viii) distributions from unconsolidated subsidiaries considering principal payments of debt and certain capital expenditures; (ix) distributions of cash received from equity method investments to MPC; (x) unrealized derivative losses (gains); and (xi) acquisition costs. |
(f) | Subject to limitations imposed by Section 162(m) of the Internal Revenue Code, the Company reserved the right to recalibrate the performance levels if significant tax reform suggested a portion of the dropdowns should be delayed into 2018. |
(g) | Excludes Speedway. |
(h) | This metric measures the personal safety performance level of MPC employees and contractors based on lost time, the number of OSHA recordable injuries or fatalities, and restricted duty incidents. In the event of a fatality, payout is determined by the Compensation Committee. |
(i) | A Category 4 Incident is one that involves a fatality. Category 3 Incidents include those in which: we incur out-of-pocket costs for incident response and recovery activities, mitigation of customer claims or regulatory penalties in excess of $100,000; a media advisory is issued by MPC; or the extenuating circumstances are deemed to be of such severity by our Quality Committee that a recommendation for this category is made to the MPC Quality Steering Committee and is subsequently approved. Quality incidents exclude MarkWest assets. Category 3 Incidents exclude assets acquired in 2017; Category 4 Incidents include assets acquired in 2017. |
The threshold, target and maximum levels of performance for each performance metric were established for 2017 by evaluating factors such as performance achieved in the prior year(s), anticipated challenges for 2017, our business plan and our overall strategy. At the time the performance levels were set for 2017, the threshold levels were viewed as likely achievable, the target levels were viewed as challenging but achievable, and the maximum levels were viewed as extremely difficult to achieve.
The table below provides both the goals for each metric and our performance achieved in 2017:
Performance Metric |
Threshold Level 50% Payout |
Target Level 100% Payout |
Maximum Level 200% Payout |
Performance Metric Result |
Target Weighting |
Performance Achieved | ||||||
Operating Income Per Barrel |
5th or 6th
Position |
3rd or 4th
Position |
1st or 2nd
Position |
2nd Position (200% of target) |
15.0% | 30.0% | ||||||
EBITDA(1) |
$3,500 | $5,800 | $6,500 | $6,026 (132% of target) |
10.0% | 13.2% | ||||||
Mechanical Availability |
93.5% | 94.5% | 95.5% | 95.7% (200% of target) |
10.0% | 20.0% | ||||||
Selling, General and Administrative Costs(1) |
$1,915 | $1,875 | $1,845 | $1,839 (200% of target) |
5.0% | 10.0% | ||||||
Distributable Cash Flow Attributable to MPLX LP(1) |
$1,200 | $1,400 | $1,450 | $1,628 (200% of target) |
5.0% | 10.0% | ||||||
Asset Dropdown Readiness and Execution |
See Footnote for Performance Target Breakdown(2) | Maximum (200% of target) |
5.0% | 10.0% | ||||||||
Responsible Care |
||||||||||||
Marathon Safety Performance Index |
1.00 | 0.65 | 0.40 | 0.95 (57% of target) |
5.0% | 2.9% | ||||||
Process Safety Events Rate |
0.58 | 0.39 | 0.31 | 0.31 (200% of target) |
5.0% | 10.0% | ||||||
Designated Environmental Incidents |
86 | 61 | 36 | 31 (200% of target) |
5.0% | 10.0% | ||||||
Quality |
$500,000 | $250,000 | $125,000 | $0 (200% of target) |
5.0% | 10.0% | ||||||
Total | 70.0% | 126.1% |
(1) | Represented in millions. |
(2) | Threshold: Complete readiness for dropping an estimated $800 million of EBITDA-generating assets into MPLX by December 31, 2017. |
Target: Complete Threshold level and execute drops totaling an estimated $600 million in EBITDA-generating assets into MPLX by December 31, 2017. |
Maximum: Complete Threshold level and execute drops totaling an estimated $800 million in EBITDA-generating assets into MPLX by December 31, 2017. |
The Compensation Committee determined Maximum performance was achieved as definitive agreements for the contribution of an estimated $1.4 billion in EBITDA-generating assets and services were executed in 2017 with closing for a portion deferred until the first quarter of 2018 due to tax reform. |
page 54 / Marathon Petroleum Corporation Proxy Statement
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Organizational and Individual Performance Achievements for the 2017 ACB Program
At the beginning of the year, each NEO develops individual performance goals relative to their respective organizational responsibilities, which are directly related to our business objectives. The subjective goals used to evaluate the individual performance of our NEOs for 2017 fell into the following general categories:
Mr. Heminger |
Mr. Griffith |
Mr. Templin |
Mr. Kenney |
Mr. Palmer | ||||||||
Talent development, retention, succession and acquisition |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||
Enhancement of shareholder value through return of capital and unlocking midstream asset value |
✓ | ✓ | ✓ | ✓ | ||||||||
System integration, optimization and debottlenecking |
✓ | ✓ | ✓ | ✓ | ||||||||
Growth through organic expansion and acquisition opportunities |
✓ | ✓ | ✓ | ✓ | ||||||||
Growth of market share for gasoline and diesel |
✓ | ✓ | ✓ | ✓ | ||||||||
Preparation of assets for potential dropdown to MPLX |
✓ | ✓ | ✓ | ✓ | ||||||||
Progress on diversity initiatives |
✓ | ✓ | ✓ | ✓ | ✓ |
Our Chairman and CEO reviews the organizational and individual performance of our other NEOs and makes annual bonus recommendations to the Compensation Committee. Key factors considered for 2017 included:
| net income attributable to MPC increased to $3.43 billion in 2017 from $1.17 billion in 2016 which, in 2017, includes a tax benefit of approximately $1.5 billion (or $2.93 per diluted share) related to tax reform legislation enacted in the fourth quarter of 2017; |
| MPC TSR for 2017 of 34.6 percent compared to the median TSR of 26.7 percent for our performance unit peer group; |
| sustained focus on shareholder returns with $3.1 billion returned to shareholders through dividends and share repurchases; and |
| record performance achieved by Speedway, which was driven by strong earnings from light product sales, an increase of 1.2 percent in same-store merchandise sales, lower operating costs and contributions from its travel center joint venture. |
The Compensation Committee evaluates the performance of our Chairman and CEO with input from our full Board and makes final annual bonus decisions for our NEOs.
Bonus opportunities for our NEOs under the ACB program are communicated as a target percentage of annualized base salary at year-end. Each of our NEOs can generally earn a maximum of 200 percent of the target award, although the Compensation Committee has discretion to award each of our NEOs and other officers up to the limits of any applicable Section 162(m) funding pool, or make no award at all, depending on MPCs overall performance and the subjective evaluation of each NEOs and other officers organizational and individual performance. The Compensation Committee reviews market data provided by the Advisor with respect to competitive pay levels and annually approves specific bonus target opportunities for each of our NEOs.
Bonus Target Adjustments
In February 2017, the Compensation Committee approved one change to bonus targets for our NEOs. Mr. Hemingers bonus target was adjusted to 160 percent of his base salary from 150 percent to maintain market competitiveness.
We do not guarantee minimum bonus payments to our NEOs.
Marathon Petroleum Corporation Proxy Statement / page 55
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2018 Bonus Payments (for 2017 Performance)
In February 2018, the Compensation Committee certified the results of our performance metrics for the 2017 ACB program and applied the following formula based on performance of established metrics, organizational and individual performance to determine our NEOs final award for 2017 performance:
Name
|
2017 Year-End Base Salary |
Bonus Target as a % |
Target Bonus ($) |
Final Award |
Final Award ($)(1) |
|||||||||
G. R. Heminger |
1,650,000 |
160 |
|
2,640,000 |
|
189.4 | 5,000,000 | |||||||
T. T. Griffith |
700,000 |
80 |
|
560,000 |
|
196.4 |
|
1,100,000 |
| |||||
D. C. Templin |
900,000 |
100 |
|
900,000 |
|
188.9 |
|
1,700,000 |
| |||||
A. R. Kenney |
725,000 |
85 |
|
616,250 |
|
178.6 |
|
1,100,000 |
| |||||
C. M. Palmer |
650,000 |
75 |
|
487,500 |
|
184.4 |
|
900,000 |
|
(1) | The final award is rounded to the nearest $5,000. |
Long-Term Incentive Compensation Program
As each of our NEOs has responsibilities for managing assets and businesses which benefit MPC and MPLX, the MPC Compensation Committee and the MPLX Committee have determined it is appropriate to grant a portion of each NEOs equity awards in the form of MPLX performance units and phantom units. The value of awards granted by MPLX is based on the MPC Compensation Committees assessment of the percentage of time each of our NEOs regularly dedicates to managing MPLX assets and businesses. Grants of MPLX awards are made by the MPLX Committee after a recommendation from the MPC Compensation Committee. In the case of Mr. Heminger, his 2017 equity awards were allocated as 80 percent MPC and 20 percent MPLX:
MPC (80%)
|
MPLX (20%)
| |
Performance Units (40%)
|
Performance Units (50%)
| |
Stock Options (40%)
|
Phantom Units (50%)
| |
Restricted Stock (20%) |
In January 2018, the MPC Compensation Committee approved changing the mix of equity awards such that at least 50 percent of future MPC annual LTI awards will be in the form of performance units. In addition, minimum TSR/TUR percentile for a payout on performance units granted after 2017 will increase to the 30th percentile from the 25th percentile. These changes were made to be responsive to shareholder feedback and in light of more recent peer data.
MPC Long-Term Incentive Compensation Program
MPC LTI awards for 2017 were granted in the form of performance units (40 percent), stock options (40 percent) and restricted stock (20 percent). The primary purpose of our equity grants is to motivate our NEOs to achieve our long-term business objectives over multiple years and align the NEOs interests with those of our shareholders. The forms of awards differ as illustrated below:
Form of LTI Award
|
Form of Settlement
|
Compensation Realized
| ||
MPC Performance Units | 25% in MPC common stock; and 75% in cash
|
$0.00 to $2.00 per unit based on our relative TSR ranking among a group of peer companies
| ||
MPC Stock Options | MPC common stock | MPC common stock price appreciation from grant date to exercise date
| ||
MPC Restricted Stock
|
MPC common stock
|
Full value of MPC common stock upon vesting
|
page 56 / Marathon Petroleum Corporation Proxy Statement
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Due to the nature of LTI awards, the actual long-term compensation value realized by our NEOs will depend on the price of our underlying stock at the time of settlement. The 2017 LTI awards were based on an intended dollar value rather than a specific number of performance units, stock options or shares of restricted stock.
MPC granted the 2017 LTI awards to our NEOs on March 1, 2017. The exercise price for stock options is equal to the closing price of a share of MPC common stock on the grant date, or the first trading day thereafter if the grant date is not a trading day. We discuss each of our forms of LTI awards in more detail below.
MPC Performance Units
The Compensation Committee believes a performance unit program serves as a complement to stock option and restricted stock programs. Our program benchmarks MPCs TSR relative to a peer group of oil industry competitors and a market index. This relative evaluation allows for the cyclicality of our business and commodity prices (crude oil) to be recognized and prevents volatility from directly advantaging or disadvantaging the payout of the award beyond that of our peers. The Compensation Committee continues to believe that TSR relative to a peer group is the single best metric for our performance unit program as it is commonly used by shareholders to measure a companys performance relative to others within the same industry. It also aligns the compensation of our NEOs with the value delivered to our shareholders. The design of our performance unit program ensures we pay above target compensation only when our TSR is above the median of the peer group.
Under our program, TSR for MPC and each of the peer group companies is measured over a 36-month performance cycle. Each performance cycle has four equally weighted measurement periods: (1) the first 12 months, (2) the second 12 months, (3) the third 12 months, and (4) the entire 36-month period. The Compensation Committee believes that measuring TSR over four measurement periods in the 36-month performance cycle is appropriate and serves the best interests of our shareholders. By having four equally weighted measurement periods, attaining maximum payout based on TSR may be achieved only by outperforming the TSR peer group for all four measurement periods.
Each peer group members TSR is determined by taking the sum of the companys stock price appreciation or reduction, plus its cumulative cash dividends, for each measurement period and dividing that total by the companys beginning stock price for that period, as illustrated below:
(Ending Stock Price Beginning Stock Price) + Cumulative Cash Dividends
Beginning Stock Price
The beginning and ending stock prices used for MPC and each peer group member in the TSR calculation are the averages of the companys respective closing stock prices for the 20 trading days immediately preceding the beginning and ending date of the applicable measurement period. The design also mitigates significant market fluctuations in stock price at the beginning or end of a performance cycle and discourages excessive or inappropriate risk-taking near the end of a performance cycle by limiting the impact on the overall payout of the award.
MPCs TSR performance percentile within the peer group is measured for each measurement period, with the related payout percentage determined using the following table. However, if MPCs TSR is negative for a measurement period, the payout percentage for that measurement period is capped at target (100 percent) regardless of actual relative TSR performance percentile. We refer to this provision as a negative TSR cap.
TSR Percentile
|
Payout (% of Target)*
| |
100th (Highest) |
200% | |
50th |
100% | |
25th |
50% | |
Below 25th |
0% |
* | Payout for performance between quartiles will be determined using linear interpolation. |
Each performance unit is dollar denominated with a target value of $1.00. The actual payout may vary from $0.00 to $2.00 (zero percent to 200 percent of target). The Compensation Committee also believes that having the maximum payout capped at $2.00 per unit mitigates excessive or inappropriate risk-taking. The final value of the performance unit award will be determined by multiplying the simple average of the payout percentages for the four measurement periods by the number of performance units granted. These awards settle 25 percent in MPC common stock and 75 percent in cash.
Marathon Petroleum Corporation Proxy Statement / page 57
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MPC Performance Units Granted in 2015
Performance units granted in 2015 had a performance cycle of January 1, 2015, through December 31, 2017. Additional information about these grants, including the peer group used, can be found in the Long-Term Incentive Compensation Program section of our 2016 Proxy Statement.
