Morning. It's 10:30 A.M. Mountain Time, and I'm calling this meeting to order. My name is Russell Girling. I am Chair of the Suncor Energy Inc. Board of Directors. We are hosting this year's annual meeting virtually, making it accessible to our shareholders regardless of physical location and allowing them to participate, submit questions, and to vote. I'd like to introduce Suncor senior leaders in attendance with me today: Rich Kruger, our President and Chief Executive Officer; Chris Smith, our Chief Financial Officer; Jackie Moore, our General Counsel; and Corporate Secretary John Mitchell, our Chief Sustainability Officer. On behalf of Suncor's directors and management, it is a pleasure to welcome you to Suncor's 2024 annual general meeting of its shareholders. I'd like to now turn the meeting over to John Mitchell for a traditional land acknowledgment.
Thank you, Russ. We acknowledge that Suncor's corporate office is located on the traditional territories of the Blackfoot and the people of the Treaty 7 region in Southern Alberta. It includes the Siksika, the Kainai, the Piikani First Nations, the Tsuut'ina, and the Stoney Nakoda First Nations, including Chiniki, Bearspaw, and Goodstoney First Nations. I'd also like to acknowledge that Southern Alberta is home to Métis Nation of Alberta Region 3. We believe observing and acknowledging the territory of Indigenous peoples in meetings like our annual meeting is a small but important way to show respect for Indigenous peoples and reflect on the significance for Suncor's operations. It reminds us that we are all bound together through our connections with each other, the Earth, and its environment.
Thank you, John. Before we begin the formal business of the day, I'd like to explain how the voting and questions will work for this meeting. This online meeting is accessible to registered shareholders, proxy holders, and to guests. However, only registered shareholders and proxy holders can ask questions and participate in the meeting. We encourage you to submit your questions as early as possible. Please identify your question. Your question relates to a motion, which is part of the formal business of the meeting, whether it is more general in nature. We'll try to address questions that directly relate to a particular motion at the appropriate time in the meeting. We'll save general questions for the question and answer period following the formal business.
In the event we're unable to address your questions during the meeting, a member of our management team will follow up directly with you after the meeting. We will conduct the voting by virtual poll. Every eligible shareholder has one vote per share that can be voted on each matter. The poll will be open for all resolutions at the same time. You can choose to vote on each resolution immediately or wait until discussions conclude on each resolution prior to casting your vote. Once the items of business have been presented, you will have additional time to enter your votes before the voting is declared closed for all resolutions. There are several matters on our agenda for this morning. To move things efficiently, two of our shareholders have agreed to make and second all formal motions.
We'll now proceed with the business of the annual meeting, starting with the appointment of the scrutineers. Computershare Trust Company of Canada is the transfer agent and registrar of the company and is represented today by Chris Parsons. If there is no objection, we'll appoint him to act as scrutineer for this meeting to report on the number and percentage of shares represented at this meeting and to record and report on the votes cast on any poll that may be taken. You've all received notice calling the meeting. I'll now ask Jackie Moore to report on the mailing of the notice.
The notice of calling this meeting was mailed on March 22, 2024, to all shareholders of record as of the close of business on March 14, 2024, and has been provided to each director and to the auditors of the company.
A copy of the notice and proof of mailing will be filed with the minutes of this meeting. I'm advised that the scrutineer's interim report has been completed and a quorum is present. Jackie, can you please re-read the scrutineer's interim report?
On the interim scrutineer's report, we have 610 shareholders represented by proxy, holding 68.19% of the issued and outstanding shares.
I declare the meeting regularly called and properly constituted for the transaction of business. The 2023 annual report, which includes the financial statements for the year ended December 31, 2023, and the auditor's report, has been tabled. It is accessible in the documents tab on today's meeting platform. The annual report was mailed to the shareholders requesting the report. We would be happy to answer any questions concerning the annual report during the question and answer session later in this meeting. We're now moving to the matters to be voted upon, and I declare the polls open on all resolutions. The first item of business to be voted upon is the election of directors. Under Suncor's bylaws, the number of directors to be elected at any meeting of the shareholders shall be the number of directors then in office or such other number as has been determined by the board.
