SUNOCO INC, DEF 14A, 2000-03-16

SUNOCO INC
DEF 14A, 2000-03-16
PETROLEUM REFINING

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SCHEDULE 14A INFORMATION

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

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

Sunoco, Inc.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:

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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 4, 2000, Sunoco, Inc. will hold its 2000 Annual Meeting of
Shareholders at the American Philosophical Society, Benjamin Franklin Hall,
427 Chestnut Street, Philadelphia. The meeting will begin at 9:30 a.m.

Only shareholders who owned stock at the close of business on February 10,
2000 can vote at this meeting or any adjournments that may take place. At the
meeting we will:

1. Elect a Board of Directors;

2. Approve the appointment of our independent auditors for 2000; and

3. Attend to other business properly presented at the meeting.

At the meeting we will also report on Sunoco's 1999 business results and other
matters of interest to shareholders.

Your Board of Directors recommends that you vote in favor of the two proposals
(numbers 1 and 2 above) which are 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
mission of our Audit Committee and its recommendation to the Board regarding
our 1999 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, please refer to the
specific instructions provided through the proxy voting process.

The approximate date of mailing for this proxy statement and card as well as a
copy of Sunoco's 1999 Annual Report is March 16, 2000. 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
General Attorney and Corporate Secretary
March 16, 2000

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TABLE OF CONTENTS
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<TABLE>
<S> <C>
Questions and Answers....................................................... 3
Proposals on which You May Vote............................................. 8
Nominees for the Board of Directors......................................... 9
Statement on Corporate Governance........................................... 13
Audit Committee Report...................................................... 17
Board Committee Membership Roster........................................... 18
Directors' Compensation..................................................... 19
Directors' and Officers' Ownership of Sunoco Stock.......................... 20
Executive Compensation: Report of the Compensation Committee................ 22
Executive Compensation, Pension Plans & Other Arrangements.................. 26
Summary Compensation Table................................................ 26
Option Grant Table........................................................ 28
Aggregated Option/SAR Exercises and Year-End Values....................... 29
Other Long-Term Incentive Awards.......................................... 30
Stock Performance Graph................................................... 31
Pension Plans............................................................. 32
Severance Plans and Other Information..................................... 33
Appendix: Audit Committee Charter........................................... A-1
</TABLE>

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QUESTIONS AND ANSWERS
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1. Q: What may I vote on?
A: (1) The election of nominees to serve on our Board of Directors;
and
(2) The approval of the appointment of our independent auditors
for 2000.

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2. Q: How does the Board recommend I vote on the proposals?
A: The Board recommends you vote FOR each of the nominees and FOR the
appointment of Ernst & Young LLP as our independent auditors for
2000.

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3. Q: Who is entitled to vote?
A: Shareholders as of the close of business on the record date, February 10,
2000, are entitled to vote at the Annual Meeting.

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4. Q: How do I cast my vote?
A: There are four different ways you may cast your vote this year.
You can 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 two proposals; or
(4) attending the meeting (if your shares are registered directly
on Sunoco's books and not held through a broker, bank or other
nominee).

Shareholders can save Sunoco money by voting by telephone or by
voting on the Internet according to the instructions provided on
the proxy or vote instruction card. You will need to use the
individual control number that is printed on your proxy or vote
instruction card in order to authenticate your ownership.

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5. Q: How do I change my vote?
A: To change your vote:

(1) notify Sunoco's Corporate Secretary 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 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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6. Q: Who will count the vote?
A: Representatives of The Corporation Trust Company, an independent
tabulator, will count the vote and act as the judge of election.

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7. 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 The Corporation Trust Company 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 The
Corporation Trust Company 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 ask that your name
be disclosed.

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8. Q: What shares are included on the proxy card(s)?
A: The shares on your proxy or vote instruction card(s) represent ALL of
your shares, including those held on account in Sunoco's Shareholder
Access & Reinvestment Plan (or "SHARP") and shares held in custody for
your account by Bankers Trust Company as trustee for the Sunoco, Inc.
Capital Accumulation Plan (or "SunCAP"), Sunoco's 401(k) plan for
employees. If you do not cast your vote, your shares (except for those in
SunCAP) will not be voted. See Question 11 for an explanation of the
voting procedure for shares in SunCAP.

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9. 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 to ensure that all
of your shares are voted.

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10.Q:How many shares can vote?
A:As of the February 10, 2000 record date, 89,493,869 shares of Sunoco common
stock were issued and outstanding. Every shareholder of common stock is
entitled to one vote for each share held.

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11.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 must instruct the SunCAP
trustee, Bankers Trust Company, how to vote your shares. 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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12.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 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
expressly not voted.

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13.Q:Who can attend the Annual Meeting and how do I get a ticket?
A:All shareholders who owned shares on February 10, 2000 can 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', General Attorney 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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14.Q:How will voting on any other business be conducted?
A:Although we do not know of any business to be considered at the 2000 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 Robert H. Campbell, Sunoco's Chairman and Chief
Executive Officer, and Jack L. Foltz, Sunoco's Vice President and General
Counsel, to vote on such matters at their discretion.

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15.Q:Where and when will I be able to find the voting results?
A:Sunoco will post the voting results on our web site at www.SunocoInc.com
approximately two weeks after the Annual Meeting. You can also find the
results in our Form 10-Q for the second quarter of 2000, which we will file
with the SEC in August 2000.