In January 2018, the Compensation Committee certified the final TSR results for the four measurement periods for the 2015 performance unit grants, which are as follows:
Measurement Period |
Actual TSR (%) |
Position |
Percentile Ranking (%) |
Payout (% of target) | ||||||||||||||||
January 1, 2015 - December 31, 2015
|
|
20.2
|
|
|
5
|
th
|
42.85
|
|
85.70
|
| ||||||||||
January 1, 2016 - December 31, 2016
|
|
(1.8
|
)
|
|
5
|
th
|
42.85
|
|
85.70
|
| ||||||||||
January 1, 2017 - December 31, 2017
|
|
34.6
|
|
|
3
|
rd
|
71.43
|
|
142.86
|
| ||||||||||
January 1, 2015 - December 31, 2017
|
|
57.0
|
|
|
2
|
nd
|
85.71
|
|
171.42
|
| ||||||||||
Average:
|
|
121.42
|
|
The resulting average of 121.42 percent of target provided for a payment equal to $1.2142 per performance unit granted. As a result, the Compensation Committee approved the following payouts to our NEOs:
Name |
Target Number of Performance Units |
Compensation Committee Approved Payout ($) | ||||||||
G. R. Heminger
|
|
3,520,000
|
|
|
4,273,984
|
| ||||
T. T. Griffith
|
|
576,000
|
|
|
699,380
|
| ||||
D. C. Templin
|
|
800,000
|
|
|
971,360
|
| ||||
A. R. Kenney
|
|
720,000
|
|
|
874,224
|
| ||||
C. M. Palmer |
578,000 | 701,808 |
The payout settled 25 percent in MPC common stock and 75 percent in cash.
MPC Performance Units Granted in 2016
Performance units granted in 2016 have a performance cycle of January 1, 2016, through December 31, 2018. They remain outstanding and are included in the Outstanding Equity Awards at 2017 Fiscal Year-End table. Additional information about these grants, including the peer group used, can be found in the Long-Term Incentive Compensation Program section of our 2017 Proxy Statement.
MPC Performance Units Granted in 2017
After an annual review of market practices, the Compensation Committee again made the decision to award performance unit grants in February 2017 with the following approved peer group:
Andeavor
|
PBF Energy
|
S&P 500 Energy Index
| ||
Chevron Corporation
|
Phillips 66
|
|||
HollyFrontier Corporation |
Valero Energy Corporation |
The number of performance units granted to each of our NEOs can be found in the Grants of Plan-Based Awards table in this Proxy Statement.
MPC Stock Options
Stock options provide a direct but variable link between our NEOs long-term compensation and the long-term value shareholders receive by investing in MPC. The Compensation Committee believes stock options are inherently performance based as option holders only realize benefits if the value of our stock increases for all shareholders after the grant date. The exercise price of our stock options is generally equal to the per-share closing price of MPC common stock on the grant date. Stock options vest in equal installments on the first, second and third anniversary of the date of grant and have a maximum 10-year term during which an NEO may exercise the options. Option holders do not have voting rights or receive dividends on the underlying stock.
The number of options granted to each of our NEOs can be found in the Grants of Plan-Based Awards table in this Proxy Statement.
page 58 / Marathon Petroleum Corporation Proxy Statement
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MPC Restricted Stock
Grants of restricted stock provide diversification in the mix of LTI awards, result in ownership of actual shares of stock and promote NEO retention. Restricted stock grants are also intended to help our NEOs increase their holdings in MPC common stock to comply with established stock ownership guidelines.
The value of restricted stock awards is also variable, and the awards vest in equal installments on the first, second and third anniversary of the date of grant. Prior to vesting, recipients have voting rights but dividends declared during the restricted period are accrued and paid in cash upon vesting.
The number of shares of MPC restricted stock granted to each of our NEOs can be found in the Grants of Plan-Based Awards table in this Proxy Statement.
MPLX Long-Term Incentive Compensation Program
Our NEOs are awarded MPLX performance units and/or phantom units by the MPLX Committee for direct and/or indirect services provided to MPLX, which are expected to create long-term value to MPC. If any of our NEOs were also an MPLX named executive officer for 2017, such NEOs MPLX equity awards are also reported and discussed in the MPLX Annual Report on Form 10-K for the year ended December 31, 2017. The amounts reported by MPLX in its Annual Report on Form 10-K are not incremental to the amounts reported in this Proxy Statement.
In January 2017, the MPLX Committee approved an LTI design whereby the MPLX LTI awards granted are in the form of performance units (50 percent) and phantom units (50 percent). Each form of LTI generally rewards performance over a multi-year period to the extent service (for phantom units) or partnership performance conditions (for performance units) are achieved. The primary purpose of MPLX LTI granted to our NEOs is to advance MPLXs long-term business objectives and strengthen the alignment between the interests of our NEOs and MPLX unitholders. The forms of LTI awards differ as illustrated below:
Form of LTI Award
|
Form of Settlement
|
Compensation Realized
| ||||
MPLX Performance Units | 25% in MPLX common units and 75% in cash |
$0.00 to $2.00 per unit based on MPLXs relative TUR ranking among a group of peers, and a DCF metric for awards granted in 2017 and 2018
| ||||
MPLX Phantom Units | MPLX common units | Full value of common units upon vesting |
Due to the nature of LTI awards, the actual long-term compensation value realized by our NEOs will depend on the price of the underlying unit at the time of settlement. The 2017 LTI awards were based on an intended dollar value rather than a specific number of performance units or phantom units.
MPLX Performance Units
The MPLX Committee believes that performance unit awards complement MPLXs phantom unit program. In 2017, the MPLX Committee, after reviewing performance programs of MPLX peer companies, added a second performance metric to the MPLX performance unit program to align it with contemporary industry program design. In addition to the existing metric of TUR relative to a peer group of midstream competitors, a DCF-per-MPLX-common-unit metric was added. DCF per MPLX common unit was chosen as unitholders also place significant importance on DCF to measure an MLPs performance relative to others within the same industry. The MPLX Committee believes the combination of these two metrics will better align the pay of our NEOs with the value delivered to MPLX unitholders, including MPC. Achieving above target payouts from the MPLX performance unit program would require at least one of these two metrics to achieve above target performance. The DCF-per-MPLX-common-unit metric was added to all performance unit grants starting in 2017.
Each performance unit is dollar denominated with a target value of $1.00. The actual payout will vary from $0.00 to $2.00 (zero percent to 200 percent of target). The MPLX Committee believes that having the maximum payout capped at $2.00 per unit mitigates excessive or inappropriate risk-taking. The final value of the 2015 and 2016 performance unit awards will continue to be determined based solely on the results of MPLXs TUR. The final value of the 2017 performance unit awards will be based 50 percent on the results of MPLXs TUR and 50 percent on the results of the DCF-per-MPLX-common-unit metric. These awards settle 25 percent in MPLX common units and 75 percent in cash.
Under the MPLX program, TUR and that of each of the peer group MLPs is measured over a 36-month performance cycle. Each performance cycle has four equally weighted measurement periods: (1) the first 12 months, (2) the second 12 months, (3) the third 12 months, and (4) the entire 36-month period. The MPLX Committee also believes that measuring TUR over four measurement periods in the 36-month performance cycle is appropriate and serves the best interests of MPLX unitholders. By having four equally weighted measurement periods, attaining maximum payout based on TUR may be achieved only by outperforming the TUR peer group for all four measurement periods.
Marathon Petroleum Corporation Proxy Statement / page 59
|
Each peer group members TUR is determined by taking the sum of the unit price appreciation or reduction, plus its cumulative cash distributions, for each measurement period and dividing that total by the peer group members beginning unit price for that period, as shown below.
(Ending Unit Price Beginning Unit Price) + Cumulative Cash Distributions
Beginning Unit Price
The beginning and ending unit prices for MPLX and each peer group member in the TUR calculation are the average of the MLPs respective closing unit prices for the 20 trading days immediately preceding the beginning or ending date of the applicable measurement period. This design mitigates significant market fluctuations in the unit price at the beginning or end of a performance cycle and discourages excessive or inappropriate risk-taking near the end of a performance cycle by limiting the impact on the overall payout of the award.
MPLXs TUR performance percentile within the peer group is measured for each measurement period with the related payout percentage determined using the following table. However, if MPLXs TUR is negative for a measurement period, the TUR payout percentage for that measurement period is capped at target (100 percent) regardless of actual relative TUR performance percentile.
TUR Percentile
|
Payout (% of Target)*
| |
100th (Highest) |
200% | |
50th |
100% | |
25th |
50% | |
Below 25th |
0% |
* | Payout for TUR between quartiles will be determined using linear interpolation. |
Distributable Cash Flow per MPLX Common Unit
The DCF-per-MPLX-common-unit metric used for 2017 performance unit awards measures the growth of MPLXs full-year DCF over the three-year performance cycle. Payout for the DCF metric will be based on achievement of DCF in the last year of the performance cycle as compared with the threshold, target and maximum levels, which will be calculated by applying pre-determined compound annual growth rates (or CAGRs) against the DCF of the year prior to the beginning of the 36-month performance cycle.
MPLX Performance Units Granted in 2015
Performance units granted by MPLX in 2015 had a performance cycle of January 1, 2015, through December 31, 2017, and use TUR as the sole performance metric. Additional information about these grants, including the peer group used, can be found in the Long-Term Incentive Compensation section of the MPLX Annual Report on Form 10-K for the year ended December 31, 2015.
In January 2018, the independent directors of the MPLX Committee certified the final TUR for the four measurement periods of the 2015 performance unit grants, which are as follows:
Measurement Period
|
Actual TUR (%)
|
Position
|
Percentile Ranking* (%)
|
Payout (% of target)**
| ||||||||||||||||
January 1, 2015 - December 31, 2015
|
|
(45.3
|
)
|
|
11th
|
|
|
9.09
|
|
|
0.00
|
| ||||||||
January 1, 2016 - December 31, 2016
|
|
3.2
|
|
|
9th
|
|
|
27.27
|
|
|
54.54
|
| ||||||||
January 1, 2017 - December 31, 2017
|
|
17.5
|
|
|
1st
|
|
|
100.00
|
|
|
200.00
|
| ||||||||
January 1, 2015 - December 31, 2017
|
|
(34.8
|
)
|
|
10th
|
|
|
10.00
|
|
|
0.00
|
| ||||||||
|
Average:
|
|
|
63.64
|
|
* | Sunoco Logistics Partners L.P. was removed from the peer group due to its acquisition by Energy Transfer Partners, L.P. in April 2017. |
** | No payout occurs for ranking below the 25th percentile. |
page 60 / Marathon Petroleum Corporation Proxy Statement
|
The resulting average of 63.64 percent of target provided for a payment equal to $0.6364 per performance unit granted. As a result, the independent directors of the MPLX Committee approved the following payments to our NEOs:
Name |
Target Number of Performance Units |
MPLX Board Approved Payout ($) | ||||||||
G. R. Heminger
|
|
1,100,000
|
|
|
700,040
|
| ||||
T. T. Griffith
|
|
180,000
|
|
|
114,552
|
| ||||
D. C. Templin
|
|
250,000
|
|
|
159,100
|
| ||||
A. R. Kenney
|
|
100,000
|
|
|
63,640
|
| ||||
C. M. Palmer |
127,500 | 81,141 |
The payout settled 25 percent in full-value MPLX common units and 75 percent in cash.
MPLX Performance Units Granted in 2016
Performance units granted by MPLX in 2016 have a performance cycle of January 1, 2016, through December 31, 2018, and use TUR as the sole performance metric. They remain outstanding and are included in the Outstanding Equity Awards at 2017 Fiscal Year-End table. Additional information about these grants, including the peer group used (which has been adjusted), can be found in the Long-Term Incentive Compensation section of the MPLX Annual Report on Form 10-K for the year ended December 31, 2016. However, Sunoco Logistics Partners L.P. was removed from the peer group due to its acquisition by Energy Transfer Partners, L.P. in April 2017.
MPLX Performance Units Granted in 2017
The MPLX Committee again made performance unit grants in February 2017. TUR will be used to determine 50 percent of the performance unit payout, using the following approved peer group:
Andeavor Logistics LP
|
Enterprise Products Partners L.P.
|
Valero Energy Partners LP | ||
Buckeye Partners, L.P.
|
Magellan Midstream Partners, L.P.
|
Western Gas Partners, LP | ||
Enbridge Energy Partners, L.P.
|
Phillips 66 Partners LP
|
Williams Partners L.P. | ||
Energy Transfer Partners, L.P.
|
Plains All American Pipeline, L.P.
|
ONEOK Partners, L.P. and Sunoco Logistic Partners L.P. were removed from the peer group as ONEOK Partners, L.P. was acquired by ONEOK Inc. and Sunoco Logistics Partners L.P. was acquired by Energy Transfer Partners, L.P.
DCF per MPLX common unit in 2019 will be used to determine the remaining 50 percent of the performance unit payout. The DCF-per-MPLX-common-unit metric was added by the MPLX Committee as it believes unitholders also place significance on DCF to measure an MLPs performance relative to others in the same industry. Threshold, target and maximum levels are calculated using a CAGR of 8 percent, 10 percent and 12 percent, respectively, over the full-year 2016 DCF per MPLX common unit. The following table will be used to determine the DCF performance metric payout percentage for the 2017 grant:
Full Year 2016 |
Threshold (50%) |
Target (100%) |
Maximum (200%) |
|||||||||
DCF per MPLX common unit |
$ | 2.3465 | $2.9559 | $3.1232 | $ | 3.2967 |
* | Payout for performance between threshold and target, and between target and maximum will be determined using linear interpolation. |
The number of performance units granted by MPLX in 2017 to each of our NEOs can be found in the Grants of Plan-Based Awards table in this Proxy Statement. Additional information about these grants can be found in the Long-Term Incentive Compensation section of the MPLX Annual Report on Form 10-K for the year ended December 31, 2017.
MPLX Phantom Units
Grants of phantom units provide diversification of the mix of LTI awards granted by MPLX, promote ownership of actual MPLX common units and promote retention. Further, phantom unit grants also help NEOs increase their holdings in MPLX common units.
Marathon Petroleum Corporation Proxy Statement / page 61
|
The value of phantom unit awards is variable, based on the value of an underlying MPLX common unit, and the awards vest in equal installments on the first, second and third anniversary of the date of grant and are settled in MPLX common units upon vesting. Prior to vesting, recipients have no right to vote the units, and cash distributions are accrued and paid in cash upon vesting. Upon vesting, a one-year holding period requirement is in effect for all full-value MPLX common units received. This holding period prevents NEOs from selling any MPLX common units for 12 months from the time they are vested. This requirement applies to units net of taxes at the time of vesting or distribution.
