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Section 1: DEF 14A (DEF 14A)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Soliciting Material Pursuant to §240.14a-12
Marathon Petroleum Corporation

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March 14, 2019
Dear Fellow Marathon Petroleum Corporation Shareholder,
On behalf of the Board of Directors and management team, I am pleased to invite you to attend Marathon Petroleum Corporation’s Annual Meeting of Shareholders, to be held in the Auditorium of Marathon Petroleum Corporation, 539 South Main Street, Findlay, Ohio 45840 on Wednesday, April 24, 2019, at 10 a.m. Eastern Daylight Time.
Your company delivered strong operational and financial performance in 2018. We also completed our transformative combination with Andeavor in October 2018, creating the largest downstream energy company in the United States. The combined legacies of these two great companies have enhanced the benefits of our integrated business model, providing unprecedented opportunities. Our nationwide footprint and broader market presence give us additional access to price-advantaged feedstocks and create new product-placement options. Our expanded logistics system lowers our crude oil acquisition costs and increases our speed to market. Over the first three months following the combination, we realized recurring and non-recurring synergies of $160 million.
Since the company’s formation in 2011, we have consistently returned capital to our shareholders beyond the needs of the business. During 2018, we returned a total of $4.2 billion to shareholders, including $3.3 billion in share repurchases. In addition, the Board of Directors announced in January a 15 percent increase in our quarterly dividend, following a 15 percent increase in 2018 and an 11 percent increase in 2017. This represents a 25 percent compound annual growth rate in our dividend over the past eight years since our formation, demonstrating continued confidence in the cash-flow generation of the business.
Our operational and financial successes are primarily driven by our thousands of talented employees and the values that define how we conduct our important work. As we provide the fuels and other products that people
rely on to make their lives better every day, we never lose sight of our core values of health and safety, environmental stewardship, integrity, corporate citizenship and an inclusive culture. Our commitment to these values in all we do helps ensure our license to operate.
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We believe that our steadfast commitment to high ethical standards and strong corporate governance benefits all of our stakeholders, including our shareholders, employees, customers, communities and the environment. This Proxy Statement provides you information regarding our corporate governance policies and practices, as well as other information you need to make informed decisions about the matters on which you are being asked to vote. I encourage you to read it and exercise your right to vote your ownership stake.
On behalf of the Board of Directors, I thank you again for your investment in Marathon Petroleum Corporation, and for participating in our success. We hope to see you in Findlay.
Sincerely,
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Gary R. Heminger
Chairman and Chief Executive Officer










Notice of 2019 Annual Meeting of Shareholders
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When
Wednesday, April 24, 2019, 10 a.m. EDT
 
 
Where    
The Auditorium of Marathon Petroleum Corporation 539 South Main Street, Findlay, Ohio 45840
 
 
Purpose of
Meeting and
Agenda
At the 2019 Annual Meeting, shareholders will vote:
 
1. To elect the four Class II directors named in the Proxy Statement;
 
2. To ratify the appointment of our independent registered public accounting firm for 2019;
 
 
 
3. To approve, on an advisory basis, our named executive officers’ compensation; and
 
 
 
4. If properly presented at the meeting, on two shareholder proposals.
 
 
 
Shareholders also will transact any other business that may properly come before the meeting or any adjournment or postponement thereof.
 
 
Who Can Vote
Shareholders of record at the close of business on Monday, February 25, 2019.
 
 
Voting
Your vote is very important. Please submit your proxy or voting instructions as soon as possible, whether or not you plan to attend the Annual Meeting. Please refer to the enclosed proxy materials or the information forwarded by your bank, broker or other holder of record to see the voting methods that are available to you.
 
 
Admission to the Annual
Meeting
Owners of record will need to have a valid form of identification to be admitted to the meeting. If your ownership is through a broker or other intermediary, then, in addition to a valid form of identification, you will also need to have proof of your share ownership to be admitted to the meeting. A recent account statement, letter or proxy from your broker or other intermediary will suffice. In order to vote at the Annual Meeting, if you are not an owner of record, you must first obtain a legal proxy form from the broker or other organization that holds your shares. Please see “Questions and Answers About the Annual Meeting” for more information.
 
 
 
Please see the inside back cover of this Proxy Statement for directions to the Annual Meeting location.
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By order of the Board of Directors,
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Molly R. Benson
Vice President, Chief Securities, Governance & Compliance Officer
and Corporate Secretary

March 14, 2019

 
 
2019 Proxy Statement
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Table of Contents
NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS
 
 
INTRODUCTION
 
 
CORPORATE GOVERNANCE
Overview
Governance Framework
The Board of Directors
Director Identification and Selection
Director Independence
Board Leadership Structure
Committees of the Board
Risk Oversight
Executive Succession Planning
Corporate Citizenship
Board Evaluations
Engaging with the Board of Directors
 
 
DIRECTOR COMPENSATION
Compensation Program for Non-Employee Directors
2018 Director Compensation Table
 
 
PROPOSAL 1. ELECTION OF DIRECTORS
 
 
AUDIT-RELATED MATTERS
Audit Committee Report
Auditor Fees and Services
 
 
PROPOSAL 2. RATIFICATION OF INDEPENDENT AUDITOR FOR 2019
 
 
COMPENSATION DISCUSSION AND ANALYSIS
 
 
EXECUTIVE COMPENSATION TABLES
 
 
PROPOSAL 3. APPROVAL, ON AN ADVISORY BASIS, OF NAMED EXECUTIVE OFFICER COMPENSATION

 
 
2019 Proxy Statement
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STOCK OWNERSHIP INFORMATION
Security Ownership by Certain Beneficial Owners
Section 16(a) Beneficial Ownership Reporting Compliance
Security Ownership by Management
 
 
RELATED PARTY TRANSACTIONS
 
 
PROPOSALS 4-5. SHAREHOLDER PROPOSALS
 
 
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING


 
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Introduction
References throughout this Proxy Statement to “the Company,” “MPC,” “we” or “our” refer to Marathon Petroleum Corporation. References to “MPLX” refer to MPLX LP, a publicly traded master limited partnership we control through our ownership of approximately 64% of its outstanding common units and our ownership of its general partner. References to “Andeavor” refer to Andeavor LLC (formerly named Andeavor), which we acquired effective October 1, 2018 (the “Andeavor Merger”). References to “ANDX” refer to Andeavor Logistics LP, a publicly traded master limited partnership we control through our ownership of approximately 64% of its outstanding common units and our ownership of its general partner.
Corporate Governance
Overview
The Board of Directors believes that our commitment to high ethical standards and strong corporate governance benefits all our stakeholders, including our shareholders, employees, customers, communities and the environment. Our key corporate governance practices include:
 
 
Page No.
ü
Proxy access shareholder right to submit director nominations for inclusion in our proxy statement
ü
Shareholder right to call a special meeting of shareholders
ü
Independent directors meet regularly in executive session
ü
Substantial majority of independent directors
ü
Strong Lead Director role reinforces effective independent leadership on the Board
ü
Three fully independent standing Board committees
7
ü
Risk oversight by the full Board and its committees
ü
Extensive voluntary disclosures in the areas of energy efficiency and environmental performance
ü
Extensive voluntary disclosures on our political spending
ü
Annual Board and committee self-evaluations
ü
Robust shareholder engagement program
ü
Meaningful stock ownership guidelines for executive officers
ü
Prohibition on hedging and pledging our stock
41
ü
Recoupment/Clawback policy
41
ü
Majority voting standard for uncontested director elections
We also believe good governance is critical to achieving long-term shareholder value. We approach governance in a strategic and thoughtful manner, taking into consideration multiple perspectives, including those of our Board, our Corporate Governance and Nominating Committee, management, experts and stakeholders, to align on what makes the most sense for our Company. We continuously look for ways to enhance our corporate governance and increase value to our shareholders.
For example, in February 2016, the Board proactively adopted “proxy access,” allowing a shareholder, or group of 20 or fewer shareholders, owning at least 3% of our outstanding common stock continuously for at least three years, to nominate and include in our proxy materials director nominees constituting up to the greater of two directors or 20% of the number of directors serving on the Board, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in the Bylaws. The Board’s decision followed a careful evaluation over several meetings of shareholder views, evolving practices, relevant academic research, the potential impact on the Company and proxy access frameworks adopted by other companies.
In January 2018, the Board adopted an amendment to our Bylaws allowing shareholders owning in the aggregate 25% of our outstanding common stock and complying with other requirements set forth in our Bylaws the right to request that the Company call a special meeting of shareholders. The Board believes the 25% ownership threshold

 
 
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strikes the appropriate balance between allowing shareholders to vote on important matters that may arise between annual meetings and protecting against the risk that a single shareholder or small group of shareholders could call a special meeting that serves only a narrow agenda. This 25% ownership threshold is a common threshold among large public companies offering shareholders this right and helps protect shareholder rights without the expense and risk associated with a lower special meeting threshold.
In May 2018, the Board adopted an amendment to our Bylaws eliminating the supermajority requirement for Bylaw amendments. Prior to this amendment, any Bylaw amendment not supported by our directors had to receive the affirmative vote of at least 80% of all outstanding shares of our common stock for such amendment to be approved. Following this amendment, any Bylaw amendment not supported by our directors must receive the affirmative vote of at least a majority of all outstanding shares of our common stock for such amendment to be approved.
Governance Framework
Our Corporate Governance Principles, our Bylaws and the charters of our Board committees together implement the governance principles we believe are best for our stakeholders and provide the framework for our governance processes. They address, among other things, the primary roles, responsibilities and oversight functions of the Board and its committees, director independence, committee composition, the lead director role, the process for director selection and director qualifications, director indemnification and shareholder rights, including the right to call a special meeting and proxy access, director compensation and director retirement and resignation.
We have adopted a Code of Ethics for Senior Financial Officers that is specifically applicable to the CEO, the CFO, the Controller, the Treasurer and persons performing similar functions, as well as to those designated as Senior Financial Officers by our Chairman and CEO or our Audit Committee. In addition, we have a Code of Business Conduct that applies to all of our directors, officers and employees. Copies of these documents are available on our website and printed copies are also available upon request to our Corporate Secretary. We will post on our website any amendments to, or waivers from, either of our Codes requiring disclosure under applicable rules within four business days following the amendment or waiver.
Our Whistleblowing as to Accounting Matters Policy establishes procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the Company or others of concerns regarding questionable accounting or auditing matters.
Copies of the Corporate Governance Principles, our Bylaws, the Board committee charters, the Code of Ethics for Senior Financial Officers, the Code of Business Conduct and the Whistleblowing as to Accounting Matters Policy are available on our website at www.marathonpetroleum.com under the heading “Investors” and the subheading “Corporate Governance.”
The Board of Directors
The Board oversees the management of our business and affairs. The Board is divided into three classes, each currently comprised of four directors. Shareholders elect each class of directors for a term of three years. The terms for the directors currently in Classes I, II and III of the Board expire in 2021, 2019 and 2020, respectively.
Effective October 1, 2018, pursuant to the terms of the merger agreement whereby we acquired Andeavor, Edward G. Galante, Gregory J. Goff, Kim K.W. Rucker and Susan Tomasky were elected to the Board. Upon such elections and pursuant to the merger agreement, Donna A. James and Frank M. Semple resigned as members of the Board. Ms. James serves as a board advisor and is expected to attend, in a non-voting capacity, certain meetings of the Board and its committees. Mr. Semple will continue to serve on the board of directors of the general partner of MPLX, and was elected to serve on the board of directors of the general partner of ANDX. In his capacity as a director of MPLX and ANDX, Mr. Semple serves as a board observer and is expected to attend, in a non-voting capacity, certain meetings of the MPC Board and its committees.
The Board met 11 times in 2018. The attendance of the members of our Board averaged approximately 95% for the aggregate of the total number of Board and committee meetings held in 2018. Each of our directors attended at least 75% of the meetings of the Board and committees on which he or she served, except for Ms. James, who due to receiving treatment for a health issue, attended 78% of the Board meetings but fewer than 75% of the combined total number of meetings of the Board and the committees on which she served. Our Corporate Governance

 
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Principles provide that the non-employee directors of the Board will hold regular executive sessions presided over by the Lead Director. The non-employee directors held nine executive sessions in 2018.
Our Corporate Governance Principles provide that directors are expected to attend the Annual Meeting. All members of the Board other than Ms. James attended the Annual Meeting of Shareholders held on April 25, 2018.
Our directors represent a balance of critical skills, qualifications and attributes to the Board, only some of which are summarized in the following table.
Senior Leadership Experience
 
 
 
 
 
 
 
 
 
 
 
 
12 Directors
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Public Company Board Experience
 
 
 
 
 
 
 
 
 
 
 
 
12 Directors
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic Planning Experience
 
 
 
 
 
 
 
 
 
 
 
 
11 Directors
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk Management Experience
 
 
 
 
 
 
 
 
 
 
 
 
11 Directors
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industry Expertise
 
 
 
 
 
 
 
 
 
 
 
 
8 Directors
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operations Experience
 
 
 
 
 
 
 
 
 
 
 
 
8 Directors
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Expertise
 
 
 
 
 
 
 
 
 
 
 
 
7 Directors
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government/Regulatory Experience
 
 
 
 
 
 
 
 
 
 
 
 
4 Directors
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legal Experience
 
 
 
 
 
 
 
 
 
 
 
 
3 Directors
Specific information about the key qualifications and experience of each director can be found beginning on page 15 under “Proposal 1. Election of Directors.”
Director Identification and Selection
The Board believes that it, as a whole, should possess a combination of skills, professional experience, and diversity of backgrounds and perspectives necessary to oversee our business. Accordingly, the Board and the Corporate Governance and Nominating Committee consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition and our current and future needs. The Corporate Governance and Nominating Committee also develops and maintains a long-term plan for Board composition that takes into consideration the current strengths, skills and experience on the Board, our director retirement policy and our strategic direction.
Process
Our Corporate Governance Principles set forth the processes for director selection and the establishment of director qualifications. The Board has delegated the director selection process to the Corporate Governance and Nominating Committee with input from our Chairman and CEO and Lead Director. The Corporate Governance and Nominating Committee considers from time to time suitable candidates for membership on the Board, including candidates recommended by shareholders. Shareholder candidates will be evaluated in accordance with the criteria for director selection described herein. Shareholders who wish to nominate a director at an annual meeting in accordance with our Bylaws should follow the instructions described under “Questions and Answers About the Annual Meeting.” Our Corporate Governance and Nominating Committee may work with a third-party professional search firm to review director candidates and their credentials. The Corporate Governance and Nominating Committee’s charter gives the Committee the authority to retain and terminate any search firm used to identify director candidates, including the authority to approve the search firm’s fees and other retention terms.

