##### 



EXHIBIT 10.39
 
 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 paymentØ
    
    Minimum annual performance rating of Productive required in most recent Annual
Performance Review in both Key Performance Activities and CompetenciesØ
    
    This plan does not represent a contract with any individual plan participantØ
    
    The plan may be changed, modified or terminated at any time throughout the plan year
 III.
    
    PARTICIPATION RATE:
  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
 Participation Rates
 Service Factor 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 LevelCorporate Level
    
    Level
    
    WeightingJob Function
    
    Weighting
    
    Weighting
    
    (Discretionary)Corporate Executive
    
    70%
    
    
    
    30%Corporate Staff
    
    60%
    
    
    
    40%Line of Business Staff
    
    40%
    
    40%
    
    20%
 Corporate Level Components & Weightings
 Components
    
    WeightingTotal Revenue
    
    35%Net Income after Taxes
    
    30%Non-Performing Assets
    
    20%Merger Cost
    
    15%(All independent components)
 (See payout tier structure at end of document).
 Line of Business & Individual Level Components & Weightings
 Line of Business Level Performance: (See payout tier structure at end of document).
 Individual (Discretionary) Level Performance: (See payout tier
structure at end of document).
 Performance Factor
  MIP Incentive Calculation
 Calculated MIP Incentive Earned
 VI.
    
    AWARD PAYMENTS:
  58




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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
 59




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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 BUDGETBudgetTotal 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 Cap2007 Budget = *
    
    Payout Factor
    
    
    0
    %
    
    
    
    50
    %
    
    
    60
    %
    
    
    70
    %
    
    
    80
    %
    
    
    90
    %
    
    
    100
    %
    
    
    105
    %
    
    
    110
    %
    
    
    115
    %
    
    
    120
    %
    
    
    125
    %
    
    
    130
    %
    
    
    135
    %BudgetNet 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 Cap2007 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 CommunityMerger 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 Cap2007 Budget = *
    
    Payout Factor
    
    
    0
    %
    
    
    
    50
    %
    
    
    60
    %
    
    
    70
    %
    
    
    80
    %
    
    
    90
    %
    
    
    100
    %
    
    
    105
    %
    
    
    110
    %
    
    
    115
    %
    
    
    120
    %
    
    
    125
    %
    
    
    130
    %
    
    
    135
    %BudgetNon 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 Cap2007 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
  Component
    
    WeightingRevenue
    
    50%Net Income
    
    50%
 Peer Ranking
    
    FactorAbove 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 circumstances2
    
    Any adjustments for unusual items (such as acquisitions, divestitures) will require comp committee approval3
    
    The above numbers will not include the impact of extraordinary items4
    
    The above numbers will be adjusted to neutralize the impact of equity compensation5
    
    The above numbers will be adjusted to normalize the impact of equity adjustments due to interest
rate movements6
    
    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. 60