BB&T (BBT)

Components of Executive Compensation

After reviewing the information provided by the consultant from the most recent comprehensive review and consulting with the Chief Executive Officer and other members of Executive Management, the Compensation Committee elected to retain the basic compensation structure from 2007 for 2008, including the mix of short-term and long-term compensation for the Chief Executive Officer and each of the other NEOs. Historically, the Compensation Committee has left intact the basic compensation structure in the “off-year” of the comprehensive review cycle.

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Table of Contents

Annual Base Salary

BB&T historically has positioned the NEO salaries at the median of the Peer Group. BB&T believes that the majority of a NEO’s compensation should be variable, based on the performance of BB&T. Accordingly, base salary plays a modest role in the overall total compensation of the NEOs. Salaries for the NEOs are reviewed on an annual basis, as well as at the time of a promotion or other change in responsibilities. Increases in salary are based on prevailing changes in market rates for equivalent executive positions in similarly situated companies, as well as a subjective evaluation of such factors as the individual’s level of responsibility, tenure with BB&T and overall contribution to BB&T.

In its review of base salaries for 2008, the Compensation Committee considered the positioning of BB&T’s salaries for the NEOs as compared to similarly situated executives relative to the market as validated by the compensation consultant’s 2006 comprehensive review, the tenure and performance of the NEOs and the recommendations of the Chief Executive Officer on salary increases for the other NEOs. Based on that review, for 2008, the Compensation Committee approved base salaries increases of 3.5% for each of the NEOs other than the Chief Executive Officer. After discussing the matter with the Chief Executive Officer, the Compensation Committee decided to increase Mr. Allison’s base salary for 2008 by 2.6%. This decision was largely driven by Mr. Allison’s request that his base salary not exceed $1 million, because under tax rules at the time, BB&T would have lost the corporate tax deduction on the amount of his salary that exceeded $1 million.

Components of Executive Compensation

Annual Base Salary

BB&T historically has positioned NEO salaries at the median against the Peer Group. BB&T believes that the vast majority of a NEO’s compensation should be variable, and at risk based on the performance of BB&T. Accordingly, base salary plays a modest role in the overall total compensation of the NEOs. Salaries for NEOs are reviewed on an annual basis, as well as at the time of a promotion or other change in responsibilities. Increases in salary are based on prevailing changes in market rates for equivalent executive positions in similarly-situated companies, as well as a subjective evaluation of such factors as the individual’s level of responsibility and overall contribution to BB&T.

In its review of base salaries for 2007, the Compensation Committee considered the positioning of BB&T’s salaries for its NEOs as compared to similarly-situated executives relative to the market as validated by the compensation consultant, the tenure and performance of the NEOs and the recommendations of the Chief Executive Officer on salary increases for the other NEOs. Based on that review, the Compensation Committee increased by an average of 5.4% the base salaries of the Chief Executive Officer and the other NEOs, except for Mr. Henson. The Compensation Committee determined that the total compensation paid in 2006 to Mr. Henson placed him in the bottom quartile of the Peer Group for principal financial officers. Based upon Mr. Henson’s level of responsibility, the low compensation payable to Mr. Henson relative to similarly-situated executives in the Peer Group, the fact that Mr. Henson did not receive a base salary increase when he was promoted to Chief Financial Officer in July of 2005 and the recommendations of the Chief Executive Officer, the Compensation Committee increased Mr. Henson’s base salary for 2007 by 56.7%. Because many of the other elements of the BB&T compensation program are targeted based on the applicable executive’s base salary, Mr. Henson’s 2007 base salary increase resulted in increases to the other elements of his 2007 compensation package relative to 2006.

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Components of Executive Compensation

Total Compensation. For 2006, the actual total compensation of the NEOs generally fell between the 25^th and 50^th percentile of total compensation paid to executives holding equivalent titles in each of the Peer Group companies. BB&T believes total compensation is consistent with (but somewhat below) BB&T’s actual financial performance in 2006 and its performance over the three-year period (2004-2006). Target compensation for 2006 was substantially unchanged from 2005 levels.

