plan. The Human Resources Committee administers the ESPP. Currently Fulton limits payroll deduction and annual employee participation in the ESPP to $7,500.

     Profit Sharing Plan – 401(k) Retirement Plan. Fulton maintains a qualified defined contribution plan (the “Profit Sharing Plan”). Through December 31, 2007 employer contributions were based on a formula providing for an amount not to exceed 15% of each eligible employee’s annual salary (10% for employees hired subsequent to January 1, 1996). All of the Executives participate in the Profit Sharing Plan. Prior to 2007, participants were 100% cliff vested after five years of eligible service. Because of changes in laws and regulations, the Profit Sharing Plan was amended, effective January 1, 2007, to provide for vesting of all participants on a graded vesting schedule resulting in 25% vesting after two years, 50% vesting after three years, 75% vesting after four years and 100% vested after five years of eligible service. In addition, the Profit Sharing Plan includes a 401(k) feature, which allows employees to defer a portion of their pre-tax salary on an annual basis, with no employer match. Employee contributions under this feature are 100% vested. The Profit Sharing Plan covers substantially all eligible employees of Fulton and its wholly owned subsidiaries, including the Executives, who are not covered under Fulton’s other defined benefit and 401(k) plans and who have either (1) completed one year of service and attained age 21; or (2) completed three years of service. The Profit Sharing Plan is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended. Participants direct the investment of their contributions into various investment options offered by the Profit Sharing Plan, including Fulton common stock.

     Effective January 1, 2008, the Profit Sharing Plan was re-named the Fulton Financial Corporation 401(k) Retirement Plan (the “401(k) Retirement Plan”) and was amended to provide for employer matching contributions that satisfy a non-discrimination “safe-harbor” available to 401(k) retirement plans. This safe-harbor employer matching contribution will be equal to 100% of each dollar a participant elects to contribute to the 401(k) Retirement Plan, but the amount of contributions that will be matched by Fulton will be limited to 5% of eligible plan compensation. In addition, certain employees are eligible for an employer profit sharing contribution under the 401(k) Retirement Plan, which for 2008 will be equal to 5% of compensation. Eligibility for this profit sharing contribution is limited to (1) employees hired prior to July 1, 2007, by a Fulton entity that was a 401(k) Retirement Plan employer as of June 30, 2007, and who were not excluded from participation under the 401(k) Retirement Plan prior to January 1, 2008, because of participation under another qualified retirement plan of their employer, and who further have attained age 21 and completed one year of service for eligibility purposes, and (2) employees who were active participants as of December 31, 2007, in the Fulton Financial Affiliates’ Defined Benefit Pension Plan, and who, as of such date, ceased accruing additional benefits because of the amendment to the Pension Plan freezing additional accruals.

     Deferred Compensation Agreements. Fulton’s nonqualified deferred compensation plans include (1) the Fulton Deferred Compensation Plan, under which directors and advisory board members can elect to defer receipt of fees and select management employees can elect to defer receipt of cash compensation, and (2) a series of essentially identical Supplemental Executive Retirement Plan Agreements entered into with a select group of senior managers, including the Executives, for the purpose of crediting them with full contributions each year equal to the contributions they would have otherwise been eligible to receive under the Fulton 401(k) Retirement Plan, except for Internal Revenue Code limits on the amount of compensation that can be taken into account under a tax-qualified retirement plan. Fulton’s contributions for 2007 are stated in footnote 6 in the “Summary Compensation Table” on page 27. Effective January 1, 2006, the deferred compensation plan accounts of each participant were held and invested under the newly-established Fulton Nonqualified Deferred Compensation Benefits Trust with Fulton Financial Advisors serving as the Trustee. The participants are permitted to direct individually the investment of the deferred amounts into various investment options under the Nonqualified Deferred Compensation Benefits Trust.

     Due to changes made effective January 1, 2008 to the underlying 401(k) Retirement Plan, it was necessary to make certain conforming changes to the design of the Deferred Compensation Plan and the Supplemental Executive Retirement Plan Agreements. The Deferred Compensation Plan was amended primarily for the purpose of enabling a participant to receive the employer matching contribution that would

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have been available under the 401(k) Retirement Plan but for the Internal Revenue Code limit on compensation that can be taken into account for the purposes of the employee matching contribution. The Supplemental Executive Retirement Plan Agreements have been amended primarily to reflect the change in profit sharing contribution levels in the 401(k) Retirement Plan.

