Edgar Filing: SUNOCO INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

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Sunoco, Inc.
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Notes:

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

NOTICE OF ANNUAL MEETING

Dear Sunoco Shareholder:

On Thursday, May 2, 2002, Sunoco, Inc. will hold its 2002 Annual Meeting of
Shareholders at the Moore College of Art and Design, Stewart Auditorium, 20th
Street and the Parkway, Philadelphia, PA. The meeting will begin at 9:30 a.m.

Only shareholders who owned stock at the close of business on February 8, 2002
can vote at this meeting or any adjournments that may take place. At the
meeting we will consider:

1. Election of a Board of Directors;

2. Approval of the appointment of our independent auditors for the fiscal
year 2002; and

3. Any other business properly presented at the meeting.

At the meeting we will also report on Sunoco's 2001 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
Audit Committee's recommendation to the Board regarding our 2001 financial
statements. We encourage you to read these materials carefully.

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

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

The approximate date of mailing for this proxy statement and card as well as a
copy of Sunoco's 2001 Annual Report is March 18, 2002. For further information
about Sunoco, please visit our web site at www.SunocoInc.com.

By Order of the Board of Directors,

/s/ ANN C. MULE'
Ann C. Mule'
Assistant General Counsel and Corporate Secretary
March 18, 2002

TABLE OF CONTENTS
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Questions and Answers...................................................... 3
Proposals on Which You May Vote............................................ 10
Nominees for the Board of Directors........................................ 11
Statement on Corporate Governance.......................................... 14
Audit Committee Report..................................................... 19
Board Committee Membership Roster.......................................... 20
Directors' Compensation.................................................... 21
Directors' and Officers' Ownership of Sunoco Stock......................... 22
Executive Compensation: Report of the Compensation Committee............... 24
Executive Compensation, Pension Plans & Other Arrangements................. 28
Summary Compensation Table............................................... 28
Aggregated Option/SAR Exercises and Year-End Values...................... 31
Option Grant Table....................................................... 32
Other Long-Term Incentive Awards......................................... 34
Stock Performance Graph.................................................. 35
Pension Plans............................................................ 36
Severance Plans and Other Information.................................... 38

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QUESTIONS AND ANSWERS
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1. Q: Who is entitled to vote?
A: Shareholders as of the close of business on the record date,
February 8, 2002, are entitled to vote at the Annual Meeting.

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

(1) telephone, using the toll-free number listed on each proxy
card (if you are a shareholder of record) or vote
instruction card (if your shares are held by a bank or
broker);
(2) the Internet, at the address provided on each proxy or vote
instruction card;
(3) marking, signing, dating, and mailing each proxy 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. For voting procedures for
shares held in the Sunoco, Inc. Capital Accumulation Plan or
"SunCAP," Sunoco's 401(k) Plan for employees, see Question 9;
or
(4) attending the meeting (if your shares are registered directly
in your name on Sunoco's books and not held through a broker,
bank or other nominee).

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

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

The deadline for voting by telephone or electronically is 11:59
p.m. Eastern U.S. Time, May 1, 2002.

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

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

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

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4. Q: Who will count the vote?
A: Representatives of IVS Associates, Inc., an independent tabulator,
will count the vote and act as the judge of election.

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5. Q: Is my vote confidential?
A: Proxy cards, vote instruction cards, telephone and Internet voting
reports, ballots and voting tabulations that identify individual
shareholders are returned directly to IVS Associates, Inc. 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 IVS Associates, Inc. to tabulate and certify the vote; (2)
as required by law; or (3) in limited circumstances such as a
proxy contest in opposition to the Board. Additionally, all
comments written on the proxy or vote instruction card or
elsewhere will be forwarded to Sunoco, but your identity will be
kept confidential unless you specifically ask that your name be
disclosed.

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

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

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8. Q: How many shares can vote?
A: As of the February 8, 2002 record date, 75,850,925 shares of
Sunoco common stock were issued and outstanding. Every shareholder
of common stock is entitled to one vote for each share held as of
the record date.

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

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

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

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

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11. Q: Who can attend the Annual Meeting and how do I get a ticket?
A: All shareholders who owned shares on February 8, 2002 may attend.
Just check the box on your proxy or vote instruction card, or as
indicated on the Internet site, or press the appropriate key if
voting by telephone. If your shares are held through a broker and
you'd like to attend, please write to Ann C. Mule', Assistant
General Counsel and Corporate Secretary, Sunoco, Inc., Ten Penn
Center, 1801 Market Street, Philadelphia, PA 19103-1699. Include a
copy of your brokerage account statement or an omnibus proxy
(which you can get from your broker), and we will send you a
ticket.

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12. Q: How will voting on any other business be conducted?
A: Although we do not know of any business to be considered at the
2002 Annual Meeting other than the proposals described in this
proxy statement, if any other business is presented at the Annual
Meeting, your signed proxy or vote instruction card, or your
authenticated Internet or telephone proxy gives authority to John
G. Drosdick, Sunoco's Chairman, Chief Executive Officer, and
President, and Ann C. Mule', Sunoco's Assistant General Counsel and
Corporate Secretary, to vote on such matters at their discretion.

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13. Q: Can I receive my proxy statement and annual report over the
Internet?
A: Yes. You can receive this information over the Internet.

(1) If you are a registered shareholder: You can 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). Your choice of electronic delivery will
remain in effect until you contact us by sending a written
request to the Corporate Secretary, Sunoco, Inc., Ten Penn
Center, 1801 Market Street, Philadelphia, PA 19103-1699.

(2) If you hold shares through a broker or bank: Please refer to
the information provided by that entity in the proxy
materials mailed to you; or contact your broker or bank and
indicate your preference to access the documents on the
Internet.

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14. Q: If I am receiving multiple copies of the proxy statement and
annual report at my residence, what do I need to do to receive
only one copy?
A: With your consent and the consent of other shareholders in your
household, we may send one set of the proxy statement and annual
report to a household where two or more Sunoco shareholders reside
if we believe they are members of the same family. Each consenting
shareholder would continue to receive a separate notice of annual
meeting and proxy card. This procedure, referred to as
"householding," would reduce the volume of duplicate information
you receive, and would also reduce the Company's printing and
mailing costs. If you are an eligible shareholder and would be
interested in receiving only one copy of the proxy statement and
annual report, please complete the question regarding consent
relating to multiple copies included on your proxy or vote
instruction card, on the Internet site, or on the telephone; or
you may contact the Company by sending a written request to the
Corporate Secretary, Sunoco, Inc., Ten Penn Center, 1801 Market
Street, Philadelphia, PA 19103-1699. Your consent will remain in
effect unless Sunoco receives contrary instructions from you or
other shareholders in your household. Also, if you would like to
obtain a copy of the annual report or proxy statement, please
direct your written request to the address above. If you hold your
shares in street name, please contact your broker.

