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:
In addition to these compensation elements, our employees, including our NEOs and other executive officers, 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 and other executive officers that are
consistent with our business strategy and 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 2016 Pension Benefits Table, see the Post-Employment Benefits for 2016 section of this Proxy Statement.
The table below summarizes our NEOs total direct compensation for 2016, which was approved by the Compensation Committee as part of our 2016 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 2016.
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 2016 proxy statements, 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 Direct Peer Group*
|
All Other NEOs
|
|
Direct Peer Group* NEOs
|
* The Compensation Committee excluded BP p.l.c. and ExxonMobil Corporation from the
direct industry peer group (further described below) when reviewing total compensation for our CEO and CFO. See Setting Executive Compensation Obtaining Market Data/Benchmarking for more information.
|
The Compensation Committee continues to believe our flexibility to mix cash and equity allows us the ability to reward NEOs and other
executive officers 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.
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Marathon Petroleum Corporation Proxy
Statement / page 57
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Setting Executive Compensation
Obtaining Market Data/Benchmarking
Due to the limited number of domestic independent downstream companies, and in recognition
of MPCs size, complexity, revenue and market capitalization, the Compensation Committee decided to continue using two peer groups a direct industry peer group and a broad industry peer group for benchmarking our NEOs
compensation for pay decisions made in 2016.
The direct industry peer group is composed of: (1) independent downstream companies similar to MPC and integrated
oil companies with significant downstream operations; (2) companies with which we compete for talent; and (3) companies we include as peers in our compensation program metrics. This peer group provides industry-specific market compensation
and program design data obtained from both proxy statements and compensation surveys. This peer group is comprised of the following nine companies:
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|
|
BP p.l.c.
|
|
HollyFrontier Corporation
|
|
Royal Dutch Shell plc
|
Chevron Corporation
|
|
Koch Industries, Inc.
|
|
Tesoro Corporation
|
ExxonMobil Corporation
|
|
Phillips 66
|
|
Valero Energy Corporation
|
At the time the direct industry peer group was approved by the Compensation Committee, MPC was at approximately the 31
st
percentile of the group in terms of market capitalization and the 27
th
percentile in terms of revenue.
The Compensation Committee determined that it would not consider BP p.l.c. or ExxonMobil Corporation in the direct industry peer group when reviewing survey data for our
CEO or CFO positions. This is due to the concern that the relative sizes of these two companies (including their market capitalizations and revenues), their complexity and their extensive global footprints could result in substantially different
scopes for these executive positions.
A broad industry peer group was selected to supplement the direct industry peer group. The broad industry peer group was
selected because it is comprised of large oil and gas companies, as well as other industrial companies focused on manufacturing, which, like MPC, could be sensitive to fluctuations in the costs of commodities. This peer group is expected to change
slightly from year to year based on the companies that choose to participate in Willis Towers Watsons Compensation Data Bank. Criteria used to screen for these companies included:
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revenues generally greater than $10 billion;
|
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|
heavy manufacturing operations;
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|
safety and environmental focus; and
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|
the availability of publicly reported information.
|
The 33 companies that were selected to comprise the broad industry
peer group for 2016 are:
|
|
|
3M Company
|
|
Johnson Controls Inc.
|
Alcoa Corporation
|
|
Lockheed Martin Corporation
|
Caterpillar Inc.
|
|
The Mosaic Company
|
Chevron Corporation
|
|
Navistar International Corporation
|
ConocoPhillips
|
|
Northrop Grumman Corporation
|
The Dow Chemical Company
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|
Occidental Petroleum Corporation
|
E.I. du Pont de Nemours and Company
|
|
Parker Hannifin Corporation
|
Eaton Corporation
|
|
Phillips 66
|
ExxonMobil Corporation
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|
Schlumberger Limited
|
Ford Motor Company
|
|
Tesoro Corporation
|
FREEPORT-McMoRan Inc.
|
|
Textron Inc.
|
General Dynamics Corporation
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|
TRW Automotive Inc.
|
General Electric Company
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|
United States Steel Corporation
|
Hess Corporation
|
|
United Technologies Corporation
|
Honeywell International Inc.
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|
Valero Energy Corporation
|
Ingersoll-Rand Public Limited
Company
|
|
Whirlpool Corporation
|
International Paper Company
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page 58 / Marathon Petroleum Corporation Proxy Statement
|
When the broad industry peer group was approved, MPC was at approximately the
36
th
percentile of this group in terms of market capitalization and the 83
rd
percentile in terms of revenue.
How We Use Market Data
The Compensation
Committees 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 groups. 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:
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the size and complexity of each NEOs role;
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an incumbents experience and demonstrated performance;
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our current and future succession needs;
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external competitiveness; and
|
Analysis of 2016 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 and other executive officers may rely so that we may attract and retain executive talent. The Compensation Committee reviews each NEOs base salary at least
annually and makes adjustments at its discretion. In setting each NEOs base salary, the Compensation Committee considers factors including, but not limited to:
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the complexity and responsibility level of the position held;
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|
the individuals experience;
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|
|
demonstrated performance;
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external competitiveness;
|
As a result of the Compensation Committees review, the following adjustments were made to the
base salaries of our NEOs in 2016:
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|
|
|
|
|
Name
|
|
Title
|
|
Previous
Base Salary
($)
|
|
Base
Salary
Effective
April 2016
($)
|
|
Increase
(%)
|
G. R. Heminger
|
|
Chairman, President and Chief Executive Officer
|
|
1,600,000
|
|
1,600,000
|
|
|
|
|
|
|
|
T. T. Griffith
|
|
Senior Vice President and Chief Financial Officer
|
|
525,000
|
|
625,000
|
|
19.0
|
|
|
|
|
|
D. C. Templin
|
|
Executive Vice President and President, MPLX
|
|
750,000
|
|
800,000
|
|
6.7
|
|
|
|
|
|
A. R. Kenney
|
|
President, Speedway LLC
|
|
650,000
|
|
700,000
|
|
7.7
|
|
|
|
|
|
C. M. Palmer
|
|
Senior Vice President, Supply, Distribution and Planning
|
|
600,000
|
|
650,000
|
|
8.3
|
Mr. Heminger did not receive a base pay increase as the Compensation Committee concluded his salary was already market competitive.
The increase amount for Mr. Griffith was based on his strong performance in his first year as Chief Financial Officer for MPC and to bring him closer to the market median for his position. The increase amount for Mr. Templin was made to
recognize his increased responsibilities and duties as the President of MPLX. The increases for Messrs. Kenney and Palmer were made to maintain market competitiveness.
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|
Marathon Petroleum Corporation Proxy
Statement / page 59
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Annual Cash Bonus Program
The ACB program is a variable incentive program intended to motivate and reward NEOs and other executive officers 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
approves the establishment of a qualified Section 162(m) funding pool for the ACB program in the first quarter of each year to ensure payments from the program qualify as performance-based compensation if certain metric levels are achieved.
This maximizes our tax deductibility opportunity with respect to the compensation paid from the ACB program for NEOs and other executive officers whose Section 162(m) compensation may otherwise exceed $1 million. The performance metrics
used to determine the 2016 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 2016 was established by
the Compensation Committee as the greater of 2 percent of net income or $19 million if mechanical availability reached 91 percent.
Based on net income
attributable to MPC of $1.17 billion, after adjusting for certain items, our pool for 2016 executive bonuses was $23.9 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. As a result, all 2016 ACB payments made in 2017 were fully tax deductible.
For the 2016 ACB program, the Compensation Committee
elected to add a selling, general and administrative cost metric to increase focus on controllable expenditures. In addition, a new metric intended to maintain focus on the commercial synergies between MPLX and MarkWest was added. With the
completion of the rebranding of the acquired Hess retail locations to Speedway branded sites in 2015, this project metric was removed for 2016.
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 measures. The remaining 30 percent under the ACB program is driven by a number of discretionary factors, including adjustments due to the volatility in petroleum-related commodity prices throughout the year,
which makes it difficult to establish reliable,
pre-determined
goals. Regardless of the funding generated by the ACB program, the Compensation Committee has discretion to generally award each of our NEOs and
other executive officers up to the limits of any applicable Section 162(m) funding pool, or make no award at all.
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|
page 60 / Marathon Petroleum Corporation Proxy Statement
|
The financial and operational performance metrics used for the 2016 ACB program were:
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|
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 the consolidated financial statements and as disclosed to investors as part of the quarterly earnings materials.
|
|
Financial (absolute)
|
Mechanical Availability
(c)
|
|
Measures the mechanical availability and reliability of the processing equipment in our refining, pipeline, terminal and marine operations.
|
|
Operational (absolute)
|
Selling, General and
Administrative Costs (SG&A)
(d)
|
|
Actual selling, general and administrative expenses adjusted for certain items.
|
|
Financial
(absolute)
|
MPLX/MarkWest Commercial
Synergies
|
|
Measures revenue enhancements or cost savings at either MPLX or MPC resulting from the combination for which committed actions were taken in 2016.
|
|
Financial
(absolute)
|
Responsible Care
(e)
|
|
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
(f)
|
|
Measurement of MPCs 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.
|
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Operational (absolute)
|
Process Safety
Events Score
|
|
Measures the success of MPCs 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 exceedences; and c) government agency
enforcement actions.
|
|
Operational (absolute)
|
Quality
|
|
Measures the impact of product quality incidents and cumulative costs to MPC (no Category 4 Incident, and costs of Category 3
Incidents).
(g)
|
|
Operational (absolute)
|
(a)
|
This is a per barrel measure of throughputU.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 2016 were: BP p.l.c.; Chevron Corporation; ExxonMobil Corporation; HollyFrontier Corporation; PBF Energy; Phillips 66; Tesoro Corporation; 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 and inventory market valuation adjustments.
|
(c)
|
Mechanical availability represents the percentage of capacity available for critical downstream 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, insurance expense and certain other expenses.
|
(e)
|
These metrics exclude MarkWest.
|
(f)
|
This metric excludes Speedway and 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.
|
(g)
|
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 $50,000; a media advisory is issued; 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.
|
The threshold, target and maximum levels
of performance for each performance metric were established for 2016 by evaluating factors such as performance achieved in the prior year(s), anticipated challenges for 2016, our business plan and our overall strategy. At the time the performance
levels were set for 2016, 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.
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|
Marathon Petroleum Corporation Proxy
Statement / page 61
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The table below provides both the goals for each metric and our performance achieved in 2016:
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Performance Metric
|
|
Threshold
Level
|
|
Target
Level
|
|
Maximum
Level
|
|
Performance
Achieved
|
|
Target
Weighting
|
|
Performance
Achieved
|
Operating Income Per
Barrel
|
|
5
th
or 6
th
Position
|
|
3
rd
or 4
th
Position
|
|
1
st
or 2
nd
Position
|
|
3rd Position
(100% of target)
|
|
20.0%
|
|
20.0%
|
EBITDA
(1)
|
|
$3,650
|
|
$4,750
|
|
$6,670
|
|
$4,501
(89% of target)
|
|
10.0%
|
|
8.9%
|
Mechanical Availability
|
|
92.4%
|
|
93.4%
|
|
94.4%
|
|
94.9%
(200% of target)
|
|
10.0%
|
|
20.0%
|
Selling, General and Administrative
Costs
(1)
|
|
$1,339
|
|
$1,309
|
|
$1,279
|
|
$1,243
(200% of target)
|
|
5.0%
|
|
10.0%
|
MPLX/MarkWest Commercial Synergies
|
|
$25,000,000
|
|
$35,000,000
|
|
$50,000,000
|
|
$75,500,000
(200% of target)
|
|
5.0%
|
|
10.0%
|
Responsible Care
|
|
|
|
|
|
|
|
|
|
|
|
|
Marathon Safety
Performance Index
|
|
0.90
|
|
0.60
|
|
0.40
|
|
0.95
(0% of target)
|
|
5.0%
|
|
0.0%
|
Process Safety
Events Score
|
|
120
|
|
80
|
|
60
|
|
56
(200% of target)
|
|
5.0%
|
|
10.0%
|
Designated
Environmental
Incidents
|
|
72
|
|
51
|
|
30
|
|
30
(200% of target)
|
|
5.0%
|
|
10.0%
|
Quality
|
|
$500,000
|
|
$250,000
|
|
$125,000
|
|
$135,000
(192% of target)
|
|
5.0%
|
|
9.60%
|
|
|
|
|
|
|
|
|
Total
|
|
70.0%
|
|
98.50%
|
|
(1)
|
Represented in millions.
|
Organizational and Individual Performance Achievements for the 2016 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 2016 fell into the following general categories:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 CEO reviews the organizational and individual performance of our other NEOs and makes annual bonus recommendations to the
Compensation Committee. Key factors considered for 2016 included:
|
|
|
net income attributable to MPC decreased 59% to $1.17 billion in 2016 from $2.85 billion in 2015;
|
|
|
|
TSR for 2016 of
-1.8%
compared to the median TSR of
-1.5%
for our performance unit peer group;
|
|
|
|
|
|
|
|
page 62 / Marathon Petroleum Corporation Proxy Statement
|
|
|
|
sustained focus on shareholder returns with $916 million returned to shareholders through dividends and share repurchases; and
|
|
|
|
continued integration of the MarkWest assets into the MPLX portfolio.
|
The Compensation Committee evaluates the
performance of our CEO with input from our full Board and makes final annual bonus decisions for our NEOs and other executive officers.