The number of phantom units granted to each of our NEOs can be found in the Grants of Plan-Based Awards table in this Proxy Statement.
page 62 / Marathon Petroleum Corporation Proxy Statement
|
Pay for Performance
The Compensation Committee believes our executive compensation programs create a strong link between the compensation provided to our NEOs and MPCs performance relative to its peers. As shown in Figure 1, our one-year TSR of 34.6 percent was above the median TSR of the performance unit peer group of 26.7 percent. Our three-year TSR was 57.0 percent, which is above the median TSR of the performance unit peer group of 45.1 percent, as shown below in Figure 2. Lastly, our five-year TSR was 130.3 percent, which is above the median TSR of the performance unit peer group of 76.9 percent, as shown below in Figure 3. TSR percentages depicted in the figures below were calculated using the same methodology used for our performance unit grants. For more information, see the MPC Performance Units section of this Proxy Statement on Page 57.
Figure 1
|
Figure 2
| |
|
|
Figure 3
|
Figure 4
| |
|
|
MPC has realized a TSR equal to 250.3 percent since we were established as an independent company on June 30, 2011. During this time, Mr. Hemingers compensation (not including the values reported in the Change in Pension Value and Non-Qualified Deferred Compensation Earnings column of the 2017 Summary Compensation Table) has increased overall by 42.76 percent, as shown in Figure 4.
The Compensation Committee has approved modest but appropriate increases to Mr. Hemingers pay package, which includes a mix of long-term and short-term incentives, as described in the Key Elements of 2017 Named Executive Officer Compensation section of this Proxy Statement. These incentives present the opportunity to be financially rewarding over the long term.
Marathon Petroleum Corporation Proxy Statement / page 63
|
Other Policies
page 64 / Marathon Petroleum Corporation Proxy Statement
|
One of the Boards key functions is to provide for executive succession planning to avoid adverse effects caused by vacancies in key leadership positions. We recognize that thoughtful succession planning is critical to creating long-term shareholder value. Although executive officers may choose to retire earlier, our policy of mandatory retirement coincident with, or immediately following, the first of the month after an officer reaches age 65 provides a known maximum time period for a qualified successor to prepare to assume the vacated position.
The Compensation Committee meets at least annually to discuss succession of our leadership, including our NEOs. During these meetings the Compensation Committee:
| identifies key roles (based on business impact and retention risk); |
| assesses likely and possible successors for these roles, including their ability to reinforce our performance culture and promote our values including: |
| Health and Safety; |
| Environmental Stewardship; |
| Integrity; |
| Corporate Citizenship; and |
| Inclusive Culture; |
| and evaluates the readiness of succession candidates, including training and development needs. |
The Compensation Committee believes its succession process is an important tool that helps manage the lead time necessary to train, develop or recruit executives capable of filling key roles, including NEOs, within MPC when the need arises.
Ratio of Annual Compensation for the CEO to our Median Employee
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are required to disclose the ratio of compensation of our principal executive officer (PEO), Mr. Heminger, to our median employees annual total compensation.
All employees, employed as of October 1, 2017, were included in our analysis:
| Approximately 12,000 full-time regular, part-time, casual, and international employees of Marathon Petroleum, and |
| Approximately 12,700 part-time retail store associates and 19,300 full-time employees at our Speedway subsidiary. |
We determined our median employee by analyzing the accumulated actual wages and bonus amounts paid to each employee between January 1, 2017, and September 30, 2017, other than our Chairman and CEO. We excluded, for administrative convenience, our six Canadian employees, which fell below the 5 percent de minimis threshold for exclusion based on our total employee population of approximately 44,000. We selected this process to determine our median employee as we believe such accumulated pay reasonably reflects the median employee annual total compensation taking into account all of our employees.
page 66 / Marathon Petroleum Corporation Proxy Statement
|
Once we identified our median employee, that employees total compensation was calculated using the same methodology required for disclosure of compensation to the CEO, under the requirements established by the SEC, in the Summary Compensation Table.
Mr. Hemingers total annual compensation: |
$ | 19,670,807 | ||
Median Employee total annual compensation: |
$ | 21,034 | ||
Ratio of PEO to Median Employee Compensation: |
935:1 |
Our Ratio in Context
We expect our ratio of 935:1 may be relatively high when compared to other domestic U.S. refiners. This expected difference is largely due to our substantial retail operations (more than 2,700 stores), staffed by approximately 32,000 employees, many of whom are part-time employees. Marathon Petroleum is the only entirely domestic downstream refining company with such a substantial retail presence. As our retail operations rely on a large labor pool of retail employees who work fewer hours and are compensated at lower levels, on a relative basis, than employees working in traditional downstream refining jobs, we would not expect our median employee to be similar in terms of job function or compensation level to the median employee of other domestic U.S. refiners. Investors and other stakeholders should take this important difference into account when making comparisons of our CEO pay ratio to those of our peer companies.
In the interest of providing an additional disclosure that investors and other stakeholders may find meaningful, we have calculated an independent ratio for MPC only, so that investors can compare Marathon Petroleums ratio to our industry peers:
Mr. Hemingers total annual compensation: |
$ | 19,670,807 | ||
Median MPC Employee total annual compensation |
||||
(excluding Speedway): |
$ | 125,771 | ||
Ratio: |
156:1 |
Compensation Committees Reflection on our Ratio
The Compensation Committee recognizes that we compete to attract, retain, motivate and reward employees in very different businesses.
The Compensation Committee relies on market data and recommendations provided by the Advisor to structure variable pay opportunities (based largely on performance) for our NEOs, including Mr. Heminger, while management relies on competitive survey data, purchased from independent third parties, to determine competitive pay levels and bonus opportunities for other employees at Marathon Petroleum and Speedway.
The Compensation Committee also relies on an assessment conducted by the Advisor that compares our Chairman and CEOs realizable compensation relative to his peers in the industry versus the performance of the Company relative to its peers. This assessment determines whether there is appropriate alignment of our compensation programs relative to our performance over a long-term period. The Compensation Committee has determined that the Chairman and CEOs realizable compensation is strongly aligned with the Companys performance.
We believe our pay practices across different business segments are each competitive and appropriate to meet the needs of our workforce and the business. As such the Compensation Committee does not make compensation decisions with the intent to manage our ratio. It believes that to do so would deviate from market competitive pay practices and could adversely affect the competitiveness of our operations.
Marathon Petroleum Corporation Proxy Statement / page 67
|
2017 Summary Compensation Table
The following table summarizes the total compensation awarded to, earned by or paid to Mr. Heminger, our Chairman and Chief Executive Officer, Mr. Griffith, our Senior Vice President and Chief Financial Officer, and the other three most highly compensated executive officers of MPC serving as of December 31, 2017.
Name and Principal Position
|
Year
|
Salary (1)
|
Stock Awards(2)(3)
|
Option Awards(2)
|
Non-Equity Incentive Plan Compensation(4)
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings(5) ($)
|
All Other Compensation(6)
|
Total ($) |
||||||||||||||||||||||
Gary R. Heminger |
2017 | 1,637,500 | 7,736,165 | 3,840,001 | 5,000,000 | 942,420 | 514,721 | 19,670,807 | ||||||||||||||||||||||
Chairman and Chief Executive Officer |
2016 | 1,600,000 | 5,575,165 | 3,520,008 | 4,200,000 | 1,097,813 | 562,822 | 16,555,808 | ||||||||||||||||||||||
2015
|
|
1,587,500
|
|
|
7,355,473
|
|
|
3,520,017
|
|
|
4,400,000
|
|
|
1,233,077
|
|
|
488,270
|
|
|
18,584,337
|
| |||||||||
Timothy T. Griffith |
2017 | 681,250 | 1,611,727 | 800,003 | 1,100,000 | 145,967 | 103,922 | 4,442,869 | ||||||||||||||||||||||
Senior Vice President and |
2016 | 600,000 | 1,013,690 | 640,004 | 750,000 | 113,173 | 91,094 | 3,207,961 | ||||||||||||||||||||||
Chief Financial Officer |
2015
|
|
507,500
|
|
|
1,203,705
|
|
|
576,018
|
|
|
650,000
|
|
|
72,017
|
|
|
69,635
|
|
|
3,078,875
|
| ||||||||
Donald C. Templin |
2017 | 856,250 | 2,623,087 | 240,001 | 1,700,000 | 285,452 | 159,596 | 5,864,386 | ||||||||||||||||||||||
President |
2016 | 800,000 | 1,869,697 | 600,005 | 1,300,000 | 241,506 | 148,860 | 4,960,068 | ||||||||||||||||||||||
2015
|
|
741,667
|
|
|
1,671,803
|
|
|
800,010
|
|
|
1,200,000
|
|
|
186,756
|
|
|
133,263
|
|
|
4,733,499
|
| |||||||||
Anthony R. Kenney |
2017 | 718,750 | 1,334,144 | 792,000 | 1,100,000 | 379,447 | 135,898 | 4,460,239 | ||||||||||||||||||||||
President, Speedway LLC |
2016 | 687,500 | 982,903 | 756,005 | 1,075,000 | 403,941 | 136,970 | 4,042,319 | ||||||||||||||||||||||
2015
|
|
631,250
|
|
|
1,250,230
|
|
|
720,009
|
|
|
1,000,000
|
|
|
320,252
|
|
|
147,673
|
|
|
4,069,414
|
| |||||||||
C. Michael Palmer |
2017 | 650,000 | 1,063,443 | 578,002 | 900,000 | 178,139 | 101,874 | 3,471,458 | ||||||||||||||||||||||
Senior Vice President, |
2016 | 637,500 | 828,663 | 578,001 | 725,000 | 195,709 | 110,767 | 3,075,640 | ||||||||||||||||||||||
Supply, Distribution and Planning
|
2015
|
|
587,500
|
|
|
1,099,727
|
|
|
578,016
|
|
|
750,000
|
|
|
392,638
|
|
|
103,869
|
|
|
3,511,750
|
|
(1) | The amounts shown in this column for calendar year 2017 for Messrs. Heminger, Griffith and Kenney reflect three months at the January 1, 2017, annualized base salary and nine months at the April 1, 2017, annualized base salary. The amount shown in this column for calendar year 2017 for Mr. Templin reflects three months at his January 1, 2017, annualized base salary, three months at his April 1, 2017, annualized base salary and six months at his July 1, 2017, annualized base salary. The amount shown in this column for calendar year 2017 for Mr. Palmer reflects his January 1, 2017, annualized base salary for 12 months as his salary did not change during the year. |
(2) | The amounts shown in these columns reflect the aggregate grant date fair value of LTI awarded in the year indicated in accordance with provisions of the Financial Accounting Standards Board Accounting Standards Codification 718, Compensation - Stock Compensation (FASB ASC Topic 718). Assumptions used in the calculation of the MPC equity value are included in footnote 23 to the Companys financial statements as reported in its Annual Reports on Form 10-K for the years ended December 31, 2017, December 31, 2016, and December 31, 2015. Assumptions used in the calculation of the MPLX equity value are included in footnote 20 to MPLXs financial statements as reported in its Annual Reports on Form 10-K for the years ended December 31, 2017, and December 31, 2016, and footnote 19 to MPLXs financial statements as reported in its Annual Report on Form 10-K for the year ended December 31, 2015. |
(3) | The maximum value of the performance units reported in this column for those who received 2015 performance unit grants, assuming the highest level of performance is achieved, for each NEO, is as follows: Mr. Heminger, MPC - $7,040,000 and MPLX - $2,200,000; Mr. Griffith, MPC - $1,152,000 and MPLX - $360,000; Mr. Templin, MPC - $1,600,000 and MPLX - $500,000; Mr. Kenney, MPC - $1,440,000 and MPLX - $200,000; and Mr. Palmer, MPC - $1,156,000 and MPLX - $255,000. The maximum value of the performance units reported in this column for those who received 2016 performance unit grants, assuming the highest level of performance is achieved, for each NEO, is as follows: Mr. Heminger, MPC - $7,040,000 and MPLX - $2,200,000; Mr. Griffith, MPC - $1,280,000 and MPLX - $400,000; Mr. Templin, MPC - $1,200,000 and MPLX - $1,500,000; Mr. Kenney, MPC - $1,512,000 and MPLX - $210,000; and Mr. Palmer, MPC - $1,156,000 and MPLX - $255,000. The maximum value of the performance units reported in this column for those receiving 2017 performance unit grants, assuming the highest level of performance is achieved, for each NEO, is as follows: Mr. Heminger, MPC - $7,680,000 and MPLX - $2,400,000; Mr. Griffith, MPC - $1,600,000 and MPLX - $500,000; Mr. Templin, MPC - $480,000 and MPLX - $2,400,000; Mr. Kenney, MPC - $1,584,000 and MPLX - $220,000; and Mr. Palmer, MPC - $1,156,000 and MPLX - $255,000. |
(4) | The amounts shown in this column reflect the total value of ACB awards earned in the year indicated, which were paid in the following year. |
(5) | The amounts shown in this column reflect the annual change in actuarial present value of accumulated benefits under the Marathon Petroleum and Speedway retirement plans. See Post-Employment Benefits for 2017 and Marathon Petroleum Retirement Plans sections of this Proxy Statement for more information regarding the Companys defined benefit plans and the assumptions used in the calculation of these amounts. There are no deferred compensation earnings reported in this column as the Companys non-qualified deferred compensation plans do not provide above-market or preferential earnings. |
page 68 / Marathon Petroleum Corporation Proxy Statement
|
All Other Compensation
(6) | We offer very limited perquisites to our NEOs, which, together with our contributions to defined contribution plans, comprise the amounts reported in the All Other Compensation column. The amounts shown in this column are summarized below: |
Name |
Personal Use of Company Aircraft(a) ($) |
Company
Physicals(b) |
Tax & Financial
Planning(c) |
Security(d) ($) |
Miscellaneous Perks & Tax Allowance Gross-ups ($) |
Company Contributions to Defined Contribution Plans(e) ($) |
Total All Other Compensation | ||||||||||||||||||||||||||||
Gary R. Heminger |
82,880 | 3,651 | 11,916 | 12,800 | | 403,474 | 514,721 | ||||||||||||||||||||||||||||
Timothy T. Griffith |
| 3,651 | | | | 100,271 | 103,922 | ||||||||||||||||||||||||||||
Donald C. Templin |
| 3,651 | 5,229 | | | 150,716 | 159,596 | ||||||||||||||||||||||||||||
Anthony R. Kenney |
| 3,651 | 10,234 | | | 122,013 | 135,898 | ||||||||||||||||||||||||||||
C. Michael Palmer |
| 3,651 | 1,698 | | | 96,525 | 101,874 |
(a) | Our Board has authorized and recommends the personal use of corporate aircraft to promote the safety, security and productivity of our Chairman and CEO. Additionally, officers are occasionally permitted to invite their spouses or other guests to accompany them on business travel when space is available. The amounts shown in this column reflect the aggregate incremental cost of personal use of corporate aircraft by our NEOs for the period from January 1, 2017, through December 31, 2017. These amounts reflect our incremental cost of travel on corporate aircraft for our NEOs, their spouses or other guests for personal travel. We have estimated our aggregate incremental cost using a methodology that reflects the average costs of operating the aircraft, such as fuel costs, trip-related maintenance, crew travel expenses, trip-related fees, storage costs, communications charges and other miscellaneous variable costs. Fixed costs, such as pilot compensation, the purchase and lease of aircraft and maintenance not related to travel are excluded from this calculation. We believe this method provides a reasonable estimate of our incremental cost. However, use of this method overstates the actual incremental cost when a flight has a primary business purpose, space is available to transport an officer or his or her guest not traveling for business purposes and no incremental cost is realized by us. No income tax assistance or gross-ups are provided for personal use of corporate aircraft. For 2017, only our Chairman and CEO had reportable personal use of corporate aircraft. |
(b) | All employees, including our NEOs, are eligible to receive an annual physical. Executives may receive an enhanced physical under the executive physical program. The amounts shown in this column reflect the average incremental cost of the executive physical program in excess of the average incremental cost of the employee physical program. Due to privacy concerns and Health Insurance Portability and Accountability Act confidentiality requirements, we do not disclose actual usage or cost of this program by individual NEOs. |
(c) | The amounts shown in this column reflect reimbursement for the costs of professional advice related to tax, estate and financial planning up to a specified maximum not to exceed $15,000 per calendar year. For information on this program refer to the Perquisites section of the Compensation Discussion and Analysis section of this Proxy Statement. |
(d) | The amount shown in this column reflects annual fees and maintenance expenses associated with personal security for Mr. Heminger. |
(e) | The amounts shown in this column reflect amounts contributed by us under the tax-qualified Marathon Petroleum Thrift Plan for Messrs. Heminger, Griffith, Templin, Kenney and Palmer, as well as under related non-qualified deferred compensation plans. See Post-Employment Benefits for 2017 and Marathon Petroleum Retirement Plans sections of this Proxy Statement for more information. |
Marathon Petroleum Corporation Proxy Statement / page 69
|
Grants of Plan-Based Awards in 2017
The following table provides information regarding all plan-based awards, including cash-based incentive awards and equity-based awards (specifically stock options, restricted stock, phantom units and performance units) granted to each of our NEOs in 2017.
