-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HkSnc9uI2XvoxYRSyapQoBsIaiM8/sKNoNVKA8yJfBB06B3L/7N5mqS9WdXbJ2PT fI6/MtraZXX7pwbALzkNfQ== 0000950152-00-000692.txt : 20000210 0000950152-00-000692.hdr.sgml : 20000210 ACCESSION NUMBER: 0000950152-00-000692 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000321 FILED AS OF DATE: 20000209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIFTH THIRD BANCORP CENTRAL INDEX KEY: 0000035527 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 310854434 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-08076 FILM NUMBER: 527853 BUSINESS ADDRESS: STREET 1: 38 FOUNTAIN SQ PLZ STREET 2: FIFTH THIRD CENTER CITY: CINCINNATI STATE: OH ZIP: 45263 BUSINESS PHONE: 5135795300 DEF 14A 1 FIFTH THIRD BANCORP--DEFINITIVE PROXY STATEMENT 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SCHEDULE 14A (RULE 14a) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
FIFTH THIRD BANCORP (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) FIFTH THIRD BANCORP (NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ....... (2) Aggregate number of securities to which transaction applies: .......... (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ............ (4) Proposed maximum aggregate value of transaction: ...................... (5) Total fee paid: ....................................................... [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ............................................... (2) Form, Schedule or Registration Statement No.: ......................... (3) Filing Party: ......................................................... (4) Date Filed: ........................................................... - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 [FIFTH THIRD BANCORP LOGO] CINCINNATI, OHIO 45263 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS February 9, 2000 To the Shareholders of Fifth Third Bancorp: You are cordially invited to attend the Annual Meeting of the Shareholders of Fifth Third Bancorp to be held at the offices of Fifth Third Bank, William S. Rowe Building, 38 Fountain Square Plaza, Cincinnati, Ohio on Tuesday, March 21, 2000 at 11:30 a.m. for the purposes of considering and acting upon the following: (1) Election of eight (8) Class II Directors to serve until the Annual Meeting of Shareholders in 2003. (2) The proposal described in the attached Proxy Statement to amend Article Fourth of the Amended Articles of Incorporation to increase the authorized number of shares of Common Stock, without par value, from 500,000,000 shares to 650,000,000 shares. The proposed Amendment is attached as Annex 2 to the Proxy Statement and incorporated therein by reference. (3) Approval of the appointment of the firm of Deloitte & Touche LLP to serve as independent auditors for the Company for the year 2000. (4) Transaction of such other business that may properly come before the Meeting or any adjournment thereof. Shareholders of record at the close of business on January 31, 2000 will be entitled to vote at the Meeting. ALL PERSONS WHO FIND IT CONVENIENT TO DO SO ARE INVITED TO ATTEND THE MEETING IN PERSON. IN ANY EVENT, PLEASE SIGN AND RETURN THE ENCLOSED PROXY WITH THIS NOTICE AT YOUR EARLIEST CONVENIENCE. By Order of the Board of Directors MICHAEL K. KEATING Secretary 3 FIFTH THIRD BANCORP 38 FOUNTAIN SQUARE PLAZA CINCINNATI, OHIO 45263 PROXY STATEMENT The Board of Directors of Fifth Third Bancorp (the "Company") is soliciting proxies, the form of which is enclosed, for the Annual Meeting of Shareholders to be held on March 21, 2000 (the "Meeting"). Each of the 309,317,262 shares of Common Stock outstanding on January 31, 2000 is entitled to one vote on all matters acted upon at the Meeting, and only Shareholders of record on the books of the Company at the close of business on January 31, 2000 will be entitled to vote at the Meeting, either in person or by proxy. The shares represented by all properly executed proxies which are sent to the Company will be voted as designated and each not designated will be voted affirmatively. Each person giving a proxy may revoke it by giving notice to the Company in writing or in open meeting at any time before it is voted. The laws of Ohio under which the Company is incorporated provide that if notice in writing is given by any Shareholder to the President, a Vice President, or the Secretary of the Company not less than forty-eight (48) hours before the time fixed for holding a meeting of Shareholders for the purpose of electing Directors that such Shareholder desires that the voting at such election shall be cumulative, and if an announcement of the giving of such notice is made upon the convening of the meeting by the Chairman or Secretary or by or on behalf of the Shareholder giving such notice, each Shareholder shall have the right to cumulate such voting power as he possesses in voting for Directors. The expense of soliciting proxies will be borne by the Company. Proxies will be solicited principally by mail, but may also be solicited by the Directors, Officers, and other regular employees of the Company, who will receive no compensation therefor in addition to their regular compensation. Brokers and others who hold stock on behalf of others will be asked to send proxy material to the beneficial owners of the stock, and the Company will reimburse them for their expenses. The Company may retain D.F. King & Co., Inc., a proxy solicitation firm, to assist the Company in soliciting proxies. As of the date of this Proxy Statement, the Company has not engaged D.F. King to assist in the solicitation of proxies for the Meeting, but may do so prior to the Meeting. If the Company does retain D.F. King to assist in soliciting proxies for the Meeting, the Company anticipates that the costs of these services would not exceed $5,000. The Annual Report of the Company for the year 1999, including financial statements, has been mailed to all Shareholders. Such report and financial statements are not a part of this Proxy Statement. CERTAIN BENEFICIAL OWNERS Under Section 13(d) of the Securities Exchange Act of 1934, a beneficial owner of a security is any person who directly or indirectly has or shares voting power or investment power over such security. Such beneficial owner under this definition need not enjoy the economic benefit of such securities. The following are the only Shareholders deemed to be beneficial owners of 5% or more of the Common Stock of the Company as of December 31, 1999:
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT TITLE OF CLASS BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS - -------------- ------------------- ----------------------- -------- Common Stock Cincinnati Financial Corporation 48,310,150(1) 15.64% 6200 South Gilmore Fairfield, Ohio 45014 Common Stock Fifth Third Bancorp 18,856,639(2) 6.11% Subsidiary Banks 38 Fountain Square Plaza Cincinnati, Ohio 45263