 
 
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Key Qualifications and Experience
In evaluating director candidates, and considering incumbent directors for renomination, the Corporate Governance and Nominating Committee considers a variety of factors, including each nominee’s independence, personal and professional accomplishments, integrity and judgment, record of public service and ability to devote sufficient time to our affairs. For incumbent directors, the factors also include preparedness and past performance on the Board. In addition to these fundamental considerations, the Board believes it is beneficial to include individuals with the following skills and experiences on the Board:
Senior leadership experience, as directors with experience in significant leadership positions possess strong abilities to motivate and manage others and to identify and develop leadership qualities in others.
Financial expertise, particularly knowledge of finance and financial reporting processes, which is relevant to understanding and evaluating our capital structure and overseeing the preparation of our financial statements and internal control over financial reporting.
Industry expertise, particularly in the areas of oil refining, logistics operations and retail sales, which is integral to understanding our business and strategy.
Strategic planning experience, which is relevant to the Board’s review of our strategies and monitoring their implementation and results.
Risk management experience, which is critical to the Board’s oversight of our risk assessment and risk management programs.
Operations experience, as it gives directors a practical understanding of developing, implementing and addressing our business strategy and development plan.
Legal experience, which guides oversight of our legal and compliance matters.
Government/regulatory experience, as we operate in a heavily regulated industry that is directly affected by governmental requirements.
Public company board serviceas directors who have served on other public company boards have experience overseeing and providing insight and guidance to management.
Specific information about the key qualifications and experience of each director can be found beginning on page 15 under “Proposal 1. Election of Directors.”
Board Diversity
In January 2018, the Board amended our Corporate Governance Principles to expressly affirm its commitment to actively seek in its director selection efforts women candidates and candidates of diverse ethnic and racial backgrounds who possess the skills and characteristics identified within our Corporate Governance Principles. This express commitment is in addition to the emphasis on a diversity of director backgrounds and experiences already found within our Corporate Governance Principles.
Our directors exhibit an effective mix of diversity, experience and fresh perspective:
83%
 
3.7 Years
 
63.5
 
33%
INDEPENDENT
 
AVERAGE TENURE
 
AVERAGE AGE
 
DIVERSE

 
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Director Independence
The Board of Directors currently consists of 12 members, 10 of whom are independent. To determine director independence, the Board considers the applicable rules of the New York Stock Exchange (“NYSE”), the categorical standards set forth in our Corporate Governance Principles and the materiality of any relationship between a director and the Company. The Board considers all relevant facts and circumstances including, without limitation, transactions between us and the director directly, immediate family members of the director or organizations with which the director is affiliated, any service by the director on the board of a company with which we conduct business, and the frequency and dollar amounts associated with these transactions. The Board further considers whether such transactions are at arm’s length in the ordinary course of business and whether any such transactions are consummated on terms and conditions similar to those with unrelated parties.
In assessing the independence of each director who served on the Board during 2018, the Board affirmatively determined that each of the following directors meets the independence standards in our Corporate Governance Principles, has no material relationship with us other than as a director, and satisfies the independence requirements of the NYSE and applicable SEC rules:
Abdulaziz F. Alkhayyal
Steven A. Davis
Kim K.W. Rucker
Evan Bayh
Edward G. Galante
J. Michael Stice
Charles E. Bunch
Donna A. James (former director)
John P. Surma
David A. Daberko (former director)
James E. Rohr
Susan Tomasky
Mr. Heminger, who serves as our CEO, Mr. Goff, who serves as our Executive Vice Chairman, and Mr. Semple (former director), who previously served as Vice Chairman of MPLX GP, are not considered to be independent.
Board Leadership Structure
Our Corporate Governance Principles provide the Board with the flexibility to exercise its business judgment on behalf of shareholders and choose the optimal leadership for the Board depending upon the Company’s particular needs and circumstances. The independent members of the Board elect the Chairman and review whether to combine or separate the roles of Chairman and CEO. In 2018, the independent directors of the Board elected Mr. Heminger to serve as Chairman. The Board has determined that Mr. Heminger is in the best position at this time to serve as Chairman due to his unique and in-depth knowledge of the history and growth of our Company, coupled with his industry expertise in key areas of strategic importance to our business.
When the CEO is elected Chairman, the independent directors may elect a Lead Director from among themselves, whose responsibilities include:
Presiding over all meetings of the Board in the Chairman/CEO’s absence, including executive sessions;
Serving as a liaison between the Chairman/CEO and the independent directors;
Consulting with the Chairman/CEO on and approving meeting agendas, schedules and information sent to the Board;
Having the authority to call meetings of the independent directors;
Providing leadership to the Board in any situation where the Chairman and CEO roles may be perceived to be in conflict; and
Directly communicating with significant shareholders, as appropriate.
In 2018, the independent directors of the Board elected Mr. Rohr to serve as Lead Director. The Board believes that this leadership structure is in the best interests of the Company and its shareholders at this time because it strikes an effective balance between management and independent director participation in the Board process.

 
 
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Committees of the Board
The following table reflects the current membership of the Board and each of its standing committees. The function of each committee is described in greater detail below.
Name
Audit
Committee
Compensation Committee
Corporate Governance and Nominating Committee
Sustainability Committee
Board of Directors
Abdulaziz F. Alkhayyal
Member
Member
 
Chair
Member
Evan Bayh
Member
 
Member
 
Member
Charles E. Bunch
 
Member
Member
 
Member
Steven A. Davis
 
Member
Member
 
Member
Edward G. Galante
 
Member
 
Member
Member
Gregory J. Goff
 
 
 
Member
Executive Vice Chairman
Gary R. Heminger
 
 
 
Member
Chairman
James E. Rohr
Member
Chair
 
 
Independent Lead Director
Kim K.W. Rucker
 
 
 
Member
Member
J. Michael Stice
Member
 
Member
 
Member
John P. Surma
Member
 
Chair
 
Member
Susan Tomasky
Chair
 
 
Member
Member
Each committee operates under a written charter adopted by the Board. These charters are posted and can be found on our website at www.marathonpetroleum.com by selecting “Investors” and “Corporate Governance” under “Board Committees and Charters.” Each charter requires the applicable committee to annually assess and report to the Board on the adequacy of its charter.
Audit Committee
Met 5 times in 2018
Current Members:
Susan Tomasky, Chair
Abdulaziz F. Alkhayyal
Evan Bayh
James E. Rohr
J. Michael Stice
John P. Surma

Primary Responsibilities:
Appoints, compensates and oversees the performance of the independent auditor, including approval of all services to be performed by the auditor.
Reviews with management, the independent auditor and our internal auditors, the integrity of our disclosure controls and procedures, annual and quarterly financial statements, and internal controls over financial reporting.
Oversees the internal audit function, including its structure and budget, and the performance and compensation of the chief audit executive.
Reviews with management significant corporate risk exposures and risk mitigation efforts.
Monitors our compliance with legal and regulatory requirements, our Code of Business Conduct, Code of Ethics for Senior Financial Officers and Whistleblowing as to Accounting Matters Policy.
The Audit Committee has authority to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the Company, and to retain independent legal, accounting or other advisors or consultants.

 
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Compensation Committee
Met 6 times in 2018
Current Members:
James E. Rohr, Chair
Abdulaziz F. Alkhayyal
Charles E. Bunch
Steven A. Davis
Edward G. Galante

Primary Responsibilities:
Sets compensation for the CEO, incorporating relevant goals and objectives, and evaluates the CEO’s performance.    
Sets compensation for our other senior officers and reviews the succession plan for senior management.
Oversees our executive compensation policies, plans, programs and practices.
Certifies achievement of performance levels under our incentive compensation plans.
Please see “Compensation Discussion and Analysis” for additional information about the Compensation Committee.
Corporate Governance and Nominating Committee
Met 4 times in 2018
Current Members:
John P. Surma, Chair
Evan Bayh
Charles E. Bunch
Steven A. Davis
J. Michael Stice


Primary Responsibilities:
Selects and recommends director candidates to the Board to be submitted for election at annual meetings and to fill any vacancies on the Board.
Recommends committee assignments to the Board.
Monitors our corporate governance practices and recommends to the Board appropriate corporate governance policies and procedures for our Company.
Reviews and recommends to the Board compensation for our non-employee directors.
Reviews political contributions, lobbying expenditures and payments to certain trade associations.
Oversees the evaluation of the Board.
Sustainability Committee
Formed in late 2018
Current Members:
Abdulaziz F. Alkhayyal, Chair
Edward G. Galante
Gregory J. Goff
Gary R. Heminger
Kim K.W. Rucker
Susan Tomasky
Primary Responsibilities:
Oversees our health, environmental, safety and security policies, plans, programs and practices, and reviews our performance and public reporting on these matters.
Reviews and assesses the effectiveness of our information technology controls relating to business continuity, data privacy and cyber security.
Reviews our Perspectives on Climate-Related Scenarios Report and our Citizenship Report.
Oversees management’s efforts on contingency planning and emergency response activities.
Executive Committee
Meets as necessary
Current Members:
Gary R. Heminger
James E. Rohr
Primary Responsibilities:
Addresses matters that may arise between meetings of the Board.
May exercise the powers and authority of the Board subject to specific limitations consistent with our Bylaws and applicable law.
The Board has determined that each member of the Audit, Compensation and Corporate Governance and Nominating Committees meets the independence requirements of the NYSE, and that each member of the Audit Committee and the Compensation Committee meets the additional independence requirements of the NYSE and the SEC, as applicable. The Board has determined that each member of the Audit Committee is financially literate. In addition, the Board has determined that each of Mr. Surma and Ms. Tomasky qualifies as an “audit committee financial expert,” as defined by the SEC rules. No member of the Audit Committee serves on the audit committees of more than three public companies, including ours. As Chairman, Mr. Heminger attends, but does not vote in, committee meetings. He does not attend Board or committee executive sessions of non-management directors.

 
 
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Risk Oversight
Role of Management
Our senior management team has developed a strong enterprise risk management (“ERM”) process for identifying, assessing and managing risk. Our ERM process is sponsored by our Chairman and CEO and our Senior Vice President and CFO, led by our enterprise risk manager, and supported by officers and senior managers responsible for working across the business to manage enterprise level risks and identify emerging risks. These leaders meet routinely and provide regular updates to our Board and its committees throughout the year.
Our mature company practices, developed through our ERM process, promote effective decision-making, including with regard to environmental, social and reputational risks. Our ERM process continually identifies, evaluates and monitors social, political and environmental trends, issues and concerns that could affect MPC’s business activities and performance. These are all considerations in strategy setting, business planning and risk management.
Role of the Board
While senior management has primary responsibility for managing risk, the Board of Directors is responsible for risk oversight. The Board and executive leadership team frequently discuss various ERM topics. Board members have significant expertise and experience in the energy sector, finance, economics, operations and public policy. The Board reviews key risks associated with our strategic plan, including emerging risks, annually at a designated strategy meeting and on an ongoing basis periodically throughout the year. The Board receives regular updates from its committees regarding their activities relative to risk oversight and reviews risks of a more strategic nature at the full Board level.
Role of the Committees
Each of the Board’s committees oversees the management of risks that fall within that committee’s areas of responsibility. In performing this function, each committee has full access to management and may engage its own advisors.
Audit Committee
Regularly reviews risks associated with financial and accounting matters, as well as those related to financial reporting.
Monitors compliance with regulatory requirements and internal control systems.
Oversees the ERM process.
Compensation Committee
Reviews our compensation programs to ensure they do not encourage excessive risk-taking.
Reviews our compensation programs and succession plans to confirm our practices are appropriate to support the retention and development of the employees necessary to achieve our business goals and objectives.
Corporate Governance and Nominating Committee
Reviews shareholder communications and other initiatives related to environmental, social and governance issues.
Sustainability Committee
Reviews and assesses effectiveness of health, environment, safety and security programs, performance metrics and audits.
Regularly discusses with management emerging trends in business continuity, data privacy and cyber security, and assesses the effectiveness of our associated information technology controls.
Executive Succession Planning
One of the Board’s key functions is to provide for executive succession planning to avoid adverse effects caused by vacancies in key leadership positions. The Board recognizes that thoughtful succession planning is critical to creating long-term shareholder value.
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 our named executive officers,

 
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within the Company when the need arises. The Compensation Committee typically meets with the full Board at least annually to discuss succession of our leadership. During these meetings the Compensation Committee:
Identifies key roles (based on business impact and retention risk).
Assesses likely and possible successors for these roles, including their ability to reinforce our performance culture and promote our values including: Health and Safety, Environmental Stewardship, Integrity, Corporate Citizenship and Inclusive Culture.
Evaluates the readiness of succession candidates, including training and development needs.
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. In July 2018, in consideration of our pending acquisition of Andeavor in October 2018, the Board approved an exception to this policy for Messrs. Heminger and Kenney to enable their continued leadership through the integration of the combined Company.
Corporate Citizenship
We believe that doing the right thing is the right way to conduct our business. In practice, the concept of corporate citizenship involves assessing all the potential ways that our actions impact others both inside and outside our operational fence lines. Our commitment to corporate citizenship means being accountable for our actions to a broad range of stakeholders: investors, employees, customers, suppliers, communities, business partners, and others who have a stake in how we operate.
Our Core Values
We have long-established core values, all of which are vital to our financial performance and to our corporate image and reputation. We manage our business to promote sustainable social, environmental and economic benefits to all stakeholders wherever we operate. By doing so, we create long-term value for our Company and shareholders, as well as the communities where we work and live.
Health and Safety
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We have the highest regard for the health and safety of our employees, contractors and neighboring communities.

 
 
 
Environmental Stewardship
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We are committed to minimizing our environmental impact and continually look for ways to reduce our footprint.
 
 
 
Integrity
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We uphold the highest standards of business ethics and integrity, enforcing strict principles of corporate governance. We strive for transparency in all of our operations.
 
 
 
Corporate Citizenship
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We work to make a positive difference in the communities where we have the privilege to operate.
 
 
 
Inclusive Culture
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We value diversity and strive to provide our employees with a collaborative, supportive, and inclusive work environment where they can maximize their full potential for personal and business success.
On the “Corporate Citizenship” page on our website, we provide more detailed information on how we implement each of our core values. This page also includes links to a number of key policies and disclosures, including our Core Values, Code of Business Conduct and Health, Environmental, Safety and Security Policy and Beliefs, which

 
 
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reflect our commitment to being transparent about how we pursue our business objectives and manage the risks inherent to energy-sector companies such as ours. On this page you can also find links to the following reports:
2018 Citizenship Report
We are proud to manufacture the affordable, safe, clean and reliable products that help make modern life possible. We do our important work while adhering to our core values. Among other enhancements in this year’s Citizenship Report, we have provided additional insight into our corporate governance, as well as a closer look at our industry-leading energy-efficiency program.
 