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15. Q: I have Sunoco shares that are held in street name, as do others in
my household. We received only one copy of the proxy statement and
annual report. What if I would like additional copies of these
materials?
A: Some brokerage firms have instituted "householding" in connection
with the delivery of annual reports and proxy statements (See
Question 14). If your family holds Sunoco shares in multiple
brokerage accounts, you may have previously received
"householding" notification from your broker or bank. If you wish
to revoke your decision to household and thereby receive multiple
reports, please contact your broker directly. If any shareholder
residing at the same address would like additional copies of the
annual report or proxy statement, please contact your broker or
bank, or you may contact Sunoco at Ten Penn Center, 1801 Market
Street, Philadelphia, PA 19103-1699, Attention: Corporate
Secretary.

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16. Q: Does any shareholder own 5% or more of Sunoco's common stock?
A: These shareholders have reported the following ownership of
Sunoco's common stock, as of December 31, 2001. The information
below is based on the most recent Schedule 13Gs filed with the
Securities and Exchange Commission, except as otherwise known by
the Company.

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Percent of
Outstanding
Shareholder Name and Address Shares Shares
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Mellon Financial Corporation
and direct or indirect subsidiaries
One Mellon Center 4,817,698/1/ 6.38%
Pittsburgh, PA 15258
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Morgan Stanley Dean Witter & Co.
Morgan Stanley Dean Witter Advisors Inc.
1585 Broadway 4,292,125/2/ 5.68%
New York, NY 10036

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NOTES TO TABLE:

/1/According to a Schedule 13G dated January 18, 2002 filed with
the Securities and Exchange Commission, Mellon Financial
Corporation holds sole voting power of 3,733,054, shared voting
power of 266,596, sole dispositive power of 4,589,176 shares,
and shared dispositive power of 155,725 shares.

/2/According to a Schedule 13G dated February 5, 2002 filed with
the Securities and Exchange Commission, Morgan Stanley Dean
Witter & Co. holds shared voting power of 4,169,073 shares and
shared dispositive power of 4,292,125 shares; and Morgan
Stanley Dean Witter Advisors Inc. holds shared voting power of
4,026,337 shares and shared dispositive power of 4,035,312
shares

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17. Q: When are the shareholder proposals for the 2003 Annual Meeting
due?
A: All shareholder proposals to be considered for inclusion in next
year's proxy statement must be submitted in writing to Ann C.
Mule', Assistant General Counsel and Corporate Secretary, Sunoco,
Inc., Ten Penn Center, 1801 Market Street, Philadelphia, PA 19103-
1699 by November 15, 2002.

Additionally, Sunoco's advance notice bylaw provisions require
that any shareholder proposal to be presented from the floor of
the 2003 Annual Meeting must be submitted in writing to Ann C.
Mule', at the above address, by December 31, 2002, 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 2003 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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18. 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, 2002 for the 2003 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 2003 Annual Meeting to nominate the
individual(s) if the nominations are to be made at a shareholder
meeting;

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

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

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

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19. Q: How much did this proxy solicitation cost?
A: Morrow & Co., Inc. was hired to assist in the distribution of
proxy materials and the solicitation of votes for a fee of
$10,000, plus estimated out-of-pocket expenses of $10,000. 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 11 nominees for election this year. Detailed information on each
is provided on pages 11 to 13. All directors are elected annually, and
serve a one-year term until the next Annual Meeting. If any director is
unable to stand for re-election, the Board may reduce its size or designate
a substitute. If a substitute is designated, proxy votes in favor of the
original director candidate will be counted for the substituted candidate.

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

2.APPROVAL OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
FOR THE FISCAL YEAR 2002

The Audit Committee has recommended, and the Board has approved, the
appointment of Ernst & Young LLP as our independent auditors for the fiscal
year 2002 subject to your approval. Ernst & Young has served as our
independent auditors since 1996. They have unrestricted access to the Audit
Committee to discuss audit findings and other financial matters.
Representatives of Ernst & Young will attend the Annual Meeting to answer
appropriate questions. They also may make a statement. The work performed
by Ernst & Young during 2001 and the related fees are set forth below.

a. Audit Fees

Ernst & Young provided audit services to Sunoco consisting of the annual
audit of Sunoco's 2001 consolidated financial statements and reviews of the
financial statements in the 2001 Forms 10-Q. The fees paid to Ernst & Young
for these services were $1,149,714.

b. Financial Information System Design and Implementation Fees

Ernst & Young did not perform any financial information system design or
implementation work for Sunoco during 2001.

c. All Other Fees

Ernst & Young provided various audit-related services to the Company,
including consultation on accounting and reporting matters, audits of
separate financial statements of subsidiaries and affiliates (including
financial statements prepared in connection with the initial public
offering by Sunoco Logistics Partners L.P., the Company's 75.2 percent
owned master limited partnership) and employee benefit plans and procedures
performed in connection with certain filings with the SEC. Ernst & Young
also provided non-audit-related services, primarily consultation on tax-
related matters. Fees for these services performed during 2001 are as
follows:

Audit-Related Services $2,398,336
Non-Audit Related Services 57,699
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$2,456,035
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Your Board unanimously recommends a vote FOR the approval of Ernst &
Young's appointment as independent auditors for the fiscal year 2002.

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NOMINEES FOR THE BOARD OF DIRECTORS
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[PHOTO OF ROBERT J. DARNALL
ROBERT J. DARNALL Director since 2000
Age 63

Mr. Darnall is the former Chairman of the Board of Prime
Advantage Corp., a position he held from 2000 to 2002, and
its former Chief Executive Officer, a position he held from
2000 to 2001. He retired as President and Chief Executive
Officer of Ispat North America, Inc. in January 2000, a
position he had held since November 1998. He was Chairman,
Chief Executive Officer, and President of Inland Steel
Industries, Inc. from September 1992 to October 1998. Mr.
Darnall is also a director of Cummins, Inc.; Household
International, Inc.; Pactiv Corporation; United States Steel
Corporation; and The Federal Reserve Bank of Chicago.

[PHOTO OF JOHN G. DROSDICK]
JOHN G. DROSDICK Director since 1996
Age 58

Mr. Drosdick was elected Chairman and Chief Executive Officer
in May 2000. Mr. Drosdick has been a director and President
of Sunoco since December 1996. He was also Chief Operating
Officer from December 1996 to May 2000. He was President and
Chief Operating Officer of Ultramar Corporation from June
1992 to August 1996. Mr. Drosdick is Chairman of the Board of
Sunoco Logistics Partners L.P., the Company's 75.2 percent
owned master limited partnership. He is also a director of
Hercules Incorporated and Lincoln National Corporation.

