Corporate Governance

Board of Directors

The Board of Directors of Syncrude is responsible for providing general oversight and direction to the corporation. The Board of Directors takes seriously its duties and responsibilities and is of the view that the processes and procedures supporting those responsibilities are comprehensive, effective and consistent with generally accepted standards of Canadian corporate governance. The whole Board meets at least twice annually and fulfills all statutory and other legal requirements that have not been delegated to the Committees of the Board.

There are three Committees of the Board, which meet on a more frequent basis: Safety, Health, Environment & Corporate Sustainability Committee; Audit & Pension Committee; and Human Resources & Compensation Committee. The Board and its Committees are comprised of Directors appointed by the Shareholders of the Corporation.

Safety, Health, Environment & Corporate Sustainability Committee

The Safety, Health, Environment & Corporate Sustainability Committee assists the Board in fulfilling its responsibilities to provide oversight, guidance and direction in respect of Corporation's safety, health, environment, corporate sustainability and security policies, practices and compliance systems, including:

• Reviewing and approving the Corporation's Safety, Health, Environment & Corporate Sustainability Policy and significant revisions to that policy and the principal programs, systems processes supporting it;
• Reviewing, assessing and approving the Corporation's processes for selection, preparation and disclosure of sustainability performance criteria and sustainability targets and measures as well as the programs and initiatives to address sustainability objectives and issues;
• Monitoring and assessing the Corporation’s performance against its Safety, Health, Environment & Corporate Sustainability Policy, procedures, standards and related requirements by receiving and reviewing regular and special reports from the Corporation regarding such performance;
• Confirming that the Corporation has implemented and continues to maintain and audit appropriate policies, procedures, controls and due diligence systems with respect to safety, health, environment and security requirements and issues including, without limitation, compliance with all applicable laws and approvals, appropriate plans and responses to deal with emerging issues or trends and adherence to procedures for notifying regulators as well as the Board and Management Committee of the Syncrude Project of any reportable incidents; and
• To review reclamation and closure plans and receive updates on reclamation activities, including tailings management.

Audit & Pension Committee

The Audit & Pension Committee assists the Board in fulfilling its responsibilities to provide oversight, guidance and direction in respect of the Corporation's internal business controls and management systems for financial accounting, reporting and disclosure as well as the financial administration and management of the Retirement Plan for the Employees of Syncrude Canada Ltd. (“Retirement Plan”) and associated assets (“Fund”), arising under the Employment Pension Plans Act (“Act”), including:

• Reviewing the adequacy of the Corporation’s internal control systems and processes and accounting principles and practices;
• Reviewing the scope and findings of external and internal audits, including serious irregularities and general trends of concern;
• Reviewing and endorsing for the Board’s approval, all annual financial statements of the Corporation and Retirement Plan;
• Overseeing the investment of the Fund and monitoring its performance and compliance with the Statement of Investment Policies and Procedures (“SIPP”);
• Reviewing and approving the SIPP, Governance Policy and Funding Policy in respect of the Plan and Fund in accordance with the Act; and
• Approving the appointment of the actuary for the Plan and trustee and custodian of the Fund and reviewing and approving financial assumptions and actuarial valuations of the Fund.

Syncrude has a Code of Ethics and several other core Business Conduct policies that are designed to foster a high level of ethical conduct expected by our employees and contractors. The Corporation stewards the application of these policies and reports regularly to the Audit and Pension Committee and its officers and make quarterly and annual representations to the Board to confirm compliance.

Human Resources & Compensation Committee

The Human Resources & Compensation Committee assists the Board in fulfilling its responsibilities to provide oversight, guidance and direction in respect of the Corporation's principal compensation and benefit programs and human resource policies and succession plans, including:

• Reviewing and approving annual adjustments to the salaries and benefits of the Corporation's employees;
• Reviewing and approving principal human resource policies and programs of the Corporation and significant changes thereto and to provide advice and direction on major human resource issues;
• Approving changes in any benefit plan texts, including the Retirement Plan and any post-retirement pension payment adjustments and adhoc increases that require Board approval; and
• To review and approve significant changes to Syncrude’s management structure and senior management succession plans and to provide guidance on significant issues regarding those matters.

Management Committee

The Management Committee is the governing body of the Syncrude Project, a joint venture. Each Joint Venture Participant of The Syncrude Project appoints two representatives to the Management Committee, which meets regularly. Generally speaking, the Management Committee primarily deals with significant operating and strategic issues and opportunities impacting the value, return, business risk, and growth and development of the assets comprising The Syncrude Project. The weight assigned to each Participant's vote through the Management Committee is proportionate to its percentage interest in The Syncrude Project.