 
Perspectives on Climate-Related Scenarios
Millions of people rely on us for the fuels and other products that make their lives better every day, and our shareholders rely on us to be good stewards of their investment. To meet these expectations, the Board of Directors and our executive leadership team anticipate and prepare for a variety of risks to our business. This report, modeled on the disclosures recommended by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, provides a detailed look at the Board’s risk management oversight, climate-related scenario analyses, asset optimization and portfolio management, and concludes that we are well positioned to remain successful into the future.
Political Engagement and Disclosure
We view our participation in the public policy process as essential to promoting our shareholders’ best interests. The refining, transportation and marketing of fuels is heavily regulated by federal, state and local governments. As a result, developments in Washington, D.C., and in the capitals of the states where we do business can significantly affect our ability to meet the need for reliable, affordable transportation fuels and other petroleum products. In our political engagement efforts, we focus on maintaining a strong refining and marketing industry in the United States, continuing to meet the energy needs of consumers at competitive prices, and protecting the value of our shareholders’ investments.
The Corporate Governance and Nominating Committee is committed to ensuring our exercise of political speech and involvement in the public policy process remains aligned with the interests of our shareholders. The Committee oversees and reviews our political contributions, lobbying expenditures and payments to trade associations that engage in lobbying activities. On the “Political Engagement and Disclosure” page of our website, we describe the roles of the Committee and various organizations within the Company in overseeing and promoting compliance with our political activity policy.
Because we recognize that our public policy activities are of interest to our shareholders and other stakeholders, we have included a number of voluntary disclosures on our website, including:
A statement of philosophy and purpose that includes several embedded links, including to public sources of information;
Federal lobbying reports that we file quarterly with the Office of the Clerk of the U.S. House of Representatives;
The states for which we have registered as a lobbyist employer or principal;
Itemized lists of corporate political contributions in an interactive map format;
Itemized lists of employee political action committee (PAC) contributions in an interactive map format; and
A list of trade associations to which MPC or its subsidiaries paid annual dues in excess of $50,000 for 2018.
Board Evaluations
Our Corporate Governance and Nominating Committee oversees an annual Board and committee self-evaluation process providing each member of the Board the opportunity to complete detailed surveys designed to assess the effectiveness of both the Board as a whole and each of its committees. The surveys seek feedback on, among other things, Board and committee composition and organization, the frequency and content of Board and committee meetings, the quality of management presentations to the Board and its committees, the Board’s relationship to senior management and the performance of the Board and its committees in light of the

 
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responsibilities of each body as established in our Corporate Governance Principles and the respective committee charters.
Along with these surveys, each director is asked to review the Corporate Governance Principles and the charter of each committee on which he or she serves, and to offer comments and revision suggestions as deemed appropriate. Summary reports of survey results are compiled and provided to the directors. Our Chairman and CEO and Lead Director lead a discussion of survey results with all of the directors as a group, and each committee chair leads a discussion of committee results within a committee meeting setting. Our Corporate Governance and Nominating Committee believes this process, which combines the opportunity for each director to individually reflect on Board and committee effectiveness with a collaborative discussion on performance, provides a meaningful assessment tool and a forum for discussing areas for improvement.
Engaging with the Board of Directors
All interested parties, including shareholders, may communicate directly with our non-employee directors by submitting a communication in an envelope addressed to:
Board of Directors (non-employee members)
c/o Corporate Secretary, Marathon Petroleum Corporation
539 South Main Street
Findlay, OH 45840
Additionally, employees of the Company may communicate with the non-employee directors by following the procedures set forth in our Code of Business Conduct.
You may communicate with the Chairs of the Board’s Committees by sending an email to:
[email protected]
[email protected]
[email protected]
[email protected]
You may communicate with the non-employee directors, individually or as a group, by sending an email to:
[email protected]
Our Corporate Secretary will forward to the directors all communications that, in her judgment, are appropriate for consideration by the directors. Examples of communications that would not be considered appropriate include commercial solicitations and matters not relevant to the Company’s affairs.

 
 
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Director Compensation
The Board of Directors determines annual cash and equity retainers and other compensation for non-employee directors. Messrs. Heminger and Goff, who are also employees, receive no additional compensation for their service on the Board.
Compensation Program for Non-Employee Directors
Annual Retainers
Following are the annual retainers established for our non-employee directors for 2018:
Role
Cash
Retainer ($)
Equity
Retainer ($)
Lead Director Retainer ($)
Committee Chair Retainer ($)
Total ($)
Lead Director
150,000

 
150,000

 
25,000

 

 
325,000

 
Audit Committee Chair
150,000

 
150,000

 

 
15,000

 
315,000

 
Compensation Committee Chair
150,000

 
150,000

 

 
15,000

 
315,000

 
Corporate Governance and Nominating Committee Chair
150,000

 
150,000

 

 
10,000

 
310,000

 
All Other Directors
150,000

 
150,000

 

 

 
300,000

 
Non-employee directors may elect to defer up to 100% of their annual cash compensation into an unfunded account. This deferred cash account may be invested in certain notional investment options offered under the Marathon Petroleum Corporation Deferred Compensation Plan for Non-Employee Directors, which options generally mirror the investment options offered to employees under the Marathon Petroleum Thrift Plan except that there is no option to invest in MPC common stock. When a director who has deferred cash compensation departs from the Board, he or she receives cash from the deferred account in a lump sum.
The deferred equity award our non-employee directors received for 2018 was comprised of MPC restricted stock units (“RSUs”) valued at $135,000 and MPLX phantom units valued at $15,000. These awards were credited to unfunded accounts based on the closing stock price of MPC common stock and the closing unit price of MPLX common units on the respective grant dates. When dividends are paid on our common stock, directors receive dividend equivalents in the form of additional MPC RSUs. When distributions are paid on MPLX common units, directors receive distribution equivalents in the form of additional MPLX phantom units. The deferred RSUs and MPLX phantom units are payable in shares of common stock and MPLX common units only upon a director’s departure from the Board or Board advisor/observer status.
2019 Compensation Program Changes
In October 2018, following a presentation and discussion with the Compensation Committee’s independent compensation consultant, the Corporate Governance and Nominating Committee recommended, and the Board determined, to make certain changes to the non-employee director compensation program to more closely align with market data and impose a cap on equity awards that could be granted in any one year. The following table shows the changes in compensation, effective January 1, 2019.
Compensation Component
2018 ($)

2019 ($)

Cash Retainer
150,000

150,000

Equity Retainer
150,000

175,000

Lead Director Retainer
25,000

30,000

Audit Committee Chair Retainer
15,000

25,000

Compensation Committee Chair Retainer
15,000

20,000

Corporate Governance and Nominating Committee Chair Retainer
10,000

15,000

Sustainability Committee Chair Retainer

10,000


 
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MPLX GP LLC and Tesoro Logistics GP, LLC Board Service
Certain of our non-employee directors receive additional compensation for their service on the boards of either or both of MPLX GP LLC (“MPLX GP”) and Tesoro Logistics GP, LLC (“TLGP”), which are wholly owned subsidiaries of MPC and the respective general partners of MPLX and ANDX. Their annual cash retainers and deferred equity awards for this service on the boards of our wholly owned subsidiaries in 2018 are reflected in the “2018 Director Compensation Table” below.
Matching Gifts Program
Under our matching gifts program, non-employee directors may elect to have us match up to $10,000 of their contributions to certain tax-exempt educational institutions each year. The annual limit is applied based on the date of the director’s gift to the institution. Due to processing delays, the actual amount paid out on behalf of a director may exceed $10,000 in a given year.
2018 Director Compensation Table
The following table shows compensation earned by or paid to our non-employee directors during 2018.
Name
Fees Earned or Paid in Cash ($)(a)
Stock Awards ($)(b)
All Other Compensation ($)(c)
Total ($)
Abdulaziz F. Alkhayyal
150,000

 
150,000

 

 
300,000

 
Evan Bayh
150,000

 
150,000

 

 
300,000

 
Charles E. Bunch
150,000

 
150,000

 
10,000

 
310,000

 
David A. Daberko (d)
83,654

 
75,687

 
3,500

 
162,841

 
Steven A. Davis
150,000

 
150,000

 
3,500

 
303,500

 
Edward G. Galante (e)
37,500

 
37,500

 

 
75,000

 
Donna A. James (f)
195,000

 
112,500

 

 
307,500

 
James E. Rohr
182,102

 
150,000

 
10,000

 
342,102

 
Kim K.W. Rucker (e)
37,500

 
37,500

 

 
75,000

 
Frank M. Semple (g)
250,500

 
222,709

 
20,000

 
493,209

 
J. Michael Stice
209,856

 
209,856

 
10,000

 
429,712

 
John P. Surma
255,000

 
237,500

 
10,000

 
502,500

 
Susan Tomasky (e)
41,250

 
37,500

 

 
78,750

 
(a)
For Messrs. Daberko, Semple, Stice and Surma, amounts include cash retainers earned for MPLX GP Board service during 2018. Mr. Semple’s amount also includes cash retainers earned for service on the Board of TLGP, to which he was elected effective October 1, 2018.
(b)
Amounts reflect the aggregate grant date fair value of MPC RSUs, MPLX phantom units and ANDX phantom units, calculated in accordance with financial accounting standards. For service on the Board, non-employee directors generally received quarterly grants of MPC RSUs with a grant date fair value of $33,750 and quarterly grants of MPLX phantom units with a grant date fair value of $3,750. Non-employee directors who also served on the MPLX GP board generally received additional quarterly grants of MPLX phantom units with a grant date fair value of $21,875. Mr. Daberko’s quarterly grants were prorated for the second quarter due to his retirement, resulting in the following grant date fair values for those awards: MPC, $9,272; MPLX, $1,030; MPLX (for MPLX GP board service), $6,010. Mr. Stice joined the MPLX GP board during the second quarter and received a prorated award of MPLX phantom units with a grant date fair value of $16,106. Mr. Semple joined the TLGP board effective October 1, 2018, and received an award of ANDX phantom units for the fourth quarter with a grant date fair value of $22,709. All MPC RSUs and MPLX phantom units are deferred until departure from the Board or Board advisor/observer status, and dividend and distribution equivalents, as applicable, in the form of additional MPC RSUs and additional MPLX phantom units are credited to each director’s deferred account as and when dividends or distributions are paid. ANDX phantom units vest on the first anniversary of the grant date. The following table reflects the aggregate number of MPC RSUs, MPLX phantom units and ANDX phantom units outstanding for each non-employee director as of December 31, 2018.

 
 
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Earned for
MPC Board Service
Earned for
MPLX GP Board Service
Earned for
TLGP Board Service
Name
MPC RSUs
MPLX Phantom Units
MPLX Phantom Units
ANDX Phantom Units
Abdulaziz F. Alkhayyal
5,148

 
1,030

 

 

 
Evan Bayh
32,749

 
2,714

 

 

 
Charles E. Bunch
8,922

 
1,608

 

 

 
Steven A. Davis
16,586

 
2,388

 

 

 
Edward G. Galante
413

 
108

 

 

 
Donna A. James
32,337

 
2,606

 

 

 
James E. Rohr
16,586

 
2,388

 

 

 
Kim K.W. Rucker
413

 
108

 

 

 
Frank M. Semple
4,707

 
906

 
5,845

 
456

 
J. Michael Stice
4,176

 
856

 
1,777

 

 
John P. Surma
32,749

 
2,714

 
14,048

 

 
Susan Tomasky
413

 
108

 

 

 
(c)
Reflects contributions made to educational institutions under our matching gifts program.
(d)
Mr. Daberko retired from the Board effective April 25, 2018. Following his retirement, in July 2018, Mr. Daberko received a distribution of MPC common stock from his deferred equity account valued at $10,494,192, cash in lieu of a fractional share of MPC common stock in the amount of $34, MPLX common units from his deferred equity account valued at $478,425, cash in lieu of a fractional MPLX common unit in the amount of $8 and $85,190 in cash deferred during his service on the Board of Directors of Marathon Oil Corporation prior to MPC’s separation in 2011.
(e)
Mr. Galante and Mmes. Rucker and Tomasky joined the Board on October 1, 2018.
(f)
Ms. James resigned as a director effective October 1, 2018. Beginning October 1, 2018, Ms. James serves in the role of Board advisor, for which she receives cash compensation. Amounts shown for Ms. James reflect (i) the compensation she received for her service as a director from January 1, 2018 through September 30, 2018 and (ii) the compensation she received for her service as a Board advisor from October 1, 2018 through December 31, 2018.
(g)
Mr. Semple resigned from the Board effective October 1, 2018. He continues to serve as a director of MPLX GP and TLGP and is invited to attend MPC Board meetings in his capacity as a Board observer.

 
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Proposal 1. Election of Directors
Our Bylaws provide that the Board is divided into three classes of directors, which are to be as nearly equal in size as possible, with one class being elected each year. The Board has set the current number of directors at 12, with four directors in each class. Shareholders elect each class of directors for a term of three years. Any director vacancies created between annual shareholder meetings may be filled by a majority vote of the remaining directors then in office. Any director appointed in this manner would hold office for a term expiring at the annual meeting of shareholders at which the term of office of the class to which he or she has been appointed expires. We expect each nominee will be able to serve if elected. 
Nominees for Class II Directors—Current Terms Expiring in 2019
The Board of Directors recommends you vote FOR the election to the Board of each of the following director nominees.
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Evan Bayh 
Senior Advisor, Apollo Global Management
Senior Advisor and Of Counsel, Cozen O’Connor Public Strategies
Independent Director
MPC Board member since 2011
MPC Committee Memberships:
Audit Committee
Corporate Governance and Nominating Committee

Key Qualifications and Experience:
Senior leadership experience in government
Regulatory experience
Financial expertise
Strategic planning experience
Risk management experience
Legal experience
Director of other public companies

Senator Bayh, 63, is a Senior Advisor with Apollo Global Management, a leading global alternative asset management firm, and Senior Advisor and Of Counsel for Cozen O’Connor Public Strategies, a law firm. He was
elected as Indiana’s Secretary of State in 1986 and as its Governor in 1988. After two terms as Governor, Mr. Bayh was elected to the U.S. Senate where he served for 12 years. He served on a number of committees, including Banking, Housing and Urban Affairs; Armed Services; Energy and Natural Resources; Select Committee on Intelligence; Small Business and Entrepreneurship; Special Committee on Aging, and chaired the International Trade and Finance Subcommittee. During his time in office, he focused on job creation, national security, small business growth and many other critical domestic issues. Senator Bayh was formerly a partner with McGuireWoods LLP, a global diversified law firm. He holds a bachelor’s degree in business economics from Indiana University and a law degree from the University of Virginia. He currently serves on the boards of Berry Global Group, Inc., Fifth Third Bancorp and RLJ Lodging Trust.

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Charles E. Bunch 
Retired Chairman and CEO, PPG Industries

Independent Director
MPC Board member since 2015
MPC Committee Memberships:
Corporate Governance and Nominating Committee
Compensation Committee

Key Qualifications and Experience:
Senior leadership experience as former CEO
Financial expertise
Strategic planning experience
Risk management experience
Operations experience
Director of other public companies

Mr. Bunch, 69, served as Chairman and CEO of PPG Industries, Inc. a global supplier of paints and coatings, from 2005 until he retired as CEO in 2015, and as Chairman in 2016. He joined PPG Industries in 1979, and


held various positions in finance and planning, marketing and general management in the United States and Europe. He later served as Senior Vice President of Strategic Planning and Corporate Services and Executive Vice President, Coatings. He was named President, Chief Operating Officer and a board member in 2002. Mr. Bunch holds a bachelor’s degree in international affairs from Georgetown University and a master’s degree in business administration from the Harvard University Graduate School of Business Administration. He currently serves on the boards of ConocoPhillips, Mondelez International, Inc. and The PNC Financial Services Group, Inc., and previously served on the boards of H.J. Heinz Company and PPG Industries, Inc.
 


 
 
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Nominees for Class II Directors—Current Terms Expiring in 2019
The Board of Directors recommends you vote FOR the election to the Board of each of the following director nominees.
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Edward G. Galante 
Retired Senior Vice President and Member of the Management Committee, ExxonMobil Corporation


Independent Director
MPC Board member since 2018
MPC Committee Memberships:
Compensation Committee
Sustainability Committee

Key Qualifications and Experience:
Senior leadership experience
Industry expertise
Strategic planning experience
Risk management experience
Operations experience
Director of other public companies

Mr. Galante, 68, served as Senior Vice President and a member of the Management Committee of ExxonMobil Corporation, a multinational oil and gas corporation, from 2001 until his retirement in 2006. Prior to that, he held
various management positions of increasing responsibility during his more than 30 years with ExxonMobil Corporation, including serving as Executive Vice President of ExxonMobil Chemical Company from 1999 to 2001. Mr. Galante holds a bachelor’s degree in civil engineering from Northeastern University. He currently serves on the boards of Celanese Corporation, Clean Harbors, Inc. and Linde PLC, and previously served on the boards of Andeavor, Praxair, Inc. and Foster Wheeler AG. Mr. Galante also serves on the board of the United Way Foundation of Metropolitan Dallas and is Vice Chairman of the board of trustees of Northeastern University.
 

