Edgar Filing: SUNOCO INC

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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Sunoco, Inc.
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Notes:

Sunoco, Inc.
[LOGO OF SUNOCO] Ten Penn Center
1801 Market Street
Philadelphia, PA 19103-
1699

NOTICE OF ANNUAL MEETING

Dear Sunoco Shareholder:

On Thursday, May 3, 2001, Sunoco, Inc. will hold its 2001 Annual Meeting of
Shareholders at the Moore College of Art and Design, Stewart Auditorium, 20th
Street and the Parkway, Philadelphia, PA. The meeting will begin at 9:30 a.m.

Only shareholders who owned stock at the close of business on February 9, 2001
can vote at this meeting or any adjournments that may take place. At the
meeting we will consider:

1. Election of a Board of Directors;

2. Approval of the Sunoco, Inc. Executive Incentive Plan;

3. Approval of the Long-Term Performance Enhancement Plan II ("LTPEP II");

4. Approval of the appointment of our independent auditors for fiscal year
2001;

5. A shareholder proposal regarding the nomination of directors, if such
proposal is properly presented at the meeting; and

6. Any other business properly presented at the meeting.

At the meeting we will also report on Sunoco's 2000 business results and other
matters of interest to shareholders.

Your Board of Directors recommends that you vote in favor of proposals 1
through 4 and against proposal 5 above as further outlined in this proxy
statement. This proxy statement also outlines the corporate governance
practices at Sunoco, discusses our compensation practices and philosophy, and
describes the Audit Committee's recommendation to the Board regarding our 2000
financial statements. We encourage you to read these materials carefully.

Whether or not you expect to attend the meeting, we urge you to vote promptly.

For those shareholders who consented to access the Proxy Statement and Annual
Report through our Internet site (www.SunocoInc.com), we thank you for
supporting our cost reducing efforts. For shareholders who may be interested
in receiving information electronically in the future, you may indicate your
preference when you vote.

The approximate date of mailing for this proxy statement and card as well as a
copy of Sunoco's 2000 Annual Report is March 16, 2001. For further information
about Sunoco, please visit our web site at www.SunocoInc.com.

By Order of the Board of Directors,

/s/ ANN C. MULE
Ann C. Mule
Assistant General Counsel and Corporate Secretary
March 16, 2001

TABLE OF CONTENTS
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Questions and Answers...................................................... 3
Proposals on Which You May Vote............................................ 9
Nominees for the Board of Directors........................................ 17
Statement on Corporate Governance.......................................... 21
Board Committee Membership Roster.......................................... 26
Directors' Compensation.................................................... 27
Directors' and Officers' Ownership of Sunoco Stock......................... 28
Stock Performance Graph.................................................... 30
Audit Committee Report..................................................... 31
Executive Compensation: Report of the Compensation Committee............... 32
Executive Compensation, Pension Plans & Other Arrangements................. 36
Summary Compensation Table............................................... 36
Option Grant Table....................................................... 38
Other Long-Term Incentive Awards......................................... 39
Aggregated Option/SAR Exercises and Year-End Values...................... 40
Severance Plans and Other Information.................................... 41
Pension Plans............................................................ 42
Exhibits
Exhibit A: Sunoco, Inc. Executive Incentive Plan......................... A-1
Exhibit B: Sunoco, Inc. Long-Term Performance Enhancement Plan II........ B-1

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QUESTIONS AND ANSWERS
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1. Q: Who is entitled to vote?
A: Shareholders as of the close of business on the record date,
February 9, 2001, are entitled to vote at the Annual Meeting.

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2. Q: How do I cast my vote?
A: There are four different ways you may cast your vote this year.
You may vote by:

(1) telephone, using the toll-free number listed on each proxy
card (if you are a shareholder of record) or vote instruction
card (if your shares are held by a bank or broker);
(2) the Internet, at the address provided on each proxy or vote
instruction card;
(3) marking, signing, dating, and mailing each proxy card or vote
instruction card and returning it in the envelope provided. If
you return your signed proxy or vote instruction card but do
not mark the boxes showing how you wish to vote, your shares
will be voted FOR the first four proposals and AGAINST the
fifth proposal. For voting procedures for shares held in the
Sunoco, Inc. Capital Accumulation Plan or "SunCAP," Sunoco's
401(k) Plan for employees, see Question 9; or
(4) attending the meeting (if your shares are registered directly
in your name on Sunoco's books and not held through a broker,
bank or other nominee).

If you are the registered shareholder (that is, if you hold your
stock in your name), you can vote by telephone or electronically
through the Internet by following the instructions provided on the
proxy card. You will need to use the individual control number
that is printed on your proxy card in order to authenticate your
ownership.

If your shares are held in "street name" (that is, they are held
in the name of a broker, bank or other nominee), or your shares
are held in custody for your account by Bankers Trust Company, a
subsidiary of Deutsche Bank, as trustee for SunCAP, you will
receive instructions with your materials that you must follow in
order to have your shares voted. Please check your proxy or voting
instruction card to determine whether you will be able to vote by
telephone or electronically.

The deadline for voting by telephone or electronically is 11:59
a.m. Eastern U.S. Time, May 2, 2001.

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3. Q: How do I revoke or change my vote?
A: To revoke or change your vote:

(1) notify Sunoco's Corporate Secretary in writing at any time
before the meeting;
(2) submit a later dated proxy by mail, telephone, or via the
Internet; or
(3) vote in person at the meeting (if your shares are registered
directly in your name on Sunoco's books and not held through a
broker, bank, or other nominee).

The latest dated, properly completed proxy that you submit whether
by mail, telephone or the Internet will count as your vote. If a
vote has been recorded for your shares and you submit a proxy card
that is not properly signed or dated, the previously recorded vote
will stand.

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4. Q: Who will count the vote?
A: Representatives of Independent Voting Services, an independent
tabulator, will count the vote and act as the judge of election.

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5. Q: Is my vote confidential?
A: Proxy cards, vote instruction cards, telephone and Internet voting
reports, ballots and voting tabulations that identify individual
shareholders are returned directly to Independent Voting Services
and are handled in a manner that protects your voting privacy. As
a registered shareholder or Non-Objecting Beneficial Owner, your
vote will not be disclosed to Sunoco except: (1) as needed to
permit Independent Voting Services to tabulate and certify the
vote; (2) as required by law; or (3) in limited circumstances such
as a proxy contest in opposition to the Board. Additionally, all
comments written on the proxy or vote instruction card or
elsewhere will be forwarded to Sunoco, but your identity will be
kept confidential unless you specifically ask that your name be
disclosed.

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6. Q: What shares are included on the proxy or vote instruction card(s)?
A: The shares on your proxy or vote instruction card(s) represent
those shares registered directly in your name, those held on
account in Sunoco's Shareholder Access & Reinvestment Plan or
"SHARP" and SunCAP shares. If you do not cast your vote, your
shares (except for those in SunCAP) will not be voted. See
Question 9 for an explanation of the voting procedure for shares
in SunCAP.

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7. Q: What does it mean if I get more than one proxy or vote instruction
card?
A: If your shares are registered differently and are in more than one
account, you will receive more than one card. Please complete and
return all of the proxy or vote instruction cards you receive (or
vote by telephone or the Internet) to ensure that all of your
shares are voted.

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8. Q: How many shares can vote?
A: As of the February 9, 2001 record date, 84,779,786 shares of
Sunoco common stock were issued and outstanding. Every shareholder
of common stock is entitled to one vote for each share held as of
the record date.

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9. Q: How is Sunoco common stock in SunCAP voted?
A: Voting instructions from SunCAP participants are maintained in the
strictest confidence and will not be disclosed to Sunoco. If you
hold shares of Sunoco common stock through SunCAP, you may vote by
instructing the SunCAP trustee, Bankers Trust Company, a
subsidiary of Deutsche Bank, how to vote your shares pursuant to
the instruction card that is mailed to you with this Proxy
Statement. If you do not provide voting instructions, or provide
unclear voting instructions, then Bankers Trust will vote the
shares in your SunCAP account in proportion to the way the other
SunCAP participants voted their shares.

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10. Q: What is a "quorum"?
A: A "quorum" is a majority of the outstanding shares. They may be
present at the meeting or represented by proxy. There must be a
quorum for the meeting to be held, and a proposal must receive
more than 50% of the shares voting to be adopted. If you submit a
timely, properly executed proxy or vote instruction card, then you
will be considered part of the quorum, even if you abstain from
voting.

Abstentions: Abstentions are not counted in the tally of votes FOR
or AGAINST a proposal. A WITHHELD vote is the same as an
abstention. Abstentions and withheld votes are counted as shares
present and entitled to be voted.

Broker Non-Votes: Broker non-votes occur when shares held by a
broker are not voted with respect to a proposal because (1) the
broker has not received voting instructions from the shareholder,
and (2) the broker lacks the authority to vote the shares at
his/her discretion. Thus, broker non-votes will not affect the
outcome of any of the matters being voted upon at the meeting, and
they are not counted as shares present and entitled to be voted
with respect to the matter on which the broker has not voted
expressly.

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11. Q: Who can attend the Annual Meeting and how do I get a ticket?
A: All shareholders who owned shares on February 9, 2001 may attend.
Just check the box on your proxy or vote instruction card, or as
indicated on the Internet site, or press the appropriate key if
voting by telephone. If your shares are held through a broker and
you'd like to attend, please write to Ann C. Mule, Assistant
General Counsel and Corporate Secretary, Sunoco, Inc., 1801 Market
Street, Philadelphia, PA 19103-1699. Include a copy of your
brokerage account statement or an omnibus proxy (which you can get
from your broker), and we will send you a ticket.

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12. Q: How will voting on any other business be conducted?
A: Although we do not know of any business to be considered at the
2001 Annual Meeting other than the proposals described in this
proxy statement, if any other business is presented at the Annual
Meeting, your signed proxy or vote instruction card, or your
authenticated Internet or telephone proxy gives authority to John
G. Drosdick, Sunoco's Chairman, Chief Executive Officer, and
President and Ann C. Mule, Sunoco's Assistant General Counsel and
Corporate Secretary, to vote on such matters at their discretion.

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13. Q: Do I have to continue receiving this information in the mail?
A: No, you can minimize the amount of information you receive through
the mail:

(1) If you are a registered shareholder:
(a) Contact our transfer agent at 800-888-8494 and arrange to
receive only one copy of Sunoco's annual report and other
mailings during the year, regardless of the number of
accounts you have; or
(b) Agree to access the annual report and proxy statement on
the Internet by completing the question regarding consent
included on your proxy or vote instruction card, on the
Internet site, or on the telephone. You will be notified
when you receive your proxy card that the materials are
available on our web site (www.SunocoInc.com).
(2) If you hold shares through a stock broker: Contact your broker
and arrange to receive one set of materials, or indicate your
preference to access the documents on the Internet.

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14. Q: Does any shareholder own 5% or more of Sunoco's common stock?
A: As of December 31, 2000, these shareholders have reported the
following ownership of Sunoco's common stock:

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Percent of
Outstanding
Shareholder Name and Address Shares Shares
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Capital Research and Management Company
333 South Hope Street 4,992,000 5.9
Los Angeles, CA 90071
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Morgan Stanley Dean Witter & Co.
1585 Broadway 4,452,471 5.2
New York, NY 10036
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AXA, and related affiliates, as a group
25, avenue Matignon 4,320,375 5.1
75008 Paris, France
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15. Q: When are the shareholder proposals for the 2002 Annual Meeting
due?
A: All shareholder proposals to be considered for inclusion in next
year's proxy statement must be submitted in writing to Ann C.
Mule, Assistant General Counsel and Corporate Secretary, Sunoco,
Inc., Ten Penn Center, 1801 Market Street, Philadelphia, PA 19103-
1699 by November 15, 2001.

Additionally, Sunoco's advance notice bylaw provisions require
that any shareholder proposal to be presented from the floor of
the 2002 Annual Meeting must be submitted in writing to Ann C.
Mule, at the above address, by December 31, 2001, and must be
accompanied by:

. the name, residence and business address of the proposing
shareholder;

. a representation that the shareholder is a record holder of
Sunoco stock or holds Sunoco stock through a broker and the
number of shares held; and

. a representation that the shareholder intends to appear in
person or by proxy at the 2002 Annual Meeting to present the
proposal. A proposal may be presented from the floor only after
Sunoco's Board of Directors has determined that it is a proper
matter for consideration under our bylaws.

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16. Q: Can a shareholder nominate someone to be a director of Sunoco?
A: As a shareholder, you may recommend any person as a nominee for
director of Sunoco by writing to the Governance Committee of the
Board of Directors, c/o Sunoco, Inc., Ten Penn Center, 1801 Market
Street, Philadelphia, PA 19103-1699. Recommendations must be
received by December 31, 2001 for the 2002 Annual Meeting, and
must be accompanied by:

. the name, residence and business address of the nominating
shareholder;

. a representation that the shareholder is a record holder of
Sunoco stock or holds Sunoco stock through a broker and the
number of shares held;

. a representation that the shareholder intends to appear in
person or by proxy at the 2002 Annual Meeting to nominate the
individual(s) if the nominations are to be made at a
shareholder meeting;

. information regarding each nominee which would be required to
be included in a proxy statement;

. a description of any arrangements or understandings between and
among the shareholder and each and every nominee; and

. the written consent of each nominee to serve as a director, if
elected.

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17. Q: How much did this proxy solicitation cost?
A: Morrow & Co., Inc. was hired to assist in the distribution of
proxy materials and the solicitation of votes for a fee of
$10,000, plus estimated out-of-pocket expenses of $20,000. We also
reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation materials to shareholders.

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PROPOSALS ON WHICH YOU MAY VOTE
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1.ELECTION OF DIRECTORS

There are 13 nominees for election this year. Detailed information on each
is provided on pages 17 to 20. All directors are elected annually, and
serve a one-year term until the next Annual Meeting. If any director is
unable to stand for re-election, the Board may reduce its size or designate
a substitute. If a substitute is designated, proxy votes in favor of the
original director candidate will be counted for the substituted candidate.

Your Board unanimously recommends a vote FOR each of these directors.

2. APPROVAL OF THE SUNOCO, INC. EXECUTIVE INCENTIVE PLAN

For a number of years, Sunoco has used its Executive Incentive Plan in
order to facilitate the realization of identified business goals. The
Executive Incentive Plan provides competitive incentive opportunities to
employees who can significantly influence Sunoco's performance and improves
Sunoco's ability to attract and motivate its management team. Sunoco
intends to continue to use the Executive Incentive Plan to help meet its
business goals. This year, Sunoco's Board of Directors proposes that you
approve our existing Executive Incentive Plan so that if established goals
and targets are met, certain payments that would be made under this plan to
Sunoco's most highly compensated executive officers may be deducted by
Sunoco for federal income tax purposes.

Generally, Section 162(m) of the Internal Revenue Code does not permit
publicly held companies like Sunoco to deduct compensation paid to certain
executive officers to the extent it exceeds $1 million per officer in any
year. However, a performance-based compensation plan that is approved by
shareholders at least once every five years will not be subject to this
deduction limit. So long as Sunoco complies with these and other
requirements set forth in Code Section 162(m), all amounts paid to
executive officers under the plan will qualify for a federal tax deduction
by Sunoco.

Summary Plan Description: The following is only a brief summary of the
material terms of the plan, and does not describe all the terms of the
plan. We urge you to read the complete text of the plan included as
Exhibit A to this proxy statement.

. The purpose of the plan is to promote the achievement of Sunoco's
short-term, targeted business objectives by providing competitive
incentive reward opportunities to those executive employees who can
significantly impact Sunoco's financial and operating performance. The
plan is designed to enhance Sunoco's ability to attract and motivate
individuals as members of a talented management team while aligning
their interests with those of the shareholders.

. The Compensation Committee of Sunoco's Board of Directors administers
the plan. This Committee is composed entirely of outside directors of
Sunoco, as defined under Code Section 162(m). None of the members
receive any additional compensation from Sunoco for administering this
plan. The plan will continue in effect until terminated by the
Committee.

. Awards made under the plan may be based on the overall performance of
the Company, and also may recognize business unit, team and/or
individual performance. No payment will be made under the plan to the
Chief Executive Officer or any of the next four most highly
compensated executive officers, unless the Committee certifies that at
least the minimum objective performance goals have been met. Such
performance goals may include specific or relative targeted amounts
of, or changes in: revenues; expenses; net income; operating income;
equity; return on equity, assets or capital employed; working capital;
shareholder return; operating capacity utilized; production or sales
volumes or throughput; health, environment and safety goals; or other
objective criteria.

. The Committee has the power to reduce the amount payable to, or to
determine that no amount will be paid to, a participant. The Committee
also may require that awards be paid in the form of Sunoco common
stock if a participant has failed to meet the minimum stock ownership
guidelines (as described on page 32). A total of 100,000 shares of
Sunoco common stock has been reserved for this purpose.

. The amount of any award for any participant is defined by reference to
a target percentage of actual base salary determined, from time to
time, by the Committee. In the event that Sunoco achieves less than
the target goals, but attains at least certain minimum threshold goals
established by the Committee, participants in the plan will receive a
portion of the target percentage. If Sunoco attains results that
exceed the target goals established by the Committee, participants
will receive a proportionately larger payment but in no event greater
than two times the target percentage. In the event that Sunoco does
not achieve at least the minimum threshold goals, no award payment
will be made.

. The amount of future payments under the Executive Incentive Plan
cannot be determined at this time, since they will be based on
Sunoco's future financial and operating performance, and applicable
future performance goals and target percentages to be established by
the Committee.

Your Board unanimously recommends a vote FOR the approval of the Sunoco,
Inc. Executive Incentive Plan.

3. APPROVAL OF THE LONG-TERM PERFORMANCE ENHANCEMENT PLAN II (LTPEP II)

Sunoco's continued growth and profitability depends, in large part, upon
its ability to maintain a competitive position in attracting and retaining
key personnel. Long-term compensation is an integral part of the total
compensation package. Therefore, Sunoco's Board of Directors proposes that
you approve the LTPEP II (for which four million shares of Sunoco common
stock will be reserved for issuance).

Summary Plan Description: The purpose of the LTPEP II is to attract,
retain and reward individuals who can and do contribute to Sunoco's
success. Awards may be made to management and key employees as well as
directors. The Compensation Committee, comprised entirely of outside
directors of the Company as defined under Code Section 162(m),
administers this plan. None of the members receive additional
compensation from Sunoco for administering this plan. The following
description of the LTPEP II is only a summary, and we urge you to read
the complete text of the plan, which is included as Exhibit B to this
proxy statement. The LTPEP II has the following types of awards and other
terms:

. Stock Options and Incentive Stock Options. Each option will be
exercisable during a period fixed by the Committee, beginning no
earlier than one year, and ending no later than ten years, after the
date of grant. Options may be transferred only by will, pursuant to
the laws of descent and distribution, in response to a qualified
domestic relations order, or during the participant's lifetime to an
immediate family member (with certain restrictions). The purchase
price payable upon exercise of an option will not be less than the
fair market value of a share of Sunoco common stock on the date the
option is granted. The purchase price may be paid in cash or in shares
of Sunoco common stock. Upon termination of the participant's
employment, unvested options will be canceled immediately, and vested
options will be canceled ninety days after the date of the
participant's termination (other than for just cause as defined in the
plan). However, to the extent exercisable, options may be exercised
for a period of up to sixty months following a termination of
employment by reason of death, permanent disability or retirement, as
determined by the Committee. The maximum number of options that may be
granted to any single participant in any one calendar year will not
exceed 400,000.

. Limited Rights. The Committee may grant related limited rights to any
participant who has been awarded options under the LTPEP II. Limited
rights are immediately exercisable in full upon grant for a period up
to seven months following a change in control of Sunoco. Upon the
exercise of limited rights, payment will be made in cash in an amount
equal to the difference between the exercise price of the related
option and the greater of (a) the highest price per share of Sunoco
common stock paid in connection with the change in control or (b) the
highest price per share of Sunoco common stock during the sixty-day
period prior to the change in control. Exercise of limited rights
reduces options held on a one-for-one basis. Generally, limited rights
will terminate upon the participant's death or termination of
employment unless such termination of employment is due to retirement
or

disability, in which case the participant may exercise limited rights
within six months of such termination to the extent they are
exercisable. A participant whose employment is terminated for other
than just cause, as defined in the plan, following a change in control
of Sunoco, may exercise limited rights during the seven-month period
following the change in control during the related option period.

. Common Stock Units. A common stock unit, or "CSU," is a right to
receive a share of Sunoco common stock and related dividend
equivalents which are paid in cash. At the time of the grant, the
Committee will determine whether this right will be conditioned only
upon continued employment with Sunoco for a certain period of time, or
whether it will be further conditioned upon the attainment, during the
period, of certain predetermined objective performance goals (based
upon financial or operating measures). CSUs usually will terminate
upon the participant's termination of employment. However, if
termination is due to death, permanent disability or retirement,
payment of all performance-based CSUs and applicable dividend
equivalents will be made at the end of the performance period, as
though the participant had continued in the employment of the Company
through such period. In the event of a change in control of the
Company, all outstanding CSUs and related dividend equivalents will be
paid out at the target level.