[PHOTO OF URSULA F. FAIRBAIRN]
URSULA F. FAIRBAIRN Director since 2001
Age 59

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

[PHOTO OF THOMAS P. GERRITY]
THOMAS P. GERRITY Director since 1990
Age 60

Dr. Gerrity is a Professor of Management at The Wharton
School of the University of Pennsylvania, a position he has
held since 1990. He also served as Dean of The Wharton School
from 1990 through July 1999. He is also a director of CVS
Corporation; Fannie Mae; Internet Capital Group, Inc.; Knight
Ridder; Reliance Group Holdings, Inc.; and is a trustee of
the Morgan Stanley Institutional Funds.

NOMINEES FOR THE BOARD OF DIRECTORS
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[PHOTO OF ROSEMARIE B. GRECO]
ROSEMARIE B. GRECO Director since 1998
Age 55

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

[PHOTO OF JAMES G. KAISER]
JAMES G. KAISER Director since 1993
Age 59

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

[PHOTO OF ROBERT D. KENNEDY]
ROBERT D. KENNEDY Director since 1995
Age 69

Mr. Kennedy retired in September 1999 as Chairman of the
Board and in July 1998 as Chief Executive Officer of UCAR
International, positions he had held since March 1998. He
retired as Chairman of the Board of Union Carbide Corporation
in December 1995, a position he had held since December 1986.
He remained a director of Union Carbide Corporation until its
merger with Dow Chemical in 2001. Previously, Mr. Kennedy
served as its Chief Executive Officer from April 1986 to
April 1995 and its President from April 1986 to 1993. Mr.
Kennedy is also a director of Chase Industries; Hercules
Incorporated; International Paper; and Kmart Corporation.

NOMINEES FOR THE BOARD OF DIRECTORS
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[PHOTO OF RICHARD H. LENNY]
RICHARD H. LENNY Director since 2002
Age 50

Mr. Lenny was elected Chairman of the Board of Hershey Foods
Corporation effective January 2002. He has been its President
and Chief Executive Officer since March 2001. He was formerly
Group Vice President of Kraft Foods, Inc. and President of
its Nabisco Biscuit and Snack business from 2000 until 2001;
President, Nabisco Biscuit Company from 1998 until 2000; and
President, Pillsbury North America from 1996 to 1998.

[PHOTO OF NORMAN S. MATTHEWS]
NORMAN S. MATTHEWS Director since 1999
Age 69

Mr. Matthews, a retail consultant and investor, was
previously President, Federated Department Stores and is
currently a director of Finlay Enterprises, Inc.; Galyan's
Trading Co.; Henry Schein, Inc.; The Progressive Corp.; and
Toys "R" Us, Inc.

[PHOTO OF R. ANDERSON PEW]
R. ANDERSON PEW Director since 1978
Age 65

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

[PHOTO OF G. JACKSON RATCLIFFE]
G. JACKSON RATCLIFFE Director since 1998
Age 65

Mr. Ratcliffe is Chairman of the Board of Hubbell
Incorporated, a position he has held since 1987, having been
first elected to its Board in 1980. He also served as its
President and Chief Executive Officer from January 1988 until
his retirement in July 2001. Mr. Ratcliffe is also a director
of Barnes Group, Inc.; Olin Corporation; and Praxair, Inc.

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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 and Annual Operating Plan,
and Monitor Sunoco's Performance:

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

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

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

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

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

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

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

Review Management Performance and Compensation:

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

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

Review Management Succession Planning:

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

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

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

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

Advise and Counsel Management:

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

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

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

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

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

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

. Board Structure:

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

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

. As a general rule, director-nominees are required to own at least
$2,000 worth of Sunoco common stock prior to standing for election
as a director.

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

. The mandatory retirement age for directors is 72.

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

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

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

. Board Operations and Meetings:

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

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

. Generally, Board members receive information well in advance of
Board meetings so they will have an opportunity to prepare for
discussion of the items at the meeting. Information is provided from
a variety of sources, including management reports, a comparison of
performance to operating and financial plans, reports on Sunoco's
stock performance and operations prepared by third parties, and
articles in various business publications. In many cases,
significant items requiring Board approval may be reviewed in one or
more meetings and voted upon in subsequent meetings, with the
intervening time being used for clarification and discussion of
relevant issues.

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

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

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

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

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

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

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

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

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

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

. Sunoco has no non-Employee Director Retirement Plan.

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

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

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 2001
Annual Report on SEC Form 10-K with Sunoco's management and the independent
auditors. Management is responsible for the financial statements and the
reporting process, including the system of internal controls. The independent
auditors are responsible for expressing an opinion on the conformity of those
audited financial statements with accounting principles generally accepted in
the United States.

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

In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors, and the Board has approved, the
inclusion of the audited financial statements in Sunoco's Annual Report on SEC
Form 10-K for the year ended December 31, 2001, for filing with the Securities
and Exchange Commission.

Respectfully submitted on March 6, 2002 by the members of the Audit Committee
of the Board of Directors:

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

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

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

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

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

R. E. Cartledge/3/ x/4/ x x
--------------------------------------------------------------------------
R. J. Darnall x x
--------------------------------------------------------------------------
J. G. Drosdick x/4/
--------------------------------------------------------------------------
M. J. Evans/3/ x x x
--------------------------------------------------------------------------
U. F. Fairbairn x x
--------------------------------------------------------------------------
T. P. Gerrity x/4/ x
--------------------------------------------------------------------------
R. B. Greco x x
--------------------------------------------------------------------------
J. G. Kaiser x x/4/
--------------------------------------------------------------------------
R. D. Kennedy x x x/4/ x
--------------------------------------------------------------------------
N. S. Matthews x x
--------------------------------------------------------------------------
R. A. Pew x x x
--------------------------------------------------------------------------
G. J. Ratcliffe x x
--------------------------------------------------------------------------
A. B. Trowbridge/3/ x x
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Number of Meetings
in 2001 13 6 2 5 3

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

NOTES TO TABLE:

/1/Information in table is presented as of December 31, 2001. R. H.
Lenny was elected a director effective February 8, 2002.

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

/3/R. E. Cartledge, M. J. Evans and A. B. Trowbridge will retire as
Directors on May 2, 2002.

/4/Committee Chairperson.