Name |
Type of Award |
Grant Date |
Approval Date(1) |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) |
Estimated Future Payouts Under Equity Incentive Plan Awards(3) |
All Other Stock Awards: Number of Shares of Stock or Units (#) |
All Other Option Awards: Number of Securities Underlying Options (#) |
Exercise or Base Price of Option Awards ($) |
Grant Date Fair Value of Stock and Option Awards(4) ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold ($) |
Target ($) |
Maximum ($) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gary R. Heminger |
MPC Stock Options | 3/1/2017 | 2/21/2017 | 269,663 | 50.99 | 3,840,001 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Restricted Stock | 3/1/2017 | 2/21/2017 | 37,655 | 1,920,028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Performance Units | 3/1/2017 | 2/21/2017 | 480,000 | 3,840,000 | 7,680,000 | 3,533,952 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Annual Cash Bonus | N/A | 2,640,000 | 5,280,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPLX Phantom Units | 3/1/2017 | 2/21/2017 | 31,563 | 1,200,025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPLX Performance Units | 3/1/2017 | 2/21/2017 | 150,000 | 1,200,000 | 2,400,000 | 1,082,160 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Timothy T. Griffith |
MPC Stock Options | 3/1/2017 | 2/21/2017 | 56,180 | 50.99 | 800,003 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Restricted Stock | 3/1/2017 | 2/21/2017 | 7,845 | 400,017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Performance Units | 3/1/2017 | 2/21/2017 | 100,000 | 800,000 | 1,600,000 | 736,240 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Annual Cash Bonus | N/A | 560,000 | 1,120,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPLX Phantom Units | 3/1/2017 | 2/21/2017 | 6,576 | 250,020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPLX Performance Units | 3/1/2017 | 2/21/2017 | 31,250 | 250,000 | 500,000 | 225,450 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Donald C. Templin |
MPC Stock Options | 3/1/2017 | 2/21/2017 | 16,854 | 50.99 | 240,001 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Restricted Stock | 3/1/2017 | 2/21/2017 | 2,354 | 120,030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Performance Units | 3/1/2017 | 2/21/2017 | 30,000 | 240,000 | 480,000 | 220,872 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Annual Cash Bonus | N/A | 900,000 | 1,800,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPLX Phantom Units | 3/1/2017 | 2/21/2017 | 31,563 | 1,200,025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPLX Performance Units | 3/1/2017 | 2/21/2017 | 150,000 | 1,200,000 | 2,400,000 | 1,082,160 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Anthony R. Kenney |
MPC Stock Options | 3/1/2017 | 2/21/2017 | 55,618 | 50.99 | 792,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Restricted Stock | 3/1/2017 | 2/21/2017 | 7,767 | 396,039 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Performance Units | 3/1/2017 | 2/21/2017 | 99,000 | 792,000 | 1,584,000 | 728,877 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Annual Cash Bonus | N/A | 616,250 | 1,232,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPLX Phantom Units | 3/1/2017 | 2/21/2017 | 2,894 | 110,030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPLX Performance Units | 3/1/2017 | 2/21/2017 | 13,750 | 110,000 | 220,000 | 99,198 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C. Michael Palmer |
MPC Stock Options | 3/1/2017 | 2/21/2017 | 40,590 | 50.99 | 578,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Restricted Stock | 3/1/2017 | 2/21/2017 | 5,668 | 289,011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Performance Units | 3/1/2017 | 2/21/2017 | 72,250 | 578,000 | 1,156,000 | 531,933 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPC Annual Cash Bonus | N/A | 487,500 | 975,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPLX Phantom Units | 3/1/2017 | 2/21/2017 | 3,354 | 127,519 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MPLX Performance Units | 3/1/2017 | 2/21/2017 | 15,938 | 127,500 | 255,000 | 114,980 |
(1) | Our Compensation Committee approved the awards reported in the table above for Messrs. Heminger, Griffith, Templin, Kenney and Palmer on February 21, 2017, with a grant date of March 1, 2017. |
(2) | The target amounts shown in this column for Messrs. Heminger, Griffith, Templin, Kenney and Palmer reflect the target annual incentive opportunity. No threshold amount is disclosed as our Compensation Committee has discretion to not award an annual incentive under the ACB program. Each NEO may generally earn a maximum of 200% of the target; however, our Compensation Committee has discretion to award each NEO an annual incentive up to the limits of the applicable Section 162(m) funding pool. |
(3) | The target amounts shown in this column reflect the number of performance units granted to Messrs. Heminger, Griffith, Templin, Kenney and Palmer. Each performance unit has a target value of $1.00. The threshold for the award is the minimum possible payout of the award, which is 12.5%. The threshold is achieved when the payout percentage is 50% for one measurement period and 0% for the other three measurement periods, thus an average payout percentage of 12.5% for the performance cycle. The maximum payout for this award is 200% of target. |
(4) | The amounts shown in this column reflect the total grant date fair value of stock options, restricted stock and performance units granted in 2017 in accordance with provisions of the Financial Accounting Standards Board Accounting Standards Codification 718, Compensation - Stock Compensation (FASB ASC Topic 718). The Black-Scholes value used for the stock options was $14.24 per share. The restricted stock value was based on the MPC closing stock price on the grant date listed, or the next business day if the grant date was not a business day. The price used for the March 1, 2017, grants of restricted stock awards was $50.99 per share. MPC performance units are designed to settle 25% in MPC common stock and 75% in cash. The MPC performance units have a grant date fair value of $0.9203 per unit as calculated using a Monte Carlo valuation model. Assumptions used in the calculation of these amounts are included in footnote 23 to the Companys financial statements as reported in its Annual Report on Form 10-K for the year ended December 31, 2017. The phantom unit value was based on the MPLX closing unit price on the grant date listed, or the next business day if the grant date was not a business day. The price used for the March 1, 2017, grants of phantom unit awards was $38.02 per unit. MPLX performance units are designed to settle 25% in MPLX common units and 75% in cash. The MPLX performance units have a weighted grant date fair value of $0.9018 per unit, which is calculated using a Monte Carlo valuation model of $0.8036 for the TUR portion (50%) and target value of $1.00 for the DCF portion (50%). Assumptions used in the calculation of these amounts are included in footnote 20 to MPLXs financial statements as reported in its Annual Report on Form 10-K for the year ended December 31, 2017. |
page 70 / Marathon Petroleum Corporation Proxy Statement
|
Marathon Petroleum Corporation Proxy Statement / page 71
|
Outstanding Equity Awards at 2017 Fiscal Year-End
The following table provides information regarding unexercised options (vested and unvested), unvested restricted stock, unvested phantom units and performance units held by each of our NEOs as of December 31, 2017.
Stock Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||
Name
|
Grant Date(1)
|
Number of Securities Underlying Unexercised Options/SARs Exercisable
|
Number of Securities Underlying Unexercised Options/SARs Unexercisable
|
Option Exercise ($)
|
Option Expiration
|
Number of Shares or Units of Stock That Have Not Vested(5) (#) |
Market Value of Shares or Units of Stock That Have Not Vested(6) ($) |
Equity Incentive Plan Awards: Shares, Units or Other Rights that Have Not Vested(7) (#) |
Equity Incentive Plan Awards: or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested(8) ($) | |||||||||||||||||||||||||
Gary R. Heminger |
2/27/08 | 55,178 | | 23.04 | 2/27/2018 | |||||||||||||||||||||||||||||
2/25/09 | 187,142 | | 10.10 | 2/25/2019 | ||||||||||||||||||||||||||||||
2/24/10 | 246,340 | | 12.37 | 2/24/2020 | ||||||||||||||||||||||||||||||
2/23/11 | 236,744 | | 20.85 | 2/23/2021 | ||||||||||||||||||||||||||||||
12/5/11 | 73,712 | | 17.20 | 12/5/2021 | ||||||||||||||||||||||||||||||
2/29/12 | 420,170 | | 20.78 | 3/1/2022 | ||||||||||||||||||||||||||||||
2/27/13 | 221,454 | | 41.37 | 2/27/2023 | ||||||||||||||||||||||||||||||
3/1/14 | 257,340 | | 41.69 | 3/1/2024 | ||||||||||||||||||||||||||||||
3/1/15 | 173,828 | 86,914(2) | 50.89 | 3/1/2025 | ||||||||||||||||||||||||||||||
3/1/16 | 117,686 | 235,374(3) | 34.63 | 3/1/2026 | ||||||||||||||||||||||||||||||
3/1/17 | 269,663(4) | 50.99 | 3/1/2027 | |||||||||||||||||||||||||||||||
1,989,594 | 591,951 | |||||||||||||||||||||||||||||||||
MPC | 83,067 | 5,480,761 | 7,360,000 | 11,611,584 | ||||||||||||||||||||||||||||||
MPLX | 63,665 | 2,258,198 | 2,300,000 | 3,500,000 | ||||||||||||||||||||||||||||||
Timothy T. Griffith |
8/26/11 | 19,100 | | 17.44 | 8/26/2021 | |||||||||||||||||||||||||||||
2/29/12 | 28,012 | | 20.78 | 3/1/2022 | ||||||||||||||||||||||||||||||
2/27/13 | 13,072 | | 41.37 | 2/27/2023 | ||||||||||||||||||||||||||||||
3/1/14 | 16,406 | | 41.69 | 3/1/2024 | ||||||||||||||||||||||||||||||
3/1/15 | 28,444 | 14,224(2) | 50.89 | 3/1/2025 | ||||||||||||||||||||||||||||||
3/1/16 | 21,397 | 42,796(3) | 34.63 | 3/1/2026 | ||||||||||||||||||||||||||||||
3/1/17 | 56,180(4) | 50.99 | 3/1/2027 | |||||||||||||||||||||||||||||||
126,431 | 113,200 | |||||||||||||||||||||||||||||||||
MPC | 15,894 | 1,048,686 | 1,440,000 | 2,285,744 | ||||||||||||||||||||||||||||||
MPLX | 12,332 | 437,416 | 450,000 | 700,000 | ||||||||||||||||||||||||||||||
Donald C. Templin |
7/1/11 | 148,370 | | 21.10 | 7/1/2021 | |||||||||||||||||||||||||||||
2/29/12 | 89,636 | | 20.78 | 3/1/2022 | ||||||||||||||||||||||||||||||
2/27/13 | 51,674 | | 41.37 | 2/27/2023 | ||||||||||||||||||||||||||||||
3/1/14 | 56,616 | | 41.69 | 3/1/2024 | ||||||||||||||||||||||||||||||
3/1/15 | 39,506 | 19,754(2) | 50.89 | 3/1/2025 | ||||||||||||||||||||||||||||||
3/1/16 | 20,060 | 40,121(3) | 34.63 | 3/1/2026 | ||||||||||||||||||||||||||||||
3/1/17 | 16,854(4) | 50.99 | 3/1/2027 | |||||||||||||||||||||||||||||||
405,862 | 76,729 | |||||||||||||||||||||||||||||||||
MPC | 10,752 | 709,417 | 840,000 | 1,268,592 | ||||||||||||||||||||||||||||||
MPLX | 51,424 | 1,824,009 | 1,950,000 | 3,150,000 |
page 72 / Marathon Petroleum Corporation Proxy Statement
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Stock Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name
|
Grant Date(1)
|
Number of Securities Underlying Unexercised Options/SARs Exercisable
|
Number of Securities Underlying Unexercised Options/SARs Unexercisable
|
Option Exercise ($)
|
Option Expiration
|
Number of Shares or Units of Stock That Have Not Vested(5) (#) |
Market Value of Shares or Units of Stock That Have Not Vested(6) ($) |
Equity Incentive Plan Awards: Shares, Units or Other Rights that Have Not Vested(7) (#) |
Equity Incentive Plan Awards: or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested(8) ($) | |||||||||||||||||||||||||||
Anthony R. Kenney |