The board has determined that 11 directors will be elected at this meeting. Of the 11 directors nominated, 10 are independent and one, Rich Kruger, is a member of management. Their backgrounds and experiences are described in Suncor's circular for this meeting. The circular is also accessible in the documents tab on today's meeting platform. May I have a motion to nominate the election of the board of directors of those candidates named in Suncor's circular for this meeting?
Morning. My name is Sinead Setall and I am a Suncor shareholder. I move to nominate the following candidates for election as directors: Ian Ashby, Patricia Bedient, Russell Girling, Jean-Paul Gladu, Rich Kruger, Brian MacDonald, Raine Mitchell-Moore, Jane Hebbert, Daniel Ramasco, Christopher Seasons, Jacqueline Shepherd.
Thank you, Setall. Can we have a seconder for that motion?
My name is Cameron Leveque and I am a Suncor shareholder. I second the motion.
Thank you. I declare the nominations closed. 11 directors are to be elected at this meeting and 11 persons have been nominated. I'll pause now to see if there are any questions directly related to the election of the directors. If there are no questions, Jackie will give additional instructions on the voting procedure.
On this vote, all shares for which proxies in favor of management have been received will be voted in accordance with those instructions. The 11 nominees named in the management proxy circular are listed on your screen. To vote for each director, please complete the ballot by clicking either for or against in the appropriate spot beside the name of each nominee.
Please cast your votes on the appointment of directors. You may submit your vote on the election of directors now or wait until the end of all the motions before submitting them at the same time. We will proceed to the next item on the agenda. The next item of business is the appointment of auditors. Management has proposed that KPMG LLP be appointed auditors of the company. Since the auditors are appointed by the shareholders, I ask for a motion appointing KPMG LLP as auditor.
My name is Sinead Setall and I move that KPMG LLP be appointed auditors of Suncor Energy Inc. to hold office until the next annual meeting of shareholders or until a successor is appointed.
Thank you. Can I have a seconder to that motion?
My name is Cameron Leveque, and I second the motion.
Thank you. Are there any questions directly related to the appointment of the auditors? If there are no questions, please cast your votes on the appointment of auditor. We'll now proceed to the next item on the agenda. The next item of business is the advisory vote on our approach to executive compensation. These types of advisory votes are often called, say, on pay resolutions. The results are considered non-binding, but allow shareholders to ensure their views are made known to the board as it considers the company's approach to compensation in the future. The form of motion set out in the circular follows the recommended best practice of the Canadian Coalition for Good Governance. May I now ask for a motion to be made?
My name is Sinead Setall and I move on an advisory basis, and not to diminish the role and responsibilities of the Board of Directors, that the shareholders accept the approach to executive compensation disclosed in the management proxy circular of Suncor Energy Inc.
Thank you. Can I have a seconder for that motion?
My name is Cameron Leveque, and I second the motion.
Thank you. We've heard the motions. Are there any questions or comments? None. We've received proxies representing a total of 87.18% of the votes cast on this motion, which direct that they be voted in favor of the approach to executive compensation. If there are no further questions, please cast your votes on the approach to executive compensation. I'll proceed to the next item on the agenda. The next item of business is the consideration of the shareholder proposal for Suncor Energy Inc. to end its pledge to be net zero by 2050. I understand that the representative of InvestNow Inc., a proxy holder, authorized representative of Gina Papineau, the shareholder that submitted the proposal, is in attendance to speak to it.
May I ask that you now share your remarks and make the motion to approve the resolution set forth on page A1 of Schedule A of the management proxy circular for this meeting?
