Page 25 - MIC 2014 - English

EXECUTIVE COMPENSATION

Letter to Shareholders

To Our Fellow Shareholders:

As the chair of the Human Resources and Compensation Committee (‘‘HR&CC’’) and chairman of the Board of Directors
(the ‘‘Board’’) of Suncor Energy Inc. (‘‘Suncor’’), we would like to share with you how we manage executive compensation

at Suncor, and how our programs align with short- and long-term performance.

Suncor’s Market for Senior Executives. Suncor is a substantial company with global operations and multiple business

units. We are the largest energy company by market capitalization in Canada, and the fifth largest in North America.
Given the size and scope of Suncor, we compete with comparable energy companies across North America for top

executive talent. To this end, we look to a group of Canadian and U.S. energy companies when we benchmark
competitive pay levels for our senior executive team. Consistent with our approach to benchmarking pay for our senior

executives, we measure ourselves against a similar group of North American energy companies, on relative shareholder
returns under our performance share unit (‘‘PSU’’) plan. This approach aligns with our pay philosophy, ensuring that we

provide competitive pay and that Suncor’s performance directly impacts the ultimate pay realized by our senior executives.

Responsible Management of Executive Compensation: Changes in 2013. Suncor’s strong pay-for-performance

philosophy underpins the design of our programs and is most directly demonstrated in the proportion of at risk mid- and
long-term incentives provided to our executives in their total direct compensation. The performance of our executives is

evaluated annually against goals that are set through a rigorous process entrenched in continuous improvement.

In our 2013 management proxy circular, we communicated that we made some important changes to our compensation
programs in 2012. We added return on capital employed to our annual incentive plan as a corporate measure, in addition

to our existing measure, cash flow from operations. We refined the design of our PSU program for grants beginning in
2013, changing the determination of the PSU vesting level from percentile rank to company group rank for relative

shareholder return. This change simplified the way we measure performance, while maintaining a minimum company rank
threshold that must be achieved for any of the PSUs to vest.

From a governance perspective, we also communicated in our 2013 management proxy circular that we implemented a

claw back policy that is consistent with the types of claw back policies that have been adopted by other large Canadian
issuers. Please see pages 29 and 33 of our management proxy circular for further information regarding our claw back

policy. We continue to monitor market, legal and regulatory practices regarding claw back policies for possible future
enhancements.

A review of our compensation programs, governance practices and market trends during 2013 did not identify the need

for any significant changes. More information on Suncor’s compensation programs and governance practices can be
found beginning on page 26 of our management proxy circular.

Supporting Strong Performance. Suncor’s senior executive compensation program is designed to support and reinforce
achieving safe and reliable operations, environmentally and socially responsible practices, industry leading returns and the

attraction and retention of skilled employees.

In 2012 and 2013, Suncor demonstrated continued strong performance in key operational excellence areas and in total
shareholder return (‘‘TSR’’). The charts below display Suncor’s improvement over time in two important areas: Suncor’s

Recordable Injury Frequency, a key safety measure, as compared to Canadian Association of Petroleum Producers (‘‘CAPP’’)
industry data; and Suncor’s TSR (which includes dividend reinvestment) for 2012 and 2013 compared to the median of

our peer group used for benchmarking senior executive compensation and to the TSX and TSX Energy indices. We
specifically focus on 2012 and 2013 TSR to reflect performance during Mr. Williams’ tenure as President and CEO.

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