SU » Topics » Deferred Stock Unit (DSU) Plan of Petro-Canada

This excerpt taken from the SU 6-K filed May 1, 2009.

Deferred Stock Unit (DSU) Plan of Petro-Canada

Once he/she has reached the share ownership guideline level, a Director may annually elect to take his/her compensation in the form of cash, Common Shares and/or DSUs. If the share ownership guidelines are not satisfied, then $70,000 of his/her compensation is delivered in DSUs. A Director who is not a Canadian resident and has not reached the guideline level may choose to receive his/her compensation in cash, with the requirement that they must purchase and retain a minimum of $70,000 in Common Shares on the market during the year.

Once he/she has reached the share ownership guideline level, the Chair of the Board of Directors may annually elect to take his/her compensation in the form of cash, Common Shares and/or DSUs. If the share ownership guidelines are not satisfied then $75,000 of his/her compensation is delivered in DSUs. A Chair who is not a Canadian resident and has not reached the guideline level may choose to receive his/her compensation in cash, with the requirement that they must purchase and retain a minimum of $70,000 in Common Shares on the market during the year.

Under Petro-Canada's DSU Plan, dividend equivalents are used to purchase additional DSUs and are credited to the Directors' notional DSU accounts on a quarterly basis.

A Director is entitled to the benefit of his/her DSUs upon ceasing to be a Director. The Director can then choose to receive the value of the DSUs granted after December 31, 2003 in the form of Common Shares purchased on the open market or in the form of cash at any time, but no later than the end of the first calendar year following retirement. Directors that are tax filers in the U.S. may choose to receive the value of the DSUs granted after December 31, 2003 in the form of Common Shares purchased on the open market or in the form of cash at any time up to 15 days prior to the end of the six months following retirement. The value of DSUs granted before January 1, 2004 can only be paid out in the form of Common Shares purchased on the open market.

The DSU value will be based on the five-day average market price of the Common Shares immediately before the conversion of the DSUs to cash or Common Shares. If a Director chooses or is required to receive Common Shares, the value of his/her DSU entitlement is used to purchase Common Shares on the open market for the benefit of the Director. Petro-Canada covers the brokerage costs associated with acquiring these shares.

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