SCOTTSDALE, Ariz. — Two of the major investors pushing for a reorganization of Marathon Petroleum Corp. issued an open letter to shareholders Oct. 24 stating their case to have CEO and Chairman Gary Heminger resign his role immediately.
“We believe our extensive engagement with many of you over the past few weeks has yielded an indisputable conclusion: Marathon’s owners feel immediate change is needed at the top of the company,” wrote Paul Foster and Jeff Stevens, who together with their affiliates hold approximately 1.7% of the outstanding common stock of Marathon Petroleum. “Since being forced to go public with our case for change, we have engaged with approximately 100 stockholders representing nearly half of the institutional base in order to discuss the persistent failures that have fueled Marathon’s considerable value destruction since the Andeavor acquisition. These conversations have not only led us to conclude that the vast majority of major stockholders share our concerns, but that there is substantial support for many of the solutions we have been advocating for.”
In September, Stevens and Foster called for Heminger to be replaced over concerns related to MPC’s performance, strategy and corporate governance. Since then, the company has shown support for Heminger, calling the 2018 acquisition of refiner and retailer Andeavor “an excellent move.”
Here’s the rest of Stevens and Foster’s letter:
“Those of you who we have spoken with agree that the board must immediately modernize corporate governance, institute more transparent financial disclosures and reporting and adopt various elements of [the previously reported] restructuring proposal. What is more telling, however, is that we have found there is overwhelming support for our calls to have Gary Heminger resign immediately from his chairman and chief executive roles.
“If the board is having its own candid and direct discussions with stockholders, we have no doubt that they are hearing similar feedback. Our view is the board has a duty to heed stockholders’ calls for change and move quickly to replace Mr. Heminger. In order to fully restore investor confidence, we believe that the board must immediately establish a special committee comprised of independent directors to identify the very best candidates for the chairman and chief executive positions. We remain fully willing to assist a special committee in its search.
“In closing, we firmly believe that the collective concerns of Marathon’s stockholders cannot be addressed through incremental actions or half-measures that stop short of the immediate changes needed with respect to governance, strategy and, most importantly, leadership. We believe the board should consider the views that many of you have as it hopefully settles on the right path forward for Marathon.”
In response, Marathon Petroluem said in a statement shared with CSP Daily News: “We are disappointed that Paul Foster and Jeff Stevens continue to make misleading comments about MPC as part of a public campaign to further their own objectives, including their prior false statements about the company’s engagement with them. We value dialogue with our shareholders and have talked with many investors in recent weeks, including Foster and Stevens, to hear their feedback. Foster and Stevens’ claims about the level of shareholder support for the company and management are inconsistent with our conversations with shareholders. Marathon has delivered substantial shareholder value under the leadership of Chairman and CEO Gary Heminger, including total shareholder returns almost double the S&P 500 during his tenure, and he has the full support of the board.
“As we have said publicly, the company is conducting a comprehensive strategic review. The review is ongoing and no conclusions have been reached.”
Marathon Petroleum Corp. is the parent company of the Speedway convenience-store chain. Speedway LLC, based in Enon, Ohio, owns and operates more than 4,000 U.S. convenience stores. Speedway ranked No. 3 in CSP’s 2019 Top 202 list of c-store chains by number of company-owned retail outlets.