Interest in executive pay from shareholders, other stakeholders and the general public has been on the rise in many countries and across industries over the past several years. This growing focus is reflected in evolving disclosure requirements, expectations of shareholders and other stakeholders for enhanced transparency and the demonstration of good governance practices.
Suncor is the largest integrated energy company in Canada and the fourth largest in North America by market capitalization. As a Canadian energy leader, Suncor is well positioned to build shareholder value through its integrated business model that takes advantage of:
- an excellent resource base
- complementary assets in the upstream and downstream
- an attractive suite of growth projects to increase future value
Compensation linked to goals
Suncor's executive compensation plans, policies and programs are designed to support and reinforce operational excellence and profitable growth goals to increase long-term shareholder value. We achieve these goals through:
- safe and reliable operations
- environmentally and socially responsible practices
- talented people
- sustained performance
To ensure alignment on key priorities, the company’s goal—setting process begins with the president & chief executive officer and cascades through the organization with key operational excellence goals established by each of the business units around:
- personal and process safety
- environmental excellence and sustainability
- operating reliability
By ensuring alignment on priorities and linking the compensation we provide to executives directly to the achievement of Suncor’s operational excellence and profitability goals, we ensure the focus of our executives is aligned with the interests of our shareholders.
To deliver sustained performance and increase shareholder value, it is essential that we attract, engage and retain talented, capable executives who can lead and execute business plans that position Suncor for long-term success. One of the ways we do this is by designing and implementing compensation plans, policies and programs that provide an attractive and competitive total compensation opportunity.
This is demonstrated in our compensation plans, which provide a significant portion (some 70% to 85% for senior executives) of total direct compensation to executives in at-risk, short, medium and long-term incentive-based pay that is tied to operational performance and to absolute and relative increases in shareholder return. Our incentive pay design provides executives with the opportunity to increase their compensation when above-target operational and shareholder return performance is achieved and limits their compensation when performance warrants.
This pay-for-performance approach is a fundamental part of our organization’s identity and responds to the expectation of shareholders for a strong link between executive pay and longer term value creation.
Oversight of compensation programs
Ensuring executive compensation plans, policies and programs are competitive, aligned with shareholder interests and appropriately limit compensation risks is an important responsibility of the board. This responsibility is carried out with the assistance of the human resources and compensation committee, and is accomplished through the review and approval of performance goals, monitoring and feedback on company performance, application of sound governance practices, and the design of executive compensation plans, policies and programs to include thresholds, cap maximums, performance hurdles and share ownership requirements.
For more information on executive compensation, download the 2013 Management Proxy Circular (PDF, 95 pp., 562 KB)