Bonus opportunities for our
NEOs under the ACB program are communicated as a target percentage of annualized base salary at year-end. Each of our NEOs and other executive officers can generally earn a maximum of 200 percent of the target award, although the Compensation
Committee has discretion to award each of our NEOs and other officers up to the limits of any applicable Section 162(m) funding pool, or make no award at all, depending on MPCs overall performance and the subjective evaluation of each
NEOs and other officers organizational and individual performance. The Compensation Committee reviews market data provided by its Advisor annually with respect to competitive pay levels and sets specific bonus target opportunities for
each of our NEOs.
Bonus Target Adjustments
In February 2016 the Compensation Committee approved one change to bonus targets for our NEOs. Mr. Templins bonus target was adjusted to 100% of his base
salary from 90%, in light of the significant increase in his responsibilities as President of MPLX.
We do not guarantee minimum bonus payments to our NEOs.
2017 Bonus Payments (for 2016 Performance)
In February 2017, the Compensation Committee certified the results of our performance metrics for the 2016 ACB program and applied the following formula based on
performance of established metrics, organizational and individual performance to determine our NEOs final award for 2016 performance:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Annualized
Base
Salary
(as of 12/31/16)
($)
|
|
Bonus
Target
as a %
of Base
Salary
(%)
|
|
Target
Bonus
($)
|
|
|
Final
Award
as a % of
Target
(%)
|
|
Final
Award
($)
1
|
|
G. R. Heminger
|
|
1,600,000
|
|
150
|
|
|
2,400,000
|
|
|
175.0
|
|
|
4,200,000
|
|
T. T. Griffith
|
|
625,000
|
|
80
|
|
|
500,000
|
|
|
150.0
|
|
|
750,000
|
|
D. C. Templin
|
|
800,000
|
|
100
|
|
|
800,000
|
|
|
162.5
|
|
|
1,300,000
|
|
A. R. Kenney
|
|
700,000
|
|
85
|
|
|
595,000
|
|
|
180.6
|
|
|
1,075,000
|
|
C. M. Palmer
|
|
650,000
|
|
75
|
|
|
487,500
|
|
|
148.7
|
|
|
725,000
|
|
|
(1)
|
The final award is rounded to the nearest $5,000.
|
MPC Long-Term Incentive Compensation
Program
Annual MPC LTI awards are 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 award vehicles differ as illustrated
below:
|
|
|
|
|
LTI Award Vehicle
|
|
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
|
|
Stock
|
|
Stock price appreciation from grant date to exercise date
|
MPC Restricted Stock
|
|
Stock
|
|
Full value of stock upon vesting
|
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 63
|
|
|
|
|
Due to the nature of LTI awards, the actual long-term compensation value realized by each of our NEOs will depend on the
price of our underlying stock at the time of settlement. We based the 2016 LTI awards on an intended dollar value rather than a specific number of performance units, stock options or shares of restricted stock.
MPC granted the 2016 LTI awards to our NEOs on March 1, 2016. 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 LTI award vehicles in more detail below.
MPC Performance Units
The Compensation Committee believes a performance unit program serves as a complement to stock options
and restricted stock. 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 measurement periods: (1) the first 12 months, (2) the second 12 months, (3) the
third 12 months, and (4) the entire 36-month period. 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.
|
|
|
TSR
Percentile
|
|
Payout
(% of Target)*
|
100
th
(Highest)
|
|
200%
|
50
th
|
|
100%
|
25
th
|
|
50%
|
Below
25
th
|
|
0%
|
|
*
|
Payout for TSR between quartiles will be determined using linear interpolation.
|
Each performance unit is dollar
denominated with a target value of $1.00. The actual payout will vary from $0.00 to $2.00 (0 percent to 200 percent of target). The final value of the 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 will then settle 25 percent in MPC full-value common stock and 75 percent in cash.
TSR is determined by taking the sum of a 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 will be the average of their respective closing stock prices for the 20 trading days immediately preceding the beginning and ending date of the
applicable measurement period.
The Compensation Committee believes that providing four measurement periods over a
36-month
cycle is appropriate and serves the best interest of our shareholders. By having four equally weighted measurement periods, attaining maximum payout is more difficult as maximum payout levels can only be achieved by outperforming the TSR peer group
for all four measurement periods. Our design also mitigates significant market fluctuations in stock price at the beginning or end of a performance cycle and does not encourage high-risk decisions near the end of a performance cycle by limiting
their impact on the overall payout of the award. In addition, the Compensation Committee also believes that having the maximum payout capped at $2.00 per unit helps mitigate excessive or inappropriate risk-taking.
MPC Performance Units Granted in 2014
Performance units granted in 2014 had a performance cycle of January 1, 2014, through December 31, 2016. Additional information about these grants, including
the peer group used, can be found in the Long-Term Incentive Compensation Program section of our 2015 Proxy Statement.
|
|
|
|
|
|
|
page 64 / Marathon Petroleum Corporation Proxy Statement
|
In January 2017, the Compensation Committee certified the final TSR for the four measurement periods for the 2014
performance unit grants, which are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measurement Period
|
|
Actual TSR
(%)
|
|
Position
|
|
Percentile
Ranking
(%)
|
|
Payout
(% of target)
|
January 1, 2014 - December 31, 2014
|
|
|
|
3.2
|
|
|
|
|
3
|
rd
|
|
|
|
71.43
|
|
|
|
|
142.86
|
|
January 1, 2015 - December 31, 2015
|
|
|
|
20.2
|
|
|
|
|
4
|
th
|
|
|
|
57.14
|
|
|
|
|
114.28
|
|
January 1, 2016 - December 31, 2016
|
|
|
|
-1.8
|
|
|
|
|
5
|
th
|
|
|
|
42.85
|
|
|
|
|
85.70
|
|
January 1, 2014 - December 31, 2016
|
|
|
|
21.5
|
|
|
|
|
4
|
th
|
|
|
|
57.14
|
|
|
|
|
114.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average:
|
|
|
|
|
114.28
|
|
The resulting average of 114.28 percent of target provided for a payment equal to $1.1428 per performance unit granted. As a result, the
Compensation Committee approved the following payments to our NEOs:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Target Number of
Performance Units
|
|
Compensation Committee
Approved Payout
($)
|
G. R. Heminger
|
|
|
|
3,200,000
|
|
|
|
|
3,656,960
|
|
T. T. Griffith
|
|
|
|
204,000
|
|
|
|
|
233,132
|
|
D. C. Templin
|
|
|
|
704,000
|
|
|
|
|
804,532
|
|
A. R. Kenney
|
|
|
|
540,000
|
|
|
|
|
617,112
|
|
C. M. Palmer
|
|
|
|
510,000
|
|
|
|
|
582,828
|
|
The results of the 2014 performance unit grant were certified by the Compensation Committee and settled 25 percent in
full-value
MPC shares and 75 percent in cash.
MPC Performance Units Granted in 2015
Performance units granted in 2015 have a performance cycle of January 1, 2015, through December 31, 2017. They remain outstanding and are
included in the Outstanding Equity Awards at 2016 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 2016 Proxy Statement.
MPC Performance Units Granted in 2016
After an annual review of market practices, the Compensation Committee again made the decision to award performance unit grants in February 2016. The Compensation
Committee approved the following peer group for performance unit awards granted in 2016:
|
|
|
|
|
Chevron Corporation
|
|
Phillips 66
|
|
S&P 500 Energy Index
|
HollyFrontier Corporation
|
|
Tesoro Corporation
|
|
|
PBF
Energy
|
|
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 and other executive officers long-term compensation and the long-term value shareholders
receive by investing in MPC. The Compensation Committee believes our 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, dividend or dividend equivalent rights on the underlying stock.
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 65
|
|
|
|
|
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.
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. Upon vesting, a
one-year
holding period requirement is in effect for all full-value shares received under our incentive compensation plan. This holding period prevents our NEOs
and other executive officers from selling any stock or performance units settled in shares for 12 months from the time the awards are vested or earned. This requirement applies to shares net of taxes at the time of vesting or distribution.
The number of restricted shares 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 Board of Directors of MPLX GP LLC (or MPLX Board) 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 2016, 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, 2016. 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 2016, the MPLX Board met and approved an LTI design whereby the MPLX LTI awards granted are in the form of performance units (50
percent) and phantom units (50 percent). Both forms of LTI generally reward performance over a multi-year period to the extent service and/or partnership performance conditions 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 Total Unitholder Return (or TUR) ranking among a group of
peers
|
MPLX Phantom Units
|
|
MPLX common units
|
|
Full value of common units upon vesting
|
MPLX Performance Units
The MPLX Board believes that performance unit awards complement its phantom unit awards. The performance unit program benchmarks MPLXs TUR against a peer group of
midstream competitors. The MPLX Board continues to believe TUR relative to a peer group is the single best metric for its performance program as it is commonly used by unitholders to measure a partnerships performance against others within the
same industry. It also aligns the awardees interests with those of MPLX unitholders. The MPLX performance unit program is designed to pay above target compensation only when TUR is above the median of the peer group.
|
|
|
|
|
|
|
page 66 / Marathon Petroleum Corporation Proxy Statement
|
Under the MPLX program, the TUR and that of each of the peer group members 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. 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 payout percentage for that measurement period is capped at target (100 percent) regardless of actual relative TUR performance percentile.
|
|
|
TUR
Percentile
|
|
Payout
(% of Target)*
|
100
th
(Highest)
|
|
200%
|
50
th
|
|
100%
|
25
th
|
|
50%
|
Below 25
th
|
|
0%
|
|
*
|
Payout for TUR between quartiles will be determined using linear interpolation.
|
Each performance unit is dollar
denominated with a target value of $1.00. The actual payout will vary from $0.00 to $2.00 (0 percent to 200 percent of target). The final value of the 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 will then settle 25 percent in MPLX full-value common units and 75 percent in cash.
TUR is determined by taking the sum of a partnerships unit price appreciation or reduction, plus its cumulative cash distributions, for each measurement period and
dividing that total by the partnerships beginning unit price for that period, as illustrated below.
(Ending Unit Price Beginning Unit
Price) + Cumulative Cash Distributions
Beginning Unit Price
The beginning and ending unit prices used for MPLX and each peer group member in the TUR calculation will be the average of their respective closing unit prices for the
20 trading days immediately preceding the beginning and ending date of the applicable measurement period.
The MPLX Board also believes that providing four
measurement periods over a
36-month
performance cycle is appropriate and serves the best interests of its unitholders. By having four equally weighted measurement periods, attaining maximum payout is more
difficult as maximum payout levels can only be achieved by outperforming the TUR peer group for all four measurement periods. The program design also mitigates significant market fluctuations in unit price at the beginning or end of a performance
cycle and does not encourage high-risk decisions near the end of a performance cycle by limiting their effect on the overall payout of the award. In addition, the MPLX Board believes that having the maximum payout capped at $2.00 per unit helps
mitigate excessive or inappropriate risk-taking.
