<PAGE> 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:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
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: ...........................................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
[FIFTH THIRD BANCORP LOGO]FIFTH THIRD BANCORP
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
<PAGE> 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 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:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT
TITLE OF CLASS BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
- -------------- ------------------- ----------------------- --------
<S> <C> <C> <C>
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
</TABLE>
<PAGE> 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
<PAGE> 5
CLASS II DIRECTORS
(TERMS EXPIRE 2000)
<TABLE>
<CAPTION>
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
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
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
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
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
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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, 67, Director of Xtek, Inc., manufacturer of 1982 89,811 .0291
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
</TABLE>
5
<PAGE> 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
<PAGE> 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
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------- ------------
SHARES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (1) COMPENSATION ($)(2)
- ------------------------------- ---- ---------- --------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
George A. Schaefer, Jr......... 1999
President and Chief Executive 1998
Officer 1997
Stephen J. Schrantz............ 1999
Executive Vice President 1998
1997
Michael D. Baker............... 1999
Executive Vice President 1998
1997
Michael K. Keating............. 1999
Executive Vice President 1998
1997
Robert J. King, Jr............. 1999
Executive Vice President 1998
1997
</TABLE>
- ---------------
(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
<TABLE>
<CAPTION>
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%($)
---------- ----------
<S> <C> <C> <C> <C> <C> <C>
George A. Schaefer, Jr....
Stephen J. Schrantz.......
Michael D. Baker..........
Michael K. Keating........
Robert J. King, Jr........
</TABLE>
- ---------------
(1) All such options were granted March 11, 1999 and first become exercisable as
to 25% of the shares covered after March 11, 1999, as to 50% after one year
of continued employment, as to 75% after two years of continued employment
and are exercisable in full after the end of three years of continued
employment. In the event the Company shall consolidate with, merge into, or
transfer all or substantially all of its assets to another corporation, then
all Options granted under this Plan shall become immediately exercisable.
The option exercise price is not adjustable over the 10-year term of the
options except due to stock splits and similar occurrences affecting all
outstanding stock.
8
<PAGE> 11
The following table sets forth certain information regarding individual
exercises of stock options during 1999 by each of the named executives.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
SHARES
ACQUIRED
ON VALUE NUMBER OF SHARES VALUE OF UNEXERCISED
EXERCISE REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME (#) ($) OPTIONS AT 12/31/99 AT 12/31/99
---- -------- ---------- --------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
(#) (#) ($) ($)
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
George A. Schaefer,
Jr.....................
Stephen J. Schrantz....
Michael D. Baker.......
Michael K. Keating.....
Robert J. King, Jr.....
</TABLE>
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.
<TABLE>
<CAPTION>
TITLE OF CLASS NAME OF OFFICER NUMBER OF SHARES(1) PERCENT OF CLASS
- -------------- --------------- ------------------- ----------------
<C> <S> <C> <C>
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
</TABLE>
- ---------------
(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 he inadvertently omitted his holdings
of beneficial ownership of shares for which he is a co-trustee for a family
trust on Form 3 and failed to timely report his acquisition of beneficial
ownership of shares held by him as co-executor of his father's estate 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
<PAGE> 12
Retirement Income Plan (the "Supplemental Plan") based upon combinations of
compensation levels and years of service:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
APPROXIMATE ANNUAL RETIREMENT BENEFIT UPON RETIREMENT AT AGE 65 BEFORE ADJUSTMENTS(1)(2)(3)
- ----------------------------------------------------------------------------------------------
REMUNERATION(4)(5) 15 20 25 30 35
- ----------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 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
</TABLE>
- ---------------
(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
<PAGE> 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
<PAGE> 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
<PAGE> 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 , which is a 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
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 , which
represented of his base salary for fiscal year 1999.
On March 11, 1999, Mr. Schaefer was granted an option to purchase
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
<PAGE> 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
<TABLE>
<CAPTION>
TOTAL RETURN INDEX
S&P MAJOR REGIONAL
FIFTH THIRD BANKS S&P 500 NASDAQ BANKS
----------- ------------------ ------- ------------
<S> <C> <C> <C> <C>
'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
</TABLE>
10 YEAR RETURN
<TABLE>
<CAPTION>
TOTAL RETURN INDEX
S&P MAJOR REGIONAL
FIFTH THIRD BANKS S&P 500 NASDAQ BANKS
----------- ------------------ ------- ------------
<S> <C> <C> <C> <C>
'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
</TABLE>
14
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 22
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
<TABLE>
<S> <C> <C>
[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.
<CAPTION>
1. ELECTION of --- (--) 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
</TABLE>
<PAGE> 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.)
