Exhibit 10.18

 

FIFTH THIRD BANCORP

 

Schedule of Executive Officer Compensation Arrangements

 

The Company’s cash compensation package for its executive officers consists of
two components: (1) base salary; and (2) annual performance-based bonuses. The
Company also provides stock based equity incentive grants to its executive
officers as a means to drive long-term performance and promote ownership in the
Company.

 

Base Salary

 

Individual salaries are reviewed annually and salary increases are based on the
Company’s overall performance, the executive’s role and responsibilities, and
the executive’s attainment of individual objectives during the preceding year.

 

Set forth below are the 2006 base salaries of the Company’s Chief Executive
Officer and the four other highest paid Executive Officers of the Company (2005
actual salary compensation is also shown for comparison):

 

Executive Officer:

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2006

Base Salary

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2005

Base Salary

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George A. Schaefer, Jr.

   $ 990,018    $ 990,018

Kevin T. Kabat

     610,000      575,000

Robert A. Sullivan

     560,000      537,992

Greg D. Carmichael

     531,000      500,000

Charles D. Drucker

     402,000      378,747

 

Annual Bonuses

 

Executive Officers are eligible to participate in the Variable Compensation Plan
(the “VCP”). The VCP is authorized under the Incentive Compensation Plan (the
“Plan”), which was approved and adopted by the Company’s shareholders in 2004.
The Plan allows the Company to issue Annual Incentive Awards (as defined in the
Plan) comprised of cash and/or equity awards. The Committee met in early 2006
and established Performance Goals (as defined in the Plan.) The Performance
Goals were set in the form of a bonus grid comprised of both return on equity
and incrementally increasing amounts of earnings per share, which produce an
incentive bonus pool available for payments in 2007. The bonus amounts in the
grid increase based on the Company’s return on equity relative to its peers and
incrementally higher earnings per share in 2006. Annual Incentive Awards are
payable in cash (provided, however, that the Committee may designate that all or
a portion of such amount may be payable in common stock of the Company).

 

Nonqualified Deferred Compensation Plan

 

Executive Officers of Fifth Third Bancorp are eligible to participate in the
Amended and Restated Fifth Third Bancorp Nonqualified Deferred Compensation Plan
(the “Deferred Compensation Plan”). The Deferred Compensation Plan is a
non-qualified deferred compensation plan which is not subject to the
qualification requirements of Section 401(a) of the Internal Revenue Code. The
Deferred Compensation Plan permits participants to defer eligible compensation
as specified in the Deferred Compensation Plan.

 

Eligible compensation deferred by participants is credited with earnings and
investment gains and losses based on hypothetical investments in Fifth Third
Bancorp Common Stock. Investments in a participant’s Common Stock account are
designated in units and no shares of Common Stock will be issued until the
participant receives a distribution from the Plan. Amounts deferred are not
actually invested in Common Stock. Rather, a grantor trust, which has been
created in connection with the Deferred Compensation Plan, holds plan assets.

 

Fifth Third Bancorp may make an additional contribution in an amount determined
for each individual to participant’s matching stock account at the time of such
allocation. The Deferred Compensation Plan provides that Fifth Third Bancorp may
credit a participant’s Company Common Stock Account with additional amounts, at
its sole discretion. Participants are 100% vested at all times in the amounts
credited to their accounts under the plan. In addition, participants are
credited with dividends on such units of Common Stock which dividends are deemed
to be reinvested in additional shares of Common Stock.

 

The amounts of benefits payable in the future under the plan are not
determinable because such benefits depend upon the amount of compensation each
participating employee elects to defer and the percentage of compensation that
Fifth Third Bancorp, at its sole discretion, may determine to credit to the
accounts of the participants.