MPLX Performance Units Granted in 2014
Performance units granted by MPLX in 2014 had a performance cycle of January 1, 2014, through December 31, 2016. Additional information about these grants,
including the peer group used, can be found in the Long-Term Incentive Compensation Program section of the MPLX Annual Report on Form
10-K
for the year ended December 31, 2014.
In January 2017, the independent directors of the MPLX Board reviewed and approved the final TUR for the four measurement periods of the 2014 performance unit grants,
which are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measurement Period
|
|
Actual TUR
(%)
|
|
Position
|
|
Percentile
Ranking
(%)
|
|
Payout
(% of target)
|
January 1, 2014 - December 31, 2014
|
|
|
|
68.4
|
|
|
|
|
2
nd
|
|
|
90.91
|
|
|
|
181.82
|
|
January 1, 2015 - December 31, 2015
|
|
|
|
-45.3
|
|
|
|
|
10
th
|
|
|
10.00
|
|
|
|
0.00
|
|
January 1, 2016 - December 31, 2016
|
|
|
|
3.2
|
|
|
|
|
9
th
|
|
|
20.00
|
|
|
|
0.00
|
|
January 1, 2014 - December 31, 2016
|
|
|
|
-3.7
|
|
|
|
|
9
th
|
|
|
20.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average:
|
|
|
|
45.46
|
|
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 67
|
|
|
|
|
The resulting average of 45.46 percent of target provided for a payment equal to $0.4546 per performance unit granted. The
independent directors of the MPLX Board approved these results and approved the following payments to our NEOs:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Target Number of
Performance Units
|
|
MPLX
Board
Approved Payout
($)
|
G. R. Heminger
|
|
|
|
1,000,000
|
|
|
|
|
454,600
|
|
T. T. Griffith
|
|
|
|
45,000
|
|
|
|
|
20,457
|
|
D. C. Templin
|
|
|
|
220,000
|
|
|
|
|
100,012
|
|
A. R. Kenney
|
|
|
|
75,000
|
|
|
|
|
34,095
|
|
C. M. Palmer
|
|
|
|
112,500
|
|
|
|
|
51,143
|
|
The 2014 performance unit grants were settled 25 percent in full-value MPLX common units and 75 percent in cash.
MPLX Performance Units Granted in 2015
Performance units granted by MPLX in 2015 have 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 the MPLX Annual Report on Form
10-K
for the year ended December 31, 2015.
MPLX Performance Units Granted in 2016
The
MPLX Board approved the following peer group for MPLX performance unit awards granted in 2016:
|
|
|
|
|
Buckeye Partners, L.P.
|
|
ONEOK Partners, L.P.
|
|
Valero Energy Partners LP
|
Enbridge
Energy Partners, L.P.
|
|
Phillips 66 Partners LP
|
|
Western Gas Partners, LP
|
Energy
Transfer Partners, L.P.
|
|
Plains All American Pipeline, L.P.
|
|
Williams Partners L.P.
|
Enterprise Products Partners L.P.
|
|
Sunoco Logistics Partners L.P.
|
|
|
Magellan
Midstream Partners, L.P.
|
|
Tesoro Logistics LP
|
|
|
This peer group was changed for 2016. Enbridge Energy Partners, L.P., Energy Transfer Partners, L.P., Enterprise Products Partners, L.P.,
ONEOK Partners, L.P., and Williams Partners L.P. were added to the peer group while Holly Energy Partners, L.P., Nustar Energy L.P. and Shell Midstream Partners L.P. were removed. These changes recognize the increased size and operational structure
of MPLX after its merger with MarkWest.
The number of performance units granted by MPLX in 2016 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 Program section of the MPLX Annual Report on Form
10-K
for
the year ended December 31, 2016.
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.
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 units received. This holding period prevents NEOs from selling any
units for 12 months from the time they are vested or earned. 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.
CEOs Compensation Compared to our Other NEOs and his Direct Industry Peers
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
42-year
tenure at MPC compared with an average of 23 years for our other NEOs. Mr. Heminger has also been a senior executive at MPC and
its predecessors for more than 18 years.
|
|
|
|
|
|
|
page 68 / Marathon Petroleum Corporation Proxy Statement
|
Recognizing the significant shareholder value created under Mr. Hemingers leadership as CEO of MPC and his over
15 years of service as our principal downstream executive, which we believe makes him the longest serving such leader of any company in our direct peer group, the Compensation Committee believes it is appropriate for his total compensation to be
above the current median of similarly situated executives of our peer groups. Please review the Pay for Performance section of this Proxy Statement for more information about shareholder returns during Mr. Hemingers tenure as
CEO of MPC.
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
-1.8
percent was consistent with the performance unit peer group median TSR of
-1.5
percent. Our three-year TSR
was 21.5 percent, which is above the median TSR of the performance unit peer group of 13.6 percent, as shown below in Figure 2. Lastly, our five-year TSR was 224.6 percent, which is above the median TSR of the performance unit peer group of 167.0
percent, as shown below in Figure 3. Since we were established as an independent company on June 30, 2011, our TSR has been significant at 167.5 percent. We have also outpaced the S&P 500 Energy Index, as well as the average of our
performance unit peer group. 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.
|
|
|
Figure 1
|
|
Figure 2
|
|
|
|
Figure 3
|
|
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 69
|
|
|
|
|
MPC has realized a TSR equal to 167.5 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 2016 Summary
Compensation Table) has increased overall by only 16.8 percent, as shown in Figure 3.
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 2016 Named Executive Officer Compensation section of this Proxy Statement. These incentives present the opportunity to be financially rewarding over the long
term. However, using the December 30, 2016, MPC common stock closing price of $50.35, shareholders received an appreciation in MPCs common stock price of 20.8 percent while the intrinsic value of Mr. Hemingers LTI granted since
2014 is approximately 8.8 percent less than the grant-date fair values as reported in our applicable prior Proxy Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
Stock Options
|
|
Total*
|
Year
Granted
|
|
Grant Date
Fair
Value
($)
|
|
Value as of
12/31/2016
($)
|
|
Grant Date
Fair
Value
($)
|
|
Value as of
12/31/2016
($)
|
|
Grant Date
Fair
Value
($)
|
|
Value as
of
12/31/2016
($)
|
2014
|
|
1,600,037
|
|
1,932,634
|
|
3,200,023
|
|
2,229,851
|
|
4,800,060
|
|
4,162,485
|
2015
|
|
1,760,082
|
|
1,741,405
|
|
3,520,017
|
|
|
|
5,280,099
|
|
1,741,405
|
2016
|
|
1,760,000
|
|
2,558,938
|
|
3,520,008
|
|
5,550,103
|
|
5,280,008
|
|
8,109,041
|
Total
|
|
5,120,119
|
|
6,232,977
|
|
10,240,048
|
|
7,779,954
|
|
15,360,167
|
|
14,012,931
|
|
*This value does not include performance units as their value is not directly based on the price of MPC common stock.
Other Policies
Stock Ownership Guidelines
Stock ownership guidelines are in place for our NEOs. The guidelines are intended to align the
long-term interests of our NEOs and our shareholders. Under these guidelines, our NEOs are expected to hold MPC common stock having a value equal to a target multiple of their annualized base salary. The targeted multiples vary among the NEOs
depending upon their position and responsibilities:
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President and CEO six times annualized base salary;
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Executive Vice President(s) four times annualized base salary; and
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Senior Vice President(s)/President, Speedway LLC three times annualized base salary.
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Because our stock ownership
guidelines are established as a multiple of each NEOs annualized base salary, the value that must be maintained will increase proportionally as their salaries increase. As of December 31, 2016, Messrs. Heminger, Templin, Kenney and Palmer
had met their stock ownership guidelines. Mr. Griffith, whose ownership guideline increased due to his promotion, had not yet met his guideline.
Our NEOs are
not permitted to sell any shares received under our incentive compensation plans unless their
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page 70 / Marathon Petroleum Corporation Proxy Statement
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respective stock ownership guideline multiples are satisfied and maintained immediately after the sale. Additionally, a
one-year
holding period requirement
is in effect for all full-value shares received under our incentive compensation plan. This holding period prevents NEOs from selling any stock or performance units settled in shares for 12 months from the time they are vested or earned. This
requirement applies to shares net of taxes at the time of vesting or distribution.
Prohibition on Derivatives and Hedging
In order to ensure our NEOs bear the full risk of MPC common stock ownership, we have always maintained a policy that prohibits hedging transactions
related to our common stock or pledging or creating security interests in our common stock, including shares held in excess of the amount required under our stock ownership guidelines.
Recoupment/Clawback Policy
Our NEOs are
subject to recoupment provisions under the ACB and LTI programs in the case of certain forfeiture events. If we are required, as a result of a determination made by the SEC or our Audit Committee, to prepare a material accounting restatement due to
noncompliance with any financial reporting requirement under applicable securities laws as a result of misconduct, our Compensation Committee may decide that a forfeiture event has occurred based on an assessment of whether an NEO or any other
executive officer: (1) knowingly engaged in misconduct; (2) was grossly negligent with respect to misconduct; (3) knowingly failed or was grossly negligent in failing to prevent misconduct; or (4) engaged in fraud, embezzlement
or other similar misconduct materially harmful to us.
If it is determined that a forfeiture event has occurred, the Compensation Committee would have the right to
request and receive reimbursement of any portion of an NEOs or any other executive officers bonus from the ACB program that would not have been earned had the forfeiture event not taken place. In addition, grants of unexercised stock
options and unvested restricted stock to such NEO or other executive officer would be subject to immediate forfeiture, as would outstanding performance units. If a forfeiture event occurred either while the NEO or other executive officer was
employed, or within three years after termination of employment, and a payment had previously been made to the NEO or other executive officer in settlement of performance units, the Compensation Committee would have the right to recoup an amount in
cash up to (but not in excess of) the amount paid in settlement of the performance units.
These recoupment provisions are in addition to the requirements under
Section 304 of the Sarbanes-Oxley Act of 2002, which provide that the CEO and CFO shall reimburse the employer for any bonus or other incentive-based or equity-based compensation, as well as any related
profits received in the
12-month
period prior to the filing of an accounting restatement due to noncompliance with financial reporting requirements as a
result of misconduct. Additionally, all equity grants made since 2012 include provisions making them subject to any clawback provisions required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, and to any other clawback
provisions as required by law or by the applicable listing standards of the exchange on which the Companys common stock is listed for trading.
Severance
Benefits
We do not maintain individual severance or
change-in-control
agreements
with our NEOs. However, we maintain the Marathon Petroleum Corporation Amended and Restated Executive Change in Control Severance Benefits Plan (or the Executive Change in Control Severance Benefits Plan) to accomplish several specific objectives,
including:
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Providing and preserving an economic motivation for participating executives to consider a business combination that might result in an executives job loss, and
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Competing effectively in attracting and retaining executives in an industry that features frequent mergers, acquisitions and divestitures.
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For more information about our Executive Change in Control Severance Benefits Plan, please see the Potential Payments upon Termination or Change in Control
section of this Proxy Statement.
Perquisites
We offer limited perquisites
to our NEOs and other executive officers. Based on analysis and advice of the Compensation Committees Advisor, the perquisites offered are consistent with those offered by our peer group companies.
Our NEOs and other executive officers are eligible for reimbursement for certain tax, estate and financial planning services up to $15,000 per year while serving as an
executive officer and $3,000 in the year following retirement or death. The Compensation Committee believes this perquisite is appropriate due to the complexities of income tax preparation for our NEOs and other executive officers, who may, for
example, be required to make personal income tax filings in multiple states due to receiving equity compensation in the form of MPLX phantom units that settle in MPLX common units.
We also offer enhanced annual physical health examinations for our senior management, including our NEOs, to promote their health and well-being. Under our program,
these officers can receive a comprehensive physical (generally in the form of a
one-day
appointment), with procedures similar to those available to all other employees under our health
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Marathon Petroleum Corporation Proxy
Statement / page 71
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program. The incremental cost of these enhanced physicals is primarily attributable to
MPC-paid
facilities charges and incremental charges incurred for not
using facilities from which we receive discounts under our health plan network.
