In 2011 Gary Heminger was appointed CEO of Marathon Petroleum Corporation (NYSE:MPC). First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Gary Heminger's Compensation Compare With Similar Sized Companies?
According to our data, Marathon Petroleum Corporation has a market capitalization of US$40b, and pays its CEO total annual compensation worth US$20m. (This figure is for the year to December 2018). That's just a smallish increase of 0.7% on last year. While we always look at total compensation first, we note that the salary component is less, at US$1.7m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
Thus we can conclude that Gary Heminger receives more in total compensation than the median of a group of large companies in the same market as Marathon Petroleum Corporation. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Marathon Petroleum has changed from year to year.
Is Marathon Petroleum Corporation Growing?
On average over the last three years, Marathon Petroleum Corporation has grown earnings per share (EPS) by 32% each year (using a line of best fit). In the last year, its revenue is up 29%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.
Has Marathon Petroleum Corporation Been A Good Investment?
I think that the total shareholder return of 58%, over three years, would leave most Marathon Petroleum Corporation shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at Marathon Petroleum Corporation with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Even better, returns to shareholders have been plentiful, over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Marathon Petroleum (free visualization of insider trades).
If you want to buy a stock that is better than Marathon Petroleum, this free list of high return, low debt companies is a great place to look.
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