Page 36 - MIC 2014 - English

EXECUTIVE COMPENSATION

Executive Equity Compensation Hedging. Pursuant to provide the right balance in our overall rewards program to

Suncor’s policies, executives are not permitted to engage in achieve this through ‘‘total direct compensation’’, consisting
short selling in shares or purchase financial instruments of salary, annual incentive and annual mid- and long-term

(including, for greater certainty, puts, options, calls, prepaid equity based incentives, and ‘‘indirect compensation’’,
variable formal contracts, equity swaps, collars or units of consisting of benefits and retirement related programs.

exchange funds) that are designed to hedge or offset a These programs are complemented with excellent career
change in the market value of common shares or other development opportunities and careful succession planning.

securities held by an executive.
Defining Our Marketplace. As the largest energy
company in Canada and fifth largest in North America by
Our Approach to Executive Compensation
market capitalization, Suncor’s size and business scope are
Pay-for-Performance Philosophy. Suncor maintains a key criteria in defining the marketplace and peer
strong pay-for-performance philosophy. Our philosophy is
companies used to establish competitive compensation
demonstrated in the mix of compensation provided to levels for our senior executives. This means we must look
executives and the way we measure success. Compensation
beyond Canadian energy companies and include
plans and practices are tied to our strategic business U.S. energy companies in our peer group in order to
objectives. A significant portion of the total direct
capture a sufficient number of companies of comparable
compensation of our senior executives is provided in size and complexity.
variable performance-based pay designed to reward
The peer group used to benchmark compensation levels for
superior business performance and increasing shareholder Suncor’s senior executives in 2013, including the NEOs
returns. This approach ensures alignment with shareholder
interests and reinforces our pay-for-performance
identified on page 26 of this management proxy circular, is
approved by the HR&CC. The peer group and selection
philosophy. For our senior executives, the incentive-based
pay is designed to reward successful short-, medium- and criteria are regularly reviewed by the committee and
include companies that are energy sector specific, have
long-term performance in key business areas such as safety,
environment, operating reliability, people, cash flow from similar attributes to Suncor in terms of scope and
complexity, and represent our market for executive talent.
operations (previously defined herein as ‘‘CFOPS’’), return
on capital employed (previously defined herein as ‘‘ROCE’’) Our peer group for 2013 is comprised of 17 North

and shareholder return, all of which enable the American based energy companies and provides a robust
performance results and returns that are important to our sample to ensure that swings in compensation data in a

shareholders.
single company do not unduly influence benchmark data.
In Canada, we include pipeline companies, since there are
Finding The Right Balance. To deliver sustained and
fewer comparable large upstream and integrated energy
profitable long-term performance, it is essential that we companies and because pipeline companies form part of
attract, engage and retain talented, capable executives who
our labour market. In the U.S., where there are more large
can execute on current priorities and help position Suncor upstream and integrated companies, we limit the peer
over the long-term for sustained success. To do this, we
companies to comparable upstream and integrated energy
design our programs to provide an attractive and companies.
competitive total compensation opportunity. We believe we

34 SUNCOR ENERGY INC. MANAGEMENT PROXY CIRCULAR 2014