     Defined Benefit Pension Plans. Fulton has not had an historical practice of using defined benefit pension plans to provide employees with retirement benefits, but some defined benefit plans have been acquired in different merger transactions over time and any such acquired plans that were continued for the plan participants were consolidated under the Fulton Financial Affiliates’ Defined Benefit Pension Plan (the “Affiliates’ Plan”). Contributions are determined actuarially and funded annually, and Affiliates’ Plan assets are invested in money markets, fixed income securities, including corporate bonds, U.S. Treasury securities and common trust funds, and equity securities, including common stocks and common stock mutual funds. Mr. Ashby is the only Executive who has participated in the Affiliates’ Plan, but he no longer accrues benefits in the Affiliates’ Plan. Mr. Ashby’s present value of accumulated benefit is reflected in the “Pension Benefits Table” on page 34.

     Survivors’ Benefit Life Insurance and Other Death Benefits. Officers of Fulton and certain of its bank subsidiaries, who had been employed by Fulton for at least five years as of April 1, 1992, are eligible to participate in a survivors' benefit program. This program provides the employee's spouse, in the event of the employee's death prior to retirement, with an annual income equal to the lesser of $25,000 or twenty-five percent of the employee's final annual salary. This benefit is paid from the date of death until the employee's sixty-fifth birthday with a minimum of ten annual payments. Messrs. Smith, Ashby, Shreiner and Wenger participate in this program. The estates of these Executives are eligible for a two times salary payment (plus an amount equal to applicable individual income taxes due on such amounts) from Fulton pursuant to individual Death Benefit Agreements between Fulton and each Executive, should the Executive die while actively employed by Fulton. Upon the Executive’s retirement, the post retirement benefit payable upon the individual’s death is reduced to $5,000.

     Health, Dental and Vision Benefits. Fulton offers a comprehensive benefits package for health, dental and vision insurance coverage to all full time employees, including the Executives, their spouses and children. Fulton pays a portion of the premiums for the coverage selected, and the amount paid varies with each health, dental and vision plan. All of the Executives have elected one of the standard coverage plans available.

     Retiree Benefit Payments. Fulton does not provide post retirement medical, dental and vision benefits to full time employees of Fulton and its affiliates who were hired or joined Fulton as a result of a merger after December 31, 1997. Employees who were hired or joined prior to January 1, 1998, and who retire on or after the attainment of age fifty-five with at least ten years of full time service are eligible for post retirement benefits. Post retirement benefits include health insurance coverage plus life insurance benefits. The level of coverage and the cost to the retiree depends on the retiree’s date of retirement and completed years of service after attainment of age forty. As a result of their length of service with Fulton, the Executives are eligible to receive these post retirement benefits at an annual cost to the Executive similar to other employees with the same years of service.

     Other Executive Benefits. Fulton provides the Executives with perquisites and other personal benefits that the Committee believes are reasonable and consistent with the overall compensation program for the CEO and the other Executives. The 2007 amounts are included in the All Other Income column of the Summary Compensation Table on page 27 of this proxy statement. These benefits enable Fulton to attract and retain talented senior executive employees for key positions, as well as provide Executives and other senior officers with opportunities to be involved in their communities and directly interact with current and prospective customers of Fulton. The Executives are provided with company owned automobiles, club memberships and other executive benefits consistent with their office and position. In addition, if

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spouses accompany an Executive when traveling on business or attending a corporate event, Fulton pays the travel and other expenses associated with spousal travel for the Executive. These additional spousal travel items are included as part of the Executive’s reported W-2 income, and the Executive pays income taxes on the amounts.

     Employment Agreements

     Fulton believes that a company should provide reasonable severance benefits to employees. These severance arrangements are intended to provide the Executives and other employees with a sense of security in making the commitment to dedicate their professional careers to the success of Fulton. With respect to the Executives, these severance benefits reflect the fact that it may be difficult for them to find comparable employment within a reasonable period of time. Fulton provides severance benefits upon a change in control. The levels of these benefits for the Executives in the change of control context are discussed below under “Termination Without Cause or for Good Reason - Upon or After a Change in Control”.

     On May 30, 2006, Fulton’s Board of Directors approved, with the recommendation of the Compensation Committee and the Hay Group, a form of employment agreement to be used for Fulton’s current and future senior executive officers, including its CEO, President, Chief Financial Officer and Senior Executive Vice Presidents. The form of employment agreement was filed as an exhibit to Fulton’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.