The primary use of our corporate aircraft is for business purposes and must be
authorized by our CEO or another executive officer designated by our Board or our CEO. Occasionally, spouses or other guests will accompany our NEOs or other executive officers on corporate aircraft, or our NEOs or other executive officers may
travel for personal purposes on corporate aircraft when space is available on business-related flights. When a spouses or guests travel does not meet the Internal Revenue Service standard for business use, the cost of that travel is
imputed as income to the NEO or other executive officer.
Our Board has authorized and recommends the personal use of corporate aircraft for our CEO in order to
promote his safety, security and productivity. The value of such personal use is periodically reported to and monitored by the Compensation Committee and is taxable income to our CEO. In addition, our CEO is provided limited security benefits. Costs
for security are primarily attributable to the maintenance, operation and monitoring of enhanced home security equipment. The Committee feels these security measures are appropriate given the growing public profile of our CEO and the growing, often
negatively slanted, publicity given to those in our industry.
Reportable values for these perquisite programs, based on the incremental costs to MPC, are included
in the All Other Compensation column of the 2016 Summary Compensation Table.
We do not provide income tax assistance or tax
gross-ups
on our executive perquisites including tax, estate and financial planning services or the personal use of corporate aircraft.
Tax Policy
Section 162(m)
of the Internal Revenue Code of 1986, as amended, generally limits the deductibility of compensation paid by a public company such as MPC to any employee who on the last day of the year is the CEO or one of the three other most highly compensated
officers (excluding the CFO) up to $1 million. A very important exemption from this requirement is provided for compensation qualifying as performance-based compensation.
The Compensation Committee generally considers the impact of this rule when developing and implementing the various elements of our executive compensation program. The
Compensation Committee generally seeks to maximize corporate tax deductibility under Section 162(m) to the extent we believe the action is not in conflict with the best interests of our shareholders. Accordingly, we have not adopted a policy
providing that all compensation must qualify as deductible under Section 162(m).
Even if the Compensation Committee intends to grant compensation that
qualifies as performance-based compensation for purposes of Section 162(m), we cannot guarantee that such compensation will qualify or ultimately will be deductible. Although the Compensation Committee may take actions intended to
limit the impact of Section 162(m), the Committee also believes that the tax deduction is only one of several relevant considerations in setting compensation. The Compensation Committee believes that the tax deduction limitation should not be
permitted to compromise our ability to design and maintain executive compensation arrangements that will attract, retain, motivate and reward executive talent to compete successfully. Accordingly, achieving the desired flexibility in the design and
delivery of compensation may result in compensation that in certain cases is not deductible for federal income tax purposes.
Compensation-Based Risk Assessment
Annually, we review our policies and practices for compensating our employees (including
non-executives)
as they relate to our risk management profile.
The Compensation Committees Advisor completed a review
of our 2016 executive compensation programs in January 2017 and noted the following risk-mitigating factors:
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the Compensation Committee annually reviews analyses on targeted compensation, actual compensation and stock ownership, and employs a philosophy of targeting total compensation at the peer group median;
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◾
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the mix of fixed versus variable compensation and cash versus equity is reasonable;
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◾
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key functions are involved in establishing, reviewing and administering MPCs incentive plans to ensure accuracy and transparency;
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◾
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incentive awards are generally capped at a maximum payout of 200 percent of target;
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◾
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metrics used within incentive plans align with shareholder value creation;
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◾
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a comprehensive process is followed when determining incentive goals, which incorporates
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page 72 / Marathon Petroleum Corporation Proxy Statement
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significant discussion between management and the Compensation Committee;
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◾
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executive officers are required to comply with a rigorous stock ownership policy and an additional holding policy on earned or vested full-value shares;
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◾
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LTI awards vest over multi-year periods;
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◾
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a
36-month
performance unit grant with multiple measurement periods discourages high-risk decisions near the end of a performance cycle that could significantly affect final
payout;
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◾
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MPC maintains an insider trading policy and an anti-hedging policy;
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◾
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MPC has a recoupment policy that addresses the restatement of results; and
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◾
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the full Board plays an active role in leadership succession planning.
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MPC management also presented a review of our
non-executive
compensation programs to the Compensation Committee. The Compensation Committee concluded that any risks arising from the compensation policies and practices for our employees were not reasonably
likely to have a material adverse effect on MPC.
Executive Succession Planning
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:
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identifies key roles (based on business impact and retention risk);
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assesses likely and possible successors for these roles, including their ability to reinforce our
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performance culture and promote our values including:
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Environmental Stewardship;
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Corporate Citizenship; and
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and evaluates the readiness of succession candidates, including training and development needs.
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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.
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Marathon Petroleum Corporation Proxy
Statement / page 73
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Executive Compensation
2016 Summary Compensation Table
The following table summarizes the total compensation awarded to, earned by or paid to Mr. Heminger, our Chairman, President 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, 2016.
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Name and
Principal Position
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Year
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Salary
(1)
($)
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Stock
Awards
(2)(3)
($)
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Option
Awards
(2)
($)
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Non-Equity
Incentive
Plan
Compensation
(4)
($)
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Change in
Pension Value and
Non-Qualified
Deferred
Compensation
Earnings
(5)
($)
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All Other
Compensation
(6)
($)
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Total
($)
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Gary R. Heminger
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2016
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1,600,000
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5,575,165
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3,520,008
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4,200,000
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1,097,813
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562,822
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16,555,808
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Chairman, President and
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2015
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1,587,500
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7,355,473
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3,520,017
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4,400,000
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1,233,077
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488,270
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18,584,337
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Chief Executive Officer
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2014
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1,537,500
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6,480,084
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3,200,023
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4,000,000
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2,922,115
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421,580
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18,561,302
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Timothy T. Griffith
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2016
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600,000
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1,013,690
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640,004
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750,000
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113,173
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91,094
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3,207,961
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Senior Vice President and
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2015
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507,500
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1,203,705
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576,018
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650,000
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72,017
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69,635
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3,078,875
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Chief Financial Officer
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Donald C. Templin
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2016
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800,000
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1,869,697
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600,005
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1,300,000
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241,506
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148,860
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4,960,068
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Executive Vice President
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2015
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741,667
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1,671,803
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800,010
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|
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1,200,000
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|
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186,756
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133,263
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4,733,499
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and President, MPLX
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2014
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687,500
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1,425,684
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704,020
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1,100,000
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182,067
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126,421
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4,225,692
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Anthony R. Kenney
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2016
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687,500
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982,903
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756,005
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1,075,000
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|
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403,941
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136,970
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4,042,319
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President,
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2015
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631,250
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1,250,230
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720,009
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1,000,000
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320,252
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147,673
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4,069,414
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Speedway LLC
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2014
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568,750
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|
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891,046
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540,002
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900,000
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|
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1,041,282
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207,548
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4,148,628
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C. Michael Palmer
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2016
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637,500
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828,663
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578,001
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725,000
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|
|
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195,709
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|
|
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110,767
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3,075,640
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Senior Vice President,
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2015
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587,500
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|
|
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1,099,727
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|
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578,016
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750,000
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|
|
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|
392,638
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|
|
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|
103,869
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|
|
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|
3,511,750
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Supply, Distribution and
Planning
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2014
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|
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|
537,500
|
|
|
|
|
688,529
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|
|
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|
510,009
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|
|
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|
725,000
|
|
|
|
|
793,637
|
|
|
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|
96,493
|
|
|
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|
3,351,168
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(1)
|
The amounts shown in this column for calendar year 2016 for Messrs. Heminger and Templin reflect their January 1, 2016, annualized base salary for 12 months as their salary did not change during the year. The
amounts shown in this column for calendar year 2016 for Messrs. Griffith, Kenney and Palmer reflect three months at the January 1, 2016, annualized base salary and nine months at the April 1, 2016, annualized base salary.
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(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, 2016, December 31, 2015, and December 31, 2014. Assumptions used in the calculation of the MPLX equity value 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, 2016, footnote 19 to MPLXs financial statements as reported in its Annual Report on Form 10-K for the year ended December 31,
2015, and footnote 16 to MPLXs financial statements as reported in its Annual Report on Form
10-K
for the year ended December 31, 2014.
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(3)
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The maximum value of the performance units reported in this column for those who received 2014 performance unit grants, assuming the highest level of performance is achieved, for each NEO, is as follows: Mr. Heminger,
MPC - $6,400,000 and MPLX - $2,000,000; Mr. Templin, MPC - $1,408,000 and MPLX - $440,000; Mr. Kenney, MPC - $1,080,000 and MPLX - $150,000; and Mr. Palmer, MPC - $1,020,000 and MPLX - $225,000. 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 receiving 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 - $255,000.
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(4)
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The amounts shown in this column reflect the total value of ACB awards earned in the year indicated, which were paid in the following year.
|
(5)
|
The amounts shown in this column reflect the annual change in actuarial present value of accumulated benefits under the Marathon Petroleum and Speedway retirement plans. See Post-Employment Benefits for 2016
and Marathon Petroleum Retirement Plans sections of this Proxy Statement for more information regarding the Companys defined benefit plans and the assumptions used in the calculation of these amounts. There are no deferred
compensation earnings reported in this column as the Companys
non-qualified
deferred compensation plans do not provide above-market or preferential earnings.
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page 74 / Marathon Petroleum Corporation Proxy Statement
|
All Other Compensation
(6)
|
We offer very limited perquisites to our NEOs, which, together with our contributions to defined contribution plans, comprise the amounts reported in the All Other Compensation column. The amounts shown in this column
are summarized below:
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|
Name
|
|
Personal Use
of Company
Aircraft
(a)
($)
|
|
Company
Physicals
(b)
($)
|
|
Tax
&
Financial
Planning
(c)
($)
|
|
Security
(d)
|
|
Miscellaneous
Perks & Tax
Allowance
Gross-Ups
($)
|
|
Company
Contributions
to
Defined
Contribution
Plans
(e)
($)
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|
Total
All
Other
Compensation
($)
|
Gary R.
Heminger
|
|
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78,352
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|
|
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3,587
|
|
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10,060
|
|
|
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43,440
|
|
|
|
|
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427,383
|
|
|
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|
562,822
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|
Timothy T.
Griffith
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|
|
|
|
|
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|
3,587
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|
|
|
|
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|
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87,507
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|
|
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|
91,094
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Donald C.
Templin
|
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|
|
|
|
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|
3,587
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|
|
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|
4,612
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|
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140,661
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|
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|
148,860
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Anthony R.
Kenney
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|
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|
|
|
|
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|
3,587
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|
|
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|
11,140
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|
|
|
|
|
|
|
|
|
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|
122,243
|
|
|
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|
136,970
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|
C. Michael
Palmer
|
|
|
|
|
|
|
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|
3,587
|
|
|
|
|
9,899
|
|
|
|
|
|
|
|
|
|
|
|
97,281
|
|
|
|
|
110,767
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|
(a)
|
Our Board has authorized and recommends the personal use of corporate aircraft to promote the safety, security and productivity of our 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, 2016, through
December 31, 2016. 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 2016, only our 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 $15,000 per calendar year. For
information on this program refer to the Perquisites section of the Compensation Discussion and Analysis section of this Proxy Statement.
|
(d)
|
The amount shown in this column reflects annual fees and maintenance expenses associated with personal security for Mr. Heminger.
|
(e)
|
The amounts shown in this column reflect amounts contributed by us under the tax-qualified Marathon Petroleum Thrift Plan for Messrs. Heminger, Griffith, Templin, Kenney and Palmer, as well as under related
non-qualified deferred compensation plans. See Post-Employment Benefits for 2016 and Marathon Petroleum Retirement Plans sections of this Proxy Statement for more information.
|
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 75
|
|
|
|
|
Grants of Plan-Based Awards in 2016
The following table provides information regarding all plan-based awards, including cash-based incentive awards and equity-based awards (specifically stock options,
restricted stock, phantom units and performance units) granted to each of our NEOs in 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Type of Award
|
|
Grant
Date
|
|
Approval
Date
(1)
|
|
Estimated Future Payouts
Under
Non-Equity
Incentive
Plan Awards
(2)
|
|
Estimated Future Payouts
Under Equity
Incentive Plan
Awards
(3)
|
|
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#)
|
|
All
Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
Exercise
or Base
Price of
Option
Awards
($)
|
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
(4)
($)
|
|
|
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
|
|
|
Gary R.