. For CSUs conditioned only upon continued employment with Sunoco,
the performance period will not be less than three years.

. For performance-based CSUs, the number of shares actually earned
will vary depending upon the levels of certain performance goals
actually achieved.

. Minimum Stock Ownership Guidelines. For participants that have failed
to meet the minimum stock ownership guidelines (as described on pages
27 and 32), the Committee has the power to impose restrictions on the
sale or other disposition of any Sunoco common stock received by those
participants as a result of any exercise of stock options or payment
of CSUs.

. Federal Tax Consequences. A participant will not realize any income
and Sunoco will not receive any deduction for federal income tax
purposes, upon the grant of options, limited rights or CSUs. With
regard to stock options or limited rights, ordinary income will be
realized by the participant at the time shares are received or cash is
paid upon exercise. For stock options, the amount of income will be
equal to the difference between the stock option price and the fair
market value of shares of Sunoco common stock on the date of the
exercise. For limited rights, the amount of income will be equal to
the cash received. Ordinary income will be realized by a participant
in the year in which CSUs are paid, in an amount equal to the fair
market value of the shares of Sunoco common stock issued at the end of
the performance period and the dividend equivalents paid. Income
received by a participant pursuant to a limited right or CSU which is
received upon a change in control of Sunoco may be subject to a
twenty-percent excise tax as an "excess parachute payment." Sunoco
will receive a deduction on its consolidated federal income tax return
for the taxable year in which the participant realizes ordinary income
from the exercise of stock options, limited rights, or CSUs. A
participant will

not recognize taxable income from the exercise of an incentive stock
option, so long as the participant holds the stock received until the
later of two years from the date of grant or one year from the date of
exercise. The exercise of an incentive stock option will result in a
tax preference item for the alternative minimum tax of an amount equal
to the difference between the stock option price and the fair market
value of the shares of Sunoco common stock on the date of exercise.

. Adjustments. If there is a change in the number of outstanding shares
of Sunoco common stock as a result of any stock dividend or
distribution, recapitalization, merger, consolidation, split-up,
combination, exchange of shares or the like, the Committee may
appropriately adjust the number of shares of Sunoco common stock to be
issued under the LTPEP II, or under the awards previously granted
under the LTPEP II.

. Amendments. The Committee may terminate or amend the LTPEP II at any
time, without shareholder approval. However, without shareholder
approval, the Committee may not amend the LTPEP II in certain
respects, including amendments which would (a) increase the maximum
award levels established in LTPEP II, including the maximum number of
shares of Sunoco common stock which may be issued under the LTPEP II
(except for adjustments as described above); (b) extend the term
during which an option may be exercised beyond ten years from the date
of grant; or (c) alter the terms of any previously granted option in
order to reduce the option price, or cancel any outstanding option
award and replace it with a new option, having a lower option price,
where the economic effect would be the same as reducing the option
price of the cancelled option.

Your Board of Directors unanimously recommends a vote FOR the approval of
the LTPEP II.

4. APPROVAL OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
FOR THE FISCAL YEAR 2001

The Audit Committee has recommended, and the Board has approved, the
appointment of Ernst & Young LLP as our independent auditors for the fiscal
year 2001 subject to your approval. Ernst & Young has served as our
independent auditors since 1996. They have unrestricted access to the Audit
Committee to discuss audit findings and other financial matters.
Representatives of Ernst & Young will attend the Annual Meeting to answer
appropriate questions. They also may make a statement. The work performed
by Ernst & Young during 2000 and the related fees are set forth below.

a. Audit Fees

Ernst & Young provided audit services to Sunoco consisting of the annual
audit of Sunoco's 2000 consolidated financial statements and reviews of the
financial statements in the 2000 Forms 10-Q. The fees paid to Ernst & Young
for these services were $503,560.

b. Financial Information System Design and Implementation Fees

Ernst & Young did not perform any financial information system design or
implementation work for Sunoco during 2000.

c. All Other Fees

Ernst & Young provided various audit-related services to the Company,
including consultation on accounting and reporting matters, audits of
separate financial statements of subsidiaries and affiliates and employee
benefit plans and procedures performed in connection with certain filings
with the SEC. Ernst & Young also provided non-audit-related services,
primarily consultation on tax-related matters. Fees for these services
performed during 2000 are as follows:

Audit-Related Services $516,623
Non-Audit Related Services 281,899
--------
$798,522
========

Your Board unanimously recommends a vote FOR the approval of Ernst &
Young's appointment as independent auditors for the fiscal year 2001.

5. SHAREHOLDER PROPOSAL

Mr. Bartlett C. Naylor, 1255 North Buchanan Street, Arlington, VA 22205,
owner of 200 shares of Sunoco common stock, has given notice to Sunoco that
he intends to present the following resolution at the Annual Meeting:

"Resolved: The shareholders urge our board of directors to take the
necessary steps to nominate at least two candidates for each open board
position, and that the names, biographical sketches, SEC-required
declarations and photographs of such candidates shall appear in the
company's proxy materials (or other required disclosures) to the same
extent that such information is required by law and is our company's
current practice with the single candidates it now proposes for each
position."

Supporting statement of Mr. Naylor:

"Although our company's board appreciates the importance of qualified
people overseeing management, we believe that the process for electing
directors can be improved.

Our company currently nominates for election only one candidate for each
board seat, thus leaving shareholders no practical choice in most
director elections. Shareholders who oppose a candidate have no easy way
to do so unless they are willing to undertake the considerable expense of
running an independent candidate for the board. The only other way to
register dissent about a given candidate is to withhold support for that
nominee, but that process rarely affects the outcome of director

elections. The current system thus provides no readily effective way for
shareholders to oppose a candidate that has failed to attend board
meetings; or serves on so many boards as to be unable to supervise our
company management diligently; or who serves as a consultant to the
company that could compromise independence; or poses other problems. As a
result, while directors legally serve as the shareholder agent in
overseeing management, the election of directors at the annual meeting is
largely perfunctory. Even directors of near bankrupt companies enjoy re-
election with 90%+ pluralities. The "real" selection comes through the
nominating committee, a process too often influenced, if not controlled,
by the very management the board is expected to scrutinize critically.

Our company should offer a rational choice when shareholders elect
directors. Such a process could abate the problem of a chair "choosing"
his own board, that is, selecting those directors he expects will
reflexively support his initiatives, and shedding those who may sometimes
dissent. Such a process could create healthy and more rigorous
shareholder evaluation about which specific nominees are best qualified.

Would such a process lead to board discontinuity? Perhaps, but only with
shareholder approval. Presumably an incumbent would be defeated only
because shareholders considered the alternative a superior choice. Would
such a procedure discourage some candidates? Surely our board should not
be made of those intolerant of competition. Would such a procedure be
"awkward" for management when it recruits candidates? Hopefully so.
(Management could print a nominee's name advanced by an independent
shareholder to limit such embarrassment.) The point is to remove the
"final" decision on who serves as a board director from the hands of
management, and place it firmly in those of shareholders.

We urge you to vote FOR this proposal."

Your Board of Directors recommends that you vote AGAINST this proposal for
the following reasons:

. Sunoco's Board of Directors is currently comprised of eleven directors
who are independent under the newly revised and more stringent NYSE
rules, and one inside director, the CEO. The Governance Committee is
comprised of six directors all of whom are independent. The Board and
Governance Committee take corporate governance and board practices
very seriously. Because the Board is of the view that all shareholders
should be informed about these practices, they are published each year
in Sunoco's proxy statement (see page 21). Sunoco's Board is of the
view that the current practices used to identify and select a slate of
Board candidates have worked and continue to work well for its
shareholders.

. Under Sunoco's Bylaws, the Board of Directors and Governance Committee
are responsible for annually identifying the best individual
candidates for election to the Board. The proposal suggests that the
current system is not effective to address director absences,
commitments to too many boards, or other problems. On the contrary,
with regard to individuals currently sitting on Sunoco's Board, the
Committee undertakes an annual individual director evaluation process
which considers the director's independence, possible conflicts of
interest, attendance,

participation, outside board commitments, as well as other performance
criteria deemed relevant by the Committee. The Board and the Committee
also have a comprehensive process to identify new potential
candidates. The evaluation process for potential candidates includes
an analysis of independence; potential conflicts of interest;
consideration of the number of outside boards a candidate sits on; and
other factors deemed relevant; as well as interviews with the
potential candidates.

. In selecting a slate of candidates each year, the Committee and the
Board carefully consider the performance and qualifications not just
of each individual but of the group as a whole, and nominate the
persons that they believe will together best serve the shareholders.
An election of only some of the identified candidates creates a risk
that the resulting Board would lack some types of experience, skills
or diversity. The Board believes that if they followed the procedure
set forth in the proposal and nominated twice as many candidates to
the Board as there are seats (in our case this would mean nominating
26 candidates each year because Sunoco doesn't have a classified
board), they would fail in their fiduciary duty to Sunoco's
shareholders to identify and recommend only the most qualified slate.

. In addition, it should be noted that Sunoco's Bylaws provide
shareholders with a mechanism to nominate candidates for the Board to
the Governance Committee. This is more fully described on page 8 of
this proxy statement.

. The Board believes that the proposal is not an efficient or effective
way to select directors. Locating competent candidates and evaluating
these individuals to make up a slate of 26 nominees willing to stand
for election under the proposed conditions each year would be a time
consuming task and could divert the Board's focus from other matters
that are of importance to the shareholders. The Board believes that
the proposal is not in the best interests of the shareholders of the
Company.

Your Board unanimously recommends a vote AGAINST this proposal.

-------------------------------------------------------------------------------

NOMINEES FOR THE BOARD OF DIRECTORS
-------------------------------------------------------------------------------

[PHOTO OF RAYMOND E.
CARTLEDGE]
RAYMOND E. CARTLEDGE Director since 1990
Age 71

Mr. Cartledge retired as Chairman of Savannah Foods &
Industries, Inc. in October 1997, a position he had held
since April 1996. Mr. Cartledge retired as Chairman and Chief
Executive Officer of Union Camp Corporation in June 1994, a
position he had held since 1986. Mr. Cartledge is Chairman of
the Board for Generac Portable Products, Inc. He is also a
director of Chase Industries, Inc.; Delta Air Lines, Inc.;
and UCAR International.

[PHOT0 OF ROBERT J.
DARNALL]
ROBERT J. DARNALL Director since 2000
Age 62

Mr. Darnall is the Chairman and Chief Executive Officer of
Prime Advantage Corp. He retired as President and Chief
Executive Officer of Ispat North America, Inc. in January
2000, a position he had held since November 1998. He was
Chairman, Chief Executive Officer, and President of Inland
Steel Industries, Inc. from September 1992 to October 1998.
Mr. Darnall is also a director of Household International,
Inc.; Cummins, Inc.; Pactiv Corporation; and The Federal
Reserve Bank of Chicago.

[PHOTO OF JOHN G.
DROSDICK]
JOHN G. DROSDICK Director since 1996
Age 57

Mr. Drosdick was elected Chairman and Chief Executive Officer
in May 2000. Mr. Drosdick has been a director and President
of Sunoco since December 1996. He was also Chief Operating
Officer from December 1996 to May 2000. He was President and
Chief Operating Officer of Ultramar Corporation from June
1992 to August 1996. He is also a director of Hercules
Incorporated and Lincoln National Corporation.

[PHOTO OF MARY
JOHNSTON EVANS]
MARY JOHNSTON EVANS Director since 1980
Age 71

Mrs. Evans is a former Vice-Chairman of Amtrak, and is a
director of Delta Air Lines, Inc.; Household International,
Inc.; Moody's Corporation; and Saint-Gobain Corp.

NOMINEES FOR THE BOARD OF DIRECTORS
-------------------------------------------------------------------------------

[PHOTO OF URSULA F.
FAIRBAIRN]
URSULA F. FAIRBAIRN
Age 58

Ms. Fairbairn is Executive Vice President, Human Resources &
Quality, American Express Co., a position she has held since
1996. Previously, Ms. Fairbairn was Senior Vice President,
Human Resources at Union Pacific from 1990 until 1996. She is
also a director of Air Products & Chemicals, Inc. and VF
Corporation.

[PHOTO OF THOMAS P.
GERRITY]
THOMAS P. GERRITY Director since 1990
Age 59

Dr. Gerrity is the Director, Wharton Electronic Business
Initiative, and has been a Professor of Management at The
Wharton School of the University of Pennsylvania since 1990.
He also served as Dean of The Wharton School from 1990
through his retirement in July 1999. He is a director of CVS
Corporation; Fannie Mae; Internet Capital Group, Inc.;
Investor Force Holdings, Inc.; Knight Ridder; Purchasing
Solutions, Inc. d/b/a ICG Commerce, Inc.; Reliance Group
Holdings, Inc.; and is a trustee of the MAS Funds of Miller,
Anderson & Sherrerd, LLP.

[PHOTO OF ROSEMARIE
B. GRECO]
ROSEMARIE B. GRECO Director since 1998
Age 54

Ms. Greco is the Principal of GRECOventures. Until August
1997, Ms. Greco was President of CoreStates Financial Corp.,
and President and Chief Executive Officer of CoreStates Bank.
She served as Chief Banking Officer of CoreStates Financial
Corp. from August 1994 to June 1996; Chief Retail Services
Officer from October 1993 to August 1994; and was a bank
director from April 1992 to August 1997. She was the
President and Chief Executive Officer of CoreStates First
Pennsylvania Bank Division of CoreStates Bank from March 1991
to August 1994. Ms. Greco is also a director of Exelon Corp.;
Pennsylvania Real Estate Investment Trust; PRWT ComServe,
Inc.; Radian Group, Inc.; and SEI Investments.

NOMINEES FOR THE BOARD OF DIRECTORS
-------------------------------------------------------------------------------

[PHOTO OF JAMES G.
KAISER]
JAMES G. KAISER Director since 1993
Age 58

Mr. Kaiser is Chairman, Chief Executive Officer and a
director of Avenir Partners, Inc. and President and a
director of Kaiser Services, LLC. He retired as President,
Chief Executive Officer and director of Quanterra
Incorporated in January 1996, positions he had held since
June 1994. Quanterra succeeded to businesses of the
environmental analytical services division of International
Technology Corporation and Enseco (a unit of Corning
Incorporated) for which Mr. Kaiser had been President and
Chief Executive Officer since June 1992. Previously, he had
served as Senior Vice President and General Manager of
Corning's Technical Products Division and Latin America/Asia
Pacific Exports Group since 1984. Mr. Kaiser is also a
director of AutoTradeCenter, Inc.; Mead Corp. and The Stanley
Works.

[PHOTO OF ROBERT D.
KENNEDY]
ROBERT D. KENNEDY Director since 1995
Age 68

Mr. Kennedy retired in September 1999 as Chairman of the
Board and in July 1998 as Chief Executive Officer of UCAR
International, positions he had held since March 1998. He
retired as Chairman of the Board of Union Carbide Corporation
in December 1995, a position he had held since December 1986.
Previously, Mr. Kennedy served as its Chief Executive Officer
from April 1986 to April 1995 and its President from April
1986 to 1993. Since 1985, he has been one of its directors.
Mr. Kennedy is also a director of Chase Industries;
International Paper; and Kmart Corporation.

[PHOTO OF NORMAN S.
MATTHEWS]
NORMAN S. MATTHEWS Director since 1999
Age 68

Mr. Matthews, a retail consultant, was previously President,
Federated Department Stores and is currently a director of
Finlay Enterprises, Inc.; Lechters, Inc.; The Progressive
Corp.; and Toys "R" Us, Inc.

NOMINEES FOR THE BOARD OF DIRECTORS
-------------------------------------------------------------------------------

[PHOTO OF R.
ANDERSON PEW]
R. ANDERSON PEW Director since 1978
Age 64

Mr. Pew retired from Sunoco in May 1996 as Chief Executive
Officer of Radnor Corporation, a position he had held since
March 1995, and as President of Helios Capital Corporation, a
position he had held since September 1977, both Sunoco
subsidiaries. Mr. Pew joined Sunoco in 1958, and served as
Corporate Secretary from May 1974 until July 1977. Mr. Pew is
also Chairman of the Board of Directors of The Glenmede
Corporation and is a director of two of its subsidiaries, The
Glenmede Trust Company and The Glenmede Trust Company, NA.

[PHOTO OF G. JACKSON
RATCLIFFE]
G. JACKSON RATCLIFFE Director since 1998
Age 64

Mr. Ratcliffe is Chairman of the Board of Hubbell
Incorporated, a position he has held since 1987, having been
first elected to its Board in 1980. Since January 1988, he
has also served as its President and Chief Executive Officer.
Mr. Ratcliffe is also a director of Olin Corporation and
Praxair, Inc.

[PHOTO OF ALEXANDER
B. TROWBRIDGE]
ALEXANDER B. TROWBRIDGE Director since 1990
Age 71

Mr. Trowbridge is President of Trowbridge Partners Inc. He
assumed this position in January 1990 upon his retirement as
President of the National Association of Manufacturers, a
position he had held since 1980. Mr. Trowbridge also serves
as a director of Harris Corporation and ICOS Corporation.

-------------------------------------------------------------------------------

STATEMENT ON CORPORATE GOVERNANCE
-------------------------------------------------------------------------------
The corporate governance standards established by the Board provide a
structure within which directors and management can effectively pursue
Sunoco's objectives for the benefit of its shareholders. Sunoco's business is
managed under the direction of the Board of Directors. The Board delegates the
conduct of business to Sunoco's senior management team. The principal
functions of the Board are to:

Evaluate the Chief Executive Officer: The ongoing evaluation of the CEO is
accomplished through the following process:

. The Chief Executive Officer meets with the Compensation Committee to
develop appropriate goals and objectives for the next year, which are
then discussed with the entire Board.

. At year end, the Compensation Committee, with input from the Board,
evaluates the performance of the Chief Executive Officer in meeting
those goals and objectives.

. This evaluation is communicated to the Chief Executive Officer at an
executive session of the Board.

. The Compensation Committee uses this evaluation in determining the Chief
Executive Officer's compensation.

Review and Approve Sunoco's Strategic Direction and Annual Operating Plan,
and Monitor Sunoco's Performance:

. Annually, the outside directors meet with the Chief Executive Officer to
discuss the overall performance and direction of the Company.

. Following that discussion, the outside directors meet independently, at
a meeting which is chaired by the Chairperson of the Governance
Committee, to evaluate Sunoco's performance and direction.

. This evaluation is communicated to the Chief Executive Officer at an
executive session of the Board.

. The Board stays abreast of political, regulatory and economic trends and
developments that may impact Sunoco's strategic direction.

. Each year, the Board and management participate in a two-day off-site
meeting at which major long-term strategies and financial and other
objectives and plans are discussed and approved.

. Annually, the Board reviews and approves a three-year strategic plan,
yearly goals and an operating plan for the Company.

. On an ongoing basis during the year, the Board monitors Sunoco's
performance against its annual operating plan and against the
performance of its peers.

Review Management Performance and Compensation:

. The Compensation Committee reviews and approves the Chief Executive
Officer's evaluation of the top management team on an annual basis.

. The Board (largely through the Compensation Committee) evaluates the
compensation plans for senior management and other employees to ensure
they are appropriate, competitive and properly reflect Sunoco's
objectives and performance.

Review Management Succession Planning:

. The Board plans for succession to the position of Chairman of the Board
and CEO as well as certain other senior management positions.

. To assist the Board, the Chairman and CEO annually provides the
Governance Committee with an assessment of senior managers and their
potential to succeed him.

. He also provides the Governance Committee with an assessment of persons
considered potential successors to certain senior management positions.

. The results of these reviews are reported to and discussed with the
Board.

Advise and Counsel Management:

. Advice and counsel to management occurs both in formal Board and
Committee meetings and through informal, individual director's contacts
with the Chief Executive Officer and other members of management.

. The Board is composed of individuals whose knowledge, background,
experience and judgment are valuable to the Company.

. The information needed for the Board's decision-making generally will be
found within Sunoco, and Board members have full access to management.

. On occasion, the Board may seek legal or other expert advice from a
source independent of management, and generally this is done with the
knowledge and concurrence of the Chief Executive Officer.

Review Structure and Operations of the Board: The Governance Committee
periodically reviews the Board's structure, operations, and need for new
members and reports the result of this review to the Board for its
approval. The Board observes the following general practices:

. Selection and Evaluation of Board Candidates: When searching for new
nominees, the Board selects candidates based on their character,
judgment, and business experience, as well as their ability to add to
the Board's existing strengths. The Governance Committee evaluates the
performance of individual directors on an annual basis and this
evaluation provides the basis for the Board's recommendation of a slate
of directors to the shareholders.