     Effective June 1, 2006, the Executives entered into new employment agreements (“Employment Agreements”) with Fulton that replaced their existing severance agreements. Each Executive’s Employment Agreement commenced when the agreement was executed, does not have a specific term of years and continues until terminated. The Employment Agreements provide that the Executive is to receive a base salary, which is set annually, and is entitled to participate in Fulton’s incentive bonus programs as in effect from time to time. The Executive also is entitled to participate in Fulton’s retirement plans, welfare benefit plans and other benefit programs.¹ In addition, Mr. Ashby’s Employment Agreement incorporates a Deferred Compensation Agreement dated April 7, 1992, filed as an exhibit to Fulton’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006, which provides Mr. Ashby an additional non-qualified retirement benefit relating to his employment by Lafayette Ambassador Bank from 1992 to 1998.

     In their Employment Agreements, Messrs. Smith, Nugent and Ashby have agreed to restrictions on the sharing of confidential information as well as non-competition and non-solicitation covenants for two years. The Employment Agreements with Messrs. Shreiner and Wenger contain restrictions on the sharing of confidential information as well as non-competition and non-solicitation covenants for one year. The non-competition and non-solicitation covenants will not apply if the Executive leaves for good reason or if his employment is terminated without cause, as defined below.

     The following tables and narratives set forth the potential post termination benefits payable to the Executives under their Employment Agreements, in a lump sum or over a period of time, upon certain termination events assuming that the Executive’s employment was terminated as of December 31, 2007.

     Voluntary Termination. In the event an Executive's employment is voluntarily terminated by the Executive other than for “Good Reason,” Fulton’s obligations are limited to the payment of the Executive's base salary through the effective date of the Executive's termination date, together with any applicable expense reimbursements and all accrued and unpaid benefits and vested benefits in accordance with the applicable employee benefit plans. No other payments are required. Good Reason is defined in the Employment Agreement to include a breach by Fulton of its material obligations without remedy, a significant change in the Executive’s authority, duties, compensation or benefits, or a relocation outside a certain distance where the Executive previously was based.
____________________

¹ Similar employment agreements have been executed with other senior officers of Fulton and its subsidiaries.

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     Termination For Cause. If an Executive's employment is terminated for “Cause,” Fulton is not thereafter obligated to make any further payments to the Executive under the Employment Agreement, other than amounts (including salary, expense reimbursement, etc.) accrued under the Employment Agreements as of the date of such termination. Cause is defined in the Employment Agreement to include an act of dishonesty constituting a felony, use of alcohol or other drugs which interferes with the performance by the Executive of the Executive’s duties, intentional refusal by the Executive to perform duties, or conduct that brings public discredit on or injures the reputation of the Corporation.

     Termination Without Cause or for Good Reason - Before a Change in Control. If an Executive terminates his employment for Good Reason or his employment is terminated by Fulton “Without Cause,” defined in the Employment Agreement to include any reason other than Cause, the Executive is entitled to receive his base salary for a specified period of time and, in the sole discretion of Fulton, he also may receive an additional cash bonus. For Messrs. Smith, Nugent and Ashby, the specified period of time is two years. For the other Executives, that period is one year. After a termination Without Cause or for Good Reason, the Executive also would continue to participate in employee health and other benefit plans for which he is eligible during the specified time period. If the Executive is not eligible to continue to participate in any employee benefit plan, he will be compensated on an annual basis for such plan at Fulton’s cost plus a gross up for any taxes applicable thereto. Assuming that each Executive's employment was terminated Without Cause or for Good Reason as of December 31, 2007, with no discretionary cash bonus awarded to the Executives, each would have received the following post termination benefits:

Name	Salary Lump Sum			Health Benefits Estimate			Total
	($)			($)			($)
R. Scott Smith, Jr.		1,526,426			24,000			1,550,426
Charles J. Nugent		956,800			24,000			980,800
Richard J. Ashby, Jr.		810,000			24,000			834,000
James E. Shreiner		306,000			12,000			318,000
E. Philip Wenger		350,000			12,000			362,000

     Termination Without Cause or for Good Reason - Upon or After a Change in Control. The Executives and other employees have built Fulton into the successful enterprise that it is today, and Fulton believes that it is important to protect them in the event of a “Change in Control.” Further, Fulton believes that the interests of shareholders will be best served if the interests of the Executives are aligned with them, and providing Change in Control benefits should eliminate or mitigate any reluctance of the Executives to pursue potential Change in Control transactions that may be in the best interests of shareholders. Based on the recommendations and review of typical Change in Control provisions performed by the Hay Group in 2006, Fulton believes that these potential Change in Control benefits it offers are typical for the financial services industry and reasonable relative to the overall value of Fulton.

