EXHIBIT 10.39
CITIZENS REPUBLIC BANCORP, INC.
Management Incentive Plan — 2007

I.   PURPOSE:

  1.   Ensure achievement of strategic goals.     2.   Align management more
closely with shareholder.     3.   Strengthen links between pay and performance.

II.   ELIGIBILITY:

  Ø   Senior Vice Presidents and above and certain other officers based upon
corporate responsibility who are not participants in another established
incentive plan with payment amounts determined by performance in relation to
goal.     Ø   Awards will be pro-rated based on months served for staff members
with less than 12 months of service in a Plan Year. Some new hire participant
awards may be guaranteed based on offer letter.     Ø   Staff members become
eligible to participate in the plan by virtue of promotion or new hire.     Ø  
Staff members must be actively employed at the time of payout to receive an
award.     Ø   A staff member who terminates employment before the Plan Year is
not eligible to receive an award.     Ø   If participant is on corrective action
on the last day of the quarter/year they are not eligible for incentive payment
    Ø   Minimum annual performance rating of Productive required in most recent
Annual Performance Review in both Key Performance Activities and Competencies  
  Ø   This plan does not represent a contract with any individual plan
participant     Ø   The plan may be changed, modified or terminated at any time
throughout the plan year

III.   PARTICIPATION RATE:

     The participation rate for individual positions is benchmarked from market
data research provided by various surveys and consultants.

IV.   INCENTIVE COMPONENTS:       The Management Incentive Plan components
consist of:

  Ø   Initial factors: Revenue, Net Income after Taxes (represents net income
after tax and prior to the impact of restructuring and merger related expenses),
Non-Performing Assets, Merger Cost.     Ø   Secondary factors: A Revenue and Net
Income Peer Ranking vs. Peer Group factor may be used to determine the FINAL
weighted average factor for the Corporate Component portion of the payout.

V.   AWARD DETERMINATION:

Targeted Incentive Pool Determination
Base Salary x Participation Rate x Service Factor = Targeted Incentive Pool
The participant’s Base Salary at plan year end is used in the calculation.
Participation Rates are determined at start of plan year and approved by the
Human Resources Compensation Committee. Participation Rates are stated as % of
base salary and are based on job function and value to the corporation.
The Service Factor is equal to the number of months the participant is employed
with the corporation during the plan year divided by 12. Example: 1.0 is equal
to 12 months, .5 is equal to 6 months.

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Level Participation Determination

                      Line of Business   Individual Level     Corporate Level  
Level   Weighting Job Function   Weighting   Weighting   (Discretionary)
Corporate Executive
  70%       30%
Corporate Staff
  60%       40%
Line of Business Staff
  40%   40%   20%

Corporate Level Components & Weightings

      Components   Weighting
Total Revenue
  35%
Net Income after Taxes
  30%
Non-Performing Assets
  20%
Merger Cost
  15%
(All independent components)
   

The results of each Corporate Level component will be placed against the payout
tier structure at the end of the plan year to determine the weighted average
payout for Corporate Level performance. (See payout tier structure at end of
document).
Line of Business & Individual Level Components & Weightings
Line of Business Level Performance: 2-4 quantifiably measurable goals should be
assigned. Includes such items as growth, financial measures, service levels,
etc... — Items that are typically numerical in nature. Goal setting for this
section should provide the measure, the goal and an assigned weighting to each
goal so that the total equals 100%. Goals should be set at levels that are
challenging to reach at 100%. The results for each measurable goal will be
placed against a corporate payout tier structure at the end of the plan year to
determine a weighted average Line of Business result. (See payout tier structure
at end of document).
Individual (Discretionary) Level Performance: 2-4 qualitative goals/initiatives
that are not quantifiable, but are measurable on the 1-4 rating scale. Includes
such items as audits, surveys, specific special projects, solutions/strategies,
implementations, etc... — Items that are not numerical in nature. Goal setting
for this section should provide the goal/initiative, the success indicator and
an assigned weighting to each goal/initiative so that the total equals 100%.
Goals should be set at levels that are challenging to reach at 100%. The results
for each goal/initiative will be placed against a corporate payout tier
structure on a 1-4 rating scale at the end of the plan year to determine a
weighted average Individual result. (See payout tier structure at end of
document).
Performance Factor
For the individual (discretionary) level component, a performance indicator of
0% to 150% will be applied against the Individual (discretionary) level final
results. Achievement of 100% should be based on meeting all expectations in
every way. A performance indicator exceeding 100% should be reserved for truly
extraordinary performance.
MIP Incentive Calculation
(Targeted Incentive Pool x Weighted Avg Corporate Result)
+
(Targeted Incentive Pool x Weighted Avg Line of Business Result)
+
(Targeted Incentive Pool x Weighted Avg Individual Result) x Performance Factor
=
Calculated MIP Incentive Earned