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Stock Based Equity Compensation Grants

 

Executive Officers are eligible to receive awards based on Fifth Third’s Common
Stock under the Plan. The following types of stock based equity compensation
awards may be granted under the Plan:

 

Stock Appreciation Rights (“SARs”). The Compensation Committee may grant SARs
independently of any stock option or in tandem with all or any part of a stock
option granted under the Plan. Upon exercise, each SAR entitles a participant to
receive an amount equal to the excess of the Fair Market Value (as defined in
the Plan) of a share of Common Stock on the date the SAR is exercised over the
Fair Market Value of a share of Common Stock on the date the SAR is granted. The
payment may be made in shares of Common Stock having a Fair Market Value on the
date of exercise equal to the amount due upon the exercise of the SAR, may be
paid in cash, or in a combination. Upon exercise of an SAR granted in
conjunction with a stock option, the option may be required to be surrendered.

 

Restricted Stock and Restricted Stock Units. An award of Restricted Stock is an
award of shares of Common Stock that may not be sold or otherwise disposed of
during a restricted period determined by the Committee. An award of Restricted
Stock Units is an award of the right to receive a share of Common Stock after
the expiration of a restricted period determined by the Committee. Restricted
Stock may be voted by the recipient. To the extent provided by the Committee,
dividends on the Restricted Stock and Restricted Stock Units may be payable to
the recipient in cash or in additional Restricted Stock or Restricted Stock
Units.

 

Performance Shares and Performance Units. Performance Shares and Performance
Units are awards of a fixed or variable number of shares or of
dollar-denominated units that are earned by achievement of performance goals
established by the Committee. If the applicable performance criteria are met,
the shares are earned and become unrestricted with respect to Performance Shares
or an amount is payable with respect to the Performance Units. The Committee may
provide that a certain percentage of the number of Performance Shares or Units
originally awarded may be earned based upon the attainment of the performance
goals. Amounts earned under Performance Share and Performance Unit Awards may be
paid in Common Stock, cash or a combination of both. During the applicable
performance period for an award, the shares may be voted by the recipient and
the recipient may be entitled to receive dividends on those shares, at the
discretion of the Committee.

 

Stock Options. Stock Options may be nonqualified stock options or incentive
stock options that comply with Code Section 422. The exercise period for any
stock option will be determined by the Committee at the time of grant. The
exercise price per share for all shares of Common Stock issued pursuant to stock
options under the Plan may not be less than 100% of the Fair Market Value of a
share of Common Stock on the grant date. Each stock option may be exercised in
whole, at any time, or in part, from time to time, after the grant becomes
exercisable. The Plan limits the term of any stock option to 10 years and
prohibits repricing of options.

 

Other Incentive Awards. The Committee may grant other types of awards of which
may be based in whole or in part by reference to Common Stock or upon the
achievement of performance goals or such other terms and conditions as the
Committee may prescribe. As required by Code Section 162(m), the Plan provides
an annual limit of $4,000,000 on the amount a single participant may earn under
any such Other Incentive Award. For purposes of this limitation, any award
earned over a period greater than one year is deemed to have been earned ratably
over the full and partial calendar years in such period.

 

In January, 2006, grants of Stock Appreciation Rights (“SARs”), and Restricted
Stock were made to Executive Officers other than Mr. Schaefer under the Plan.
Grants of SARs were made to Executive Officers at an exercise price of 100% of
the market value on the date of grant with a vesting date of four years after
the date of grant. Grants of Restricted Stock were made to Executive Officers
with a four-year period of restriction. Additional awards may be granted in 2006
or subsequent years at the Committee’s discretion.

 

Fifth Third Bancorp’s Compensation Committee may make grants of stock based
equity compensation awards to the Executive Officers of Fifth Third Bancorp in
the future as well.