     A Change in Control is defined in the Employment Agreements to include the acquisition of the beneficial ownership of twenty percent or more of the outstanding shares of the voting stock of Fulton by any one person, a significant change in the composition of the Board of Fulton during any period of two consecutive years or Fulton’s merger or consolidation with another corporation. If, during the period beginning ninety days before a Change in Control and ending two years after such Change in Control, an Executive is terminated by Fulton Without Cause or an Executive resigns for Good Reason, Fulton is required to pay the Executive a multiple of the sum of the Executive’s: (i) base salary immediately before the Change in Control; and (ii) the highest annual cash bonus or other incentive compensation awarded over the prior three years. The Executive also is entitled to receive an aggregate amount equal to Fulton retirement plan contributions for the multiple period under each retirement plan in which the Executive was a participant immediately prior to the Executive's termination. The Committee set the Change in Control payment multiple at three years in the Employment Agreements for Messrs. Smith, Nugent and Ashby, because this was the

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multiple used in their prior severance agreements. For Messrs. Shreiner and Wenger, the Committee set the multiple at two years. The Employment Agreements also provide for certain other post termination benefits such as up to $10,000 for outplacement services.

     The table below uses the 2006 Variable Plan bonus award to calculate the cash bonus lump sum. Assuming that, as of December 31, 2007, each Executive’s employment was terminated upon or after a Change in Control Without Cause or for Good Reason, each would have received the following post termination benefits:

Name	Salary	Cash	Lump Sum of	Tax Gross	Health	Clubs,	Value of	Total
	Lump	Bonus	Future	Up	Benefits	Cars &	Option
	Sum	Lump	Qualified and		Estimate	Other	Vesting
		Sum	Non-qualified			Benefits
			Plans			Estimate
	($)	($)	($)	($)	($)	($)	($)	($)
R. Scott Smith, Jr.	2,289,639	1,144,821	343,446	1,467,756	36,000	58,000	0	5,339,662
Charles J. Nugent	1,435,200	502,320	193,752	830,244	36,000	58,000	0	3,055,516
Richard J. Ashby, Jr.	1,215,000	425,250	164,025	691,770	36,000	58,000	0	2,590,045
James E. Shreiner	612,000	204,104	81,610	328,622	24,000	42,000	0	1,292,336
E. Philip Wenger	700,000	224,660	92,466	381,003	24,000	42,000	0	1,464,129

     The Employment Agreements provide that, in the event any payment or distribution by Fulton to or for the benefit of an Executive would be subject to excise tax as a “golden parachute,” the Executive will be entitled to receive an additional payment equal to the total excise tax imposed. The determination that a "gross up" payment is required and its amount is to be made by an accounting firm, and Fulton is responsible for the accounting firm's fees and expenses. The Hay Group advised the Compensation Committee that this ‘gross up provision” has become a typical provision in such agreements. In keeping with Fulton’s objectives to offer a competitive contract, this provision was included in the Employment Agreements for all of the Executives.

     Retirement. In the event an Executive terminates his employment due to retirement upon attaining age sixty-five, Fulton is obligated to pay the Executive's base salary through the effective date of the Executive's retirement, together with any applicable expense reimbursements and all accrued and unpaid benefits and vested benefits in accordance with the applicable employee benefit plans. Fulton would have no further obligation under the Employment Agreement, however, assuming that each Executive attained the age of sixty-five and retired December 31, 2007, each would have received a lump sum payment of $25 for each year of service, a payment made to all retiring employees, plus each would have received retiree health benefits, as a supplement to the Executives’ Medicare benefits at sixty-five, at an annual estimated cost to Fulton of approximately $3,600.

     In the event an Executive terminates his employment due to retirement upon attaining age sixty, and the Executive has ten or more years of consecutive service with Fulton, unvested options and restricted shares awarded under Fulton’s option plans would automatically vest as a result of the Executive’s retirement. None of the Executives have been awarded restricted shares. Assuming that all the Executives attained the age of sixty and retired December 31, 2007, their individual unvested options would not have had any value because they have option exercise prices above the $11.22 closing price of Fulton common stock on December 31, 2007.

     With respect to Mr. Ashby, who will retire on March 28, 2008, the Compensation Committee approved, on his retirement, the transfer to him of the company car he uses and the continuation of his club benefits for one year. These retirement benefits are not included in Mr. Ashby’s agreement, nor under any Fulton plan. Fulton estimates the value of these benefits to be $21,000 as of his actual retirement date.