VI.   AWARD PAYMENTS:

All awards earned under Management Incentive Plan will be paid as soon as
practical following approval by the Compensation and Human Resources Committee
in February.

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VII.   ADDITIONAL PROVISIONS:

  1.   The Management Incentive Plan shall be administered by the Compensation
and Human Resources Committee of the Corporation.     2.   While all attempts
will be made to follow the incentive formulas and metrics, subjective
adjustments occasionally can and will be made both upwards and downwards based
on management discretion which will require CEO approval.

  Ø   Adjustments will be considered based on value of an individual’s
contribution to performance during the year and not based on comparison to prior
year awards, comparison to peer’s incentive levels, attitude, effort, etc.     Ø
  Subjective adjustments will be the exception and not the rule. Management will
however reserve the right to make these subjective adjustments if necessary to
be equally fair to shareholders and plan participants.

  3.   The incentive award for the Chairman and President and CEO will be
determined by the Compensation and Human Resources Committee of Citizens Banking
Corporation Board of Directors.     4.   A special award fund (Discretionary)
equal to 15% of the aggregate incentive award will be available for individual
awards as determined by the President and CEO. Awards from this fund are made to
staff members who are not participants in the Management Incentive Plan.

  Ø   Awards for the Discretionary Fund will be made only in recognition of
exemplary achievements.     Ø   Distribution of all available amounts in this
fund is not mandatory. (see discretionary award guidelines in section VIII)

  5.   Participation in the Management Incentive Plan shall not be construed as
giving any employee the right to continued employment with the corporation for
the full or for any subsequent period.

VIII.   DISCRETIONARY AWARD GUIDELINES:

  Ø   Objectives: Recognize and promote exemplary individual performance or
initiative.     Ø   Eligible Participants: All staff members are eligible except
staff members who are in established incentive plans with payment amounts
determined by performance in relation to established goals.     Ø   Nomination
Process: Managers would nominate staff member(s) according to established
guidelines. They should also obtain concurrence and approval from their
respective Direct Report to the CEO.     Ø   Monetary Guidelines: Range of $500
to $3000. Larger amounts could be given in exceptional circumstances.     Ø  
Guidelines: Discretionary awards should be given in recognition for one or more
of the following performance criteria:

     Earnings:

  •   Expense reduction     •   Revenue enhancement

     Innovation:

  •   Continuous improvement efforts     •   Innovative delivery alternatives  
  •   Foresight and planning to prevent crises

     Achievement:

  •   Unique/specialized skills or knowledge of value to the company, i.e., Key
Performers     •   Sustained high performance     •   Exemplary performance
during unusual circumstances or specific events     •   Special projects
completed in an exceptional manner or ahead of schedule     •   Extraordinary
client service

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2007 Full Year Forecast vs. 2007 Approved Scale Structure

                                                                               
                                                            MIP will be
initially calculated based on the following components and payout tier
structure.             2007 BUDGET                                              
                        Budget                                                  
             