. Board Structure:

. Each director is elected annually by shareholders for a one-year
term.

. The Board consists entirely of independent outside directors except
for the Chief Executive Officer. None of the directors has a
consulting contract with Sunoco.

. Periodically, the full Board conducts an assessment of how it is
functioning as a whole so that it may continuously improve its
performance.

. The mandatory retirement age for directors is 72.

. An outside director must tender his or her resignation for
consideration by the Governance Committee if the position he or she
held at the time of election changes.

. As a general rule, it is the Board's expectation that when officer
directors leave their Company positions, they will no longer serve
on the Board.

. New directors must participate in an orientation process that
includes reviewing extensive materials regarding Sunoco's business
and operations, visits to Sunoco facilities and meetings with key
personnel. As part of this process, new directors attend meetings of
all the Board's committees to acquaint them with the work and
operations of each. After this orientation, new Board members are
given regular committee assignments.

. Board Operations and Meetings:

. Sunoco's Board usually meets seven times per year in regularly
scheduled meetings but meets more often if necessary.

. While the Board believes that a carefully planned agenda is
important for effective Board meetings, the agenda is flexible
enough to accommodate unexpected developments. The items on the
agenda are typically determined by the Chairperson in consultation
with the Board. Any director may request that an item be included on
the agenda.

. Generally, Board members receive information well in advance of
Board meetings so they will have an opportunity to prepare for
discussion of the items at the meeting. Information is provided from
a variety of sources, including management reports, a comparison of
performance to operating and financial plans, reports on Sunoco's
stock performance and operations prepared by third

parties, and articles in various business publications. In many
cases, significant items requiring Board approval may be reviewed in
one or more meetings and voted upon in subsequent meetings, with the
intervening time being used for clarification and discussion of
relevant issues.

. At Board meetings, ample time is scheduled to assure full discussion
of important matters. Management presentations are scheduled to
permit a substantial proportion of Board meeting time to be available
for discussion and comments.

. Committee Structure: The full Board considers all major decisions of the
Company. However, the Board has established the following five standing
committees, each of which is composed entirely of outside directors,
except for the Executive Committee, so that certain important areas can
be addressed in more depth than may be possible in a full Board meeting:

. The Audit Committee oversees Sunoco's accounting processes and
reporting systems and the adequacy of internal controls, reviews and
approves Sunoco's financial disclosures, and evaluates the
performance and recommends the appointment of independent auditors.
This Committee is responsible for preparing and issuing the Audit
Committee Report published in this proxy statement. This Committee,
along with the Board, is responsible for reviewing and updating the
Audit Committee Charter.

. The Governance Committee reviews the role, composition, and structure
of the Board and its committees as well as directors' compensation.
It also reviews and evaluates Board members in determining the annual
directors' slate and identifies new director nominees. This Committee
reviews the CEO's recommendations of potential successors, as well as
potential successors to other senior management positions. This
Committee, along with the Board, is responsible for reviewing and
updating Sunoco's Statement on Corporate Governance published in this
proxy statement.

. The Compensation Committee reviews matters related to the
compensation of the Chief Executive Officer and other senior
management personnel, as well as the general employee compensation
and benefit policies and practices of the Company. This Committee
also approves goals for incentive plans, evaluates performance
against these goals, and issues the Compensation Committee Report on
executive compensation to shareholders published in this proxy
statement.

. The Public Affairs Committee reviews the Company's performance in the
areas of health, environment and safety, equal employment
opportunity, and political activities. It also oversees the
administration of corporate contributions and evaluates Sunoco's
relationship with shareholders and all other constituencies.

. The Executive Committee exercises the authority of the Board during
the intervals between meetings of the Board.

. Directors' Compensation: The Governance Committee sets and administers
the policies that govern the level and form of directors' compensation.

. Annually, Sunoco participates in numerous directors' compensation
surveys compiled by third-party consultants. The amount and form of
Sunoco's directors' compensation are benchmarked against companies
in Sunoco's performance peer group as well as others in the oil
industry and industry in general.

. The Committee believes that more than half of the total director
compensation package should be delivered in the form of Sunoco
common stock and stock equivalents in order to better align the
interests of Sunoco's directors with the interests of its
shareholders. In order to further encourage a link between director
and shareholder interests, the Committee adopted Director Stock
Ownership Guidelines to which members of the Board of Directors are
expected to adhere.

. Sunoco has no non-Employee Director Retirement Plan.

The Board annually reviews its board practices in comparison to the governance
standards identified by leading governance authorities and the evolving needs
of the Company and determines whether or not this Statement on Corporate
Governance should be updated.

-------------------------------------------------------------------------------

BOARD COMMITTEE MEMBERSHIP ROSTER/1/
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Public
Name Audit/2/ Compensation Executive Governance Affairs
-------------------------------------------------------------------------
-------------------------------------------------------------------------

R. E. Cartledge x/3/ x x
-------------------------------------------------------------------------
R. J. Darnall x x
-------------------------------------------------------------------------
J. G. Drosdick x/3/
-------------------------------------------------------------------------
M. J. Evans x x x
-------------------------------------------------------------------------
T. P. Gerrity x/3/ x
-------------------------------------------------------------------------
R. B. Greco x x
-------------------------------------------------------------------------
J. G. Kaiser x x/3/
-------------------------------------------------------------------------
R. D. Kennedy x x x/3/ x
-------------------------------------------------------------------------
N. S. Matthews x x
-------------------------------------------------------------------------
R. A. Pew x x x
-------------------------------------------------------------------------
G. J. Ratcliffe x x
-------------------------------------------------------------------------
A. B. Trowbridge x x
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Number of Meetings 9 8 2 4 3
in 2000

-------------------------------------------------------------------------------

NOTES TO TABLE:

/1/Information in table is presented as of the February 9, 2001 record
date.

/2/All members of the Audit Committee are "independent" as defined in
the listing standards of the New York Stock Exchange.

/3/Committee Chairperson.

--------------------------------------------------------------------------------

DIRECTORS' COMPENSATION
-------------------------------------------------------------------------------
As discussed in the Statement on Corporate Governance, Sunoco annually
benchmarks the form and amount of directors' compensation. Directors are
compensated partially in Sunoco common stock or stock equivalents to better
align their interests with those of shareholders. Currently, equity-based
compensation represents on average more than half of the total compensation
package. Executive officers are not paid for their services as directors. The
Board held seven meetings during 2000, and all of the directors attended at
least 75% of the Board meetings and Committee meetings of which they were
members. The following table summarizes the compensation of Sunoco's directors
during 2000.

Directors' Compensation Table

------------------------------------------------------------------------

Type of Compensation Cash Stock Based
------------------------------------------------------------------------
------------------------------------------------------------------------

Annual Retainer $8,520 670/1/
------------------------------------------------------------------------
Yearly Credit under Deferred Compensation Plan 736/2/
------------------------------------------------------------------------
Annual Retainer for Committee Chair $2,000
------------------------------------------------------------------------
Board or Committee Attendance Fee (per meeting)/3/ $1,250

-------------------------------------------------------------------------------

NOTES TO TABLE:

/1/ Represents shares of Sunoco common stock paid under the Directors'
Retainer Stock Plan having a value of $19,880 on the date of grant.

/2/ Represents restricted share units that are not payable until death
or other termination of Board service, having a value equal to
$22,000 on the date of grant.

/3/ A fee of $1,250 per day is also paid in cash for special
assignments.

Directors' Deferred Compensation: The Directors' Deferred Compensation Plan
permits outside directors to defer all or a portion of their compensation,
except for the Yearly Credit which is required to be deferred in restricted
share units. Payments of compensation deferred under this plan are restricted
in terms of the earliest and latest dates that payments may begin. Deferred
compensation is designated as share units, cash units, or a combination of
both. A share unit is treated as if it were invested in shares of Sunoco
common stock, but it does not have voting rights. Dividend equivalents are
credited to each Director in the form of additional share units. Share units
are settled in cash, based upon the fair market value of Sunoco common stock
at the time of payment. Cash units accrue interest at a rate based upon
Sunoco's cost of borrowing.

Directors' Stock Ownership Guidelines: Each outside director is expected to
own Sunoco common stock with a market value equal to at least three times the
average total annual director's compensation. Currently, this ownership
guideline is approximately $220,000. Included in the determination of stock
ownership for purposes of these guidelines are all shares beneficially owned
and any share units held in the Directors' Deferred Compensation Plan. New
directors are allowed a five-year phase-in period to comply with the
guidelines. As of the February 9, 2001 record date, all of Sunoco's current
directors were in compliance with these stock ownership guidelines (or, in the
case of directors with less than five years of service, on track to compliance
within the five-year period). Sunoco has also established stock ownership
guidelines for its executives, and these are discussed on page 32.

-------------------------------------------------------------------------------

DIRECTORS' & OFFICERS' OWNERSHIP OF SUNOCO STOCK
-------------------------------------------------------------------------------
The following table shows how much Sunoco common stock each Named Executive
Officer/1/ and director nominee beneficially owned as of December 31, 2000. No
director or executive officer beneficially owns more than 1% of the common
stock, and directors and executive officers as a group beneficially own
approximately 1.8% of the common stock.

Directors' & Officers' Stock Ownership

---------------------------------------------------------------------

Shares of Share Units
Common Stock and
Beneficially Share
Name Owned/2/ Equivalents/3/ Total
---------------------------------------------------------------------
---------------------------------------------------------------------

R. H. Campbell/4/,/5/ 727,747 34,085 761,832
---------------------------------------------------------------------
R. E. Cartledge 4,402 12,392 16,794
---------------------------------------------------------------------
R. J. Darnall 2,000 1,442 3,442
---------------------------------------------------------------------
J. G. Drosdick/5/ 317,170 0 317,170
---------------------------------------------------------------------
M. J. Evans 4,271 17,804 22,075
---------------------------------------------------------------------
U. F. Fairbairn/6/ 0 0 0
---------------------------------------------------------------------
D. M. Fretz/5/ 61,370 2,789 64,159
---------------------------------------------------------------------
T. P. Gerrity 7,007 8,100 15,107
---------------------------------------------------------------------
R. B. Greco 1,920 4,905 6,825
---------------------------------------------------------------------
T. W. Hofmann/5/ 62,034 0 62,034
---------------------------------------------------------------------
J. G. Kaiser 5,926 5,575 11,501
---------------------------------------------------------------------
R. D. Kennedy 14,960 3,585 18,545
---------------------------------------------------------------------
N. S. Matthews 0 4,603 4,603
---------------------------------------------------------------------
R. W. Owens/5/ 53,282 1,175 54,457
---------------------------------------------------------------------
R. A. Pew/5/,/7/ 88,572 2,486 91,058
---------------------------------------------------------------------
G. J. Ratcliffe 1,000 4,275 5,275
---------------------------------------------------------------------
A. B. Trowbridge 6,362 8,100 14,462
---------------------------------------------------------------------
C. K. Valutas/5/ 48,227 0 48,227
---------------------------------------------------------------------
All directors and executive
officers as a group 1,576,228 113,118 1,689,346
including those named
above/4/,/5/,/7/
---------------------------------------------------------------------

NOTES TO TABLE:

/1/The Chief Executive Officer and the next four most highly compensated
executive officers during the last fiscal year.

/2/This column includes shares of Sunoco common stock held by directors and
officers or by certain members of their families (for which the directors
and officers have sole or shared voting or investment power), shares of
Sunoco common stock they hold in SunCAP and SHARP, and shares of Sunoco
common stock that directors and officers have the right to acquire within
60 days of December 31, 2000.

/3/Includes share unit balances held under the Directors' Deferred
Compensation Plan and the Deferred Compensation Plan for executives, and
share equivalent balances held by executives under Sunoco's Savings
Restoration Plan (see footnote 3 on page 37). Although ultimately paid in
cash, the value of share units and share equivalents mirrors the value of
Sunoco common stock. Thus, the amounts ultimately realized by the directors
and executives will reflect all changes in the market value of Sunoco
common stock from the date of deferral and/or accrual until the date of
payout. The share units and share equivalents do not have voting rights,
but are credited with dividend equivalents in the form of additional share
units or share equivalents.

/4/R. H. Campbell retired as Chairman of the Board and Chief Executive Officer
of Sunoco in May 2000. Mr. Campbell is included in the table since he was
CEO for part of the fiscal year ending December 31, 2000.

/5/The amounts shown include shares of Sunoco common stock which the following
persons have the right to acquire as a result of the exercise of stock
options within 60 days after December 31, 2000 under the Sunoco, Inc. Long-
Term Performance Enhancement Plan ("LTPEP"), our current long-term
incentive plan, and under the Sunoco, Inc. Executive Long-Term Stock
Investment Plan ("ELSIP"), which is a predecessor plan:

----------------------------------------------

Name Shares
-------------------------------------------------------------------
-------------------------------------------------------------------

J. G. Drosdick 240,000
-------------------------------------------------------------------
D. M. Fretz 53,970
-------------------------------------------------------------------
T. W. Hofmann 50,350
-------------------------------------------------------------------
R. W. Owens 23,800
-------------------------------------------------------------------
R. A. Pew 11,380
-------------------------------------------------------------------
C. K. Valutas 37,990
-------------------------------------------------------------------
R. H. Campbell 645,830
-------------------------------------------------------------------
-------------------------------------------------------------------

All directors and executive officers as a group (including
those named above) 1,201,110

/6/U. F. Fairbairn has not been a director or officer of Sunoco, and is
standing for election to Sunoco's Board of Directors for the first time.

/7/R. A. Pew has sole voting and investment power with respect to shares of
common stock beneficially owned, except that voting and investment power is
shared for 16,050 shares.

-------------------------------------------------------------------------------

STOCK PERFORMANCE GRAPH
-------------------------------------------------------------------------------
Sunoco's Performance Peer Group is composed of the major domestic independent
refining and marketing companies and integrated oil companies which are both
similar in size to Sunoco and represent its competitors in certain geographic
areas.

Comparison of Five-Year Cumulative Return/1/

[GRAPH]

Peer Group
----------
Amerada Hess
Ashland
Tesoro
Tosco
Ultramar Diamond Shamrock/2/
USX/Marathon
Valero
Fiscal Year Ended December 31

1995 1996 1997 1998 1999 2000

Sunoco, Inc. 100 92 165 145 97 145

Peer Group 100 130 164 140 131 165

S&P 500 Index 100 123 164 211 255 232

NOTES TO GRAPH:

/1/ Assuming that the value of the investment in Sunoco common stock and each
index was $100 on December 31, 1995 and that all dividends were
reinvested, this graph compares Sunoco's cumulative total return (i.e.,
based on common stock price and dividends), plotted on an annual basis,
with Sunoco's Performance Peer Group's cumulative total returns and the
S&P 500 Stock Index (a performance indicator of the overall stock market).

/2/ On December 4, 1996, Ultramar Corporation merged with Diamond Shamrock,
Inc. to form Ultramar Diamond Shamrock Corporation ("UDS"). Prior to the
merger, Ultramar Corporation's stock price was used in the computation of
the Peer Group's Cumulative Return.

-------------------------------------------------------------------------------

AUDIT COMMITTEE REPORT
-------------------------------------------------------------------------------
The Audit Committee reviews Sunoco's financial reporting process on behalf of
the Board of Directors. In fulfilling its responsibilities, the Committee has
reviewed and discussed the audited financial statements contained in the 2000
Annual Report on SEC Form 10-K with Sunoco's management and the independent
auditors. Management is responsible for the financial statements and the
reporting process, including the system of internal controls. The independent
auditors are responsible for expressing an opinion on the conformity of those
audited financial statements with accounting principles generally accepted in
the United States.

The Committee discussed with the independent auditors their independence from
Sunoco and its management including the matters in the written disclosures
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees and considered the compatibility of non-
audit services with the auditors' independence. In addition, the Committee
discussed the matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees, as amended.

In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board, and the Board has approved, the inclusion of the
audited financial statements in Sunoco's Annual Report on SEC Form 10-K for
the year ended December 31, 2000, for filing with the Securities and Exchange
Commission.

Respectfully submitted on March 1, 2001 by the members of the Audit Committee
of the Board of Directors:

Thomas P. Gerrity, Chair
Robert J. Darnall
Mary Johnston Evans
Rosemarie B. Greco
R. Anderson Pew
Alexander B. Trowbridge

-------------------------------------------------------------------------------

EXECUTIVE COMPENSATION: REPORT OF THE COMPENSATION COMMITTEE
-------------------------------------------------------------------------------
The Committee's Responsibilities: The Compensation Committee of the Board has
responsibility for setting and administering the policies which govern
executive compensation. The Committee is composed entirely of outside
directors. Reports of the Committee's actions and decisions are presented to
the full Board. The purpose of this report is to summarize the philosophical
principles, specific program objectives and other factors considered by the
Committee in reaching its determinations regarding the executive compensation
of the Named Executive Officers.

Compensation Philosophy: The Committee has approved principles for the
management compensation program which:

. Encourage strong financial and operational performance of the Company;

. Emphasize performance-based compensation ("pay at risk") which balances
rewards for short-term and long-term results;

. Focus executives on "beating the competition" through plans which include
measurements based on performance relative to peer companies;

. Link compensation to the interests of shareholders by providing stock
incentives and requiring significant shareholdings; and

. Provide a competitive level of total compensation necessary to attract and
retain talented and experienced executives.

Management's Stock Ownership Guidelines: The Committee considers stock
ownership by management to be an important means of linking management's
interests directly to those of shareholders. Sunoco has stock ownership
guidelines for its approximately 40 top executives. The amount of stock
required to be owned increases with the level of responsibility of each
executive, with the Chief Executive Officer expected to own stock with a value
at least equal to four times his base salary. Until such time as they are
actually paid out and received, shares that the executives have the right to
acquire through the exercise of stock options are not included in the
calculation of stock ownership. For purposes of these guidelines, a portion of
the shares assumed to have been earned with respect to future payouts of
common stock units are counted when computing stock ownership. Participants
are expected to reach their respective stock ownership goals by the end of a
five-year period. Sunoco also has stock ownership guidelines for its outside
directors, and these are discussed on page 27.

Compensation Methodology: Sunoco strives to provide a comprehensive executive
compensation program that is competitive and performance-based in order to
attract and retain superior executive talent. Each year the Committee reviews
market data and assesses

Sunoco's competitive position for three components of executive compensation:
(1) base salary, (2) annual incentives, and (3) long-term incentives. To
assist in benchmarking the competitiveness of its compensation programs,
Sunoco participates in executive compensation surveys compiled by third-party
consultants. Because the Committee believes that the Company's direct
competition for executive talent is broader than the companies that are
included in the Performance Peer Group established for purposes of comparing
shareholder returns (see the Stock Performance Graph on page 30 for more
information), these surveys include companies in the Performance Peer Group
and others in the oil industry. This information is supplemented by general
industry compensation information. The compensation survey data reflect
adjustments for each company's relative revenue, asset base, employee
population and capitalization, along with the scope of managerial
responsibility and reporting relationships.

As part of the Committee's annual review of the competitiveness of the
executive compensation program for 2000, the Committee decided to increase the
components to provide a competitive level. Significantly, the increase in the
long-term compensation component reflects the continuing trend of the surveyed
group of companies to increase the percentage of executive compensation
provided by equity-based awards which better align management with
shareholders' interests.

Components of Compensation:

. Base Salary: Annual base salary is designed to compensate executives for
their level of responsibility and sustained individual performance. The
Committee approves in advance all salary increases for the Named Executive
Officers. The goal is to compensate executives within the mid-level of the
range of base salaries paid by companies in the Performance Peer Group, the
oil industry, and industry in general.

. Annual Incentives: Annual incentive awards for the Named Executive Officers
are provided in order to promote the achievement of Sunoco's business
objectives. Each year the Committee considers the Company's prior year's
performance and objectives, as well as its expectations for Sunoco in the
upcoming year. Bearing in mind these considerations, the Committee sets
certain Company performance criteria or goals which must be met before
payments are made. Additionally, individual performance goals may be
established for each participant. Payments may range from 0% to 200% of the
annual incentive opportunity, with payments increasing as performance
improves.

For the current awards, the Committee established a fixed percentage of
annual salary range midpoint as an executive's annual incentive opportunity,
based on comparative survey data on annual incentives paid in the Performance
Peer Group, the oil industry, and industry in general. The incentive
opportunity increases with the level of responsibility of the executive.
Annual incentive awards for 2000 were based on meeting weighted objectives
for two principal measurements:

. after-tax operating income; and
. relative ranking, as measured by return on capital employed, or "ROCE,"
against the Performance Peer Group (see page 30).

Sunoco achieved the maximum threshold established for operating income in
2000 and attained an ROCE ranking better than the annual incentive award
target level. As a result, the annual incentive approved by the Committee
for each Named Executive Officer was 188% of the annual incentive
opportunity. The Bonus column of the Summary Compensation Table on page 36
contains the annual incentive earned for 2000 for each of the Named
Executive Officers.