Annual Base Salary. BB&T historically has positioned NEO salaries at the median against the Peer Group. BB&T believes that the vast majority of a NEO’s compensation should be variable, and at risk based on the performance of BB&T, and thus base salary should play a modest role in the overall total compensation of the NEOs. Salaries for NEOs are reviewed on an annual basis, as well as at the time of a promotion or other change in responsibilities. Increases in salary are based on prevailing changes in market rates for equivalent executive positions in similarly-situated companies, as well as a subjective evaluation of such factors as the individual’s level of responsibility, performance and overall contribution to BB&T. For 2006, the Compensation Committee, after considering the positioning of BB&T’s salaries for its NEOs as compared to similarly-situated executives relative to the market as validated by the compensation consultant, the tenure and performance of the NEOs and the recommendations of the Chief Executive Officer on salary increases for the other NEOs, increased by 4% the base salaries of the Chief Executive Officer and the other NEOs as follows:

Components of Executive Compensation

Annual Base Salary. For 2005, the Compensation Committee, after considering BB&T’s corporate goals and objectives and the compensation review conducted by the outside compensation consultant, did not adjust the base salary of the Chief Executive Officer. The base salaries of the other members of Executive Management were adjusted based on the recommendations of the outside compensation consultant.

Annual Executive Incentive Plan. In 1996 and on recommendation of the Board of Directors, BB&T’s shareholders approved the terms of the BB&T Corporation Short-Term Incentive Plan (“Bonus Plan”), covering Executive Management and other key employees selected by the Compensation Committee, which plan was approved by the shareholders in 2001 and is presented for re-approval in 2006. The Compensation Committee determined that it was appropriate to establish performance targets within the parameters of the Bonus Plan for 2005. The Bonus Plan provides cash awards to participants based on the achievement of performance goals established by the Compensation Committee. Awards are based on corporate performance, business unit/function performance, individual performance or any combination of these criteria. Corporate performance is determined based on such factors as stock price, market share, sales, earnings per share, return on equity, return on average assets and/or expense management. Business unit/function performance is determined primarily based on financial goals, non-financial goals, growth and/or market share. Individual performance is determined primarily based on selected business criteria such as process improvement, sales, loan growth, deposit growth and/or expense management. The size of each participant’s cash award is determined by establishing target incentive award expressed as a percentage of the participant’s base salary, up to a maximum amount established by the Compensation Committee.

For 2005, the Compensation Committee provided that the target incentive award would be established for the Chief Executive Officer and Chief Operating Officer at 100% of base salary, and for other members of Executive Management depending on position at 90% or 75% of base salary. The performance criteria applicable to the Chief Executive Officer and the other members of Executive Management for purposes of the Bonus Plan are determined based solely on corporate performance. For the Chief Executive Officer and the other members of Executive Management, the Compensation Committee established corporate performance goals for 2005 based on cash basis earnings per share (weighted at 80%) and cash basis return on assets (weighted at 20%). In 2005, BB&T achieved approximately 87% of the cash basis earnings per share target, and achieved over 200% of the cash basis return on assets target. Accordingly, members of Executive Management were eligible for and will receive bonus payments for 2005 in the aggregate amount of $3,735,858, with the Chief Executive Officer and the four next highest paid executive officers receiving the following individual Bonus Plan awards: Mr. Allison—$981,000; Mr. King—$626,750; Mr. Chalk—$408,341; Mr. Greene—$321,891; and Mr. Wilson—$311, 672.

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Stock Incentive Plans. In 2004, the Board of Directors unanimously approved the adoption of a new equity incentive plan, the 2004 Stock Incentive Plan (the “2004 Stock Plan”), which was approved by shareholders at the 2004 Annual Meeting of shareholders. Benefits may be granted under the 2004 Stock Plan to selected participants, including members of Executive Management, as determined by the Compensation Committee and Board of Directors. Awards that may be granted under the 2004 Stock Plan include incentive stock options and non-qualified stock options; SARs in the form of related SARs and freestanding SARs; awards in the form of restricted stock awards and restricted stock units; awards in the form of performance shares and performance units; and phantom stock awards.

Prior to adoption of the 2004 Stock Plan, BB&T’s principal equity compensation plan had been the 1995 Omnibus Stock Incentive Plan (the “1995 Stock Plan”). Based on the limited availability of option shares of BB&T Common Stock reserved and remaining for issuance under the 1995 Stock Plan, stock option awards for 2005 were made to eligible participants, including members of Executive Management, from both the 1995 Stock Plan and the 2004 Stock Plan. No future awards will be made under the 1995 Stock Plan.