Heminger
|
|
MPC Stock Options
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
353,060
|
|
|
|
|
34.63
|
|
|
|
|
3,520,008
|
|
|
|
MPC Restricted Stock
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,760,000
|
|
|
|
MPC Performance Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
440,000
|
|
|
|
|
3,520,000
|
|
|
|
|
7,040,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,017,312
|
|
|
|
MPC Annual Cash Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
2,400,000
|
|
|
|
|
4,800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX Phantom Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,100,013
|
|
|
|
MPLX Performance Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137,500
|
|
|
|
|
1,100,000
|
|
|
|
|
2,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
697,840
|
|
Timothy T. Griffith
|
|
MPC Stock Options
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,193
|
|
|
|
|
34.63
|
|
|
|
|
640,004
|
|
|
|
MPC Restricted Stock
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
320,016
|
|
|
|
MPC Performance Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
|
|
640,000
|
|
|
|
|
1,280,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
366,784
|
|
|
|
MPC Annual Cash Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
500,000
|
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX Phantom Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,010
|
|
|
|
MPLX Performance Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
200,000
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
126,880
|
|
Donald C. Templin
|
|
MPC Stock Options
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,181
|
|
|
|
|
34.63
|
|
|
|
|
600,005
|
|
|
|
MPC Restricted Stock
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,034
|
|
|
|
MPC Performance Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
600,000
|
|
|
|
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
343,860
|
|
|
|
MPC Annual Cash Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
800,000
|
|
|
|
|
1,600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX Phantom Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750,003
|
|
|
|
MPLX Performance Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,750
|
|
|
|
|
750,000
|
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
475,800
|
|
Anthony R. Kenney
|
|
MPC Stock Options
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,828
|
|
|
|
|
34.63
|
|
|
|
|
756,005
|
|
|
|
MPC Restricted Stock
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
378,021
|
|
|
|
MPC Performance Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,500
|
|
|
|
|
756,000
|
|
|
|
|
1,512,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
433,264
|
|
|
|
MPC Annual Cash Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
595,000
|
|
|
|
|
1,190,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX Phantom Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,006
|
|
|
|
MPLX Performance Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,125
|
|
|
|
|
105,000
|
|
|
|
|
210,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,612
|
|
C. Michael Palmer
|
|
MPC Stock Options
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,974
|
|
|
|
|
34.63
|
|
|
|
|
578,001
|
|
|
|
MPC Restricted Stock
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
289,022
|
|
|
|
MPC Performance Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,250
|
|
|
|
|
578,000
|
|
|
|
|
1,156,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
331,252
|
|
|
|
MPC Annual Cash Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
487,500
|
|
|
|
|
975,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX Phantom Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127,503
|
|
|
|
MPLX Performance Units
|
|
|
|
3/1/2016
|
|
|
|
|
2/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,938
|
|
|
|
|
127,500
|
|
|
|
|
255,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,886
|
|
(1)
|
Our Compensation Committee approved the awards reported in the table above for Messrs. Heminger, Griffith, Templin, Kenney and Palmer on February 23, 2016, with a grant date of March 1, 2016.
|
(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 2016 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 $9.97 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, 2016, grants of restricted stock awards was $34.63 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 $0.5731 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, 2016. The price used for the March 1, 2016, grants of phantom unit awards was $26.53
per unit. MPLX performance units are designed to settle 25% in MPLX common units and 75% in cash. The MPLX performance units have a grant date fair value of $0.6344 per unit as calculated using a Monte Carlo valuation model. 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, 2016.
|
|
|
|
|
|
|
|
page 76 / Marathon Petroleum Corporation Proxy Statement
|
MPC Stock Options (Option Awards)
Our Compensation Committee granted stock options to Messrs. Heminger, Griffith, Templin, Kenney and Palmer with a grant date of March 1, 2016. All options vest in
one-third
increments on the first, second and third anniversaries of the date of grant and expire 10 years following the date of grant. No dividends are paid and there are no voting rights associated with stock
options. In the event of the death or retirement (whether mandatory or not) of an NEO, unvested options granted to such NEO as an officer immediately vest and remain exercisable until the earlier of five years following the date of death or
retirement or the original expiration date. Unvested options granted to an NEO as a
non-officer
immediately vest and remain exercisable until the earlier of three years following the date of death or
retirement or the original expiration date. In the event of a change in control of the Company and a Qualified Termination, unvested options immediately vest and remain exercisable for the original term of the option. Upon voluntary or involuntary
termination of an NEO, unvested options are forfeited. Upon voluntary or involuntary termination of an NEO for cause, vested options are cancelled. Upon involuntary termination of an NEO without cause, vested options are exercisable for 90 days
following the date of termination.
MPC Restricted Stock (Stock Awards)
Our Compensation Committee granted restricted stock awards to Messrs. Heminger, Griffith, Templin, Kenney and Palmer with a grant date of March 1, 2016, which vest in
one-third increments on the first, second and third anniversaries of the grant date. Dividends accrue on the restricted stock awards and are paid upon vesting. There are voting rights associated with unvested restricted stock awards. If an NEO
retires under our mandatory retirement policy, unvested restricted stock vests and accrued dividends are paid upon the mandatory retirement date (the first day of the month coincident with or following the officers 65th birthday). In the event
of the death of an NEO or a change in control of the Company, unvested restricted stock immediately vests and accrued dividends are paid. If an NEO retires or otherwise leaves the Company prior to the vesting date, unvested restricted stock and
accrued but unpaid dividends are forfeited.
MPC Performance Units (Equity Incentive Plan Awards)
Our Compensation Committee granted performance units to Messrs. Heminger, Griffith, Templin, Kenney and Palmer with a grant date of March 1, 2016. Each performance unit
has a target value of $1.00 and is designed to settle 25% in MPC common stock and 75% in cash. Payout of these units could vary from $0.00 to $2.00 per unit and is tied to MPCs TSR over a 36-month period as compared to the TSR of those in our
peer group for the January 1, 2016, through December 31, 2018, measurement period. No dividends are paid and there are no voting rights associated with unvested performance units. If an NEO retires following the completion of one-half of the
measurement period (18 months) for the 2015 grant or the completion of nine months of the measurement period for the 2016 grant, the NEO will be eligible to receive, at our Compensation Committees discretion, a prorated payout based on the
actual results of the entire measurement period. For the 2016 grant, if an NEO retires under our mandatory retirement policy, outstanding performance units will fully vest, however payout will occur at the end of the full 36-month performance cycle
based on the certified results of the performance cycle. In the event of the death of an NEO, all unvested performance units immediately vest at target levels. In the event of a change in control of the Company and a Qualified Termination (as
defined following the Potential Payments upon Termination or Termination in the Event of a Change in Control table), unvested performance units for the 2015 grant immediately vest at target levels. For the 2016 grant, unvested
performance units will vest and be paid out based on actual TSR performance of the Company amongst its specified peer group for the period from the date of grant to the date of the change in control,
and target TSR performance for the period from the date of the change in control to the end of the performance cycle. If an NEO terminates employment under any other circumstance, unvested
performance units are forfeited.
MPC Annual Cash Bonus
(Non-Equity
Incentive Plan Awards)
Our Compensation Committee established the ACB program as a variable incentive program intended to motivate and reward NEOs for achieving short-term (annual) business
objectives that drive overall shareholder value while encouraging responsible risk-taking and accountability. Bonuses are determined at the discretion of our Compensation Committee and the achievement of
pre-established
goals. If an NEO retires on or after July 1 of the performance year, eligibility for a bonus is at our Compensation Committees discretion. In the event of the death of an NEO during
the performance period, unless otherwise determined by the Compensation Committee, a target bonus will be paid. In the event of change in control of the Company and a Qualified Termination, a cash severance is paid in lieu of a bonus. If an NEO
terminates employment under any other circumstance, the NEO will be ineligible for a bonus payment.
MPLX Phantom Units (Other Unit Awards)
The MPLX Board granted phantom unit awards to Messrs. Heminger, Griffith, Templin, Kenney and Palmer with a grant date of March 1, 2016. The phantom unit awards vest in
one-third increments on the first, second and third anniversaries of the grant date. Distribution equivalents accrue on the phantom unit awards and are paid upon vesting. There are no voting rights associated with unvested phantom units. If an NEO
retires under MPCs mandatory retirement policy, unvested phantom units vest and accrued distribution equivalents are paid upon the mandatory retirement date (the first day of the month coincident with or following the officers 65th
birthday). In the event of the death of an NEO or a change in control of MPLX, unvested phantom units immediately vest and accrued distribution equivalents are paid. If an NEO retires or otherwise leaves MPLX prior to the vesting date, unvested
phantom units and unpaid distribution equivalents are forfeited.
MPLX Performance Units (Equity Incentive Plan Awards)
The MPLX Board granted performance units to Messrs. Heminger, Griffith, Templin, Kenney and Palmer with a grant date of March 1, 2016. Each performance unit has a
target value of $1.00 and is designed to settle 25% in MPLX common units and 75% in cash. Payout of these units could vary from $0.00 to $2.00 per unit and is tied to MPLXs TUR over a
36-month
period as
compared to the TUR of those in a peer group for the January 1, 2016, through December 31, 2018, measurement period. No cash distributions are paid and there are no voting rights associated with unvested performance units. If an NEO
retires following the completion of
one-half
of the measurement period (18 months) for the 2015 grant or the completion of nine months of the measurement period for the 2016 grant, the NEO will be eligible to
receive, at the discretion of the MPLX Board, a prorated payout based on the actual results of the entire measurement period. For the 2016 grant, if an NEO retires under our mandatory retirement policy, outstanding performance units will fully vest,
however payout will occur at the end of the full
36-month
performance cycle based on the certified results of the performance cycle. In the event of the death of an NEO, all unvested performance units
immediately vest at target levels. In the event of a change in control of MPLX, unvested performance units for the 2015 grant immediately vest at target levels. For the 2016 grant, unvested performance units will vest and be paid out based on actual
TUR performance of MPLX amongst its specified peer group for the
period from the date of grant to the date of the change in control, and target TUR performance for
the period from the date of the change in control to the end of the performance cycle. If an NEO terminates employment under any other circumstance, unvested performance units are forfeited.
