8-KMaterial Agreements

FIFTH THIRD BANCORP 8-K Report, Material Agreement (Feb 13, 2006)

Filed February 13, 2006For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) filed an 8-K on February 13, 2006, to report on the establishment of its 2006 Performance Goals for the payment of Annual Incentive Awards. These goals, set by the Compensation Committee of the Board of Directors, are structured as a bonus grid based on both return on equity (ROE) relative to peers and increasingly higher earnings per share (EPS) for the fiscal year 2006. The incentives are intended to be paid in cash in 2007, though the Committee retains the discretion to issue common stock instead. The filing also provides a comprehensive overview of the Company's Incentive Compensation Plan, approved by shareholders in 2004. This plan encompasses various forms of executive and employee compensation, including Stock Appreciation Rights (SARs), Restricted Stock and Restricted Stock Units, Performance Shares and Performance Units, Stock Options (with specific terms regarding exercise price, term, and prohibition of repricing), and other incentive awards with an annual limit of $4,000,000 per participant.

Key Highlights

  • 1Establishment of 2006 Performance Goals for Annual Incentive Awards.
  • 2Bonus structure tied to Return on Equity (ROE) and Earnings Per Share (EPS) growth.
  • 3Incentive awards are payable in cash in 2007, with an option for stock payout.
  • 4Detailed description of the 2004 approved Incentive Compensation Plan.
  • 5Plan includes various equity-based compensation vehicles: SARs, Restricted Stock/Units, Performance Shares/Units, and Stock Options.
  • 6Stock Options have a 10-year term limit and prohibit repricing.
  • 7Annual limit of $4,000,000 on 'Other Incentive Awards' per participant.

Frequently Asked Questions

The 2006 incentive compensation is tied to achieving specific performance goals based on the company's Return on Equity (ROE) relative to its peers and incrementally increasing Earnings Per Share (EPS) for the fiscal year 2006.

The Annual Incentive Awards for 2006 performance are expected to be paid in 2007. Payments are primarily in cash, but the Compensation Committee has the discretion to issue common stock instead.

The plan allows for Stock Appreciation Rights (SARs), Restricted Stock and Restricted Stock Units, Performance Shares and Performance Units, Stock Options, and other incentive awards. These instruments have varying structures related to vesting, exercise, and performance criteria.

Yes, stock options cannot be repriced, and their term is limited to 10 years from the grant date. The exercise price must also be at least 100% of the Fair Market Value on the grant date.