Marathon Petroleum
Annual Meeting: April 28, 2021
Marathon’s 2020 Summary Compensation Table shows high pay for two executives in transition: newly-appointed CEO Michael J. Hennigan and former CEO Gary R. Heminger. Hennigan made $15,534,265 in 2020, more than doubling his compensation package from 2019 ($7,656,867) when he was CEO and President of Marathon’s subsidiary, MPLX. Heminger’s total compensation decreased to $10,005,700 in 2020, given that he only served as CEO for ten weeks of the fiscal year. However, this does not provide the full picture of his compensation package. Specifically, Heminger’s generous retirement provisions have raised concerns among shareholders and has become the focus of a vote no campaign by the International Brotherhood of Teamsters (the “Teamsters”).
The Teamsters launched its campaign in March with a letter filed at the SEC highlighting Heminger’s “exorbitant retirement package,” stating:
“It is not unusual to see long-tenured CEOs retire with relatively large retirement benefits, although Heminger’s includes a $35.1 million pension benefit, a $12.9 million defined contribution account, and accelerated equity, is sizable even by CEO standards. A far less common practice, however, is Marathon’s payment of a $6 million restricted stock award to Heminger the day before he stepped down as chair (April, 29, 2020), and a full six weeks after he resigned as CEO role.”
The letter urges shareholders to not only oppose pay but also support a proposal regarding the treatment of equity in the case of a change in control. The Teamsters state that the current policy, which allows for accelerated vesting following a change in control, is “starkly at odds with a pay-for-performance approach.” Instead, the proposal advocates for the “adoption of a pro-rata vesting approach,” which “offers far better alignment with, and value for, shareholders.”
Finally, the Teamsters’ letter contends that the company demonstrates “skewed human capital management priorities” in its recent pay decisions, even beyond its executive compensation packages. Specifically, the 200-worker lockout at Marathon’s St. Paul refinery and the company’s $411 million COVID-related benefit taken from the CARES Act. In fact, a recent article identified Marathon as the “largest beneficiary of government assistance,” noting that the company received $2.1 billion in tax breaks while laying off more than a tenth of its workforce in 2020.
“[The company] had no problem paying their executives for good performance when they didn’t perform well,” said Chris Kuveke, a researcher at BailoutWatch. “I don’t believe we should subsidize an industry that has been supported by the government for the past 100 years. It’s time to stop subsidizing them and start facing the climate crisis.”