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 77
|
|
|
|
|
Outstanding Equity Awards at 2016 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, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Grant Date
(1)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
|
Number of
Shares
of Stock
or Units
that
Have
Not
Vested
(5)
(#)
|
|
|
Market
Value of
Shares
of Stock
or Units
that
Have
Not
Vested
(6)
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
that Have
Not
Vested
(7)
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
that Have
Not
Vested
(8)
($)
|
Gary R. Heminger
|
|
|
5/30/2007
|
|
|
|
71,024
|
|
|
|
|
|
|
25.88
|
|
|
5/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2008
|
|
|
|
55,178
|
|
|
|
|
|
|
23.04
|
|
|
2/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/25/2009
|
|
|
|
187,142
|
|
|
|
|
|
|
10.10
|
|
|
2/25/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2010
|
|
|
|
246,340
|
|
|
|
|
|
|
12.37
|
|
|
2/24/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2011
|
|
|
|
236,744
|
|
|
|
|
|
|
20.85
|
|
|
2/23/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/5/2011
|
|
|
|
73,712
|
|
|
|
|
|
|
17.20
|
|
|
12/5/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/29/2012
|
|
|
|
420,170
|
|
|
|
|
|
|
20.78
|
|
|
3/1/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2013
|
|
|
|
221,454
|
|
|
|
|
|
|
41.37
|
|
|
2/27/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2014
|
|
|
|
171,560
|
|
|
|
85,780
(2)
|
|
|
41.69
|
|
|
3/1/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2015
|
|
|
|
86,914
|
|
|
|
173,828
(3)
|
|
|
50.89
|
|
|
3/1/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
353,060
(4)
|
|
|
34.63
|
|
|
3/1/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,770,238
|
|
|
|
612,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPC
|
|
|
|
86,677
|
|
|
|
4,364,187
|
|
|
|
7,040,000
|
|
|
|
8,045,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX
|
|
|
|
57,223
|
|
|
|
1,981,060
|
|
|
|
2,200,000
|
|
|
|
1,350,030
|
|
Timothy T. Griffith
|
|
|
8/26/2011
|
|
|
|
19,100
|
|
|
|
|
|
|
17.44
|
|
|
8/26/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/29/2012
|
|
|
|
28,012
|
|
|
|
|
|
|
20.78
|
|
|
3/1/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2013
|
|
|
|
13,072
|
|
|
|
|
|
|
41.37
|
|
|
2/27/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2014
|
|
|
|
10,936
|
|
|
|
5,470
(2)
|
|
|
41.69
|
|
|
3/1/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2015
|
|
|
|
14,222
|
|
|
|
28,446
(3)
|
|
|
50.89
|
|
|
3/1/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
64,193
(4)
|
|
|
34.63
|
|
|
3/1/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,342
|
|
|
|
98,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPC
|
|
|
|
13,831
|
|
|
|
696,391
|
|
|
|
1,216,000
|
|
|
|
1,389,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX
|
|
|
|
9,307
|
|
|
|
322,208
|
|
|
|
380,000
|
|
|
|
230,914
|
|
Donald C. Templin
|
|
|
7/1/2011
|
|
|
|
148,370
|
|
|
|
|
|
|
21.10
|
|
|
7/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/29/2012
|
|
|
|
89,636
|
|
|
|
|
|
|
20.78
|
|
|
3/1/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2013
|
|
|
|
51,674
|
|
|
|
|
|
|
41.37
|
|
|
2/27/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2014
|
|
|
|
37,744
|
|
|
|
18,872
(2)
|
|
|
41.69
|
|
|
3/1/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2015
|
|
|
|
19,752
|
|
|
|
39,508
(3)
|
|
|
50.89
|
|
|
3/1/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
60,181
(4)
|
|
|
34.63
|
|
|
3/1/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
347,176
|
|
|
|
118,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPC
|
|
|
|
16,722
|
|
|
|
841,953
|
|
|
|
1,400,000
|
|
|
|
1,599,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX
|
|
|
|
31,803
|
|
|
|
1,101,020
|
|
|
|
1,000,000
|
|
|
|
556,825
|
|
|
|
|
|
|
|
|
page 78 / Marathon Petroleum Corporation Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Option Awards
|
|
Stock Awards
|
Name
|
|
Grant Date
(1)
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares
of Stock
or Units
that
Have
Not
Vested
(5)
(#)
|
|
Market
Value of
Shares
of Stock
or Units
that
Have
Not
Vested
(6)
($)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units
or
Other
Rights
that Have
Not
Vested
(7)
(#)
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
that Have
Not
Vested
(8)
($)
|
Anthony R. Kenney
|
|
|
|
2/25/2009
|
|
|
|
|
30,124
|
|
|
|
|
|
|
|
|
|
10.10
|
|
|
|
|
2/25/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2010
|
|
|
|
|
47,454
|
|
|
|
|
|
|
|
|
|
12.37
|
|
|
|
|
2/24/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2011
|
|
|
|
|
59,242
|
|
|
|
|
|
|
|
|
|
20.85
|
|
|
|
|
2/23/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/5/2011
|
|
|
|
|
14,262
|
|
|
|
|
|
|
|
|
|
17.20
|
|
|
|
|
12/5/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/29/2012
|
|
|
|
|
67,228
|
|
|
|
|
|
|
|
|
|
20.78
|
|
|
|
|
3/1/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2013
|
|
|
|
|
33,218
|
|
|
|
|
|
|
|
|
|
41.37
|
|
|
|
|
2/27/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2014
|
|
|
|
|
28,950
|
|
|
|
|
14,476
(2)
|
|
|
|
|
41.69
|
|
|
|
|
3/1/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2015
|
|
|
|
|
17,778
|
|
|
|
|
35,556
(3)
|
|
|
|
|
50.89
|
|
|
|
|
3/1/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
75,828
(4)
|
|
|
|
|
34.63
|
|
|
|
|
3/1/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
298,256
|
|
|
|
|
125,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPC
|
|
|
|
|
17,794
|
|
|
|
|
895,928
|
|
|
|
|
1,476,000
|
|
|
|
|
1,686,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX
|
|
|
|
|
5,283
|
|
|
|
|
182,897
|
|
|
|
|
205,000
|
|
|
|
|
125,230
|
|
C. Michael Palmer
|
|
|
|
5/30/2007
|
|
|
|
|
8,568
|
|
|
|
|
|
|
|
|
|
25.88
|
|
|
|
|
5/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/28/2008
|
|
|
|
|
11,450
|
|
|
|
|
|
|
|
|
|
21.69
|
|
|
|
|
5/28/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/26/2010
|
|
|
|
|
17,298
|
|
|
|
|
|
|
|
|
|
12.87
|
|
|
|
|
5/26/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2011
|
|
|
|
|
50,746
|
|
|
|
|
|
|
|
|
|
20.85
|
|
|
|
|
2/23/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/5/2011
|
|
|
|
|
11,544
|
|
|
|
|
|
|
|
|
|
17.20
|
|
|
|
|
12/5/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/29/2012
|
|
|
|
|
61,626
|
|
|
|
|
|
|
|
|
|
20.78
|
|
|
|
|
3/1/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2013
|
|
|
|
|
31,374
|
|
|
|
|
|
|
|
|
|
41.37
|
|
|
|
|
2/27/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2014
|
|
|
|
|
27,342
|
|
|
|
|
13,672
(2)
|
|
|
|
|
41.69
|
|
|
|
|
3/1/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2015
|
|
|
|
|
14,272
|
|
|
|
|
28,544
(3)
|
|
|
|
|
50.89
|
|
|
|
|
3/1/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
57,974
(4)
|
|
|
|
|
34.63
|
|
|
|
|
3/1/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
234,220
|
|
|
|
|
100,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPC
|
|
|
|
|
14,174
|
|
|
|
|
713,661
|
|
|
|
|
1,156,000
|
|
|
|
|
1,321,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX
|
|
|
|
|
6,610
|
|
|
|
|
228,838
|
|
|
|
|
255,000
|
|
|
|
|
156,481
|
|
(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, 2017.
|
(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, 2017 and March 1, 2018.
|
(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, 2017, March 1, 2018, and March 1, 2019.
|
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 79
|
|
|
|
|
(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, 2016. 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
|
|
|
3/1/2014
|
|
|
|
12,796
|
|
|
3/1/2017
|
|
|
|
3/1/2015
|
|
|
|
23,058
|
|
|
3/1/2017, 3/1/2018
|
|
|
|
3/1/2016
|
|
|
|
50,823
|
|
|
3/1/2017, 3/1/2018, 3/1/2019
|
|
|
|
|
|
|
|
86,677
|
|
|
|
Timothy T. Griffith
|
|
|
3/1/2014
|
|
|
|
816
|
|
|
3/1/2017
|
|
|
|
3/1/2015
|
|
|
|
3,774
|
|
|
3/1/2017, 3/1/2018
|
|
|
|
3/1/2016
|
|
|
|
9,241
|
|
|
3/1/2017, 3/1/2018, 3/1/2019
|
|
|
|
|
|
|
|
13,831
|
|
|
|
Donald C. Templin
|
|
|
3/1/2014
|
|
|
|
2,816
|
|
|
3/1/2017
|
|
|
|
3/1/2015
|
|
|
|
5,242
|
|
|
3/1/2017, 3/1/2018
|
|
|
|
3/1/2016
|
|
|
|
8,664
|
|
|
3/1/2017, 3/1/2018, 3/1/2019
|
|
|
|
|
|
|
|
16,722
|
|
|
|
Anthony R. Kenney
|
|
|
3/1/2014
|
|
|
|
2,160
|
|
|
3/1/2017
|
|
|
|
3/1/2015
|
|
|
|
4,718
|
|
|
3/1/2017, 3/1/2018
|
|
|
|
3/1/2016
|
|
|
|
10,916
|
|
|
3/1/2017, 3/1/2018, 3/1/2019
|
|
|
|
|
|
|
|
17,794
|
|
|
|
C. Michael Palmer
|
|
|
3/1/2014
|
|
|
|
2,040
|
|
|
3/1/2017
|
|
|
|
3/1/2015
|
|
|
|
3,788
|
|
|
3/1/2017, 3/1/2018
|
|
|
|
3/1/2016
|
|
|
|
8,346
|
|
|
3/1/2017, 3/1/2018, 3/1/2019
|
|
|
|
|
|
|
|
14,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX Phantom Units
|
|
|
|
|
Name
|
|
Grant Date
|
|
|
# of Unvested Units
|
|
|
Vesting Date
|
Gary R. Heminger
|
|
|
3/1/2014
|
|
|
|
6,840
|
|
|
3/1/2017
|
|
|
|
3/1/2015
|
|
|
|
8,920
|
|
|
3/1/2017, 3/1/2018
|
|
|
|
3/1/2016
|
|
|
|
41,463
|
|
|
3/1/2017, 3/1/2018, 3/1/2019
|
|
|
|
|
|
|
|
57,223
|
|
|
|
Timothy T. Griffith
|
|
|
3/1/2014
|
|
|
|
308
|
|
|
3/1/2017
|
|
|
|
3/1/2015
|
|
|
|
1,460
|
|
|
3/1/2017, 3/1/2018
|
|
|
|
3/1/2016
|
|
|
|
7,539
|
|
|
3/1/2017, 3/1/2018, 3/1/2019
|
|
|
|
|
|
|
|
9,307
|
|
|
|
Donald C. Templin
|
|
|
3/1/2014
|
|
|
|
1,505
|
|
|
3/1/2017
|
|
|
|
3/1/2015
|
|
|
|
2,028
|
|
|
3/1/2017, 3/1/2018
|
|
|
|
3/1/2016
|
|
|
|
28,270
|
|
|
3/1/2017, 3/1/2018, 3/1/2019
|
|
|
|
|
|
|
|
31,803
|
|
|
|
Anthony R. Kenney
|
|
|
3/1/2014
|
|
|
|
513
|
|
|
3/1/2017
|
|
|
|
3/1/2015
|
|
|
|
812
|
|
|
3/1/2017, 3/1/2018
|
|
|
|
3/1/2016
|
|
|
|
3,958
|
|
|
3/1/2017, 3/1/2018, 3/1/2019
|
|
|
|
|
|
|
|
5,283
|
|
|
|
C. Michael Palmer
|
|
|
3/1/2014
|
|
|
|
770
|
|
|
3/1/2017
|
|
|
|
3/1/2015
|
|
|
|
1,034
|
|
|
3/1/2017, 3/1/2018
|
|
|
|
3/1/2016
|
|
|
|
4,806
|
|
|
3/1/2017, 3/1/2018, 3/1/2019
|
|
|
|
|
|
|
|
6,610
|
|
|
|
(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, 2016, using the MPC closing stock price of
$50.35 and the MPLX closing unit price of $34.62 on December 30, 2016, which was the last trading day of 2016.