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

DIRECTORS' COMPENSATION
-------------------------------------------------------------------------------
As discussed in the Statement on Corporate Governance, Sunoco benchmarks both
the form and amount of directors' compensation. Directors are compensated
partially in Sunoco common stock or stock equivalents to better align their
interests with those of shareholders. Currently, equity-based compensation
represents on average more than half of the total compensation package.
Executive officers are not paid for their services as directors. The Board
held seven meetings during 2001, 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
2001.

Directors' Compensation Table

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

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

Annual Retainer $18,400 265/1/
-------------------------------------------------------------------------
Yearly Credit under Deferred Compensation Plan 590/2/
-------------------------------------------------------------------------
Annual Retainer for Committee Chair $ 2,000
-------------------------------------------------------------------------
Board or Committee Attendance Fee (per meeting)/3/ $ 1,250
-------------------------------------------------------------------------
Stock Options 1,580/4/

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

NOTES TO TABLE:
/1/Represents shares of Sunoco common stock paid under the Directors'
Retainer Stock Plan having a value of approximately $10,000 on the
date of grant.
/2/Represents restricted share units that are not payable until death
or other termination of Board service, having a value equal to
approximately $22,000 on the date of grant, calculated in accordance
with the terms of the Directors' Deferred Compensation Plan.
/3/A fee of $1,250 per day is also paid in cash for special meetings.
/4/Represents options to purchase Sunoco common stock awarded under the
Sunoco Long-Term Performance Enhancement Plan II having a value of
approximately $19,000 on the date of grant, as determined using the
Black-Scholes option pricing model. The stock options have a ten-
year term and are exercisable two years after the date of grant with
an exercise price equal to the fair market value of Sunoco common
stock on the date of grant.

Directors' Deferred Compensation: The Directors' Deferred Compensation Plan
permits outside directors to defer a portion of their compensation. 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 $278,000. 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 8, 2002 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 24.

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

DIRECTORS' & OFFICERS' OWNERSHIP OF SUNOCO STOCK
-------------------------------------------------------------------------------
The following table shows how much Sunoco common stock each Named Executive
Officer/1/, director and director nominee beneficially owned as of December
31, 2001. No director or executive officer beneficially owns more than 1.0% of
the common stock, and directors and executive officers as a group beneficially
own approximately 1.4% of the common stock.

Directors' & Officers' Stock Ownership

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

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

R. E. Cartledge/4/ 4,402 14,975 19,377
---------------------------------------------------------------------
R. J. Darnall 2,000 2,353 4,353
---------------------------------------------------------------------
J. G. Drosdick/5/ 421,051 0 421,051
---------------------------------------------------------------------
M. J. Evans/4/ 4,372 19,609 23,981
---------------------------------------------------------------------
U. F. Fairbairn 101 1,735 1,836
---------------------------------------------------------------------
D. M. Fretz/5/ 85,759 3,269 89,028
---------------------------------------------------------------------
T. P. Gerrity 1,480 8,921 10,401
---------------------------------------------------------------------
R. B. Greco 2,185 5,640 7,825
---------------------------------------------------------------------
J. G. Kaiser 6,354 6,328 12,682
---------------------------------------------------------------------
R. D. Kennedy 15,225 4,284 19,509
---------------------------------------------------------------------
R. H. Lenny/6/ 1,000 0 1,000
---------------------------------------------------------------------
J. H. Maness 10,680 0 10,680
---------------------------------------------------------------------
N. S. Matthews 1,000 6,767 7,767
---------------------------------------------------------------------
R. W. Owens/5/ 76,028 1,639 77,667
---------------------------------------------------------------------
R. A. Pew/7/ 77,457 3,155 80,612
---------------------------------------------------------------------
G. J. Ratcliffe 1,000 5,713 6,713
---------------------------------------------------------------------
A. B. Trowbridge/4/ 6,627 8,921 15,548
---------------------------------------------------------------------
C. K. Valutas/5/ 54,730 0 54,730
---------------------------------------------------------------------
All directors and executive
officers as a group 1,070,427 95,458 1,169,885
including those named
above/5/,/6/,/7/
---------------------------------------------------------------------

NOTES TO TABLE:

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

/2/This column includes shares of Sunoco common stock held by directors and
officers or by certain members of their families (for which the directors
and officers have sole or shared voting or investment power), shares of
Sunoco common stock they hold in SunCAP and SHARP, shares of Sunoco common
stock earned in connection with the 1997 and the 1998 Performance-Based
Common Stock Unit Awards within 60 days of December 31, 2001, and shares of
Sunoco common stock that directors and officers had the right to acquire
within 60 days of December 31, 2001.

/3/Includes share unit balances held under the Directors' Deferred
Compensation Plan and the Deferred Compensation Plan for executives, and
share equivalent balances held by executives under Sunoco's Savings
Restoration Plan (see footnote 3 on page 29). Although ultimately paid in
cash, the value of share units and share equivalents mirrors the value of
Sunoco common stock. Thus, the amounts ultimately realized by the directors
and executives will reflect all changes in the market value of Sunoco
common stock from the date of deferral and/or accrual until the date of
payout. The share units and share equivalents do not have voting rights,
but are credited with dividend equivalents in the form of additional share
units or share equivalents.

/4/R. E. Cartledge, M. J. Evans and A. B. Trowbridge will be retiring as
directors effective May 2, 2002.

/5/The amounts shown include shares of Sunoco common stock which the following
persons have the right to acquire as a result of the exercise of stock
options within 60 days after December 31, 2001 under certain Sunoco, Inc.
plans:

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

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

J. G. Drosdick 335,000
------------------------------------------------------------------
D. M. Fretz 75,970
------------------------------------------------------------------
R. W. Owens 42,300
------------------------------------------------------------------
C. K. Valutas 41,060
------------------------------------------------------------------
All directors and executive officers as a group (including 742,410
those named above)
------------------------------------------------------------------

/6/R. H. Lenny was elected a director of Sunoco effective February 8, 2002.
Mr. Lenny owns 1,000 shares of Sunoco common stock which were acquired
after December 31, 2001 and before February 8, 2002.

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

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

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" including measurements based
on performance relative to peer companies;

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

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

Management's Stock Ownership Guidelines: The Committee considers stock
ownership by management to be an important means of linking management's
interests directly to those of shareholders. Sunoco has stock ownership
guidelines for its approximately 40 top executives. The amount of stock
required to be owned increases with the level of responsibility of each
executive, with the Chief Executive Officer expected to own stock with a value
at least equal to four times his base salary. Until such time as they are
actually paid out and received, shares that the executives have the right to
acquire through the exercise of stock options are not included in the
calculation of stock ownership. For purposes of these guidelines, a portion of
the shares assumed to have been earned with respect to future payouts of
common stock units are counted when computing stock ownership. Participants
are expected to reach their respective stock ownership goals by the end of a
five-year period. As of the February 8, 2002 record date, all of the
executives subject to the stock ownership guidelines were in compliance (or,
in the case of new executives or executives in new positions with higher stock
ownership requirements, on track to compliance within the five-year period).
Sunoco also has stock ownership guidelines for its outside directors, and
these are discussed on page 21.

