NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Stock Appreciation Rights (SARs)  Restricted Stock Awards (RSAs)  Fifth Third Bancorp  113 The Bancorp uses assumptions, which are evaluated and  revised as necessary, in estimating the grant-date fair value of each  SAR grant. The weighted-average assumptions were as follows for  the years ended: contractual life of the option is based on the U.S. Treasury yield  curve in effect at the time of grant. Stock-based compensation expense was $64 million, $51  million and $56 million for the years ended December 31, 2010,  2009 and 2008, respectively, and is included as compensation  expense in the Consolidated Statements of Income. The total  related income tax benefit recognized was $18 million, $18 million  and $20 million for the years ended December 31, 2010, 2009 and  2008, respectively. The expected option life is derived from historical exercise  patterns and represents the amount of time that options granted  are expected to be outstanding. The expected volatility is based on  a combination of historical and implied volatilities of the  Bancorp’s common stock. The expected dividend yield is based  on annual dividends divided by the Bancorp’s stock price. Annual  dividends are based on projected dividends, estimated using a  historical long-term dividend payout ratio, over the estimated life  of the awards. The risk-free interest rate for periods within the  The weighted-average grant-date fair value of SARs granted was  $5.10, $2.41 and $2.09 per share for the years ended 2010, 2009  and 2008, respectively. The total grant-date fair value of SARs that  vested during 2010, 2009 and 2008 was $25 million, $26 million  and $61 million, respectively. At December 31, 2010, there was $37 million of stock-based  compensation expense related to nonvested SARs not yet  recognized. The expense is expected to be recognized over a  remaining weighted-average period of approximately 2.7 years.  The following table summarizes outstanding and exercisable SARs by grant price at December 31, 2010: The total grant-date fair value of RSAs that vested during 2010,  2009 and 2008 was $30 million, $36 million and $24 million,  respectively. At December 31, 2010, there was $50 million of  stock-based compensation expense related to nonvested restricted  stock not yet recognized. The expense is expected to be  recognized over a remaining weighted-average period of approximately 2.4 years. 2010  2009 2008 RSAs (shares in thousands)  Shares  Weighted-  Average  Grant-Date  Fair Value Shares  Weighted- Average  Grant-Date  Fair Value Shares  Weighted- Average  Grant-Date  Fair Value Nonvested at January 1  4,645 $23.85 5,584 $29.04 3,519 $40.80 Granted 1,677 14.69 751 4.72 3,157 19.27 Vested  (817) 36.96 (870) 40.84 (486) 48.62 Forfeited  (347) 22.39 (820) 23.86 (606) 30.72 Nonvested at December 31  5,158 $18.89  4,645 $23.85  5,584 $29.04  Outstanding SARs  Exercisable SARs  Grant Price Per Share  Number of  SARs at  Year End  (000’s)  Weighted- Average Grant Price  Weighted- Average  Remaining  Contractual  Life (in years)  Number of  SARs at  Year End  (000’s)  Weighted- Average Grant Price  Weighted- Average  Remaining  Contractual  Life (in years)  Under $10.00  7,136 $4.03 8.3 1,300 $3.96 8.3 $10.01-$20.00 10,412 17.04 8.3 2,718 19.21 7.3 $20.01-$30.00 59 23.38 7.2 23 23.68 7.1 $30.01-$40.00 8,580 38.74 5.4 7,569 38.80 5.3 Over $40.00  4,965 46.07 3.7 4,737 46.35 3.5 All SARs  31,152 $24.67 6.8 16,347 $34.94 5.4 2010  2009 2008 SARs (shares in thousands)  Shares  Weighted- Average  Grant Price  Shares  Weighted- Average  Grant Price  Shares  Weighted- Average  Grant Price  Outstanding at January 1  28,571 $26.82 22,508 $35.43 17,526 $41.81 Granted 5,310 14.74 8,398 4.05 6,836 19.25 Exercised  (319) 3.96 - - - - Forfeited or expired  (2,410) 30.87 (2,335) 27.93 (1,854) 36.03 Outstanding at December 31  31,152 $24.67 28,571 $26.82 22,508  $35.43 Exercisable at December 31  16,347 $34.94 12,254 $40.38 8,352 $44.46 2010  2009 2008 Expected life (in years)  6  6 6 Expected volatility 38%  73% 30% Expected dividend yield  2.0%  1.3% 8.7% Risk-free interest rate  3.1%  2.2% 3.3%