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16.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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17.Q:Does any shareholder own 5% or more of Sunoco's common stock?
A:As of December 31, 1999, the following shareholders owned 5% or more of
Sunoco's common stock:

<TABLE>
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<CAPTION>
Percent of
Outstanding
Shareholder Shares Shares
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<S> <C> <C>
Capital Research & Management Company 7,082,000 7.9
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Fidelity Management & Research Corp. 6,208,202 6.9
-------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 5,052,365 5.6
</TABLE>
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18. Q: When are the shareholder proposals for the 2001 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, General
Attorney and Corporate Secretary, Sunoco, Inc., Ten Penn Center, 1801
Market Street, Philadelphia, PA 19103-1699 by November 23, 2000.

Additionally, Sunoco's advance notice bylaw provisions require that any
shareholder proposal to be presented from the floor of the 2001 Annual
Meeting must be submitted in writing to Ann C. Mule, at the above
address, by December 31, 2000, 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 2001 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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19. 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, 2000 for the 2001 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 meeting of the shareholders 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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20. 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 $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 12 nominees for election this year. Detailed information on each
is provided on pages 9 to 12. 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, proxies voting on the original
director candidate will be cast for the substituted candidate.

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

2. APPROVAL OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS

The Audit Committee has recommended, and the Board has approved, the
appointment of Ernst & Young LLP as our independent auditors for 2000
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.

Audit services provided by Ernst & Young during 1999 included an audit of
Sunoco's consolidated financial statements, audits of the separate
financial statements of certain Company affiliates, audits of employee
benefit plan financial statements and a review of Sunoco's Annual Report
and certain other filings with the SEC and other governmental agencies. In
addition, Ernst & Young provided various non-audit services to the Company
during 1999.

Your Board unanimously recommends a vote FOR the approval of Ernst &
Young's appointment as independent auditors for 2000.

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NOMINEES FOR THE BOARD OF DIRECTORS
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RAYMOND E. CARTLEDGE Director since 1990
Age 70

[PHOTO OF Mr. Cartledge retired as Chairman of Savannah Foods &
RAYMOND E. Industries, Inc. in October 1997, a position he had held
CARTLEDGE] 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 also a
director of Chase Industries, Inc.; Delta Air Lines, Inc.;
and UCAR International.

ROBERT J. DARNALL

Age 61

[PHOTO OF Mr. Darnall retired as President and Chief Executive Officer
ROBERT J. of Ispat North America, Inc. in January 2000, a position he
DARNALL] 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; Cummins Engine
Company; and the Federal Reserve Bank of Chicago.

JOHN G. DROSDICK Director since 1996
Age 56

[PHOTO OF Mr. Drosdick will assume the Chief Executive Officer
JOHN G. position, and is expected to be elected Chairman of Sunoco
DROSDICK] following the 2000 Annual Meeting. Mr. Drosdick has been a
director and President and Chief Operating Officer of Sunoco
since December 1996. He was President and Chief Operating
Officer of Ultramar Corporation (which merged with Diamond
Shamrock, Inc. in 1997 to become Ultramar Diamond Shamrock
Corporation) from June 1992 to August 1996, and from 1990 to
June 1992, he was President of its U.S. refining and
marketing business. Previously, Mr. Drosdick was President
and Chief Operating Officer of Tosco Corporation from 1987 to
1989, and from 1989 to 1990 he was President and Chief
Executive Officer of its subsidiary, Tosco Refining Company.
He is also a director of Hercules Incorporated.

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NOMINEES FOR THE BOARD OF DIRECTORS
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MARY JOHNSTON EVANS Director since 1980
Age 70

[PHOTO OF Mrs. Evans is a former Vice-Chairman of Amtrak, and is a
MARY director of Baxter International Inc.; Delta Air Lines, Inc.;
JOHNSTON EVANS] Household International, Inc.; Saint-Gobain Corp.; and The
Dun & Bradstreet Corporation.

THOMAS P. GERRITY Director since 1990
Age 58

[PHOTO OF Dr. Gerrity has been a Professor of Management, The Wharton
THOMAS P. School of the University of Pennsylvania, since July 1990.
GERRITY] Previously, he served as Dean of The Wharton School from 1990
through his retirement in July 1999 and as President of CSC
Consulting and Vice President of Computer Science Corp. from
1989 to June 1990. He is also a director of CVS Corporation;
Fannie Mae; Internet Capital Group, Inc.; Knight Ridder;
Purchasing Solutions, Inc.; Reliance Group Holdings, Inc.;
and is a trustee of the Miller, Anderson & Sherrerd LLP's
Mutual Funds Group.

ROSEMARIE B. GRECO Director since 1998
Age 53

[PHOTO OF Ms. Greco is the Principal of GRECOventures. She was co-
ROSEMARIE B. Chairman of The Private Industry Council of Philadelphia,
GRECO] Inc. and was the Interim President and Chief Executive
Officer of the organization from April through August of
1998. In August 1997, Ms. Greco resigned her positions as
President of CoreStates Financial Corp. and as President and
Chief Executive Officer of CoreStates Bank. She served as
Chief Banking Officer of CoreStates Financial Corp. from
August 1994 to June 1996, and as 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 Cardone
Industries, Inc.; Genuardi Family Markets, Inc.; PECO Energy
Company; the Pennsylvania Real Estate Investment Trust; PRWT
ComServe, Inc.; and Radian Group, Inc.

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NOMINEES FOR THE BOARD OF DIRECTORS
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JAMES G. KAISER Director since 1993
Age 57

[PHOTO OF Mr. Kaiser is Chairman, Chief Executive Officer and a
JAMES G. director of Avenir Partners, Inc. and President of Kaiser
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 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 Mead Corp. and The Stanley Works.