|
|
|
|
|
|
|
|
page 80 / 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, 2016. The MPC performance unit grants awarded in 2015 and 2016 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 2015 and 2016 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
|
|
Measurement Period Ending Date
|
|
Gary R. Heminger
|
|
|
3/1/2015
|
|
|
3,520,000
|
|
|
12/31/2017
|
|
|
|
|
3/1/2016
|
|
|
3,520,000
|
|
|
12/31/2018
|
|
|
|
|
|
|
|
7,040,000
|
|
|
|
|
Timothy T. Griffith
|
|
|
3/1/2015
|
|
|
576,000
|
|
|
12/31/2017
|
|
|
|
|
3/1/2016
|
|
|
640,000
|
|
|
12/31/2018
|
|
|
|
|
|
|
|
1,216,000
|
|
|
|
|
Donald C. Templin
|
|
|
3/1/2015
|
|
|
800,000
|
|
|
12/31/2017
|
|
|
|
|
3/1/2016
|
|
|
600,000
|
|
|
12/31/2018
|
|
|
|
|
|
|
|
1,400,000
|
|
|
|
|
Anthony R. Kenney
|
|
|
3/1/2015
|
|
|
720,000
|
|
|
12/31/2017
|
|
|
|
|
3/1/2016
|
|
|
756,000
|
|
|
12/31/2018
|
|
|
|
|
|
|
|
1,476,000
|
|
|
|
|
C. Michael Palmer
|
|
|
3/1/2015
|
|
|
578,000
|
|
|
12/31/2017
|
|
|
|
|
3/1/2016
|
|
|
578,000
|
|
|
12/31/2018
|
|
|
|
|
|
|
|
1,156,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPLX
Performance Units
|
|
|
|
|
Name
|
|
Grant Date
|
|
|
# of Unvested Units
|
|
Measurement Period Ending Date
|
Gary R. Heminger
|
|
|
3/1/2015
|
|
|
1,100,000
|
|
12/31/2017
|
|
|
|
3/1/2016
|
|
|
1,100,000
|
|
12/31/2018
|
|
|
|
|
|
|
2,200,000
|
|
|
Timothy T. Griffith
|
|
|
3/1/2015
|
|
|
180,000
|
|
12/31/2017
|
|
|
|
3/1/2016
|
|
|
200,000
|
|
12/31/2018
|
|
|
|
|
|
|
380,000
|
|
|
Donald C. Templin
|
|
|
3/1/2015
|
|
|
250,000
|
|
12/31/2017
|
|
|
|
3/1/2016
|
|
|
750,000
|
|
12/31/2018
|
|
|
|
|
|
|
1,000,000
|
|
|
Anthony R. Kenney
|
|
|
3/1/2015
|
|
|
100,000
|
|
12/31/2017
|
|
|
|
3/1/2016
|
|
|
105,000
|
|
12/31/2018
|
|
|
|
|
|
|
205,000
|
|
|
C. Michael Palmer
|
|
|
3/1/2015
|
|
|
127,500
|
|
12/31/2017
|
|
|
|
3/1/2016
|
|
|
127,500
|
|
12/31/2018
|
|
|
|
|
|
|
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, 2016 assuming a payout of $1.1428 per unit for the March 1, 2015, grant
and $1.1428 per unit for the March 1, 2016, grant, which is the next higher performance achievement that exceeds the performance for these grants measurement period that ended December 31, 2016. 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, 2016, assuming a payout of $0.7273 per unit for the March 1, 2015, grant and $0.50 per unit for the March 1, 2016, grant, which is the
next higher performance achievement that exceeds the performance for these grants measurement period that ended December 31, 2016.
|
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 81
|
|
|
|
|
Option Exercises and Stock Vested in 2016
The following table provides information regarding MPC stock options exercised by our NEOs in 2016, as well as shares of MPC restricted stock and MPLX phantom units
vested in 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
Value Realized on
Exercise
(1)
($)
|
|
Number of
Shares Acquired
on
Vesting
(#)
|
|
Value Realized
on Vesting
(2)
($)
|
Gary R. Heminger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPC
|
|
|
|
|
71,958
|
(3)
|
|
|
|
1,468,663
|
|
|
|
|
35,926
|
|
|
|
|
1,238,452
|
|
|
|
|
|
|
|
|
|
|
|
MPLX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,398
|
|
|
|
|
529,253
|
|
Timothy T. Griffith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,388
|
|
|
|
|
116,751
|
|
|
|
|
|
|
|
|
|
|
|
MPLX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,418
|
|
|
|
|
36,845
|
|
Donald C. Templin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,144
|
|
|
|
|
280,750
|
|
|
|
|
|
|
|
|
|
|
|
MPLX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,642
|
|
|
|
|
120,432
|
|
Anthony R. Kenney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,274
|
|
|
|
|
285,332
|
|
|
|
|
|
|
|
|
|
|
|
MPLX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,525
|
|
|
|
|
39,584
|
|
C. Michael Palmer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,576
|
|
|
|
|
192,202
|
|
|
|
|
|
|
|
|
|
|
|
MPLX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,197
|
|
|
|
|
57,019
|
|
(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 June 2016.
|
Post-Employment Benefits for 2016
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, most 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 $120,000 or more in 2016).
|
|
|
|
|
|
|
page 82 / Marathon Petroleum Corporation Proxy Statement
|
2016 Pension Benefits Table
The 2016 Pension Benefits Table below reflects the actuarial present value of accumulated benefits payable to each of our NEOs under the Marathon Petroleum Retirement
Plan, the Speedway Retirement Plan and the defined benefit portion of the Excess Plans as of December 31, 2016. These values have been determined using actuarial assumptions consistent with those used in our financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of
Years of
Credited
Service
(1)
|
|
Present
Value of
Accumulated
Benefit
(2)
($)
|
|
Payments
During Last
Fiscal Year
|
Gary R. Heminger
|
|
Marathon Petroleum Retirement Plan
|
|
36.08 years
|
|
|
|
1,973,019
|
|
|
|
|
|
|
|
|
Marathon Petroleum Excess Benefit Plan
|
|
36.08 years
|
|
|
|
24,362,670
|
|
|
|
|
|
|
|
|
Speedway Retirement Plan
|
|
6.48 years
|
|
|
|
330,177
|
|
|
|
|
|
|
|
|
Speedway Excess Benefit Plan
|
|
6.48 years
|
|
|
|
4,360,139
|
|
|
|
|
|
|
Timothy T. Griffith
|
|
Marathon Petroleum Retirement Plan
|
|
5.33 years
|
|
|
|
104,872
|
|
|
|
|
|
|
|
|
Marathon Petroleum Excess Benefit Plan
|
|
5.33 years
|
|
|
|
224,773
|
|
|
|
|
|
|
Donald C. Templin
|
|
Marathon Petroleum Retirement Plan
|
|
5.50 years
|
|
|
|
134,520
|
|
|
|
|
|
|
|
|
Marathon Petroleum Excess Benefit Plan
|
|
5.50 years
|
|
|
|
800,832
|
|
|
|
|
|
|
Anthony R. Kenney
|
|
Marathon Petroleum Retirement Plan
|
|
21.83 years
|
|
|
|
1,296,709
|
|
|
|
|
|
|
|
|
Marathon Petroleum Excess Benefit Plan
|
|
21.83 years
|
|
|
|
4,605,054
|
|
|
|
|
|
|
|
|
Speedway Retirement Plan
|
|
18.99 years
|
|
|
|
580,240
|
|
|
|
|
|
|
|
|
Speedway Excess Benefit Plan
|
|
18.99 years
|
|
|
|
2,747,599
|
|
|
|
|
|
|
C. Michael Palmer
|
|
Marathon Petroleum Retirement Plan
|
|
41.42 years
|
|
|
|
2,331,470
|
|
|
|
|
|
|
|
|
Marathon Petroleum Excess Benefit Plan
|
|
41.42 years
|
|
|
|
5,209,126
|
|
|
|
|
|
|
(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 3.90%, 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 varied from 1.00% to 1.25% based on the anticipated year of retirement.
The present value of accumulated benefit for the Speedway Retirement Plan was calculated assuming a discount rate of 3.90%, 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 3.06% 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 83
|
|
|
|
|
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 2016, 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
|
|
|
|
|
|
|
page 84 / Marathon Petroleum Corporation Proxy Statement
|
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 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 25% 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 on or after January 1, 2016, are fully vested.
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 85
|
|
|
|
|
Marathon Petroleum Excess Benefit Plan (Defined Contribution)
Certain highly compensated
non-officer
employees and, prior to January 1, 2006, executive officers who elected not to
participate in the Marathon Petroleum Deferred Compensation Plan, comprise those eligible to receive defined contribution accruals under the Marathon Petroleum Excess Benefit Plan. The defined contribution formula in the Marathon Petroleum Excess
Benefit Plan is designed to allow eligible employees to receive employer matching contributions equal to the amount they would have otherwise received under the
tax-qualified
Marathon Petroleum Thrift Plan
were it not for Internal Revenue Code limitations.
Defined contribution accruals in the Marathon Petroleum Excess Benefit Plan are credited with interest equal to
that paid in the Marathon Stable Value Fund option of the Marathon Petroleum Thrift Plan. The annual rate of return on this option for the year ended December 31, 2016, was 1.76%. All distributions from the plan are paid in the form
of a lump sum following the participants separation from service.
As noted, our NEOs no longer participate in the defined contribution formula of the Marathon
Petroleum Excess Benefit Plan; all
non-qualified
employer matching contributions for our NEOs now accrue under the Marathon Petroleum Amended and Restated Deferred Compensation Plan.
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 +
Participation
|
|
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%
|
|
|
|
|
|
|
|
page 86 / Marathon Petroleum Corporation Proxy Statement
|
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.
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. A participant must be vested under the Speedway Retirement Plan in order for an excess
retirement benefit to be payable to the participant.
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 87
|
|
|
|
|
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.
2016
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,251
|
|
|
|
|
|
|
61,999
|
|
|
|
|
|
|
|
|
|
|
Marathon Petroleum Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
408,780
|
|
|
|
|
212,707
|
|
|
|
|
|
|
5,448,301
|
|
|
|
|
|
|
|
|
|
|
Emro Marketing Company Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,122
|
|
|
|
|
|
|
265,605
|
|
Timothy T.
Griffith
|
|
Marathon Petroleum Deferred Compensation Plan
|
|
|
|
62,327
|
|
|
|
|
68,904
|
|
|
|
|
42,499
|
|
|
|
|
|
|
546,837
|
|
Donald C. Templin
|
|
Marathon Petroleum Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
122,058
|
|
|
|
|
43,549
|
|
|
|
|
|
|
606,655
|
|
Anthony R. Kenney
|
|
Marathon Petroleum Deferred Compensation Plan
|
|
|
|
168,634
|
|
|
|
|
103,640
|
|
|
|
|
90,293
|
|
|
|
|
|
|
1,326,655
|
|
|
|
|
|
|
|
|
|
|
Speedway Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
234,041
|
|
|
|
|
|
|
3,117,062
|
|
|
|
|
|
|
|
|
|
|
Speedway Excess Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,214
|
|
|
|
|
|
|
166,935
|
|
|
|
|
|
|
|
|
|
|
Emro Marketing Company Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,948
|
|
|
|
|
|
|
406,107
|
|
C. Michael Palmer
|
|
Marathon Petroleum Excess Benefit Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
495
|
|
|
|
|
|
|
113,294
|
|
|
|
|
|
|
|
|
|
|
Marathon Petroleum Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
78,678
|
|
|
|
|
67,493
|
|
|
|
|
|
|
476,047
|
|
(1)
|
The amounts shown in this column are also included in the Salary and
Non-Equity
Incentive Plan Compensation columns of the 2016 Summary Compensation Table.
|
(2)
|
The amounts shown in this column are also included in the All Other Compensation column of the 2016 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, $1,877,151;
Mr. Templin, $395,264; Mr. Kenney, $368,865; and Mr. Palmer, $139,825; (b) under the Speedway Deferred Compensation Plan: Mr. Kenney, $699,152; and (c) under the Speedway Excess Benefit Plan: Mr. Kenney, $113,267.
|
|
|
|
|
|
|
|
page 88 / Marathon Petroleum Corporation Proxy Statement
|
Marathon Petroleum Deferred Compensation Plan
MPC LP sponsors the Marathon Petroleum Amended and Restated Deferred Compensation Plan (which we refer to as the Marathon Petroleum Deferred Compensation Plan). The
Marathon Petroleum Deferred Compensation Plan is an unfunded,
non-qualified
plan in which our NEOs and other executive officers may participate. This plan is designed to provide participants the opportunity to
supplement their retirement savings by deferring income in a
tax-effective
manner. Participants may defer up to 20% of their salary and bonus each year. Deferral elections are made in December of each year for
amounts to be earned in the following year and are irrevocable. The Marathon Petroleum Deferred Compensation Plan provides for a match on any participants salary and bonus deferral equal to the percentage provided by the Marathon Petroleum
Thrift Plan, which is currently 117% of contributions up to 6% of gross pay. Participants are fully vested in their deferrals under the plan.