     Disability. Following an Executive's “Total Disability,” defined in the Employment Agreements to be a continuous medically determinable physical or medical impairment, the employment of the Executive would terminate automatically, in which event Fulton is not thereafter obligated to make any further payments under

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the Employment Agreement, other than amounts (including salary, expense reimbursement, etc.) accrued as of the date of such termination, plus an amount equal to at least six months' base salary in effect immediately prior to the date of the Total Disability. Thereafter, for as long as the Executive continues to be disabled, Fulton will continue to pay the Executive at least 60% of the base salary until the earlier of the Executive’s death or December 31 of the calendar year in which the Executive attains age sixty-five. To the extent it does not duplicate benefits already being provided, an Executive will also receive those benefits customarily provided by Fulton to disabled former employees, which benefits shall include, but are not limited to, life, medical, health, accident insurance and a survivor's income benefit. Assuming that each Executive was disabled as of December 31, 2007, and the Total Disability lasted 18 months, each would have received the following disability benefits:

	Salary			Total Annual Disability			Estimated Health
Name	First Six Months			Payments Until 65			Benefits for 18 Months			Total
	($)			($)			($)			($)
R. Scott Smith, Jr.		381,607			457,928			18,000			857,535
Charles J. Nugent		239,200			287,040			18,000			544,240
Richard J. Ashby, Jr.		202,500			243,000			18,000			463,500
James E. Shreiner		153,000			183,600			18,000			354,600
E. Philip Wenger		175,000			210,000			18,000			403,000

     Death. In the event of a termination of employment as a result of an Executive's death, the Executive's dependents, beneficiaries or estate, as the case may be, would receive such survivor's income and other benefits as they may be entitled to under the terms of Fulton’s benefit programs, which includes the $25,000 Survivors Benefit Life Insurance and the twice base salary amount plus tax under the Death Benefit Agreement described above. Assuming that each Executive died as of December 31, 2007, each of their estates or beneficiaries would have received the following death benefits:

	Survivors Benefit Life			Death Benefit			Estimated Death
Name	Insurance			Agreement Payment			Benefit Tax Gross Up			Total
	($)			($)			($)			($)
R. Scott Smith, Jr.		25,000			1,526,426			1,039,858			2,591,284
Charles J. Nugent		25,000			956,800			651,808			1,633,608
Richard J. Ashby, Jr.		25,000			810,000			551,802			1,386,802
James E. Shreiner		25,000			612,000			416,917			1,053,917
E. Philip Wenger		25,000			700,000			476,866			1,201,866

     Other Elements

     162(m) and Tax Consequences. Although Fulton takes into account deductibility of compensation, tax deductibility is not a primary objective of its compensation programs. Section 162(m) of the Internal Revenue Code disallows the deductibility by Fulton of any compensation over $1 million per year paid to certain members of Senior Management unless certain criteria are satisfied.

     409A Changes. Section 409A of the Internal Revenue Code, effective January 1, 2005, defines what constitutes a “nonqualified deferred compensation plan”, conditions income tax deferrals under such plans on their compliance with certain distribution, acceleration, election and funding restrictions, and also imposes penalty tax and interest penalties for noncompliance. In order to preserve intended tax deferrals and to avoid the imposition of taxes and penalties, Fulton’s intent is to identify all such nonqualified deferred compensation plans it maintains and to timely amend each, where necessary, to meet the Section 409A requirements, and to

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alter the administration of each, where necessary, to comply with Section 409A. This amendment and compliance process is ongoing. With respect to Senior Management, in particular, the deferred compensation agreements and the employment and severance agreements summarized above have been amended for Section 409A compliance.

     Discussion of Option Grant Timing. Fulton does not have a formal policy on option granting or required grant dates. However, the Compensation Committee and Board of Directors historically have met in June of each year to consider and award options to the Executives and other officers. Fulton does not back date options or grant them retroactively, and does not coordinate option grants with the release of positive or negative corporate news. The 2004 Option Plan does not permit the award of discounted options, the reload of stock options or the re-pricing of stock options. Pursuant to the terms of the 2004 Option Plan, option prices are determined based on the average of the high and low trading price on the grant date. Historically, Fulton has granted options on or about July 1, as opposed to the date of the June meeting when action is taken by the Compensation Committee and Board of Directors to grant each award.

     Stock Ownership Guidelines. Fulton believes that broad based stock ownership by directors, officers and employees is an effective method to align the interests of its shareholders with the interests of its directors, officers and employees. However, Fulton does not have a formal share ownership requirement defined for directors, or any group of officers or employees, at the present time.

     Senior Management Succession. The topic of Senior Management succession is discussed and reviewed from time to time at Fulton. At the December 2007 Executive Committee meeting, seniors officers in Fulton’s Human Resources department discussed and reviewed the succession planning processes used by management to identify successors for each member of Senior Management at Fulton, middle management at Fulton, senior management at each of Fulton’s bank subsidiaries, and within each division for those banks with divisions.