ROBERT D. KENNEDY Director since 1995
Age 67

[PHOTO OF Mr. Kennedy retired in September 1999 as Chairman of the
ROBERT D. Board and in July 1998 as Chief Executive Officer of UCAR
KENNEDY] International, positions he had held since March 1998. He
continues as a director. 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
International Paper; Kmart Corporation; and Lion Ore Mining
International, Ltd. He is also on the advisory boards of The
Blackstone Group and RFE Investment Partners.

NORMAN S. MATTHEWS Director since 1999

Age 67

[PHOTO OF Mr. Matthews, a retail consultant, was previously President,
NORMAN S. Federated Department Stores and is currently a director of
MATTHEWS] Eye Care Centers of America; Finlay Enterprises, Inc.;
Lechters, Inc.; The Progressive Corp.; and Toys "R" Us, Inc.

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NOMINEES FOR THE BOARD OF DIRECTORS
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R. ANDERSON PEW Director since 1978
Age 63

[PHOTO OF Mr. Pew retired from Sunoco in May 1996 as Chief Executive
R. ANDERSON Officer of Radnor Corporation, a position he had held since
PEW] 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.

G. JACKSON RATCLIFFE Director since 1998
Age 63

[PHOTO OF G. Mr. Ratcliffe is Chairman of the Board of Hubbell
JACKSON Incorporated, a position he has held since 1987, having been
RATCLIFFE] 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.

ALEXANDER B. TROWBRIDGE Director since 1990
Age 70

[PHOTO OF Mr. Trowbridge is President of Trowbridge Partners Inc. He
ALEXANDER B. assumed this position in January 1990 upon his retirement as
TROWBRIDGE] President of the National Association of Manufacturers, a
position he had held since 1980. Mr. Trowbridge also serves
as a director of E. M. Warburg, Pincus Funds; Harris
Corporation; ICOS Corporation; IRI International Corporation;
New England Life Insurance Company; The Gillette Company; and
The Rouse Company.

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STATEMENT ON CORPORATE GOVERNANCE
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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, 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/her. He/she 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.

13
<PAGE>

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 useful 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. 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 and the Chief Operating 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.

14
<PAGE>

. 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 chaired by an outside director 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 examines accounting processes and reporting
systems, assesses the adequacy of internal controls and risk
management, reviews and approves Sunoco's financial disclosures, and
evaluates the performance and recommends the appointment of
independent auditors.

. 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, along with the Board, is responsible for
reviewing and updating Sunoco's Statement on Corporate Governance.

. 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.

15
<PAGE>

. The Public Affairs Committee reviews compliance with laws governing
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 link director and shareholder
interests, the Committee recommended and the Board approved Director
Stock Ownership Guidelines in October 1997.

. In 1996, Sunoco eliminated its Non-Employee Director Retirement Plan
and replaced it prospectively with an annual grant in share units
under the Directors' Deferred Compensation 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.

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

16
<PAGE>

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 1999
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, the matters required to
be discussed by Statement on Auditing Standards No. 61, Communication with
Audit Committees, as amended. In addition, the Committee has discussed with
the independent auditors, the auditors' 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.

In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in Sunoco's Annual Report on SEC Form
10-K for the year ended December 31, 1999, for filing with the Securities and
Exchange Commission.

Respectfully submitted on March 2, 2000 by the members of the Audit Committee
of the Board of Directors:

Thomas P. Gerrity, Chair
Mary Johnston Evans
Rosemarie B. Greco
R. Anderson Pew
William F. Pounds
Alexander B. Trowbridge

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

17
<PAGE>

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

<TABLE>
<CAPTION>
Public
Name Audit/2/ Compensation Executive Governance Affairs
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
R. H. Campbell/3/ x/4/ x
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
R. E. Cartledge x/4/ x x
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
J. G. Drosdick x x
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
M. J. Evans x x x
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
T. P. Gerrity x/4/ x
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
R. B. Greco x
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
J. G. Kaiser x x/4/
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
R. D. Kennedy x x x
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
N. S. Matthews x
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
R. A. Pew x x
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
W. F. Pounds/5/ x x x/4/
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
G. J. Ratcliffe x
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
A. B. Trowbridge x x
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
Number of Meetings
in 1999 8 6 2 5 2
</TABLE>
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------

NOTES TO TABLE:

/1/ Information in table is presented as of March 2, 2000.

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

/3/ Robert H. Campbell will retire as Chairman, Chief Executive Officer
and Director on May 4, 2000.

/4/ Committee Chairperson.

/5/ William F. Pounds will retire as Director on May 4, 2000.

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

18
<PAGE>

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 approximately 55% of the total compensation
package. Executive officers are not paid for their services as directors. The
Board held seven meetings during 1999, 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 1999:

Directors' Compensation Table

<TABLE>
<CAPTION>
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
Type of Compensation Cash Stock Based
=========================================================================
<S> <C> <C>
Annual Retainer $8,520 $19,880/1/
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
Yearly Credit under Deferred Compensation Plan $22,000/2/
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
Annual Retainer for Committee Chair $2,000
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------
Board or Committee Attendance Fee (per meeting)/3/ $1,250
</TABLE>
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------

NOTES TO TABLE:

/1/ Represents shares of Sunoco common stock paid under the Directors'
Retainer Stock Plan. On May 6, 1999, each outside director received 545
shares for this portion of the Annual Retainer.

