(Bloomberg) -- Two activist investors in Marathon Petroleum Corp. say there is now broad-based shareholder support for immediate changes at the company including the resignation of Chairman and Chief Executive Officer Gary Heminger.
Paul Foster and Jeff Stevens, who collectively own 1.7% of the oil refiner, said they have discussed their concerns with more than 100 investors representing about half of the institutional shareholder base.
“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,” the two said in a letter to shareholders that was obtained by Bloomberg.
They said the Marathon Petroleum shareholders they have spoken to agree that the board must immediately modernize its corporate governance, be more transparent in its financial disclosures and reporting, and adopt various elements of the proposal put forth by fellow activist Elliott Management Corp.
‘Overwhelming Support’
“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,” the pair said. “If the board is having its own candid and direct discussions with stockholders, we have no doubt that they are hearing similar feedback.”
The company, based in Findlay, Ohio, accused the pair of making misleading comments as part of their campaign to further their own objectives. It said it continues its strategic review and has yet to reach a conclusion on how to proceed.
“We dialogue with our shareholders and have talked with many investors in recent weeks, including Foster and Stevens, to hear their feedback,” it said. “Foster and Stevens’ claims about the level of shareholder support for the company and management are inconsistent with our conversations with shareholders.”
Marathon Petroleum said it has delivered substantial shareholder under Heminger’s leadership and that he has the full support of the board.
Its shares were little changed at $65.93 at 2:15 p.m. in New York.
Foster and Stevens were board members at Andeavor, the refiner bought by Marathon Petroleum last year for about $22 billion. They went public last month with their call for Heminger to resign. Marathon’s shares have fallen 8.6% in the past year, compared with a 10% gain for Standard and Poor’s 500 Oil & Gas Refining & Marketing Index.
Replacement CEO
Stevens declined in an interview at the time to name his top pick for Heminger’s replacement, though he said Vice Chairman Greg Goff would be a good choice.
Also last month, Elliott, which owns a 2.5% stake in Marathon Petroleum, renewed its push for it to split into three separate companies in a move the investment firm claims will unlock more than $22 billion in . Another activist, D.E. Shaw & Co., also has been pushing for the company to find ways to improve .
The activists met with members of the Marathon board last week to discuss the company’s strategy and the future of its CEO, people familiar with the matter have said. Marathon Petroleum aims to reach a decision on how to proceed before reporting third-quarter results on Oct. 31, the people said.
“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,” Foster and Stevens said.
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