2/23/11 | 59,242 | | 20.85 | 2/23/2021 | |||||||||||||||||||||||||||||||
12/5/11 | 14,262 | | 17.20 | 12/5/2021 | ||||||||||||||||||||||||||||||||
2/29/12 | 67,228 | | 20.78 | 3/1/2022 | ||||||||||||||||||||||||||||||||
2/27/13 | 33,218 | | 41.37 | 2/27/2023 | ||||||||||||||||||||||||||||||||
3/1/14 | 43,426 | | 41.69 | 3/1/2024 | ||||||||||||||||||||||||||||||||
3/1/15 | 35,556 | 17,778(2) | 50.89 | 3/1/2025 | ||||||||||||||||||||||||||||||||
3/1/16 | 25,276 | 50,552(3) | 34.63 | 3/1/2026 | ||||||||||||||||||||||||||||||||
3/1/17 | 55,618(4) | 50.99 | 3/1/2027 | |||||||||||||||||||||||||||||||||
278,208 | 123,948 | |||||||||||||||||||||||||||||||||||
MPC | 17,405 | 1,148,382 | 1,548,000 | 2,437,747 | ||||||||||||||||||||||||||||||||
MPLX | 5,939 | 210,656 | 215,000 | 325,000 | ||||||||||||||||||||||||||||||||
C. Michael Palmer |
12/5/11 | 11,544 | | 17.20 | 12/5/2021 | |||||||||||||||||||||||||||||||
2/29/12 | 61,626 | | 20.78 | 3/1/2022 | ||||||||||||||||||||||||||||||||
2/27/13 | 31,374 | | 41.37 | 2/27/2023 | ||||||||||||||||||||||||||||||||
3/1/14 | 41,014 | | 41.69 | 3/1/2024 | ||||||||||||||||||||||||||||||||
3/1/15 | 28,544 | 14,272(2) | 50.89 | 3/1/2025 | ||||||||||||||||||||||||||||||||
3/1/16 | 19,324 | 38,650(3) | 34.63 | 3/1/2026 | ||||||||||||||||||||||||||||||||
3/1/17 | 40,590(4) | 50.99 | 3/1/2027 | |||||||||||||||||||||||||||||||||
193,426 | 93,512 | |||||||||||||||||||||||||||||||||||
MPC | 13,126 | 866,053 | 1,156,000 | 1,816,596 | ||||||||||||||||||||||||||||||||
MPLX | 7,075 | 250,950 | 255,000 | 382,500 |
(1) | The dates presented in this column that are prior to June 30, 2011, represent the dates awards were granted by Marathon Oil. All other grant dates represent the grant dates of awards granted by MPC. The Marathon Oil awards were converted to MPC equity awards in connection with the Spinoff and remain subject to the original vesting schedules. Therefore, to assist in understanding the vesting dates associated with the pre-Spinoff awards, we list the original grant dates for all awards of MPC equity. |
(2) | This stock option grant is scheduled to become exercisable in one-third increments on the first, second and third anniversaries of the date of grant. The remaining unvested portion of the grant will become exercisable on March 1, 2018. |
(3) | This stock option grant is scheduled to become exercisable in one-third increments on the first, second and third anniversaries of the date of grant. This remaining unvested portion of the grant will become exercisable in one-half increments on March 1, 2018 and March 1, 2019. |
(4) | This stock option grant is scheduled to become exercisable in one-third increments on the first, second and third anniversaries of the date of grant. This grant will become exercisable in one-third increments on March 1, 2018, March 1, 2019, and March 1, 2020. |
Marathon Petroleum Corporation Proxy Statement / page 73
|
(5) | The amounts shown in this column reflect the number of shares of MPC unvested restricted stock and MPLX phantom units held by each of our NEOs on December 31, 2017. Restricted stock grants and phantom units are generally scheduled to vest in one-third increments on the first, second and third anniversaries of the date of grant. |
MPC Restricted Stock | ||||||||||
Name | Grant Date | # of Unvested Shares | Vesting Date | |||||||
Gary R. Heminger |
3/1/15 | 11,530 | 3/1/18 | |||||||
3/1/16 | 33,882 | 3/1/18, 3/1/19 | ||||||||
3/1/17 | 37,655 | 3/1/18, 3/1/19, 3/1/20 | ||||||||
83,067 | ||||||||||
Timothy T. Griffith |
3/1/15 | 1,888 | 3/1/18 | |||||||
3/1/16 | 6,161 | 3/1/18, 3/1/19 | ||||||||
3/1/17 | 7,845 | 3/1/18, 3/1/19, 3/1/20 | ||||||||
15,894 | ||||||||||
Donald C. Templin |
3/1/15 | 2,622 | 3/1/18 | |||||||
3/1/16 | 5,776 | 3/1/18, 3/1/19 | ||||||||
3/1/17 | 2,354 | 3/1/18, 3/1/19, 3/1/20 | ||||||||
10,752 | ||||||||||
Anthony R. Kenney |
3/1/15 | 2,360 | 3/1/18 | |||||||
3/1/16 | 7,278 | 3/1/18, 3/1/19 | ||||||||
3/1/17 | 7,767 | 3/1/18, 3/1/19, 3/1/20 | ||||||||
17,405 | ||||||||||
C. Michael Palmer |
3/1/15 | 1,894 | 3/1/18 | |||||||
3/1/16 | 5,564 | 3/1/18, 3/1/19 | ||||||||
3/1/17 | 5,668 | 3/1/18, 3/1/19, 3/1/20 | ||||||||
13,126 |
MPLX Phantom Units | ||||||||||
Name | Grant Date | # of Unvested Shares | Vesting Date | |||||||
Gary R. Heminger |
3/1/15 | 4,460 | 3/1/18 | |||||||
3/1/16 | 27,642 | 3/1/18, 3/1/19 | ||||||||
3/1/17 | 31,563 | 3/1/18, 3/1/19, 3/1/20 | ||||||||
63,665 | ||||||||||
Timothy T. Griffith |
3/1/15 | 730 | 3/1/18 | |||||||
3/1/16 | 5,026 | 3/1/18, 3/1/19 | ||||||||
3/1/17 | 6,576 | 3/1/18, 3/1/19, 3/1/20 | ||||||||
12,332 | ||||||||||
Donald C. Templin |
3/1/15 | 1,014 | 3/1/18 | |||||||
3/1/16 | 18,847 | 3/1/18, 3/1/19 | ||||||||
3/1/17 | 31,563 | 3/1/18, 3/1/19, 3/1/20 | ||||||||
51,424 | ||||||||||
Anthony R. Kenney |
3/1/15 | 406 | 3/1/18 | |||||||
3/1/16 | 2,639 | 3/1/18, 3/1/19 | ||||||||
3/1/17 | 2,894 | 3/1/18, 3/1/19, 3/1/20 | ||||||||
5,939 | ||||||||||
C. Michael Palmer |
3/1/15 | 517 | 3/1/18 | |||||||
3/1/16 | 3,204 | 3/1/18, 3/1/19 | ||||||||
3/1/17 | 3,354 | 3/1/18, 3/1/19, 3/1/20 | ||||||||
7,075 |
(6) | The amounts shown in this column reflect the aggregate value of all shares of MPC unvested restricted stock and MPLX phantom units held by each of our NEOs on December 31, 2017, using the MPC closing stock price of $65.98 and the MPLX closing unit price of $35.47 on December 29, 2017, which was the last trading day of 2017. |
page 74 / Marathon Petroleum Corporation Proxy Statement
|
(7) | The amounts shown in this column reflect the number of unvested performance units for MPC and MPLX held by each of our NEOs on December 31, 2017. The MPC performance unit grants awarded in 2016 and 2017 have a 36-month performance cycle and are designed to settle 25% in MPC common stock and 75% in cash. Each of these performance unit grants is dollar denominated with a target value of $1.00. Payout may vary from $0.00 to $2.00 per unit and is tied to MPCs TSR as compared to specified peer groups. The MPLX performance unit grants awarded in 2016 and 2017 have a 36-month performance cycle and are designed to settle 25% in MPLX common units and 75% in cash. Each of these performance unit grants is dollar denominated with a target value of $1.00. Payout may vary from $0.00 to $2.00 per unit and is tied to MPLXs TUR as compared to specified peer groups. |
MPC Performance Units |
||||||||||
Name
|
Grant Date
|
# of Unvested Units
|
Performance Period Ending Date
|
|||||||
Gary R. Heminger |
3/1/16 | 3,520,000 | 12/31/18 | |||||||
3/1/17 | 3,840,000 | 12/31/19 | ||||||||
7,360,000 | ||||||||||
Timothy T. Griffith |
3/1/16 | 640,000 | 12/31/18 | |||||||
3/1/17 | 800,000 | 12/31/19 | ||||||||
1,440,000 | ||||||||||
Donald C. Templin |
3/1/16 | 600,000 | 12/31/18 | |||||||
3/1/17 | 240,000 | 12/31/19 | ||||||||
840,000 | ||||||||||
Anthony R. Kenney |
3/1/16 | 756,000 | 12/31/18 | |||||||
3/1/17 | 792,000 | 12/31/19 | ||||||||
1,548,000 | ||||||||||
C. Michael Palmer |
3/1/16 | 578,000 | 12/31/18 | |||||||
3/1/17 | 578,000 | 12/31/19 | ||||||||
1,156,000 |
MPLX Performance Units | ||||||||
Name
|
Grant Date
|
# of Unvested Units
|
Performance Period Ending Date
| |||||
Gary R. Heminger |
3/1/16 | 1,100,000 | 12/31/18 | |||||
3/1/17 | 1,200,000 | 12/31/19 | ||||||
2,300,000 | ||||||||
Timothy T. Griffith |
3/1/16 | 200,000 | 12/31/18 | |||||
3/1/17 | 250,000 | 12/31/19 | ||||||
450,000 | ||||||||
Donald C. Templin |
3/1/16 | 750,000 | 12/31/18 | |||||
3/1/17 | 1,200,000 | 12/31/19 | ||||||
1,950,000 | ||||||||
Anthony R. Kenney |
3/1/16 | 105,000 | 12/31/18 | |||||
3/1/17 | 110,000 | 12/31/19 | ||||||
215,000 | ||||||||
C. Michael Palmer |
3/1/16 | 127,500 | 12/31/18 | |||||
3/1/17 | 127,500 | 12/31/19 | ||||||
255,000 |
(8) | The amounts shown in this column for MPC reflect the aggregate value of all performance units held by each of our NEOs on December 31, 2017, assuming a payout of $1.4286 per unit for the March 1, 2016, grant and $1.7143 per unit for the March 1, 2017, grant, which is the next higher performance achievement that exceeds the performance for these grants measurement period that ended December 31, 2017. The amounts shown in this column for MPLX reflect the aggregate value of all performance units held by each of our NEOs on December 31, 2017, assuming a payout of $1.00 per unit for the March 1, 2016, grant and $2.00 per unit for the March 1, 2017, grant, which is the next higher performance achievement that exceeds the performance for these grants measurement period that ended December 31, 2017. |
Marathon Petroleum Corporation Proxy Statement / page 75
|
Option Exercises and Stock Vested in 2017
The following table provides information regarding MPC stock options exercised by our NEOs in 2017, as well as shares of MPC restricted stock and MPLX phantom units vested in 2017.
Option Awards | Stock Awards | ||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise(1) ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting(2) ($) | |||||||||||||||||||||
Gary R. Heminger |
|||||||||||||||||||||||||
MPC | 71,024(3) | 1,885,332 | 41,265 | 2,093,786 | |||||||||||||||||||||
MPLX | | | 25,121 | 951,332 | |||||||||||||||||||||
Timothy T. Griffith |
|||||||||||||||||||||||||
MPC | | | 5,782 | 293,379 | |||||||||||||||||||||
MPLX | | | 3,551 | 134,476 | |||||||||||||||||||||
Donald C. Templin |
|||||||||||||||||||||||||
MPC | | | 8,324 | 422,360 | |||||||||||||||||||||
MPLX | | | 11,942 | 452,244 | |||||||||||||||||||||
Anthony R. Kenney |
|||||||||||||||||||||||||
MPC | 77,578 | 3,945,726 | 8,156 | 413,835 | |||||||||||||||||||||
MPLX | | | 2,238 | 84,753 | |||||||||||||||||||||
C. Michael Palmer |
|||||||||||||||||||||||||
MPC | 88,062 | 3,711,280 | 6,716 | 340,770 | |||||||||||||||||||||
MPLX | | | 2,889 | 109,406 |
(1) | The amounts shown in this column reflect the actual pre-tax gain realized by our NEOs upon exercise of stock options, which is the fair market value of the shares on the date of exercise less the per share grant price. |
(2) | The amounts shown in this column reflect the actual pre-tax gain realized by our NEOs upon vesting of MPC restricted stock and MPLX phantom units, which is the fair market value of the shares/units on the date of vesting. |
(3) | The stock options exercised were due to expire in May 2017. |
Post-Employment Benefits for 2017
Pension Benefits
We provide tax-qualified retirement benefits to our employees, including our NEOs, under the Marathon Petroleum Retirement Plan. While most employees of Speedway generally do not participate in the Marathon Petroleum Retirement Plan, some receive tax-qualified retirement benefits under the Speedway Retirement Plan. In addition, we sponsor the Marathon Petroleum Excess Benefit Plan and the Speedway Excess Benefit Plan (or Excess Plans) for the benefit of a select group of management and other employees who are highly compensated as defined by Section 414(q) of the Internal Revenue Code (annual compensation of $120,000 or more in 2017).
page 76 / Marathon Petroleum Corporation Proxy Statement
|
2017 Pension Benefits Table
The 2017 Pension Benefits Table below reflects the actuarial present value of accumulated benefits payable to each of our NEOs under the Marathon Petroleum Retirement Plan, the Speedway Retirement Plan and the defined benefit portion of the Excess Plans as of December 31, 2017. These values have been determined using actuarial assumptions consistent with those used in our financial statements.
