Incentive Remuneration  We have an incentive remuneration program, comprised of short and long-term at-risk components, to incentivize key executives  and employees of Sundance and its subsidiaries. The goal of the incentive remuneration program is to motivate management  and senior employees to achieve short and long-term goals to improve shareholder value. This plan represents the performance- based, at risk component of each executive's total remuneration. The incentive remuneration program is designed to: 1) align  management and shareholder interests, and 2) attract and retain management and senior employees to execute strategic  business plans to grow Sundance as approved by our board of directors. It is the practice of the Remuneration and Nominations  Committee to carefully monitor the incentive remuneration program to ensure its ongoing effectiveness. The incentive remuneration program has provisions for an annual cash and equity bonus in addition to the base salary levels.  The annual cash bonus Short-Term Incentive ("STI") is established to reward short-term performance towards our goal of  increasing shareholder value. The equity component Long-Term Incentive ("LTI") is intended to reward progress towards our  long-term goals and to motivate and retain management to make decisions benefiting long-term value creation. On an annual basis, targets are established and agreed by the Remuneration and Nominations Committee, subject to approval  by our board of directors. The targets are used to determine the bonus pool, but both the STI and LTI bonuses for the Key  Management Personnel require approval by the Remuneration and Nominations Committee and are fully discretionary. Bonuses  earned under the STI will be paid in cash and those under the LTI by means of awarding Restricted Share Units (RSUs) under the  RSU Plan. For 2013 performance year, bonus targets ranged from 75% to 100% of base salaries for STI and 175% to 250% of base  salaries for LTI. For 2014 performance year, bonus targets ranged from 75% to 100% of base salaries for STI and 225% to 325%  of base salaries for LTI. Due to the current low commodity pricing environment and to preserve the Company’s liquidity, any STI  earned on the 2014 financial performance metrics (to be paid in 2015) will be paid out in RSUs instead of cash.  Based on an assessment of the overall management team and Company performance achievement relative to financial metrics,  a bonus pool is formed, based on a percentage of each employee’s annual base salary, for allocating awards relative to the  individual performance category. The Managing Director recommends to the Remuneration and Nominations Committee the  allocation of such awards for Key Management Personnel other than himself. The Remuneration and Nominations Committee  determines the allocation of the Managing Director’s individual performance bonus, along with any adjustments (either positive  or negative) to the recommendations made by the Managing Director for other Key Management Personnel. The Committee has put in place a ceiling on short-term incentive awards with specific metrics that are aligned with the interests  of shareholders. Annual incentive payouts should not exceed 10% of Net Operating Cash Flow (defined as Net Income adjusted  for changes in Working Capital and Non-Cash Operating Expenses). Annual Incentives The table below contains the payout leverage for performance achievement as a percent of target.  Level  Performance Achievement  Payout Earned  Performance <90% results in zero payout  Threshold  90%  50%  Every 1% increase in performance above threshold yields a 5% increase in payout up to target.  Target  100%  100%  Every 1% increase in performance above target yields a 2% increase in payout up to maximum.  Maximum  125%  150%  - 34 - 