4 - --------------- (1) Cincinnati Financial Corporation owns 37,397,650 shares of the Common Stock of the Company. Cincinnati Insurance Company, a subsidiary of Cincinnati Financial Corporation, owns 9,275,097 shares. Cincinnati Casualty Company, another subsidiary, owns 946,653 shares. Cincinnati Life Insurance Company, another subsidiary of Cincinnati Financial Corporation, owns 690,750 shares. (2) There are eleven wholly-owned bank subsidiaries of the Company, which are beneficial owners of 8,827,434 shares. The banks hold these shares in a fiduciary capacity under numerous trust relationships, none of which relates to more than 5% of the shares, and have sole or shared voting power, and sole or shared investment power over these shares. The banks also hold shares in a non-discretionary capacity, and disclaim any beneficial interest in all shares held in these capacities. ELECTION OF DIRECTORS In accordance with the Company's Code of Regulations, the Board of Directors is classified into three classes as nearly equal in number as the then total number of Directors constituting the whole Board permits. Each class is to be elected to separate three (3) year terms with each term expiring in different years. At each Annual Meeting the Directors or nominees constituting one class are elected for a three (3) year term. The term of those Directors listed below as Class II expires at the Annual Meeting on March 21, 2000 and this Class contains the nominees to be elected to serve until the Annual Meeting of Shareholders in 2003. Any vacancies that occur after the Directors are elected may be filled by the Board of Directors in accordance with law for the remainder of the full term of the vacant directorship. The Board of Directors intends to nominate for election as Class II Directors the eight (8) persons listed below, all of whom are presently serving as Class II Directors of the Company. It is the intention of the persons named in the Proxy to vote for the election of all nominees named. If any nominee(s) shall be unable to serve, which is not now contemplated, the proxies will be voted for such substitute nominee(s) as the Board of Directors recommends. Nominees receiving the eight (8) highest totals of votes cast in the election will be elected as directors. Proxies in the form solicited hereby which are returned to the Company will be voted in favor of the eight (8) nominees specified below unless otherwise instructed by the shareholder. Abstentions and shares not voted by brokers and other entities holding shares on behalf of beneficial owners will not be counted and will have no effect on the outcome of the election. At its December, 1999 meeting, the Board of Directors voted to increase the size of the Board from 21 to 24 members. The Board appointed Robert L. Koch, II, Thomas W. Traylor and Alton C. Wendzel to fill the vacancies created by the increase in the size of the Board of Directors. The following tables set forth information with respect to each Class II Director, all of whom are nominees for re-election at the Annual Meeting, and with respect to incumbent Directors in Classes I and III of the Board of Directors who are not nominees for re-election at the Annual Meeting. 2 5 CLASS II DIRECTORS (TERMS EXPIRE 2000)
SHARES OF COMPANY COMMON STOCK BENEFICIALLY OWNED ON DECEMBER 31, 1999(1) ----------------------- DIRECTOR PERCENT NAME, AGE AND PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS SINCE NUMBER(4) OF CLASS - ------------------------------------------------------------------------------------------------------ JOHN F. BARRETT(3), 50, President, CEO and Director of The 1988 57,161 .0185 Western-Southern Life Insurance Co. since March, 1994. For- merly, President and COO, The Western-Southern Life Insurance Co. Director of Convergys Corporation and Andersons, Inc. RICHARD T. FARMER, 65, Chairman and Director, Cintas 1982 102,609 .0332 Corporation, a service company that designs, manufactures and implements corporate identity uniform programs, since August, 1995. Formerly, Mr. Farmer was Chairman, CEO and Director of Cintas Corporation. ROBERT B. MORGAN(3), 65, Executive Counselor and Director of 1986 55,025 .0178 Cincinnati Financial Corporation and Cincinnati Insurance Company. BRIAN H. ROWE, 68, Chairman Emeritus, GE Aircraft Engines, 1980 51,470 .0167 General Electric Company since February, 1995. Previously, Mr. Rowe was Chairman from September, 1993, and was President and CEO, GE Aircraft Engines, General Electric Company. Director of Atlas Air, Inc., B/E Aerospace, Convergys Corporation, Stewart & Stevenson Services, Inc., Textron Inc., and Dynatech Corporation. GEORGE A. SCHAEFER, JR.(2), 54, President and Chief Exec- 1988 1,507,217 .4865 utive Officer of Fifth Third Bancorp and Fifth Third Bank. Director of Anthem Insurance, Inc. JOHN J. SCHIFF, JR.(2),(3), 56, Chairman and Director of 1983 275,257 .0901 Cincinnati Financial Corporation and Cincinnati Insurance Company. Retired as Chairman of John J. & Thomas R. Schiff & Co., Inc., an insurance agency in December, 1996. Director of Cinergy Corp., Standard Register Co., Cincinnati Bengals and John J. & Thomas R. Schiff & Co., Inc. DONALD B. SHACKELFORD, 67, Chairman, Fifth Third Bank, 1998 1,338,363 .4332 Central Ohio since June, 1998. Formerly, Vice Chairman of State Savings Company and Chairman of State Savings Bank. Director of The Limited, Inc., The Progressive Corporation and Intimate Brands, Inc. DUDLEY S. TAFT, 59, President and Director, Taft Broadcasting 1981 61,983 .0201 Company, investor in entertainment and media properties. Director of Cinergy Corp., The Union Central Life Insurance Company, United States Playing Card Co., and The Tribune Company.
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SHARES OF COMPANY COMMON STOCK BENEFICIALLY OWNED ON DECEMBER 31, 1999(1) ----------------------- DIRECTOR PERCENT NAME, AGE AND PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS SINCE NUMBER(4) OF CLASS - ------------------------------------------------------------------------------------------------------ CLASS III DIRECTORS (TERMS EXPIRE 2001) DARRYL F. ALLEN, 56, Special Advisor to the Chairman, Eaton 1997 3,350 .0011 Corporation, since April 1999. Previously, Mr. Allen was Chairman, CEO and President, Aeroquip-Vickers, Inc., formerly known as Trinova Corporation, a manufacturer and distributor of engineered components for industry, automotive, aerospace and defense. Director of Milacron, Inc. GERALD V. DIRVIN, 62, Retired April, 1994, as Executive Vice 1989 36,934 .0120 President and Director, The Procter & Gamble Company, manu- facturers of household and consumer products. Director of Cintas Corporation. JOSEPH H. HEAD, JR.(2), 67, Chairman and Director, Atkins & 1987 135,334 .0438 Pearce, Inc., manufacturer of industrial textiles. Director of Baldwin Piano & Organ Company, Hilltop Basic Resources, Inc., Rotex, Inc., Sabin Robbins Paper Co. and Robbins Inc. ALLEN M. HILL, 54, CEO and President of DPL Inc. and its 1998 36,181 .0117 subsidiary The Dayton Power and Light Company. JERRY L. KIRBY, 65, Chairman of Fifth Third Bank, Western 1998 204,471 .0662 Ohio. Formerly Chairman, President and CEO of Citfed Bancorp and Citizens Federal Bank. Director of Roberds Inc. DR. MITCHEL D. LIVINGSTON, 55, Vice President for Student 1997 5,670 .0018 Affairs and Human Resources, University of Cincinnati. Formerly, Dr. Livingston was Vice President for Student Services, University of Albany. JAMES E. ROGERS, 52, Vice Chairman, President, CEO and 1995 9,932 .0032 Director of Cinergy Corp., Cinergy Services, CG&E and PSI Energy, since December, 1995, and Mr. Rogers was Vice Chair- man, President and COO since October, 1994. Formerly, Mr. Rogers was Chairman, President and CEO of PSI Energy. Director of Duke Realty Investments, Inc. ALTON C. WENDZEL, 69, President and CEO Coloma Frozen Foods, 1999 84,408 .0273 Inc. and Chairman of Greg Orchards and Produce, Inc. and Greg Farms, Inc., growers and producers of fresh and frozen produce.
