•   Comerica Incorporated      •   M&T Bank Corporation

      •   Commerce Bancorp, Inc.     •   The PNC Financial Services Group, Inc.

      •   Compass Bancshares, Inc.   •   UnionBanCal Corporation

      •   First Horizon National     •   Valley National Bancorp Corporation

      •   Fulton Financial Corp.     •   Webster Financial Corp.

      •   Huntington Bancshares      •   Zions Bancorporation Incorporated

      •   KeyCorp

As a result of the acquisition of Commerce Bancorp, Inc. and Compass Bancshares, Inc. by other companies, the Compensation Committee increased its peer group of financial services companies, effective for calendar year 2008, to 15 by adding Regions Financial Corporation, BB&T Corporation, Fifth Third Bancorp, and Marshall & Ilsley Corporation. The additions were selected after review and consideration of each financial service company's business scope and current market footprint.
Modifications to Performance Share Award Metrics The Compensation Committee approved modifications to certain performance metrics used to establish criteria upon which the vesting of certain long-term incentive grants awarded in 2008 to members of the Office of the Chief Executive Officer ("OCEO") will be accelerated from five-year cliff vesting to three-year cliff vesting if achieved.
In 2007, Sovereign used a return on risk-weighted assets metric for both determining the company performance objectives under its annual short-term incentive plans and establishing the criteria for the accelerated vesting of certain long-term incentive grants provided to members of the OCEO.

While Sovereign will continue to use return on risk-weighted assets as the sole metric for company performance objectives under its annual short-term incentive plans, for 2008 it will use both the return on risk-weighted assets and relative total shareholder return metrics for establishing the criteria for accelerated vesting of certain long-term incentive grants to members of the OCEO (creating dual thresholds). Members of the OCEO currently include Joseph Campanelli, Salvatore Rinaldi, and Kirk Walters. Under these long-term incentive grants, members of the OCEO received shares of restricted stock. These shares have a five-year cliff vesting schedule, which schedule may be reduced to three years if a threshold performance level is achieved in both the return on risk-weighted assets and relative total shareholder return metrics. The threshold performance level for such accelerated vesting in 2011 for long-term incentive grants to members of the OCEO made in 2008 is as follows:
1. Sovereign's total growth in return on risk-weighted assets for the three-year cycle (2008 through 2010) must be greater than the relative performance of at least 50% of the financial services companies in Sovereign's peer group; and

2. Sovereign's percentile rank of average relative total shareholder return for the three-cycle (2008 through 2010) must be in the top one-third (5 or higher out of 15) of its peer group.