. Long-Term Incentive Compensation: Each year, the Committee reviews and
approves all long-term incentive awards. Current awards are primarily a
combination of stock options and performance-based common stock units
(which represent shares of Sunoco common stock). These awards provide
compensation to executives only if shareholder value increases. Common
stock units also focus executives on "beating the competition" by measuring
Sunoco's performance versus the Performance Peer Group. In determining the
number of stock options and performance-based common stock units awarded,
the Committee reviews surveys of similar awards made to individuals in
comparable positions within the Performance Peer Group, in the oil
industry, and in general industry, and the executive's past performance.
The following is a description of the awards granted through 2000:

. Stock Options: Options have an exercise price equal to the fair market
value of common stock on the date of grant and are exercisable beginning
two years from the date of grant.

. Common Stock Units: Performance-based common stock units are earned
based on the Company's total common stock shareholder return (stock
price appreciation plus dividend yield) for a three-year performance
period compared to that of the Performance Peer Group. Additionally,
under the currently outstanding awards, the common stock units will be
forfeited if certain minimum common stock price levels are not met by
the end of a one-year period following the end of the performance
period, regardless of how Sunoco performs versus the Performance Peer
Group. In order to ensure the retention of key executives, or as part of
the compensation to a new executive hired from outside the Company, the
Committee also occasionally grants common stock units which require only
continued employment as a condition of vesting.

Chief Executive Officer Compensation: The Chief Executive Officer participates
in the same programs and receives compensation based on the same factors as
the other executive officers. However, Mr. Drosdick's overall compensation
reflects a greater degree of policy and decision-making authority and a higher
level of responsibility with respect to the strategic direction and financial
and operational results of the Company. For 2000, the Chief Executive
Officer's compensation components were:

. Base Salary: As a result of his appointment as Chairman, Chief Executive
Officer and President and also as a result of his individual performance,
Mr. Drosdick's annual salary was increased to $800,000, effective May 4,
2000.

. Annual Incentive: Annual incentive compensation for Mr. Drosdick is based
upon relative attainment of the annual performance goals for the Company.
Based on these

criteria, and the Committee's review of competitive practices, Mr. Drosdick
was awarded $1,128,000 representing 188% of his annual incentive
opportunity for performance in 2000.

. Long-Term Incentive Awards: In May 2000, in connection with his election to
Chairman and Chief Executive Officer, Mr. Drosdick received a grant of
65,000 stock options which become exercisable in May 2002. In December
2000, as part of the Company's annual award of long-term compensation to
executives, Mr. Drosdick received a grant of 135,000 stock options which
become exercisable in December 2002, and 50,000 performance-based common
stock units. In determining the amounts granted, the Committee considered,
without specific weighting, the performance of the Company and relative
total shareholder return, and the value of such awards granted to other
chief executive officers in the Performance Peer Group, the oil industry,
and industry in general. See page 33 for a discussion of the Committee's
review of and actions regarding 2000 long-term incentive compensation.

Omnibus Budget Reconciliation Act of 1993: This Act has had no material impact
upon Sunoco's ability to take a tax deduction for annual compensation in
excess of $1 million paid to any of the Named Executive Officers.

Compensation Committee Interlocks and Insider Participation: There are none.

Respectfully submitted by the members of the Compensation Committee of the
Board of Directors:

Raymond E. Cartledge, Chair
James G. Kaiser
Robert D. Kennedy
Norman S. Matthews
G. Jackson Ratcliffe

-------------------------------------------------------------------------------

EXECUTIVE COMPENSATION, PENSION PLANS & OTHER ARRANGEMENTS
--------------------------------------------------------------------------------
Summary Compensation Table

--------------------------------------------------------------------------------

Long-Term Compensation
------------------------------
Annual Compensation Awards/2/ Payouts
-------------------------------------------------------------------
Other Restricted Securities
Name and Base Annual Stock Underlying LTIP All Other
Principal Position Year Salary/1/ Bonus Compensation Awards Options Payouts Compensation/3/
($) ($) ($) ($) (#) ($) ($)
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------

J. G. DROSDICK 2000 757,692 1,128,000 36,452 0 200,000 494,063/4/ 42,344
Chairman of the 1999 610,012 73,200 6,646 0 95,000 755,000/4/ 34,198
Board, Chief Executive 1998 602,316 534,180 27,362 0 60,000 0 33,207
Officer
and President
-----------------------------------------------------------------------------------------------------------------------
D. M. FRETZ 2000 324,500 274,950 4,698 0 36,750 143,569/5/ 17,668
Senior Vice 1999 312,000 28,089 4,268 0 22,000 152,500/6/ 17,023
President, 1998 311,580 211,460 6,015 0 14,960 112,314/6/ 16,848
MidContinent
Refining, Marketing And
Logistics
-----------------------------------------------------------------------------------------------------------------------
R. W. OWENS 2000 293,231 274,950 53,920/7/ 0 33,150 265,000/8/ 15,471
Senior Vice 1999 264,992 23,060 5,674/7/ 0 18,500 0 14,013
President 1998 264,708 173,500 7,639/7/ 0 13,800 0 12,989
Northeast
Marketing
-----------------------------------------------------------------------------------------------------------------------
C. K. VALUTAS 2000 262,400 274,950 2,741 0 28,800 55,961/5/ 13,923
Senior Vice 1999 209,976 18,917 3,814 0 14,000 0 11,104
President and 1998 184,302 129,690 14,809 0 10,000 0 9,725
Chief
Administrative
Officer
-----------------------------------------------------------------------------------------------------------------------
T. W. HOFMANN 2000 266,621 221,966 4,618 0 24,000 46,698/5/ 14,067
Vice President and 1999 250,016 23,060 6,423 0 18,500 0 13,221
Chief Financial Officer 1998 220,914 173,500 3,138 0 13,800 0 11,658
-----------------------------------------------------------------------------------------------------------------------
R. H. CAMPBELL/9/ 2000 452,312 497,448 448 0 0 501,719/5/ 37,761
Retired Chairman 1999 840,000 126,000 51 0 150,000 0 70,930
of the Board 1998 830,790 921,000/10/ 2,552 0 110,000 0 69,562
and Chief
Executive Officer
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------

NOTES TO TABLE:

/1/ The amounts reported in the table under Base Salary reflect that there were
26 bi-weekly pay periods in 1999 and 2000, and 27 bi-weekly pay periods in
1998.

/2/ Long-term awards were composed of stock options and common stock units
(representing shares of Sunoco common stock). Grants of performance-based
common stock unit awards are excluded from this table; however, such grants
made during the last completed fiscal year are reflected in the table of
Performance-Based Common Stock Unit Awards on page 39. Other common stock
unit awards, if any, are included in this Summary Compensation Table as
Restricted Stock Awards.

/3/ The table below shows the components of this column for 2000:

-----------------------------------------------------------------------

Company Match Under Cost of
Name Defined Contribution Plans* Term Life Insurance Total
---------------------------------------------------------------------------
---------------------------------------------------------------------------

J. G. Drosdick $37,885 $4,459 $42,344
---------------------------------------------------------------------------
D. M. Fretz 16,225 1,443 17,668
---------------------------------------------------------------------------
R. W. Owens 14,661 810 15,471
---------------------------------------------------------------------------
C. K. Valutas 13,120 803 13,923
---------------------------------------------------------------------------
T. W. Hofmann 13,331 736 14,067
---------------------------------------------------------------------------
R. H. Campbell 17,769 19,992 37,761

----------------------------------------------------------------------

* Executive officers participate in two defined contribution plans:
(i) SunCAP, Sunoco's 401(k) plan for most employees, and (ii) the
Sunoco, Inc. Savings Restoration Plan. The Savings Restoration Plan
permits a SunCAP participant to continue receiving the Company-
matching contribution after reaching certain limitations under the
Internal Revenue Code.

/4/ J. G. Drosdick became an employee of Sunoco on November 15, 1996. As part of
his Employment Agreement with Sunoco, Mr. Drosdick received an award of
25,000 common stock units valued at $581,250 on the date of grant. The
shares were paid to him in November 1999 at which time they had a value of
$709,375 (including dividend equivalents). In 1997, Mr. Drosdick was granted
a special award of 2,500 common stock units with a value of $104,688 on the
date of grant. This award was paid to Mr. Drosdick in 1,250 share
installments in January 1999 and January 2000 when they were valued at
$45,625 and $30,938, respectively (including dividend equivalents). The
amount shown for 2000 includes $463,125 representing the value of the common
stock units paid out in 2000 at 130% of the targeted amount, plus applicable
dividend equivalents, attributable to the 1996 Performance-Based Common
Stock Unit Award.

/5/ The required criteria for payout of the 1996 Performance-Based Common Stock
Unit Award were met in early 2000 and 130% of the targeted award was paid at
that time. The amounts shown reflect the value of the common stock units
paid out plus applicable dividend equivalents.

/6/ In 1996, D. M. Fretz was granted a special award of 10,000 common stock
units with a value of $257,500 on the date of grant. The first installment
of 2,000 shares with a value of $71,626 was paid to Ms. Fretz in August
1997; the second installment of 3,000 shares with a value of $112,314 was
paid to her in August 1998; and the final installment of 5,000 shares with a
value of $152,500 was paid to Ms. Fretz in August 1999.

/7/ In connection with his hiring in 1997, the Company loaned R. W. Owens
$100,000 for expenses largely in connection with his relocation to the
Philadelphia area. The loan was imputed to bear a variable interest rate,
and the imputed interest was compensatory to Mr. Owens. In 2000, $50,000 of
the loan amount was forgiven and was imputed income to Mr. Owens. The
outstanding balance of $50,000 is due to be repaid in 2001. In 1998, the
imputed interest rate was 5.63% and the imputed income to Mr. Owens was
$5,630. In 1999, the imputed interest rate was 4.89% and the imputed income
was $4,885. In 2000, the imputed interest rate was 6.15% and the imputed
income to Mr. Owens was $3,073. The figures for each year also include
amounts related to reimbursements for the payment of certain taxes.

/8/ In connection with his hiring in 1997, R. W. Owens was granted a special
award of 10,000 common stock units. The award was paid to him in January
2000 and was valued at $265,000 (including dividend equivalents) at that
time.

/9/ R. H. Campbell retired as Chairman of the Board and Chief Executive Officer
of Sunoco in May 2000. Mr. Campbell is included in this table since he was
CEO during a part of fiscal year ending December 31, 2000.

/10/ $591,000 of R. H. Campbell's total 1998 annual incentive award was deferred
in the form of share units under Sunoco's Deferred Compensation Plan. These
share units are treated as if they were invested in shares of Sunoco common
stock, and are credited with dividend equivalents in the form of additional
share units.
-------------------------------------------------------------------------------

OPTION GRANT TABLE

-------------------------------------------------------------------------------

The following table presents additional information concerning the option
awards shown in the Summary Compensation Table for fiscal year 2000. These
options to purchase common stock were granted to the Named Executive Officers
under Sunoco's Long-Term Performance Enhancement Plan ("LTPEP").

Option Grants in 2000/1/

------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of
Individual Grants Stock Price Appreciation for
Option Term/4/
-------------------------------------------------------------------------------------------
Securities Percent
Underlying of Total
Options Options
Granted/3/ Granted
---------------- to Exercise
Employees Or Base
in Fiscal Price Expiration 5% 10%
Name/2/ Date Number Year ($/share) Date ($) ($)

------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------

J. G. DROSDICK
Chairman of the Board, 05/04/00 65,000/5/ 9.3 31.000 05/03/10 1,267,240 3,211,390
Chief Executive Officer 12/06/00 135,000 19.2 27.875 12/05/10 2,366,550 5,997,510
and President
------------------------------------------------------------------------------------------------------------
D. M. FRETZ 12/06/00 36,750 5.2 27.875 12/05/10 644,228 1,632,656
Senior Vice President,
MidContinent Refining,
Marketing and Logistics
------------------------------------------------------------------------------------------------------------
R. W. OWENS
Senior Vice President 12/06/00 33,150 4.7 27.875 12/05/10 581,120 1,472,722
Northeast Marketing
------------------------------------------------------------------------------------------------------------
C. K. VALUTAS 12/06/00 28,800 4.1 27.875 12/05/10 504,864 1,279,469
Senior Vice President
and Chief Administrative
Officer
------------------------------------------------------------------------------------------------------------
T. W. HOFMANN
Vice President and 12/06/00 24,000 3.4 27.875 12/05/10 420,720 1,066,224
Chief Financial Officer
------------------------------------------------------------------------------------------------------------

NOTES TO TABLE:
/1/ No Stock Appreciation Rights ("SARs") were granted.
/2/ R. H. Campbell retired as Chairman of the Board and Chief Executive Officer
of Sunoco in May 2000. Mr. Campbell is not included in this table since he
was not granted any stock options during 2000.
/3/ Each option was awarded with an exercise price equal to the fair market
value of a share of Sunoco common stock on the date of grant and will become
exercisable two years from the grant date. These stock options were granted
along with an equal number of limited rights. Limited rights become
exercisable only in the event of a Change in Control of the Company (as
defined on page 41) and permit the holder to be paid in cash the
appreciation on a stock option instead of exercising the option.
/4/ These dollar amounts are not intended to forecast future appreciation of the
common stock price. The Named Executives Officers will not benefit unless
the common stock price increases above the stock option exercise price. Any
appreciation in the common stock price which results in a gain to these
Named Executive Officers would also benefit all shareholders of the common
stock. For example, the additional value realized by all shareholders of
Sunoco common stock as a group based on the assumed appreciation levels for
the December 6, 2000 grants reflected in the table would be as follows:

-------------------------------
APPRECIATION
LEVEL ADDITIONAL VALUE
-------------------------------
-------------------------------

5% $1,487,098,053
-------------------------------
10% $3,768,728,928
-------------------------------

/5/ These options were granted to Mr. Drosdick upon his appointment as Chairman
and Chief Executive Officer of Sunoco.

-------------------------------------------------------------------------------

OTHER LONG-TERM INCENTIVE AWARDS
-------------------------------------------------------------------------------
Performance-Based Common Stock Unit Awards Granted in 2000/1/

------------------------------------------------------------------------------

Estimated Future Payout
---------------------------
Number of Maximum
Common End of Threshold Target (Number
Stock Units Performance (Number (Number of
Name/2/ (CSUs) Period of CSUs) of CSUs) CSUs)
------------------------------------------------------------------------------
------------------------------------------------------------------------------

J. G. DROSDICK
Chairman of the Board, 50,000 12/31/03 12,500 50,000 75,000
Chief Executive Officer
and President
------------------------------------------------------------------------------
D. M. FRETZ
Senior Vice President, 4,100 12/31/03 1,025 4,100 6,150
MidContinent Refining,
Marketing and Logistics
------------------------------------------------------------------------------
R. W. OWENS
Senior Vice President 3,700 12/31/03 925 3,700 5,550
Northeast Marketing
------------------------------------------------------------------------------
C. K. VALUTAS
Senior Vice President 3,200 12/31/03 800 3,200 4,800
and Chief Administrative
Officer
------------------------------------------------------------------------------
T. W. HOFMANN
Vice President and Chief 2,670 12/31/03 668 2,670 4,005
Financial Officer
------------------------------------------------------------------------------

NOTES TO TABLE:

/1/ The actual payout of the performance-based common stock units granted will
depend upon Sunoco achieving certain performance levels, based upon total
common stock shareholder return, as compared with the total common stock
shareholder return of the Performance Peer Group over a three-year
performance period subsequent to their grant. Additionally, regardless of
how Sunoco performs versus the Performance Peer Group, the common stock
units will be forfeited if certain minimum common stock price levels are
not met by the end of a one-year period following the end of the
performance period.

/2/ R. H. Campbell retired as Chairman of the Board and Chief Executive
Officer of Sunoco in May 2000. Mr. Campbell is not included in this table
since he was not granted common stock units during 2000.

-------------------------------------------------------------------------------

AGGREGATED OPTION/SAR EXERCISES AND YEAR-END VALUES
-------------------------------------------------------------------------------
The following table shows information for the Named Executive Officers
concerning:

. exercises of stock options and stock appreciation rights (SARs) during
2000; and

. the amount and values of unexercised stock options and SARs as of December
31, 2000.

Aggregated Option/SAR Exercises in 2000 and Year-End Option/SAR Values

Number of Value of Unexercised
Securities Number of Securities In-the-Money
Underlying Underlying Options/SARs Options/SARs
Options/ Unexercised At Year-End At Year-End
SARs Value (#) ($)
Name Exercised Realized/1/ ------------------------- -------------------------
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------

J. G. DROSDICK
Chairman of the 0 0 240,000 295,000 1,455,000 1,760,938
Board,
Chief Executive
Officer
and President
-----------------------------------------------------------------------------------------------
D. M. FRETZ
Senior Vice 0 0 53,970 58,750 176,113 399,235
President,
MidContinent
Refining,
Marketing and
Logistics
-----------------------------------------------------------------------------------------------
R. W. OWENS
Senior Vice 0 0 23,800 51,650 11,213 348,778
President
Northeast
Marketing
-----------------------------------------------------------------------------------------------
C. K. VALUTAS
Senior Vice 283 902 37,990 42,800 116,074 285,525
President
and Chief
Administrative
Officer
-----------------------------------------------------------------------------------------------
T. W. HOFMANN
Vice President 0 0 50,350 42,500 177,031 295,594
and
Chief Financial
Officer
-----------------------------------------------------------------------------------------------
R. H. CAMPBELL
Retired Chairman 14,600 37,413 645,830 150,000 2,402,650 1,265,625
of
the Board and
Chief
Executive Officer

NOTE TO TABLE:

/1/ Value realized is equal to the difference between the option/SAR exercise
price and the fair market value of Sunoco common stock at the date of
exercise multiplied by the number of options/SARs exercised.

-------------------------------------------------------------------------------

SEVERANCE PLANS AND OTHER INFORMATION
-------------------------------------------------------------------------------
The Named Executive Officers participate in plans with certain other key
management personnel which provide for severance benefits in the event they
are involuntarily terminated without cause by Sunoco. In the case of the Chief
Executive Officer, severance payments would be equal to two years of base
salary plus guideline annual incentive. The other Named Executive Officers
would receive such payments for one and one-half years. If termination
(whether actual or constructive) occurs within two years of a Change in
Control of Sunoco, severance would be payable in a lump sum equal to three
years of base salary plus guideline annual incentive for the Chief Executive
Officer and two years for the other Named Executive Officers. Based upon base
salary and guideline annual incentive at year-end 2000, payments under these
plans would have been as follows:

-------------------------------------------------------------------------------

Name/1/ Involuntary Termination Change in Control/2/
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------

J. G. Drosdick $2,800,000 $4,200,000
--------------------------------------------------------------------------------------
D. M. Fretz 706,125 941,500
--------------------------------------------------------------------------------------
R. W. Owens 669,375 892,500
--------------------------------------------------------------------------------------
C. K. Valutas 639,375 852,500
--------------------------------------------------------------------------------------
T. W. Hofmann 582,101 776,134
--------------------------------------------------------------------------------------

NOTES TO TABLE:

/1/ R. H. Campbell retired as Sunoco's Chairman of the Board and Chief
Executive Officer in May 2000, and as a result does not participate in the
Severance Plans.

/2/ For purposes of these arrangements, a "Change in Control" means the
occurrence of any of the following events or transactions:

(a) Those directors who were members of Sunoco's Board of Directors
immediately prior to any of the following transactions cease, within
one year of a control transaction, to constitute a majority of either
Sunoco's Board or the Board of any successor to Sunoco (or to all or
substantially all of Sunoco's assets):

(1) any tender offer for or acquisition of Sunoco's capital stock;

(2) any merger, consolidation, or sale of all or substantially all of
Sunoco's assets; or

(3) the submission of a nominee or nominees for the position of director
of Sunoco, in a proxy solicitation or otherwise, by a shareholder or
group of shareholders acting in concert as described in Sections
13(d)(3) and/or 14(d)(2) of the Securities Exchange Act of 1934, as
amended; or

(b) Any entity, person (or group of persons acting in concert as described
in Sections 13(d)(3) and/or 14(d)(2) of the Securities Exchange Act of
1934, as amended), acquires shares of Sunoco, Inc. in a transaction or
series of transactions that results in such entity, person or Group
directly or indirectly owning beneficially more than twenty percent
(20%) of the outstanding voting shares of Sunoco, Inc.