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 35 for more
information), these surveys include companies in the performance peer group
and others in the oil industry. This information is supplemented by general
industry compensation information. The compensation survey data reflect
adjustments for each company's relative revenue, asset base, employee
population and capitalization, along with the scope of managerial
responsibility and reporting relationships.

As part of the Committee's annual review of the competitiveness of the
executive compensation program for 2001, the Committee decided to increase the
components to provide a competitive level. Significantly, the increase in the
long-term compensation component reflects the continuing trend of the surveyed
group of companies to increase the percentage of executive compensation
provided by equity-based awards which better align management with
shareholders' interests.

Components of Compensation:

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

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

For the current awards, the Committee established a fixed percentage of
actual annual base salary as an executive's annual incentive opportunity,
based on comparative survey data on annual incentives paid in the former
performance peer group, the oil industry, and industry in general. The
incentive opportunity increases with the level of the actual base salary
which reflects the level of responsibility of the executive. Annual
incentive awards for 2001 were based on meeting weighted objectives for
the following principal measurements:

. after-tax operating income; and

. relative ranking, as measured by return on capital employed, or "ROCE,"
against the former performance peer group (see page 35);

. as modified by certain health, environment and safety performance goals.

.. Long-Term Incentive Compensation: Each year, the Committee reviews and
approves all long-term incentive awards. Current awards are primarily a
combination of stock options and performance-based common stock units. In
determining the number of stock options and performance-based common stock
units awarded, the Committee reviews surveys of similar awards made to
individuals in comparable positions within the performance peer group, in
the oil industry, and in general industry, and the executive's past
performance. The following is a description of the awards granted through
2001:

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

. Common Stock Units: For the 2001 awards, performance-based common stock
units are earned based on the level of performance achieved over a
three-year period subsequent to the date of grant measured on a scale
combining the Company's return on capital employed above the cost of
capital and its earnings per share growth. In order to ensure the
retention of key executives, as part of the compensation to a new
executive hired from outside the Company, or to reward executives for
noteworthy achievements, the Committee also occasionally grants common
stock units which require only continued employment as a condition of
vesting.

Chief Executive Officer Compensation: The Chief Executive Officer participates
in the same programs and receives compensation based on the same factors as
the other executive officers. However, Mr. Drosdick's overall compensation
reflects a greater degree of policy and decision-making authority and a higher
level of responsibility with respect to the strategic direction and financial
and operational results of the Company. For 2001, the Chief Executive
Officer's compensation components were:

.. Base Salary: As a result of Sunoco's performance in 2000 as well as his
individual performance, Mr. Drosdick"s annual salary was increased to
$840,000, effective January 1, 2001.

.. Annual Incentive: Annual incentive compensation for Mr. Drosdick is based
upon relative attainment of the annual performance goals for the Company.
Based on these criteria, and the Committee's review of competitive
practices, Mr. Drosdick was awarded $1,344,924 representing 160.1% of his
annual incentive opportunity for performance in 2001.

.. Long-Term Incentive Awards: In December 2001, as part of the Company's
annual award of long-term compensation to executives, Mr. Drosdick received
a grant of 210,000 stock options which become exercisable in December 2003,
and 25,000 performance-based common stock units. In determining the amounts
granted, the Committee considered, without specific weighting, the
performance of the Company and relative total shareholder return, and the
value of such awards granted to other chief executive officers in the new
performance peer group, the oil industry, and industry in general. See page
26 for a discussion of the Committee's review of and actions regarding 2001
long-term incentive compensation.

Omnibus Budget Reconciliation Act of 1993: This Act has 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 for the year 2001.

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
Ursula F. Fairbairn
James G. Kaiser
Robert D. Kennedy
Norman S. Matthews
G. Jackson Ratcliffe

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

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

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

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

J. G. DROSDICK 2001 840,000 1,344,924 14,470 0 210,000 682,488/4/,/5/ 48,199
Chairman of the 2000 757,692 1,128,000 36,452 0 200,000 494,063/5/ 42,344
Board, Chief Executive 1999 610,012 73,200 6,646 0 95,000 755,000/5/ 34,198
Officer,
and President
-----------------------------------------------------------------------------------------------------------------------------
J. H. MANESS 2001 360,000 288,198 5,307 0 44,000 624,250/8/ 13,734
Senior Vice 2000 218,750 244,217/6/ 57,735/7/ 1,458,000/8/ 59,800 0 1,654
President,
Refining and
Supply
-----------------------------------------------------------------------------------------------------------------------------
D. M. FRETZ 2001 350,000 281,890 5,725 0 40,000 176,309/4/,/9/ 20,083
President and 2000 324,500 274,950 4,698 0 36,750 143,569/9/ 17,668
Chief Executive 1999 312,000 28,089 4,268 0 22,000 152,500/9/ 17,023
Officer, Sunoco
Logistics Partners
L.P., and Former
Senior Vice
President,
Sunoco, Inc.
-----------------------------------------------------------------------------------------------------------------------------
R. W. OWENS 2001 340,000 272,187 5,282 0 42,000 161,522/4/,/12/ 19,509
Senior Vice 2000 293,231 274,950 53,920/10/ 0 33,150 265,000/12/ 15,471
President, 1999 264,992 23,060 5,674/10/ 204,500/11/ 18,500 0 14,013
Marketing
-----------------------------------------------------------------------------------------------------------------------------
C. K. VALUTAS 2001 320,000 256,176 4,164 0 37,000 91,342/4/,/13/ 18,362
Senior Vice 2000 262,400 274,950 2,741 0 28,800 55,961/13/ 13,923
President 1999 209,976 18,917 3,814 0 14,000 0 11,104
and Chief
Administrative Officer
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------

NOTES TO TABLE:

/1/The amounts reported in the table under Base Salary reflect that there were
26 bi-weekly pay periods in 2001, 2000 and 1999. J. H. Maness became an
employee of Sunoco on May 1, 2000, thus his base salary reflects 17.5 pay
periods in 2000.

/2/Long-term awards were composed of stock options and common stock units
(representing shares of Sunoco common stock). Grants of performance-based
common stock unit awards are excluded from this table; however, such grants
made during the last completed fiscal year are reflected in the table of
Performance-Based Common Stock Unit Awards on page 34. Other common stock
unit awards, if any, are included in this Summary Compensation Table as
Restricted Stock Awards.