Compensation Committee Report

     The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis with management at their March 2008 meeting and, based on the review and discussions, the members of the Compensation Committee present at the meeting recommended to the Board of Directors that the Compensation Discussion and Analysis above be included with or incorporated in Fulton's Annual Report on Form 10-K for the year ended December 31, 2007, and the 2008 annual proxy statement, as applicable.

Executive Compensation Committee

Patrick J. Freer, Chair
John O. Shirk, Vice Chair
Jeffrey G. Albertson
Donald M. Bowman, Jr.
George W. Hodges
Donald W. Lesher, Jr.

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SUMMARY COMPENSATION TABLE

Name and Principal	Year	Salary1	Bonus2	Stock	Option	Non-Equity	Change in	All Other	Total
Position				Awards	Awards3	Incentive	Pension	Compensation6
						Plan	Value and
						Compensation4	Nonqualified
							Deferred
							Compensation
							Earnings5
		($)	($)	($)	($)	($)	($)	($)	($)
R. Scott Smith, Jr.	2007	763,213	0	0	225,840	0	0	133,718	1,122,771
Chairman, President and	2006	734,946	28,267	0	70,713	381,607	0	142,667	1,358,200
Chief Executive Officer
of Fulton Financial
Corporation
Charles J. Nugent	2007	478,400	0	0	147,152	0	0	95,655	721,207
Senior Executive Vice	2006	460,682	17,718	0	59,396	167,440	0	97,645	802,881
President and Chief
Financial Officer of
Fulton Financial
Corporation
Richard J. Ashby, Jr.7	2007	405,000	0	0	173,463	0	0	79,163	657,626
Senior Executive Vice	2006	390,000	15,000	0	52,059	141,750	0	96,225	695,034
President of Fulton
Financial Corporation;
Chairman of Fulton
Financial Advisors, N.A.
James E. Shreiner	2007	306,000	0	0	61,850	0	0	57,625	425,475
Senior Executive Vice	2006	280,777	10,799	0	42,043	102,052	0	53,863	489,534
President of Fulton
Financial Corporation -
Administrative Services
E. Philip Wenger	2007	350,000	0	0	58,715	0	0	79,729	488,444
Senior Executive Vice	2006	309,056	11,887	0	42,043	112,330	0	79,629	554,945
President of Fulton
Financial Corporation –
Community Banking;
Chairman of Fulton Bank

____________________

¹ Represents the 2006 and 2007 annual base salary for each of the Executives named in this table.
² Represents a two-week holiday bonus paid in 2006 to the Executives and other Fulton employees. The Compensation Committee has decided to discontinue the payment of this bonus for the Executives and other officers who participate in the Variable Plan. The Executives were not eligible to receive the holiday bonus in 2007.

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³ Amounts represent the compensation expense for stock option awards recognized in Fulton’s Consolidated Statements of Income in 2007 and 2006, under the provisions of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS 123R). The per-option fair value of options granted in 2007, 2006 and 2005 was $1.78, $2.39 and $2.40, respectively. A discussion of the significant assumptions used to determine these fair values can be found in Note M, which starts on page 78 in the Notes to Consolidated Financial Statements, "Stock-Based Compensation Plans and Shareholders' Equity" located in the Fulton Financial Corporation Annual Report on Form 10-K for the year ended December 31, 2007. There were no forfeitures of options during 2006 and 2007 by any of the Executives, and the expense being recognized for grants also assumes that none of the options will be forfeited. There can be no assurance that the Executives will ever realize these values in the future, or that the options will ever be exercised. Under Fulton’s Stock Option Plan, options vest 36 months following their grant date. In 2007, the Stock Option Plan was amended to allow for immediate vesting of options upon retirement if the holder of the options has attained both age 60 and 10 years of continuous service with Fulton. This amendment was applicable to options granted in 2007 and 2006. As required by SFAS 123R, compensation expense is recognized evenly over the 36-month vesting period or over the period from the date of grant to the period when the option holder attains both age 60 and 10 years of continuous service, if shorter.

The following table provides additional detail on the compensation expense recognized in 2007 for stock option awards of the Executives.