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SHARES OF COMPANY COMMON STOCK BENEFICIALLY OWNED ON DECEMBER 31, 1999(1) ----------------------- DIRECTOR PERCENT NAME, AGE AND PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS SINCE NUMBER(4) OF CLASS - ------------------------------------------------------------------------------------------------------ CLASS I DIRECTORS (TERMS EXPIRE 2002) THOMAS B. DONNELL(2), 53, Chairman, Fifth Third Bank, 1984 518,566 .1679 Northwestern Ohio, National Association (Toledo, Ohio). JOAN R. HERSCHEDE, 60, President and CEO of The Frank 1991 30,480 .0099 Herschede Company, an investment holding company. WILLIAM G. KAGLER, 67, Retired as Chairman of Skyline Chili 1983 54,841 .0178 Inc., a restaurant and frozen food product manufacturer, since October, 1995. Formerly, Mr. Kagler was Chairman of the Executive Committee since November, 1994, and was Chairman, CEO and Director of Skyline Chili, Inc. since November, 1992 and was President, CEO and Director of Skyline Chili, Inc. from 1984-1992. Previously, Mr. Kagler served as President of Kagler & Associates, Inc., a consulting firm, and President of the Kroger Co. Director of The Union Central Life Insurance Company and The Ryland Group, Inc. JAMES D. KIGGEN(2), 67, Director of Xtek, Inc., manufacturer 1982 89,811 .0291 of hardened steel parts, since November, 1995. Formerly, Mr. Kiggen was Chairman, President, CEO and Director of Xtek, Inc. Chairman of the Board of Directors of BroadWing Inc. (formerly Cincinnati Bell, Inc.), provider of communication services ROBERT L. KOCH II, 61, President of Koch Enterprises, Inc., a 1999 173,356 .0561 manufacturing company. Director of Sigcorp, Inc. and Bindley Western Industries, Inc. DAVID E. REESE, 59, Chairman, Fifth Third Bank, Southwest, 1998 337,590 .1093 F.S.B. Formerly Vice Chairman of State Savings Company from July, 1972 to June, 1998, and Chairman of State Savings Bank, F.S.B. from June 1992 to June 1998. Mr. Reese was also Chairman of Sundance Broadcasting, Inc., owner of commercial radio stations, from 1987 to 1996, and Sundance Broadcasting of Idaho, Inc., owner of commercial radio stations, from 1978 to 1996. DENNIS J. SULLIVAN, JR.(2), 67, Executive Counselor of Dan 1984 54,314 .0176 Pinger Public Relations, Inc., a public relations agency, since February, 1993. Formerly, Executive Vice President, Chief Financial Officer and Director of Cincinnati Bell, Inc. and Cincinnati Bell Telephone Company. Director of Anthem Insurance, Inc., and Kalthoff International, Inc. THOMAS W. TRAYLOR, 60, CEO of Traylor Bros., Inc., an 1999 220,423 .0714 underground and marine construction company. All Directors and Executive Officers as a Group (37 persons). 8,805,947 2.8171
5 8 - --------------- (1) As reported to Fifth Third Bancorp by the Directors as of the date stated. Includes shares held in the name of spouses, minor children, certain relatives, trusts, estates and certain affiliated companies as to which beneficial ownership may be disclaimed. (2) Members of the Executive Committee of the Board of Directors. (3) Messrs. Morgan and Schiff, Jr. are Directors of Cincinnati Financial Corporation and Mr. Barrett is a Director of The Western-Southern Life Insurance Co., whose holdings of Company shares with their affiliates are more fully set forth above under the caption "Certain Beneficial Owners" in this Proxy Statement. (4) The amounts shown represent the total shares owned outright by such individuals together with shares which are issuable upon the exercise of currently exercisable, but unexercised stock options. Specifically, the following individuals have the right to acquire the shares indicated after their names, upon the exercise of such stock options: Mr. Allen, 3,125; Mr. Barrett, 23,096; Mr. Dirvin, 23,096; Mr. Donnell, 52,816; Mr. Farmer, 23,096; Mr. Head, 2,000; Ms. Herschede, 5,375; Mr. Hill, 11,045; Mr. Kagler, 10,438; Mr. Kiggen, 23,096; Mr. Kirby, 109,688; Mr. Koch, 6,198; Mr. Livingston, 4,357; Mr. Morgan, 23,096; Mr. Reese, 39,500; Mr. Rogers, 9,595; Mr. Rowe, 23,096; Mr. Schaefer, 911,877; Mr. Schiff, 5,375; Mr. Shackelford, 39,500; Mr. Sullivan, 2,000; Mr. Taft, 15,501, Mr. Traylor, 6,198; Mr. Wendzel, 3,131. The amount shown for Mr. Koch also includes convertible capital securities which are convertible to 766 shares of Common Stock of the Company. The aggregate number of shares issuable upon the exercise of currently exercisable, but unexercised stock options, held by the Executive Officers is 2,326,095. 6 9 BOARD OF DIRECTORS, ITS COMMITTEES, MEETINGS AND FUNCTIONS The Board of Directors of the Company met five (5) times during 1999. Except for Messrs. Allen, Donnell, Hill, Kirby, Koch, Reese, Shackelford, Traylor and Wendzel, each of the Directors of the Company is also a member of the Board of Directors of Fifth Third Bank which met five (5) times during 1999. The Company has an Executive Committee consisting of Messrs. Donnell, Head, Kiggen, Schaefer, Schiff and Sullivan, which meets only on call. While this Committee has, under Ohio law, the powers to act between meetings of the Board on virtually all matters that the Board could act upon, it is not considered as an active committee by the Company, but reserves its function for emergency purposes. The Executive Committee met two (2) times in 1999. The Company has a Compensation and Stock Option Committee, which consisted of Messrs. Head, Hill and Rogers, and met two (2) times during 1999. The Board of Directors does not have a nominating committee. This function is normally served by the Board of Directors and in emergencies by the Executive Committee. The Audit Committee of the Company serves in a dual capacity as the Audit Committee of the Company and Fifth Third Bank, meeting in formal meetings in March, July and November as well as informally at other times. Three (3) formal meetings were held during 1999. One of the functions of this