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Is Marathon Petroleum Corporation's (NYSE:MPC) CEO Being Overpaid?

Simply Wall St

Gary Heminger has been the CEO of Marathon Petroleum Corporation (NYSE:MPC) since 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Marathon Petroleum

How Does Gary Heminger's Compensation Compare With Similar Sized Companies?

According to our data, Marathon Petroleum Corporation has a market capitalization of US$39b, and paid its CEO total annual compensation worth US$20m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.7m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

As you can see, Gary Heminger is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Marathon Petroleum Corporation is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Marathon Petroleum, below.

NYSE:MPC CEO Compensation, December 9th 2019

Is Marathon Petroleum Corporation Growing?

Marathon Petroleum Corporation has increased its earnings per share (EPS) by an average of 28% a year, over the last three years (using a line of best fit). It achieved revenue growth of 47% over the last year.

This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.

Has Marathon Petroleum Corporation Been A Good Investment?

Most shareholders would probably be pleased with Marathon Petroleum Corporation for providing a total return of 34% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We examined the amount Marathon Petroleum Corporation pays its CEO, and compared it to the amount paid by 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. Shareholders may want to check for free if Marathon Petroleum insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.