Fifth Third Bancorp gave president and chief executive officer George A. Schaefer Jr. a 16% pay increase last year — in the form of a higher cash salary and a bonus — and also awarded its other top executives with salary increases based on their performance.

But Mr. Schaefer and the others got much smaller stock options than they did a year earlier. Mr. Schaefer received options representing 300,000 shares, with an estimated potential value of at least $7.5 million. In 1999 he received options representing 375,000 shares with a potential value of at least $11 million. Each set of options will expire 10 years after they were awarded.

Options have become increasingly popular as boards try to link corporate performance to executive pay, and some executive recruiters said they expect banking companies to continue to lavish options on executives who meet their goals. But market volatility may be dampening some of the enthusiasm for taking options in lieu of cash compensation.

“We are all watching to see whether that’s the case,” said Rhonda Edelman, a compensation consultant with Pearl Meyer & Partners. “But if you’re paying someone 300,000 shares, that’s still saying it’s a major part of your compensation.”

Robbie Jennings, a spokeswoman for Fifth Third, said the increases in cash compensation and annual bonus were meant to be the rewards for the company’s performance. “Because Fifth Third has now posted its 27th consecutive year of record increased earnings, the board felt it was merited,”.

Its three-for-two stock split in July also increased the number of shares that a shareholder can have, she said.

Mr. Schaefer started at the company in 1971 as a management trainee. He also worked in the data processing department and commercial lending unit before ascending to the top post in 1990.

Henry “Chip” Dickson, an analyst at Lehman Brothers, said the pay raises are linked to Fifth Third’s success. “It is hard to criticize the company’s performance,” he said. “This year there should be more than 15% earnings growth. They have been one of the strongest performers. I think that is going to continue.”

Mr. Schaefer’s salary last year rose 2.5% from a year earlier, to $976,732, according to a proxy statement the company filed with the Securities and Exchange Commission.

The 55-year-old CEO also took home a $1.4 million bonus, 27.2% more than the bonus he got in 1999. Fifth Third also granted him options of 300,000 common shares priced at $40.16, according to the proxy.

The pay increases and stock incentives did not end with Mr. Schaefer.

Ms. Jennings said that five executive vice presidents also were given performance-based pay increases last year ranging from $275,000 to $380,000, but they each received options for only 97,000 shares, with a potential value of at least $2.4 million, compared with 120,000 shares in 1999, with an estimated value of at least $3.7 million.

Stephen J. Schrantz’s base pay rose 4%, to $491,142, and his bonus increased 8.6%, to $380,000. Michael D. Baker’s salary increased 7%, to $403,468, and his bonus jumped 7.4%, to $290,000. Michael K. Keating’s salary also rose 7%, to $402,620, and his bonus went up 1.9%, to $275,000.

Robert J. King Jr.’s salary increased 6.3%, to $353,464, and he was given a $300,000 bonus, six times the bonus he received in 1999. Robert P. Neihaus’ base pay climbed 9.7%, to $315,972, and his $275,000 bonus was 22.2% more than the bonus he got the year before.

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