Committee is to carry out the statutory requirements of a bank audit committee as prescribed under Ohio law. Other functions include the engagement of independent auditors, reviewing with those independent auditors the plans and results of the audit engagement of the Company, reviewing the scope and results of the procedures for internal auditing, reviewing the independence of the independent auditors and similar functions. The Board of Directors has adopted a written charter for the Audit Committee which is attached hereto as Annex 1. The Audit Committee members for 1999 were Messrs. Barrett, Kiggen, Sullivan and Mrs. Herschede. Executive compensation and stock options are determined by the Compensation and Stock Option Committee of the Board of Directors. The formal report of the Compensation and Stock Option Committee with respect to 1999 compensation and stock option grants begins on Page 11 herein. No Member of the Board of the Company attended less than 75% of the aggregate meetings of the Board of Directors and all committees on which he or she served during 1999. EXECUTIVE COMPENSATION Set forth below are tables showing for the Chief Executive Officer and the four other highest-paid executive officers of the Company: (1) in summary form, the compensation paid for the last three years; (2) the options granted and options exercised; and (3) beneficial ownership of the Company's Common Stock. SUMMARY The following table is a summary of certain information concerning the compensation awarded, paid to, or earned by the Company's chief executive officer and each of the Company's other four most highly compensated executive officers (the "named executives") during each of the last three fiscal years. 7 10 SUMMARY COMPENSATION TABLE
LONG TERM ANNUAL COMPENSATION COMPENSATION ----------------------- ------------ SHARES UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (1) COMPENSATION ($)(2) - ------------------------------- ---- ---------- --------- ------------ ------------------- George A. Schaefer, Jr......... 1999 952,902 1,140,000 250,000 293,006 President and Chief Executive 1998 905,767 900,000 225,000 252,807 Officer 1997 854,414 825,000 225,000 235,118 Stephen J. Schrantz............ 1999 472,306 350,000 80,000 115,123 Executive Vice President 1998 452,298 300,000 90,000 105,322 1997 436,548 285,000 90,000 101,017 Michael D. Baker............... 1999 377,888 270,000 80,000 90,704 Executive Vice President 1998 352,886 240,000 90,000 86,364 1997 327,885 220,000 90,000 76,704 Michael K. Keating............. 1999 377,888 270,000 80,000 90,704 Executive Vice President 1998 352,889 235,000 90,000 82,304 1997 333,943 220,000 90,000 77,552 Robert J. King, Jr............. 1999 332,319 250,000 80,000 81,525 Executive Vice President 1998 314,078 205,000 90,000 72,671 1997 275,235 175,000 90,000 63,033
- --------------- (1) Adjusted for three-for-two splits on July 15, 1997 and April 15, 1998. (2) All Other Compensation consists solely of the amounts representing the allocations to each named executive under The Fifth Third Master Profit Sharing and Non-qualified Deferred Compensation Program. STOCK OPTIONS The following table sets forth information concerning individual grants of options to purchase the Company's Common Stock made to the named executives in 1999: OPTION GRANTS IN LAST FISCAL YEAR
NUMBER PERCENT OF POTENTIAL REALIZABLE OF SHARES TOTAL OPTIONS EXERCISE VALUE AT ASSUMED UNDERLYING GRANTED TO OR ANNUAL RATES OF STOCK OPTIONS EMPLOYEES BASE PRICE EXPIRATION PRICE APPRECIATION NAME GRANTED(1) IN FISCAL YEAR ($/SH.) DATE FOR OPTION TERM ---- ---------- -------------- ---------- ---------- ----------------------- 5%($) 10%($) ---------- ---------- George A. Schaefer, Jr.... 250,000 5.8% 73.3125 03/11/09 11,526,459 29,210,311 Stephen J. Schrantz....... 80,000 1.9 73.3125 03/11/09 3,688,467 9,347,300 Michael D. Baker.......... 80,000 1.9 73.3125 03/11/09 3,688,467 9,347,300 Michael K. Keating........ 80,000 1.9 73.3125 03/11/09 3,688,467 9,347,300 Robert J. King, Jr........ 80,000 1.9 73.3125 03/11/09 3,688,467 9,347,300
- --------------- (1) All such options were granted March 11, 1999 and first become exercisable as to 25% of the shares covered after March 11, 1999, as to 50% after one year of continued employment, as to 75% after two years of continued employment and are exercisable in full after the end of three years of continued employment. In the event the Company shall consolidate with, merge into, or transfer all or substantially all of its assets to another corporation, then all options granted under this Plan shall become immediately exercisable. The option exercise price is not adjustable over the 10-year term of the options except due to stock splits and similar occurrences affecting all outstanding stock. 8 11 The following table sets forth certain information regarding individual exercises of stock options during 1999 by each of the named executives. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
SHARES ACQUIRED ON VALUE NUMBER OF SHARES VALUE OF UNEXERCISED EXERCISE REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS NAME (#) ($) OPTIONS AT 12/31/99 AT 12/31/99 ---- -------- ---------- --------------------------- ---------------------------- EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE (#) (#) ($) ($) ----------- ------------- ------------ ------------- George A. Schaefer, Jr... 101,251 $4,982,977 911,877 356,252 $40,180,961 $4,257,869 Stephen J. Schrantz...... 33,751 1,668,406 347,377 127,502 15,378,626 1,702,245 Michael D. Baker......... 0 0 259,627 127,502 10,345,970 1,702,245 Michael K. Keating....... 12,701 555,127 242,855 127,502 9,378,854 1,702,245 Robert J. King, Jr....... 10,650 533,494 220,097 127,502 8,241,667 1,702,245
BENEFICIAL OWNERSHIP The following table sets forth certain information regarding the named executives' beneficial ownership of the Common Stock of the Company as of December 31, 1999.
