Corporate Governance

Compensation Philosophy

Sun's executive compensation programs are designed to effectively link the actions of our executives to business outcomes that drive value for stockholders. In designing these programs, we are guided by three principles:

• Maintaining a clear link between the achievement of business goals and compensation payout. Executive compensation programs can be an effective means of driving the behavior needed to accomplish our objectives, but only if each executive clearly understands how achievement of predetermined business goals influences his or her compensation.
• Selecting the right performance measures. Equally important, of course, is the selection of those performance measures. They need to be measurable and linked to both increased stockholder value and Sun's success over the long term.
• Sharing information and encouraging feedback. We also believe that focused and clear program design supports transparency for our stockholders. It is important for stockholders to understand the basis for our executives' compensation, as this provides stockholders insight into our goals and direction and the manner in which company resources are being used to increase stockholder value. We welcome stockholder input on our compensation practices.

Performance-Based Compensation

Sun emphasizes compensation elements that reward performance for measures that correlate closely with increases in stockholder value. Accordingly, a significant portion of our executive compensation is at-risk, including performance-based bonuses and performance-based stock compensation.

Stock Compensation

The Leadership Development and Compensation Committee of the Board of Directors (the "LDCC") believes that it is in the best interests of our stockholders for our executive officers to own Sun stock. Given this, a significant portion of executive compensation is provided in stock options granted at fair market value and in performance contingent restricted stock units. Executives will only receive benefits from these awards when Sun's stock price increases or when Sun achieves predetermined operational goals. The alignment with stockholders' interests is further supported by Sun's Stock Ownership Guidelines, requiring executive officers to achieve and maintain a certain level of Sun stock ownership by a predetermined date.

For more information regarding executive compensation, please review our most recent proxy statement.