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Kim K.W. Rucker 
Former Executive Vice President, General Counsel and Secretary, Andeavor

Independent Director
MPC Board member since 2018
MPC Committee Memberships:
Sustainability Committee

Key Qualifications and Experience:
Senior leadership experience
Industry expertise
Risk management experience
Legal experience
Regulatory experience
Director of other public companies

Ms. Rucker, 52, served as Executive Vice President, General Counsel and Secretary of Andeavor from 2016 to October 2018. She also served as Executive Vice President and General Counsel of TLGP from 2016 to
October 2018. Prior to joining Andeavor, Ms. Rucker served as Executive Vice President, Corporate & Legal Affairs, General Counsel and Corporate Secretary of Kraft Foods Group, Inc., a grocery manufacturing and processing company, from 2012 until 2015, where she led legal, corporate and government affairs functions. Prior to that, Ms. Rucker served as Senior Vice President, General Counsel and Chief Compliance Officer of Avon Products, Inc., beginning in 2008, and assumed additional duties as Corporate Secretary in 2009, and as Senior Vice President, Corporate Secretary and Chief Governance Officer of Energy Future Holdings Corp. (formerly TXU Corp.) from 2004 to 2008. Ms. Rucker was also Corporate Counsel for Kimberly-Clark Corporation and a Partner in the Corporate & Securities group at the law firm of Sidley Austin LLP. She holds a bachelor’s degree in economics from the University of Iowa, a law degree from the Harvard Law School and a master’s degree in public policy from the John F. Kennedy School of Government at Harvard University. She currently serves on the boards of Lennox International Inc. and Celanese Corporation. Ms. Rucker also serves on the board of trustees of Johns Hopkins Medicine.





 
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Continuing Class III Directors—Current Terms Expiring in 2020
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Steven A. Davis 
Former Chairman and CEO, Bob Evans Farms, Inc.

Independent Director
MPC Board member since 2013
MPC Committee Memberships:
Corporate Governance and Nominating Committee
Compensation Committee

Key Qualifications and Experience:
Senior leadership experience as former CEO
Industry expertise
Strategic planning experience
Risk management experience
Operations experience
Director of other public companies

Mr. Davis, 60, served as the Chairman and Chief Executive Officer of Bob Evans Farms, Inc., a foodservice and consumer products company, from 2006 through 2015. Prior to joining Bob Evans Farms, he served in a
variety of leadership positions at restaurant and consumer packaged goods companies, including as President of Long John Silver’s and A&W All-American Food Restaurants. In addition, he held senior executive and operational positions at Yum! Brands’ Pizza Hut division and Kraft General Foods. Mr. Davis holds a bachelor’s degree in business administration from the University of Wisconsin at Milwaukee and a master’s degree in business administration from the University of Chicago. He currently serves on the boards of Legacy Acquisition Corp. and Albertsons Companies, Inc., and has been appointed to the board of PPG Industries, Inc., subject to shareholder approval at PPG’s annual meeting. Mr. Davis also serves on the International Board of Directors for the Juvenile Diabetes Research Foundation. He previously served on the boards of Bob Evans Farms, Inc., Sonic Corp. and Walgreens Boots Alliance, Inc.


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Gary R. Heminger  
Chairman and CEO, Marathon Petroleum Corporation


Chairman of the Board
MPC Board member since 2011
MPC Committee Memberships:
Sustainability Committee

Key Qualifications and Experience:
Senior leadership experience as current CEO of MPC
Financial expertise
Industry expertise
Strategic planning experience
Risk management experience
Operations experience
Director of other public companies

Mr. Heminger, 65, has served as our Chairman of the Board since April 2016, as Chief Executive Officer since 2011, and also served as our President from 2011 to 2017. He is also Chairman of the Board and Chief Executive
Officer of MPLX GP and TLGP. Mr. Heminger joined Marathon Oil Company in 1975, serving in various finance, auditing, marketing and business development roles. He served as President of Marathon Pipe Line Company from 1995 to 1996, and as Manager, Business Development and Joint Interest of Marathon Oil Company beginning in 1996. He was named Vice President of Business Development for Marathon Ashland Petroleum LLC upon its formation in 1998, and Senior Vice President, Business Development in 1999. In 2001, he was named Executive Vice President, Supply, Transportation and Marketing, and was appointed President of Marathon Petroleum Company LLC and Executive Vice President-Downstream of Marathon Oil Corporation later that year. Mr. Heminger holds a bachelor’s degree in accounting from Tiffin University, a master’s degree in business administration from the University of Dayton, and is a graduate of the Wharton School Advanced Management Program at the University of Pennsylvania. Mr. Heminger currently serves on the boards of Fifth Third Bancorp, PPG Industries, Inc., MPLX GP and TLGP. He also serves on the boards of directors and executive committees of the American Petroleum Institute and the American Fuel and Petrochemicals Manufacturers (AFPM). He is also a member of the Oxford Institute for Energy Studies, a member of the board of trustees of The Ohio State University and is past Chairman of the board of trustees of Tiffin University.





 
 
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Continuing Class III Directors—Current Terms Expiring in 2020
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J. Michael Stice 
Dean of the Mewbourne College of Earth & Energy, The University of Oklahoma

Independent Director
MPC Board member since 2017
MPC Committee Memberships:
Audit Committee
Corporate Governance and Nominating Committee

Key Qualifications and Experience:
Senior leadership experience as former CEO
Industry expertise
Strategic planning experience
Risk management experience
Operations experience
Director of other public companies

Mr. Stice, 59, has served as the Dean of the Mewbourne College of Earth & Energy at The University of Oklahoma since August 2015. Mr. Stice retired as the Chief Executive Officer of Access Midstream Partners L.P., a gathering and
processing master limited partnership, in 2014 and from its board of directors in 2015. He had served as Access Midstream’s and Chesapeake Midstream Partners, L.P.’s Chief Executive Officer since 2009, and as President and Chief Operating Officer of Chesapeake Midstream Development, L.P., a wholly owned subsidiary of Chesapeake Energy Corporation, and as Senior Vice President of natural gas projects of Chesapeake Energy Corporation since 2008. Mr. Stice began his career in 1981 with Conoco, serving in a variety of positions of increasing responsibility. He was named President of ConocoPhillips Qatar in 2003. Mr. Stice holds a bachelor’s degree in chemical engineering from the University of Oklahoma, a master’s degree in business from Stanford University and a doctorate in education from The George Washington University. He currently serves on the boards of U.S. Silica Holdings, Inc., Spartan Energy Acquisition Corp. and MPLX GP, and previously served on the boards of Access Midstream Partners GP, L.L.C., MarkWest Energy GP L.L.C., SandRidge Energy, Inc. and Williams Partners GP LLC.
.


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John P. Surma 
Retired Chairman and CEO, United States Steel Corporation

Independent Director
MPC Board member since 2011
MPC Committee Memberships:
Audit Committee
Corporate Governance and Nominating Committee, Chair

Key Qualifications and Experience:
Senior leadership experience as former CEO
Financial expertise
Industry expertise
Strategic planning experience
Risk management experience
Operations experience
Regulatory experience
Director of other public companies

Mr. Surma, 64, retired as the Chief Executive Officer of United States Steel Corporation and as Executive Chairman in 2013. Prior to joining United States Steel, Mr. Surma served in several executive positions with
Marathon Oil Corporation, including as Senior Vice President, Finance & Accounting of Marathon Oil Company in 1997, President, Speedway SuperAmerica LLC in 1998, Senior Vice President, Supply & Transportation of Marathon Ashland Petroleum LLC in 2000 and President of Marathon Ashland Petroleum in 2001. Prior to joining Marathon, Mr. Surma worked for Price Waterhouse LLP, becoming a partner in 1987. In 1983, Mr. Surma participated in the President’s Executive Exchange Program in Washington, D.C., serving as Executive Staff Assistant to the Federal Reserve Board’s Vice Chairman. He was appointed by President Barack Obama to the President’s Advisory Committee for Trade Policy and Negotiations, serving from 2010 to 2014, including as Vice Chairman. Mr. Surma holds a bachelor’s degree in accounting from Pennsylvania State University. He currently serves on the boards of Concho Resources Inc., Ingersoll-Rand plc and MPLX GP, and previously served on the board of United States Steel Corporation. He also serves on the board of the University of Pittsburgh Medical Center, and formerly chaired the board of the Federal Reserve Bank of Cleveland.







 
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Continuing Class I Directors—Current Terms Expiring in 2021
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Abdulaziz F. Alkhayyal 
Retired Senior Vice President, Industrial Relations, Saudi Aramco


Independent Director
MPC Board member since 2016
MPC Committee Memberships:
Audit Committee
Compensation Committee
Sustainability Committee, Chair

Key Qualifications and Experience:
Senior leadership experience
Industry expertise
Strategic planning experience
Operations experience
Director of other public companies

Mr. Alkhayyal, 65, retired from Saudi Aramco, the Saudi Arabian national petroleum and natural gas company, in 2014, having served as Senior Vice President of Industrial Relations since 2007, Senior Vice President of Refining,
Marketing and International since 2001, and Senior Vice President, International Operations since 2000. He previously served in other management roles at Saudi Aramco, including as a member of general management from 1993 to 1996, Vice President, Sales and Marketing in 1996, Vice President Employee Relations and Training in 1997 and Vice President, Corporate Planning in 1998. Prior to his management roles, Mr. Alhayyal had served in various company field operations for Saudi Aramco since 1981. Mr. Alkhayyal holds a bachelor’s degree in mechanical engineering and a master’s degree in business administration from the University of California, Irvine, and attended the Advanced Management Program at the University of Pennsylvania. He currently serves on the boards of Halliburton Company, one of the world’s largest providers of products and services to the energy industry, and the Saudi Electricity Company. He also serves on the board of the International Youth Foundation.


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Gregory J. Goff
Executive Vice Chairman, Marathon Petroleum Corporation


Executive Vice Chairman of the Board
MPC Board member since 2018
MPC Committee Memberships:
Sustainability Committee

Key Qualifications and Experience:
Senior leadership experience as former CEO
Financial expertise
Industry expertise
Strategic planning experience
Risk management experience
Operations experience
Director of other public companies

Mr. Goff, 62, has served as our Executive Vice Chairman since our acquisition of Andeavor in October 2018. Until October 2018, he had served as Andeavor’s President and Chief Executive Officer since 2010 and as Chairman since
2014. He also served as Chairman of the Board and Chief Executive Officer of TLGP, from 2010 until October 2018. Prior to joining Andeavor, Mr. Goff served as Senior Vice President, Commercial for ConocoPhillips, an international, integrated energy company, from 2008 to 2010, and held a number of other positions at ConocoPhillips from 1981 to 2008, including Managing Director and CEO of Conoco JET Nordic; Chairman and Managing Director of Conoco Limited, a UK-based refining and marketing affiliate; President of ConocoPhillips Europe and Asia Pacific downstream operations; President of ConocoPhillips U.S. Lower 48 and Latin America exploration and production business; and President of ConocoPhillips specialty businesses and business development. He holds a bachelor’s degree in science and a master’s degree in business administration from the University of Utah. Mr. Goff currently serves on the boards of PolyOne Corporation, MPLX GP and TLGP, and previously served on the boards of Andeavor, DCP Midstream GP, LLC, QEP Midstream Partners, LP, and Western Logistics GP LLC. He also serves on the National Advisory Board of the University of Utah Business School and previously served as Chairman of the Board of AFPM.





 
 
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Continuing Class I Directors—Current Terms Expiring in 2021
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James E. Rohr 
Retired Chairman and CEO, The PNC Financial Services Group, Inc.


Lead Independent Director
MPC Board member since 2013
MPC Committee Memberships:
Audit Committee
Compensation Committee, Chair

Key Qualifications and Experience:
Senior leadership experience as former CEO
Financial expertise
Strategic planning experience
Risk management experience
Director of other public companies

Mr. Rohr, 70, served as Chief Executive Officer of The PNC Financial Services Group, Inc., a financial services company, from 2000 until his retirement as CEO in 2013 and as Executive Chairman of the Board in 2014, after

serving more than 40 years with the company in various capacities of increasing responsibility and in several leadership roles. Mr. Rohr oversaw PNC’s expansion into new markets and led PNC to record growth. Mr. Rohr holds a bachelor of arts degree from the University of Notre Dame and a master’s degree in business administration from The Ohio State University. He currently serves on the boards of directors of Allegheny Technologies Incorporated, EQT Corporation and ECHO Realty, LP., and previously served on the boards of General Electric Company, BlackRock, Inc. and The PNC Financial Services Group, Inc. Mr. Rohr serves on the board of The Heinz Endowments, is Chairman of the board of trustees of Carnegie Mellon University, a member of the boards of trustees of the University of Notre Dame and the Dietrich Foundation, and is past Chairman of the Pittsburgh Cultural Trust. He is also a board member emeritus of the Salvation Army and a member of the Allegheny Foundation.

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Susan Tomasky 
Retired President of AEP Transmission, a business division of American Electric Power Co.


Independent Director
MPC Board member since 2018
MPC Committee Memberships:
Audit Committee, Chair
Sustainability Committee

Key Qualifications and Experience:
Senior leadership experience
Financial expertise
Strategic planning experience
Risk management experience
Legal experience
Regulatory experience
Director of other public companies

Ms. Tomasky, 65, served as President of AEP Transmission, a business division of American Electric Power Co., Inc., from 2008 to 2011. She previously served in other executive officer positions at American Electric
Power Co., including Executive Vice President and General Counsel from 1998 to 2001, Executive Vice President of Finance and Chief Financial Officer from 2001 to 2006 and Executive Vice President of Shared Services from 2006 to 2008. Prior to joining American Electric Power Co., Ms. Tomasky was a partner at the law firm of Hogan & Hartson (now Hogan Lovells), where she was a member of the firm’s energy group, and as General Counsel of the Federal Energy Regulatory Commission. She previously served as a director of the Federal Reserve Bank of Cleveland, a member bank in the Federal Reserve System. Ms. Tomasky holds a bachelor’s degree in liberal arts from the University of Kentucky and a law degree from The George Washington University Law School. She currently serves on the board of Public Service Enterprise Group Incorporated, and previously served on the boards of Summit Midstream Partners GP, LLC and Andeavor, including as Lead Director from 2014 to 2018. Ms. Tomasky is also a director of several private and non-profit organizations, including as a member of the board of trustees of Kenyon College.