TITLE OF CLASS NAME OF OFFICER NUMBER OF SHARES(1) PERCENT OF CLASS - -------------- --------------- ------------------- ---------------- Common Stock George A. Schaefer, Jr. 1,507,217 .4865 Common Stock Stephen J. Schrantz 508,295 .1644 Common Stock Michael D. Baker 412,203 .1334 Common Stock Michael K. Keating 328,306 .1062 Common Stock Robert J. King, Jr. 306,188 .0991
- --------------- (1) The amounts shown represent the total shares owned outright by such individuals together with shares which are issuable upon the exercise of currently exercisable, but unexercised stock options. These individuals have the right to acquire the shares indicated after their names, upon the exercise of such stock options: Mr. Schaefer, 911,877; Mr. Schrantz, 347,377; Mr. Baker, 259,627; Mr. Keating, 242,855; and Mr. King, 220,097. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's Executive Officers and Directors, and persons who own more than ten percent of a registered class of the Company's stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission ("SEC"). Executive Officers, Directors and greater than ten percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that no Forms 5 were required for those persons, the Company believes that, for the period January 1, 1999 through December 31, 1999, all filing requirements applicable to its Executive Officers and Directors were complied with, except for John J. Schiff, Jr. Mr. Schiff has reported on Form 5 that his holdings of beneficial ownership of shares for which he is a co-trustee for a family trust were omitted from his initial Form 3 and that his acquisition of beneficial ownership of shares held by him as co-executor of his father's estate were not timely reported on Form 4. RETIREMENT PLANS The following table shows estimated annual benefits payable upon retirement under The Fifth Third Bancorp Master Retirement Plan (the "Retirement Plan") and The Fifth Third Bancorp Supplemental 9 12 Retirement Income Plan (the "Supplemental Plan") based upon combinations of compensation levels and years of service: PENSION PLAN TABLE
APPROXIMATE ANNUAL RETIREMENT BENEFIT UPON RETIREMENT AT AGE 65 BEFORE ADJUSTMENTS(1)(2)(3) - ---------------------------------------------------------------------------------------------- REMUNERATION(4)(5) 15 20 25 30 35 - ----------------------- ------------ ------------ ------------ ------------ ------------ $ 300,000 44,585 59,449 74,305 89,169 89,169 400,000 59,835 79,783 99,720 119,669 119,669 500,000 75,085 100,118 125,136 150,169 150,169 600,000 90,334 120,452 150,551 180,669 180,669 700,000 105,584 140,786 175,967 211,169 211,169 800,000 120,335 160,447 200,558 240,670 240,670 900,000 135,585 180,780 225,975 271,170 271,170 1,000,000 150,835 201,113 251,392 301,670 301,670 1,100,000 166,085 221,447 276,808 332,170 332,170 1,200,000 181,335 241,780 302,225 362,670 362,670 1,300,000 196,585 262,113 327,642 393,170 393,170 1,400,000 211,835 282,447 353,058 423,670 423,670 1,500,000 227,085 302,780 378,475 454,170 454,170 1,600,000 242,335 323,113 403,892 484,670 484,670 1,700,000 257,585 343,447 429,308 515,170 515,170 1,800,000 272,835 363,780 454,725 545,670 545,670
- --------------- (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 $130,000 for 1999. Any annual pension benefit accrued over $130,000 is payable under the Supplemental Plan. (3) For the purpose of computing a benefit under these Plans on December, 31, 1999, Mr. Schaefer had 29 years of credited service; Mr. Schrantz, 16 years; Mr. Baker, 25 years; Mr. Keating, 13 years; and Mr. King, 23 years. (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 1999 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 $150,000 limit is taken into consideration under the Retirement Plan. Compensation in excess of an inflation adjusted $150,000 limit is taken into account under the Supplemental Plan. 10 13 COMPENSATION OF DIRECTORS Non-employee Directors of the Company receive a single annual retainer of $15,000 and a fee of $1,000 per meeting attended (including committee meetings). Pursuant to a Deferred Compensation Plan, Directors may annually defer from one-half to all of their compensation as directors until age 65 or until they cease to serve on the Board, whichever occurs last. The deferred funds bear interest until paid at an annually adjusted rate equal to 1% over the U.S. treasury bill rate or Directors may elect to receive a return on deferred funds at a rate equal to the rate of return on the Company's stock. Directors who are also employees receive no additional compensation for service on the Board. The Company's 1998 Long-Term Incentive Stock Plan provides that the Committee has full authority to provide awards of stock options to non-employee Directors. In 1999, each non-employee director received options for 2,000 shares. The exercise price is equal to 100% of the market price on the date of grant. The options expire ten years from the date of grant. REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE POLICY 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 option grants to its executive officers as a means to promote ownership in the Company. The Stock Option and Compensation Committee (the "Committee") is composed of directors who are not employees of the Company. This Committee is responsible for the approval and administration of the base salary level and annual bonus compensation programs as well as the stock option program for Executive Officers. In determining compensation levels, the Committee considers salary and bonus levels which will attract and retain qualified executives when considered with the other components of the Company's compensation structure; specific annual performance criteria; and rewarding Executive Officers for continuous improvement in their respective areas which contribute to continual increases in shareholder value. The Company's philosophy for granting stock options is based on the principles of encouraging key employees to remain with the Company and to encourage ownership thereby providing them with a long-term interest in the Company's overall performance and incenting those executive officers to manage with a view toward maximizing long-term shareholder value. The Company uses the services of Buck Consultants, an executive compensation consulting firm, to perform competitive peer analysis on an annual basis. They in conjunction with the Company identified a group of peer companies based on market capitalization, geographic location, performance and similarity in lines of business. BASE SALARY Executive Officers salaries are determined by evaluating the 1999 comparative data and the responsibilities of their positions. Individual salary increases are reviewed annually and are based on the Company's overall performance and the executive's attainment of individual objectives during the preceding year. ANNUAL BONUSES Executive Officers (other than officers designated to participate in the Fifth Third Bancorp Variable Compensation Plan as discussed below) are eligible to earn annual bonuses. At the end of the year, the Committee establishes a target bonus matrix comprised of incrementally increasing amounts of earnings per share which, if attained, make available an incentive pool for bonus payments. At the end of 1999, the Company's goal was to increase net income and earnings per share by 15% over 1998. The matrix was established by the Committee to reflect a bonus pool which increased if incrementally higher net income or earnings per share resulted in 1999 as compared to 1998. In 1999, the target bonus ranged from 35% to 65% 11 14 of base salary. However, if the Bancorp goals are not met, individual bonuses are reduced proportionately, with no bonuses paid unless earnings increase. The target net income and earnings per share were exceeded in 1999. Annual performance goals are also established for each Executive Officer, including personal and departmental goals. The