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Share-Based Compensation
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation 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
We expense all share-based payments to employees and non-employee directors based on the grant date fair value of the awards over the requisite service period, adjusted for estimated forfeitures.
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 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 and Restricted Stock Units
We grant restricted stock units to certain employees and to our non-employee directors. Prior to 2021, we granted restricted stock to certain employees and to our non-employee directors. In general, restricted stock and restricted stock units granted to employees vest over a requisite service period of three years. Restricted stock awards and restricted stock unit awards granted to officers prior to 2022 are subject to an additional one year holding period after the three-year vesting period. Restricted stock recipients have the right to vote such stock; however, dividends are accrued and when vested are payable at the dates specified in the awards. The non-vested shares are not transferable and are held by our transfer agent. Restricted stock units granted to non-employee directors are considered to vest immediately at the time of the grant for accounting purposes, as they are non-forfeitable, but are not issued until the director’s departure from the board of directors. Restricted stock unit recipients do not have the right to vote any shares of stock and accrue dividend equivalents which when vested are payable at the dates specified in the awards. The fair values of restricted stock and restricted stock units are equal to the market price of our common stock on the grant date.
Performance Units and Performance Share Units
We grant performance share unit awards to certain 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% to 200%) during the three calendar year period beginning in the year of grant, multiplied by MPC’s closing share price on the date the Committee certifies performance. Performance share units have a vesting service period beginning on the grant date and ending on the last day of the three-year performance period. 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 and the Standard & Poor’s 500 Index and the Alerian MLP Index over the performance period, as well as the median of MPC’s compensation reference group. These awards settle 100 percent in cash and are accounted for as liability awards and recorded at fair value with a mark-to-market adjustment made each quarter.
We also grant performance share unit awards to certain non-officer employees. These performance share unit awards operate as explained above for awards made to certain officer employees, but the awards vest in one-third increments on December 31 of the first, second and third calendar years of the three calendar year performance period.
No performance share unit awards were granted prior to 2021. Prior to 2021, we granted performance unit awards to certain officer employees under the MPC 2012 Plan. Performance units are dollar-denominated. The target value of all performance units is $1.00, with actual payout up to $2.00 per unit (up to 200 percent of target). Performance unit awards have a 36-month requisite service period. The payout value of these awards is determined by the relative ranking of the TSR of MPC common stock compared to the TSR of a select group of peer companies, as well as the Standard & Poor’s 500 Energy Index fund over an average of four measurement periods. These awards are settled 25 percent in MPC common stock and 75 percent in cash. The number of shares actually distributed is determined as 25 percent of the final payout divided by the closing price of MPC common stock on the day the Committee certifies the final TSR rankings, or the next trading day if the certification is made outside of normal trading hours. The performance units paying out in cash are accounted for as liability awards and recorded at fair value with a mark-to-market adjustment made each quarter. The performance units that settle in shares are accounted for as share awards and do not receive dividend equivalents.
Total Share-Based Compensation Expense
The following table reflects activity related to our share-based compensation arrangements, including the converted awards related to the acquisition of Andeavor:
(Millions of dollars)202220212020
Share-based compensation expense$153 $88 $100 
Tax benefit recognized on share-based compensation expense37 22 25 
Cash received by MPC upon exercise of stock option awards243 106 11 
Tax benefit received for tax deductions for stock awards exercised53 13 16 
Stock Option Awards
The following is a summary of our common stock option activity in 2022: 
Number of SharesWeighted Average Exercise Price
Weighted Average Remaining Contractual Terms (in years)
Aggregate Intrinsic Value (Millions of dollars)
Outstanding at December 31, 20217,795,036 $46.23 
Exercised(5,267,328)46.16 
Forfeited or expired(38,474)20.87 
Outstanding at December 31, 20222,489,234 46.78 
Vested and expected to vest at December 31, 20222,488,962 46.78 4.1$173 
Exercisable at December 31, 20222,000,853 51.77 3.3129 
The intrinsic value of options exercised by MPC employees during 2022, 2021 and 2020 was $247 million, $88 million and $25 million, respectively.
As of December 31, 2022, unrecognized compensation cost related to stock option awards was $1 million, which is expected to be recognized over a weighted average period of 0.2 years.
Restricted Stock and Restricted Stock Unit Awards
The following is a summary of restricted stock and restricted stock unit award activity of our common stock in 2022:
 Restricted Stock Restricted Stock Units
 Number of
Shares		Weighted
Average
Grant Date
Fair Value		Number of
Units		Weighted
Average
Grant Date
Fair Value
Unvested at December 31, 2021194,629 $60.95 2,313,919 $35.84 
Granted— — 653,378 75.81 
Vested(191,833)60.98 (1,026,720)34.24 
Forfeited(2,105)60.92 (154,427)47.64 
Unvested at December 31, 2022691 54.60 1,786,150 50.36 
The following is a summary of the values related to restricted stock and restricted stock unit awards held by MPC employees and non-employee directors:
Restricted StockRestricted 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
Intrinsic Value of Awards Vested During the Period (Millions of dollars)
Weighted Average Grant Date Fair Value of Awards Granted During the Period
2022$17 $— $99 $75.81 
202120 — 90 55.27 
202018 56.49 59 22.82 
As of December 31, 2022, unrecognized compensation cost related to restricted stock awards was less than $1 million, which is expected to be recognized over a weighted average period of 0.1 years. Unrecognized compensation cost related to restricted stock unit awards was $54 million, which is expected to be recognized over a weighted average period of 1.18 years.
Performance Unit Awards
The following table presents a summary of the 2022 activity for performance unit awards to be settled in shares:
 Number of UnitsWeighted Average Grant Date Fair Value
Unvested at December 31, 20216,255,283 $0.78 
Vested(6,221,223)0.77 
Forfeited(34,060)0.89 
Unvested at December 31, 2022— — 
The number of shares that would be issued upon target vesting, using the closing price of our common stock on December 31, 2022 would be 26,685 shares.
Performance units to be settled in MPC shares have a grant date fair value calculated using a Monte Carlo valuation model, which requires the input of subjective assumptions. The following table provides a summary of these assumptions:
2020
Risk-free interest rate0.9 %
Look-back period (in years)2.8
Expected volatility30.4 %
Grant date fair value of performance units granted$0.89 
The risk-free interest rate for the remaining performance period as of the grant date is based on the U.S. Treasury yield curve in effect at the time of the grant. The look-back period reflects the remaining performance period at the grant date. The assumption for the expected volatility of our stock price reflects the average MPC common stock historical volatility.
MPLX Awards
Compensation expense for awards of MPLX units are not material to our consolidated financial statements for 2022.