Exhibit 10.7

 

LOGO [g325282g06v85.jpg]       Sunoco, Inc.    1818 Market Street Ste 1500   
Philadelphia, PA 19103-3687

March 1, 2012

Mr. Brian P. MacDonald

Sunoco, Inc.

1818 Market Street, Suite 1500

Philadelphia, PA 19103

Dear Brian:

Contained herein are the specifics of the compensation arrangements between you
and Sunoco, Inc. (“Sunoco”) in connection with your promotion to Chief Executive
Officer (“CEO”) and President of Sunoco on March 1, 2012 (the “Promotion Date”)
and your election to the Board of Directors of Sunoco (the “Sunoco Board”). As
CEO you will report directly to the Sunoco Board and have all of the customary
authorities, duties and responsibilities that accompany being the CEO and
President of a public company.

Compensation

As of the Promotion Date, your annual rate of salary will be $1,000,000
(“Salary”) and, for years after 2012, your target annual bonus under Sunoco’s
annual bonus plan will be 145% of your Salary, for total annualized target cash
compensation of $2,450,000. For 2012, your target annual bonus will be
$1,307,500, taking into account your annual rate of salary and target bonus
percentage described in the preceding sentence for the portion of 2012 on and
following the Promotion Date, and your annual rate of salary ($700,000) and your
target annual bonus percentage (85%) for the portion of 2012 prior to the
Promotion Date.

At the February 29, 2012 meeting of the Compensation Committee of the Sunoco
Board (the “Compensation Committee”), you were granted an equity award having an
aggregate value of $4,000,000. Sixty percent of this award is in the form of
performance common stock units (“PCSUs”) and forty percent of this award is in
the form of restricted share units (“RSUs”). The actual number of PCSUs and RSUs
granted was determined by dividing the targeted value by the closing price of
Sunoco common stock on the date of grant, rounded down to the nearest whole
number of units. The PCSUs will measure Sunoco’s performance throughout calendar
years 2012,2013 and 2014. The RSUs shall vest in three equal annual installments
on the first, second and third anniversaries of the date of grant, subject to
continued employment through the applicable vesting date. The equity grants will
be made under Sunoco’s Long-Term Performance Enhancement Plan III (the “LTPEP
III”), and you will receive separate award documents.

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Mr. Brian P. MacDonald

March 1, 2012

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You will be eligible to receive equity grants with an annual target value of
400% of your Salary in connection with the 2013 and subsequent equity grant
cycles that occur while you are employed by Sunoco. However, the target value is
not guaranteed to be granted to you, and the actual value of the equity grant
(which may be higher or lower than the target), the equity award mix and the
applicable performance metrics will be determined at the discretion of the
Compensation Committee. Future equity grants, if any, will be made under
Sunoco’s then current equity plan (currently the LTPEP III) and you will receive
separate award documents in respect of any such equity grants.

Election as Chair of the Board of Directors of Sunoco and SXL

Effective May 3, 2012, each of the Sunoco Board and the Board of Directors of
Sunoco Logistic Partners L.P. (the “SXL Board”) will take action to appoint you
as Chair of the Sunoco Board and the SXL Board, respectively.

Stock Ownership Guidelines

Sunoco executives are subject to stock ownership guidelines. The ownership
guidelines, expressed as a multiple of annual base salary, vary by job level.
For the CEO, the guideline is currently six times annual base salary. You are
expected to meet that guideline within 5 years of the Promotion Date.

Vacation

You will be entitled to 25 days of paid vacation annually. In addition, you will
also be allocated two paid floating holidays each year. These floating holidays
are in addition to the normal holidays designated by Sunoco.

Benefits

Sunoco provides a full range of benefits for most of its salaried employees,
including comprehensive health plans, disability, life insurance, and savings
plans. Your memberships in certain, limited clubs used strictly for business
purposes will be paid for by Sunoco. Sunoco has a policy of supporting its
executives who serve on non-profit organizations through matching contributions
(subject to certain limitations).

You will be entitled and encouraged to have a thorough physical examination
performed annually at no cost to you.

You will continue to participate in the Sunoco savings plan (the “SunCap Plan”),
which matches your contributions up to 5% of you base pay. The SunCap Plan also
has a profit-sharing feature. This profit-sharing contribution is discretionary
on the part of Sunoco, and can be made in any amount up to 3% of your base pay.
Matching and profit-sharing amounts in excess of statutory limits will be
provided in Sunoco’s non-qualified Savings Restoration Plan.

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Mr. Brian P. MacDonald

March 1, 2012

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Every executive of Sunoco, including the CEO, is an employee at will. You will
continue to be eligible to participate in the Sunoco, Inc. Executive Severance
Plan (taking into account your status as CEO), which provides for severance
benefits in the event of an involuntary termination of employment other than for
cause, and the Sunoco, Inc. Special Executive Severance Plan (taking into
account your status as CEO), which provides severance benefits to an executive
whose employment is involuntarily terminated or who resigns for good reason in
connection with or following a change in control.

You will have only two perquisites as CEO - free parking at corporate
headquarters, and reasonable, limited personal use of the corporate aircraft for
safety/security reasons, including the ability to have a spouse and/or family
member accompany you on business or personal trips. In accordance with company
policy, you will not be grossed up for taxes you incur in connection with the
free parking or travel on the company aircraft that has a non-business, personal
use. These perquisites are subject to the annual review of perquisites conducted
by the Compensation Committee, and in any event the access to corporate aircraft
will cease when Sunoco no longer owns an interest in any aircraft.

More complete descriptions of Sunoco’s plans, including the summary plan
descriptions and plan documents, are available to you. The Sunoco Board and/or
Sunoco reserves the right to make changes to its employee policies, procedures,
and plans at any time.

Indemnification and D&O Insurance

You will continue to receive indemnification and directors’ and officers’
insurance coverage pursuant to the terms and conditions of the Sunoco Amended
and Restated Indemnification Agreement, as amended from time to time.

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Mr. Brian P. MacDonald

March 1, 2012

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Please review this letter. If you elect to accept the terms of this letter,
please sign and return to us as a counterpart signature page. This letter
agreement will be effective if signed in counterparts, and delivery of a
signature page is effective to bind the parties to this letter agreement.

 

Sincerely,

/s/ JOHN K. WULFF

John K. Wulff Chair, Sunoco, Inc. Compensation Committee of the Board of
Directors

I accept this offer to be Chief Executive Officer and President, Sunoco, Inc. on
the terms set forth above.

 

/s/ BRIAN P. MacDONALD

Brian P. MacDonald

 

cc: John P. Jones, III

Dennis Zeleny