Good morning. Thank you for the opportunity to present InvestNow's shareholder proposal. My name is Gina Papineau. I am a shareholder of Suncor Energy and I am asking fellow shareholders to vote for proposal number one. Attacks on the oil and gas sector are coming from all fronts. Celebrities, social media influencers, radical activist shareholders, governments, banks, ideologically driven financial alliances, and well-funded nonprofit organizations are all calling for divestment and promoting the elimination of the Canadian oil and gas sector in the next 25 years, an objective they've dubbed net zero by 2050. Net zero by 2050 is currently the number one ideological, political, and financial goal in Canada. Governments and regulatory agencies are creating and implementing policies to phase out oil and gas, and our financial institutions and corporations are following suit.
This costly and economically ruinous crusade is based on dogma and ideology, not on what's best for shareholders or Canadians at large. Attempts to implement net zero by 2050 will have negative consequences for real people. This is why we are asking Suncor Energy to end its pledge to achieve net zero by 2050. Suncor has continuously improved on emissions. Why commit to an arbitrary goal like net zero? Net zero by 2050 means massive declines in the use of coal, oil, and natural gas. It commits to radical changes in very short timeframes. It's not legally mandated and has no clear connection to increased shareholder value. To pledge net zero by 2050 is to ask shareholders to believe that eliminating one of our country's most productive sectors will somehow benefit Canada and reduce global CO2 emissions. The facts suggest the opposite.
In 2022, 82% of the world's primary energy needs were met by oil, natural gas, and coal, and global demand for these fuels is increasing, not decreasing. If the oil and gas the world wants and needs is not supplied by Canadian energy companies like Suncor, it will be supplied by authoritarian regimes in poorly regulated, undemocratic countries that are less responsible and less environmentally friendly. Emissions will go up and environmental performance will go down. There will be more hardship for everyday Canadians as our economy is hobbled, businesses and industries shut down, people lose their jobs, and the price of energy soars. Meanwhile, global demand for oil and gas will be satisfied by countries other than Canada. Why would Suncor and its shareholders want to commit to that?
As one of the largest and leading oil and gas companies in Canada, Suncor should be producing more oil and gas and getting it out to more customers in Canada and around the world. They should do this unapologetically. In the face of a supply-demand imbalance, Suncor should increase our energy supply, reducing energy costs for Canadians and the world. Oil and gas is central to Canada's economy and prosperity. The sector is essential for the healthy functioning of our economy, for jobs, for innovation, and in fact, for global emission reductions. Canadians, from the hundreds of thousands who work in the sector to the millions, all of us, who depend on it for our standard of living, expect that Suncor Energy will put their customers' and shareholders' interests ahead of the pursuit of a political goal like net zero by 2050.
We believe Suncor Energy has an economic and moral imperative to do so. Please vote for proposal number one. I move that the proposed resolution set forth on page A1 of Schedule A of the management proxy circular of Suncor Energy Inc. in respect of its 2024 annual meeting of shareholders be approved. Thank you.
Thank you, Gina. Could I have a seconder for that motion?
My name is Cameron Leveque and I second the motion.
Thank you. I'll now ask John Mitchell, Suncor's Chief Sustainability Officer, to speak to Suncor's position on this motion.
Our strategy, including our net zero ambition and commitment to sustainability leadership, is clear, concise, and focused. Suncor's full response to this proposal is set forth in the management proxy circular. Suncor's board and management have recommended that shareholders vote against this motion.
Thank you. You've heard the motion, which has been seconded. Are there any questions or comments? If there are no further questions or comments, I propose that we now vote on this matter by ballot. We'll follow the same ballot procedures as described by the Corporate Secretary earlier. Please complete the ballot by clicking either for or against in the appropriate spot beside shareholder proposal number one. We have received proxies representing a total of 98.92% of the votes cast on this motion, which direct that they be voted against shareholder proposal number one. We'll now proceed to the next item on the agenda. The next item of business is the consideration of the shareholder proposal for Suncor to disclose audited results assessing a range of climate transition scenarios.