/2/ Each outside director's account is credited annually with restricted share
units that are not payable until death or other termination of Board
service.

/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. In
addition, the Yearly Credit 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 10, 2000 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 22.
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------

19
<PAGE>

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, 1999. 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

<TABLE>
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
<CAPTION>
Shares of Share Units
Common Stock and
Beneficially Share
Name Owned/2/ Equivalents/3/ Total
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
<S> <C> <C> <C>
Robert H. Campbell/4/ 630,621 41,434 672,055
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
Raymond E. Cartledge 4,402 9,037 13,439
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
Robert J. Darnall/5/ 2,000 0 2,000
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
John G. Drosdick/4/ 246,508 0 246,508
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
Mary Johnston Evans 4,143 15,512 19,655
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
Deborah M. Fretz/4/ 45,460 2,266 47,726
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
Thomas P. Gerrity 6,337 7,093 13,430
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
Rosemarie B. Greco 1,250 4,008 5,258
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
James G. Kaiser 5,062 4,655 9,717
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
Robert D. Kennedy 14,290 2,733 17,023
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
David E. Knoll/4/,/6/ 169,286 0 169,286
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
Norman S. Matthews 0 1,876 1,876
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
William F. Pounds 2,555 26,187 28,742
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
R. Anderson Pew/4/,/6/ 92,122 1,672 93,794
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
G. Jackson Ratcliffe 1,000 2,449 3,449
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
Sheldon L. Thompson/4/ 96,139 0 96,139
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
Alexander B. Trowbridge 5,542 7,093 12,635
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
All directors and executive
officers as a group including 1,648,361 129,389 1,777,750
those named above/4/,/5/,/6/
- - - - - - - - - - - - - - - - - -----------------------------------------------------------------------
</TABLE>

20
<PAGE>

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 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 Sunoco common stock that directors
and officers have the right to acquire within 60 days of December 31, 1999.

/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 4 on page 27). 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/ 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, 1999 under the Sunoco, Inc. Long-
Term Performance Enhancement Plan ("LTPEP"), our current long-term incentive
plan, and under the Sunoco, Inc. Long-Term Incentive Plan ("LTIP") and the
Sunoco, Inc. Executive Long-Term Stock Investment Plan ("ELSIP"), both of
which are predecessor plans:

Name Shares
----------------------------------------------------------------------
----------------------------------------------------------------------
R. H. Campbell 559,850
----------------------------------------------------------------------
J. G. Drosdick 180,000
----------------------------------------------------------------------
D. M. Fretz 40,590
----------------------------------------------------------------------
D. E. Knoll 140,080
----------------------------------------------------------------------
R. A. Pew 15,600
----------------------------------------------------------------------
S. L. Thompson 86,660
----------------------------------------------------------------------
All directors and executive officers as a group (including
those named above) 1,258,153
----------------------------------------------------------------------

/5/ Mr. Darnall has not been a director or officer of Sunoco, and is standing
for election to Sunoco's Board of Directors for the first time. Mr. Darnall
owns 2,000 shares of Sunoco common stock which are included in the table and
in the totals for all directors and officers as a group.

/6/ The individuals and group named in the table have sole voting and investment
power with respect to shares of common stock beneficially owned, except that
voting and investment power is shared as follows:
----------------------------------------------------------------------

All directors and executive officers as a group (including
those named above) 16,487
----------------------------------------------------------------------

21
<PAGE>

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. 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.
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 19.

22
<PAGE>

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 31 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 three
components of executive compensation for 1999, the Committee concluded that
base salaries and annual incentives were competitive. However, the Committee
was of the view that long-term incentives were not competitive and so decided
to increase them to more competitive levels. 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 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
guideline annual incentive, with payments increasing as performance
improves.

23
<PAGE>

The Committee establishes a fixed percentage of annual salary as an
executive's guideline 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 guideline amount increases with
the level of responsibility of the executive. Annual incentive awards for
1999 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 31).

Although Sunoco did not achieve the minimum threshold established for
operating income in 1999, it did attain an ROCE ranking slightly better
than the minimum award level. As a result, the annual incentive approved by
the Committee for each Named Executive Officer was 20% of the guideline
incentive opportunity. The Bonus column of the Summary Compensation Table
on page 26 contains the annual incentive earned for 1999 for each of the
Named Executive Officers.

. Long-Term Incentive Compensation: The Committee reviews and approves all
long-term incentive awards. These 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.
They also consider the number of long-term incentive awards previously
granted to the executive.

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

. Common Stock Units: Performance-based common stock units are earned only
if the Company's total common stock shareholder return (stock price
appreciation plus dividend yield) for a three-year performance period
compares favorably to that of the Performance Peer Group. 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. 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.

24
<PAGE>

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. Campbell'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 1999, the Chief Executive
Officer's compensation components were:

. Base Salary: As a result of Sunoco's performance in 1998 and his individual
performance, Mr. Campbell's annual salary increased to $840,000 for 1999.

. Annual Incentive: Annual incentive compensation for Mr. Campbell is based
upon relative attainment of the annual performance goals for the Company
and on Mr. Campbell's individual objectives as determined by the Committee.
Based on these criteria, and the Committee's review of competitive
practices, Mr. Campbell was awarded $126,000 representing 20% of his
guideline incentive for performance in 1999.