Name	2007 Option Grant -	2006 Option Grant -	2005 Option Grant -	Total 2007	Grant Date Fair Value
	Compensation Expense	Compensation Expense	Compensation Expense	Stock	of 2007 Stock Options
	Recognized in 2007	Recognized in 2007	Recognized in 2007	Option	(d)
	(a)	(b)	(c)	Expense
	($)	($)	($)	($)	($)
R. Scott Smith, Jr.	81,926	91,502	52,412	225,840	81,926
Charles J. Nugent	42,744	59,334	45,074	147,152	64,116
Richard J. Ashby, Jr.	64,116	71,610	37,737	173,463	64,116
James E. Shreiner	10,259	19,096	32,495	61,850	42,744
E. Philip Wenger	7,124	19,096	32,495	58,715	42,744

	(a)		Messrs. Smith and Ashby had attained age 60 and 10 years of continuous service when stock options were granted in July 2007. Accordingly, the entire grant date fair value was recognized as compensation expense in 2007. Mr. Nugent had attained 10 years of continuous service when stock options were granted in July 2007 and will attain age 60 in April 2008. Compensation expense is being recognized ratably over this 9-month period as it is shorter than the normal 36-month vesting period. Mr. Shreiner had attained 10 years of continuous service when stock options were granted in July 2007 and will attain age 60 in August 2009. Compensation expense is being recognized ratably over this 25-month period as it is shorter than the normal 36-month vesting period. Mr. Wenger had attained 10 years of continuous service when stock options were granted in July 2007, but will not attain age 60 until subsequent to the 36-month vesting period; accordingly, compensation expense is being recognized over the normal 36-month vesting period.
	(b)		Represents compensation expense related to options granted in July 2006. In 2006, six months of expense, or 1/6th of the total grant date fair value, was recognized in 2006 for each of the Executives. When the Stock Option Plan was amended in 2007, the remaining 30 months, or 5/6th, of the grant date fair value for the 2006 grant for Messrs. Smith and Ashby was recognized in full in 2007. Recognition of compensation expense for the 2006 grant for Mr. Nugent was accelerated to be recognized ratably over 21 months from the date of the grant. There were no adjustments to the recognition of compensation expense for Messrs. Shreiner and Wenger; the amounts shown represent 12 months, or 1/3, of the grant date fair value of the 2006 stock option grant.
	(c)		Represents compensation expense related to options granted in July 2005, which is being recognized evenly over the 36 month vesting period for each named executive. Amounts shown represent 12 months, or 1/3, of the grant date fair value of the 2005 stock option grant.
	(d)		The SFAS 123R total grant date fair value for 2007 awards is provided for reference and is also reported in “Grants of Plan-Based Awards Table”. See also “Outstanding Equity Awards at Fiscal Year-End Table.”

⁴ Amounts listed for 2006 are Non-Equity Incentive Plan Compensation cash payments approved by the Executive Compensation Committee on March 19, 2007 for 2006 performance pursuant to Fulton’s Variable Plan. The Executive Compensation Committee determined at its March 5, 2008 meeting that because Fulton did not achieve the 2007 performance threshold established for the Variable Plan, no Non-Equity Incentive Plan Compensation cash payments would be paid to the Executives for 2007.
⁵ Fulton has determined that the Executives did not receive above-market earnings and such amounts did not need to be reported in this table column for 2006 and 2007. All participants in the non-qualified deferred compensation plan, which also includes senior managers other than the Executives, are permitted to select various investment options listed in footnote 2 of the “Nonqualified Deferred Compensation Table” on page 34 below. The rate of return for an individual participant’s account is based on the performance of the various standard investment options selected by each participant.

28

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⁶ All Other Compensation includes Fulton’s payments for Qualified Profit Sharing Plan Contributions, Non-Qualified Profit Sharing Plan Contributions, club membership fees, use of company provided automobiles and certain travel expenses where spouses traveled with the executives and attended Fulton events. The methodology to calculate the aggregate incremental cost of perquisites and other personal benefits was to use the amount disbursed for the items. Where a benefit involved assets owned by Fulton, an estimate of the incremental cost was used. Amounts for vehicles include the cost of related items attributed to the company provided vehicle including an insurance premium of $1,075 for each vehicle. The “Other Perquisites” column includes spousal travel and other small benefits that individually are less than ten percent of all perquisites received by the Executive. The breakdown and total of all other compensation for each Executive for 2006 and 2007 is shown in the table below:

		Qualified Profit	Non-Qualified	Club	Use of	Other	Total All
Name	Year	Sharing Plan	Profit Sharing	Memberships	Company	Perquisites	Other
		Company	Plan Company		Provided		Compensation
		Contribution	Contribution		Automobiles
		($)	($)	($)	($)	($)	($)
R. Scott Smith, Jr.	2007	33,750	80,732	10,562	7,158	1,516	133,718
	2006	33,000	77,242	15,275	13,454	3,696	142,667
Charles J. Nugent	2007	33,750	38,010	11,096	12,583	216	95,655
	2006	33,000	36,102	10,623	14,223	3,697	97,645
Richard J. Ashby, Jr.	2007	33,750	27,000	10,301	5,857	2,255	79,163
	2006	33,000	25,500	20,950	13,941	2,834	96,225
James E. Shreiner	2007	33,750	12,150	8,251	3,016	458	57,625
	2006	33,000	9,117	7,649	3,263	834	53,863
E. Philip Wenger	2007	33,750	18,750	14,090	12,001	1,138	79,729
	2006	33,000	13,358	18,834	13,424	1,013	79,629

⁷ Mr. Ashby will retire as an executive officer of Fulton effective March 28, 2008.