nature of these goals differs depending upon each officer's job responsibilities. Goals are both quantitative in nature, such as sales and revenue goals and cost containment; and qualitative in nature, such as the development and retention of key personnel, assessment and development of quality products and services, and management effectiveness. At the end of each year, the extent to which the profit plan goals are actually attained is measured. If all goals are completely met, the executive officer receives a target bonus amount. To the extent goals are partially met, then only that portion as expressed in the bonus matrix is paid out. Although specific relative weights are not assigned to each performance factor, a greater emphasis is placed on increasing net income. THE FIFTH THIRD BANCORP VARIABLE COMPENSATION PLAN In 1998 the Committee and the Company's shareholders approved and adopted the Fifth Third Bancorp Variable Compensation Plan ("Variable Compensation Plan"). For 1999, the Committee designated the participants in the Variable Compensation Plan as the President and CEO and all officers who were designated as an Executive Vice President of the Company as of January 1, 1999. The Committee also designated Performance Goals (as defined in the Variable Compensation Plan) for 1999 in the form of a matrix comprised of incrementally increasing amounts of earnings per share and net income and were based on the higher of these two measurements as defined in the matrix as approved by the Committee. If the Performance Goals as established in that matrix were not met, individual payments were reduced proportionately with no payments made pursuant to the Variable Compensation Plan unless net income or earnings per share increase. The Committee reviewed the performance of the Company and compared it to the Performance Goals for the 1999 Plan Year. Based on the Company's performance, the Committee certified that the Performance Goals were exceeded for 1999. STOCK OPTION GRANTS Options to purchase Common Stock are granted annually to Executive Officers. In years prior to 1998 these grants were made under the Company's Amended 1990 Stock Option Plan. At the Shareholders Meeting held on March 17, 1998, the Company's 1998 Long-Term Incentive Stock Option Plan was approved by the required number of votes. The stock option grants to Executive Officers in 1999 were made under the 1998 Long-Term Incentive Stock Plan. Grants are made to Executive Officers at an option price of 100% of the market value on the date of grant. The Company's philosophy in granting stock options is to increase Executive Officer ownership in the Company and not to serve as a vehicle for additional compensation. Executive Officers are incented to manage with a view toward maximizing long-term shareholder value. In determining the total number of options to be granted annually to all recipients, including the Executive Officers, the Committee considers the number of options already held by the Executive Officer, dilution, number of shares of Common Stock outstanding and the performance of the Company during the immediately preceding year. This year's grant totaled 4,292,660, or 1.39% of shares outstanding. The Committee sets guidelines for the number of shares available for the granting of stock options to each Executive Officer based on the total number of options available, an evaluation of competitive data for similar grants and the executive officer salary and position. These stock option grants provide incentive for the creation of shareholder value since the full benefit of the grant to each Executive Officer can only be realized with an appreciation in the price of the Company's common shares. 12 15 CHIEF EXECUTIVE OFFICER'S COMPENSATION AND STOCK OPTION GRANTS The Committee considered the following factors in determining the base salary for 1999 for George A. Schaefer, Jr., President and Chief Executive Officer of the Company: the Company's success in attaining its profit plan for 1998 as discussed below and the level of compensation paid to the highest paid executive at the companies selected for peer comparison. Based on these factors, the Committee established Mr. Schaefer's base salary effective November 27, 1998 at $950,000, which is a 5.6% increase from his 1998 salary level of $900,000. This placed Mr. Schaefer's compensation near the middle of base salaries paid by those companies selected for peer comparison. For 1999, Mr. Schaefer was eligible to earn a cash bonus ranging up to 120% of his base salary based on Performance Goals as designated under the Variable Compensation Plan. The Company's Performance Goals were established at a 15% increase over the 1998 operating net income or operating earnings per share. For 1999, the Company operating net income increased by 16.6% over 1998 and operating earnings per share increased by 14.8% over 1998. Based on these factors, the Committee certified that the Company had exceeded its Performance Goals and determined that Mr. Schaefer earned a bonus of $1,140,000, which represented 120% of his base salary for fiscal year 1999. On March 11, 1999, Mr. Schaefer was granted an option to purchase 250,000 shares of Common Stock of the Company. That grant was made in accordance with the guidelines of the Committee referenced above, including specifically the Company's increase in its year-to-date earnings for the 1999 fiscal year and the 1999 Comparative Data. Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation over $1,000,000 paid for any fiscal year to the corporation's chief executive officer and four other most highly compensated executive officers. The Company designed the 1998 Long-Term Incentive Stock Plan and the Variable Compensation Plan to meet the criteria for deductibility under Section 162(m). Accordingly, the Committee believes that all compensation for 1999 paid to Mr. Schaefer and to the other named executive officers is properly deductible under the Code. Any non-deductible amounts that have been paid, or may be paid in the future, under those plans are not expected to be significant. Joseph H. Head, Jr. Allen M. Hill James E. Rogers COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION In 1999 the Compensation and Stock Option Committee members were Joseph H. Head, Jr., Allen M. Hill and James E. Rogers. CERTAIN TRANSACTIONS Fifth Third Bancorp has engaged and intends to continue to engage in the lending of money through its subsidiary, Fifth Third Bank, to various of its Directors and corporations or other entities in which they may own a controlling interest. The loans to such persons (i) were made in the ordinary course of business, (ii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and (iii) did not involve more than a normal risk of collectibility or did not present other unfavorable features. During 1999 insurance premiums, amounting to $347,318, at competitive rates, for various coverages for the Company were paid to the John J. & Thomas R. Schiff & Company, Inc., of which Mr. Schiff was Chairman until he retired in December, 1996. Mr. Schiff maintains a greater than ten percent ownership interest in that insurance agency. On December 30, 1999, the Company purchased corporate owned life insurance from Cincinnati Life Insurance Company, a subsidiary of Cincinnati Financial Corporation, at competitive rates for such coverage. The total one-time premium paid during 1999 was approximately $302,868,723. 13 16 FINANCIAL PERFORMANCE TOTAL RETURN ANALYSIS The graphs below summarize the cumulative return experienced by the Company's stockholders over the years 1994 through 1999, and 1989 through 1999, respectively, compared to the S&P 500 Stock Index, the S&P Major Regional Banks and the NASDAQ Banks. FIFTH THIRD BANCORP VS. MARKET INDICES - -------------------------------------------------------------------------------- 5 YEAR RETURN
