8-KLeadership ChangesMaterial AgreementsRegulation FD+1

Marathon Petroleum Corp 8-K Report, Material Agreement (Dec 16, 2019)

Filed December 16, 2019For Securities:MPC

Summary

Marathon Petroleum Corporation (MPC) has entered into a Cooperation Agreement with activist investor Elliott Associates, L.P. and its affiliates. This agreement, effective December 16, 2019, involves significant changes to MPC's board of directors and governance structure. Notably, MPC accepted the resignation of director Gregory J. Goff and appointed Jonathan Z. Cohen, nominated by Elliott, to fill the vacancy. Mr. Cohen has been appointed to serve on the special committee evaluating MPC's Midstream business options and the committee overseeing the CEO search. Elliott will also have the right to designate a non-voting advisor to the Midstream Committee. Furthermore, MPC has agreed to propose an amendment to its charter to eliminate the classified board structure, moving towards annual director elections, which will be put to a shareholder vote at the 2020 Annual Meeting. Elliott, in turn, has agreed to certain standstill provisions and to vote its shares in accordance with the Board's recommendations for director elections and most other proposals during the standstill period. This agreement signals a resolution to potential proxy contest pressures from Elliott and sets a new direction for governance at MPC.

Key Highlights

  • 1MPC entered into a Cooperation Agreement with Elliott Associates and its affiliates, resolving potential proxy contest issues.
  • 2Jonathan Z. Cohen, nominated by Elliott, has been appointed to MPC's Board of Directors.
  • 3Mr. Cohen will serve on special committees focused on evaluating the Midstream business and the CEO search.
  • 4Elliott will have the right to appoint a non-voting advisor to the Midstream Committee.
  • 5MPC has agreed to propose an amendment to eliminate its classified board structure, moving to annual director elections.
  • 6Elliott has agreed to customary standstill provisions and to vote its shares in support of MPC's director slate.
  • 7The agreement aims to provide stability and align with the interests of both MPC and its shareholders.

Frequently Asked Questions

The primary purpose of the Cooperation Agreement is to resolve potential disagreements and a proxy contest. It includes an agreement on board composition, a commitment from MPC to declassify its board, and mutual commitments regarding voting and standstill provisions, aiming to bring stability and a collaborative approach to MPC's governance and strategic evaluations.

Jonathan Z. Cohen is an individual nominated by Elliott Associates. His appointment to MPC's board of directors is part of the Cooperation Agreement and is intended to represent Elliott's interests and provide oversight, particularly on the special committees evaluating the Midstream business and the CEO search.

Eliminating the classified board structure means that all directors will be elected annually by shareholders, rather than being elected for staggered multi-year terms. This change, subject to shareholder approval, is expected to increase board accountability to shareholders.

During the Standstill Period, Elliott is generally prohibited from engaging in proxy solicitations, forming groups with respect to MPC's stock (beyond certain limits), participating in tender offers or other extraordinary transactions without specific exceptions, and making certain requests or initiating litigation against MPC or its officers. These restrictions are designed to prevent hostile actions and encourage cooperation.