Marathon Petroleum CorpMPC
Marathon Petroleum Corp Stock Compensation Disclosure
Share-Based Compensation
Description of the Incentive Plans
Our employees and non-employee directors are eligible to receive share, share-based and other types of awards under the Marathon Petroleum Corporation 2021 Incentive Compensation Plan (“MPC 2021 Plan”). The MPC 2021 Plan authorizes the Compensation and Organization Development Committee of our board of directors (“Committee”) to grant nonqualified or incentive stock options, stock appreciation rights, share and share-based awards (including restricted stock and restricted stock unit awards), cash awards and performance awards to our employees and non-employee directors. The maximum number of shares of our common stock available for awards under the MPC 2021 Plan is 20.5 million shares. The MPC 2021 Plan became effective upon shareholder approval on April 28, 2021. Prior to that date, our employees and non-employee directors were eligible to receive share, share-based and other types of awards under the Amended and Restated Marathon Petroleum Corporation 2012 Incentive Compensation Plan (“MPC 2012 Plan”), effective April 26, 2012, and prior to that date, the Marathon Petroleum Corporation 2011 Second Amended and Restated Incentive Compensation Plan (“MPC 2011 Plan”). Shares issued as a result of awards granted under these plans are funded through the issuance of new MPC common shares.
Share-Based Awards under the Plans
Stock Options
Prior to 2021, we granted stock options to certain officer and non-officer employees under the MPC 2011 Plan and the MPC 2012 Plan. Stock options represent the right to purchase shares of our common stock at an exercise price equal to the closing price of our common stock on the date of grant. Stock options generally vest over a service period of three years and expire ten years after the grant date. We expensed stock options based on the grant date fair value of the awards over the requisite service period, adjusted for estimated forfeitures. We used the Black Scholes option-pricing model to estimate the fair value of stock options granted, which requires the input of subjective assumptions.
Restricted Stock Units
We grant restricted stock unit awards to certain employees and to our non-employee directors. Vested restricted stock units are distributed in shares of MPC’s common stock on the dates specified in the awards. The number of restricted stock units granted pursuant to each award is determined by dividing the target value of the award by MPC’s common stock average 30-day closing price prior to the grant date. In general, restricted stock units granted to employees vest over a requisite service period of three years. Restricted stock units granted to non-employee directors prior to May 1, 2025 were considered to vest immediately at the time of the grant for accounting purposes, as they were non-forfeitable as of the grant date and distributed upon the director’s departure from the board of directors. Restricted stock units granted to non-employee directors after April 30, 2025 are fully earned at the grant date but are subject to proration if the director departs from the board of directors prior to the one-year anniversary of the grant date. These awards are considered to vest over the one-year service period for accounting purposes. For restricted stock units granted to a non-employee director after April 30, 2025, the director may elect to defer distributions until the director’s departure from the board of directors; if no deferral election is made the restricted stock units are distributed following the one-year anniversary of the grant date.
Restricted stock unit recipients do not have the right to vote any shares of stock and accrue dividend equivalents which when vested are payable on the dates specified in the awards. Accrued dividend equivalents on vested employee awards are paid in cash. Accrued dividend equivalents on vested non-employee director awards are settled in shares of MPC common stock. We expense restricted stock units based on the grant date fair value of the awards over the requisite service period, adjusted for estimated forfeitures. The fair values of restricted stock units are equal to the market price of our common stock on the grant date.
Performance Share Units
We grant performance share unit awards to certain officer and non-officer employees. At grant, a performance share unit has a target value equal to the MPC common stock average 30-day closing price prior to the grant date. The actual payout value of a performance share unit is based on company performance (which can range from 0 percent to 200 percent) for the three-year performance period beginning January 1 of the year of grant, multiplied by, for the awards granted in 2022, MPC’s closing share price on the date the Committee certifies performance; and for the awards granted in 2023, 2024 and 2025, MPC’s average closing share price for the final thirty calendar days at the end of the performance period. For awards granted in 2022 through 2024, and for two-thirds of the value of the awards granted in 2025 Company performance for purposes of payout will be determined by the relative ranking of the total shareholder return (“TSR”) of MPC common stock over the three-year performance period compared to the TSR of a select group of peer companies, the Standard & Poor’s 500 Index, the Alerian MLP Index, as well as the median of MPC’s compensation reference group applicable for the year the award is granted. For the remaining one-third of the value of the awards granted in 2025, Company performance for purposes of payout will be determined by MPC’s relative change in free cash flow (“FCF”) per share generated during the performance period compared to the FCF of a select group of peer companies. These awards settle 100 percent in cash and are accounted for as liability awards. We expense liability-classified performance share unit awards at fair value over the requisite service period, with mark-to-market adjustments made each quarter until payout occurs. The fair value of the TSR service condition is determined using a Monte Carlo valuation
model. The fair value of the FCF performance condition is valued using management’s current estimate of the most probable payout percentage.