. Long-Term Incentive Awards: In December 1999, Mr. Campbell received a grant
of 150,000 stock options which become exercisable in December 2001 and will
expire five years after Mr. Campbell's retirement date, and 15,000
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, the value of such awards
granted to other chief executive officers in the Performance Peer Group,
the oil industry, and industry in general, and the number of stock options
and common stock units granted in prior years. See page 23 for a discussion
of the Committee's review of and actions regarding 1999 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. Therefore,
the Committee has determined that it is not necessary to seek shareholder
approval to amend any current compensation plan at this time to comply with
this Act.

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
Mary Johnston Evans (member through February 2, 2000)
James G. Kaiser
Robert D. Kennedy
Norman S. Matthews
G. Jackson Ratcliffe

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

25
<PAGE>

EXECUTIVE COMPENSATION, PENSION PLANS & OTHER ARRANGEMENTS
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------

Summary Compensation Table

<TABLE>
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------
<CAPTION>
Long-Term Compensation/3/
--------------------------------------------------------------
Annual Compensation Awards Payouts
----------------------------------------------------------------------------------
Other Restricted Securities
Name and Base Annual Stock Underlying LTIP All Other
Principal Position Year Salary/1/ Bonus Compensation/2/ Awards Options Payouts Compensation/4/
($) ($) ($) ($) (#) ($) ($)
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. H. CAMPBELL 1999 840,000 126,000 51 0 150,000 0 70,930
Chairman of the 1998 830,790 921,000/5/ 2,552 0 110,000 0 69,562
Board and Chief 1997 699,140 882,000/5/ 0 0 50,000 0 53,935
Executive Officer
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------
J. G. DROSDICK 1999 610,012 73,200 6,646 0 95,000 755,000/6/ 34,198
President and Chief 1998 602,316 534,180 27,362 0 60,000 0 33,207
Operating Officer 1997 560,040 557,300 125,047 104,688/6/ 40,000 0 5,852
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------
D. E. KNOLL 1999 350,012 28,089 2,698 0 22,000 45,625/7/ 23,452
Senior Vice 1998 349,758 211,460 3,655 0 14,960 0 22,043
President, Northeast 1997 326,976 236,600 3,470 104,688/7/ 10,910 0 20,636
Refining and
Chemicals
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------
D. M. FRETZ 1999 312,000 28,089 4,268 0 22,000 152,500/8/ 17,023
Senior Vice 1998 311,580 211,460 6,015 0 14,960 112,314/8/ 16,848
President, Lubricants 1997 281,996 236,600 5,283 0 10,910 71,626/8/ 14,912
and Logistics
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------
S. L. THOMPSON 1999 298,012 28,089 788 0 22,000 0 23,541
Senior Vice President 1998 297,702 211,460 1,374 0 14,960 0 20,860
and Chief 1997 273,000 236,600 1,213 0 10,910 0 18,417
Administrative Officer
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------
</TABLE>

26
<PAGE>

NOTES TO TABLE:

/1/ The amounts reported in the table under Base Salary reflect that there
were 26 bi-weekly pay periods in 1999, 27 bi-weekly pay periods in 1998,
and 26 bi-weekly pay periods in 1997.

/2/ For each of the Named Executive Officers, the amounts in this column
reflect reimbursements for the payment of taxes associated with certain
payments for club memberships. For Mr. Drosdick in 1997, this column also
reflects reimbursement for the payment of certain expenses ($41,953) and
taxes ($43,063) associated with moving and relocation.

/3/ Long-term awards were composed of stock options and common stock units
(representing shares of Sunoco common stock). The performance-based common
stock unit portion of these awards is excluded from this table but
reflected in the table of Performance-Based Common Stock Unit Awards on
page 30. Other common stock unit awards are included in this Summary
Compensation Table as Restricted Stock Awards, and are described in
further detail in notes 6 through 8 below.

/4/ The table below shows the components of this column for 1999:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Company Match Under Cost of
Name Defined Contribution Plans* Term Life Insurance Total
------------------------------------------------------------------------
------------------------------------------------------------------------
<S> <C> <C> <C>
R. H.
Campbell $42,000 $28,930 $70,930
------------------------------------------------------------------------
J. G.
Drosdick 30,501 3,697 34,198
------------------------------------------------------------------------
D. E. Knoll 17,501 5,951 23,452
------------------------------------------------------------------------
D. M. Fretz 15,600 1,423 17,023
------------------------------------------------------------------------
S. L.
Thompson 14,901 8,640 23,541
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>

* 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 even after reaching certain
limitations under the Internal Revenue Code.

/5/ $591,000 of R. H. Campbell's total 1998 annual incentive award and
$534,000 of his total 1997 annual incentive award were 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.

/6/ 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 2000 when they were valued at
$45,625 and $30,938, respectively (including dividend equivalents).

/7/ In 1997, D. E. Knoll 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. Knoll in 1,250 share installments in January 1999 and 2000 when
they were valued at $45,625 and $30,938, respectively (including dividend
equivalents).

/8/ 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.