/3/The table below shows the components of this column for 2001:

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

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

J. G. Drosdick $42,000 $6,199 $48,199
-------------------------------------------------------------------------
J. H. Maness $11,077 $2,657 $13,734
-------------------------------------------------------------------------
D. M. Fretz $17,500 $2,583 $20,083
-------------------------------------------------------------------------
R. W. Owens $17,000 $2,509 $19,509
-------------------------------------------------------------------------
C. K. Valutas $16,000 $2,362 $18,362

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

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

/4/The amounts shown for 2001 include the payout of performance-based common
stock units granted in 1997, which were paid out at 25% of target, plus
applicable dividend equivalents. The payout of the common stock units was
contingent on achieving a certain level of total shareholder return as
compared to the Peer Group, which was achieved, and on achieving a certain
stock price averaged over a specified ten-day period. The stock price was
achieved, but not for the specified ten-day period. Due to the Company's
performance, the Compensation Committee determined that it was appropriate
to pay out the 1997 Performance-Based Common Stock Unit Awards at the 25%
level. The required criteria for payout of the 1998 Performance-Based
Common Stock Unit Award were met in 2001 and 110% of the targeted award was
paid in early 2002. The amounts shown reflect the value of the common stock
units paid out plus applicable dividend equivalents.

/5/J. G. Drosdick became an employee of Sunoco on November 15, 1996 and
received an award of 25,000 common stock units valued at $581,250 on the
date of grant. The shares were paid to him in November 1999 at which time
they had a value of $709,375 (including dividend equivalents). In 1997, Mr.
Drosdick was granted a special award of 2,500 common stock units with a
value of $104,688 on the date of grant. This award was paid to Mr. Drosdick
in 1,250 share installments in January 1999 and January 2000 when they were
valued at $45,625 and $30,938, respectively (including dividend
equivalents). The amount shown for 2000 also includes $463,125 representing
the value of the 1996 Performance-Based Common Stock Unit Award paid out in
2000 at 130% of the targeted award, plus applicable dividend equivalents.
The amount shown for 2001 consists of $150,000 representing the value of
the 1997 Performance-Based Common Stock Unit Award and $532,488
representing the value of the 1998 Performance-Based Common Stock Unit
Award, plus applicable dividend equivalents.

/6/The amount shown includes a one-time bonus paid to J. H. Maness when he
joined the Company in May 2000.

/7/The amount shown includes $23,468 paid to J. H. Maness in 2000 for certain
relocation and temporary housing expenses, and also includes amounts
related to reimbursements of the payment of certain taxes.

/8/In connection with his hiring in 2000, J. H. Maness was granted a special
award of 48,000 common stock units with a value of $1,458,000 on the date
of grant. This award is payable in 16,000 share installments in 2001, 2002
and 2003 contingent upon his continued employment with the Company. The
first installment of 16,000 shares with a value of $624,250 was paid to Mr.
Maness in May 2001.

NOTES TO TABLE: (CONTINUED)

/9/ 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 to be paid out in three
installments. The final installment of 5,000 shares with a value of
$152,500 was paid to Ms. Fretz in August 1999. The amount shown for 2000
reflects the value of the 1996 Performance-Based Common Stock Unit Award
that was paid out, plus applicable dividend equivalents. The amount shown
for 2001 consists of $38,750 representing the value of the 1997
Performance-Based Common Stock Unit Award and $137,559 representing the
value of the 1998 Performance-Based Common Stock Unit Award, plus
applicable dividend equivalents.

/10/In connection with his hiring in 1997, the Company loaned R. W. Owens
$100,000 for expenses largely in connection with his relocation to the
Philadelphia area. The loan was imputed to bear a variable interest rate,
and the imputed interest was compensatory to Mr. Owens. In 2000, $50,000 of
the loan amount was forgiven and was imputed income to Mr. Owens. The
remaining balance of $50,000 was repaid in the first quarter of 2001. In
1999, the imputed interest rate was 4.89% and the imputed income was
$4,885. In 2000, the imputed interest rate was 6.15% and the imputed income
to Mr. Owens was $3,073. There was no imputed income to Mr. Owens in 2001
for this loan. The amounts for each year also include reimbursements for
the payment of certain taxes.

/11/In 1999, R. W. Owens received a special award of 8,000 common stock units
with a value of $204,500 on the date of grant, which will be payable after
three years of continued employment with the Company.

/12/In 1997, R. W. Owens was granted a special award of 10,000 common stock
units in connection with his hiring. The award was paid to him in January
2000 and was valued at $265,000 (including dividend equivalents) at that
time. The amount shown for 2001 consists of $35,500 representing the value
of the 1997 Performance-Based Common Stock Unit Award and $126,022
representing the value of the 1998 Performance-Based Common Stock Unit
Award, plus applicable dividend equivalents.

/13/The amount shown for 2000 reflects the value of the 1996 Performance-Based
Common Stock Unit Award paid out plus applicable dividend equivalents. The
amount shown for 2001 consists of $18,125 representing the value of the
1997 Performance-Based Common Stock Unit Award and $73,217 representing the
value of the 1998 Performance-Based Common Stock Unit Award, plus
applicable dividend equivalents.

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

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

.. exercises of stock options and stock appreciation rights (SARs) during
2001; and

.. the amount and values of unexercised stock options and SARs as of December
31, 2001.

Aggregated Option/SAR Exercises in 2001 and Year-End Option/SAR Values

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

J. G. DROSDICK
Chairman of the Board, 0 0 335,000 410,000 3,334,050 1,689,875
Chief Executive
Officer,
and President
-----------------------------------------------------------------------------------------------------
J. H. MANESS
Senior Vice President, 0 0 0 103,800 0 511,117
Refining and Supply
-----------------------------------------------------------------------------------------------------
D. M. FRETZ/2/
President and Chief
Executive Officer,
Sunoco Logistics 0 0 75,970 76,750 599,369 347,839
Partners L.P., and
Former Senior Vice
President, Sunoco, Inc.
-----------------------------------------------------------------------------------------------------
R. W. OWENS
Senior Vice President, 0 0 42,300 75,150 285,282 313,765
Marketing
-----------------------------------------------------------------------------------------------------
C. K. VALUTAS
Senior Vice President 11,730 124,655 41,060 65,800 295,607 272,592
and Chief
Administrative
Officer

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/D. M. Fretz, President and Chief Executive Officer of Sunoco Logistics
Partners L.P., resigned as Senior Vice President, Sunoco, Inc. effective
February 8, 2002. Pursuant to the terms of the December 2001 stock option
award, the stock options awarded to Ms. Fretz will be canceled. Options
awarded to her in prior years remain outstanding according to their terms.