I understand that a representative of Investors for Paris Compliance, a proxy holder and authorized representative of the Salal Foundation, the shareholder that submitted the proposal, is in attendance to speak to that today. May I ask that you now share your remarks and make a motion to approve the proposed resolution set forth on page A3 of Schedule A of this management proxy circular for this meeting?
Yes, thank you. Good morning. My name is Dr. Kenyon and I'm with Investors for Paris Compliance, the proxy holder for Salal Foundation, Suncor shareholder. As one of Canada's largest integrated oil and gas companies, Suncor is subject to significant risks with respect to the response to climate change and the market changes disruptions that are coming with this energy transition. Unfortunately, Suncor has been found wanting on climate reporting as the investor-led Climate Action 100+ recently released an evaluation of 10 global oil and gas companies and their transition strategies. While none of them scored very well, Suncor did receive the lowest score. We filed this shareholder proposal with Suncor to get at the issue of whether the company is truly grappling with the financial risks unfolding with this market change and the energy transition.
As Suncor's oil sands production faces a dual challenge of being amongst the highest emitting and highest cost sources of oil in the world, the market changes with the energy transition will impact Suncor's assets, liabilities, and profitability. Suncor needs to report on these financial impacts through key metrics. For example, like estimated future oil price and the corresponding future impacts on revenue and margins, changes to predicted production, impact on production growth, reservoir valuation and estimates, asset retirement obligations, etc., etc. This proposal is not a request for Suncor to do something extra, but rather a request for it to live up to the emerging financial reporting standards. The International Financial Reporting Standard, which will soon be implemented in Canada, requires companies to consider the material climate-related matters in their financials.
KPMG, who is Suncor's auditor, says that when material impacts to companies are occurring, they need to provide key judgments and estimates affected by climate-related matters and to achieve a fair presentation in financial statements. Other oil and gas companies like Shell, BP, Repsol, etc., who are already reporting to the International Financial Reporting Standard, provide good examples of how Suncor might report on material impacts in its financial reporting. Take Shell's oil price scenario analysis, for example, where the company compares its mid-price oil price assumption to four other price oil prices based on different climate scenarios, and then reports on the financial impacts of these other oil prices in its 2023 and on the oil, rather, it reports on the impacts of its 2023 and 2022 financial results.
Suncor faces even greater risks than Shell, as its business is largely focused on oil sands production and refining, a high-cost and high-emitting form of oil. These greater risks make it even more critical for Suncor to account for the impacts of the market changes with the energy transition in their financial reporting. Gone are the days when a glossy ESG report is enough to satisfy investors that a company is on track to sustainability and climate action. The market changes from the energy transition are a major economic driver of business success over the coming years. The material impacts from this change require accurate and relevant metrics to demonstrate whether companies like Suncor are adapting to the opportunities this presents or at risk of failing by remaining stuck in the past.
With that, I move that the proposed resolution set forth on page A3 of Schedule A of the management proxy circular of Suncor Energy Inc. in respect of its 2024 annual meeting of shareholders be approved. Thank you.
Thank you. Can we have a seconder for that motion?
My name is Cameron Leveque and I second the motion.
Thank you. I'd now ask John Mitchell, Suncor's Chief Sustainability Officer, to speak to Suncor's position on this motion.
Our strategy, including our net zero ambition and commitment to sustainability leadership, is clear, concise, and focused. Suncor's full response to this proposal is set forth in the management proxy circular. Suncor's board and management have recommended that shareholders vote against this motion.
Cameron, you've heard the motion, which has been seconded. Are there any questions or comments? If there are no further questions or comments, I propose that we now vote on this matter by ballot. We'll follow the same ballot procedures described by the Corporate Secretary earlier. Please complete the ballot by clicking either for or against in the appropriate spot beside shareholder proposal number two. We've received proxies representing a total of 88.45% of the votes cast on this motion, which direct that they be voted against shareholder proposal number two. For those of you that have not voted on all the resolutions, please do so now as we will shortly close the polls. Now, at 8:53 A.M., I'll close the polls on all resolutions at 8:54 A.M. to allow time for votes to be cast. We'll now complete the business of the meeting.