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

27
<PAGE>
OPTION GRANT TABLE
<TABLE><S> <C>
- - - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------
</TABLE>
The following table presents additional information concerning the option
awards shown in the Summary Compensation Table for fiscal year 1999. 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 1999/1/
<TABLE>
- - - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Individual Grants Stock Price Appreciation for
Option Term/3/
---------------------------------------------------------------------------------------------
Securities Percent of
Underlying Total
Options Options 0% 5% 10%
Granted/2/ Granted to Exercise
---------------- Employees or Base Stock Stock Stock
in Fiscal Price Expiration Price Price Price
Name Date Number Year ($/share) Date $25.250 $41.130 $65.492
- - - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. H. CAMPBELL 12/01/99 150,000 14.6 25.25 11/30/09/4/ 0 2,382,000 6,036,300
Chairman of the
Board and Chief
Executive Officer
- - - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------
J. G. DROSDICK 12/01/99 95,000 9.3 25.25 11/30/09 0 1,508,600 3,822,990
President and
Chief Operating
Officer
- - - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------
D. E. KNOLL 12/01/99 22,000 2.1 25.25 11/30/09 0 349,360 885,324
Senior Vice President,
Northeast Refining
and Chemicals
- - - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------
D. M. FRETZ 12/01/99 22,000 2.1 25.25 11/30/09 0 349,360 885,324
Senior Vice President,
Lubricants and
Logistics
- - - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------
S. L. THOMPSON 12/01/99 22,000 2.1 25.25 11/30/09 0 349,360 885,324
Senior Vice President
and Chief Administrative
Officer
- - - - - - - - - - - - - - - - - ---------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO TABLE:

/1/ No Stock Appreciation Rights ("SARs") were granted.

/2/ 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 33) and permit the holder to be paid in cash the
appreciation on a stock option instead of exercising the option.

/3/ These dollar amounts are not intended to forecast future appreciation of
the common stock price. Executives 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 the
executives would also benefit all shareholders of the common stock. The
additional value realized by all shareholders of Sunoco common stock as a
group based on these assumed appreciation levels is as follows:
<TABLE>
-------------------------------------
<CAPTION>
APPRECIATION LEVEL ADDITIONAL VALUE
-------------------------------------
-------------------------------------
<S> <C>
0% $0
-------------------------------------
5% $1,427,114,511
-------------------------------------
10% $3,616,495,099
-------------------------------------
</TABLE>

/4/ Although the table reflects an expiration date ten years from the date of
grant, Mr. Campbell's stock options will expire five years after his
retirement date.
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------

28
<PAGE>

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

. exercises of stock options and SARs during 1999; and

. the amount and values of unexercised stock options and SARs as of December
31, 1999.

Aggregated Option/SAR Exercises in 1999 and Year-End Option/SAR Values

<TABLE>
<CAPTION>
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------
Number of
Securities Number of Securities Value of Unexercised
Underlying Underlying In-the-Money
Options/ Options/SARs Granted Options/SARs at Year-End
SARs Value (#) ($)
Name Exercised Realized/1/ ------------------------- -------------------------
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. H. CAMPBELL
Chairman of 0 0 559,850 260,000 0 0
the
Board and
Chief
Executive
Officer
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------
J. G. DROSDICK
President and 0 0 180,000 155,000 25,000 0
Chief
Operating
Officer
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------
D. E. KNOLL
Senior Vice 0 0 140,080 36,960 0 0
President,
Northeast
Refining and
Chemicals
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------
D. M. FRETZ
Senior Vice 0 0 40,590 36,960 0 0
President,
Lubricants and
Logistics
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------
S. L. THOMPSON
Senior Vice 25,860/2/ 153,449 86,660 36,960 0 0
President
and Chief
Administrative
Officer
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------------
</TABLE>

NOTES 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.

/2/ Mr. Thompson retained 2,250 shares of Sunoco common stock following the
exercise of these stock options and the payment of related withholding
taxes.

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

29
<PAGE>

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

<TABLE>
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------
<CAPTION>
Estimated Future Payouts
------------------------------------
Number of Minimum Maximum
Common End of Stock Price Threshold Target (Number
Year Stock Units Performance Required for (Number (Number of
Name Granted (CSUs) Period Payout/2/ of CSUs) of CSUs) CSUs)
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
R. H. CAMPBELL 1999 15,000 12/31/02 23.67 3,750 15,000 22,500
Chairman of 1998 15,000 12/31/01 33.69 3,750 15,000 22,500
the 1997 15,000 12/31/00 41.96 3,750 15,000 22,500
Board and 1996/3/ 13,000 12/31/99 24.49 3,250 13,000 19,500
Chief
Executive
Officer
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------
J. G. DROSDICK 1999 12,000 12/31/02 23.67 3,000 12,000 18,000
President and 1998 12,000 12/31/01 33.69 3,000 12,000 18,000
Chief 1997 12,000 12/31/00 41.96 3,000 12,000 18,000
Operating 1996/3/ 12,000 12/31/99 24.49 3,000 12,000 18,000
Officer
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------
D. E. KNOLL 1999 3,100 12/31/02 23.67 775 3,100 4,650
Senior Vice 1998 3,100 12/31/01 33.69 775 3,100 4,650
President, 1997 3,100 12/31/00 41.96 775 3,100 4,650
Northeast 1996/3/ 3,100 12/31/99 24.49 775 3,100 4,650
Refining and
Chemicals
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------
D. M. FRETZ 1999 3,100 12/31/02 23.67 775 3,100 4,650
Senior Vice 1998 3,100 12/31/01 33.69 775 3,100 4,650
President, 1997 3,100 12/31/00 41.96 775 3,100 4,650
Lubricants and 1996/3/ 3,720 12/31/99 24.49 930 3,720 5,580
Logistics
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------
S. L. THOMPSON 1999 3,100 12/31/02 23.67 775 3,100 4,650
Senior Vice 1998 3,100 12/31/01 33.69 775 3,100 4,650
President 1997 3,100 12/31/00 41.96 775 3,100 4,650
and Chief 1996/3/ 3,100 12/31/99 24.49 775 3,100 4,650
Administrative
Officer
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------
</TABLE>

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/ Represents a consecutive 10-day average of the closing prices for Sunoco
common stock as published in the consolidated trading tables of the Wall
Street Journal under the caption "New York Stock Exchange Composite
Transactions."

