The non-employee directors selected Ms. Donadio to serve as independent lead director, effective May 26, 2021. Our board doesn’t have a policy regarding whether the roles of the chairman and CEO should be separate, but rather makes this determination based on what’s best for our company at a given point in time.
We believe that independent board oversight is essential to effective governance. Our Corporate Governance Principles require that non-employee directors meet at regularly scheduled executive sessions without the CEO present. The lead independent director presides at these meetings. In addition, our Corporate Governance Principles require that all our principal committees be composed entirely of independent directors.
The board has four principal standing committees: Audit and Finance; Compensation; Corporate Governance and Nominating; and Health, Environmental, Safety and Corporate Responsibility (HES&CR). The HES&CR committee plays a vital oversight role in our sustainability efforts and includes board members with experience in this area.
For more information on board composition, structure and independence, please refer to our 2021 Proxy Statement.
At Marathon Oil, promoting a culture of diversity and inclusion is important to us, and it begins at the top. We’ve made progress on balancing various aspects of diversity so that our board and workforce better represent our stakeholders and the communities where we operate. We view and define diversity in its broadest sense, encompassing gender, ethnicity, age, education, experience and leadership qualities.
The Corporate Governance and Nominating Committee reviews the appropriate size and composition of the board with the full board. When considering director nominees, we look at a diverse pool of candidates, considering each candidate’s business or professional experience, demonstrated leadership ability, integrity and judgment, record of public service, diversity, financial and technological acumen and international experience. As of May 26, 2021, three of our four board committees are led by women or ethnically diverse individuals.
Our directors have experience spanning a broad range of industries in the public and not-for-profit sectors. They bring a variety of skills, qualifications and viewpoints that strengthen our board’s ability to carry out its oversight role on behalf of our shareholders. Please see the Appendix for our board of directors’ skills matrix. The charts below are reflective of our board as of May 2021.
- ᵃ Three of our eight directors, including the current chairs of the Audit and Finance and HES&CR Committees, are female.
- ᵃ 25% of our directors self-identify as an ethnicity other than Caucasian/White.
- ᵃ The average age of the directors is 61 years.
- ᵃ The NYSE requires that independent directors must comprise the majority of the board. The Board has determined that each of the directors, other than Mr. Tillman, meets the NYSE’s independence standards.
- ᵃ We believe the mix between short- and long-tenured directors reflects a balance of company experience and new perspectives.
Executive Compensation Philosophy
The board’s Compensation Committee reviews and recommends to our board all matters of policy and procedure relating to executive officer compensation. Our compensation program incorporates a number of best practices in executive compensation, including the Compensation Committee’s engagement of an independent compensation consultant to advise the committee. The committee:
- Reviews and approves the corporate philosophy, goals and objectives relevant to the CEO’s compensation, and determines and recommends to the independent directors for approval the CEO’s compensation level based on our board’s performance evaluation.
- Determines and approves the compensation of the other executive officers, and administers our incentive compensation and equity-based plans.
- Reviews the executive compensation program to ensure it doesn’t encourage excessive risk-taking.
- Reviews our executive compensation, incentive compensation program and succession plans so we have appropriate practices in place to support the retention and development of the talent necessary to achieve our business goals and objectives.
Our success is based on financial performance and operational results, and we believe that our executive compensation program is an important driver of that success. The primary objectives of our program are to pay for performance, encourage creation of long-term shareholder value and pay competitively. We believe continuously improving our ESG performance is essential to successfully executing our long-term strategy of maximizing shareholder value, and we’ve made changes to reflect that in both CEO and our other executive officers’ compensation.
Executive compensation includes base salary, annual cash bonuses, long-term incentive awards and other benefits and limited perquisites. By design, a significant portion of our executive officers’ overall compensation, including annual cash bonuses and long-term incentive awards, is “performance based,” and the opportunity to earn value is largely dependent on both company and individual performance. For 2020, our CEO’s awarded compensation was approximately 91 times the median of the annual total compensation for all our employees.
Our short-term incentive program metrics align our financial and operational goals with our health, environmental, safety, security (HES&S) and corporate sustainability commitments. In 2020, we reinforced our HES&S and sustainability commitments by adding a greenhouse gas (GHG) intensity metric to our strategic objectives. Building on that commitment, in 2021, we added a GHG emissions intensity target to our executive short-term incentive scorecard, which aims for an approximate 30% reduction to GHG emissions intensity measured against 2019 levels. We believe adding this metric strengthens the link between our operations and our commitment to addressing climate change risk.
For more information about our 2020 executive compensation program, as well as the roles and responsibilities of the Compensation Committee, please see our 2021 Proxy Statement and the Compensation Committee Charter.
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