The Secretary will give the results from the report on proxies.
Stress on the election of directors, Ian Ashby, 99.9% in favor, Patricia Bedient, 99% in favor, Russell Gehrling, 97.4% in favor, Jean-Paul Gladu, 97.7% in favor, Rich Kruger, 99.9% in favor, Ann McDonald, 99% in favor, Raine Mitchell-Moor, 96% in favor, Jane Hebbert, 98.9% in favor, Daniel Ramasco, 99.9% in favor, Christopher Seasons, 99.2% in favor, Jacqueline Sheppard, 98.9% in favor. On the appointment of auditors, 99.8% in favor of KPMG LLP. On the say on pay resolution on executive compensation, 87.18% in favor. On shareholder proposal number one, 98.92% against, and on shareholder proposal number two, 88.45% against. We will file final voting results on SEDAR today, and the final scrutineer's report will be incorporated into the minutes of the meeting.
Jackie, declare that the Board of Directors will consist of 11 nominees named in the circular. I declare that the shareholders have approved the appointment of KPMG LLP as the auditors, and I declare that the shareholders have accepted the approach to executive compensation disclosed in Suncor's circular. I declare that the shareholders have not approved the resolution proposed in shareholder proposal number one. I also declare that the shareholders have not approved the resolution proposed in shareholder proposal number two. If there are no other matters to be properly brought before this meeting, I have a motion that the formal part of the meeting be terminated.
My name is Cameron Leveque, and I move that the meeting be terminated.
Thank you. Can I have a seconder for that motion?
My name is Sinead Settle and I second the motion.
Thank you, ladies and gentlemen. I now declare the meeting terminated. Before we begin the question and answer period, I'll turn the microphone over to Rich Kruger, Suncor's President and Chief Executive Officer, and Chris Smith, our Chief Financial Officer, for some remarks.
Thank you. Thank you, Russ. 2023 was a year of tremendous change for our company. Change that included new executive leadership and a resharpened focus on the fundamentals, the fundamentals of safety, operational integrity, reliability, and profitability. These and other changes are intended to ensure Suncor is a profitable, high-performing company today and a profitable, high-performing company into the future. My priorities since joining Suncor in April 2023 can best be summarized by three words: clarify, simplify, and focus. Clarify what's most important to the company, simplify how we pursue our work, and focus on improving overall performance. With clear priorities and focused efforts, we create tremendous value through our unparalleled integrated upstream and downstream asset base, underpinned by large-scale, long-life oil sands resources. This, in a nutshell, is our winning proposition.
We create value for our shareholders via financial returns, our customers through quality products, society by providing much-needed energy, communities through employment and business opportunities, and our employees through career development and being part of something meaningful. How did we do in 2023 focusing on these fundamentals? I'll start with safety. Strong safety performance and strong business performance go hand in hand. I'm pleased to report that 2023 was the safest year in the company's history, with no life-threatening or life-altering injuries of any kind and lost time injuries down nearly 50% from 2022. I'll continue with reliability. In 2023, we operated our bitumen upgraders at a 92% utilization rate, our best-ever full-year performance. Our refining network achieved a solid 90% utilization rate for the year, with an exceptional 99% in the second half.
Continuing with delivering on commitments, we achieved our 2023 upstream production guidance, provided a year earlier to the investment community, with production of 746,000 barrels per day, the second highest annual average in our history. Recognizing we operate in a commodity business, disciplined cost management is essential to our success. In 2023, we simplified our organization and eliminated work not aligned with our priorities, reducing above-field costs by $450 million per year in the process. This is one example of many initiatives to lower our overall cost structure, improve competitiveness, increase financial resilience, and deliver long-term shareholder value. We also improved our asset portfolio in 2023, aligning it with core competencies and competitive strengths. Specifically, we sold non-core assets in the North Sea and our renewable power business for a combined $1.8 billion, while purchasing the remaining interest of our Fort Hills asset for $2.2 billion.