In 2005 and after considering the compensation review conducted by the outside compensation consultant, the Compensation Committee determined that option grants would be based on competitive market factors and that the Black-Scholes methodology for computing the value of options would be utilized. The Compensation Committee also determined that the number of shares subject to a grant generally would be calculated as a percentage of the participant’s salary as projected at the time of the grant. Following this methodology, the Compensation Committee approved the award of options for 8,828,549 shares to 5,837 employees of BB&T. In 2005, the awards to the BB&T Named Executives represented approximately 10% of the total awards made and were as follows; Mr. Allison—options for 228,260 shares; Mr. King—options for 125,000 shares; Mr. Chalk—options for 75,407 shares; Mr. Greene—options for 57,065 shares; and Mr. Wilson—options for 55,253 shares. No SARs, performance shares or restricted stock awards were granted in 2005.

Three-Year Long-Term Incentive Plan. In 1996, BB&T established a long-term performance unit incentive plan (“LTIP”) for members of Executive Management only, which operates as a component of the 1995 Stock Plan and the 2004 Stock Plan. Performance units are performance-based awards payable, in the Compensation Committee’s discretion, in shares of BB&T Common Stock, cash or a combination of both. The Compensation Committee establishes for each performance unit (i) a performance target and (ii) an applicable percentage (which cannot be less than zero, but which can exceed 100% of the value of the performance unit to be paid to the participant based upon the degree to which the performance target is met). A performance target is a profitability target that serves as the basis for valuing a performance unit. A performance target is based on certain performance criteria determined by the Compensation Committee and is earned based on the performance unit value during each valuation period (generally, the calendar year following the date of the award). The Compensation Committee establishes the number of valuation periods applicable to a performance unit, which number may not be less than three. The value of a performance unit equals the applicable percentage, as set by the Compensation Committee, times the fair market value of Common Stock on the date of grant, plus such other nominal value as may be set by the Compensation Committee. In 2003, the 2003-2005 performance unit LTIP was established by the Compensation Committee and provided that the performance criteria would be cash basis return on equity for the three-year period, with a target goal of 20.05%. For this three-year period, the Corporation attained a cash basis return on equity of 24.88%, which entitled the participants in 2005 to receive an award of 200% of their target payout. The 2003-2005 LTIP awards payable in 2005 to the BB&T Named Executives were as follows: Mr. Allison—$2,149,728; Mr. King—$861,028; Mr. Chalk—$589,156; Mr. Greene—$451,826; and Mr. Wilson—$405,092. In 2005, the Compensation Committee established the 2005-2007 performance unit LTIP and provided that the performance criteria would be cash basis return on equity. The Compensation Committee approved a target payout for Mr. Allison of 105% of average base salary, for Mr. King of 90% of average base salary, for Mr. Chalk of 75% of average base salary, and for Messrs. Greene and Wilson of 60% of average base salary. The Compensation Committee established a cash basis return on equity target goal, based on the average of the Peer Group, of 20.29% for the three-year period of the LTIP, with a maximum goal of 26.56%.

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Perquisites Practices. Perquisites for members of Executive Management are limited to (i) the installation and maintenance (approximately $924 per year) of a residential security system, at the Corporation’s expense, for the protection of the members of Executive Management, and (ii) cash benefit adjustments pursuant to an election to opt out of BB&T group life insurance coverage for several members of Executive Management in 2005 as follows: Mr. Allison—$5,052; Mr. King—$2,298; and Mr. Chalk—$1,709.

Other Employee Benefit Plans. During 2005, the Corporation maintained various employee benefit plans that constitute a portion of the total compensation package available to Executive Management and all eligible employees of BB&T. These plans consisted of a 401(k) Savings Plan (which permits employees to contribute up to 25% of their compensation with the Corporation matching up to 6% of their contribution); a retirement plan covering substantially all employees of the Corporation, including Executive Management; a health care plan that provides medical and dental coverage for all eligible employees; and certain non-qualified deferred compensation plans. See “Retirement Plans” above. The Compensation Committee concluded that these plans are consistent with plans provided by peer bank holding companies and industry standards and that no material modification of such plans was necessary in 2005. In addition, the Compensation Committee determines the base salary and incentive compensation for the Chief Executive Officer and other members of Executive Management within the context of these other employee benefit plans that are part of the total compensation packages.