In addition, the
Marathon Petroleum Deferred Compensation Plan provides benefits for participants equal to the employer matching contributions they would have otherwise received under the
tax-qualified
Marathon Petroleum
Thrift Plan were it not for Internal Revenue Code limitations. All matching contributions made on or after January 1, 2016 are fully vested.
The investment options
available under the Marathon Petroleum Deferred Compensation Plan generally mirror the investment options offered to participants under the Marathon Petroleum Thrift Plan with the exception of MPC common stock and BrokerageLink, which are not
investment options under the Marathon Petroleum Deferred Compensation Plan. The Marathon Petroleum Deferred Compensation Plan provides that all participants will receive their benefits as a lump sum following separation from service.
Speedway Deferred Compensation Plan
Until
January 1, 2014, when certain Speedway employees (including Mr. Kenney) became eligible to participate in the Marathon Petroleum Deferred Compensation Plan, Mr. Kenney participated in the Speedway Deferred Compensation Plan. The
Speedway Deferred Compensation Plan is an unfunded,
non-qualified
plan in which a select group of management and highly compensated employees of Speedway participated. The plan was designed to provide
participants the opportunity to save for retirement by deferring income in a
tax-effective
manner. Participants could defer up to 25% of their salary and bonus each year. Participants are fully vested in their
deferrals under the plan.
In addition, the Speedway Deferred Compensation Plan provided benefits for participants, which were intended to be approximately equal to
the employer matching contributions they would have otherwise received under the then Speedway Retirement Savings Plan but which were not
received because highly compensated employees are not permitted to defer compensation under that plan. Speedway, therefore, matched each participants deferrals under the Speedway Deferred
Compensation Plan at the rate of $0.67 per dollar contributed on the first 6% of compensation deferred up to a maximum of 4% of a participants eligible compensation. Participants are fully vested in these matching amounts under the plan.
The Speedway Deferred Compensation Plan provided participants with two
non-elective
employer contribution amounts. The first
employer contribution amount equaled 3.5% of salary deferrals. The second employer contribution amount equaled 4% of eligible pay for employment retention purposes.
The investment options available under the Speedway Deferred Compensation Plan generally mirror the investment options offered to participants under the Marathon
Petroleum Thrift Plan with the exception of MPC common stock and BrokerageLink, which are not investment options under the Speedway Deferred Compensation Plan. All participants in the Speedway Deferred Compensation Plan will receive their benefits
as a lump sum following separation from service.
Emro Marketing Company Deferred Compensation Plan
Messrs. Heminger and Kenney also participated in the Emro Marketing Company Deferred Compensation Plan (or Emro Plan) while working at Emro Marketing Company (a former
MPC subsidiary). The Emro Plan was frozen to new participants effective December 31, 2009 and is no longer open to new deferrals. The employees eligible to participate in the Emro Plan were a select group of management and highly compensated
employees.
The Emro Plan is an unfunded,
non-qualified
plan and was designed to provide participants the opportunity to
supplement their retirement savings by deferring income in a
tax-effective
manner and to meet other long-term financial goals. Amounts deferred by participants under the Emro Plan are credited with interest at
the prime interest rate, adjusted quarterly, which was 3.25% for the quarter ended December 31, 2016. The Emro Plan provides that participants will receive their benefits from the Emro Plan in a lump sum following separation from service.
Section 409A Compliance
All of our
non-qualified
deferred compensation plans in which our NEOs and other executive officers participate are in compliance with, or exempt from, Section 409A of the Internal Revenue Code. As a result, distribution
of amounts subject to Section 409A may be delayed for six months following retirement or other separation from service where the participant is considered a specified employee for purposes of Section 409A.
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 89
|
|
|
|
|
Potential Payments Upon Termination or Change in Control
Retirement
Our employees are eligible for
retirement once they reach age 50 and have at least 10 years of vesting service with MPC or its subsidiaries. As of December 31, 2016, Messrs. Heminger, Kenney and Palmer were retirement eligible. Upon retirement, our NEOs and other executive
officers are entitled to receive their vested benefits that have accrued under our employee and executive benefit programs. For more information about the retirement and deferred compensation programs, see Pension Benefits and
Non-Qualified
Deferred Compensation.
In addition, upon retirement, unvested stock options held by our NEOs and other
executive officers become exercisable according to the grant terms. Unvested restricted stock awards are forfeited upon retirement (except in the case of a mandatory retirement at age 65, at which time they vest in full). For performance units, if
an NEO has worked more than half of the measurement period, awards may be vested on a prorated basis at the discretion of the Compensation Committee.
Death or Disability
In the event of death or disability, our NEOs and other executive officers (or their beneficiaries) are
entitled to the vested benefits they have accrued under MPCs employee benefits programs. LTI awards immediately vest in full upon the death of an NEO, with performance units vesting at the target level. In the event of disability, LTI awards
continue to vest as if the NEO remained employed for up to 24 months during the period of disability.
Other Termination
No employment or severance agreements are in place for our NEOs and other executive officers except as provided in the Executive Change in Control
Severance Benefits Plan, which is described in more detail below.
Change in Control
The Executive Change in Control Severance Benefits Plan provides certain benefits upon a change in control and a Qualified Termination (as defined following the
Potential Payments upon Termination or Termination in the Event of a Change in Control table) and is designed to ensure continuity of management through a
change-in-control
transaction. Upon a change in control and Qualified Termination, our NEOs and other executive officers are eligible to receive:
|
|
|
a cash payment of up to three times the sum of the NEOs current annualized base salary plus three times the highest bonus paid in the three years before the termination or change in control;
|
|
|
|
life and health insurance benefits for up to 36 months after termination at the lesser of the current cost or the active employee cost;
|
|
|
|
an additional three years of service credit and three years of age credit for purposes of retiree health and life insurance benefits;
|
|
|
|
a cash payment equal to the actuarial equivalent of the difference between amounts receivable by the NEO under the final average pay formula in our pension plans and those which would be payable if: the NEO had an
additional three years of participation service credit; the NEOs final average pay would be the higher of their salary at the time of the
change-in-control
event
or termination plus their highest annual bonus from the preceding three years; for purposes of determining early retirement commencement factors, the NEO had three additional years of vesting service credit and three additional years of age; and the
NEOs pension had been fully vested; and
|
|
|
|
a cash payment equal to the difference between amounts receivable under the defined contribution plans of MPC and its subsidiaries and amounts which would have been received if the NEOs savings had been fully
vested.
|
All unvested awards that NEOs currently hold have a double-trigger provision that provides for stock options and restricted stock to become
fully vested and exercisable and performance units to vest at target performance levels upon a change in control with a Qualified Termination.
No excise tax
gross-up
is provided to any current or future participant under the Executive Change in Control Severance Benefits Plan.
The
severance benefits are payable if an NEO is terminated or resigns for good reason (as defined in the Executive Change in Control Severance Benefits Plan) in connection with a change in control, with good reason generally being defined as a reduction
in the NEOs roles, responsibilities, pay or benefits, or the NEO being required to relocate more than 50 miles from his or her current location. However, benefits are not payable if the termination is for cause or due to mandatory retirement,
death, disability or resignation (other than for good reason) by the NEO. The Executive Change in Control Severance Benefits Plan provides that the period during which a separation from service for good reason is considered to be in connection with
a change in control continues during a potential
change-in-control
period and for two years after a change in control.
The table below reflects the amount of compensation payable to each of our NEOs in the event of termination of employment or change in control, assuming in each case the
termination occurred on December 31, 2016. The table uses our closing stock price as of that date.
|
|
|
|
|
|
|
page 90 / Marathon Petroleum Corporation Proxy Statement
|
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)
|
|
|
|
18,000,000
|
|
|
|
|
33,508,040
|
|
|
|
|
6,293,387
|
|
|
|
|
6,345,247
|
|
|
|
|
9,240,000
|
|
|
|
|
48,927
|
|
|
|
|
73,435,601
|
|
|
|
Voluntary Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,293,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,293,387
|
|
|
|
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)
|
|
|
|
3,825,000
|
|
|
|
|
|
|
|
|
|
1,056,512
|
|
|
|
|
1,018,599
|
|
|
|
|
1,596,000
|
|
|
|
|
53,903
|
|
|
|
|
7,550,014
|
|
|
|
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)
|
|
|
|
6,000,000
|
|
|
|
|
|
|
|
|
|
1,109,571
|
|
|
|
|
1,942,973
|
|
|
|
|
2,400,000
|
|
|
|
|
51,843
|
|
|
|
|
11,504,387
|
|
|
|
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)
|
|
|
|
5,100,000
|
|
|
|
|
5,442,102
|
|
|
|
|
1,317,451
|
|
|
|
|
1,078,825
|
|
|
|
|
1,681,000
|
|
|
|
|
41,605
|
|
|
|
|
14,660,983
|
|
|
|
Voluntary Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,317,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,317,451
|
|
|
|
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)
|
|
|
|
4,200,000
|
|
|
|
|
8,629,834
|
|
|
|
|
1,029,819
|
|
|
|
|
942,499
|
|
|
|
|
1,411,000
|
|
|
|
|
38,065
|
|
|
|
|
16,251,217
|
|
|
|
Voluntary Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,029,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,029,819
|
|
|
|
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 as specified in the Executive Change in Control Severance Benefits
Plan.
|
(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, 2016, taking into account the spread (if any) between the options exercise prices and the closing price of our common stock on December 30, 2016.
|
(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, 2016, taking into account the closing price of our common stock and MPLX common units on December 30, 2016.
|
(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.
|
|
|
|
|
|
|
|
Marathon Petroleum Corporation Proxy
Statement / page 91
|
|
|
|
|
(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 Executive Change in Control Severance Benefits Plan. 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, 2016.
|
A change in control will occur
under the Executive Change in Control Severance Benefits Plan upon the consummation of a transaction that would have to be reported pursuant to certain securities laws identified in the Executive Change in Control Severance Benefits Plan document. A
change in control is deemed to occur if:
|
|
|
any person acquires beneficial ownership of 20% or more of the voting power of MPCs outstanding securities (excluding MPC and certain affiliated persons);
|
|
|
|
the following individuals cease for any reason to collectively constitute a majority of our Board: (1) individuals who constituted the majority of the directors serving on our Board as of the date of the plan
(October 25, 2012); and (2) directors who assume office after the date of the plan (other than any directors who assume office in connection with an actual or threatened election contest) and were approved or nominated for election by
two-thirds
of the directors that either were in office as of the date of the plan or who were previously nominated and assumed office in this manner;
|
|
|
|
MPC, or any direct or indirect subsidiary of MPC, is involved in a merger or consolidation with any other entity other than a merger or consolidation that results in the voting securities of MPC outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the voting power of the surviving entity;
|
|
|
|
MPC shareholders approve a plan of complete liquidation; or
|
|
|
|
MPC sells all or substantially all of its assets.
|
In addition, if any person takes certain actions that could result in
a change in control, a potential change in control will have occurred. The definition of a potential change in control for purposes of the Executive Change in Control Severance Benefits Plan is, in general, a potential change in control that would
occur upon MPC entering into an agreement that could result in a change in control, any person becoming the owner of 15% or more of our common stock, a public announcement by any person or entity stating an intention to acquire MPC or a
determination by our Board that a potential change in control has occurred.
The definition of a Qualified Termination is one where an NEO separates from service (as
set forth under Section 409A of the Internal Revenue Code) within two years after the date of a change in control unless such separation from service is:
|
|
|
due to death or disability;
|
|
|
|
effected by MPC for cause;
|
|
|
|
effected by the employee other than for good reason; or
|
|
|
|
on or after the date the employee attains age 65.
|
|
|
|
|
|
|
|
page 92 / Marathon Petroleum Corporation Proxy Statement
|