 
  Total Revenue   Actual               *       *       *       *       *       *
      *       *       *       *       *       *       *          
35%
  2006 Actual = *   % to Actual (Actual/Budget)     <85 %       85 %     92.5 %
    96.25 %     98.125 %     99.0625 %     100 %     100.5 %     101 %     101.5
%     102 %     102.5 %     103 %     103.5 %   No Cap
 
  2007 Budget = *   Payout Factor     0 %       50 %     60 %     70 %     80 %
    90 %     100 %     105 %     110 %     115 %     120 %     125 %     130 %  
  135 %                                        
 
                                                                               
                                                         
 
                                                                    Budget      
                                                         
 
  Net Income After Tax *   Actual               *       *       *       *      
*       *       *       *       *       *       *       *       *          
30%
  2006 Actual = *   % to Actual (Actual/Budget)     <85 %       85 %     92.5 %
    96.25 %     98.125 %     99.0625 %     100 %     100.5 %     101 %     101.5
%     102 %     102.5 %     103 %     103.5 %   No Cap
 
  2007 Budget = *   Payout Factor     0 %       50 %     60 %     70 %     80 %
    90 %     100 %     105 %     110 %     115 %     120 %     125 %     130 %  
  135 %                                             * Amount represents net
income after tax and prior to the impact of restructuring and merger related
expenses.                                                                      
                                           
 
                                                                               
                                                         
 
                                                      Amount communicated to
Investment Community                                                      
 
  Merger Cost Savings *   Actual               *       *       *       *       *
      *       *       *       *       *       *       *       *          
15%
  2006 Actual = *   % to Actual (Actual/Budget)     <85 %       85 %     92.5 %
    96.25 %     98.125 %     99.0625 %     100 %     100.25 %     100.5 %    
100.75 %     101 %     101.25 %     101.5 %     101.75 %   No Cap
 
  2007 Budget = *   Payout Factor     0 %       50 %     60 %     70 %     80 %
    90 %     100 %     105 %     110 %     115 %     120 %     125 %     130 %  
  135 %                                        
 
                                                                               
                                                         
 
                                                                    Budget      
                                                         
 
  Non Performing Assets   Actual               *       *       *       *       *
      *       *       *       *       *       *       *       *          
20%
  2006 Actual = *   % to Actual (Actual/Budget)     > 110 %       110 %     105
%     102.5 %     101.25 %     100.625 %     100 %     97 %     94 %     91 %  
  88 %     85 %     82 %     79 %   No Cap
 
  2007 Budget = *   Payout Factor     0 %       50 %     60 %     70 %     80 %
    90 %     100 %     110 %     120 %     130 %     140 %     150 %     160 %  
  170 %                                        
 
                                                                               
                                                          100%   Payout % is
incremental between tiers (ex. Each % over budget earns x% additional incentive)
                                                                               
               

Discretionary Modifier — Guidelines Only
An additional peer group ranking modifier may be used to determine final payouts
of MIP

      Component   Weighting
Revenue
  50% Net Income   50%

      Peer Ranking   Factor Above 75th Percentile
Below 25th Percentile   125%
50%

2007 vs 2006 performance
Peer Group:
*

1   Discretion may be used by the comp committee to over-ride the formula under
appropriate circumstances   2   Any adjustments for unusual items (such as
acquisitions, divestitures) will require comp committee approval   3   The above
numbers will not include the impact of extraordinary items   4   The above
numbers will be adjusted to neutralize the impact of equity compensation   5  
The above numbers will be adjusted to normalize the impact of equity adjustments
due to interest rate movements   6   The discretion of management and the
Compensation Committee is the final factor in the determination of eligibility
and for final determination of payment award.

 

*   Portions of this exhibit have been omitted pursuant to Citizens’ request to
the Secretary of the Securities and Exchange Commission for confidential
treatment pursuant to Rule 24b-2 under the Securities and Exchange Act of of
1934, as amended.

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