The non-employee directors selected Mr. Boyce to serve as independent lead director and Mr. Tillman to serve as chairman, effective February 1, 2019. 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, all of whom are currently independent, meet at regularly scheduled executive sessions without the CEO and chairman present. The lead independent director presides at these meetings. In addition, our Corporate Governance Principles require that all our principal committees comprise entirely 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 2020 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 to ensure both our board and workforce better represent our stakeholders and 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 with our board the appropriate size and composition of the 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.
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 stockholders.
For more information on board diversity, and to view our Skills Matrix, please see our 2020 Proxy Statement.
- ᵃ Two of our eight directors, including the 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 directors is 61 years.
- ᵃ The NYSE requires that independent directors must comprise the majority of the board. The board has determined that each member, other than Mr. Tillman, meet the NYSE's independence standards.
- ᵃ 50% of our board has joined within the last three years. The average tenure of the directors is less than five years, which we believe reflects a balance of company experience and new perspectives.
Board Oversight of Sustainability
We believe that strong governance produces a corporate culture and a business environment conducive to our company’s growth and longevity. The board’s oversight role includes reviewing the sustainability of our operations, the strength of our risk management efforts and the viability of our strategic plans. This oversight and guidance is critical to protecting Marathon Oil’s ability to create long-term value.
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 best practices in executive compensation, including engaging 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 to ensure 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 stockholder value and pay competitively.
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 2019, our CEO’s awarded compensation was approximately 97 times the median of the annual total compensation for all of our employees.
Our short-term incentive program metrics align with our financial, operational and health, environmental and safety (HES) commitments. In 2020, we reinforced our HES commitment by adding a greenhouse gas intensity metric to our strategic objectives. We believe adding this metric strengthens the tie between our operations and our commitment to addressing climate change risk.
For more information about our 2019 executive compensation program, as well as the roles and responsibilities of the Compensation Committee, please see our 2020 Proxy Statement and the Compensation Committee Charter.
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