/3/ The required minimum share price level for the 1996 award was met in early
2000 and 130% of the targeted award was paid at that time. It will be
reported as a year 2000 payout in the Summary Compensation Table in next
year's proxy statement.
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------

30
<PAGE>

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. During 1999, Sunoco re-evaluated the composition of its Performance
Peer Group and determined that a change was appropriate to better meet these
criteria.

Comparison of Five-Year Cumulative Return/1/

[GRAPH APPEARS HERE]

NEW PEER GROUP FORMER PEER GROUP
-------------- -----------------
Amerada Hess Amerada Hess
Ashland Ashland
Tesoro Crown Central
Tosco Tosco
Ultramar Diamond Shamrock/2/ Total Petroleum, N.A./2/
USX/Marathon Ultramar Diamond Shamrock/2/
Valero USX/Marathon
Valero

Fiscal Year Ended December 31

1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
Sunoco, Inc 100 99 92 163 143 96
New Peer Group 100 120 156 197 169 157
Former Peer Group 100 117 151 190 160 149
S&P 500 Stock Index 100 138 169 226 290 351

NOTES TO GRAPH:

/1/ Assuming that the value of the investment in Sunoco common stock and each
index was $100 on December 31, 1994 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 New
and Former Performance Peer Groups' 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
Groups' Cumulative Returns. On September 29, 1997, UDS acquired Total
Petroleum, N.A. ("Total") in a transaction in which each share of Total was
exchanged for .322 of a share of UDS. For purposes of this graph, the
resultant cash value of this transaction has been reinvested in the Former
Peer Group of companies in proportion to their market capitalization on that
date.
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------

31
<PAGE>

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"). The estimates
assume that benefits are received in the form of a single life annuity.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Final Average Estimated Annual Benefits
Total Cash Upon Retirement at Age 62
Compensation/1/ After Completion of the Following Years of Service
---------------------------------------------------------------------------
---------------------------------------------------------------------------
20 Years 25 Years 30 Years 35 Years 40 Years
---------------------------------------------------------------------------
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$200,000 $ 80,000 $ 93,000 $100,000 $108,000 $ 115,000
---------------------------------------------------------------------------
400,000 160,000 187,000 200,000 215,000 230,000
---------------------------------------------------------------------------
600,000 240,000 280,000 300,000 323,000 345,000
---------------------------------------------------------------------------
800,000 320,000 373,000 400,000 430,000 460,000
---------------------------------------------------------------------------
1,000,000 400,000 467,000 500,000 538,000 575,000
---------------------------------------------------------------------------
1,200,000 480,000 560,000 600,000 645,000 690,000
---------------------------------------------------------------------------
1,400,000 560,000 653,000 700,000 753,000 805,000
---------------------------------------------------------------------------
1,600,000 640,000 747,000 800,000 860,000 920,000
---------------------------------------------------------------------------
1,800,000 720,000 840,000 900,000 968,000 1,035,000
---------------------------------------------------------------------------
</TABLE>

NOTE TO TABLE:

/1/ Final Average Total Cash Compensation is the average of the base
salary and annual incentive award in the highest 36 consecutive
months during the last 120 months of service. The salaries and
bonuses in the Summary Compensation Table on page 26 reflect the
total cash compensation covered by the pension plans.

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 1999 salary and guideline annual incentive would
be approximately $250,000.

Credited years of service under these plans for the Named Executive Officers
as of December 31, 1999 are as follows:

----------------------------------------------
<TABLE>
<CAPTION>
Name Years of Service
--------------------------------
--------------------------------
<S> <C>
R. H. Campbell 39
--------------------------------
J. G. Drosdick 3
--------------------------------
D. E. Knoll 32
--------------------------------
D. M. Fretz 22
--------------------------------
S. L. Thompson 37
--------------------------------
</TABLE>
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------

32
<PAGE>

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 and the Chief Operating 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 the Chief Operating Officer, and two years for the
other Named Executive Officers. Based upon base salary and guideline annual
incentive for 1999, payments under these plans would have been as follows:

<TABLE>
<CAPTION>
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------
Name Involuntary Termination Change in Control/1/
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------
<S> <C> <C>
R. H. Campbell $2,940,000 $4,410,000
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------
J. G. Drosdick 1,952,000 2,928,000
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------
D. E. Knoll 735,671 980,894
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------
D. M. Fretz 678,671 904,894
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------
S. L. Thompson 657,671 876,894
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------------
</TABLE>

NOTES TO TABLE:

/1/ 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
regardless of whether performance targets have been met.

33
<PAGE>

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 1999, 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 1999.
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------

By Order of the Board of Directors,

/s/ Ann C. Mule

Ann C. Mule
General Attorney and Corporate Secretary
Philadelphia, PA
March 16, 2000

34
<PAGE>

APPENDIX
AUDIT COMMITTEE CHARTER
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------

Organization: The Committee shall consist of at least three Directors
including a Chairperson. The Committee shall include only independent
Directors as defined by the relevant listing authority. Each member of the
Committee shall be financially literate or must become financially literate
within a reasonable period of time after his or her appointment to the
Committee, and at least one member of the Committee must have accounting or
related financial management expertise as the foregoing qualifications are
interpreted by the Board of Directors ("Board") in its business judgement.

