Page 35 - MIC 2014 - English

include both financial and operating targets. This share ownership requirement level through the first

balanced approach discourages focus on a single year following retirement.
measure at the expense of other key factors
• The HR&CC and the Board provide strong oversight of
(e.g., profitable growth at the expense of safety). The the management of Suncor’s compensation programs.
targets, results and payouts are stress tested and
The HR&CC has discretion in assessing performance
reviewed by the HR&CC.
under executive compensation programs to adjust

• The funds available to provide annual cash payouts metrics or the payouts based on results and events,
under the AIP are determined based on a scorecard for and have used the discretion to reduce or increase

each business unit with consistent measurement across payouts under certain programs in the past.
areas critical to Suncor’s success. A threshold for
• The Board approved the adoption of the Claw Back
payouts under the plan is established each year based Policy for Suncor in 2012. Under the Claw Back Policy,
on a minimum cash flow from operations level
in situations where: (i) the amount of incentive
requirement. Payouts under the AIP are capped at compensation received by an executive officer or
220% of target. The use of a number of key
former executive officer to whom the policy applies
performance measurement areas diversifies the risk was calculated based or contingent upon the
under any one performance area.
achievement of certain financial results that were
• Under the DSU Plan, executives may elect annually to subsequently the subject of or affected by a material
allocate either 50% or 100% of their AIP payment to restatement of all or a portion of the company’s

DSUs. This feature in the DSU Plan is used by financial statements; and (ii) the executive officer or
executives to assist in meeting share ownership former executive officer engaged in intentional

requirements and defers annual incentive misconduct or fraud that caused, or potentially caused,
compensation, further encouraging a focus on the need for the restatement, as admitted by the

long-term performance. For the 2013 performance executive officer or, in the absence of such admission,
period, eleven executives elected to take either 50% or as determined by a court of competent jurisdiction in a

all of their AIP payment in DSUs.
final judgment that cannot be appealed; and (iii) the
incentive compensation payment received would have

Policies and Guidelines
been lower had the financial results been properly
reported, then the Board may, to the extent permitted
• Suncor’s total compensation for executives is regularly
benchmarked against a peer group of companies of by applicable laws and to the extent it determines that
it is in the company’s best interest to do so, require
similar size and scope approved by the HR&CC. This
ensures that compensation is competitive with peers reimbursement of the amount by which the after-tax
incentive compensation received by such executive
and aligned with Suncor’s philosophy.
officer under the company’s annual and long-term
• Stock options and PSUs are granted annually, thereby incentive plans exceeded that which the executive
providing overlapping performance cycles that require
officer would have received had the financial
sustained high levels of performance to achieve a statements not been materially restated.
consistent payout.

• Suncor executives must achieve and maintain specific Conclusion

share ownership levels based on a multiple of their Given the oversight procedures and the key risk mitigation
annual salary. A substantial ownership level in the
features of Suncor’s compensation policies and programs
company assists in aligning executive interests with described above, Suncor believes that it would be difficult
those of shareholders. The share ownership guidelines
for anyone in management acting alone, or acting as a
for executive officers are found on page 36 of this group, to make ‘‘self-interested’’ decisions for immediate
management proxy circular and range from 2 salary
short-term gains that could have a material impact on the
for senior vice presidents to 5 salary for the organization’s financial or share price performance.
President and CEO. In addition, there is a further

requirement for the President and CEO to maintain his

SUNCOR ENERGY INC. MANAGEMENT PROXY CIRCULAR 2014 33