A 100% ownership builds on our best-in-class physical integration, ensuring long-term bitumen supplies to our upgrader facilities. Chris Smith, our CFO, will detail 2023 financial performance shortly. I'll simply note that we generated 13.3 billion in funds from operations, the second highest in company history. We also made material progress in reducing emissions from our operations in 2023. In the near term, our new $1.7 billion co-generation facility at the oil sands base plant will replace coke-fired boilers with lower emissions natural gas. This project will be complete in 2024, supporting our 10 megaton per annum emissions reduction objective by 2030. Longer term, we continue to collaborate with the Pathways Alliance to pursue a large-scale carbon capture and storage, or CCS, which will be a key enabler of our objective of achieving net zero greenhouse gas emissions from our operations by 2050.
CCS has enormous potential to decarbonize the oil sands, but requires a competitive fiscal framework for the investments in conjunction with the federal and provincial governments. I'll now turn it over to Chris Smith, our CFO, to review 2023 financial performance in more detail.
Thanks, Rich, and good morning, everyone. I'll now speak in more detail to the financial performance of the company. In 2023, we delivered $13.3 billion in annual adjusted funds from operations, or $10.19 per share, the second highest in the company's history, along with $7.5 billion in free funds flow. Our adjusted operating earnings were $6.7 billion, or $5.10 per share. We continued to strengthen the balance sheet through debt reduction while delivering strong shareholder returns, returning $5 billion of cash to shareholders through dividends and share repurchases, resulting in a 9% cash yield to our shareholders. As a demonstration of our Board's confidence in the continuing improvement of our business and financial resiliency, we increased Suncor's quarterly dividend last year to $0.5450 per share. This has resulted in the highest dividend per share in the company's history, with total per share dividend payments being 12% higher compared to 2022.
With respect to our share buyback program, in 2023, we repurchased $2.2 billion of common shares, representing 52 million shares for approximately 4% of our issued and outstanding shares as at December 31, 2022. Over the last three years, we have bought back 15% of our common shares and reduced our debt by approximately $6 billion while continuing to invest prudently in strengthening and growing our business. These actions reflect our unwavering commitment to executing capital discipline, maximizing shareholder returns, and strengthening our balance sheet. We're releasing our first quarter 2024 results later today, and we look very forward to sharing those with you. I'll now turn the floor back to Rich.
I'll wrap up by first thanking my colleagues at Suncor, employees and contractors alike. Thank you for your expertise, your dedication, and your commitment to working safely and efficiently each and every day to make Suncor the best it can be now and into the future. Your work providing energy to Canadians and others worldwide improves people's lives, bolsters our economy, supports local communities, promotes relationships with Indigenous peoples, and rewards our shareholders. You have a tremendous responsibility and should be celebrated, celebrated for what you do and how you do it. I am proud to be on your team. I would also like to thank the company's Board of Directors. Thank you individually and collectively for your wisdom, oversight, guidance, and support. Finally, to our shareholders, we recognize that you have choices in where to invest.
Thank you for the trust and confidence you place in us to manage your investment. We don't take it lightly, and we're committed to earning it each and every year. Thank you.
Thanks, Rich and Chris. Before moving to questions, I'd like to acknowledge Suncor directors who have recently retired: Ira Thomas, Dennis Houston, and Michael Wilson, Michael, who served specifically as Chair of the Board from 2017. The Board and management would like to thank Ms. Thomas, Mr. Houston, and Mr. Wilson for their significant contributions to this company over a number of years. I'd now like to open the floor to view and respond to your questions. We'll take questions submitted online. A reminder that only those who have logged on as registered shareholders or as proxy holders are able to ask questions. To do so, simply enter the question in your platform tool. Seeing there's no more questions, I'd like to thank everyone for joining us today. We appreciate your interest and support in Suncor, and we look forward to connecting with you again. Thank you again.
Stay safe and have a great day.