Page 61 - MIC 2014 - English

accounting fair value, as determined in accordance with IFRS, is different than the fair value of awards at the grant date and why.

As disclosed in the company’s 2013 management proxy circular, effective January 1, 2013, Suncor commenced valuing its option-based awards using
the Black Scholes methodology, which is consistent with the accounting valuation and in accordance with IFRS. For 2013 option-based awards, the fair
value of the awards at the grant date, as shown in the Summary Compensation Table above, reflects the number of options awarded multiplied by the
accounting fair value price (the ‘‘2013 Option-Based Methodology’’, and together with the 2013 Share-Based Methodology, the ‘‘2013
Methodologies’’). The fair value of the 2013 option award was $11.72. The value was calculated using the following assumptions: common share price

of $32.46, expected life of 4.5 years, volatility of 48.6%, risk free rate of 1.39% and dividend yield of 1.64%.
For 2012 and 2011 option-based awards, the fair value of awards at the grant date, as shown in the Summary Compensation Table above, reflects the
number of options awarded multiplied by the value calculated using Towers Watson’s binomial valuation methodology. The HR&CC used this
methodology in making its decisions regarding incentive grants since it was applied consistently in its competitive market analyses.

A summary of the 2012 and 2011 grant date fair values calculated using Towers Watson’s binomial methodology, the key assumptions used under this
methodology as well as the accounting fair values (as determined using the Black Scholes methodology) and the variance between the values based on
the two methodologies is provided below. The variance between the two values for each award is the result of a different methodology being applied
to value the awards.

Towers Watson’s Binomial Methodology Black Scholes
Key Assumptions
Methodology

Grant Variance to
Date Risk-Free Accounting Grant Date
Fair Value Dividend Expected Rate Fair Value Fair Value
Year and Plan
($)
Yield
Volatility
Term
Life
Vesting
(over term)
Turnover ($)
($)

2012 – SOP
9.34
1.20%
34%
7 years
4.5 years
0.3%-3.0%
5%
13.34
4.00
3 year ratable
.............................................................................................................................................................................................................................................
2011 – SOP 11.13 1.20% 34% 7 years 4.5 years 3 year ratable 0.3%-3.0% 5% 16.59 5.46

(3) Accounting Valuation Comparison. It is important to note Suncor changed its equity valuation methodology beginning in 2013. Under the 2013
Methodologies used beginning in 2013, the overall fair value of the share-based and option-based awards increased, which makes it difficult to make
comparisons between 2013 and each of 2012 and 2011 where the values were based on different methodologies. For comparison purposes, a
supplementary Summary Compensation Table for the President and CEO is provided below which shows the grant date fair values for share-based and

option-based awards for 2013, 2012 and 2011 using the 2013 Methodologies outlined in footnotes (1) and (2).

Option- Share-
Based Non-equity incentive Pension All Other Total Based
plan compensation ($)
Salary Awards Value Compensation Compensation Awards
Name and Position
Year ($)
($)
Annual Long-Term
($)
($)
($)
($)
S.W. WILLIAMS
149 560
2013 1 291 346
4 687 224
4 453 600
2 420 000 —
(162,500)
12 839 230
.............................................................................................................................................................................................
President and
2012 1 222 423 4 242 274 4 909 120 2 080 000 — 1 570 600 138 801 14 163 218
Chief Executive Officer
.............................................................................................................................................................................................
2011 811 923 2 746 584 3 318 000 1 300 000 — 3 644 100 107 848 11 928 455

The following table summarizes the history of share-based and option-based awards for the President and CEO. While the fair value of the award
increases as a result of the methodology changes, it did not result in a corresponding percentage increase in the number of units awarded.

Mr. Williams was President and Chief Operating Officer (‘‘COO’’) until April 30, 2012 and President and CEO from May 1, 2012. The 2012 and 2013
grants reflect President and CEO level.
Share-Based Awards Option-Based Awards

Share Price at Number
Number
Year Grant ($)
Granted % Change
Granted % Change

2013 32.46
144 400
18%
380 000 3%
.............................................................................................................................................................................................................................................
2012 34.58 122 680 84% 368 000 84%
.............................................................................................................................................................................................................................................
2011 41.24 66 600 — 200 000 —

(4) Consists solely of AIP. Awards earned and included under AIP for 2013 performance were paid in 2014. Similarly, awards earned and included for
2012 and 2011 were paid in the year following the year in which they were earned.
(5) The Pension Value reflects the compensatory change as disclosed in the tables under the ‘‘Defined Benefits Plans’’ and, where applicable, the ‘‘Defined
Contribution Plans’’ sections on page 63 of this management proxy circular.

(6) All Other Compensation for 2013 includes actual costs incurred by Suncor related to company contributions to the Suncor savings and benefit plans
which provides up to 7.5% of basic earnings on a matching basis on behalf of the individual. For Mr. Little, value also includes gross ups for taxes
associated with Sunjet flights. For Mr. Williams, value also includes the aggregate total of annual perquisites and other personal benefits including a
flexible perquisite allowance of $50,000 which is a taxable benefit that is paid in two installments bi-annually. With the exception of Mr. Williams, the

aggregate amount of annual perquisites and other personal benefits did not exceed the lesser of $50,000 or 10% of the total annual salary for each
Named Executive Officer for the 2013 financial year and are not included in the All Other Compensation value.
(7) Effective May 1, 2012, Mr. Williams was appointed Chief Executive Officer. Until May 1, 2012, and for the time periods indicated above, Mr. Williams
was COO. Mr. Williams was appointed President on December 1, 2011.

SUNCOR ENERGY INC. MANAGEMENT PROXY CIRCULAR 2014 59