Name | Plan Name |
Number of Years of Credited Service(1) |
Present Value of Accumulated Benefit(2) |
Payments During Last Fiscal Year | ||||||||||
Gary R. Heminger |
Marathon Petroleum Retirement Plan | 37.08 years | 1,982,795 | | ||||||||||
Marathon Petroleum Excess Benefit Plan | 37.08 years | 25,100,982 | | |||||||||||
Speedway Retirement Plan | 6.48 years | 344,131 | | |||||||||||
Speedway Excess Benefit Plan | 6.48 years | 4,540,517 | | |||||||||||
Timothy T. Griffith |
Marathon Petroleum Retirement Plan | 6.33 years | 135,714 | | ||||||||||
Marathon Petroleum Excess Benefit Plan | 6.33 years | 339,898 | | |||||||||||
Donald C. Templin |
Marathon Petroleum Retirement Plan | 6.50 years | 166,019 | | ||||||||||
Marathon Petroleum Excess Benefit Plan | 6.50 years | 1,054,785 | | |||||||||||
Anthony R. Kenney |
Marathon Petroleum Retirement Plan | 22.83 years | 1,311,214 | | ||||||||||
Marathon Petroleum Excess Benefit Plan | 22.83 years | 4,804,414 | | |||||||||||
Speedway Retirement Plan | 18.99 years | 611,159 | | |||||||||||
Speedway Excess Benefit Plan | 18.99 years | 2,882,262 | | |||||||||||
C. Michael Palmer |
Marathon Petroleum Retirement Plan | 42.42 years | 2,338,200 | | ||||||||||
Marathon Petroleum Excess Benefit Plan | 42.42 years | 5,380,535 | |
(1) | The number of years of credited service shown in this column represents the number of years the NEO has participated in the Plan. However, plan participation service used for the purpose of calculating each participants benefit under the Marathon Petroleum Retirement Plan legacy final average pay formula and the Speedway pension equity formula was frozen as of December 31, 2009. Plan participation service used for the purpose of calculating each participants benefit under the Speedway Retirement Plan legacy final average pay formula was frozen on December 31, 1998. |
(2) | The present value of accumulated benefit for the Marathon Petroleum Retirement Plan was calculated assuming a discount rate of 3.55%, the RP2000 mortality table for lump sums, a 96% lump-sum election rate and retirement at age 62 (or current age, if later). In accordance with the Marathon Petroleum Retirement Plan provisions and actuarial assumptions, the discount rate for lump-sum calculations is 0.75% for all anticipated years of retirement. The present value of accumulated benefit for the Speedway Retirement Plan was calculated assuming a discount rate of 3.55%, the 94GAR mortality table for lump sums, a 96% lump-sum election rate and retirement at age 65. In accordance with the Speedway Retirement Plan provisions and actuarial assumptions, the discount rate for lump-sum calculations was 2.62% for the Speedway legacy benefit formula and 2.82% for the pension equity formula, for the anticipated year of retirement for those with Speedway benefits. Please refer to the Speedway Retirement Plan section of this Proxy Statement for more detail on the Speedway formulas. |
Marathon Petroleum Retirement Plans
Marathon Petroleum Retirement Plan
In general, our employees and certain employees of Speedway are immediately eligible to participate in the Marathon Petroleum Retirement Plan. The Marathon Petroleum Retirement Plan is primarily designed to provide employees income after retirement. Prior to January 1, 2010, the monthly benefit under the Marathon Petroleum Retirement Plan was equal to the following formula:
[ | 1.6% | × | Final Average Pay |
× | Years of Participation |
] | | [ | 1.33% | × | Estimated Primary Social Security Benefit |
× | Years of Participation |
] |
This formula is referred to as the Marathon legacy benefit formula. Effective January 1, 2010, the Marathon legacy benefit formula was amended to (i) cease future accruals of additional years of participation, and (ii) as applied to eligible NEOs, cease further compensation updates. No more than 37.5 years of participation may be recognized under the Marathon legacy benefit formula.
Marathon Petroleum Corporation Proxy Statement / page 77
|
Eligible earnings under the Marathon Petroleum Retirement Plan include, but are not limited to, pay for hours worked, pay for allowed hours, military leave allowance, commissions, 401(k) contributions to the Marathon Petroleum Thrift Plan and incentive compensation bonuses. Age continues to be updated under the Marathon legacy benefit formula.
Benefit accruals for years beginning in 2010 are determined under a cash-balance formula. Under the cash-balance formula, each year plan participants receive pay credits equal to a percentage of compensation based on their plan points. Plan points equal the sum of a participants age and cash-balance service:
| Participants with less than 50 points receive a 7% pay credit; |
| Participants with at least 50 but less than 70 points receive a 9% pay credit; and |
| Participants with 70 or more points receive an 11% pay credit. |
Participants in the Marathon Petroleum Retirement Plan become fully vested upon the completion of three years of vesting service. Normal retirement age for both the Marathon legacy benefit and cash-balance formulas is 65. However, retirement-eligible participants are able to retire and receive an unreduced benefit under the Marathon legacy benefit formula after reaching age 62.
The forms of benefit available under the Marathon Petroleum Retirement Plan include various annuity options and a lump-sum distribution option.
Participants are eligible for early retirement upon reaching age 50 and completing 10 years of vesting service. If an employee retires between the ages of 50 and 62 with sufficient vesting service, the amount of benefit under the Marathon legacy benefit formula is reduced in accordance with the table below:
Age at Retirement |
Early Retirement Factor |
Age at Retirement |
Early Retirement Factor | |||
62
|
100%
|
55
|
75%
| |||
61
|
97%
|
54
|
71%
| |||
60
|
94%
|
53
|
67%
| |||
59
|
91%
|
52
|
63%
| |||
58
|
87%
|
51
|
59%
| |||
57
|
83%
|
50
|
55%
| |||
56
|
79%
|
There are no early retirement subsidies under the cash-balance formula. Messrs. Heminger, Kenney and Palmer are currently eligible for early retirement benefits under the Marathon Petroleum Retirement Plan.
Under the cash-balance formula, plan participants receive pay credits based on age and cash-balance service. For 2017, Messrs. Heminger, Kenney and Palmer received pay credits equal to 11% of compensation, which is the highest level of pay credit available under the plan. Mr. Templin received pay credits equal to 9% of compensation. Additionally, under the terms of his employment offer entered into with our former parent company, Mr. Templin receives additional contributions to our non-qualified plan to ensure that the aggregate contributions from our qualified and non-qualified retirement plans equal 11% of his applicable compensation. Based on the age and service calculation specified in the Marathon Petroleum Retirement Plan, Mr. Templin will receive a supplemental non-qualified contribution set at 2% of eligible compensation in the Marathon Petroleum Excess Benefit Plan. This supplemental contribution will be decreased over time as Mr. Templins age and service increase; he will be eligible for the full 11% contribution in his qualified plan in 2022. Mr. Griffith received pay credits equal to 9% of compensation in our qualified plan.
Marathon Petroleum Excess Benefit Plan (Defined Benefit)
Marathon Petroleum Company LP (or MPC LP) sponsors the Marathon Petroleum Excess Benefit Plan, an unfunded, non-qualified retirement plan, for the benefit of a select group of management and highly compensated employees. The Marathon Petroleum Excess Benefit Plan generally provides benefits that participants, including our NEOs, would have otherwise received under the tax-qualified Marathon Petroleum Retirement Plan were it not for Internal Revenue Code limitations. For our NEOs, eligible earnings under the Marathon Petroleum Excess Benefit Plan include the items listed above, excluding bonuses, for the Marathon Petroleum Retirement Plan, as well as deferred compensation contributions, for the highest consecutive 36-month period over the 10-year period up to December 31, 2012. The Marathon Petroleum Excess
page 78 / Marathon Petroleum Corporation Proxy Statement
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Benefit Plan also provides an enhancement for executive officers using the three highest bonuses earned over the 10-year period up to December 31, 2012, instead of the consecutive bonus formula in place for non-officers. We believe this enhancement is appropriate in light of the greater volatility of executive officer bonuses. However, as Messrs. Griffith and Templin have not accrued a benefit under the Marathon legacy benefit formula, they are not eligible for this enhancement.
Due to the structure of the frozen Marathon legacy benefit formula under the Marathon Petroleum Retirement Plan, the age-related lump-sum benefit conversion factors used to calculate lump-sum benefits under the frozen legacy final average pay benefit formula result in a year-to-year decrease in the lump-sum benefit for participants generally beginning on or after the age of 59. As a result, if participants choose to continue their employment with MPC after they reach age 59, their lump-sum benefit may decline year to year.
The Marathon Petroleum Excess Benefit Plan permits the Compensation Committee, on a discretionary basis, to extend a lump-sum retirement benefit supplement (or Service Benefit) to individual officers of MPC to offset the age-related erosion of benefit from age 62 until such officers actual retirement date or date of death. An officer must be vested under the Marathon Petroleum Retirement Plan to qualify for the Service Benefit. The Compensation Committee previously extended eligibility for the Service Benefit to Messrs. Heminger, Kenney and Palmer.
The Service Benefit will not correct for any age-related erosion of benefit occurring prior to an officer reaching age 62 but, for those officers selected by the Compensation Committee in its sole discretion, the Service Benefit will correct for the age-related erosion of benefit from age 62 until such officers actual retirement date or date of death. If an officer who has been offered the Service Benefit retires or dies after reaching age 62 and while an active employee with us, the officers Service Benefit will be calculated as follows:
a. | If the lump-sum interest rate upon the officer reaching the age of 62 used to calculate the retirement lump-sum benefit is less than or equal to the lump-sum interest rate as of the officers actual retirement date or date of death, the Service Benefit shall be the difference between the legacy lump-sum benefit he or she would have been eligible to receive using the age 62 lump-sum conversion factor based on the lump-sum interest rate in effect on the actual retirement date or date of death and the legacy lump-sum benefit he or she is eligible to receive using the lump-sum conversion factor for the actual age at retirement or death based on the lump-sum interest rate in effect on the actual retirement date or date of death; or |
b. | If the lump-sum interest rate upon the officer reaching the age of 62 used to calculate the retirement lump-sum benefit is greater than the lump-sum interest rate as of the officers actual retirement date or date of death, the Service Benefit shall be the difference between the legacy lump-sum benefit he or she would have been eligible to receive using the lump-sum conversion factor and lump-sum interest rate in effect at age 62 and the legacy lump-sum benefit he or she is eligible to receive using the lump-sum conversion factor and lump-sum interest rate in effect on the actual retirement date or date of death. |
As intended by the Compensation Committee, the Service Benefit does not compensate for unfavorable fluctuations in the lump-sum interest rate and is in fact structured to prevent payment of a Service Benefit greater than intended within a favorable interest rate environment; the Service Benefit is designed to correct only for the benefit erosion an officer may experience for continued employment with us after reaching the age of 62.
Marathon Petroleum Thrift Plan
MPC LP sponsors the Marathon Petroleum Thrift Plan, a tax-qualified employee savings plan. In general, all of our employees and Speedway employees, including our NEOs, are immediately eligible to participate in the Marathon Petroleum Thrift Plan. The purpose of the Marathon Petroleum Thrift Plan is to assist employees in maintaining a steady program of savings to supplement their retirement income and to meet other financial needs.
The Marathon Petroleum Thrift Plan allows contributions for NEOs on a pre-tax or Roth basis. Employees may elect to make any combination of pre-tax or Roth contributions from 1% to a maximum of 75% of gross pay. The participating employer will match participant contributions at a rate of 117% up to a maximum of 6% of gross pay. All matching contributions made are fully vested.
Marathon Petroleum Corporation Proxy Statement / page 79
|
Speedway Retirement Plan
Speedway sponsors the Speedway Retirement Plan. The Speedway Retirement Plan is primarily designed to help employees provide for an income after retirement. During his prior service with Speedway, Mr. Heminger participated in the Speedway Retirement Plan. At the time of his participation, the monthly benefit under the Speedway Retirement Plan was calculated under the following formula:
[ | 2.0% |
× |
Final Average Pay |
× | Years of Participation |
] | | [ | 2.0% | × | Estimated Primary Social Security Benefit |
× | Years of Participation |
] |
This formula is referred to as the Speedway legacy benefit formula. This benefit formula was grandfathered for all employees participating in this plan as of December 31, 1998, and no additional years of participation credit beyond that date are recognized. Additionally, compensation updates for the NEOs participating in the Speedway legacy benefit formula ceased as of December 31, 1998. No more than 25 years of participation may be recognized under the formula.
Eligible earnings under the Speedway Retirement Plan included pay for hours worked, pay for allowed hours, military leave allowance, commissions, 401(k) contributions to the then Speedway Retirement Savings Plan and incentive compensation bonuses. Vesting service and age continue to be updated under the Speedway legacy benefit formula.
Effective January 1, 1999, the Speedway Retirement Plan was amended so that benefits accrued on or after that date would be determined under a pension equity formula.
As an employee of Speedway, Mr. Kenney has accrued a benefit under both the Speedway legacy benefit formula and the pension equity formula. Under the pension equity formula, each year participants were credited with a percentage of their final average pay. The percentages were based on the sum of a participants age plus participation service, as follows:
Age +
|
Percentage of Final Average Pay
| ||||
0-29
|
2.50%
| ||||
30-39
|
4.00%
| ||||
40-49
|
5.25%
| ||||
50-59
|
7.75%
| ||||
60-69
|
10.50%
| ||||
70-79
|
13.00%
| ||||
80+ |
15.50% |
The pension equity formula generally provides that a participants pension equity accrued balance will equal the sum of the percentages the participant has accrued for each year of participation multiplied by final average pay. This pension equity accrued balance is then converted into an actuarially equivalent annuity payable at normal retirement age, which was the participants accrued benefit under the pension equity formula. Effective January 1, 2010, the Speedway Retirement Plan was amended to (i) cease pension equity percentage accruals, and (ii) as applied to Mr. Kenney, eliminate compensation updates. Vesting service and age continue to be updated under the pension equity formula.
For participants who separate from service after 2007, benefits under the Speedway Retirement Plan are fully vested upon the completion of three years of vesting service. Normal retirement age for both the Speedway legacy benefit and pension equity formulas is age 65. The forms of benefit available under the Speedway Retirement Plan include various annuity options and a lump-sum distribution option.
page 80 / Marathon Petroleum Corporation Proxy Statement
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Participants are eligible for early retirement upon reaching age 50 and completing 10 years of vesting service. If an employee retires between the ages of 50 and 65, the amount of benefit under the Speedway legacy benefit formula is reduced in accordance with the table below:
Age at Retirement |
Early Retirement Factor |
Age at Retirement |
Early Retirement Factor | ||||||||||||
65
|
100%
|
57
|
76%
| ||||||||||||
64
|
97%
|
56
|
73%
| ||||||||||||
63
|
94%
|
55
|
70%
| ||||||||||||
62
|
91%
|
54
|
67%
| ||||||||||||
61
|
88%
|
53
|
64%
| ||||||||||||
60
|
85%
|
52
|
61%
| ||||||||||||
59
|
82%
|
51
|
58%
| ||||||||||||
58 |
79% | 50 | 55%
|
There are no early retirement subsidies under the pension equity formula. Messrs. Heminger and Kenney are currently eligible for early retirement benefits under the Speedway Retirement Plan.