The Management Committee reviews and approves the strategic plans, business plans, annual budget and major capital appropriations developed by Syncrude, as operator of The Syncrude Project. In addition, it reviews overall performance, both operationally and financially.

The Management Committee has established the Operations & Strategy Subcommittee (“OSSC”) to support it, Syncrude and the Participants.

Operations & Strategy Subcommittee

The OSSC provides the initial and more detailed review of matters being directed to the Management Committee for decision by Syncrude. It also assists Syncrude on matters for which it is seeking guidance, input or support from the Participants. The oversight responsibilities of the OSSC includes:

• Reviewing and endorsing Syncrude’s Business Plan, Annual Budget, R&D Technology Development Plan and strategic plans;
• Reviewing and endorsing major capital project work programs and other planned capital expenditures and monitoring performance of Syncrude’s major capital project execution;
• Reviewing and endorsing growth development and lease optimization opportunities; and
• Reviewing and monitoring Syncrude’s regular stewardship reports and operating performance, including cost and plant reliability.

Officers of Syncrude Canada Ltd.

Investor Advisory

In the interest of providing readers of this report with information regarding Syncrude, including management’s assessment of Syncrude’s future technologies, reclamation, emissions and production levels and Syncrude operations, certain statements and graphs throughout this sustainability report contain forward-looking information and forward-looking statements (collectively referred to as “forward-looking statements”) under applicable securities law. Forward-looking statements are typically identified by words such as “anticipate”, “expect”, “believe”, “plan”, “intend”, “will”, “aim”, “goal”, “could”, “target” or similar words suggesting future outcomes.

Forward-looking statements in this report include, but are not limited to, statements and graphs with respect to: Syncrude’s Vision and Values, and goals; future expectations and goals regarding reclamation, tailings management, water use, Aboriginal relations, air emissions, greenhouse gas reductions; regulatory and government relations, profitability and sustainable development; plans for reclamation activities and monitoring, including the anticipated timing for completion of reclamation projects; estimated cost savings and reductions in land disturbance as a result of reducing the thickness of soil capping on reclaimed land; tailings management technologies under development and the anticipated uses and benefits thereof; processes and technologies being identified and implemented to reduce net water use from the Athabasca River and potential benefits thereof; plans for a pilot-scale plant for treating tailings water using petroleum coke; research underway to identify air emissions reduction strategies; energy demand; the target for 2017 energy intensity; expectations relating to labour supply and demand; and expectations regarding the Mildred Lake Extension project.

The factors or assumptions on which the forward-looking statements are based include, but are not limited to: the successful and timely implementation of capital projects; Syncrude’s spending plans; the ability to obtain regulatory and Syncrude joint venture owner approval; the continuation of assumed tax, royalty and other legislative and regulatory regimes; commodity prices; capital efficiencies and cost savings; future production rates; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; and the success of the technologies and initiatives under development.

You are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur.

Although Syncrude believes that the expectations represented by such forward-looking statements are reasonable and reflect the current views of Syncrude, there can be no assurance that such expectations will prove to be correct. Some of the risks and other factors that could cause results to differ materially from those expressed in the forward-looking statements contained in this sustainability report include, but are not limited to: the impacts of legislative and regulatory changes especially those which relate to royalties, taxation, tailings, water and the environment; the impact of new technologies on the cost of oil sands mining; budgeted capital expenditures may be insufficient for carrying out planned activities; the impacts of rising costs associated with tailings and water management and other sustainability initiatives; the inability of Syncrude to obtain required consents, permits or approvals, including without limitation, the inability of Syncrude to obtain approval to return water from its operations; various events which could disrupt operations including fires, equipment failures and severe weather; unsuccessful or untimely implementation of capital or maintenance projects; the impact of technology on operations and processes and how new technology may not perform as expected; the obtaining of required owner approvals from the Syncrude participants for expansions, operational issues and contractual issues; labour turnover and shortages and the productivity achieved from labour in the Fort McMurray area; uncertainty of estimates with respect to reserves and resources; volatility of crude oil prices; general economic, market and business conditions; and such other risks and uncertainties described from time to time in the reports and filings made with regulatory authorities by Syncrude.

You are cautioned that the foregoing list of important factors is not exhaustive. Furthermore, the forward-looking statements contained in this report are made as of the date of this report and unless required by law, Syncrude does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this report are expressly qualified by this cautionary statement.