 

Retirement Plans

 

Fifth Third Bancorp also maintains The Fifth Third Bancorp Master Retirement
Plan (the “Retirement Plan”) and The Fifth Third Bancorp Supplemental Retirement
Income Plan (the “Supplemental Plan”). The Retirement Plan and Supplemental Plan
were frozen as of November 15, 1998 except for employees who were at least age
50 and had 15 years of credited service as of December 31, 1998. The following
table shows estimated annual benefits payable upon retirement under Retirement
Plan and the Supplemental Plan based upon combinations of compensation levels
and years of service:

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PENSION PLAN TABLE

 

Approximate Annual Retirement Benefit Upon Retirement At Age 65 Before
Adjustments (1) (2) (3)

 

Remuneration(4)(5)

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  15

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  20

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  25

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  30

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  35

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700,000   104,178   138,903   173,629   208,355   208,355 800,000   119,428  
159,237   199,046   238,855   238,855 900,000   134,678   179,570   224,463  
269,355   269,355 1,000,000   149,928   199,903   249,879   299,855   299,855
1,100,000   165,178   220,237   275,296   330,355   330,355 1,200,000   180,428
  240,570   300,713   360,855   360,855 1,300,000   195,678   260,903   326,129
  391,355   391,355 1,400,000   210,928   281,237   351,546   421,855   421,855
1,500,000   226,178   301,570   376,963   452,355   452,355 1,600,000   241,428
  321,903   402,379   482,855   482,855 1,700,000   256,678   342,237   427,796
  513,355   513,355 1,800,000   271,928   362,570   453,213   543,855   543,855
1,900,000   287,178   382,903   478,629   574,355   574,355 2,000,000   302,428
  403,237   504,046   604,855   604,855 2,100,000   317,678   423,570   529,463
  635,355   635,355 2,200,000   332,928   443,903   554,879   665,855   665,855
2,300,000   348,178   464,237   580,296   696,355   696,355 2,400,000   363,428
  484,570   605,713   726,855   726,855 2,500,000   378,678   504,903   631,129
  757,355   757,355

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(1) Benefits shown are computed on the basis of a straight life annuity. Other
available forms of benefits payment under the Retirement Plan, which are the
actuarial equivalent of the straight life annuity, are the joint and surviving
spouse annuity, the contingent annuitant option, the life — 10-year-certain
option, and the single lump-sum option. The method of payment from the
Supplemental Plan is either a single lump sum or an installment.

(2) Under the current law, the maximum annual pension benefit payable under the
Internal Revenue Code, applicable to the Retirement Plan, is $170,000 for 2005.
Any annual pension benefit accrued over $170,000 is payable under the
Supplemental Plan.

(3) The Retirement Plan and Supplemental Plan were frozen as of November 15,
1998 except for employees who were at least age 50 and had 15 years of credited
service as of December 31, 1998. For the purpose of computing a benefit under
these Plans on December, 31, 2005, Mr. Schaefer had 34 years of credited
service. Mr. Schaefer continues to accrue benefits under these Plans. Mr. Kabat
has a frozen benefit related to his service with Old Kent Financial Corporation.
His annual benefit at age 65 would be approximately $65,400. Mr. Carmichael,
Mr. Drucker and Mr. Sullivan joined the Company after these plans were frozen
and therefore are not eligible to participate.

(4) The amounts shown are the gross benefit amounts provided by both the
Retirement Plan and the Supplemental Plan. Plan benefits are determined as 30.5%
of final average pay minus 11.1% of the participant’s social security final
average compensation (up to his social security covered compensation) with a
reduction of 1/30th for each year of credited service less than 30. Benefits are
also reduced for termination of service prior to age 60, for a commencement of
benefit payments prior to age 60, and eliminated under the vesting schedule if
the participant has less than five (5) vesting years.

(5) Compensation for retirement benefit calculations under the Retirement Plan
is defined as the base rate of pay plus variable compensation and is based on
the final average pay for the highest five consecutive years out of the ten
years preceding retirement. The 2005 base pay plus variable compensation are
substantially the same as the amounts shown under the “Salary and Bonus” columns
of the Summary Compensation Table. No more than an inflation adjusted $200,000
limit is taken into consideration under the Retirement Plan. Compensation in
excess of an inflation adjusted $200,000 limit is taken into account under the
Supplemental Plan.