8-KLeadership ChangesShareholder Matters

FIFTH THIRD BANCORP 8-K Report, Executive Changes (Apr 20, 2011)

Filed April 20, 2011For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) filed an 8-K on April 20, 2011, detailing key events from their Annual Shareholders Meeting and adjustments to executive compensation. A significant development is the company's exit from the TARP Capital Purchase Program, which allowed for the modification of executive compensation structures that were previously constrained by TARP standards. These changes include the elimination of phantom stock units for salary payments and the reinstatement of eligibility for incentive compensation and bonuses, including equity-based awards. Furthermore, the filing reports the outcomes of the Annual Shareholders Meeting held on April 19, 2011. Shareholders voted on several proposals, including the election of the Board of Directors, the appointment of Deloitte & Touche LLP as the independent auditor, and the approval of the 2011 Incentive Compensation Plan. Importantly, shareholders also provided advisory votes on executive compensation, approving the compensation structure and indicating a preference for an annual vote on executive pay.

Key Highlights

  • 1Fifth Third Bancorp has repurchased its preferred stock and warrant from the U.S. Department of the Treasury, signifying an exit from the TARP Capital Purchase Program.
  • 2Executive compensation adjustments have been made, including the elimination of phantom stock units and the reintroduction of bonuses and equity-based incentive compensation for named executive officers.
  • 3Significant increases in the 'Variable Compensation Target' and 'Equity-based Long-term Incentive Compensation Target' are noted for several senior executives following the TARP exit.
  • 4All incumbent directors were re-elected to serve until the 2012 Annual Meeting of Shareholders.
  • 5Deloitte & Touche LLP was overwhelmingly approved by shareholders to serve as the independent registered public accounting firm for 2011.
  • 6The Fifth Third Bancorp 2011 Incentive Compensation Plan was approved, allowing for the issuance of up to 39 million additional shares of common stock.
  • 7Shareholders provided an advisory vote in favor of the company's executive compensation practices and preferred an annual frequency for future advisory votes on executive pay.

Frequently Asked Questions

Exiting the TARP program is a positive signal for Fifth Third Bancorp. It indicates the company has stabilized financially to the point where it could repay government assistance. This also allows the company greater flexibility in its operational and compensation strategies, free from the specific restrictions imposed by the TARP Standards for Compensation.

Following the exit from TARP, Fifth Third Bancorp has adjusted its executive compensation. The use of 'phantom stock units' for salary payments has been eliminated. More significantly, executives are now eligible to receive incentive compensation and bonuses, including equity-based awards, which were previously restricted or limited under TARP rules. The targets for variable compensation and long-term equity incentives have also been increased for several key officers.

Shareholders re-elected all directors, approved Deloitte & Touche LLP as the independent auditor, and passed the 2011 Incentive Compensation Plan. They also provided an advisory 'say-on-pay' vote, approving the executive compensation strategy, and voted for this advisory vote to occur annually.

Broker non-votes indicate that shares held in 'street name' by brokerage firms were not voted by the beneficial owners on those specific proposals. While not necessarily a sign of opposition, a high number of broker non-votes, as seen in the 2011 Incentive Compensation Plan and the advisory votes on executive compensation, suggests a lack of direct shareholder engagement or instruction on those matters from a significant portion of shareholdings.