Outcome: Successfully withdrawn following a commitment from the company to issue a report examining the current state of its executive leadership team diversity and its plan to make this team more diverse in terms of race, ethnicity, and gender.
“We focus on building a diverse workforce by recruiting, hiring and promoting the most qualified candidates” – Marathon Petroleum
We believe that diversity, inclusive of gender and race, are critical attributes of a well-functioning executive team and necessary to meaningfully drive diversity throughout an organization and to support strong community and employee relations.
Currently, Marathon Petroleum has limited racial/ethnic diversity present on the executive team.
Despite the strong business case for cultivating a diverse workforce, white males continue to dominate executive roles at Fortune 500 companies. MPC has made progress in acknowledging the value of diversity and inclusion, but the Company has failed to deploy this strategy among senior leadership. The limited workforce diversity data the company discloses makes it difficult for investors to discern whether the Company is expanding racial and ethnic diversity across multiple ranks at the company. As reported by Marathon Petroleum, almost a third of the 43,800 employees identify as non-white while the representation of non-white persons on the executive team is undeterminable.
Marathon Petroleum has made progress expanding board diversity. It is time, in our view, to extend the same focus and accountability to building diversity in its leadership ranks.
A growing body of empirical research indicates a significant positive relationship between firm value and the percentage of women and minorities people of color in senior leadership roles. Diversity of gender, but also of race and ethnicity are critical to a well-composed leadership team. A McKinsey & Company report found that companies in the top quartile for gender or racial ethnicity are more likely to financially outperform national industry medians. Specifically, companies with greater ethnic diversity were 35 percent more likely to outperform. For every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent . Without a truly diverse executive team we are concerned Marathon Petroleum may be leaving money and value on the table.
It is commendable that Company has a stated its commitment to promoting equal opportunity practices within the firm and has employed a strategy including employee resource groups, mentoring programs, diversity teams, and cultural awareness programs. However, this approach does not appear to be sufficient as diversity is still lacking at the highest ranks at the Company and amongst the most influential decision makers at the Company.
We believe that linking diversity performance metrics to senior executive compensation packages can sharpen management’s ability to manage human capital management risks, increase accountability and successfully reach inclusion and diversity goals.
RESOLVED: Shareholders request that the Board of Directors prepare a report (at a reasonable cost, in a reasonable time, and omitting confidential information) providing its assessment of the current state of its executive leadership team diversity and its plan to make the company’s executive leadership team more diverse in terms of race, ethnicity, and gender.