 
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Audit-Related Matters
Audit Committee Report
The Audit Committee has reviewed and discussed with management our audited financial statements and our report on internal control over financial reporting for 2018. The Audit Committee discussed with the independent auditors, PricewaterhouseCoopers LLP, the matters required to be discussed by the Public Company Accounting Oversight Board’s standard, Auditing Standard No. 1301. The Committee has received the written disclosures and the letter from PricewaterhouseCoopers LLP required by the applicable requirements of the Public Company Accounting Oversight Board for independent auditor communications with audit committees concerning independence and has discussed with PricewaterhouseCoopers LLP its independence. Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements and the report on internal control over financial reporting for Marathon Petroleum Corporation be included in our Annual Report on Form 10-K for the year ended December 31, 2018, for filing with the SEC.
Audit Committee
Susan Tomasky, Chair
Abdulaziz F. Alkhayyal
Evan Bayh
James E. Rohr
J. Michael Stice
John P. Surma
Auditor Fees and Services
Auditor Independence
Our Audit Committee has considered whether PricewaterhouseCoopers is independent for purposes of providing external audit services to the Company and has determined that it is.
Auditor Fees
Aggregate fees for professional services rendered for the Company by PricewaterhouseCoopers for the years ended December 31, 2018 and 2017 were:
 
2018
($ in thousands)
2017
($ in thousands)
Audit (a)
11,623

 
6,942

 
Audit-Related (b)
705

 
305

 
Tax (c)
1,430

 
50

 
All Other (d)
5

 
3

 
Total (e)
13,763

 
7,300

 
(a)
Audit fees for the years ended December 31, 2018 and 2017 were for professional services rendered for the audit of consolidated financial statements and internal controls over financial reporting; the performance of subsidiary, statutory and regulatory audits; the issuance of comfort letters; the provision of consents; and the review of documents filed with the SEC. Audit fees for the year ended December 31, 2017 also included audit procedures related to the newly enacted tax legislation.
(b)
Audit-Related fees for the year ended December 31, 2018 were for professional services rendered for an assessment of our information system implementation in 2018 and events not associated with the current year audit. Audit-Related fees for the year ended December 31, 2017 were for professional services rendered in 2017 for potential transactions and events not associated with the current year audit.
(c)
Tax fees for the year ended December 31, 2018 were for professional services rendered for the preparation of IRS Schedule K-1 tax forms for ANDX unitholders, for income tax compliance and consultation services, and to assist management in estimating MPLX income and deduction allocations to MPC. Tax fees for the year ended December 31, 2017 were for professional services rendered to assist management in estimating MPLX income and deduction allocations to MPC.
(d)
All Other fees for the years ended December 31, 2018 and December 31, 2017 were for an accounting research and disclosure checklist software license.
(e)
MPLX, a consolidated subsidiary of MPC, separately pays its own fees, which totaled $4.8 million for the year ended December 31, 2018, and $5.4 million for the year ended December 31, 2017.

 
 
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Pre-Approval of Audit Services
We have established a Pre-Approval of Audit, Audit-Related, Tax and Permissible Non-Audit Services Policy that, among other things, sets forth the procedure for the Audit Committee to pre-approve all audit, audit-related, tax and permissible non-audit services, other than as provided under a de minimis exception.
Under the policy, the Audit Committee may pre-approve any services to be performed by our independent auditor up to 12 months in advance and may approve in advance services by specific categories pursuant to a forecasted budget. Once each year, our Senior Vice President and Chief Financial Officer presents a forecast of audit, audit-related, tax and permissible non-audit services to the Audit Committee for approval in advance. Our Senior Vice President and Chief Financial Officer, in coordination with the independent auditor, provides an updated budget to the Audit Committee, as needed, throughout the ensuing fiscal year.
Pursuant to the policy, the Audit Committee has delegated pre-approval authority of up to $500,000 to the Chair of the Audit Committee for unbudgeted items, and the Chair reports the items pre-approved pursuant to this delegation to the full Audit Committee at its next scheduled meeting.
In 2018 and 2017, our Audit Committee pre-approved all of these services in accordance with its pre-approval policy. Our Audit Committee did not utilize the policy’s de minimis exception in 2018 or 2017.
Our pre-approval policy is posted on our website at www.marathonpetroleum.com by selecting “Investors” and “Corporate Governance,” under the heading “Policies and Guidelines.”
Certain Hiring Guidelines
We have established Guidelines for Hiring of Employees or Former Employees of the Independent Auditor that ensure our compliance with applicable law and NYSE listing standards. These Guidelines are posted and can be found on our website at www.marathonpetroleum.com by selecting “Investors” and “Corporate Governance,” under the heading “Policies and Guidelines.”
Proposal 2. Ratification of Independent Auditor for 2019
Our Audit Committee has appointed PricewaterhouseCoopers LLP, an independent registered public accounting firm, as our independent auditor to audit the Company’s books and accounts for the year ending December 31, 2019. While the Audit Committee is responsible for appointing, replacing, compensating and overseeing the work of the independent auditor, as a matter of good corporate governance, the Board has directed that this appointment be submitted to our shareholders for ratification. If our shareholders do not ratify this appointment, our Audit Committee will reconsider whether to retain PricewaterhouseCoopers. Even if the appointment is ratified, our Audit Committee may, in its discretion, direct the appointment of a different independent auditor at any time during the year if it determines such change would be in our best interests or in the best interests of our shareholders.
We expect representatives of PricewaterhouseCoopers to be present at our Annual Meeting, with an opportunity to make a statement if they desire to do so, and to be available to respond to appropriate questions from our shareholders.
The Board of Directors recommends you vote FOR the ratification of PricewaterhouseCoopers as our independent auditor for the year ending December 31, 2019.
 


 
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Compensation Discussion and Analysis
In this section, we describe the material elements of our executive compensation program for our named executive officers (our “NEOs”). We also provide an overview of our compensation philosophy and objectives and explain how and why the Compensation Committee made its 2018 compensation decisions for our NEOs. We recommend that this section be read in conjunction with the tables and related disclosures in the “Executive Compensation Tables” section of this Proxy Statement.
 
 
EXECUTIVE COMPENSATION
TABLE OF CONTENTS
Section
Page No.
Executive Summary
How We Determine Executive Compensation
Elements of Compensation
2018 Base Salary
2018 Annual Cash Bonus Program
Long-Term Incentive Compensation Program
Other Benefits
Compensation Governance
Executive Compensation Tables
 
 
Executive Summary
Named Executive Officers
Our NEOs for 2018 consist of our principal executive officer, our principal financial officer and the next three most highly compensated executive officers, who were:
Name
Title
Gary R. Heminger
Chairman and Chief Executive Officer
Timothy T. Griffith
Senior Vice President and Chief Financial Officer
Donald C. Templin
President, Refining, Marketing and Supply
Gregory J. Goff
Executive Vice Chairman
Anthony R. Kenney
President, Speedway LLC
Mr. Templin was named to his current role effective October 1, 2018; he previously served as President.
Mr. Goff was named as Executive Vice Chairman effective October 1, 2018, in connection with our acquisition of Andeavor, for which Mr. Goff served as President, Chief Executive Officer and Chairman. His compensation is governed by a Letter Agreement we entered into with him on April 29, 2018, the date we agreed to acquire Andeavor.

 
 
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2018 Company Performance Highlights
For MPC, 2018 was a transformative year, marked by strong operational and financial performance, as well as the completion of our strategic combination with Andeavor. Following are just a few of our 2018 performance highlights:
EARNINGS
 
OPERATIONS
$2.8B
 
$5.6B
Full-year earnings for 2018
 
Total income from operations for 2018
 
 
 
CAPITAL RETURNED TO SHAREHOLDERS
 
TRANSFORMATIVE COMBINATION
$4.2B
 
Coast to Coast
Amount of capital returned in 2018,
including $3.3 billion in share repurchases
 
Completed our acquisition of Andeavor, creating the largest downstream energy company in the United States, with a nationwide footprint
 
 
 
DIVIDEND INCREASE
 
SYNERGIES
15%
 
$160MM in Q4
Announced an increase in our quarterly dividend,
to $0.53 per share, in January 2019
 
Recurring and non-recurring synergies realized from the combination with Andeavor in first three months post-acquisition
 
 
 
ENVIRONMENTAL STEWARDSHIP
 
CONVENIENCE STORES
Recognized
 
3,920
Earned the U.S. Environmental Protection Agency’s ENERGY STAR Partner of the Year award,
the only refiner to earn the award in 2018
 
Approximate number of company-
owned and operated convenience stores
at 2018 year-end, located across 35 states
Shareholder-Friendly Executive Compensation Practices
Our executive compensation program includes a number of shareholder-friendly features that we believe align with contemporary governance practices, promote alignment with our pay-for-performance philosophy and mitigate risk to our shareholders. See “Compensation Governance” below for additional information about our compensation governance practices.
We Do:
We Don’t:
ü
Cap annual cash bonus and performance unit payouts
û
Allow the hedging or pledging of MPC common stock
ü
Have long-term incentive (“LTI”) awards based on relative total shareholder return
û
Enter into employment contracts with NEOs or any other executive officers (a)
ü
Require NEOs to hold all shares received under our incentive compensation plan for a minimum of one year after vesting
û
Guarantee minimum bonus payments to any of our executive officers
ü
Have “double triggers” for change-in-control payout provisions for all LTI awards
û
Provide tax gross-ups for perquisites
ü
Maintain significant stock ownership guidelines for NEOs
û
Pay dividends or dividend equivalents on unvested equity
ü
Impose clawback provisions on both long-term and short-term incentive awards
û
Allow the repricing of stock options without shareholder approval

 
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ü
Conduct an annual shareholder say-on-pay vote on NEO compensation
û
Provide excise tax gross-up provisions with regard to any change in control of MPC
ü
Have an independent compensation consultant, retained directly by the Compensation Committee
û
Grant stock options below fair market value as of the grant date
ü
Limit business perquisites
 
 
(a)
Although we generally do not enter into employment agreements with our executive officers, we did enter into a Letter Agreement with Mr. Goff in connection with our acquisition of Andeavor, for which he previously served as President, Chief Executive Officer and Chairman of the Board. We describe in this CD&A the compensation Mr. Goff is expected to receive under the terms of that agreement.
Shareholder Engagement and “Say-on-Pay” Voting Results
We regularly engage with our shareholders on a wide range of topics, including our NEOs’ compensation. Since 2012, we have provided our shareholders with the opportunity to cast an annual advisory Say-on-Pay vote on our NEOs’ compensation. At our 2018 Annual Meeting of Shareholders, our shareholders approved our NEOs’ compensation with approximately 92% of the vote. The Compensation Committee believes this strong level of support affirms the design and objectives of our executive compensation program, and this support influenced its decision to maintain a consistent overall approach for 2018. Shareholder engagement and the outcome of our annual Say-on-Pay vote will continue to inform our future compensation decisions.
At our 2018 Annual Meeting, our shareholders approved our named executive officer compensation
with approximately 92% of the vote.
Our shareholders have the opportunity to vote on our NEO compensation at the upcoming Annual Meeting. See Proposal 3 on page 67 of this Proxy Statement for more information on this advisory vote.
Program Changes for 2018
While the Compensation Committee is pleased with the high level of shareholder support for our NEOs’ compensation indicated by our 2018 Say-on-Pay voting results, it continues to consider shareholder feedback and market data to be important inputs into our executive compensation program design. In early 2018, our Compensation Committee determined to alter the mix of long-term compensation awarded to our NEOs to consist of 50% performance units, an increase from 40% the previous year. The proportion of stock options awarded was correspondingly decreased to 30% from 40% the previous year. In addition, the minimum TSR/TUR percentile for payouts on MPC and MPLX performance units awarded in 2018 was increased to the 30th percentile from the 25th percentile. The Compensation Committee believes these changes align with its intent to compensate NEOs in a manner that is both market competitive and intended to enhance shareholder value.
Pay for Performance
The Compensation Committee believes our executive compensation programs create a strong link between our NEOs’ compensation and our performance relative to our peers. As shown below, our one-year, three-year and five-year TSR was above the median TSR of the performance unit peer group. We calculated TSR for purposes of these graphs using the same methodology and peer group that we use for our performance unit awards. See “Elements of Compensation—Long-Term Incentive Compensation—MPC Performance Units” for more information on this methodology.
1 Year TSR Performance
3 Year TSR Performance
5 Year TSR Performance
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We have realized a cumulative TSR of 226% since we were established as an independent company on June 30, 2011. During this time, Mr. Heminger’s compensation has increased overall by 44%, as shown below.
CEO Compensation Increase (a) vs. TSR Performance
397118253_ceotsra02.jpg
(a)
Does not include the annual change in actuarial present value of accumulated benefits under our retirement plans. See “Post-Employment Benefits for 2018” and “Marathon Petroleum Retirement Plans” for more information about those amounts.
How We Determine Executive Compensation
Executive Compensation Philosophy and Objectives
We believe our executive compensation program plays a critical role in maximizing long-term shareholder value. Our program supports our ability to attract, motivate, retain and reward the highest quality executives who we believe will create value for our shareholders by executing our business priorities, including strong operational performance and responsible corporate leadership.
Our Compensation Committee periodically reviews our compensation philosophy to ensure it achieves these objectives, making adjustments as necessary to reflect peer group and industry practices, as well as shareholder feedback. Our current philosophy generally targets total direct compensation, defined as the aggregate of base salary plus target bonus plus intended value of annual LTI awards, for our NEOs at the median (50th percentile) of the compensation for similar executives of companies in our peer group. Our Compensation Committee believes that this focus on total direct compensation rather than each individual element of compensation plays a critical role in attracting, retaining, motivating and rewarding the highest quality executives.
The Compensation Committee has designed our executive compensation programs to:
Provide fair and competitive levels of compensation, after taking into account individual roles and responsibilities, while allowing for the discretion to place each NEO within the competitive range of each pay element;
Align compensation programs with company and individual performance;
Foster an ownership culture that aligns the interests of our NEOs with those of shareholders;
Consider the cyclical commodity influences of the business; and
Discourage excessive risk-taking and appropriately align risk with reward.

 
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Compensation Committee Consultant
To promote objectivity in reviewing and analyzing market data and trends, the Compensation Committee has engaged Pay Governance LLC (the “Consultant”) as its independent compensation consultant. The Consultant reports directly to our Compensation Committee, regularly attends Compensation Committee meetings and advises the Compensation Committee on:
The design and implementation of our compensation policies and programs to accomplish our compensation objectives;
Comparative data on the executive compensation policies and practices of our peers; and
How our compensation programs and policies align with relevant regulatory requirements and governance standards.
See “Compensation Governance—Compensation Committee Consultant Independence” for additional information about the Consultant’s independence and related matters.
Our Peer Group
For making pay decisions for 2018, the Compensation Committee used a compensation peer group developed in consultation with the Consultant. This peer group is large and diverse, comprised of energy and other chemical and industrial companies sensitive to fluctuations in commodity prices. The Compensation Committee believes that including certain companies outside the energy industry helps ensure the peer group is large enough to minimize year-over-year volatility in compensation data. Criteria used to select our peer group included:
Revenues generally greater than $10 billion;
Heavy manufacturing operations;
Commodity exposure;
Safety and environmental focus; and
Availability of publicly reported information.
Our peer group for 2018 compensation decisions was comprised of the following companies:  
3M Company
The Dow Chemical Company
Johnson Controls International plc
Andeavor
E. I. du Pont de Nemours and Company
Phillips 66
The Boeing Company
Eaton Corporation plc
PPG Industries, Inc.
Caterpillar Inc.
The Goodyear Tire & Rubber Company
United States Steel Corporation
Chevron Corporation
HollyFrontier Corporation
United Technologies Corporation
ConocoPhillips
Honeywell International Inc.
Valero Energy Corporation
Deere & Company
International Paper Company
 
When the Compensation Committee approved this peer group in May 2017, we were at approximately the 23rd percentile of the group in terms of market capitalization and the 81st percentile in terms of revenue. In situations where there is insufficient peer-group data for comparative purposes, the Consultant reviews data from available survey sources encompassing a broader group of commodity-based manufacturing companies and provides recommendations to the Compensation Committee.
In May 2018, the Compensation Committee, in consultation with the Consultant, approved a new peer group more reflective of our size and scope following our acquisition of Andeavor. The Committee replaced several smaller companies with larger companies and made other adjustments to reflect recent merger activity, including our acquisition of Andeavor. Our new peer group for 2018, which the Compensation Committee will use to make

 
 
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compensation decisions for 2019, is comprised of the following companies:
3M Company
Deere & Company
Johnson Controls International plc
Archer-Daniels-Midland Company
DowDuPont Inc.
Phillips 66
The Boeing Company
Exxon Mobil Corporation
PPG Industries, Inc.
Caterpillar Inc.
Ford Motor Company
Schlumberger Limited
Chevron Corporation
General Motors Company
United Technologies Corporation
ConocoPhillips
Halliburton Company
Valero Energy Corporation
 
Honeywell International Inc.
 