Each eligible executive will be entitled to medical, life insurance and
disability coverage for up to the number of years of severance received, at
the same rate that such benefits are provided to active employees of Sunoco.
In the case of a Change in Control, the plans also provide for the protection
of certain pension benefits which would have been earned during the years for
which severance was paid and reimbursement for any additional tax liability
incurred as a result of excise taxes imposed on payments deemed to be
attributable to the Change in Control. Sunoco's long-term incentive
compensation plans provide that upon a Change in Control, all stock options
become immediately exercisable, and all common stock unit awards are paid out
at the targeted award amount regardless of whether performance targets have
been met.
-------------------------------------------------------------------------------

PENSION PLANS
-------------------------------------------------------------------------------
This table shows the estimated annual retirement benefits payable to a covered
participant based upon the final average pay formulas of the Sunoco, Inc.
Retirement Plan ("SCIRP"), the Sunoco, Inc. Pension Restoration Plan, and the
Sunoco, Inc. Supplemental Executive Retirement Plan ("SERP"). Participants in
these plans may elect to receive their accrued benefits in the form of either
a lump sum or an annuity. The estimates shown in the table below assume that
benefits are received in the form of a single life annuity.

Final Average Estimated Annual Benefits
Total Cash Upon Retirement at Age 62
Compensation/1/ After Completion of the Following Years of Service
---------------------------------------------------------------------
---------------------------------------------------------------------
15 Years/2/ 20 Years/2/ 25 Years 30 Years 35 Years 40 Years/3/
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

$ 200,000 $ 80,000 $ 80,000 $ 93,000 $ 100,000 $ 108,000 $ 115,000
------------------------------------------------------------------------------------
400,000 160,000 160,000 187,000 200,000 215,000 230,000
------------------------------------------------------------------------------------
600,000 240,000 240,000 280,000 300,000 323,000 345,000
------------------------------------------------------------------------------------
800,000 320,000 320,000 373,000 400,000 430,000 460,000
------------------------------------------------------------------------------------
1,000,000 400,000 400,000 467,000 500,000 538,000 575,000
------------------------------------------------------------------------------------
1,200,000 480,000 480,000 560,000 600,000 645,000 690,000
------------------------------------------------------------------------------------
1,400,000 560,000 560,000 653,000 700,000 753,000 805,000
------------------------------------------------------------------------------------
1,600,000 640,000 640,000 747,000 800,000 860,000 920,000
------------------------------------------------------------------------------------
1,800,000 720,000 720,000 840,000 900,000 968,000 1,035,000
------------------------------------------------------------------------------------
2,000,000 800,000 800,000 933,000 1,000,000 1,075,000 1,150,000

NOTES TO TABLE:

/1/ Final Average Total Cash Compensation is the average of the base
salary and guideline annual incentive award in the highest 36
consecutive months during the last 120 months of service.

/2/ Based on the SERP minimum benefit formula of 40% of the Final
Average Total Cash Compensation with 12 or more years of service.

/3/ R. H. Campbell retired as Sunoco's Chairman of the Board and
Chief Executive Officer in the year 2000, following 40 years of
service with Sunoco. Mr. Campbell elected to receive his
retirement benefit in the form of a lump sum that was paid
pursuant to the terms of the applicable plans. This retirement
benefit is in addition to those amounts shown in the Summary
Compensation Table on page 36.

The retirement benefits shown above for SCIRP, the Pension Restoration Plan
and SERP are amounts calculated prior to the Social Security offset. The
Social Security offset is equal to one and two-thirds percent of primary
Social Security benefits for each year of Retirement Plan participation up to
30 years or a maximum offset of 50% of primary Social Security benefits.

Mr. Drosdick's employment agreement provides that he is eligible to
participate in SERP and that any SERP benefit payable to him will be offset by
accrued benefits from the pension plans of prior employers. Assuming a
retirement age of 62 and the satisfaction of applicable plan conditions, the
estimated total annual retirement benefit under Sunoco's plans to be paid to
Mr. Drosdick based upon his 2000 salary and annual incentive award would be
approximately $270,000.

Mr. Owens' employment agreement provides that he is eligible to participate in
SERP and that any SERP benefit payable to him will be offset by accrued
benefits from the pension plans of prior employers. For purposes of
calculating his benefits under SERP, Mr. Owens has been credited with his
years of service with certain former employers. Assuming a retirement age of
62 and the satisfaction of applicable plan conditions, the estimated total
annual retirement benefit under Sunoco's plans to be paid to Mr. Owens based
upon his 2000 salary and annual incentive award would be approximately
$167,000 prior to offset by his prior employers' pension plan benefits.

Credited years of service under these plans for the Named Executive Officers
as of December 31, 2000 are as follows:

----------------------------------------------

Name/1/ Years of Service
-----------------------------
-----------------------------

J. G. Drosdick 4
-----------------------------
D. M. Fretz 23
-----------------------------
R. W. Owens 3
-----------------------------
C. K. Valutas 24
-----------------------------
T. W. Hofmann 23
-----------------------------

NOTE TO TABLE:

/1/ R. H. Campbell retired as Sunoco's
Chairman of the Board and Chief
Executive Officer in May 2000, and as
a result is not included in this
table.

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Directors' & Officers' Indemnification Agreements

Sunoco's bylaws require that Sunoco indemnify its directors and officers, to
the extent permitted by Pennsylvania law, against any costs, expenses
(including attorneys' fees) and other liabilities to which they may become
subject by reason of their service to Sunoco. To insure against such
liabilities, Sunoco has purchased liability insurance for its directors and
officers and has entered into indemnification agreements with its directors
and certain key executive officers and other management personnel. This
insurance and the indemnification agreements supplement the provisions in
Sunoco's Articles of Incorporation which eliminate the potential monetary
liability of directors and officers to Sunoco or its shareholders in certain
situations as permitted by law.

Section 16(a) Beneficial Ownership Reporting Compliance

Sunoco believes that during 2000, all SEC filings of its officers and
directors complied with the requirements of Section 16 of the Securities
Exchange Act, based on a review of forms filed, or written notice that no
annual forms were required. Sunoco is not aware of any shareholder who owned
10 percent or more of Sunoco common stock during 2000.
-------------------------------------------------------------------------------

By Order of the Board of Directors,

/s/ Ann C. Mule

Ann C. Mule
Assistant General Counsel and Corporate Secretary
Philadelphia, PA
March 16, 2001

Exhibit A

--------------------------------------------------------------------------------

SUNOCO, INC.

EXECUTIVE INCENTIVE PLAN

(Amended and Restated as of May 3, 2001)

--------------------------------------------------------------------------------

A-1

ARTICLE I

Definitions

As used in this Plan, the following terms shall have the meanings herein
specified:

1.1 Board of Directors - shall mean the Board of Directors of the Company.

1.2 CEO - shall mean the Chief Executive Officer of the Company.

1.3 Change in Control - shall mean the occurrence of any of the following
events or transactions:

(a) Continuing Directors cease, within one year of a Control Transaction,
to constitute a majority of the Board of Directors of Sunoco, Inc. (or of
the Board of Directors of any successor to Sunoco, Inc. or to all or
substantially all of its assets), or

(b) any entity, person or Group acquires shares of Sunoco, Inc. in a
transaction or series of transactions that results in such entity, person
or Group directly or indirectly owning beneficially more than twenty
percent (20%) of the outstanding voting shares of Sunoco, Inc.

1.4 CIC Incentive Award - shall mean the incentive award payable in cash
following a Change in Control, as such award is described herein at Article
VII.

1.5 CIC Just Cause - shall mean:

(a) a judicial determination that the Participant has committed fraud,
misappropriation, or embezzlement against the Company; or

(b) a non-appealable conviction of, or entry of a plea of nolo contendere
for, an act by the Participant constituting a felony which, as determined
by the Company in good faith, constitutes a crime involving moral turpitude
and has resulted in material harm to the Company, its subsidiaries and
affiliates taken as a whole.

A termination of employment pursuant to Just Cause shall not be effective
unless accompanied by a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the Continuing Directors at a meeting of
the Board of Directors which was called and held for the purpose of
considering such termination, or if there are no Continuing Directors, when by
at least three quarters ( 3/4) of the entire Board of Directors (after
reasonable notice to the Participant and an opportunity for the Participant,
together with the Participant's counsel, to be heard before the Board of
Directors) finding that, in the good faith opinion of the Board of Directors,
the Participant was guilty of conduct set forth in the preceding sentence, and
specifying the particulars thereof in detail. In any Board deliberations or
votes concerning a determination under this Section 1.5, the Participant shall
recuse himself from such deliberations and votes.

1.6 CIC Participant - shall mean any Participant who:

(a) was employed by the Company on the date of the Change in Control;

A-2

(b) was eligible for a prorated award under the provisions of Section
5.2; or

(c) following a Potential Change in Control, ceased to be an employee of
the Company as a result of either a termination of employment by the
Company other than for CIC Just Cause or a termination of employment by the
Participant for one of the following reasons:

(1) The assignment to such Participant of any duties materially
inconsistent with such Participant's positions, duties,
responsibilities and status with the Company immediately prior to the
Change in Control, or a reduction in the duties and responsibilities
held by the Participant immediately prior to the Change in Control; a
change in the Participant's reporting responsibilities, title or
offices as in effect immediately prior to the Change in Control that is
adverse to the Participant; or any removal of the Participant from or
any failure to reelect the Participant to any position with the Company
that such Participant held immediately prior to the Change in Control
except in connection with such Participant's:

(i) assignment to a new position at a higher combined annual
base salary and Guideline Incentive Award; or

(ii) termination of employment by the Company for CIC Just
Cause;

(2) With respect to any Participant who is a member of the Board of
Directors immediately prior to the Change in Control, any failure of
the shareholders of the Company to elect or reelect, or of the Company
to appoint or reappoint, the Participant as a member of the Board of
Directors;

(3) A reduction by the Company in the Participant's annual base
salary or Guideline Incentive Award as in effect immediately prior to
the Change in Control; the failure by the Company to continue in
effect, or the taking of any action by the Company that would adversely
affect such Participant's participation in or materially reduce such
Participant's benefits under its employee benefit plans or compensation
plans, taken as a whole, in which such Participant was participating
immediately prior to the Change in Control; provided, however, that in
the aggregate such actions by the Company significantly reduce the
Participant's total compensation (i.e., the sum of Participant's annual
base salary, Guideline Incentive Award and the aggregate value to the
Participant of all employee benefit and compensation plans); or the
failure by the Company, without the Participant's consent, to pay to
the Participant any portion of the Participant's current compensation,
or to pay to the Participant any portion of an installment of deferred
compensation under any deferred compensation program of the Company; or

(4) The Company requires the Participant to be based anywhere other
than the Participant's present work location or a location within
thirty-five (35) miles from the present location; or the Company
requires the Participant to travel on Company business to an extent
substantially more burdensome than such Participant's travel
obligations during the period of twelve (12) consecutive months
immediately preceding the Change in Control; provided, however, that
the Participant can

A-3

demonstrate that such termination or circumstance in subsections (1)
through (4) herein leading to termination was at the request of a third
party with which the Company had entered into negotiations or an
agreement with regard to a Change in Control or otherwise occurred in
connection with, or in anticipation of, a Change in Control, and also
provided that in either such case, such Change in Control actually
occurs within one (1) year following the date of termination.

1.7 CIC Short Period - shall mean the portion of the Plan Year from January
1 to the date of the occurrence of a Change in Control.

1.8 Code - shall mean the Internal Revenue Code of 1986, as amended.

1.9 Committee - shall mean the committee appointed to administer this Plan
by the Board of Directors of the Company, as constituted from time to time.
The Committee shall consist of at least two (2) members of the Board of
Directors, each of whom shall meet applicable requirements set forth in the
pertinent regulations under Section 16 of the Securities Exchange Act of 1934,
as amended, and Section 162(m) of the Code.

1.10 Company - shall mean Sunoco, Inc., a Pennsylvania corporation. The term
"Company" shall include any successor to Sunoco, Inc., any subsidiary or
affiliate which has adopted the Plan, or a corporation succeeding to the
business of Sunoco, Inc., or any subsidiary or affiliate, by merger,
consolidation or liquidation or purchase of assets or stock or similar
transaction.

1.11 Continuing Director - shall mean a director who was a member of the
Board of Directors immediately prior to a Control Transaction which results in
a Change in Control.

1.12 Control Transaction - shall mean any of the following transactions or
any combination thereof:

(a) any tender offer for or acquisition of capital stock of Sunoco, Inc.;

(b) any merger, consolidation, or sale of all or substantially all of the
assets of Sunoco, Inc.; or

(c) the submission of a nominee or nominees for the position of director
of Sunoco, Inc. by a shareholder or a Group of shareholders in a proxy
solicitation or otherwise.

1.13 Executive Resources Employee - shall mean any individual who has been
designated by the Company as a member of the Company's Executive Resources
group. Generally, such group shall include employees in Grades 14 and above
and all other employees subject to Section 16 of the Securities and Exchange
Act of 1934, as amended.

1.14 Executive Team - shall mean the senior executives who have significant
operating and/or strategic responsibilities for the Company as designated by
the CEO.

1.15 Fair Market Value - shall mean, as of any date and in respect of any
share of Sunoco Stock, the opening price on such date of a share of Sunoco
Stock (which price shall be the closing price on the previous trading day of a
share of Sunoco Stock as reported on

A-4

the New York Stock Exchange Composite Transactions Tape, and as reflected in
the consolidated trading tables of the Wall Street Journal or any other
publication selected by the Committee). If there is no sale of shares of
Sunoco Stock on the New York Stock Exchange for more than ten (10) days
immediately preceding such date, or if deemed appropriate by the Committee for
any other reason, the Fair Market Value of the shares of Sunoco Stock shall be
as determined by the Committee in such other manner as it may deem
appropriate. In no event shall the Fair Market Value of any share of Sunoco
Stock be less than its par value.

1.16 Group - shall mean persons who act in concert as described in Sections
13(d)(3) and/or 14(d)(2) of the Securities Exchange Act of 1934, as amended.

1.17 Guideline Incentive Award - shall mean the result of the individual
Participant's actual annualized salary multiplied by the guideline percentage,
as determined under Article III.

1.18 Incentive Award - shall mean the award granted to a Participant.

1.19 Ordinary Just Cause - shall mean:

(a) the Participant's conviction for a criminal offense (other than a
traffic offense) including, without limitation, a crime involving moral
turpitude or common law fraud; or

(b) the Company's reasonable determination that the Participant has:

(1) committed an act of fraud, embezzlement, theft, or
misappropriation of funds in connection with such Participant's duties
in the course of his employment with the Company; or

(2) engaged in gross mismanagement, willful misconduct, or gross
negligence in the course of his/her employment with the Company; or

(3) violated any of the Company's policies, including, but not
limited to, policies regarding sexual harassment, insider trading,
confidentiality, substance abuse and/or conflicts of interest, which
violation could result in the termination of the Participant's
employment or removal as a director of the Company.

1.20 Participant - shall mean a person participating or eligible to
participate in the Plan, as determined under Section 2.4.

1.21 Performance Factor - shall mean:

(a) for a Participant who is one of the top five most highly compensated
officers of the Company during the applicable Plan Year: the various payout
percentages related to the attainment levels of one or more Performance
Goals, as determined by the Committee; and

(b) for a Participant who is not one of the top five most highly
compensated officers of the Company during the applicable Plan Year: such
payout percentages related to the attainment levels of one or more
Performance Goals, as determined by the CEO, or any authorized delegate
thereof.

A-5

1.22 Performance Goals - shall mean:

(a) for a Participant who is one of the top five most highly compensated
officers of the Company during the applicable Plan Year: the objective
financial or operating goals established by the Committee in accordance
with Section 162(m) of the Code. Such Performance Goals may include
specific targeted amounts of, or changes in, revenues; expenses; net
income; operating income; equity; return on equity, assets or capital
employed; working capital; shareholder return; operating capacity utilized;
production or sales volumes; throughput; or other objective criteria; and

(b) for a Participant who is not one of the top five most highly
compensated officers of the Company during the applicable Plan Year: such
annual financial, operating, or other goals and objectives as may be
established from time to time in the sole discretion of the CEO, or any
authorized delegate thereof.

Such goals may be applicable to the Company as a whole, to one or more of
the Company's business units or teams, or to an individual Participant in the
Plan. Performance Goals may be applied in total or on a per share, per barrel
or percentage basis and on an absolute basis or relative to other companies,
industries or indices or any combination thereof, as determined by the
Committee (in the case of Performance Goals established by the Committee with
respect to a Participant who is one of the top five most highly compensated
officers of the Company during the applicable Plan Year) or by the CEO, or any
authorized delegate thereof (in the case of a Participant who is not one of
the top five most highly compensated officers of the Company during the
applicable Plan Year).

1.23 Plan - shall mean the Company's Executive Incentive Plan as amended and
restated effective as of May 3, 2001.

1.24 Plan Year - shall mean the performance (calendar) year.

1.25 Potential Change in Control - shall mean the occurrence of any of the
following events or transactions:

(a) any person (other than Sunoco, Inc., or any affiliate or subsidiary
thereof) makes a tender offer for capital stock of Sunoco, Inc.;

(b) any person becomes the beneficial owner, directly or indirectly, of
capital stock of Sunoco, Inc. in an amount which requires the filing of
Schedule 13D or its equivalent form pursuant to the Rules and Regulations
under the Securities Exchange Act of 1934 as from time to time amended;

(c) the submission of a nominee or nominees for the position of director
of Sunoco, Inc. by a shareholder or Group of shareholders in a proxy
solicitation or otherwise which, in its judgment, the Board of Directors
determines by adoption of a resolution within thirty (30) days of such
submission, might result in a Change in Control of Sunoco, Inc.;

(d) any person files a pre-merger notification for the acquisition of
capital stock of Sunoco, Inc. pursuant to the Hart-Scott-Rodino Act; or

A-6

(e) the Board of Directors in its judgment determines by adoption of a
resolution that a Potential Change in Control of Sunoco, Inc. for purposes
of this Plan has occurred.

1.26 Pro-rated Bonus Award - shall mean an amount equal to the Incentive
Award otherwise payable to a Participant for the Plan Year in which the
Participant's termination of employment with the Company (other than for
Ordinary Just Cause) is effective, multiplied by a fraction the numerator of
which is the number of full and partial months in the applicable Plan Year
through the date of termination of such Participant's employment, and the
denominator of which is twelve (12).

1.27 Sunoco Stock - shall mean the common stock of Sunoco, Inc.

ARTICLE II

Background and Purpose

2.1 Purpose. The purpose of the Executive Incentive Plan is to promote the
achievement of the Company's short-term, targeted business objectives by
providing competitive incentive reward opportunities to those employees who
can significantly impact the Company's performance. The Plan enhances the
Company's ability to attract, develop and motivate individuals as members of a
talented management team while aligning their interest with those of the
shareholders. As described herein, the awards made under the Plan may
recognize Company, business unit, team and/or individual performance.

2.2 Effective Date. This amendment and restatement of the Plan is effective
May 3, 2001.

2.3 Administration. The Committee shall have full power and authority to
construe, interpret and administer the Plan and to make rules and regulations
subject to the provisions of the Plan. All decisions, actions, determinations
or interpretations of the Committee shall be made in its sole discretion and
shall be final, conclusive and binding on all parties.

2.4 Eligibility and Participation. Participation in the Plan is limited to
Executive Resource Employees and other employees evaluated in positions with
Grades 11, 12 and 13 at any time during the Plan Year.

ARTICLE III

Determination of Guideline Incentive Awards

3.1 Guideline Percentages. Within the time prescribed by Section 162(m) of
the Code, the Committee will establish, in writing, for the applicable Plan
Year, the guideline incentive opportunities for Participants as a percentage
of actual salary in effect on the last day of the final pay period of the
current Plan Year.

3.2 Guideline Incentive Award. The Guideline Incentive Award is calculated
for each Participant by multiplying the individual Participant's actual salary
in effect on the last day of

A-7

the final pay period of the current Plan Year by the applicable guideline
percentage established by the Committee.

Actual incentive awards to individual Participants may be greater or lesser
than this guideline depending on Company and, as necessary, business unit,
team and/or individual Participant performance.

ARTICLE IV

Determination of Incentive Award

4.1 Performance Goals.

(a) Five Most Highly Compensated Officers: For a Participant who is one of
the top five most highly compensated officers of the Company during the
applicable Plan Year, the amount of any Incentive Award earned will be based
upon the attainment of Performance Goals established by the Committee in
accordance with Section 162(m) of the Code. Within the time prescribed by
Section 162(m) of the Code, the Committee will establish, in writing, the
weighted Performance Goals and related Performance Factors for various goal
achievement levels for the applicable Plan Year, and will determine the
appropriate methodology for including Company, business unit, team and/or
individual performance in the Incentive Award computations for such year.

In establishing the weighted Performance Goals, the Committee shall take the
necessary steps to insure that the ability to achieve the pre-established
goals is uncertain at the time the goals are set. The established written
Performance Goals, assigned weights, and Performance Factors shall be written
in terms of an objective formula, whereby any third party having knowledge of
the relevant Company, business unit, team and/or individual performance
results could calculate the amount to be paid. Such Performance Goals may vary
by Participant and by award.