Speedway Excess Benefit Plan
Speedway also sponsors the unfunded, non-qualified Speedway Excess Benefit Plan for the benefit of a select group of management and highly compensated employees. This plan provides participants, including Messrs. Heminger and Kenney, with benefits that would have otherwise been received from the tax-qualified Speedway Retirement Plan were it not for Internal Revenue Code limitations. For our NEOs, eligible earnings under the Speedway Excess Benefit Plan include the items listed above, excluding bonuses, for the Speedway Retirement Plan, as well as deferred compensation contributions, for the highest consecutive 36-month period over the 10-year period up to December 31, 2012. The Speedway Excess Benefit Plan also provides an enhancement for executive officers using the three highest bonuses earned over the 10-year period up to December 31, 2012, instead of the consecutive bonus formula in place for non-officers. Speedway believes this enhancement is appropriate in light of the greater volatility of executive officer bonuses. Effective January 1, 2013, this Plan was amended to cease further compensation updates; therefore, Messrs. Heminger and Kenney have not accrued any additional benefits under this plan since that date. A participant must be vested under the Speedway Retirement Plan in order for an excess retirement benefit to be payable to the participant.
In addition, the Speedway Excess Benefit Plan provides benefits for eligible participants equal to the non-elective 3.5% Company contribution they would have otherwise received under the tax-qualified Retirement Savings Sub-Plan of the Marathon Petroleum Thrift Plan (RSSP) were it not for Internal Revenue Code limitations. Mr. Kenney was eligible for this contribution paid in 2015. At that time, the RSSP provided this non-elective contribution as applied to eligible compensation for eligible Speedway employees (all employees age 21 or older who have completed one year of service, have worked more than 1,000 hours and are employed on the last day of the year), including Mr. Kenney. Mr. Kenney, along with certain other Speedway employees, now participates in the Marathon Petroleum Thrift Plan; therefore, he is no longer eligible for the non-elective 3.5% Company contribution.
Marathon Petroleum Corporation Proxy Statement / page 81
|
Other Non-Qualified Deferred Compensation
The Non-Qualified Deferred Compensation Table below provides information regarding the non-qualified savings and deferred compensation plans sponsored by MPC or its subsidiaries.
2017 Non-Qualified Deferred Compensation
Name |
Executive contributions in last fiscal year(1) |
Registrant contributions in last fiscal year(2) |
Aggregate earnings in last fiscal year |
Aggregate withdrawals/ distributions |
Aggregate balance at last fiscal year-end(3 ) | |||||||||||||||||||||||||
Gary R. Heminger |
Marathon Petroleum Excess Benefit Plan | | | 1,342 | | 63,341 | ||||||||||||||||||||||||
Marathon Petroleum Deferred Compensation Plan | | 384,520 | 1,615,916 | | 7,386,738 | |||||||||||||||||||||||||
EMRO Marketing Company Deferred Compensation Plan | | | 10,993 | | 276,598 | |||||||||||||||||||||||||
Timothy T. Griffith |
Marathon Petroleum Deferred Compensation Plan | 71,418 | 81,317 | 132,994 | | 832,566 | ||||||||||||||||||||||||
Donald C. Templin |
Marathon Petroleum Deferred Compensation Plan | | 131,762 | 107,645 | | 846,062 | ||||||||||||||||||||||||
Anthony R. Kenney |
Marathon Petroleum Deferred Compensation Plan | 179,308 | 103,059 | 355,882 | | 1,964,904 | ||||||||||||||||||||||||
Speedway Deferred Compensation Plan | | | 895,764 | | 3,969,678 | |||||||||||||||||||||||||
Speedway Excess Plan | | | 2,162 | | 212,245 | |||||||||||||||||||||||||
EMRO Marketing Company Deferred Compensation Plan | | | 16,809 | | 422,916 | |||||||||||||||||||||||||
C. Michael Palmer |
Marathon Petroleum Excess Benefit Plan | | | 2,452 | | 115,746 | ||||||||||||||||||||||||
Marathon Petroleum Deferred Compensation Plan | | 77,571 | 94,698 | | 648,316 |
(1) | The amounts shown in this column are also included in the Salary and Non-Equity Incentive Plan Compensation columns of the 2017 Summary Compensation Table. |
(2) | The amounts shown in this column are also included in the All Other Compensation column of the 2017 Summary Compensation Table. |
(3) | Of the amounts shown in this column, the following amounts have been reported in our Summary Compensation Tables for previous years: (a) under the Marathon Petroleum Deferred Compensation Plan: Mr. Heminger, $2,285,931; Mr. Griffith, $227,258; Mr. Templin, $517,322; Mr. Kenney, $641,139; and Mr. Palmer, $218,503; (b) under the Speedway Deferred Compensation Plan: Mr. Kenney, $699,152; and (c) under the Speedway Excess Benefit Plan: Mr. Kenney, $113,267. |
page 82 / Marathon Petroleum Corporation Proxy Statement
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Marathon Petroleum Corporation Proxy Statement / page 83
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page 84 / Marathon Petroleum Corporation Proxy Statement
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Marathon Petroleum Corporation Proxy Statement / page 85
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Potential Payments upon Termination or Termination in the Event of a Change in Control
Severance(1) | Additional Pension Benefits(2) |
Accelerated Options(3) |
Accelerated Restricted Stock(4) |
Accelerated Performance Units(5) |
Other Benefits(6) |
Total | ||||||||||||||||||||||||
Name |
Scenario | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||
Gary R. Heminger |
Change in Control (No Termination or Retirement) (7) | | | | | | | | ||||||||||||||||||||||
Change in Control (With Qualified Termination) | 4,201,389 | 32,520,813 | 12,732,756 | 7,738,959 | 9,660,000 | 50,595 | 66,904,512 | |||||||||||||||||||||||
Voluntary Retirement | | | 12,732,756 | | | | 12,732,756 | |||||||||||||||||||||||
Resignation (No Retirement) (8) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||
Involuntary Termination by Company Without Cause or Good Reason (9) | | | | | | | | |||||||||||||||||||||||
Involuntary Termination by Company With Cause or Good Reason (10) | | | | | | | | |||||||||||||||||||||||
Timothy T. Griffith |
Change in Control (No Termination or Retirement) (7) | | | | | | | | ||||||||||||||||||||||
Change in Control (With Qualified Termination) (11) | 4,350,000 | | 2,398,433 | 1,486,102 | 1,890,000 | 56,343 | 10,180,878 | |||||||||||||||||||||||
Voluntary Retirement (12) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||
Resignation (No Retirement) | | | | | | | | |||||||||||||||||||||||
Involuntary Termination by Company Without Cause or Good Reason (9) | | | | | | | | |||||||||||||||||||||||
Involuntary Termination by Company With Cause or Good Reason (10) | | | | | | | | |||||||||||||||||||||||
Donald C. Templin |
Change in Control (No Termination or Retirement) (7) | | | | | | | | ||||||||||||||||||||||
Change in Control (With Qualified Termination) (11) | 6,600,000 | | 1,808,523 | 2,533,426 | 2,790,000 | 54,469 | 13,786,418 | |||||||||||||||||||||||
Voluntary Retirement (12) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||
Resignation (No Retirement) | | | | | | | | |||||||||||||||||||||||
Involuntary Termination by Company Without Cause or Good Reason (9) | | | | | | | | |||||||||||||||||||||||
Involuntary Termination by Company With Cause or Good Reason (10) | | | | | | | | |||||||||||||||||||||||
Anthony R. Kenney |
Change in Control (No Termination or Retirement) (7) | | | | | | | | ||||||||||||||||||||||
Change in Control (With Qualified Termination) | 1,393,548 | 5,819,537 | 2,686,789 | 1,359,038 | 1,763,000 | 43,069 | 13,064,981 | |||||||||||||||||||||||
Voluntary Retirement | | | 2,686,789 | | | | 2,686,789 | |||||||||||||||||||||||
Resignation (No Retirement) (8) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||
Involuntary Termination by Company Without Cause or Good Reason (9) | | | | | | | | |||||||||||||||||||||||
Involuntary Termination by Company With Cause or Good Reason (10) | | | | | | | | |||||||||||||||||||||||
C. Michael Palmer |
Change in Control (No Termination or Retirement) (7) | | | | | | | | ||||||||||||||||||||||
Change in Control (With Qualified Termination) | 1,516,667 | 8,247,963 | 2,035,486 | 1,117,003 | 1,411,000 | 39,308 | 14,367,427 | |||||||||||||||||||||||
Voluntary Retirement | | | 2,035,486 | | | | 2,035,486 | |||||||||||||||||||||||
Resignation (No Retirement) (8) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||
Involuntary Termination by Company Without Cause or Good Reason (9) | | | | | | | | |||||||||||||||||||||||
Involuntary Termination by Company With Cause or Good Reason (10) | | | | | | | |
(1) | The payment of cash severance upon a change in control requires both (a) the occurrence of a change in control and (b) a Qualified Termination. If the Qualified Termination occurs within three years of the date the officer reaches age 65, the officers benefit will be limited to a pro rata portion of the benefit. The officers benefit is calculated using a fraction equal to the number of full and partial months existing between the Qualifying Termination and the officers 65th birthday divided by 36 months. The benefits for Messrs. Heminger, Kenney and Palmer have been reduced because they are within three years of reaching age 65. |
(2) | The incremental retirement benefits included in these amounts were calculated using the following assumptions: individual life expectancies using the RP2000 Combined Healthy Table weighted 75% male and 25% female; a discount rate of 1.00% for NEOs who are retirement eligible (taking into account the additional three years of age and service credit) and 1.00% for our NEOs who are not retirement eligible; the current lump-sum interest rate for the relevant plans; and a lump-sum form of benefit. Health and welfare plans reflect the incremental cost of coverage under the policy using the assumptions used for financial reporting purposes under generally accepted accounting principles in the United States. |
(3) | The vesting of stock options is accelerated upon retirement or a change in control with a Qualified Termination. The amounts shown in this column reflect the value that would be realized if accelerated stock options were exercised on December 31, 2017, taking into account the spread (if any) between the options exercise prices and the closing price of our common stock on December 29, 2017. |
(4) | The vesting of restricted stock is accelerated upon a change in control with a Qualified Termination. The amounts shown in this column reflect the value that would be realized if accelerated MPC restricted stock and MPLX phantom unit awards vested on December 31, 2017, taking into account the closing price of our common stock and MPLX common units on December 29, 2017. |
page 86 / Marathon Petroleum Corporation Proxy Statement
|
(5) | The amounts shown in this column reflect the MPC and MPLX performance unit target vesting amounts that would be payable in the event of a change in control with each performance unit having a target value of $1.00. |
(6) | Other benefits include 36 months of continued health, dental and life insurance coverage in the event of a change in control. |
(7) | All grants require a change in control and Qualified Termination before vesting and therefore no value is reported in this row. |
(8) | Messrs. Heminger, Kenney and Palmer are eligible to retire under our retirement plan and therefore no amounts for resignation have been calculated. |
(9) | Our NEOs are eligible for the same termination allowance plan available to all other employees, which would pay a severance between eight and 62 weeks of salary based either on service or level of base salary. Payments under the Plan are at the discretion of our Compensation Committee. |
(10) | Payments would be at the discretion of our Compensation Committee for involuntary termination for cause or with good reason. |
(11) | The additional pension benefits due to a change in control and subsequent Qualified Termination is attributable solely to the final average pay formula in the change-in-control plans. Given the date of hire of Messrs. Griffith and Templin, they are not eligible for any benefit under this formula. |
(12) | Messrs. Griffith and Templin were not eligible to retire as of December 31, 2017. |
Marathon Petroleum Corporation Proxy Statement / page 87
|
Marathon Petroleum Corporation Proxy Statement / page 89
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Compensation Policies and Practices for Employees
We offer our employees a competitive pay package that includes base pay, annual cash bonuses and long-term incentives for qualifying employees. We do not believe that our compensation policies or practices for any employees are reasonably likely to have a material adverse effect on MPC.
Delivery of a Single Set of Proxy Materials to Households with
Multiple Marathon Petroleum Corporation Shareholders (Householding)
We are delivering only one set of proxy materials to multiple shareholders who share the same address unless we have received contrary instructions from one or more of the shareholders sharing such address. Upon request, we will forward a separate copy of proxy materials to any shareholder at your address. If you wish to receive a separate copy of the proxy materials, you may call us at (419) 421-3711 or write to us at Marathon Petroleum Corporation, Shareholder Services Office, 539 South Main Street, Findlay, OH 45840. Shareholders sharing an address who now receive multiple copies of the proxy materials may request delivery of a single set by calling us at the above number or writing to us at the above address.
We will bear the cost of this solicitation of proxies. In addition to soliciting proxies by mail, our directors, officers and employees may solicit proxies by telephone, in person or by other means. They will not receive any extra compensation for this work. The Company has retained Innisfree M&A Incorporated to assist with the solicitation of proxies for a fee not to exceed $135,000 plus reimbursement for certain expenses. We will also make arrangements with brokerage firms and other custodians, nominees and fiduciaries to forward proxy solicitation material to the beneficial owners of common stock, and we will reimburse them for reasonable out-of-pocket expenses that they incur in connection with forwarding the material.
By order of the Board of Directors,
Molly R. Benson
Vice President, Corporate Secretary and Chief Compliance Officer
March 15, 2018
page 90 / Marathon Petroleum Corporation Proxy Statement
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PROPOSED AMENDMENTS TO OUR AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO ELIMINATE SUPERMAJORITY VOTING REQUIREMENTS
Text of proposed amendments to the Certificate (deletions are indicated by strikeouts and additions are indicated by double-underlining):
Amend ARTICLE SEVEN, BYLAWS, as follows:
The Board shall have
the power to adopt, amend, repeal or restate the Bylaws of the Corporation. Any adoption, amendment, repeal or restatement of the Bylaws of the Corporation by the Board shall require the approval of a majority of the Directors then in office. The
stockholders shall also have the power to adopt, amend, repeal or restate the Bylaws of the Corporation at any meeting of stockholders before which such matter has been properly brought in accordance with the Bylaws of the Corporation;
provided, however, that, except for any amendment, repeal or restatement approved by the majority of the Directors then in office, in addition to any vote of the holders of any class or series of capital stock of the Corporation
required by Applicable Laws or by this Certificate of Incorporation, the affirmative vote of the holders of at least a majority eighty percent (80%)
of the voting power of all then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, shall
be required to adopt, amend, repeal or restate any provision of the Bylaws of the Corporation.
