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Exhibit
10.2
July 15, 2008
Ms. Lynn Laverty
Elsenhans
[Address]
Dear Lynn:
Contained herein are the specifics of an
offer to you to join Sunoco, Inc. as its Chief Executive Officer
and President and to be elected to its Board of Directors effective
August 8, 2008. You are required to complete a physical
examination and substance screening as soon as possible prior to
your start date or within a reasonable time thereafter. Your
examination and screening will be coordinated by Sunoco’s
Medical Director once we have received your written acceptance of
this offer.
Compensation
For 2008, your annual rate of pay, your
salary, will be $1,240,000 and your target bonus under the annual
Executive Incentive Plan (“EIP”) will be 120% of your
salary or $1,488,000, for total annualized targeted cash
compensation of $2,728,000. The actual annual bonus earned can
range from 0% to 200% of target depending on how well the company
performs. Since 2008 will be a partial year, any 2008 salary will
be that earned based on the portion of the year you actually serve,
and your EIP amount also will be pro rated based on the portion of
the year you actually serve. The performance metrics for the 2008
EIP include After Tax Operating Income and Return on Capital
Employed as compared to the proxy peer companies and Health,
Environmental and Safety performance. These performance metrics
were established by the Compensation Committee for 2008 and are
subject to change in future years at the discretion of the
Committee.
July 15, 2008
Page 2
You will receive a one-time grant of
restricted share units equal in value to $5,000,000 at the date of
grant, which will be August 29, 2008. The number of share
units awarded will be determined on the date of grant, by dividing
the targeted value by the closing common stock share price on the
grant date, subject to rounding down to the nearest whole number of
share units. The share units will vest in equal one-third
installments, subject to rounding to whole share units, on the
third, fourth and fifth anniversaries, respectively, of the grant
date. The distributions will be made to you in the form of net
common shares after taxes within 30 days after the vesting date.
Dividend equivalents accrued up through the vesting date on each
installment will be paid in cash net of required taxes. A voluntary
termination by you or termination by the company for any reason,
other than pursuant to a change in control, will result in the
forfeiture of any remaining unvested share units. All long-term
incentive awards granted to our executive officers are made under
the company’s Long-Term Performance Enhancement Plan II
(“LTPEP II”), and you will receive a separate award
document related to this sign-on equity award at the grant
date.
At the December 2008 Compensation
Committee meeting, you will receive equity grants equal in value to
$6,270,000. The grants will be equally split in value between stock
options, calculated under the valuation method used by the
company’s compensation consultant, and performance Common
Stock Units (“CSUs”) using the closing common stock
share price at the time of grant to value the number of CSUs. The
performance CSUs have historically measured the company’s
performance over the three calendar years following the grant date.
The CSU performance metrics are reviewed during the fall
Compensation Committee meetings and have generally been approved at
the December meeting. For the most recent CSUs granted in December
2007, the performance measures are Total Shareholder Return and
Earnings per Share Growth measured against the proxy peer
companies. Please note that the performance metrics and mix are
reviewed annually by the Compen
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