(1) Adjustment or Modification of Performance Goals. The Committee, in
its discretion (and within the time prescribed by Section 162(m) of the
Code), may adjust or modify the calculation of Performance Goals to prevent
dilution or enlargement of the rights of Participants:

(i) in the event of, in recognition of, or in anticipation of, any
unanticipated, unusual nonrecurring or extraordinary corporate item,
transaction, event, or development; or

(ii) in response to, or in anticipation of, changes in applicable
laws, regulations, accounting principles, or business conditions.

Unless otherwise determined by the Committee, if any provision of the
Plan or any Incentive Award granted to an individual who is one of the top
five most highly compensated officers of the Company hereunder would not
comply with Section 162(m) of the Code, such provision or Incentive Award
shall be construed or deemed amended to conform to Section 162(m) of the
Code.

A-8

(2) Determination of Performance Factor. After the end of each Plan Year,
the Committee will determine:

(i) the extent to which the Company, business unit and/or team
Performance Goals have been met; and

(ii) the Company, business unit and/or team Performance Factor (each
of which may vary from 0% to 200%), appropriate to the level of
performance achieved with respect to each Performance Goal.

(b) Other Participants: For a Participant who is not one of the top five
most highly compensated officers of the Company during the applicable Plan
Year, the amount of any Incentive Award earned will be based upon the
attainment of Performance Goals established as provided in this Section
4.1(b). For each Plan Year, the CEO, and if so delegated, other members of the
Executive Team will determine the appropriate methodology for including
Company, business unit, team and individual performance in the Incentive Award
computations for such year. While Company Performance will always be included
in the computation, the other factors may or may not be included as deemed
appropriate by the Executive Team. The applicable Performance Factors shall be
determined as follows:

(1) Determination of Performance Factor Applicable to Company. For each
Plan Year, the Compensation Committee shall establish annual Performance
Goal(s) for the Company, based on one or more criteria that the
Compensation Committee, in its sole discretion, determines to be
applicable.

After the end of each calendar year, the Compensation Committee will
determine the extent to which such Performance Goals have been met and the
appropriate Company Performance Factor, from 0% to 200%, that is
appropriate with the varying levels of performance for each goal.

(2) Determination of Business Unit and Team Performance Factors. The CEO,
and if so delegated, other members of the Executive Team shall determine
the annual business unit Performance Goal(s) and the applicable levels of
performance based on one or more factors. Business unit leaders will
establish annual Performance Goal(s) for any teams within their respective
business units.

After the end of each calendar year, the CEO, and if so delegated, other
members of the Executive Team will determine the extent to which the
business unit Performance Goals have been met and the business unit
Performance Factor, from 0% to 200%, that is appropriate with the varying
levels of performance for each goal. Business unit leaders will similarly
evaluate the performance of any teams to determine the appropriate
Performance Factor applicable to such team.

4.2 Individual Performance Factors. Incentive Awards under this Plan may be
based, in whole or in part, upon the attainment of individual performance
objectives or targets. For a Participant who is one of the top five most
highly compensated officers of the Company during the applicable Plan Year,
the Committee will establish, in writing, individual

A-9

performance objectives or targets in accordance with Section 162(m) of the
Code and Section 4.1 hereof. For all other Participants, the recommended
individual performance assessment process is briefly outlined as follows:

(a) Prior to the beginning of each Plan Year or other appropriate time,
the Participant and his or her manager will agree on individual performance
targets or objectives (which may be related to the Participant's
collaboration on a work team) to be attained during the Plan Year.

(b) Progress toward attainment of such individual targets or objectives
will be formally reviewed on a periodic basis.

(c) At the end of the year, the manager will assess the degree to which
the individual performance targets or objectives have been achieved,
keeping in mind environmental or circumstantial changes that may have
affected the original targets or objectives. Specifically, consideration
should be given to:

(1) level of contributions relative to peers.

(2) degree of difficulty of performance targets.

(3) reaction to unanticipated changes in the business environment.

(4) unplanned contributions.

(5) team performance, as appropriate.

(d) While the level of individual performance for the Plan should be
based primarily on annual targets and objectives, the performance factors
utilized for this program should be consistent with appraisals used for the
purposes of salary administration as updated to reflect performance since
the last appraisal.

(e) The performance appraisal should be documented in such a way as to
identify the performance targets and objectives, the assessment of
individual performance against such targets and objectives, and any other
significant information to support the recommendation.

(f) The Participant's individual performance factor should be determined
based upon the individual performance assessment as outlined below:

Individual Performance Adjustment to Individual
Assessments Performance Components*
---------------------- ------------------------

Exceed all performance targets.................... 150% to 200%
Exceed most performance targets................... 115% to 145%
Met most performance targets...................... 90% to 110%
Met some/few performance targets.................. 50% to 85%
Completely unacceptable performance............... 0%

--------
* All assessments should be multiples of 5%.

A-10

(g) The Participant's individual performance assessment will be
determined by his or her manager and approved by the appropriate member of
the Executive Team and, where appropriate, the CEO.

ARTICLE V

Forfeiture and/or Proration of Incentive Award

5.1 Forfeiture. Provided that no Change in Control of the Company has
occurred, if a Participant voluntarily terminates his or her employment with
the Company (for any reason other than retirement, death, permanent
disability, approved leave of absence) prior to December 31 of any Plan Year,
such Participant will not receive payment of any Incentive Award for such Plan
Year. Likewise, a Participant will not receive payment of any Incentive Award
for a particular Plan Year if no Change in Control has occurred and the
Participant's employment with the Company is terminated for Ordinary Just
Cause before March 15 of the succeeding calendar year.

5.2 Proration. A Pro-rated Bonus Award, reflecting participation for a
portion of the Plan Year, will be paid to any Participant whose employment
status changed during the year as a result of death or permanent disability
(as determined by the Committee), or due to retirement, approved leave of
absence, or termination at the Company's request (other than for Ordinary Just
Cause). New hires and part-time employees also will receive a Pro-rated Bonus
Award. Unless otherwise required by applicable law, any Pro-rated Bonus Award
payable hereunder will be paid on the date when Incentive Awards are otherwise
payable as provided in the Plan.

ARTICLE VI

Timing, Form of Payment, and Deferral of Awards

6.1 Timing and Form of Payment.

(a) Certification in Writing. Prior to the payment of any Incentive Award
under this Plan, the Committee will certify in writing that the applicable
Performance Goals, and any other material terms or conditions of such
award, have been satisfied. In making this certification, the Committee
will be entitled to rely upon an appropriate officer's certificate from the
Company's Chief Financial Officer. Upon approval by the Committee of the
individual Incentive Awards for the top five most highly compensated
officers of the Company and the aggregate amount of all Incentive Awards
for the Plan Year, and subject to Sections 6.2 and 6.3 hereof, payment of
the individual awards will be made in cash less the withholding of
appropriate taxes. Payment will be made not later than March 15th of the
calendar year following each Plan Year.

(b) Negative Discretion. The Committee will have the discretion, by
Participant and by grant, to reduce (but not to increase) some or all of
the amount of any Incentive Award that would otherwise be payable by reason
of the satisfaction of the Performance Goals. In making any such
determination, the Committee is authorized to take into account any such
factor or factors it determines are appropriate, including but not limited

A-11

to Company, business unit and individual performance; provided, however,
the exercise of such negative discretion with respect to one executive may
not be used to increase the amount of any award otherwise payable to
another executive.

6.2 Deferral of Awards.

(a) Deferral by Participant. Certain executives may elect to defer their
Incentive Award under the terms of the Sunoco, Inc. Deferred Compensation
Plan.

(b) Deferral by Committee. Each year in conjunction with the granting of
an Annual Incentive Award to a Participant in this Plan, the Committee, in
its sole discretion, may cause all or a portion of such Annual Incentive
Award to be deferred under the terms of the Sunoco, Inc. Deferred
Compensation Plan. Any portion of the Annual Incentive Award which is
deferred shall be credited to a Participant's account under the Deferred
Compensation Plan at the time the bonus would otherwise have been paid had
no Committee action to defer been taken.

6.3 Awards of Sunoco Stock. In the sole discretion of the Committee, all or
a portion of each Participant's Incentive Award may be paid in shares of
Sunoco Stock, all or a portion of which may be subject to certain restrictions
for failure to meet applicable minimum stock ownership guidelines, or
otherwise.

(a) For a Participant subject to minimum stock ownership guidelines (as
established from time to time by the Committee or the Company), but failing
to meet the applicable personal ownership requirement within the prescribed
period, the Committee may award shares of Sunoco Stock, from the treasury
of the Company, subject to appropriate restrictions on sale, exchange,
transfer, pledge, hypothecation, gift or other disposition.

(b) The number of shares of Sunoco Stock to be issued from the Company's
treasury pursuant to this Section 6.3 shall be determined by dividing:

(1) the amount of the Incentive Award to be paid in Sunoco Stock; by

(2) the average Fair Market Value of Sunoco Stock during the ten (10)
consecutive trading days immediately preceding the date on which the
Incentive Award is to be paid.

ARTICLE VII

Change in Control

7.1 Effect of Change in Control. The terms of this Article VII shall
immediately become operative, without further action or consent by any person
or entity, upon a Change in Control, and once operative shall supersede and
control over any other provisions of this Plan.

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7.2 Acceleration. Upon the occurrence of a Change in Control, the CIC
Incentive Award shall be payable in cash within thirty (30) days of the
occurrence of a Change in Control (or as soon as it is practicable to
determine the appropriate Performance Factors under Subsection (a) below) to
all CIC Participants. Such award shall be calculated according to the terms of
the Plan, except as follows:

(a) The applicable Performance Factors shall be determined based upon
performance of the Company, business unit and/or team, as the case may be,
from January 1 through the end of the most recent quarter (prior to the
Change in Control) for which the Company has reported its earnings to the
public. Notwithstanding the methodology established by the Committee for
the Plan Year, there shall be no adjustment for individual performance
factors in the determination of the CIC Incentive Award. If a specified
percentage of the Guideline Award was to be based upon individual
performance, such percentage will be adjusted using the weighted average of
the Performance Factors applicable to Company and, as necessary, business
unit and/or team performance used to determine the non-individual
performance components of the CIC Participant's award.

(b) The amount of the CIC Incentive Award shall be equal to the
respective annual Guideline Incentive Award adjusted to reflect the
Performance Factors applicable to Company and, as necessary, business unit
and/or team performance (calculated in accordance with subsection (a)
hereof), multiplied by the number of full and partial months in the CIC
Short Period divided by twelve (12). Such result shall be further adjusted
to reflect participation for only a portion of the CIC Short Period in
accordance with Section 5.2.

(c) Notwithstanding the provisions of Section 8.3 hereof, effective upon
a Change in Control, no action by the Committee or the Board of Directors
may terminate or reduce the benefits or prospective benefits of any CIC
Participant on the date of reference without the express written consent of
such CIC Participant.

7.3 Attorney's Fees. The Company shall pay all reasonable legal fees and
related expenses incurred by a Participant in seeking to obtain or enforce any
payment, benefit or other right such Participant may be entitled to under the
Plan after a Change in Control; provided, however, that the Participant shall
be required to repay any such amounts to the Company to the extent a court of
competent jurisdiction issues a final and non-appealable order setting forth
the determination that the position taken by the Participant was frivolous or
advanced in bad faith.

ARTICLE VIII

Miscellaneous

8.1 Funding of Plan. In a meeting to be held not later than December 31st of
each Plan Year, the Committee may determine, by appropriate resolution, an
estimate of the amount of monies, if any, that should be set aside for the
current Plan Year for payment to Participants in the following calendar year.

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8.2 Construction. Nothing in this Plan or in any agreement or other
instrument executed pursuant thereto shall be construed as conferring upon any
Participant the right to receive executive incentive compensation or to be
continued in the employ of the Company and any rights conferred by this Plan
may not be transferred, sold, assigned, pledged, anticipated or otherwise
disposed of other than by will or intestate laws.

8.3 Amendment. This Plan may be amended at any time by the Committee and may
be terminated in whole or in part at any time by the Board of Directors
(except as set forth in Section 7.2(c)).

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Exhibit B

--------------------------------------------------------------------------------

SUNOCO, INC.

LONG-TERM PERFORMANCE ENHANCEMENT PLAN II

(as of May 3, 2001)

--------------------------------------------------------------------------------

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ARTICLE I

Definitions

As used in this Plan, the following terms shall have the meanings herein
specified:

1.1 Affiliate - shall mean any person or entity which directly, or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with Sunoco, Inc.

1.2 Board of Directors - shall mean the Board of Directors of Sunoco, Inc.

1.3 Change in Control - shall mean the occurrence of any of the following
events or transactions:

(b) any entity, person or Group acquires shares of Sunoco, Inc. in a
transaction or series of transactions that result in such entity, person or
Group directly or indirectly owning beneficially more than twenty percent
(20%) of the outstanding voting shares of Sunoco, Inc.

1.4 Code - shall mean the Internal Revenue Code of 1986, as amended.

1.5 Committee - shall mean the committee appointed to administer this Plan
by the Board of Directors of the Company, as constituted from time to time.
The Committee shall consist of at least two (2) members of the Board of
Directors, each of whom shall meet applicable requirements set forth in the
pertinent regulations under Section 16 of the Securities Exchange Act of 1934,
as amended, and Section 162(m) of the Code.

1.6 Common Stock - shall mean the authorized and unissued or treasury shares
of common stock of Sunoco, Inc.

1.7 Common Stock Units - shall have the meaning provided herein at Section
6.1.

1.8 Company - shall mean Sunoco, Inc., a Pennsylvania corporation. The term
"Company" shall include any successor to Sunoco, Inc., any Subsidiary or
Affiliate which has adopted the Plan, or a corporation succeeding to the
business of Sunoco, Inc., or any Subsidiary or Affiliate by merger,
consolidation, liquidation or purchase of assets or stock or similar
transaction.

1.9 Continuing Director - shall mean a Director who was a member of the
Board of Directors immediately prior to a Control Transaction which results in
a Change in Control.

1.10 Control Transaction - shall mean any of the following transactions or
any combination thereof:

(a) any tender offer for or acquisition of capital stock of Sunoco, Inc.;

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(b) any merger, consolidation, or sale of all or substantially all of the
assets of Sunoco, Inc.; or

(c) the submission of a nominee or nominees for the position of director
of Sunoco, Inc. by a shareholder or a Group of shareholders in a proxy
solicitation or otherwise.

1.11 CSU Payout Date - shall have the meaning provided herein at Section
6.9.

1.12 Dividend Equivalents - shall have the meaning provided herein at
Section 6.3.

1.13 Dividend Equivalent Account - shall have the meaning provided herein at
Section 6.3.

1.14 Employment Termination Date - shall mean the date on which the
employment relationship between the Participant and the Company is terminated,
or on which the Participant ceases to be a director of the Company.

1.15 Exercise Period - shall have the meaning provided herein at Section
5.3.

1.16 Fair Market Value - shall mean, as of any date and in respect of any
share of Common Stock, the opening price on such date of a share of Common
Stock (which price shall be the closing price on the previous trading day of a
share of Common Stock as reported on the New York Stock Exchange Composite
Transactions Tape, and as reflected in the consolidated trading tables of the
Wall Street Journal or any other publication selected by the Committee). If
there is no sale of shares of Common Stock on the New York Stock Exchange for
more than ten (10) days immediately preceding such date, or if deemed
appropriate by the Committee for any other reason, the Fair Market Value of
the shares of Common Stock shall be as determined by the Committee in such
other manner as it may deem appropriate. In no event shall the Fair Market
Value of any share of Common Stock be less than its par value.

1.17 Group - shall mean persons who act in concert as described in Sections
13(d)(3) and/or 14(d)(2) of the Securities Exchange Act of 1934, as amended.

1.18 Immediate Family Member - shall mean spouse (or common law spouse),
siblings, parents, children, stepchildren, adoptive relationships and/or
grandchildren of the Participant (and, for this purpose, also shall include
the Participant).

1.19 Incentive Stock Options - shall have the meaning provided herein at
Section 4.1.

1.20 Just Cause - shall mean:

(a) a judicial determination that the Participant has committed fraud,
misappropriation, or embezzlement against the Company; or

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No termination of employment shall be deemed an effective termination for
Just Cause unless accompanied by a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the Continuing Directors at a
meeting of the Board of Directors which was called and held for the purpose of
considering such termination, or if there are no Continuing Directors, then by
at least three quarters (3/4) of the entire Board of Directors (after
reasonable notice to the Participant and an opportunity for the Participant,
together with the Participant's counsel, to be heard before the Board of
Directors) finding that, in the good faith opinion of the Board of Directors,
the Participant was guilty of conduct set forth in the preceding sentence, and
specifying the particulars thereof in detail. In any deliberations or votes by
the Board of Directors concerning a determination under this Section, the
Participant shall recuse himself from such deliberations and votes.

1.21 Limited Rights - shall have the meaning provided herein at Section 5.1.

1.22 Market Price - shall have the meaning provided herein at Section 5.4.

1.23 Option - shall mean Stock Option and/or Incentive Stock Option.

1.24 Option Price - shall mean the purchase price per share of Common Stock
deliverable upon the exercise of an Option.

1.25 Optionee - shall mean the holder of an Option.

1.26 Participant - shall have the meaning provided herein at Section 2.4(a).

1.27 Performance Factors - shall mean the various payout percentages related
to the attainment levels of one or more Performance Goals, as determined by
the Committee.

1.28 Performance Goals - shall mean the specific targeted amounts of, or
changes in, financial or operating goals including: revenues; expenses; net
income; operating income; equity; return on equity, assets or capital
employed; working capital; shareholder return; operating capacity utilized;
production or sales volumes; or throughput. Other financial or operating goals
may also be used as determined by the Committee. Such goals may be applicable
to the Company as a whole or one or more of its business units and may be
applied in total or on a per share, per barrel or percentage basis and on an
absolute basis or relative to other companies, industries or indices or any
combination thereof, as determined by the Committee.

1.29 Performance Period - shall have the meaning provided herein at Section
6.4.

1.30 Plan - shall have the meaning provided herein at Section 2.2.

1.31 Potential Change in Control - shall mean the occurrence of any of the
following events or transactions:

(a) any person (other than Sunoco, Inc., or any Affiliate or Subsidiary
thereof) makes a tender offer for capital stock of Sunoco, Inc.;

(b) any person becomes the beneficial owner, directly or indirectly, of
capital stock of Sunoco, Inc. in an amount which requires the filing of
Schedule 13D or its equivalent

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form pursuant to the Rules and Regulations under the Securities Exchange
Act of 1934 as from time to time amended;

(d) any person files a pre-merger notification for the acquisition of
capital stock of Sunoco, Inc. pursuant to the Hart-Scott-Rodino Act; or

(e) the Board of Directors in its judgment determines by adoption of a
resolution that a Potential Change in Control of Sunoco, Inc. for purposes
of this Plan has occurred.

1.32 Qualifying Termination - shall mean, with respect to the employment of
any Participant, the following:

(a) a termination of employment by the Company within seven (7) months
after a Change in Control, other than for Just Cause;

(b) a termination of employment by the Participant within seven (7)
months after a Change in Control for one or more of the following reasons:

(1) the assignment to such Participant of any duties materially
inconsistent with such Participant's positions, duties,
responsibilities and status with the Company immediately prior to the
Change in Control, or a reduction in the duties and responsibilities
held by the Participant immediately prior to the Change in Control; a
change in the Participant's reporting responsibilities, title or
offices as in effect immediately prior to the Change in Control that is
adverse to the Participant; or any removal of the Participant from or
any failure to reelect the Participant to any position with the Company
that such Participant held immediately prior to the Change in Control
except in connection with such Participant's:

(i) assignment to a new position at a higher combined annual
base salary and guideline (target) bonus; or

(ii) termination of employment by the Company for Just Cause;

(2) with respect to any Participant who is a member of the Board of
Directors immediately prior to the Change in Control, the removal by
the Company's shareholders of, or any failure of the Company's
shareholders to elect or reelect, or of the Company to appoint or
reappoint, the Participant as a member of the Board of Directors;

(3) a reduction by the Company in either of the Participant's annual
base salary or guideline (target) bonus as in effect immediately prior
to the Change in Control; the failure by the Company to continue in
effect, or the taking of any action by the Company that would adversely
affect such Participant's participation in or significantly reduce such
Participant's benefits under, any employee benefit plan or

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compensation plan in which such Participant was participating
immediately prior to the Change in Control; provided, however, that in
the aggregate such actions by the Company significantly reduce the
Participant's total compensation (i.e., the sum of Participant's annual
base salary, guideline (target) bonus, and the aggregate value to the
Participant of all employee benefit and compensation plans); or the
failure by the Company, without the Participant's consent, to pay to
the Participant any portion of the Participant's current compensation,
or to pay to the Participant any portion of an installment of deferred
compensation under any deferred compensation program of the Company; or

(4) the Company requires the Participant to be based anywhere other
than the Participant's present work location or a location within
thirty-five (35) miles from the present location; or the Company
requires the Participant to travel on Company business to an extent
substantially more burdensome than such Participant's travel
obligations during the period of twelve (12) consecutive months
immediately preceding the Change in Control;

provided, however, that in the case of any such termination of employment
by the Participant under this subparagraph (b), such termination shall not
be deemed to be a Qualifying Termination unless the termination occurs
within 120 days after the occurrence of the event or events constituting
the reason for the termination; or

(c) a termination of employment by the Company other than a termination
for Just Cause, or a termination of employment by the Participant for one
of the reasons set forth in (b) above, following a Potential Change in
Control, if the Participant can demonstrate that such termination or
circumstance in (b) above leading to termination:

(1) was at the request of a third party with which the Company had
entered into negotiations or an agreement with regard to a Change in
Control; or

(2) otherwise occurred in connection with, or in anticipation of, a
Change in Control;

provided, however, that in either such case, such Change in Control
actually occurs within one (1) year following the Employment Termination
Date.