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

OPTION GRANT TABLE
-------------------------------------------------------------------------------
The following table presents additional information concerning the option
awards shown in the Summary Compensation Table for fiscal year 2001. These
options to purchase common stock were granted to the Named Executive Officers
under either Sunoco's Long-Term Performance Enhancement Plan ("LTPEP") or
Sunoco's Long-Term Performance Enhancement Plan II ("LTPEPII").

Option Grants in 2001/1/

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

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

J. G. DROSDICK
Chairman of the Board,
Chief Executive Officer, 12/5/01 210,000 28.53 37.82 12/5/11 4,994,850 12,657,750
and President
--------------------------------------------------------------------------------------------------
J. H. MANESS
Senior Vice President, 12/5/01 44,000 5.98 37.82 12/5/11 1,046,540 2,652,100
Refining and Supply
--------------------------------------------------------------------------------------------------
D. M. FRETZ/4/
President and
Chief Executive Officer,
Sunoco Logistics 12/5/01 40,000 5.43 37.82 12/5/11 951,400 2,411,000
Partners
L.P., and Former Senior
Vice President,
Sunoco, Inc.
--------------------------------------------------------------------------------------------------
R. W. OWENS
Senior Vice President, 12/5/01 42,000 5.71 37.82 12/5/11 998,970 2,531,550
Marketing
--------------------------------------------------------------------------------------------------
C. K. VALUTAS
Senior Vice President
and
Chief Administrative 12/5/01 37,000 5.03 37.82 12/5/11 880,045 2,230,175
Officer
--------------------------------------------------------------------------------------------------

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. Each option has a term of
ten years from the date of grant. 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 (as defined in the Plan) 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. The Named Executive Officers will not benefit
unless the common stock price increases above the stock option exercise
price. Any appreciation in the common stock price which results in a gain
to these Named Executive Officers would also benefit all shareholders of
the common stock. For example, the additional value realized by all
shareholders of Sunoco common stock as a group (at December 31, 2001)
based on the assumed annual appreciation levels for the term of the
options for the December 5, 2001 grants reflected in the table would be as
follows:

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

5% $1,796,452,199
-----------------------------------
10% $4,552,497,636
-----------------------------------

/4/D. M. Fretz, President and Chief Executive Officer of Sunoco Logistics
Partners L.P., resigned as Senior Vice President, Sunoco, Inc. effective
February 8, 2002. Pursuant to the terms of the December 2001 stock option
award, the stock options awarded to Ms. Fretz will be canceled.

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

OTHER LONG-TERM INCENTIVE AWARDS
--------------------------------------------------------------------------------
Performance-Based Common Stock Unit Awards Granted in 2001/1/

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

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

J. G. DROSDICK
Chairman of the Board,
Chief Executive Officer, 25,000 12/31/04 6,250 25,000 50,000
and President
------------------------------------------------------------------------------
J. H. MANESS
Senior Vice President, 4,600 12/31/04 1,150 4,600 9,200
Refining and Supply
------------------------------------------------------------------------------
D. M. FRETZ/2/
President and
Chief Executive Officer,
Sunoco Logistics 4,200 12/31/04 1,050 4,200 8,400
Partners L.P., and
Former Senior Vice
President, Sunoco, Inc.
------------------------------------------------------------------------------
R. W. OWENS
Senior Vice President, 4,400 12/31/04 1,100 4,400 8,800
Marketing
------------------------------------------------------------------------------
C. K. VALUTAS
Senior Vice President
and Chief Administrative 4,000 12/31/04 1,000 4,000 8,000
Officer
------------------------------------------------------------------------------

NOTES TO TABLE:

/1/The actual payout of the performance-based common stock units granted will
depend on the level of performance achieved over a three-year period
subsequent to their grant measured on a scale combining the Company's return
on capital employed above its cost of capital and its earnings per share
growth.

/2/D. M. Fretz, President and Chief Executive Officer of Sunoco Logistics
Partners L.P., resigned as Senior Vice President, Sunoco, Inc. effective
February 8, 2002. Pursuant to the terms of the December 2001 Performance-
Based Common Stock Unit Award, the common stock units awarded to Ms. Fretz
will be canceled.

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

STOCK PERFORMANCE GRAPH
-------------------------------------------------------------------------------
During 2001, Sunoco reevaluated the composition of its performance peer group
and determined that a change was appropriate. Sunoco's new performance peer
group is composed of the major domestic independent refining and marketing
companies and other companies which are similar in size to Sunoco and
represent its competitors in certain geographic areas.

Comparison of Five-Year Cumulative Return/1/

[CHART]

Fiscal Year Ended December 31

1996 1997 1998 1999 2000 2001

Sunoco, Inc. 100 178 157 105 157 179
Former Peer Group 100 127 107 100 126 144
New Peer Group 100 127 112 105 130 144
S&P 500 Index 100 133 171 208 189 166

NOTES TO GRAPH:

/1/Assuming that the value of the investment in Sunoco common stock and each
index was $100 on December 31, 1996 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 September 10, 2001, Tosco Corporation was acquired by Phillips Petroleum
Company. For purposes of calculating the total return for the Former Peer
Group, Tosco is included in the average through the date of the
acquisition. Following the transaction, the resultant cash value has been
reinvested in the Former Peer Group of companies in proportion to their
market capitalization on that date.

/3/On December 31, 2001, Ultramar Diamond Shamrock Corporation ("UDS") was
acquired by Valero Energy. UDS is included in the average total return of
the Former Peer Group for the entire five-year period.
-------------------------------------------------------------------------------

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

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

$ 200,000 $ 80,000 $ 80,000 $ 93,000 $ 100,000 $ 108,000 $ 115,000
---------------------------------------------------------------------------------------
400,000 160,000 160,000 187,000 200,000 215,000 230,000
---------------------------------------------------------------------------------------
600,000 240,000 240,000 280,000 300,000 323,000 345,000
---------------------------------------------------------------------------------------
800,000 320,000 320,000 373,000 400,000 430,000 460,000
---------------------------------------------------------------------------------------
1,000,000 400,000 400,000 467,000 500,000 538,000 575,000
---------------------------------------------------------------------------------------
1,200,000 480,000 480,000 560,000 600,000 645,000 690,000
---------------------------------------------------------------------------------------
1,400,000 560,000 560,000 653,000 700,000 753,000 805,000
---------------------------------------------------------------------------------------
1,600,000 640,000 640,000 747,000 800,000 860,000 920,000
---------------------------------------------------------------------------------------
1,800,000 720,000 720,000 840,000 900,000 968,000 1,035,000
---------------------------------------------------------------------------------------
2,000,000 800,000 800,000 933,000 1,000,000 1,075,000 1,150,000
---------------------------------------------------------------------------------------
2,500,000 1,000,000 1,000,000 1,167,000 1,250,000 1,344,000 1,438,000
---------------------------------------------------------------------------------------
3,000,000 1,200,000 1,200,000 1,400,000 1,500,000 1,613,000 1,725,000

NOTES TO TABLE:

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

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

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 is eligible to participate in SERP. 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 2001 salary and annual
incentive award would be approximately $353,000.