Statement of Policy: The Committee shall, through regular or special meetings
with management, the General Auditor, and the Company's independent auditor,
provide oversight on matters relating to accounting, financial reporting,
internal control, auditing, and regulatory compliance activities and other
matters as the Board or the Committee Chairperson deems appropriate.

Responsibilities: The Committee shall recommend to the Board the appointment
of the Company's independent auditor and shall review the activities and
independence of the independent auditor. This includes communicating to the
independent auditor that he or she is ultimately accountable to the Board and
the Committee. The Committee and the Board have the ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the
independent auditor (or to nominate the independent auditor to be proposed for
shareholder approval in any proxy statement). The Committee shall (1) ensure
that the independent auditor provides annually to the Committee a formal
written statement delineating all relationships between the independent
auditor and the Company, (2) actively engage in a dialogue with the
independent auditor with respect to any disclosed relationships or services
that may impact the objectivity and independence of the independent auditor,
and (3) recommend that the Board take appropriate action in response to the
independent auditor's report to satisfy itself of the independent auditor's
independence.

The Committee shall appoint and evaluate, in consultation with executive
management, the General Auditor, and review and approve the budgets and
staffing for the internal audit department.

The Committee shall have separate direct lines of communication between itself
and the independent auditor, the General Auditor and, with regard to
litigation and legal and regulatory compliance, the General Counsel.

The Committee shall review:

. Annual audit plans of the General Auditor and the independent auditor;

. The results of the internal and the independent auditor's activities,
including major conclusions, findings and recommendations, and related
management responses;

. The Company's accounting and financial reporting practices, annual
report to shareholders and significant SEC filings;

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. Material litigation involving the Company and litigation involving
officers and directors;

. Accounting, legal, tax and other developments of major significance to
the Company;

. Adequacy and effectiveness of internal controls;

. Major capital project post audit results;

. Compliance with legal business policies and regulatory requirements;

. The management delegation of authority process;

. The continued adequacy of this Audit Committee Charter on an annual
basis; and

. Such other matters as the Board or the Committee considers appropriate.

With regard to the SEC Form 10-K, prior to its filing, the Committee, in
addition to its assessment of the independent auditor's independence, shall
review and discuss the audited financial statements with management, and
discuss with the independent auditors the matters required to be discussed by
relevant auditing standards, including the quality, not just the
acceptability, of the accounting principles and underlying estimates used in
the audited financial statements. The Committee shall report to the Board and
to the shareholders whether, based on such reviews and discussions, it
recommends to the Board that the most recent year's audited financial
statements be included in the Company's SEC Form 10-K to be filed with the
SEC.

With regard to the SEC Form 10-Q, the Chairperson and/or his or her Committee
designee(s) shall review the document with management and the independent
auditor prior to its filing.

The Committee shall receive periodic reports from management, the General
Counsel, the General Auditor and the independent auditor on matters relating
to accounting, financial reporting, internal control, auditing, litigation and
compliance with legal business policies and regulatory requirements. The
Committee shall receive these reports pursuant to a schedule that the
Committee Chairperson develops in consultation with management.

The Committee shall meet privately (without members of management present) and
separately with each of the General Auditor and the independent auditor at
least once each year and, when requested, with the Company's General Counsel.

The Committee may cause an investigation to be made into any matter within the
scope of its responsibility. The Committee may engage independent resources to
assist in its investigations as it deems necessary.

The Committee Chairperson shall make regular reports to the Board on the
Committee's activities.
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[Sunoco Logo]

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, 05/03/00.*

[LOGO] Your Control Number is: [LOGO]
Call on a touch-tone telephone
1-877-290-2604 anytime. There
is no charge for this call.

For Telephone/Internet Voting

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, 05/03/00.*

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 the close of
business on Monday, May 1, 2000.

Fold and Detach Here Fold and Detach Here
- - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------

THIS PROXY AND VOTING INSTRUCTION CARD
Sunoco, Inc. IS SOLICITED ON BEHALF OF THE BOARD OF
[Sunoco Ten Penn Center DIRECTORS OF SUNOCO, INC. FOR THE MAY 4,
Logo] 1801 Market Street 2000 ANNUAL MEETING OF SHAREHOLDERS OR
Philadelphia, PA 19103-1699 ANY ADJOURNMENTS THEREOF.

The undersigned appoints R. H. CAMPBELL and J. L. FOLTZ 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 2000 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 "Question and Answers" section on pages 3 to 7
of the accompanying proxy statement.

SIGNATURE ___________________ SIGNATURE__________________ DATED_________, 2000

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
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<S> <C> <C> <C> <C> <C>
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) and (2). SunCAP shares will be voted in accordance
with the terms of that plan.

The Board of Directors unanimously recommends a vote FOR proposals (1) and (2).
--------------------------
(1) ELECTION OF DIRECTORS
FOR All WITHHOLD From
01 - R. E. Cartledge 04 - M. J. Evans 07 - J. G. Kaiser 10 - R. A. Pew Nominees All Nominees
02 - R. J. Darnall 05 - T. P. Gerrity 08 - R. D. Kennedy 11 - G. J. Ratcliffe Listed Listed
03 - J. G. Drosdick 06 - R. B. Greco 09 - N. S. Matthews 12 - A. B. Trowbridge [_] [_]

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

____________________________________________________________________________________
FOR AGAINST ABSTAIN
(2) Approval of the appointment of Ernst & Young LLP as independent auditors [_] [_] [_]
for the fiscal year 2000.

[_] Please check ONLY if you plan to attend the 2000 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.
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