S&P MAJOR REGIONAL FIFTH THIRD BANKS S&P 500 NASDAQ BANKS ----------- ------------------ ------- ------------ '1994' 100.00 100.00 100.00 100.00 '1995' 156.00 152.00 134.00 145.00 '1996' 205.00 201.00 161.00 183.00 '1997' 406.00 295.00 211.00 299.00 '1998' 537.00 319.00 268.00 264.00 '1999' 560.00 267.00 320.00 243.00
10 YEAR RETURN
S&P MAJOR REGIONAL FIFTH THIRD BANKS S&P 500 NASDAQ BANKS ----------- ------------------ ------- ------------ '1989' 100 100 100 100 '1990' 92 71 97 65 '1991' 194 128 126 90 '1992' 236 163 136 136 '1993' 230 172 150 176 '1994' 219 163 152 178 '1995' 342 256 208 258 '1996' 448 350 256 326 '1997' 887 526 345 533 '1998' 1175 581 439 470 '1999' 1225 498 531 433
14 17 PROPOSAL TO AMEND ARTICLE FOURTH OF AMENDED ARTICLES OF INCORPORATION The Board of Directors recommends the amendment of Article Fourth of the Company's Amended Articles of Incorporation in the manner shown in Annex 2 hereto. The proposed Amendment to Article Fourth would change the number of authorized shares of the Company's Common Stock from five hundred million (500,000,000) shares to six hundred fifty million (650,000,000) shares. This change would be effective upon the date of filing of the Amendment to the Amended Articles with the Secretary of State of the State of Ohio. The Board of Directors believes that it is in the best interest of the Company and its Shareholders that the Company have a sufficient number of authorized but unissued shares available for possible use in future acquisition and expansion opportunities that may arise, for general corporate needs such as future stock dividends or stock splits, and for other proper purposes within the limitations of the law. The Company has no current plans to use its authorized but unissued shares of Common Stock without par value for any particular purpose. Such shares would be available for issuance without further action by the Shareholders, except as otherwise limited by applicable law. Among other requirements, Ohio law provides that in connection with a merger or consolidation, issuance of shares that constitute one-sixth or more of the Company's voting power in the election of directors would require further Shareholder approval. The current proposal does not constitute such approval, and the Company would seek special approval of any merger that would trigger this provision of Ohio law. If additional shares of Common Stock are issued by the Company, it may potentially have an anti-takeover effect by making it more difficult to obtain Shareholder approval of various actions, such as a merger or removal of management. Additionally, the issuance of additional shares of Common Stock may, among other things, have a dilutive effect on earnings per share and on the equity and voting power of existing Shareholders. The terms of any Common Stock issuance which will be determined by the Company's Board of Directors, will depend upon the reason for issuance and will be dependent largely on market conditions and other factors existing at the time. The increase in authorized shares of Common Stock has not been proposed in connection with any anti-takeover related purpose and the Board of Directors and management have no knowledge of any current efforts by anyone to obtain control of the Company or to effect large accumulations of the Company's Common Stock. The resolutions attached to this Proxy Statement as Annex 2 will be submitted for adoption at the Annual Meeting. The affirmative vote of the holders of shares of the Common Stock, without par value, of the Company entitling them to exercise two-thirds of the voting power of such shares is necessary to adopt the proposed amendment. Proxies will be voted in favor of the resolutions unless otherwise instructed by the Shareholder. Abstentions and shares not voted by brokers and other entities holding shares on behalf of the beneficial owners will have the same effect as votes cast against the Amendment. The Board of Directors recommends adoption of the resolutions. AUDITORS The Board of Directors proposes and recommends that the Shareholders approve the selection by the Board of the firm of Deloitte & Touche LLP to serve as independent auditors for the Company for the year 2000. The firm has served as independent auditors for Fifth Third Bank since 1970 and the Company since 1975. Representatives of Deloitte & Touche LLP will be present at the Shareholders' Meeting to make such comments as they desire and to respond to questions from Shareholders of the Company. Action by the Shareholders is not required by law in the appointment of independent auditors, but their appointment is submitted by the Board of Directors in order to give the Shareholders the final choice in the designation of auditors. If the resolution approving Deloitte & Touche LLP as the Company's independent auditors is rejected by the Shareholders then the Board of Directors will reconsider its choice of independent auditors. Proxies in the form solicited hereby which are returned to the Company will be voted in favor of the resolution unless otherwise instructed by the shareholders. Abstentions will have the same effect as votes cast against the resolution, provided such shares are properly present at the meeting in person or by proxy, and 15 18 shares not voted by brokers and other entities holding shares on behalf of beneficial owners will have no effect on the outcome. The Board of Directors recommends the adoption of the resolution. 2001 SHAREHOLDER PROPOSALS In order for Shareholder proposals for the 2001 Annual Meeting of Shareholders to be eligible for inclusion in the Company's Proxy Statement, they must be received by the Company at its principal office in Cincinnati, Ohio, prior to October 12, 2000. Any Shareholder who intends to propose any other matter to be acted upon at the 2001 Annual Meeting of Shareholders must inform the Company no later than December 26, 2000. If notice is not provided by that date, the persons named in the Company's proxy for the 2001 Annual Meeting will be allowed to exercise their discretionary authority to vote upon any such proposal without the matter having been discussed in the proxy statement for the 2001 Annual Meeting. OTHER BUSINESS The Board of Directors does not know of any other business to be presented to the Meeting and does not intend to bring other matters before the Meeting. However, if any other matters properly come before the Meeting, it is intended that the persons named in the accompanying Proxy will vote thereon according to their best judgment and interest of the Company. No Shareholder has informed the Company of any intention to propose any other matter to be acted upon at the Meeting. Accordingly, the persons named in the accompanying Proxy are allowed to exercise their discretionary authority to vote upon any such proposal without the matter having been discussed in this Proxy Statement. By order of the Board of Directors MICHAEL K. KEATING Secretary 16 19 ANNEX 1 FIFTH THIRD BANCORP AND SUBSIDIARIES AUDIT COMMITTEE OF THE BOARD OF DIRECTORS STATEMENT OF DUTIES AND RESPONSIBILITIES DUTIES The audit committee of the board of directors (the "audit committee") for Fifth Third Bancorp (the "Bancorp") and its subsidiaries assists the board of directors in providing oversight of Bancorp management's financial reporting and the internal and external audit functions. The audit committee also reviews the Bancorp's process of assessing the effectiveness of internal controls and their effect on financial reporting and the program that management has established to monitor compliance with policies and procedures. Within this broad scope, the audit committee reviews management's evaluation of factors related to independence of and engagement and interaction with the independent auditor. RESPONSIBILITIES Audit Committee Composition. The audit committee should consist of not fewer than three independent directors. No member should be a large customer as defined by the FDIC Improvement Act. At least two (2) members