Page 32 - MIC 2014 - English

EXECUTIVE COMPENSATION

structure, plan designs, performance metrics and Philosophy. We compensate senior executives:

governance for compensation. The Risk Framework was • for performance achieved, which is measured against
used by the HR&CC in 2012 and 2013. See
challenging goals;
‘‘Compensation Governance – Managing Compensation
Risk’’ on page 32 of this management proxy circular.
• competitively, with target pay at the median of the
Suncor Compensation Peers and above/below
• Employment and change of control agreements –
positioning where performance warrants; and
the termination provisions contained in the
employment agreements for our NEOs include a • with a mix of fixed and variable performance based
compensation that enables Suncor to attract, engage
24-month notice period. In addition, all stock option
and PSU grants made beginning in 2012 have double and retain talented executives.

trigger vesting, requiring both a change of control and
termination of the executive. See ‘‘Termination Compensation Governance

Agreements and Change of Control Arrangements’’ on Board of Directors. The Board oversees development of
page 64 of this management proxy circular.
the overall strategic direction and policy framework for

• Supplemental executive retirement plan (‘‘SERP’’) – Suncor. This responsibility, in part, is discharged with the
assistance of Board committees, including the HR&CC.
our SERP design helps us attract skilled executives and
retain them during periods of challenging share price Further details relating to Board committees can be found
performance. This is balanced by features that limit the in Schedule C attached to this management proxy circular.

pension, including restricted participation, a five-year
vesting period and caps on payouts. No additional
Human Resources & Compensation Committee. Central
to the role of the HR&CC is the alignment of executive
years of non-Suncor service are recognized under the
SERP both for vesting and benefit accrual purposes. See compensation with the delivery of shareholder value. The
capabilities, powers and operation of the HR&CC under its
‘‘Compensation Disclosure of Named Executive
Officers – Suncor Retirement Arrangements’’ on mandate include assisting the Board annually in the areas
of executive compensation, succession planning, incentive
page 61 of this management proxy circular.
compensation plans and compensation governance. Key
• Annual incentive plan and PSU Plan performance objectives include:
thresholds – key incentive plans include payout caps
• reviewing and approving the overall corporate goals
and threshold performance levels that must be
achieved before payouts are made.
and objectives of Suncor relevant to compensation of
the President and CEO, and ensuring that the overall
• Deferral of Annual Incentive – Suncor has an annual goals and objectives of Suncor are supported by an

incentive deferral program that allows executives to appropriate executive compensation philosophy
take a portion or all of their AIP payment in DSUs. See and programs;

‘‘Compensation Governance – Managing Compensation • evaluating the performance of the President and CEO
Risk – Key Risk Mitigating Features’’ on page 32 of this
against approved goals and criteria, and recommending
management proxy circular.
to the Board the total compensation for the President

and CEO in light of the evaluation of the President and
Compensation Objectives and Philosophy
CEO’s performance;

Objectives. Our executive compensation policies and • reviewing the President and CEO’s evaluation of the
programs:
other senior executives’ performance and
• support Suncor’s strategy and operational excellence recommendations for total compensation of these

goals, which are focused on increasing shareholder senior executives;
value through reliable operations, safety and
• reviewing the succession planning process and results
environmental excellence, sustained performance and for senior executives;
industry leading returns;
• reviewing NEO and senior executive termination
• are competitive, and designed around
agreements and NEO termination obligations in relation
pay-for-performance objectives and responsive to to market practices and trends;
market changes; and
• reviewing compensation programs using a risk
• include actual rewards under short-, mid- and
assessment framework to help ensure Suncor’s
long-term programs that are directly linked to Suncor’s compensation programs and practices do not
business results and increased shareholder value.
encourage the taking of excessive or inappropriate
risks;

30 SUNCOR ENERGY INC. MANAGEMENT PROXY CIRCULAR 2014