1.33 Stock Options - shall have the meaning provided herein at Section 3.1.

1.34 Subsidiary - shall mean any corporation of which, at the time, more
than fifty percent (50%) of the shares entitled to vote generally in an
election of directors are owned directly or indirectly by Sunoco, Inc. or any
subsidiary thereof.

ARTICLE II

Background, Purpose and Term of Plan; Participation & Eligibility for Benefits

2.1 Background. Effective on December 31, 2001, no further awards shall be
made under the Sunoco, Inc. Long-Term Performance Enhancement Plan adopted in
May, 1997; provided, however, that any rights theretofore granted under that
plan shall not be affected.

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2.2 Purpose of the Plan. The purposes of this Sunoco, Inc. Long-Term
Performance Enhancement Plan II (the "Plan") are to:

(a) better align the interests of shareholders and management of the
Company by creating a direct linkage between Participants' rewards and
shareholders' gains;

(b) provide management with the ability to increase equity ownership in
Sunoco, Inc.;

(d) provide an incentive to management for continuous employment with the
Company.

It is intended that most awards made under the Plan will qualify as
performance-based compensation under Section 162(m) of the Code.

2.3 Term of the Plan. This Plan will become effective upon approval by the
holders of a majority of the votes present, in person or represented by proxy,
at the 2001 Annual Meeting of Shareholders of the Company. No awards will be
made under the Plan after December 31, 2006, unless the Board of Directors
extends this date to a date no later than December 31, 2011. The Plan and all
awards made under the Plan prior to such date (or extended date) shall remain
in effect until such awards have been satisfied or terminated in accordance
with the Plan and the terms of such awards.

2.4 Administration. The Plan shall be administered by the Committee, which
shall have the authority, in its sole discretion and from time to time to:

(a) designate the employees or directors, or classes of employees or
directors, eligible to participate in the Plan (each such employee or
director being a "Participant");

(b) grant awards provided in the Plan in such form and amount as the
Committee shall determine;

(c) impose such limitations, restrictions and conditions upon any such
award as the Committee shall deem appropriate; and

(d) interpret the Plan, adopt, amend and rescind rules and regulations
relating to the Plan, and make all other determinations and take all other
action necessary or advisable for the implementation and administration of
the Plan.

The decisions and determinations of the Committee on all matters relating to
the Plan shall be in its sole discretion and shall be conclusive. No member of
the Committee shall be liable for any action taken or not taken or decision
made or not made in good faith relating to the Plan or any award thereunder.

2.5 Eligibility for Participation. Participants in the Plan shall be:

(a) non-employee members of the Board of Directors of the Company; and

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(b) those officers and other key employees occupying responsible
managerial or professional positions at the Company, and capable of
substantially contributing to its success.

In making this selection and in determining the amount of awards, the
Committee shall consider any factors deemed relevant, including the
individual's functions, responsibilities, value of services to the Company and
past and potential contributions to its profitability and sound growth.

2.6 Types of Awards Under the Plan. Awards under the Plan may be in the form
of any one or more of the following:

(a) Stock Options, as described in Article III;

(b) Incentive Stock Options, as described in Article IV;

(d) Common Stock Units, as described in Article VI.

2.7 Aggregate Limitation on Awards. Shares of stock which may be issued
under the Plan shall be Common Stock. The maximum number of shares of Common
Stock which may be issued under the Plan shall be four million (4,000,000). No
Option may be granted if the number of shares of Common Stock to which such
Option relates, when added to the number of shares of Common Stock previously
issued under the Plan, exceeds the number of such shares reserved under the
preceding sentence. For purposes of calculating the maximum number of shares
of Common Stock which may be issued under the Plan:

(a) all the shares issued (including the shares, if any, withheld for tax
withholding requirements) shall be counted when cash is used as full
payment for shares issued upon exercise of an Option;

(b) only the shares issued (including the shares, if any, withheld for
tax withholding requirements) net of shares of Common Stock used as full or
partial payment for such shares upon exercise of an Option, shall be
counted; and

(c) only the shares issued (including the shares, if any, withheld for
tax withholding) upon vesting and payment of Common Stock Units, shall be
counted.

In addition to shares of Common Stock actually issued pursuant to the
exercise of Options, there shall be deemed to have been issued a number of
shares equal to the number of shares of Common Stock in respect of which
Limited Rights (as described in Article V) shall have been exercised. Shares
tendered by a Participant as payment for shares issued upon exercise of an
Option shall be available for issuance under the Plan. Any shares distributed
pursuant to an Option may consist, in whole or in part, of authorized and
unissued shares or treasury shares including shares of Common Stock acquired
by purchase in the open market or in private transactions. Any shares of
Common Stock subject to an Option, which for any reason is terminated,
unexercised or expires shall again be available for issuance under the Plan,
but shares subject to an Option that, as a result of the exercise of Limited
Rights, are not issued, shall not be available for issuance under the Plan.

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(d) The maximum number of Options that shall be granted in any calendar
year to a Participant shall be four hundred thousand (400,000).

(e) The maximum number of Common Stock Units granted in any calendar year
to a Participant shall be fifty thousand (50,000).

(f) The maximum number of Common Stock Units granted under the Plan will
be one million (1,000,000).

The share limits set forth in this Section 2.7 shall be adjusted to reflect
any capitalization changes as discussed in Section 7.9.

ARTICLE III

Stock Options

3.1 Award of Stock Options. The Committee, from time to time, and subject to
the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, may grant to any Participant in the Plan one or more
options to purchase for cash or shares the number of shares of Common Stock
("Stock Options") allotted by the Committee. The date a Stock Option is
granted shall mean the date selected by the Committee as of which the
Committee allots a specific number of options to a Participant pursuant to the
Plan.

3.2 Stock Option Agreements. The grant of a Stock Option shall be evidenced
by a written Stock Option Agreement, executed by the Company and the holder of
a Stock Option, stating the number of shares of Common Stock subject to the
Stock Option evidenced thereby, and in such form as the Committee may from
time to time determine.

3.3 Stock Option Price. The Option Price per share of Common Stock
deliverable upon the exercise of a Stock Option shall be not less than 100% of
the Fair Market Value of a share of Common Stock on the date the Stock Option
is granted.

3.4 Term and Exercise. The term and the vesting schedule of the Stock
Options shall be determined by the Committee. However, no Stock Option may be
exercisable before the first anniversary of the date of grant or after the
tenth anniversary of such date. No Stock Option shall be exercisable after the
expiration of its term.

3.5 Transferability. No Stock Option may be transferred by the Participant
other than by will, by the laws of descent and distribution or, to the extent
not inconsistent with the applicable provisions of the Code, pursuant to a
domestic relations order under applicable provisions of law, and during the
Participant's lifetime the option may be exercised only by the Participant;
provided, however, that, subject to such limits as the Committee may
establish, the Committee, in its discretion, may allow the Participant to
transfer a Stock Option for no consideration to, or for the benefit of, an
Immediate Family Member or to a bona fide trust for the exclusive benefit of
such Immediate Family Members, or a partnership or limited liability company
in which such Immediate Family Members are the only partners or members.

B-9

Such transfer may only be effected following the advance written notice from
the Participant to the Committee, describing the terms and conditions of the
proposed transfer, and such transfer shall become effective only when recorded
in the Company's record of outstanding Stock Options. Any such transferable
Stock Option is further conditioned on the Participant and such Immediate
Family Member or other transferee agreeing to abide by the Company's then-
current Stock Option transfer guidelines. In the discretion of the Committee,
the foregoing right to transfer a Stock Option also will apply to the right to
transfer ancillary rights associated with such Stock Option, and to the right
to consent to any amendment to the applicable Stock Option Agreement.

Subsequent transfers shall be prohibited except in accordance with the laws
of descent and distribution, or by will. Following transfer, any such Stock
Options shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, and the terms "Optionee" or
"Participant" shall be deemed to include the transferee; provided, however,
that the events of termination of employment of Sections 3.8 ("Retirement or
Disability"), 3.9 ("Termination for Other Reasons") and 3.10 ("Death of
Optionee") hereof shall continue to be applied with respect to the original
Optionee, following which the options shall be exercisable by the transferee
only to the extent, and for the respective periods specified therein. Neither
the Committee nor the Company will have any obligation to inform any
transferee of a Stock Option or stock appreciation right of any expiration,
termination, lapse or acceleration of such Option. The Company will have no
obligation to register with any federal or state securities commission or
agency any Common Stock issuable or issued under a Stock Option or stock
appreciation right that has been transferred by a Participant under this
Section 3.5.

3.6 Manner of Payment. Each Stock Option Agreement shall set forth the
procedure governing the exercise of the Stock Option granted thereunder, and
shall provide that, upon such exercise in respect of any shares of Common
Stock subject thereto, the Optionee shall pay to the Company, in full, the
Option Price for such shares (together with payment for any taxes which the
Company is required by law to withhold by reason of such exercise) with cash
or with Common Stock. All shares of Common Stock issued under this Plan, or
any other Company plan, must be held at least six (6) months before they may
be used as payment of the Option Price.

3.7 Issuance and Delivery of Shares. As soon as practicable after receipt of
payment, the Company shall deliver to the Optionee a certificate or
certificates for, or otherwise register the Optionee on the books and records
of the Company as a holder of, such shares of Common Stock. The Optionee shall
become a shareholder of the Company with respect to the Common Stock so
registered, or represented by share certificates so issued, and as such shall
be fully entitled to receive dividends, to vote and to exercise all other
rights of a shareholder except to the extent otherwise provided in the Option
award.

(a) Notwithstanding the foregoing, and at the discretion of the
Committee, any Optionee subject to minimum stock ownership guidelines (as
established from time to time by the Committee or the Company), but failing
to meet the applicable personal ownership requirement within the prescribed
period may, upon exercise of the Options,

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receive a number of shares of Common Stock subject to the following
restrictions which shall remain in place until compliance with such
ownership guidelines is attained:

(1) The number of shares subject to the restrictions shall be equal
to the total number of shares received in the exercise of the Options,
minus the sum of:

(i) to the extent that shares received upon exercise of the
Option are used to pay the Option Price, the number of shares
which have a Fair Market Value on the date of the Option exercise
equal to the total amount paid for all the shares received in the
Option exercise; and

(ii) to the extent that shares received upon exercise of the
Option are used to pay taxes and brokerage fees, the number of
shares which have a Fair Market Value on the date of the Option
exercise equal to the applicable federal, state and local
withholding tax on the total Option exercise and any brokerage
commission or interest charges, if applicable to the exercise.

(2) Other than transfers to family members or trusts that are
permitted in accordance with the applicable stock ownership guidelines,
and that will not result in a reduction in the level of ownership
attributable to the Participant under such guidelines, the Optionee
shall be prohibited from effecting the sale, exchange, transfer,
pledge, hypothecation, gift or other disposition of such shares of
Common Stock until the earlier of:

(i) attainment of compliance with applicable stock ownership
guidelines;

(ii) the Optionee's death, retirement, or permanent disability
(as determined by the Committee); or

(iii) occurrence of the Optionee's Employment Termination Date,
for any reason other than Just Cause.

Notwithstanding the foregoing, six (6) months after the exercise of
the Stock Option, such shares of Common Stock may be used as payment of
the Option Price of shares issued upon the exercise of other Stock
Options. However, all such shares issued will be restricted shares.

(3) The restrictions shall apply to any new, additional or different
securities the Optionee may become entitled to receive with respect to
such shares by virtue of a stock split or stock dividend or any other
change in the corporate or capital structure of the Company.

(b) Until such time as the restrictions hereunder lapse, the shares will
be held in "book-entry form" and appropriate notation of these restrictions
will be maintained in the records of the Company's transfer agent and
registrar. Any share certificate representing such shares will bear a
conspicuous legend evidencing these restrictions, and the Company may
require the Optionee to deposit the share certificate with the Company or
its agent, endorsed in blank or accompanied by a duly executed irrevocable
stock power or other instrument of transfer.

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3.8 Retirement or Disability. Upon termination of the Optionee's employment
by reason of retirement or permanent disability (as each is determined by the
Committee), the Optionee may, within sixty (60) months from the date of
termination, exercise any Stock Options to the extent such options are
exercisable during such 60-month period.

3.9 Termination for Other Reasons. Except as provided in Sections 3.8 and
3.10, or except as otherwise determined by the Committee, upon termination of
an Optionee's employment, all unvested Stock Options shall terminate
immediately, and all vested Stock Options shall terminate:

(a) immediately, in the case of an Optionee terminated by the Company for
Just Cause; or

(b) upon the expiration of ninety (90) calendar days following the
occurrence of the Optionee's Employment Termination Date, other than for
Just Cause;

provided, however, that the Limited Rights awarded in tandem with such Stock
Options shall not terminate and such Limited Rights shall remain exercisable
during the Exercise Period for any Optionee whose employment relationship with
the Company has been terminated as a result of any Qualifying Termination.

3.10 Death of Optionee. Any rights in respect of Stock Options to the extent
exercisable on the date of the Optionee's death may be exercised by the
Optionee's estate or by any person that acquires the legal right to exercise
such Stock Option by bequest, inheritance, or otherwise by reason of the death
of the Optionee. Any such exercise to be valid must occur within the remaining
option term of the Stock Option. The foregoing provisions of this Section 3.10
shall apply to an Optionee who dies while employed by the Company and to an
Optionee whose employment may have terminated prior to death; provided,
however, that:

(a) an Optionee who dies while employed by the Company will be treated as
if the Optionee had retired on the date of death. Accordingly, the
Optionee's estate or a person who acquires the right to exercise such Stock
Option by bequest or inheritance will have the right to exercise the Stock
Option in accordance with Section 3.8; or

(b) the estate or a person who acquires the right to exercise a Stock
Option by bequest or inheritance from an Optionee who dies after
terminating employment with the Company will have the remainder of any
exercise period provided under Sections 3.8 and 3.9.

3.11 Acceleration of Options. Notwithstanding any provisions to the contrary
in agreements evidencing Options granted thereunder, each outstanding Option
shall become immediately and fully exercisable upon the occurrence of any
Change in Control of Sunoco, Inc.

3.12 Effect of Exercise. The exercise of any Stock Options shall cancel that
number of related Limited Rights, if any, which is equal to the number of
shares of Common Stock purchased pursuant to said Options.

B-12

ARTICLE IV

Incentive Stock Options

4.1 Award of Incentive Stock Options. The Committee, from time to time, and
subject to the provisions of the Plan and such other terms and conditions as
the Committee may prescribe, may grant to any Participant in the Plan one or
more "incentive stock options" (intended to qualify as such under the
provisions of Section 422 of the Code ("Incentive Stock Options")) to purchase
for cash or shares the number of shares of Common Stock allotted by the
Committee. The date an Incentive Stock Option is granted shall mean the date
selected by the Committee as of which the Committee allots a specific number
of options to a Participant pursuant to the Plan. Notwithstanding the
foregoing, Incentive Stock Options shall not be granted to any owner of ten
percent (10%) or more of the total combined voting power of the Company and
its subsidiaries.

4.2 Incentive Stock Option Agreements. The grant of an Incentive Stock
Option shall be evidenced by a written Incentive Stock Option Agreement,
executed by the Company and the holder of an Incentive Stock Option stating
the number of shares of Common Stock subject to the Incentive Stock Option
evidenced thereby, and in such form as the Committee may from time to time
determine.

4.3 Incentive Stock Option Price. The Option Price per share of Common Stock
deliverable upon the exercise of an Incentive Stock Option shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the date the
Incentive Stock Option is granted.

4.4 Term and Exercise. The term and the vesting schedule of the Incentive
Stock Option shall be determined by the Committee. However, no Incentive Stock
Option may be exercisable before the first anniversary of the date of grant or
after the tenth anniversary of such date. No Incentive Stock Option shall be
exercisable after the expiration of its term.

4.5 Limits on Incentive Stock Options. Each Incentive Stock Option shall
provide that, if the aggregate Fair Market Value of the stock on the date of
grant with respect to which Incentive Stock Options are exercisable for the
first time by an Optionee during any calendar year, under this Plan or any
other stock option plan of the Company exceeds One Hundred Thousand Dollars
($100,000.00), then the Option, as to the excess shall be treated as a non-
qualified stock option. An Incentive Stock Option shall not be granted to any
person who is not an "employee" of the Company (within the meaning of Section
424(f) of the Code).

4.6 Retirement or Disability. Upon the termination of the Optionee's
employment by reason of retirement or permanent disability (as each is
determined by the Committee), the Optionee may, within sixty (60) months from
the date of such termination of employment, exercise any Incentive Stock
Options to the extent such Incentive Stock Options are exercisable during such
60-month period. Notwithstanding the foregoing, the tax treatment available
pursuant to Section 422 of the Code upon the exercise of an Incentive Stock
Option will not be available to an Optionee who exercises any Incentive Stock
Option more than:

(a) twelve (12) months after the date of termination of employment due to
permanent disability; or

(b) three (3) months after the date of termination of employment due to
retirement.

B-13

4.7 Termination for Other Reasons. Except as provided in Sections 4.6 and
4.8, or except as otherwise determined by the Committee, upon termination of
an Optionee's employment, all unvested Incentive Stock Options shall terminate
immediately, and all vested Incentive Stock Options shall terminate:

(a) immediately, in the case of an Optionee terminated by the Company for
Just Cause; or

(b) upon the expiration of ninety (90) calendar days following the date
of termination of an Optionee's employment other than for Just Cause;

provided, however, that the Limited Rights awarded in tandem with such
Incentive Stock Options shall not terminate and such Limited Rights shall
remain exercisable during the Exercise Period for any Optionee whose
employment relationship with the Company has been terminated as a result of
any Qualifying Termination.

4.8 Death of Optionee. Any rights in respect of Incentive Stock Options to
the extent exercisable on the date of the Optionee's death may be exercised by
the Optionee's estate or by any person that acquires the legal right to
exercise such Stock Option by bequest, inheritance, or otherwise by reason of
the death of the Optionee. Any such exercise to be valid must occur within the
remaining option term of the Incentive Stock Option. The foregoing provisions
of this Section 4.8 shall apply to an Optionee who dies while employed by the
Company and to an Optionee whose employment may have terminated prior to
death; provided, however, that:

(a) an Optionee who dies while employed by the Company will be treated as
if the Optionee had retired on the date of death. Accordingly, the
Optionee's estate or a person who acquires the right to exercise such
Incentive Stock Option by bequest or inheritance will have the right to
exercise the Incentive Stock Option in accordance with Section 4.6; or

(b) the estate or a person who acquires the right to exercise a stock
option by bequest or inheritance from an Optionee who dies after
terminating employment with the Company will have the remainder of any
exercise period provided under Section 4.6 and 4.7.

4.9 Applicability of Stock Options Selections. Section 3.6 ("Manner of
Payment"), Section 3.7 ("Issuance and Delivery of Shares"), Section 3.11
("Acceleration of Options") and Section 3.12 ("Effect of Exercise"),
applicable to Stock Options, shall apply equally to Incentive Stock Options.
Said Sections are incorporated by reference in this Article IV as though fully
set forth herein.

ARTICLE V

Limited Rights

5.1 Award of Limited Rights. Concurrently with or subsequent to the award of
any Option, the Committee may, subject to the provisions of the Plan and such
other terms and

B-14

conditions as the Committee may prescribe, award to the Optionee with respect
to each Option, a related limited right permitting the Optionee, during a
specified limited time period, to be paid the appreciation on the Option in
lieu of exercising the Option ("Limited Right").

5.2 Limited Rights Agreement. Limited Rights granted under the Plan shall be
evidenced by written agreements in such form as the Committee may from time to
time determine.

5.3 Exercise Period. Limited Rights are immediately exercisable in full upon
grant for a period of up to seven (7) months following the date of a Change in
Control (the "Exercise Period").