Components of Executive Compensation

Annual Base Salary. For 2004, the Compensation Committee, after considering a number of factors, including the recommendation of the Chief Executive Officer, did not adjust the base salary of the Chief Executive Officer or any member of Executive Management (as set on April 1, 2003, other than adjustments for certain members of Executive Management added in 2003 and 2004) because the Corporation did not reach all of its 2003 Profit Plan earnings objectives.

Annual Executive Incentive Plan. In 1995, BB&T established the BB&T Corporation Short-Term Incentive Plan (“Bonus Plan”), covering Executive Management and other senior officers selected by the Compensation Committee, which plan was approved by the shareholders in 1996 and again in 2001. The Compensation Committee determined that it was appropriate to establish performance targets within the parameters of the Bonus Plan for 2004. The Bonus Plan provides cash awards to participants based on the achievement of performance goals established by the Compensation Committee. Awards are based on corporate performance, business unit/function performance, individual performance or any combination of these criteria. Corporate performance is determined primarily based on the attainment of earnings per share goals and return on asset goals. Business unit/function performance is determined primarily based on the attainment of financial or non-financial goals, growth and market share. Individual performance is determined primarily based on the attainment of selected business criteria such as process improvement, sales, loan growth, deposit growth and expense management. The size of the cash awards is determined by establishing target incentive awards expressed as a percentage of base salary, up to a maximum amount established by the Compensation Committee.

For 2004, the Compensation Committee provided that the target incentive award would be established for the Chief Executive Officer, Chief Operating Officer and President at 100% of base salary, and for other members of Executive Management depending on position at 90% or 75% of base salary. The performance criteria applicable to the Chief Executive Officer and the rest of Executive Management for purposes of the Bonus Plan are determined based solely on corporate performance. For the Chief Executive Officer and the rest of Executive Management, the Compensation Committee established corporate performance goals for 2004 based on cash basis earnings per share (weighted at 80%) and return on assets (weighted at 20%), with specific goals established by budgeted earnings, industry standards and other similar factors. In 2004, BB&T achieved approximately 77% of the cash basis earnings per share target (weighted at 80%), and achieved over 200% of the return on assets target (weighted at 20%). As a result, members of Executive Management were eligible for bonus payments for 2004. In accordance with the Compensation Committee’s authority under the Bonus Plan, Bonus Plan payments were paid to the Chief Executive Officer and other members of Executive Management for 2004 based on the respective percentages outlined above.

Stock Incentive Plans. Since 1995, the Corporation’s principal equity compensation plan has been the 1995 Omnibus Stock Incentive Plan (the “1995 Stock Plan”). The Compensation Committee selects individuals who will participate in the 1995 Stock Plan and, from time to time, may grant stock options, stock appreciation rights (‘‘SARs’’), restricted stock awards, performance units and performance shares to selected participants. Stock options granted under the 1995 Stock Plan may be incentive stock options or non-qualified stock options. In October 2002, the Committee determined that future grants would consist entirely of non-qualified stock options. In 2004, awards were granted under the 1995 Stock Plan. No awards may be granted under the 1995 Stock Plan after April 9, 2005.

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In 2004, the Board of Directors unanimously approved the adoption of a new equity incentive plan, the 2004 Stock Incentive Plan (the “2004 Stock Plan”), which was approved by shareholders at the 2004 Annual Meeting of Shareholders. Benefits may be granted under the 2004 Stock Plan to selected participants as determined by the Board of Directors or the Compensation Committee. Awards that may be granted under the 2004 Stock Plan include incentive stock options and non-qualified stock options; SARs in the form of related SARs and freestanding SARs; restricted awards in the form of restricted stock awards and restricted stock units; performance awards in the form of performance shares and performance units; and phantom stock awards. No awards were granted under the 2004 Stock Plan in 2004.