Marathon Petroleum Corporation Proxy Statement / page I-1
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PROPOSED AMENDMENTS TO OUR AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO ELIMINATE SUPERMAJORITY VOTING REQUIREMENTS
Text of proposed amendments to the Certificate (deletions are indicated by strikeouts and additions are indicated by double-underlining):
Amend ARTICLE SIX, BOARD OF DIRECTORS, Section 5 as follows:
5. Removal of Directors. Subject to the rights, if any, of holders of Preferred Stock as set forth in any
applicable Preferred Stock Designation, Directors of the Corporation may be removed from office only (a) by the Court of Chancery pursuant to Section 225(c) of the DGCL or (b) for cause by the affirmative vote of the holders of at
least a majority eighty percent (80%) of the voting power of all then outstanding shares of capital stock of the Corporation generally entitled to vote in the election of
Directors, voting together as a single class. Except as Applicable Laws otherwise provide, cause for the removal of a Director will be deemed to exist only if the Director whose removal is proposed: (i) has been convicted, or has
been granted immunity to testify in any proceeding in which another has been convicted, of a felony by a court of competent jurisdiction and that conviction is no longer subject to direct appeal; (ii) has been found to have been grossly
negligent or guilty of misconduct in the performance of his or her duties to the Corporation in any matter of substantial importance to the Corporation by a court of competent jurisdiction; or (iii) has been adjudicated by a court of competent
jurisdiction to be mentally incompetent, which mental incompetency directly affects his or her ability to serve as a Director of the Corporation.
Amend ARTICLE EIGHT, AMENDMENTS TO THIS RESTATED CERTIFICATE, as follows:
Notwithstanding anything in this Restated Certificate of Incorporation or the Bylaws
of the Corporation to the contrary, the affirmative vote of the holders of at least a majority eighty percent (80%) of the voting power of all then outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, shall be required to alter, amend, repeal or restate any
provision of this Restated Certificate of Incorporation.; provided, however, that if any such alteration, amendment, repeal or restatement
(except any alteration, amendment, repeal or restatement of Article SIX, this Article EIGHT or Article NINE) has been approved by the majority of the Directors then in office, then the affirmative vote of the holders of a majority of the voting
power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, will be sufficient to adopt such alteration, amendment, repeal or restatement. Any
alteration, amendment, repeal or restatement to Article SIX, this Article EIGHT or Article NINE shall require the affirmative vote of the holders of at least eighty percent (80%) of the voting power of all then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of Directors, voting together as a single class, regardless of whether or not such alteration, amendment, repeal or restatement is approved by the majority of the Directors then in
office.
Marathon Petroleum Corporation Proxy Statement / page II-1
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PRELIMINARY
*** Exercise Your Right to Vote ***
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be Held on April 25, 2018.
Meeting Information
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Meeting Type: Annual Meeting | ||||||||||||||||||||
MARATHON PETROLEUM CORPORATION | For holders as of: February 26, 2018 | |||||||||||||||||||
Date: April 25, 2018 |
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Time: 10:00 AM Eastern Time |
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Location: Marathon Petroleum Corporation |
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539 South Main Street | ||||||||||||||||||||
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Findlay, OH
45840-3229
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MARATHON PETROLEUM CORP. 539 SOUTH MAIN STREET FINDLAY, OH 45840-3229 |
You are receiving this communication because you hold shares in the company named above. | |||||
This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or easily request a paper copy (see reverse side). | ||||||
We encourage you to access and review all of the important information contained in the proxy materials before voting.
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See the reverse side of this notice to obtain proxy materials and voting instructions.
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PRELIMINARY
Before You Vote
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How to Access the Proxy Materials
Proxy Materials Available to VIEW or RECEIVE: |
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NOTICE AND PROXY STATEMENT ANNUAL REPORT
How to View Online: Have the information that is printed in the box marked by the arrow (located on the following page) and visit: www.proxyvote.com.
How to Request and Receive a PAPER or E-MAIL Copy: If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO charge for receiving a copy. Please choose one of the following methods to make your request: 1) BY INTERNET: www.proxyvote.com 2) BY TELEPHONE: 1-800-579-1639 3) BY E-MAIL*: sendmaterial@proxyvote.com
* If requesting materials by e-mail, please send a blank e-mail with the information that is printed in the box marked by the arrow (located on the following page) in the subject line.
Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before April 11, 2018 to facilitate timely delivery.
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How To Vote
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Please Choose One of the Following Voting Methods
Vote In Person: Many shareholder meetings have attendance requirements including, but not limited to, the possession of an attendance ticket issued by the entity holding the meeting. Please check the meeting materials for any special requirements for meeting attendance. At the meeting, you will need to request a ballot to vote shares held in registered form.
Vote By Internet: To vote now by Internet, go to www.proxyvote.com. Have the information that is printed in the box marked by the arrow (located on the following page) available and follow the instructions.
Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will include a proxy card.
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PRELIMINARY
Voting Items |
Your Board of Directors recommends you vote FOR the following Class I Directors for a three-year term expiring in 2021:
1. Election of Class I Directors
Nominees:
1a. Abdulaziz F. Alkhayyal
1b. Donna A. James
1c. James E. Rohr
Your Board of Directors recommends you vote FOR Items 2 and 3:
2. Ratification of the selection of PricewaterhouseCoopers LLP as the companys independent auditor for 2018.
3. Approval, on an advisory basis, of the companys named executive officer compensation.
Your Board of Directors recommends you vote EVERY YEAR 1 YEAR for Item 4:
4. Recommendation, on an advisory basis, of the frequency of advisory votes on the companys named executive officer compensation.
Your Board of Directors recommends you vote FOR Items 5 and 6:
5. Approval of amendments to the companys Restated Certificate of Incorporation to eliminate the supermajority voting requirement applicable to bylaw amendments.
6. Approval of amendments to the companys Restated Certificate of Incorporation to eliminate the supermajority voting requirements applicable to certificate amendments and the removal of directors.
Your Board of Directors recommends you vote AGAINST Item 7:
7. Shareholder proposal seeking alternative shareholder right to call a special meeting provision.
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PRELIMINARY
MARATHON PETROLEUM CORP. 539 SOUTH MAIN STREET FINDLAY, OH 45840-3229 |
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on Tuesday, April 24, 2018, for shares held by registered holders directly and until 11:59 P.M. Eastern Time on Sunday, April 22, 2018, for shares held in the Marathon Petroleum Thrift Plan (including the Speedway Retirement Savings Sub-Plan). Have your proxy card and voting instruction form in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on Tuesday, April 24, 2018, for shares held by registered holders directly and until 11:59 P.M. Eastern Time on Sunday, April 22, 2018, for shares held in the Marathon Petroleum Thrift Plan (including the Speedway Retirement Savings Sub-Plan). Have your proxy card and voting instruction form in hand when you call and then follow the instructions.
VOTE BY MAIL Mark, sign and date your proxy card and voting instruction form and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards, voting instruction forms and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||
KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD AND VOTING INSTRUCTION FORM IS VALID ONLY WHEN SIGNED AND DATED.
MARATHON PETROLEUM CORP. | ||||||||||||||||||||||||||||||
Your Board of Directors recommends you vote FOR the following Class I Directors for a three-year term expiring 2021: |
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1. Election of Class I Directors |
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Nominees: |
For |
Against |
Abstain |
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1a. Abdulaziz F. Alkhayyal |
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1b. Donna A. James |
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1c. James E. Rohr |
☐ | ☐ | ☐ | |||||||||||||||||||||||||||
Your Board of Directors recommends you vote FOR Items 2 and 3: |
For | Against | Abstain | Your Board of Directors recommends you vote FOR Items 5 and 6: |
For | Against | Abstain | |||||||||||||||||||||||
2. Ratification of the selection of PricewaterhouseCoopers LLP as the companys independent auditor for 2018. |
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5. Approval of amendments to the companys Restated Certificate of Incorporation to eliminate the supermajority voting requirement applicable to bylaw amendments. |
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3. Approval, on an advisory basis, of the companys named executive officer compensation. |
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6. Approval of amendments to the companys Restated Certificate of Incorporation to eliminate the supermajority voting requirements applicable to certificate amendments and the removal of directors. |
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☐ |
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Your Board of Directors recommends you vote EVERY YEAR 1 YEAR for Item 4. |
1 Year |
2 Years | 3 Years |
Abstain | Your Board of Directors recommends you vote AGAINST Item 7: |
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4. Recommendation, on an advisory basis, of the frequency of advisory votes on the companys named executive officer compensation.
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7. Shareholder proposal seeking alternative shareholder right to call a special meeting provision. |
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Yes
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No
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Please indicate if you plan to attend this meeting. |
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
PRELIMINARY
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
E00440-P74122
Proxy Card and Voting Instruction Form
This Proxy Card and Voting Instruction Form are solicited on behalf of the Board of Directors
for the Annual Meeting of Shareholders on April 25, 2018
For shares held by registered holders
The undersigned hereby appoints Gary R. Heminger, David A. Daberko and Donald C. Templin, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Marathon Petroleum Corporation common stock registered to the undersigned which the undersigned is entitled to vote (the Registered Shares) and, in their discretion, to vote the Registered Shares upon such other business as may properly come before the Annual Meeting of Shareholders of the Company to be held April 25, 2018, or any adjournment thereof, with all powers which the undersigned would possess if present at the Meeting. You are encouraged to specify your choice by marking the appropriate boxes on the reverse side, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors recommendations. The proxies cannot vote the Registered Shares unless you sign and return the proxy card.
For shares held in the Marathon Petroleum Thrift Plan (including the Speedway Retirement Savings Sub-Plan)
These confidential voting instructions will only be shared with Fidelity Management Trust Company, as Trustee for the Marathon Petroleum Thrift Plan. The undersigned, as a participant in the Marathon Petroleum Thrift Plan, hereby directs the Trustee to vote the number of shares of Marathon Petroleum Corporation common stock credited to the undersigneds account under the Marathon Petroleum Thrift Plan (the Credited Shares) at the Annual Meeting of Shareholders, and at any meeting resulting from any adjournment(s) or postponement(s) thereof, upon all subjects that may properly come before the Meeting, including the matters described in the 2018 Notice of Annual Meeting and Proxy Statement. In the Trustees discretion, it may vote Credited Shares upon such other matters as may properly come before the Meeting. Your vote is confidential. The Credited Shares will be voted as directed on the reverse side. If no direction is made, if the form is not signed, or if the form is not received by April 22, 2018, the Credited Shares will not be voted. You cannot vote the Credited Shares in person at the Annual Meeting; the Trustee is the only one who can vote the Credited Shares.
PROXY CARD AND VOTING INSTRUCTION FORM TO BE SIGNED AND DATED ON THE REVERSE SIDE
PRELIMINARY
All Correspondence to: | ||
Computershare Investor Services PLC | ||
The Pavilions, Bridgwater Road, | ||
Bristol, BS99 6ZY |
To be effective, all forms of direction must be lodged with
Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY by 18 April 2018 at 12.00 noon
Explanatory Notes:
1. Please indicate, by placing X in the appropriate space overleaf, how you wish your votes to be cast in respect of each of the Resolutions. If this form is duly signed and returned, but without specific direction as to how you wish your votes to be cast, the form will be rejected. |
2. Any alterations made in this form should be initialled.
3. Full details of the resolutions are contained in the enclosed Proxy Statement. |
11635_70734_MAIL/000001/000001/SG151/i123 |
PRELIMINARY
Form of Direction
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Please use a black pen. Mark with an X inside the box as shown in this example. |
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I, the undersigned being a participant in the Marathon Petroleum Corporation Vested Share Account, hereby instruct Computershare Company Nominees Limited (The Nominee) to vote or cause to be voted any shares of common stock of Marathon Petroleum Corporation held by them on my behalf and entitled to vote at the Annual Meeting of Shareholders of Marathon Petroleum Corporation to be held on Wednesday, 25 April 2018 and at any adjournment or postponement thereof.
Your Board of Directors recommends you vote FOR the Class I Director Nominees referenced in Item 1 for a three-year term expiring in 2021.
Your Board of Directors recommends you vote FOR Items 2 and 3.
Your Board of Directors recommends you vote EVERY YEAR 1 Year for Item 4.
Your Board of Directors recommends you vote FOR Items 5 and 6.
Your Board of Directors recommends you vote AGAINST Item 7.
Election of Class I Directors
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For | Against | Abstain | |||||
1. (a) Abdulaziz F. Alkhayyal |
☐ | ☐ | ☐ | |||||
(b) Donna A. James |
☐ | ☐ | ☐ | |||||
(c) James E. Rohr |
☐ | ☐ | ☐ | |||||
2. Ratification of the selection of PricewaterhouseCoopers LLP as the companys independent auditor for 2018. |
☐ | ☐ | ☐ | |||||
3. Approval, on an advisory basis, of the companys named executive officer compensation. |
☐ | ☐ | ☐ | |||||
1 Year | 2 Years | 3 Years | Abstain | |||||
4. Recommendation, on an advisory basis, of the frequency of advisory votes on the companys named executive officer compensation. |
☐ |
☐ | ☐ | ☐ | ||||
For | Against | Abstain | ||||||
5. Approval of amendments to the companys Restated Certificate of Incorporation to eliminate the supermajority voting requirement applicable to bylaw amendments. |
☐ | ☐ | ☐ | |||||
6. Approval of amendments to the companys Restated Certificate of Incorporation to eliminate the supermajority voting requirements applicable to certificate amendments and the removal of directors. |
☐ | ☐ | ☐ | |||||
7. Shareholder proposal seeking adoption of an alternative shareholder right to call a special meeting provision. |
☐ | ☐ | ☐ |
Signature | Date | |||||||
DD/MM/YY |
In the case of joint shareholders, only one holder need sign. In the case of a corporation, the Form of Director should be signed by a duly authorised official whose capacity should be stated, or by an attorney. |