of the audit committee should have banking or related financial management expertise as defined by the FDIC Improvement Act. These factors should be evaluated annually. Meetings. The audit committee should meet on a regular basis and special meetings should be called as circumstances require. The audit committee should meet privately with the internal auditor and the independent auditor at least once during each year. Minutes and other relevant records of meetings and decisions should be maintained. External Auditor. The audit committee should recommend the appointment and/or discharge of the Bancorp's external auditor. The committee should also evaluate the external auditor's independence, along with the proposed terms of its engagement. Audit Plans. The audit committee should review the annual audit plans of the internal audit division and the independent public accountant, including the degree of coordination of the respective plans. The audit committee should inquire as to the extent to which the planned audit scope can be relied upon to detect material misstatements in the financial statements and other public disclosures, weaknesses in internal controls and fraud. Additionally, inquiry should be made regarding audit plans of electronic data processing and controls to ensure that such plans address the related impact on financial risk and internal controls. External Audit Results. The audit committee should review the annual financial statement audit results of the Bancorp. The committee should also review with management and the external auditor their assessment of the adequacy of internal controls and the resolution of identified material weaknesses and reportable conditions in internal controls, compliance with laws and regulations and other audit reports deemed significant by the committee. Communication. It is the external auditor's responsibility, as required by generally accepted auditing standards, to make certain communications to the audit committee on an annual basis. Such matters include the external auditor's responsibility under generally accepted auditing standards, changes in significant accounting principles, significant audit adjustments, any disagreements with management, difficulties encountered during the audit, consequential illegal acts or irregularities, major issues discussed with management prior to retention of the external auditors as auditors of the Bancorp, or instances of management consultation with other accountants regarding significant accounting or auditing matters. Internal Audit. The audit committee should review the report of internal audit division activities including the opinion of the internal audit director regarding the adequacy of the internal control structure. 17 20 The audit committee should also review the appointment and replacement of the senior internal auditing executive. New Accounting Pronouncements. Changes in accounting standards that have a material effect on the financial statements and new or changing regulations which will effect compliance issues or the approach taken towards evaluating the internal control structure should be explained to the audit committee by financial management or the external auditor. Legal Counsel. The audit committee should meet regularly with the Bancorp's general counsel, and outside counsel when appropriate, to discuss legal matters that have a significant impact on the company's financial statements. An assessment of legal liability should be reviewed including establishment of any appropriate reserves until the matter is adjudicated. The audit committee may retain counsel at its discretion without prior permission of the institution's board of directors or its management at the expense of the Bancorp. Areas Requiring Special Attention. The audit committee may request detailed reports from management, the external auditor, or the internal auditor related to significant matters affecting the financial reporting process, internal controls, or other areas of special interest. 18 21 New or amended language is indicated by underlining ANNEX 2 PROPOSED AMENDMENT TO ARTICLE FOURTH OF AMENDED ARTICLES OF INCORPORATION RESOLVED, That Paragraphs (A) and (A)(1) of Article Fourth of the Amended Articles of Incorporation of Fifth Third Bancorp be, and they hereby are, amended in their entirety to read as follows: "FOURTH: (A) The total authorized number of shares of the corporation is Six Hundred Fifty Million Five Hundred Thousand (650,500,000) shares, which shall be classified as follows: (1) Six Hundred Fifty Million (650,000,000) shares of common stock without par value. Each share of the common stock shall entitle the holder thereof to one (1) vote on each matter properly submitted to the shareholders for their vote, consent, waiver, release, or other action, subject to the provisions of the law with respect to cumulative voting. RESOLVED, FURTHER, That the proper officers of the Company be and hereby are authorized and directed to take all actions, execute all instruments, and make all payments which are necessary or desirable, in their discretion, to make effective the foregoing amendment to the Amended Articles of Incorporation of the Company, including, without limitation, filing a certificate of such amendment with the Secretary of State of Ohio. 19 22 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. [Logo] PROXY The undersigned hereby appoints Joseph H. Head, Jr., James D. Kiggen and Dennis J. Sullivan and each of them, with FULL power of substitution, as proxies to Fifth Third Bancorp vote, as designated below, FOR and in the name of the 38 FOUNTAIN SQUARE PLAZA undersigned all shares of stock of FIFTH THIRD BANCORP Cincinnati, OH 45263 which the undersigned is entitled to vote at the Annual Meeting of the Stockholders of said COMPANY scheduled to be held March 21, 2000 at the offices of said Company, William S. Rowe Building, Cincinnati, Ohio, or at any adjournment thereof. THE BOARD OF DIRECTORS RECOMMENDS A FOR VOTE ON THE ELECTION OF DIRECTORS AND ON THE PROPOSALS. PLEASE MARK AN X IN ONE BOX UNDER EACH ITEM.
1. ELECTION of eight (8) Class II Directors [ ] FOR all nominees listed below. [ ] WITHHOLD AUTHORITY to vote for all nominees listed below. CLASS II-John F. Barrett, Richard T. Farmer, Robert B. Morgan, Brian H. Rowe, George A. Schaefer, Jr., John J. Schiff, Jr., Donald B. Shackelford, Dudley S. Taft INSTRUCTION: To withhold authority to vote for any individual nominee, write the nominees name in the space below. - ----------------------------------------------------------------------------------------------------------------------------------- 2. PROPOSAL to amend Article Fourth of the Amended Articles of Incorporation to increase the authorized number of shares of Common Stock, without par value, from 500,000,000 shares to 650,000,000 shares. [ ] FOR [ ] AGAINST [ ] ABSTAIN 3. PROPOSAL to approve an appointment of DELOITTE & TOUCHE LLP as independent auditors of the Company. [ ] FOR [ ] AGAINST [ ] ABSTAIN
23 [Logo] FIFTH THIRD BANCORP C/O CORPORATE TRUST SERVICES MAIL DROP 10AT66-3212 38 FOUNTAIN SQUARE PLAZA CINCINNATI, OH 45263 fold and detach here - -------------------------------------------------------------------------------- In their discretion, the PROXIES are authorized to vote upon such other business as may properly come before the meeting. This PROXY when executed will be voted in the manner directed hereby the undersigned STOCKHOLDER(S). If no direction is made, this PROXY will be voted FOR Proposals 1, 2 and 3. ALL FORMER PROXIES ARE HEREBY REVOKED. DATED:_____________________, 2000 _________________________________ (Signature of Stockholder) _________________________________ (Signature of Stockholder) (Please sign exactly as your name or names appear opposite. All joint owners should sign. When signing in a fiduciary capacity or as a corporate officer, please give your full title as such.) -----END PRIVACY-ENHANCED MESSAGE-----