The general public, including shareholders, is increasingly interested in executive pay details, particularly given the recent downturn in the economy. Suncor's compensation philosophy supports our long-term growth strategy by aligning executive compensation with shareholder interests.

Suncor's compensation programs are designed to pay for performance. Employees, including senior executives, are rewarded for achieving annual operating and financial goals, progress in executing our long-term growth strategy and delivering strong total shareholder return performance versus our peers.

The compensation mix places a significant portion of the executive's compensation at risk, taking into account individual, business unit and corporate performance. Compensation components (including base salary, annual incentive and mid- and long-term incentives) also encourage retention of key executives for leadership succession purposes.

Suncor's Board of Directors regularly assesses our compensation practices to ensure they are competitive, take into account external market trends and support the company's long-term growth strategies. In 2009, economic and market conditions prompted changes to Suncor's compensation program. Discretionary salary increases have been frozen for all employees. Plans are in place to review this measure when market conditions improve.

Suncor has also reduced total compensation levels for executives and senior managers from 2008 levels. In 2009, option grants have been held at 2008 target levels. Performance Share Units (PSUs), introduced in 2004, pay out if and when Suncor's performance—measured against our peers—meets a certain threshold. PSU grants continue to reflect one-half of the overall economic value of the long-term incentive package.

For more information on executive compensation, refer to our management proxy circular in the right column.