In its most recent executive compensation review, the Compensation Committee determined that option grants will be based on competitive market factors and that the Black-Scholes methodology for computing the value of options will be utilized. The Compensation Committee also determined that the number of shares subject to a grant generally will be equal to a percentage of the employee’s salary as projected at the time of the grant. Following this methodology, in February 2004, the Compensation Committee approved the award of options for 6,445,502 shares to 5,523 employees of the Corporation. In 2004, the awards to the BB&T Named Executives represented approximately 10% of the total awards made and were as follows; Mr. Allison—options for 186,545 shares; Mr. King—options for 87,727 shares; Mr. Chalk—options for 62,045 shares; Mr. Reed—options for 62,045 shares; Mr. Greene—options for 47,727 shares; and Mr. Williamson—options for 139,909 shares. No SARs, performance shares or restricted stock awards were granted in 2004. The grant of performance units under the 1995 Stock Plan and the 2004 Stock Plan is discussed below under “Three-Year Long-Term Incentive Plan.”

Three-Year Long-Term Incentive Plan. In 1996, BB&T established a long-term performance unit incentive plan (“LTIP”), which operates as a component of the 1995 Stock Plan and the 2004 Stock Plan. Performance units are performance-based awards payable, in the Compensation Committee’s discretion, in shares of BB&T Common Stock, cash or a combination of both. The Compensation Committee establishes for each performance unit (i) a performance target and (ii) an applicable percentage (which cannot be less than zero, but which can exceed 100% of the value of the performance unit to be paid to the participant based upon the degree to which the performance target is met). A performance target is a profitability target that serves as the basis for valuing a performance unit. A performance target is based on certain performance criteria determined by the Compensation Committee and is earned based on the performance unit value during each valuation period (generally, the calendar year following the date of the award). The Compensation Committee establishes the number of valuation periods applicable to a performance unit, which number may not be less than three. The value of a performance unit equals the applicable percentage, as set by the Compensation Committee, times the fair market value of Common Stock on the date of grant, plus such other nominal value as may be set by the Compensation Committee. In 2002, the 2002-2004 performance unit LTIP was established by the Compensation Committee and provided that the performance criteria would be cash basis return on equity for the three-year period, with a target goal of 22.54%. For this three-year period, the Corporation attained a cash basis return on equity of 23.59%, which entitled the participants to receive an award of 158.33% of their target payout. In 2004, the LTIP awards to the BB&T Named Executives were as follows: Mr. Allison—$1,250,003; Mr. King—$555,461; Mr. Chalk—$341,597; Mr. Reed—$341,597; Mr. Greene—$333,285; and Mr. Williamson—$712,436. In 2004, the Compensation Committee established the 2004-2006 performance unit LTIP and provided that the performance criteria would be cash basis return on equity. The Compensation Committee approved a target payout for Mr. Allison of 120% of average base salary, for Mr. Williamson of 98% of average base salary, for Mr. King of 83% of average base salary, for Messrs. Chalk and Reed of 75% of average base salary, and for Mr. Greene of 60% of average base salary. The Compensation Committee established a cash basis return on equity target goal, based on the average of the Peer Group, of 20.26% for the three-year period of the LTIP, with a maximum goal of 23.10%.

Perquisites Practices. Perquisites for members of Executive Management are limited to (i) the installation and maintenance (approximately $924 per year) of a residential security system, at the Corporation’s expense, for the protection of the members of Executive Management, and (ii) cash benefit adjustments pursuant to an election to opt out of BB&T group life insurance coverage for several members of Executive Management in

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2004 as follows: Mr. Allison—$5,052; Mr. Williamson—$1,797; Mr. King—$2,298; Mr. Chalk—$1,709; and Mr. Reed—$1,680.

Other Employee Benefit Plans. During 2004, the Corporation maintained various employee benefit plans that constitute a portion of the total compensation package available to Executive Management and all eligible employees of BB&T. These plans consisted of a 401(k) Savings Plan (which permits employees to contribute up to 25% of their compensation with the Corporation matching up to 6% of their contribution); a retirement plan covering substantially all employees of the Corporation, including Executive Management; a health care plan that provides medical and dental coverage for all eligible employees; and certain non-qualified deferred compensation plans. See “Retirement Plans” above. The Compensation Committee concluded that these plans are consistent with plans provided by peer bank holding companies and industry standards and that no material modification of such plans was necessary in 2004. In addition, the Compensation Committee determines the base salary and incentive compensation for the Chief Executive Officer and other members of Executive Management within the context of these other employee benefit plans that are part of the total compensation packages.