How We Use Market Data
The Consultant works with our Human Resources compensation team to identify key job responsibilities for each NEO, and matches those responsibilities to comparable job descriptions of executives in our peer group. Market data based on these matches is used as a starting point for the evaluation of each NEO’s base salary, short-term incentive targets and LTI awards.
As noted above under “Executive Compensation Philosophy and Objectives,” Total Direct Compensation for our NEOs is generally targeted at the median (50th percentile) of the compensation for similar executives of companies in our peer group. Additional factors may result in the actual level of compensation being above or below each NEO’s respective market median, including but not limited to:
The size and complexity of each NEO’s role;
Each NEO’s experience, contribution and demonstrated performance;
Our current and future succession needs;
Business results;
External competitiveness; and
Internal pay equity.
The Compensation Decision-Making Process
Our Compensation Committee is responsible for establishing and overseeing executive compensation programs and policies that are consistent with our overall compensation philosophy. In making compensation decisions, the Committee considers a variety of factors, including information provided by the Consultant, market data from our peer group, input from the CEO, the factors listed in “How We Use Market Data,” above, and any other information the Committee deems relevant in its discretion.
The Compensation Committee meets regularly in executive session outside the presence of the CEO and other executive officers. While the Compensation Committee seeks significant input from the CEO on compensation decisions and performance appraisals for all executive officers other than himself, all final compensation decisions for our executive officers are made by the Committee.

 
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Elements of Compensation
Our executive compensation program is primarily comprised of the following key elements. Each is designed to be market-competitive and meet the objectives of our executive compensation philosophy and program.
Element
Description
Objective
Base Salary
Based on the scope and responsibility level of the position held, individual performance and experience, as well as peer group market data
Reviewed at least annually and adjusted as appropriate 
Fixed cash component provides a competitive, stable and reliable base level of compensation to attract and retain NEOs
Annual Cash Bonus (“ACB”) Program
Performance-based award opportunity
 
Determined based on both corporate and applicable operating organization’s performance against pre-determined metrics, as well as the assessment of individual performance by our CEO and the Compensation Committee
Motivate and reward achievement of our business objectives that drive overall performance and shareholder value

Align pay with company and executive performance
Long-Term Incentive Awards
Stock options
Value realized solely on MPC common stock price appreciation
Motivate achievement of our long-term business objectives by linking compensation directly to long-term equity performance

Strengthen alignment between NEO and shareholder interests

Encourage retention
Restricted stock
Value dependent on MPC common stock performance
Performance units
Exceed target value only with above-median relative Total Shareholder Return (“TSR”) ranking among our peers
MPLX phantom units
Value dependent on MPLX common unit performance
MPLX performance units
Exceed target value only with above-median relative Total Unitholder Return (“TUR”) ranking among our peers and Distributable Cash Flow (“DCF”) performance above targeted growth
Compensation Mix
The Compensation Committee believes using a mix of cash and equity compensation encourages and motivates our NEOs to achieve both our short-term and long-term business objectives. Consistent with our philosophy that executive compensation should be linked to Company and NEO performance and directly aligned with long-term shareholder value creation, the majority of our NEOs’ compensation is at-risk and based on performance metrics tied to our corporate strategy.
2018 Target Compensation Mix
CEO
Average for Other NEOs (a)
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(a)
Excludes Mr. Goff’s target compensation, as it is governed by the terms of his Letter Agreement rather than set by our Compensation Committee.

 
 
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“At-risk” means there is no guarantee that the target value of the awards will be realized. Based on its evaluation of performance, the Compensation Committee has the discretion to reduce, and even award nothing for, the performance-based payouts and individual performance adjustments under the ACB and performance unit awards. Stock options have no initial value and can expire with zero value if the price of our common stock does not appreciate above the grant date price over the 10-year term of the options. Restricted stock may lose value depending on stock price performance. Therefore, for NEOs to earn and sustain competitive compensation, we must meet our strategic objectives, perform well relative to our peers, and deliver market-competitive returns to our shareholders.
The Compensation Committee believes our flexibility to mix cash and equity allows us to reward NEOs based on potentially very different business and strategic objectives across our business segments, recognizing that some of our organizations (such as retail and transportation) compete for talent with companies in industries that typically have compensation structures significantly different than those of our core business. Based on data from peer group disclosures in 2018 and input from the Consultant, we believe our mix of pay elements is competitive with current market practices at our peer group companies.
2018 Base Salary
The primary purpose of base salary is to provide a competitive, fixed level of income upon which our NEOs may rely, which is critical to attracting and retaining executive talent. In setting base salary, the Compensation Committee evaluates peer group data, as well as each individual’s experience, contribution and demonstrated performance, our current and future succession needs, business results, external competitiveness and internal pay equity. Taking these matters into consideration, the Compensation Committee made the following adjustments to our NEOs’ base salaries for 2018:
Name
Previous Base Salary ($)
Base Salary Effective April 1, 2018 ($)
Increase (%)
Heminger
1,650,000

 
1,700,000

 
3.0

 
Griffith
700,000

 
800,000

 
14.3

 
Templin
900,000

 
950,000

 
5.6

 
Goff (a)
1,600,000

 
1,600,000

 
N/A

 
Kenney
725,000

 
750,000

 
3.4

 
(a)
Mr. Goff’s previous base salary was set by Andeavor’s compensation committee prior to the Andeavor Merger. His current base salary is governed by the terms of his Letter Agreement and was effective October 1, 2018, the date he commenced employment with us.
The Compensation Committee’s decision to increase Mr. Griffith’s base salary in particular was based on his continued strong performance and the Committee’s determination to bring him closer to the market median for his position. The Compensation Committee’s decisions to increase the base salaries of Messrs. Heminger, Templin and Kenney reflect annual merit program increases to maintain market competitiveness.

 
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2018 Annual Cash Bonus Program
Our Annual Cash Bonus (“ACB”) program motivates and rewards NEOs for achieving short-term financial and operational business objectives that drive overall performance and shareholder value, as well as for individual performance during the year. The program is designed to align pay with company and executive performance, consistent with our compensation philosophy and business strategy.
2018 ACB Program Structure
In February 2018, the Compensation Committee, based on management’s recommendation, approved the ACB program for 2018. Awards under the ACB program for our NEOs are calculated as follows:
Annualized Base Salary
X
Bonus Target
X
Performance
=
Final Award
 
 
 
 
 
 
 
 
 
Bonus opportunities are expressed as a percentage of each NEO’s base salary.
The Compensation Committee approves target bonus opportunities for our NEOs based on analysis of market-competitive data of our compensation peer group, while also taking into consideration each executive’s experience, relative scope of responsibility and potential, internal pay equity considerations and any other information the Committee deems relevant in its discretion.
 
At the beginning of the performance year, the Compensation Committee establishes the performance metrics.
After the end of the performance year, the Compensation Committee reviews and assesses MPC’s performance against the pre-established performance metrics, as well as other factors the Committee deems relevant in its discretion.
The Committee also reviews and assesses each NEO’s organizational and individual performance.
Following this review, the Committee makes a final annual bonus decision for each NEO. Payout results may be above or below target based on actual MPC and individual performance.
 
 
 
 
 
 
 
 
 
Awards under the ACB program are generally capped at 200% of each NEO’s target award.
We do not guarantee minimum bonus payments to our NEOs.
2018 Company Metrics and Performance
The Compensation Committee believes it is important for the ACB program to emphasize pre-established financial and operational (including environmental and safety) performance measures, and has determined to collectively weight these measures at 70%, as reflected in the table below. The remaining 30% is driven by a number of discretionary factors, including business results in light of opportunities and challenges encountered during the year and adjustments due to the volatility in petroleum-related commodity prices throughout the year, which makes it difficult to establish reliable, pre-determined goals, and individual performance achievements. The threshold, target and maximum levels of performance for each performance metric were established for 2018 by evaluating factors such as performance achieved in the prior year(s), anticipated challenges for 2018, our business plan and our overall strategy. At the time the performance levels were set for 2018, the threshold levels were viewed as likely achievable, the target levels were viewed as challenging but achievable, and the maximum levels were viewed as extremely difficult to achieve. The table below provides the goals for each metric, target weighting and our performance achieved in 2018 ($ in millions):

 
 
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Category
Performance Metric
Threshold
50% Payout
Target
100% Payout
Maximum
200% Payout
Result
Target Weighting
Performance Achieved
Financial
Operating Income Per Barrel (a)
5th or 6th Position
3rd or 4th
Position
1st or 2nd Position
4th Position
15%
15%
 
(100% of target)
 
 
 
Controllable Costs (b)
$7,015
$6,680
$6,510
$6,498
10%
20%
 
 
 
 
 
(200% of target)
 
 
 
Distributable Cash Flow at MPLX LP (c)

$2,335
$2,595
$2,725
$2,781
10%
20%
 
 
 
 
(200% of target)
 
 
 
EBITDA (d)
$3,400
$5,700
$7,500
$8,001
5%
10%
 
 
 
 
 
(200% of target)
 
 
Operational
Mechanical Availability (e)
94%
95%
96%
95.9%
10%
19%
 
 
 
 
 
(190% of target)
 
 
 
Marathon Safety Performance Index (f)
1.00
0.65
0.40
1.07
5%
 
 
 
 
(0% of target)
 
 
 
Process Safety Events Rate (g)
0.60
0.39
0.23
0.27
5%
8.8%
 
 
 
 
(175% of target)
 
 
 
Designated Environmental Incidents (h)
82
59
36
23
5%
10%
 
 
 
 
(200% of target)
 
 
 
Quality Incidents (i)
$500,000
$250,000
$125,000
5%
10%
 
 
 
 
 
(200% of target)
 
 
 
 
 
 
 
Total
70%
112.8%
(a)
Measures our operating income per barrel of crude oil throughput, adjusted for unusual business items and accounting changes, compared to a group of peer companies, which for 2018 were: BP p.l.c.; Chevron Corporation; ExxonMobil Corporation; HollyFrontier Corporation; PBF Energy; Phillips 66; and Valero Energy Corporation.
(b)
Costs generally not subject to change based on production volume, purchases of commodities, sales, throughputs or changes in commodity prices. These costs are adjusted to exclude costs related to acquisitions and divestitures, capital projects in excess of $500 million, and employee bonus accruals.
(c)
Represents the cash flow available to be paid to MPLX’s common unitholders, as disclosed in MPLX’s consolidated financial statements.
(d)
Derived from our consolidated financial statements and adjusted for certain items. This non-GAAP performance metric is calculated as earnings before interest and financing costs, interest income, income taxes, depreciation and amortization expense adjusted to exclude the effects of impairment expenses, pension settlement gains/losses, inventory market valuation adjustments, certain non-cash charges and credits, and the effects of acquisitions and divestitures.
(e)
Measures the mechanical availability of the processing equipment in our refineries and the critical equipment in our midstream assets.
(f)
Measures our success and commitment to employee safety. Goals are set annually at best-in-class industry performance, focusing on continual improvement and include common industry metrics.
(g)
Measures our ability to identify, understand and control certain process hazards.
(h)
Measures certain internal environmental performance metrics.
(i)
Shown in absolute dollars. Measures the impact of product quality incidents and cumulative costs to us.


 
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NEO Individual Performance
At the beginning of the year, each NEO employed by us at that time develops individual performance goals relative to his respective organizational responsibilities, which are directly related to our business objectives. The subjective goals used to evaluate the individual performance of our participating NEOs for 2018 fell into the following general categories:
Goal
Heminger
Griffith
Templin
Kenney
Talent development, retention, succession and acquisition
ü
ü
ü
ü
Enhancement of shareholder value through return of capital and unlocking midstream asset value
ü
ü
ü
 
Excellence in environmental, personal safety and process safety improvement
ü
 
ü
ü
System integration, optimization and removing bottlenecks
ü
ü
ü
ü
Growth through organic expansion and acquisition opportunities
ü
ü
ü
ü
Growth of market share for gasoline and diesel
ü
 
ü
ü
Progress on diversity initiatives
ü
ü
ü
ü
Following the end of 2018, the Compensation Committee evaluated the CEO’s performance with input from our full Board, and our CEO reviewed the organizational and individual performance of the other participating NEOs and made annual bonus recommendations to the Compensation Committee. Key factors considered for 2018 included:
Completed transformative acquisition of Andeavor, effective October 1, 2018, creating the largest downstream energy company in the United States, with a nationwide footprint;
Achieved full-year earnings for 2018 of $2.8 billion; and
Sustained focus on shareholder returns, with $4.2 billion returned to shareholders through dividends and share repurchases.
Bonus Payments for 2018
In February 2019, the Compensation Committee certified the results of our performance metrics for the 2018 ACB program and, taking into consideration MPC’s performance relative to the pre-established metrics, each NEO’s organizational and individual performance, the key factors discussed above and any other factors the Committee deemed relevant, awarded the following amounts under the ACB program to our participating NEOs for 2018:
Name
2018 Year-End
Base Salary ($)
Bonus Target as a % of Base Salary
Target Bonus ($)
Final Award
as a % of Target
Final
Award ($)
Heminger
1,700,000

 
160
 
2,720,000

191
 
5,200,000
Griffith
800,000

 
80
 
640,000

180
 
1,150,000
Templin
950,000

 
100
 
950,000

179
 
1,700,000
Kenney
750,000

 
85
 
637,500

173
 
1,100,000
Andeavor’s 2018 Incentive Compensation Program
Mr. Goff commenced employment with us effective October 1, 2018, and thus was not eligible to participate in the 2018 ACB. His cash bonus for 2018 was determined under the Andeavor Incentive Compensation Program (“ICP”), which was approved in February 2018 by the compensation committee of Andeavor’s board of directors. The 2018 ICP structure provided all employees under the program, including Mr. Goff, with the same upward and downward bonus opportunity (0% below threshold; 50% at threshold; 100% at target; and 200% at maximum; with interpolation between levels), subject to adjustment based on individual performance. The calculation for determining the total payout to Mr. Goff was:

 
 