Mr. Owens is eligible to participate in SERP. Any SERP benefit payable to him
will be offset by accrued benefits from the pension plans of prior employers.
For purposes of calculating his benefits under SERP, Mr. Owens has been
credited with his years of service with certain former employers. Assuming a
retirement age of 62 and the satisfaction of applicable plan conditions, the
estimated total annual retirement benefit under Sunoco's plans to be paid to
Mr. Owens based upon his 2001 salary and annual incentive award would be
approximately $219,000 prior to offset by his prior employers' pension plan
benefits.

Credited years of service under these plans for the Named Executive Officers
as of December 31, 2001 are as follows:

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

Name Years of Service
-----------------------------
-----------------------------

J. G. Drosdick 5
-----------------------------
J. H. Maness 1
-----------------------------
D. M. Fretz 24
-----------------------------
R. W. Owens 12/1/
-----------------------------
C. K. Valutas 25
-----------------------------

NOTE TO TABLE:

/1/R. W. Owens' years of service include 8
years credited under SERP for service with
prior employers, as described above.

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

SEVERANCE PLANS AND OTHER INFORMATION
-------------------------------------------------------------------------------
The Named Executive Officers participate in plans with certain other key
management personnel which provide for severance benefits in the event they
are involuntarily terminated without cause by Sunoco. In the case of the Chief
Executive Officer, severance payments would be equal to two years of base
salary plus guideline annual incentive in effect on his or her termination
date, as defined in the plans. 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, as
defined in the plans, severance would be payable in a lump sum equal to three
times annual compensation for the Chief Executive Officer and the other Named
Executive Officers. For these purposes, annual compensation consists of (i)
the executive's annual base salary in effect immediately prior to a Change in
Control or immediately prior to his or her employment termination date,
whichever is greater, plus (ii) the greater of his or her annual guideline
incentive in effect immediately before the Change in Control or employment
termination date, or the highest bonus awarded to the executive in any of the
three years ending before the Change in Control or in any subsequent year
ending before his or her employment termination date.

Each eligible executive will be entitled to medical and life insurance
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 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 performance-based common stock unit awards will be paid
out in an amount equal to the total number of performance-based common stock
units outstanding as of the Change in Control (when the Change in Control
occurs during the year following the date of grant) and at the greater of (i)
the total number of performance-based common stock units outstanding as of the
Change in Control or (ii) the total number of performance-based common stock
units outstanding, multiplied by the applicable performance factor (as defined
in the Plans) related to the Company's performance immediately prior to the
Change in Control (when the Change in Control occurs after the first year of
grant). The common stock unit awards will be paid out regardless of whether
performance targets have been met. Common stock unit awards conditioned on
continued employment will be paid out in an amount equal to the total number
of common stock units outstanding as of the Change in Control.

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

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 2001, 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, except that late filings were made to report two
separate grants of broad-based employee stock options--800 employee stock
options granted to Mr. Charles Valutas and 700 employee stock options granted
to Mr. Paul Mulholland, Treasurer of Sunoco, which were inadvertently not
filed by the Company on Mr. Valutas' and Mr. Mulholland's behalf. Sunoco is
not aware of any shareholder who owned 10 percent or more of Sunoco common
stock during 2001.
-------------------------------------------------------------------------------

By Order of the Board of Directors,

/s/ Ann C. Mule'

Ann C. Mule'
Assistant General Counsel and Corporate Secretary
Philadelphia, PA
March 18, 2002

[LOGO] SUNOCO
Sunoco, Inc.

Visit our site
on the World Wide Web

http://www.SunocoInc.com

[LOGO OF SUNOCO]

Your Vote is Important!

You can vote in one of three ways:

OPTION 1: Vote by Telephone - Call 1-877-290-2604 and respond to a few simple
questions after entering the Control Number below. Telephone voting
closes at 11:59 p.m. Eastern U.S. Time on Wednesday, May 1, 2002.*

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

OPTION 2: Vote by Internet - Access http://www.proxyvoting.com/sunoco and
respond to a few simple prompts after entering the Control Number
above. Internet voting closes at 11:59 p.m. Eastern U.S. Time on
Wednesday, May 1, 2002.*

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

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

Whichever method you choose, please vote promptly.

*In order to allow the SunCAP Trustee adequate time to vote the shares
held in that plan, voting instructions from SunCAP participants must
be received no later than 5:00 p.m. Eastern U.S. Time on Tuesday,
April 30, 2002.

Fold and Detach Here Fold and Detach Here
--------------------------------------------------------------------------------
[LOGO OF SUNOCO] THIS PROXY AND VOTING INSTRUCTION CARD IS
Sunoco, Inc. SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Ten Penn Center OF SUNOCO, INC. FOR THE MAY 2, 2002 ANNUAL
1801 Market Street MEETING OF SHAREHOLDERS OR ANY ADJOURNMENTS
Philadelphia, PA 19103-1699 THEREOF.

The Undersigned appoints J.G. DROSDICK and A.C. MULE' and each of them, with
full power of substitution, as proxies and attorneys-in-fact (the "Proxies") to
vote as indicated all shares of Sunoco, Inc. Common Stock, which the undersigned
is entitled to vote, and in their discretion, to vote upon such other business
as may properly come before the 2002 Annual Meeting. This proxy card also
provides voting instructions for shares held for the account of the undersigned,
if any, in the Sunoco, Inc. Capital Accumulation Plan ("SunCAP"). For additional
explanatory information, see the "Questions and Answers" section of the
accompanying proxy statement.

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

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

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

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

(2) Approval of the appointment of [_] FOR [_] AGAINST [_] ABSTAIN
Ernst & Young LLP as independent
auditors for fiscal year 2002:

[_] Please check ONLY if you plan to attend the 2002 Annual Meeting. Admission
tickets are required and will be mailed to you.

[_] Please check if you have multiple shareholders in your household and want to
consent to receive only one set of the annual report and proxy statement.
Your consent will remain effective, and will apply to future annual meeting
materials, until revoked. (See page 7 of the 2002 Proxy Statement,
Question 14)

[_] Please check if you consent to access future annual reports and proxy
statements 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.