5.4 Amount of Payment. The amount of payment to which an Optionee shall be
entitled upon the exercise of each Limited Right shall be equal to 100% of the
amount, if any, which is equal to the difference between the Option Price of
the related Option and the Market Price of a share of such Common Stock.
Market Price is defined to be the greater of:

(a) the highest price per share of Common Stock paid, in connection with
any Change in Control, during the period from the date of occurrence of a
Potential Change in Control through the ninetieth (90th) day following the
subsequent related Change in Control; and

(b) the highest price per share of Common Stock reflected in the
consolidated trading tables of The Wall Street Journal (presently the New
York Stock Exchange Composite Transactions quotations) during the 60-day
period prior to the Change in Control.

5.5 Form of Payment. Payment of the amount to which an Optionee is entitled
upon the exercise of Limited Rights, as determined pursuant to Section 5.4,
shall be made solely in cash.

5.6 Effect of Exercise. If Limited Rights are exercised, the Stock Options,
if any, related to such Limited Rights cease to be exercisable to the extent
of the number of shares with respect to which the Limited Rights were
exercised. Upon the exercise or termination of the Options, if any, related to
such Limited Rights, the Limited Rights granted with respect thereto terminate
to the extent of the number of shares as to which the related Options were
exercised or terminated; provided, however, that with respect to Options that
are terminated as a result of the termination of the Optionee's employment
status, the Limited Rights awarded in tandem therewith shall not terminate and
such Limited Rights shall remain exercisable during the Exercise Period for
any Optionee whose employment relationship with the Company has been
terminated as a result of any Qualifying Termination.

5.7 Retirement or Disability. Upon termination of the Optionee's employment
by reason of permanent disability or retirement (as each is determined by the
Committee), the Optionee may, within six (6) months from the date of
termination, exercise any Limited Rights to the extent such Limited Right is
exercisable during such six-month period.

5.8 Death of Optionee or Termination for Other Reasons. Except as provided
in Sections 5.7 and 5.9 or except as otherwise determined by the Committee,
all Limited Rights

B-15

granted under the Plan shall terminate upon the termination of the Optionee's
employment or upon the death of the Optionee.

5.9 Termination Related to a Change in Control. The requirement that an
Optionee be terminated by reason of retirement or permanent disability or be
employed by the Company at the time of exercise pursuant to Sections 5.7 and
5.8, respectively, is waived during the Exercise Period as to any Optionee
whose employment relationship with the Company has been terminated as a result
of any Qualifying Termination.

ARTICLE VI

Common Stock Units

6.1 Award of Common Stock Units. The Committee, from time to time, and
subject to the provisions of the Plan, may grant to any Participant in the
Plan rights to receive shares of Common Stock which are subject to a risk of
forfeiture by the Participant ("Common Stock Units"). At the time it grants
any Common Stock Units, the Committee shall determine whether the payment of
such Common Stock Units shall be conditioned upon either:

(a) the Participant's continued employment with the Company throughout a
stated period (Section 6.4); or

(b) the attainment of certain predetermined performance objectives during
a stated period (Section 6.5).

The date Common Stock Units are granted shall mean the date selected by the
Committee as of which the Committee allots a specific number of Common Stock
Units to a Participant pursuant to the Plan.

6.2 Common Stock Unit Agreements. Common Stock Units granted under the Plan
shall be evidenced by written agreements stating the number of Common Stock
Units evidenced thereby or in such form and as the Committee may from time to
time determine.

6.3 Dividend Equivalents. A holder of Common Stock Units will be entitled to
receive payment from the Company in an amount equal to each cash dividend
("Dividend Equivalent") the Company would have paid to such holder had he, on
the record date for payment of such dividend, been the holder of record of
shares of Common Stock equal to the number of Common Stock Units which had
been awarded to such holder as of the close of business on such record date.
The Company shall establish a bookkeeping account on behalf of each
Participant in which the Dividend Equivalents that would have been paid to the
holder of Common Stock Units ("Dividend Equivalent Account") shall be
credited. The Dividend Equivalent Account will not bear interest.

6.4 Performance Period. Upon making an award, the Committee shall determine
(and the Common Stock Unit Agreement shall state) the length of the applicable
period during which employment must be maintained or certain performance
targets must be attained (the "Performance Period"). Performance Periods will
normally be from three (3) to five (5) years; provided, however, that the
Committee at its sole discretion may establish other time periods; and further
provided, that the Performance Period for an award conditioned upon a
Participant's continued employment with the Company shall not be less than
three (3) years.

B-16

6.5 Performance Goals. Common Stock Units and the related Dividend
Equivalent Account earned may be based upon the attainment of Performance
Goals established by the Committee in accordance with Section 162(m) of the
Code. Within the first ninety (90) days of the Performance Period, the
Committee shall establish, in writing, the weighted Performance Goals and
related Performance Factors for various goal achievement levels for the
Company. In establishing the weighted Performance Goals, the Committee shall
take the necessary steps to insure that the Company's ability to achieve the
pre-established goals is uncertain at the time the goals are set. The
established written Performance Goals, assigned weights, and Performance
Factors shall be written in terms of an objective formula, whereby any third
party having knowledge of the relevant Company performance results could
calculate the amount to be paid. Such Performance Goals may vary by
Participant and by grant.

The number of Common Stock Units and Dividend Equivalents earned will be
equal to the amounts awarded multiplied by the applicable Performance Factors.
However, the Committee shall have the discretion, by Participant and by grant,
to reduce (but not to increase) some or all of the amount that would otherwise
be payable by reason of the satisfaction of the Performance Goals. In making
any such determination, the Committee is authorized to take into account any
such factor or factors it determines are appropriate, including but not
limited to Company, business unit and individual performance.

6.6 Payment of Common Stock Units and Dividend Equivalent Account. Payment
in respect of Common Stock Units earned (as determined under Sections 6.4 and
6.5) shall be made to the holder thereof within ninety (90) days after the
Performance Period for such units has ended, but only to the extent the
Committee certifies in writing that the continuing employment and/or any
applicable performance targets have been met.

Payment for Common Stock Units earned shall be made in shares of Common
Stock, except as provided in Section 6.9. The number of shares paid shall be
equal to the number of Common Stock Units earned. The holder may elect to
reduce this amount by the number of shares of Common Stock which have, on the
date the Common Stock Units are paid, a fair market value equal to the
applicable federal, state and local withholding tax due on the receipt of
Common Stock, in lieu of making a cash payment equal to the amount of such
withholding tax due. A holder of Common Stock Units will be entitled to
receive from the Company, at the end of the Performance Period, payment of an
amount in cash equal to the Dividend Equivalent Account earned (as determined
under Sections 6.4 and 6.5) by the holder minus applicable federal, state and
local withholding tax due.

(a) Notwithstanding the foregoing, and at the discretion of the
Committee, any Participant subject to minimum stock ownership guidelines
(as established from time to time by the Committee or the Company), but
failing to meet the applicable personal ownership requirement within the
prescribed period may receive a number of shares of Common Stock upon
payment of the Common Stock Units, subject to the following restrictions
which shall remain in place until compliance with such ownership guidelines
is attained:

(1) The number of shares subject to the restrictions shall be equal
to the total number of Common Stock Units being paid out, minus the
number of shares of Common Stock used to pay applicable federal, state
and local withholding tax on the total payment of such Common Stock
Units.

B-17

(2) Other than transfers to family members or trusts that are
permitted in accordance with the applicable stock ownership guidelines,
and that will not result in a reduction in the level of ownership
attributable to the Participant under such guidelines, the Participant
shall be prohibited from effecting the sale, exchange, transfer,
pledge, hypothecation, gift or other disposition of such shares of
Common Stock until the earlier of:

(i) attainment of compliance with applicable stock ownership
guidelines;

(ii) the Participant's death, retirement, or permanent
disability (as determined by the Committee); or

(iii) occurrence of the Participant's Employment Termination
Date, for any reason other than Just Cause.

(3) These restrictions shall apply to any new, additional or
different securities the Participant may become entitled to receive
with respect to such shares by virtue of a stock split or stock
dividend or any other change in the corporate or capital structure of
the Company.

(b) Until such time as the restrictions hereunder lapse, the shares will
be held in "book-entry form" and appropriate notation of these restrictions
will be maintained in the records of the Company's transfer agent and
registrar. Any share certificate representing such shares will bear a
conspicuous legend evidencing these restrictions, and the Company may
require the Participant to deposit the share certificate with the Company
or its agent, endorsed in blank or accompanied by a duly executed
irrevocable stock power or other instrument of transfer.

6.7 Death, Disability or Retirement.

(a) Upon the occurrence of a Participant's Employment Termination Date,
by reason of death, permanent disability or retirement (as each is
determined by the Committee) prior to the end of the Performance Period:

(1) in the case of an award of Common Stock Units made pursuant to
Section 6.1(a) hereof and conditioned upon the Participant's continued
employment, the conditions to payout, if any, shall be determined by
the Committee and shall be as set forth in the agreement granting the
Common Stock Units.

(2) in the case of an award of Common Stock Units made pursuant to
Section 6.1(b) hereof and conditioned upon the attainment of certain
predetermined performance objectives, no portion of the Participant's
Common Stock Units and the Dividend Equivalent Account related to such
award shall be forfeited, and the Common Stock Units, together with
related Dividend Equivalents, shall be paid out as though such
Participant continued to be an employee or director of the Company
through any applicable Performance Period, and as, if, and when the
applicable Performance Goals have been met.

6.8 Termination of Employment. Except as provided in Sections 6.7 and 6.9,
or as determined by the Committee, 100% of all Common Stock Units of a
Participant under the

B-18

Plan shall be forfeited and the Dividend Equivalent Account shall be forfeited
upon the occurrence of the Participant's Employment Termination Date prior to
the end of the Performance Period, and in such event the Participant shall not
be entitled to receive any Common Stock or any payment of the Dividend
Equivalent Account regardless of the level of Performance Goals achieved for
the respective Performance Periods.

6.9 Change in Control. In the event of a Change in Control, all the
Participant's outstanding Common Stock Units shall be payable to the
Participant in cash or stock, as follows:

(a) if pooling of interests accounting treatment is to be used with
respect to such Change in Control, the Participant will receive shares of
Common Stock equal in number to the total number of Common Stock Units
granted to such Participant; or

(b) if pooling of interests accounting treatment is not to be used with
respect to such Change in Control, the Participant will be paid an amount
in cash equal to the number of Common Stock Units outstanding multiplied by
the Market Price as defined in Section 5.4. Such amount will be reduced by
the applicable federal, state and local withholding taxes due.

The cash or stock, as the case may be, shall be paid out to the Participant
no later than ninety (90) days following the date of occurrence of such Change
in Control (the "CSU Payout Date"), regardless of whether the applicable
Performance Period has expired or whether performance targets have been met.
There will be no adjustment for any Performance Factors described in Section
6.5.

On or before the CSU Payout Date, and regardless of whether pooling of
interests accounting treatment is to be used with respect to such Change in
Control, the Participant will be paid an amount in cash equal to the value of
the amounts accrued in the Participant's Dividend Equivalent Account
immediately preceding the Change in Control. Payout of Common Stock Units and
the Dividend Equivalent Account shall be made to each Participant:

(d) whose employment relationship with the Company is terminated:

(1) as a result of any Qualifying Termination prior to the CSU Payout
Date; or

(2) as a result of death, permanent disability or retirement (as each
is determined by the Committee), that has occurred prior to the CSU
Payout Date.

The Committee may establish, at the time of the grant of Common Stock Units,
other conditions which must be met for payout to occur. These conditions shall
be set forth in the Committee's resolution granting the Common Stock Units and
in the Agreement with the holder.

B-19

ARTICLE VII

Miscellaneous

7.1 General Restriction. Each award under the Plan shall be subject to the
requirement that if, at any time, the Committee shall determine that:

(a) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any
state or Federal law; or

(b) the consent or approval of any government regulatory body; or

is necessary or desirable as a condition of, or in connection with, the
granting of such award or the issue or purchase of shares of Common Stock
thereunder, then such award may not be consummated in whole or in part unless
such listing, registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions not acceptable to
the Committee.

7.2 Accounting and Tax Treatment for Change in Control. Notwithstanding
anything in this Plan to the contrary, in the event of a Change in Control,
the Committee shall not have the right to take any actions described in the
Plan that would make the Change in Control ineligible for pooling of interests
accounting treatment or that would make the Change in Control ineligible for
desired tax treatment if, in the absence of such right, the Change in Control
would qualify for such treatment and the Company intends to use such treatment
with respect to the Change in Control.

7.3 Non-Assignability. Awards under the Plan shall not be assignable or
transferable by the recipient thereof, except by will or by the laws of
descent and distribution except as otherwise determined by the Committee.
Accordingly, during the life of the recipient, such award shall be exercisable
only by such person or by such person's guardian or legal representative,
unless the Committee determines otherwise.

7.4 Right to Terminate Employment. Nothing in the Plan or in any agreement
entered into pursuant to the Plan shall confer upon any Participant the right
to continue in the employment of the Company, to continue to be nominated or
serve on the Board of Directors, or affect any right which the Company may
have to terminate the employment of such Participant.

7.5 Non-Uniform Determinations. The Committee's determinations under the
Plan (including without limitation, determinations of the persons to receive
awards, the form, amount and timing of such awards, the terms and provisions
of such awards, and the agreements evidencing same) need not be uniform and
may be made by it selectively among persons who receive, or are eligible to
receive, awards under the Plan, whether or not such persons are similarly
situated.

7.6 Rights as a Shareholder. The recipient of any award under the Plan shall
have no rights as a shareholder with respect thereto unless and until shares
of Common Stock are issued on behalf of such recipient in "book-entry" form,
in the records of the Company's transfer agent and registrar, or certificates
have been issued for such shares.

B-20

7.7 Leaves of Absence. The Committee shall be entitled to make such rules,
regulations and determinations as it deems appropriate under the Plan in
respect of any leave of absence taken by the recipient of any award. Without
limiting the generality of the foregoing, the Committee shall be entitled to
determine (a) whether or not any such leave of absence shall constitute a
termination of employment within the meaning of the Plan and (b) the impact,
if any, of any such leave of absence on awards under the Plan theretofore made
to any recipient who takes such leaves of absence.

7.8 Newly Eligible Employees. The Committee shall be entitled to make such
rules, regulations, determinations and awards as it deems appropriate in
respect of any employee who becomes eligible to participate in the Plan or any
portion thereof after the commencement of an award or incentive period.

7.9 Adjustments. In any event of any change in the outstanding Common Stock
by reason of a stock dividend or distribution, recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like, the
Committee may appropriately adjust the number of shares of Common Stock which
may be issued under the Plan, the number of shares of Common Stock subject to
Options theretofore granted under the Plan, the Option Price of Options
theretofore granted under the Plan, the number of Common Stock Units
theretofore awarded under the Plan and any and all other matters deemed
appropriate by the Committee.

7.10 Amendment of the Plan.

(a) The Committee may, without further action by the shareholders and
without receiving further consideration from the Participants, amend this Plan
or condition or modify awards under this Plan in response to changes in
securities or other laws or rules, regulations or regulatory interpretations
thereof applicable to this Plan or to comply with stock exchange rules or
requirements.

(b) The Committee may at any time, and from time to time, modify or amend
the Plan, or any award granted under the Plan, in any respect; provided,
however, that, without shareholder approval the Committee may not:

(1) increase the maximum award levels established in Section 2.7,
including the maximum number of shares of Common Stock which may be issued
under the Plan (other than increases pursuant to Section 7.9);

(2) extend the term during which an Option may be exercised beyond ten
years from the date of grant; or

(3) alter the terms of any Option to reduce the Option Price, or cancel
any outstanding Option award and replace it with a new Option, having a
lower Option Price, where the economic effect would be the same as reducing
the Option Price of the cancelled Option.

Except as provided in Section 7.10(a) above, no termination, modification or
amendment of the Plan (or any award granted under the Plan), shall, without
the consent of a Participant, affect the Participant's rights under an award
previously granted.

B-21

[LOGO OF SUNOCO]
Sunoco, Inc.

Visit our site
on the World Wide Web

http://www.SunocoInc.com

[LOGO OF SUNOCO]

Your Vote is Important!

You can vote in one of three ways:

OPTION 1: Vote by Telephone - Call 1-877-290-2604 and respond to a few simple
questions after entering the Control Number below. Telephone voting
closes at 11:59 p.m. Eastern U.S. Time on Wednesday, 05/02/01.*

Call on a touch-tone telephone Your Control Number is:
1-877-290-2604 anytime. There
is no charge for this call. For Telephone/Internet Voting
[GRAPHIC OF TELEPHONE] [GRAPHIC OF COMPUTER]

OPTION 2: Vote by Internet - Access http://www.proxyvoting.com/sunoco and
respond to a few simple prompts after entering the Control Number
above. Internet voting closes at 11:59 p.m. Eastern U.S. Time on
Wednesday, 05/02/01.*

Your telephone or Internet vote authorizes the named Proxies to vote
your shares in the same manner as if you had marked, signed and
returned your proxy card.

OPTION 3: Vote by Mail - If you do not wish to vote using a touch-tone telephone
or the Internet, complete and return the proxy card below in the
envelope provided.*

Whichever method you choose, please vote promptly.

*In order to allow the SunCAP Trustee adequate time to vote the shares
held in that plan, voting instructions from SunCAP participants must
be received no later than 5:00 p.m. Eastern U.S. Time on Tuesday, May
1, 2001.

Fold and Detach Here Fold and Detach Here
--------------------------------------------------------------------------------
[LOGO OF SUNOCO] THIS PROXY AND VOTING INSTRUCTION CARD IS
Sunoco, Inc. SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Ten Penn Center OF SUNOCO, INC. FOR THE MAY 3, 2001 ANNUAL
1801 Market Street MEETING OF SHAREHOLDERS OR ANY ADJOURNMENTS
Philadelphia, PA 19103-1699 THEREOF.

The undersigned appoints J.G. DROSDICK and A.C. MULE' and each of them, with
full power of substitution, as proxies and attorneys-in-fact (the "Proxies") to
vote as indicated all shares of Sunoco, Inc. Common Stock, which the undersigned
is entitled to vote, and in their discretion, to vote upon such other business
as may properly come before the 2001 Annual Meeting. This proxy card also
provides voting instructions for shares held for the account of the undersigned,
if any, in the Sunoco, Inc. Capital Accumulation Plan ("SunCAP"). For additional
explanatory information, see the "Questions and Answers" section of the
accompanying proxy statement.

SIGNATURE SIGNATURE DATED
--------------------- ----------------------- --------
Please sign exactly as your name appears above. When signing as attorney,
executor, administrator, trustee, guardian, etc., give full title. If stock is
jointly owned, each joint owner should sign.
CONTINUED ON REVERSE SIDE

This proxy and voting instruction card, when properly executed, will be voted by
the Proxies in the manner designated below. For shares not held in SunCAP, if
this proxy and voting instruction card is returned signed, but there is no
indication of a vote or if it is not clear which box is checked, the Proxies
will vote FOR proposals (1) through (4) and AGAINST proposal (5). SunCAP shares
will be voted in accordance with the terms of that plan.

The Board of Directors unanimously recommends a vote FOR proposals (1) through
-------------------------
(4) and AGAINST proposal (5).
----------------------------

(1) Election of a Board of Directors

01 - R. E. Cartledge 04 - M. J. Evans 07 - R. B. Greco 10 - N. S. Matthews 13 - A. B. Trowbridge FOR All WITHHOLD From
02 - R. J. Darnall 05 - U. F. Fairbairn 08 - J. G. Kaiser 11 - R. A. Pew Nominees All Nominees
03 - J. G. Drosdick 06 - T. P. Gerrity 09 - R. D. Kennedy 12 - G. J. Ratcliffe listed Listed
[_] [_]

TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE (TO ABSTAIN), LIST NOMINEE'S
NAME:
---------------------------------------------------------------------------

(2) Approval of the Sunoco, Inc. [_] FOR [_] AGAINST [_] ABSTAIN
Executive Incentive Plan:

(3) Approval of the Long-Term [_] FOR [_] AGAINST [_] ABSTAIN
Performance Enhancement Plan II
("LTPEP II"):

(4) Approval of the appointment of [_] FOR [_] AGAINST [_] ABSTAIN
Ernst & Young LLP as independent
auditors for fiscal year 2001:

(5) A shareholder proposal regarding [_] FOR [_] AGAINST [_] ABSTAIN
the nomination of directors, if
such proposal is properly presented
at the meeting:

[_] Please check ONLY if you plan to attend the 2001 Annual Meeting. Admission
tickets are required and will be mailed to you.
[_] Please check if you do not wish to receive an Annual Report for this
account.
[_] Please check if in the future you would like to view the Annual Report and
Proxy Statement electronically via the Internet instead of receiving them in
the mail. Your consent will remain effective, and will apply to future
Annual Meeting materials, until revoked.

Please sign and date your proxy card on the reverse side and return it promptly
in the envelope provided.