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[
Bonus Eligible Earnings
x
Target Bonus %
x
% Overall
Company Performance Achieved
]
+/-
Individual Performance Adjustment (a)
=
Final Award
(a)
Calculated as a percentage of the individual target bonus opportunity (bonus eligible earnings multiplied by target bonus percentage).
Based on its analysis of market-competitive data, its compensation philosophy and other factors, such as internal equity and individual contributions, Andeavor’s Compensation Committee set Mr. Goff’s target bonus opportunity for 2018 at 160% of his bonus eligible earnings.
Payouts under the 2018 ICP were determined by measuring Andeavor’s overall corporate performance, as assessed by our Compensation Committee, against the performance measures established by Andeavor’s Compensation Committee. The table below provides the goals for each measure, target weighting and performance achieved in 2018 ($ in millions):
Performance Measure
Threshold ($) (50% Payout)
Target ($)
(100% Payout)
Maximum ($) (200% Payout)
Weighting
Performance Achieved (a)
Margin-neutral EBITDA (b)
$
2,762

 
$
3,249

 
$
3,573

 
50%
200%
 
Growth, Productivity and Synergy Improvements (c)
$
437

 
$
486

 
$
559

 
20%
200%
 
Cost Management (d)
$
3,961

 
$
3,772

 
$
3,583

 
15%
106%
 
Process Safety Management (e)
0.18

 
0.16

 
0.14

 
5%
 
Environmental (e)
33

 
28

 
25

 
5%
88%
 
Personal Safety (f)
0.73

 
0.57

 
0.51

 
5%
84%
 
 
 
 
 
 
 
 
Total
165%
 
(a)
The Compensation Committee had the discretion to adjust Andeavor’s performance results to take into account unplanned or unanticipated business decisions or events that are outside of management’s control, unusual or non-recurring items, and other factors, to determine the total amount, if any, payable under the 2018 ICP. In calculating Andeavor’s performance under each measure, the Compensation Committee considered the impact of the Andeavor Merger and determined to adjust Andeavor’s performance under each measure to consider Andeavor’s performance for the period from January 1, 2018 through September 30, 2018, prior to its acquisition on October 1, 2018, rather than for the full 2018 fiscal year.
(b)
Achievement of U.S. GAAP-based net earnings before interest, income taxes, depreciation and amortization, measured on a margin neutral basis by excluding fluctuations in commodity prices (and thereby fluctuations in margins) over which management has little influence.
(c)
Targeted improvements from growth initiatives, productivity with existing assets and synergies from acquisitions to create value, including growth from income-generating capital improvements, margin improvement initiatives, organic growth initiatives and other smaller projects.
(d)
Measurement of operating expenditures and administrative expenses less certain adjustments. The cost metric excludes refining energy costs, annual incentive compensation costs, stock-based compensation expense, non-controllable expenses for post-retirement employee benefits (pension, medical, life insurance) and insurance costs (property, casualty and liability).
(e)
Targeted improvement in the number of incidents over the average for the past three years. Threshold is set at the three-year average.
(f)
Targeted improvement in the number of recordable personal safety incidents over the average for the past three years. Threshold is set at the three-year average.
For the calculation of both the EBITDA and cost management measures, the Compensation Committee had the discretion to take into consideration special items, including decisions that have a material impact on Andeavor’s results compared to budget, unusual items and non-recurring items. In calculating the EBITDA measure results, the Compensation Committee made adjustments to account for acquisition and transaction-related costs that were not included in the original targets and bonus related cost increases and decreases relative to the original target. In calculating the cost management measure results, the Compensation Committee made adjustments to account for an accounting classification change that moved logistics related service costs from Cost of Sales to Operating Expense after targets were set.
The 2018 ICP provided that Mr. Goff’s payout could be adjusted above or below the amount determined by Andeavor’s overall corporate performance based on an assessment of his overall performance, taking into account

 
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successful achievement of goals, business plan execution and other leadership attributes. Taking into consideration Andeavor’s overall corporate performance, as well as Mr. Goff’s leadership of Andeavor through the Andeavor Merger and his significant contributions to the ongoing integration of the two companies, the 2018 annual bonus payout approved for Mr. Goff was:
Name
Bonus Eligible Earnings ($) (a)
Target Bonus as a % of Earnings
Target Bonus ($)
Final Award
as a % of Target
Final Award ($)
Goff
1,600,000
160
2,560,000
180
4,600,000
(a)
Bonus eligible earnings is based on salary earned during the 2018 calendar year.
Long-Term Incentive Compensation Program
Our long-term incentive (“LTI”) compensation program is designed to promote achievement of our long-term business objectives by linking our NEOs’ compensation directly to long-term equity performance and strengthening alignment between our NEOs’ interests and our shareholders’ interests. The target value for each NEO’s LTI award is determined by the Compensation Committee based upon input from the Consultant and peer group data, as well as the size and complexity of each NEO’s role.
Our Compensation Committee has determined it is appropriate for our NEOs to receive a portion of their LTI awards in the form of MPLX performance units and phantom units, as each NEO has responsibility for managing assets and businesses that advance MPLX’s long-term business objectives, which in turn benefits MPC. The mix of MPC and MPLX awards granted is based on the Compensation Committee’s assessment of the percentage of time each NEO regularly dedicates to managing the affairs of MPLX. For 2018, the Compensation Committee determined that the following mix of awards was appropriate for our NEOs:
Heminger
Griffith
Templin
80% MPC LTI Awards
20% MPLX LTI Awards
50% Performance Units
30% Stock Options
20% Restricted Stock
50% Performance Units
50% Phantom Units
Kenney
90% MPC LTI Awards
10% MPLX LTI Awards
50% Performance Units
30% Stock Options
20% Restricted Stock
50% Performance Units
50% Phantom Units
MPC performance units, stock options and restricted stock are granted by the Compensation Committee. MPLX performance units and phantom units are granted by a committee of the MPLX Board comprised of the Chairman and the non-management directors (the “MPLX Committee”) following a recommendation by the Compensation Committee.
LTI awards represent a compensation opportunity. The actual long-term compensation value realized by our NEOs will depend on the price of our underlying stock at the time of settlement. The 2018 LTI awards were based on an intended dollar value rather than a specific number of performance units, stock options or shares of restricted stock. Each form of LTI award is discussed in more detail below.
Mr. Goff commenced employment with us on October 1, 2018 and did not receive an LTI award for 2018. His Letter Agreement provides that he will receive an LTI award, valued at $12,250,000, for 2019.
Changes to LTI Components for 2018
As a result of its ongoing analysis of peer data and as part of its continuing effort to be responsive to feedback from our shareholders, the Compensation Committee made the following changes to the LTI program for 2018:
The overall mix of LTI awards was changed so that, beginning with awards granted in 2018, at least 50% of MPC annual LTI awards will be in the form of performance units.
Beginning with 2018 awards, the minimum TSR/TUR percentile for a payout on performance units will increase to the 30th percentile from the 25th percentile.
MPC Performance Units
The Compensation Committee believes that TSR is the best overall pay-for-performance metric to align our NEOs’ interests with shareholder interests. Our performance units evaluate MPC’s TSR relative to a peer group of oil industry competitors and a market index. This relative evaluation recognizes the cyclical nature of our business and

 
 
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commodity prices (crude oil) and prevents volatility from directly advantaging or disadvantaging the payout of the award beyond that of our peers. Our performance units are designed to ensure we pay above target compensation only when our TSR is above the median of the peer group.
TSR for MPC and each of the peer group companies is measured over a 36-month performance cycle. Each performance cycle has four equally weighted measurement periods: (i) the first 12 months; (ii) the second 12 months; (iii) the third 12 months; and (iv) the entire 36-month period. The Compensation Committee believes that this structure is appropriate as maximum payout based on TSR may only be achieved by outperforming the TSR peer group for all four measurement periods.
Each peer group member’s TSR for a measurement period is determined by the following formula:
(Ending Stock Price - Beginning Stock Price) + Cumulative Cash Dividends
Beginning Stock Price
The beginning and ending stock prices used for MPC and each peer group member in the TSR calculation are the averages of each company’s closing stock price for the 20 trading days immediately preceding the beginning and ending date of the applicable measurement period. This helps mitigate significant market fluctuations in stock price at the beginning or end of a performance cycle and discourages excessive or inappropriate risk-taking near the end of a performance cycle by limiting the impact on the overall payout of the award.
Our TSR performance percentile within the peer group is measured for each measurement period, with the related payout percentage determined as follows: 
TSR Percentile
Payout (% of Target) (a)
100th (Highest)
200%
50th
100%
25th (b)
50%
Below 25th (b)
0%
(a)
Payout for performance between quartiles will be determined using linear interpolation.
(b)
Increased to the 30th percentile for awards granted in 2018 and thereafter.
Each performance unit is denominated in dollars with a target value of $1.00. The actual payout may vary from $0.00 to $2.00 (0% to 200% of target). The Compensation Committee believes that capping the maximum payout at 200% mitigates excessive or inappropriate risk-taking. In addition, if MPC’s TSR is negative for a measurement period, the payout percentage for that measurement period is capped at target (100%) regardless of actual relative TSR performance percentile. The final value of the performance unit award will be determined by multiplying the simple average of the payout percentages for the four measurement periods by the number of performance units granted. These awards settle 25% in MPC common stock and 75% in cash. Unvested performance units do not receive dividends and do not have voting rights.
Performance units granted in 2016 had a performance cycle of January 1, 2016, through December 31, 2018. The peer group for these performance units was: Andeavor, Chevron Corporation, HollyFrontier Corporation, PBF Energy, Phillips 66, Valero Energy Corporation and the S&P 500 Energy Index. Due to industry consolidation, Andeavor was removed from the group effective January 1, 2018.
In January 2019, the Compensation Committee certified the final TSR results for the four applicable measurement periods as follows:  
Measurement Period
Actual TSR (%)
Position
Percentile Ranking (%)
Payout (% of Target)
January 1, 2016 - December 31, 2016
(1.8)
5th
42.86
85.72
January 1, 2017 - December 31, 2017
34.6
3rd
71.43
142.86
January 1, 2018 - December 31, 2018
(4.6)
4th
50.00
100.00
January 1, 2016 - December 31, 2018
25.4
3rd
66.67
133.34
 
 
 
Average:
115.48

 
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Based on the resulting average, each performance unit granted was multiplied by $1.1548, and the Compensation Committee approved the following payouts to our NEOs:  
Name
Target Number of
Performance Units
Compensation Committee
Approved Payout ($)
Heminger
3,520,000

 
4,064,896

 
Griffith
640,000

 
739,072

 
Templin
600,000

 
692,880

 
Kenney
756,000

 
873,029

 
MPC performance units granted to our NEOs in 2017 and 2018 remain outstanding. See the “Outstanding Equity at 2018 Fiscal Year-End” table below for additional information about these awards, including the amount granted, the performance cycle and the applicable peer group.
MPC Stock Options
Stock options provide a direct but variable link between our NEOs’ long-term compensation and the long-term value shareholders receive by investing in MPC. The Compensation Committee believes stock options are inherently performance-based as option holders realize benefits only 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 our common stock on the grant date. Stock options generally vest in equal installments on the first, second and third anniversaries of the grant date and expire 10 years following the grant date. Option holders do not have voting rights or receive dividends on the underlying stock. See the “2018 Grants of Plan-Based Awards” table below for the number of options granted to our NEOs in 2018.  
MPC Restricted Stock
Our Compensation Committee awards restricted stock to our NEOs to promote their ownership of actual shares of our common stock, to help them comply with our stock ownership guidelines and to promote their retention. Awards generally vest in equal installments on the first, second and third anniversaries of the grant date. Unvested restricted stock awards accrue dividends, which are paid upon vesting. Holders of unvested restricted stock have voting rights. See the “2018 Grants of Plan-Based Awards” table below for the number of shares of restricted stock granted to our NEOs in 2018.
MPLX Performance Units
The Compensation Committee and the MPLX Committee believe that MPLX performance unit awards align our NEOs’ interests with the interests of our shareholders and MPLX’s unitholders. Performance units granted in 2016 are based on TUR relative to a peer group of midstream companies, as further described below. In 2017, the MPLX Committee added a DCF-per-MPLX-common-unit metric to the MPLX performance unit program to align it with contemporary industry program design. The MPLX Committee believes the TUR and DCF metrics are important indicators of performance as they are commonly used by unitholders to measure a master limited partnership’s (“MLP”) performance against others within the same industry. Achieving above-target payouts would require at least one of these two metrics to achieve above-target performance.
TUR for MPLX and each peer group MLP is measured over a 36-month performance cycle. Each performance cycle has four equally weighted measurement periods: (i) the first 12 months; (ii) the second 12 months; (iii) the third 12 months; and (iv) the entire 36-month period. The MPLX Committee believes this structure is appropriate as maximum payout based on TUR may only be achieved by outperforming the TUR peer group for all four measurement periods.
Each peer group member’s TUR is determined by the following formula:
(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 are the averages of each company’s closing unit price for the 20 trading days immediately preceding the beginning or ending date of the applicable measurement period. This helps mitigate significant market fluctuations in unit price at the beginning or end of a performance cycle and discourages excessive or inappropriate risk-taking near the end of a performance cycle by limiting the impact on the overall payout of the award.

 
 
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MPLX’s TUR performance percentile within the peer group is measured for each measurement period, with the related payout percentage determined as follows: 
TUR Percentile
Payout (% of Target) (a)
100th (Highest)
200%
50th
100%
25th (b)
50%
Below 25th (b)
0%
(a)
Payout for performance between quartiles will be determined using linear interpolation.
(b)
Increased to the 30th percentile for awards granted in 2018 and thereafter.
Each performance unit is denominated in dollars with a target value of $1.00. The actual payout may vary from $0.00 to $2.00 (0% to 200% of target). The MPLX Committee believes that capping the maximum payout at 200% mitigates excessive or inappropriate risk-taking. In addition, if MPLX’s TUR is negative for a measurement period, the payout percentage for that measurement period is capped at target (100%) regardless of actual relative TUR performance percentile. These awards settle 25% in MPLX common units and 75% in cash. Holders of unvested performance units do not receive cash distributions and do not have voting rights.
Performance units granted in 2016 had a performance cycle of January 1, 2016 through December 31, 2018. The peer group for these performance units was: Andeavor Logistics LP, Buckeye Partners, L.P., Enbridge Energy Partners, L.P., Energy Transfer Partners, L.P., Enterprise Products Partners L.P., Magellan Midstream Partners, L.P., ONEOK Partners, L.P., Phillips 66 Partners LP, Plains All American Pipeline, L.P., Sunoco Logistics Partners L.P., Valero Energy Partners LP, Western Gas Partners, LP and Williams Partners L.P. Due to industry consolidations, ONEOK Partners, L.P. and Sunoco Logistics Partners L.P. were removed from the group effective January 1, 2017, and Enbridge Energy Partners, L.P., Energy Transfer Partners, L.P. and Williams Partners L.P. were removed from the group effective January 1, 2018.
In January 2019, the MPLX Committee certified the final TUR results for the four applicable measurement periods as follows:
Measurement Period
Actual TUR (%)
Position
Percentile Ranking (%)
Payout (% of target)
January 1, 2016 - December 31, 2016
3.2
12th
15.38
January 1, 2017 - December 31, 2017
17.5
1st
100.00
200.00
January 1, 2018 - December 31, 2018
(4.2)
6th
37.50
75.00
January 1, 2016 - December 31, 2018
15.7
4th
62.50
125.00
 
 
 
Average:
100.00
The final value of the 2016 performance unit awards was determined by multiplying the simple average of the payout percentages for the four measurement periods by the number of performance units granted. Based on the resulting average, each performance unit granted was multiplied by $1.00, and the MPLX Committee approved the following payouts to our NEOs:
Name
Target Number of
Performance Units
MPLX Board
Approved Payout ($)
Heminger
1,100,000

 
1,100,000

 
Griffith
200,000

 
200,000

 
Templin
750,000

 
750,000

 
Kenney
105,000

 
105,000

 
For MPLX performance unit awards granted in 2017 and 2018, the final value will be based 50% on MPLX’s TUR, as described above, and 50% on a DCF-per-MPLX-common-unit metric. This metric measures the growth of MPLX’s full-year DCF over the three-year performance cycle. The MPLX Committee added this metric in 2017 as it believes unitholders view DCF as an important measure of an MLP’s performance relative to others in the same industry.