Significant assumptions used in our Monte Carlo valuation models include: 1) risk free interest rate, for which we utilize the treasury rate for the time period closest to the remaining performance period of the award being valued; 2) look-back period (in years), for which we utilize the remaining performance period of the award being valued; and 3) expected volatility, for which we utilize the historical volatility of our own stock and the stock of our peer group for the look-back period previously discussed.
In general, performance share units granted to officers have a vesting service period beginning on the grant date and ending on the last day of the three-year performance period, and performance share units granted to employees outside of our senior management vest in one-third increments at the end of each calendar year of the performance period. However, certain employees are eligible to vest in some awards earlier, subject to reaching certain age and employment milestones, with payout still occurring at the end of the original performance period.
Total Share-Based Compensation Expense
The following table reflects activity related to our share-based compensation arrangements:
| (Millions of dollars) | 2025 | 2024 | 2023 | ||||||||||||||
| Share-based compensation expense | $ | 160 | $ | 137 | $ | 211 | |||||||||||
| Tax benefit recognized on share-based compensation expense | 38 | 33 | 51 | ||||||||||||||
| Cash received by MPC upon exercise of stock option awards | 24 | 25 | 62 | ||||||||||||||
| Tax benefit received for tax deductions for stock awards exercised | 6 | 28 | 49 | ||||||||||||||
Stock Option Awards
The following is a summary of our common stock option activity in 2025:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Terms (in years) | Aggregate Intrinsic Value (Millions of dollars) | ||||||||||||||||||||
| Outstanding at December 31, 2024 | 506,060 | $ | 57.50 | ||||||||||||||||||||
| Exercised | (381,401) | 62.50 | |||||||||||||||||||||
Outstanding at December 31, 2025(a) | 124,659 | 42.17 | 3.5 | $ | 15 | ||||||||||||||||||
(a) All options outstanding at December 31, 2025 are fully vested and exercisable.
The intrinsic value of options exercised by MPC employees during 2025, 2024 and 2023 was $35 million, $75 million and $136 million, respectively.
As of December 31, 2025, there was no unrecognized compensation cost related to stock option awards.
Restricted Stock Unit Awards
The following is a summary of restricted stock unit award activity of our common stock in 2025:
| Restricted Stock Units | |||||||||||
| Number of Units | Weighted Average Grant Date Fair Value | ||||||||||
| Unvested at December 31, 2024 | 1,033,269 | $ | 142.08 | ||||||||
| Granted | 564,679 | 159.47 | |||||||||
| Vested | (424,718) | 120.03 | |||||||||
| Forfeited | (62,801) | 152.07 | |||||||||
| Unvested at December 31, 2025 | 1,110,429 | 158.79 | |||||||||
The following is a summary of the values related to restricted stock unit awards held by MPC employees and non-employee directors:
| Restricted Stock Units | |||||||||||
Intrinsic Value of Awards Vested During the Period (Millions of dollars) | Weighted Average Grant Date Fair Value of Awards Granted During the Period | ||||||||||
| 2025 | $ | 71 | $ | 159.47 | |||||||
| 2024 | 102 | 171.55 | |||||||||
| 2023 | 144 | 133.94 | |||||||||
As of December 31, 2025, unrecognized compensation cost related to restricted stock unit awards was $98 million, which is expected to be recognized over a weighted average period of 1.9 years.
Performance Awards
The following is a summary of performance share unit awards activity in 2025:
| Number of Performance Share Units | |||||
| Unvested at December 31, 2024 | 427,348 | ||||
| Granted | 303,688 | ||||
| Vested | (271,706) | ||||
| Forfeited | (17,499) | ||||
| Unvested at December 31, 2025 | 441,831 | ||||
We paid $122 million, $169 million and $14 million during the years ended 2025, 2024 and 2023, respectively, to settle performance awards.
As of December 31, 2025, unrecognized compensation cost related to performance awards was $19 million, which is expected to be recognized over a weighted average period of 1.3 years. As of December 31, 2025, the total liability associated with performance awards was $151 million.
MPLX Awards
Compensation expense for awards of MPLX units are not material to our consolidated financial statements for 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 23, 2023 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.