 
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Threshold, target and maximum DCF levels for the awards granted in 2017 are calculated by applying pre-determined compound annual growth rates of 8%, 10% and 12%, respectively, over the DCF per MPLX common unit for 2016 as follows:
Award Year
Metric
Threshold (a)
(50% Payout)
Target (a)
(100% Payout)
Maximum (a)
(200% Payout)
 2017
DCF per common unit at 12/31/2019
$2.9559
$3.1232
$3.2967
(a)
Payout for performance between these levels will be determined using linear interpolation.
Threshold, target and maximum DCF levels for the awards granted in 2018 are determined at the beginning of each year of the performance cycle by the MPLX Committee based on the annual business plan. The levels for 2018 were ($ in millions):
Award Year
Metric
Threshold (a)
(50% Payout)
Target (a)
(100% Payout)
Maximum (a)
(200% Payout)
 2018
DCF at 12/31/2018
$2,335
$2,595
$2,725
(a)
Payout will be based on achievement of DCF in each year of the performance cycle as compared with the threshold, target and maximum levels. Payout for performance between these levels will be determined using linear interpolation.
MPLX performance units granted to our NEOs in 2017 and 2018 remain outstanding. See the “Outstanding Equity at 2018 Fiscal Year-End” table below for additional information about these awards, including the amount granted, the performance cycle, and the applicable peer group.
MPLX Phantom Units
Grants of phantom units promote increased ownership by our NEOs of MPLX common units, which strengthens alignment between our NEOs’ interests and the interests of MPLX’s unitholders, including us. The value of phantom unit awards is variable, based on the value of an underlying MPLX common unit. Awards generally vest in equal installments on the first, second and third anniversaries of the grant date and are settled in MPLX common units. Distribution equivalents accrue on the phantom unit awards and are paid upon vesting. Holders of unvested phantom units have no voting rights. NEOs are required to hold all MPLX common units received upon vesting of phantom units for at least one year. This requirement applies to units net of taxes at the time of vesting or distribution. See the “2018 Grants of Plan-Based Awards” table below for the number of phantom units granted to our NEOs in 2018.
Other Benefits
In addition to the three key compensation elements described above, our NEOs are generally eligible to participate in our market-competitive health and life insurance plans, long-term and short-term disability programs, retirement and severance programs. We also provide limited perquisites to our NEOs that are consistent with our business strategy and/or market-based trends. None of these additional programs are considered material by the Compensation Committee when making compensation decisions.
Retirement Benefits
Retirement benefits provided to our NEOs are designed to be consistent in value and aligned with benefits offered by the other companies with which we compete for talent. Benefits payable under our qualified and nonqualified plans are described in more detail in “Post-Employment Benefits” and “Nonqualified Deferred Compensation.”
Severance Benefits
We have not entered into individual severance or change-in-control agreements with our NEOs. However, our Amended and Restated Executive Change in Control Severance Benefits Plan and the MPLX LP Executive Change in Control Severance Benefits Plan accomplish several specific objectives, including:
Providing and preserving an economic motivation for participating executives to consider a business combination that might result in an executive’s job loss; and
Competing effectively in attracting and retaining executives in an industry that features frequent mergers, acquisitions and divestitures.
Our change in control benefits are described in more detail in “Potential Payments upon Termination or Change in Control.”

 
 
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Perquisites
We offer limited perquisites to our NEOs. Based on the Consultant’s analysis and advice, we believe the perquisites we offer are consistent with those offered by our peer group companies.
Our NEOs 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 benefit is appropriate due to the complexities of income tax preparation for our NEOs, who may, for example, be required to make personal income tax filings in multiple states as a result of receiving 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 are eligible for 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 program.
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 may 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 spouse’s or guest’s 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 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, we provide limited security benefits to our CEO, the costs of which are primarily attributable to the maintenance, operation and monitoring of enhanced security systems. The Committee feels these security measures are appropriate given the growing public profile of our CEO and the publicity given to those in our industry.
Reportable values for these perquisites, based on the incremental costs to us, are included in the “All Other Compensation” column of the “2018 Summary Compensation Table.”
We do not provide income tax assistance or tax gross-ups on our executive perquisites.
Compensation Governance
Stock Ownership Guidelines
The Compensation Committee has established stock ownership guidelines for our executive officers intended to align their long-term interests with those of our shareholders. These guidelines require the executive officers in the positions shown below to retain MPC common stock having a value equal to a target multiple of their annualized base salary. The targeted multiples vary depending upon the executives’ position and responsibilities:
Position
Stock Ownership Guideline
Chief Executive Officer
6x annualized base salary
Executive Vice Chairman
Presidents
Executive Vice Presidents
4x annualized base salary
Chief Human Resources Officer
General Counsel
Senior Vice Presidents
3x annualized base salary
Vice Presidents
2x annualized base salary
Each officer must hold all equity we grant until the applicable ownership guideline has been achieved. As of December 31, 2018, all of our NEOs had met their stock ownership guidelines.

 
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The guidelines also require that these officers hold all full-value shares of MPC common stock received under our incentive compensation plan, including upon the settlement of performance units, for a minimum of one year following the date those shares are earned or vest.
Prohibition on Derivatives and Hedging
We prohibit 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. This ensures that our NEOs bear the full risk of MPC common stock ownership.
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 executive officer, including our NEOs: (i) knowingly engaged in misconduct; (ii) was grossly negligent with respect to misconduct; (iii) knowingly failed or was grossly negligent in failing to prevent misconduct; or (iv) 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 has the right to request and receive reimbursement of any portion of an executive officer’s bonus from the ACB program that would not have been earned had the forfeiture event not taken place. In addition, the executive’s unexercised stock options, unvested restricted stock and outstanding performance units would be subject to immediate forfeiture. If a forfeiture event occurred either while the executive officer was employed, or within three years after termination of employment, and a payment had previously been made to the executive officer in settlement of performance units, the Compensation Committee would have the right to recoup an amount in cash up to 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 require the CEO and CFO to reimburse the company 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 NYSE.
Tax Policy
Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), generally disallows a tax deduction to a public corporation for compensation over $1 million paid in any fiscal year to certain executive officers (and, beginning in 2018, certain former executive officers). Historically, Section 162(m) exempted qualifying performance-based compensation from the deduction limit if certain requirements were met. Significant aspects of our compensation programs were designed to permit (but not require) compensation to potentially qualify for this performance-based exception. To accomplish this, we previously asked shareholders to approve equity and incentive compensation plans that included limitations and provisions required to be included under Section 162(m).
Tax reform legislation amended Section 162(m) in December of 2017 to: (i) eliminate the exemption for performance-based compensation, other than with respect to payments made pursuant to certain “grandfathered” arrangements entered into prior to November 2, 2017, and in effect on that date; and (ii) expand the group of current and former executive officers who may be covered by the Section 162(m) deduction limit.
While our shareholder-approved incentive plans are structured to provide that certain awards could be made in a manner intended to potentially qualify for the performance-based compensation exemption, that exemption is no longer available for tax years after 2017, other than with respect to certain “grandfathered” arrangements as noted above. Our Compensation Committee expects in the future to authorize compensation in excess of $1 million to our NEOs that will not be deductible under Section 162(m) when it believes doing so is in the best interests of us and our shareholders. Additionally, with the performance-based compensation exception no longer available, we will no longer include specific Section 162(m)-related limitations or provisions or request shareholder approval for this purpose, and generally will not attempt to meet the requirements previously included in our plans related to the now eliminated performance-based compensation exception under the prior Section 162(m) regime as there is no tax benefit from doing so.

 
 
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Compensation Committee Consultant Independence
The Compensation Committee engaged Pay Governance LLC (the “Consultant”) as its independent compensation consultant for 2018. While the Compensation Committee oversees the Consultant’s activities, the Consultant does interact with management to gather information and formalize proposals for presentation to the Committee. During 2018, the only services the Consultant provided to us or our management were directly related to executive or director compensation matters.
In determining that the advice it receives from the Consultant is objective and not influenced by the Consultant’s working relationship with MPC or the Compensation Committee, the Committee considered:
The Consultant’s provision of other services to us;
The amount of fees we paid the Consultant, as a percentage of the Consultant’s total revenue;
The Consultant’s policies and procedures that are designed to prevent internal conflicts;
Any business or personal relationship of the Consultant with the members of the Compensation Committee or our executive officers; and
Any of our stock owned by the Consultant.
The Compensation Committee has considered and assessed all relevant factors, including those required by the SEC that could give rise to a potential conflict of interest with respect to the Consultant in 2018. Based on this review, the Compensation Committee determined that the Consultant’s work performed during 2018 did not raise any conflicts of interest.
Compensation-Based Risk Assessment
Annually, the Consultant performs an assessment of the risks associated with our compensation programs. In January 2019, the Compensation Committee reviewed the most recent assessment of our policies and practices for compensating our executive officers and non-executive employees as they relate to our risk management profile. This assessment noted the following risk-mitigating factors:
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;
The mix of fixed versus variable compensation and cash versus equity is reasonable;  
Key functions are involved in establishing, reviewing and administering our incentive plans to ensure accuracy and transparency;
Incentive awards are generally capped at a maximum payout of 200% of target;
Metrics used within incentive plans align with shareholder value creation;
A comprehensive process is followed when determining incentive goals, which incorporates significant discussion between management and the Compensation Committee;     
Executive officers are required to comply with a rigorous stock ownership policy and an additional holding policy on earned or vested full-value shares;
Long-term incentive awards vest over multi-year periods;
Appropriate levels of review, approval and governance support compensation decisions;
We maintain an insider trading policy, an anti-hedging policy and a recoupment policy that addresses the restatement of results; and
The full Board plays an active role in leadership succession planning.
Following its assessment, the Compensation Committee concluded that:
Our compensation programs are appropriate to meet our business objectives;
Our compensation programs are balanced in composition between cash and equity;

 
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Our compensation programs are balanced in composition between annual and long-term performance; and
Any risks arising from our compensation programs are not reasonably likely to have a material adverse effect on our financial statements.
Compensation Committee Interlocks and Insider Participation
Messrs. Rohr (Chair), Alkhayyal, Bunch, Davis and Galante and Ms. James served on our Compensation Committee during 2018. The Board determined that each member qualified as independent. As Chairman of MPLX GP, the general partner of MPLX, and of TLGP, the general partner of ANDX, Mr. Heminger participates in compensation decisions for those entities. During 2018, none of our other executive officers served as a member of a compensation committee or board of directors of another entity that has an executive officer serving as a member of our Compensation Committee or Board of Directors.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis for 2018 with management and, based on such review and discussions, recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Annual Report on Form 10-K for the year ended December 31, 2018.
Compensation Committee
James E. Rohr, Chair
Abdulaziz F. Alkhayyal
Charles E. Bunch
Steven A. Davis
Edward G. Galante

 
 
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Executive Compensation Tables
2018 Summary Compensation Table
The following table provides information regarding compensation for our 2018 NEOs for the years shown.
Name and
Principal Position
Year
Salary
($) (a)
Stock Awards
($) (b) (c)
Option Awards ($) (b)
Non-Equity Incentive Plan Compensation
($) (d)
Change in Pension Value
($) (e)
All Other
Compensation
($) (f)
Total
($)
Gary R. Heminger
Chairman and Chief Executive Officer
2018
1,687,500

8,143,693

3,240,009

5,200,000

931,253

603,595

 
19,806,050

2017
1,637,500

7,736,165

3,840,001

5,000,000

942,420

514,721

 
19,670,807

2016
1,600,000

5,575,165

3,520,008

4,200,000

1,097,813

562,822

 
16,555,808

Timothy T. Griffith
Senior Vice President and Chief Financial Officer
2018
775,000

1,655,410

672,011

1,150,000

130,153

135,124

 
4,517,698

2017
681,250

1,611,727

800,003

1,100,000

145,967

103,922

 
4,442,869

2016
600,000

1,013,690

640,004

750,000

113,173

91,094

 
3,207,961

Donald C. Templin
President, Refining, Marketing and Supply
2018
937,500

2,364,874

960,005

1,700,000

268,777

192,823

 
6,423,979

2017
856,250

2,623,087

240,001

1,700,000

285,452

159,596

 
5,864,386

2016
800,000

1,869,697

600,005

1,300,000

241,506

148,860

 
4,960,068

Gregory J. Goff
Executive Vice Chairman
2018
400,000



4,600,000

1,062,308

121,941

 
6,184,249

Anthony R. Kenney
President, Speedway
2018
743,750

1,519,283

675,016

1,100,000

286,725

142,504

 
4,467,278

2017
718,750

1,334,144

792,000

1,100,000

379,447

135,898

 
4,460,239

2016
687,500

982,903

756,005

1,075,000

403,941

136,970

 
4,042,319

(a)
Reflects actual salary earned during the fiscal year covered. Compensation is reviewed after the end of each year, and salary increases, if any, are generally effective April 1 of the following year. Mr. Goff commenced employment with us on October 1, 2018; the amount shown for him reflects the prorated portion of his salary from that date through year-end. See “Compensation Discussion and Analysis—Elements of Compensation—Base Salary” for additional information on base salaries for 2018.
(b)
The amounts shown in these columns reflect the aggregate grant date fair value of LTI awarded in the applicable year calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification 718, Compensation—Stock Compensation (“FASB ASC Topic 718”). See Note 23 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 and Note 22 to MPLX’s financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2018 for valuation assumptions used to determine the value of these awards.
(c)
The maximum value of the performance units granted in 2018, assuming the highest level of performance achieved, is: Mr. Heminger, MPC - $10,800,000 and MPLX - $2,700,000; Mr. Griffith, MPC - $2,240,000 and MPLX - $560,000; Mr. Templin, MPC - $3,200,000 and MPLX - $800,000; Mr. Kenney, MPC - $2,250,000 and MPLX - $250,000.
(d)
Reflects the total value of ACB awards earned for the year indicated, which were paid in the following year.
(e)
The amounts shown in this column reflect the annual change in actuarial present value of accumulated benefits under the Marathon Petroleum, Speedway and Andeavor retirement plans. See “Post-Employment Benefits for 2018” for more information regarding our defined benefit plans and the assumptions used in the calculation of these amounts. There are no deferred compensation earnings reported in this column as our nonqualified deferred compensation plans do not provide above-market or preferential earnings.

 
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(f)
We offer 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 in the following table. See “Compensation Discussion and Analysis—Other Benefits—Perquisites” for a description of each of these items.  
Name
Personal Use of Company Aircraft ($) (g)
Company Physicals ($)
Tax and Financial Planning ($)
Security ($)
Company Contributions to Defined Contribution Plans ($) (h)
Total All Other Compensation ($)
Heminger
111,251

 
3,769

 
12,793

 
6,454

 
469,328

 
603,595