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GRANTS OF PLAN BASED AWARDS

Name	Grant	Approval	Estimated Future or			Estimated Future or			All Other	All Other	Exercise	Closing	Grant Date
	Date1	Date2	Possible Payouts Under			Possible Payouts Under			Stock	Option	or Base	Price on	Fair Value
			Non-Equity Incentive Plan			Equity Incentive Plan			Awards:	Awards:	Price of	Grant	of Stock and
			Awards3			Awards			Number	Number of	Option	Date5	Option
			Threshold	Target	Maximum	Threshold	Target	Maximum	of Shares	Securities	Awards4		Awards6
									of Stock	Underlying
									or Units	Options
			($)	($)	($)	(#)	(#)	(#)	(#)	(#)	($/Sh)	($/Sh)	($)
R. Scott Smith, Jr.	7/1/2007	6/18/2007	-	-	-	-	-	-	-	46,000	14.415	14.42	81,926
Charles J. Nugent	7/1/2007	6/18/2007	-	-	-	-	-	-	-	36,000	14.415	14.42	64,116
Richard J. Ashby, Jr.	7/1/2007	6/18/2007	-	-	-	-	-	-	-	36,000	14.415	14.42	64,116
James E. Shreiner	7/1/2007	6/18/2007	-	-	-	-	-	-	-	24,000	14.415	14.42	42,744
E. Philip Wenger	7/1/2007	6/18/2007	-	-	-	-	-	-	-	24,000	14.415	14.42	42,744

____________________

¹ Pursuant to the terms of the 2004 Stock Option and Compensation Plan, since the July 1, 2007, grant date was not a NASDAQ trading day, the fair market value was determined based on the average of the highest and lowest trading price of Fulton stock on the next preceding trading day, which was Friday, June 29, 2007.
² As consistent with past option award practice, Fulton approved the 2007 options at the June Executive Compensation Committee and Board meetings both held on June 18, 2007, with a future grant date of July 1, 2007. The low trading, high trading, closing, and average of high/low trading prices of Fulton stock on June 18, 2007 were $14.71, $15.10, $14.75 and $14.905, respectively.
³ The Executives will not receive a cash bonus payment under the Variable Plan for 2007.
⁴ Determined pursuant to the terms of the 2004 Stock Option and Compensation Plan as the average of the highest and lowest trading price of Fulton stock on the grant date. The June 29, 2007 high trading and low trading prices were $14.52 and $14.31, respectively.
⁵ Closing price of Fulton stock on June 29, 2007, the next preceding day before the July 1, 2007 grant date, was $14.42.
⁶ FAS 123R Fair Value. There can be no assurance that the Executives will ever exercise the options or realize the amounts listed in the future.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

	Option Awards1					Stock Awards2
Name	Number	Number of	Equity	Option	Option	Number of	Market	Equity	Equity
	of	Securities	Incentive	Exercise	Expiration	Shares or	Value of	Incentive	Incentive
	Securities	Underlying	Plan Awards:	Price	Date	Units of	Shares or	Plan	Plan Awards:
	Underlying	Unexercised	Number of	($)		Stock That	Units of	Awards:	Market or
	Unexercised	Options	Securities			Have Not	Stock That	Number of	Payout Value
	Options	(#)	Underlying			Vested	Have Not	Unearned	of Unearned
	(#)	Unexercisable3	Unexercised			(#)	Vested	Shares,	Shares, Units
	Exercisable		Unearned				($)	Units or	or Other
			Options					Other	Rights That
			(#)					Rights That	Have Not
								Have Not	Vested
								Vested	($)
								(#)
R. Scott Smith, Jr.	36,172	0	0	11.32	6/30/2008	0	0	0	0
R. Scott Smith, Jr.	32,907	0	0	10.45	6/30/2009	0	0	0	0
R. Scott Smith, Jr.	30,580	0	0	10.38	6/30/2010	0	0	0	0
R. Scott Smith, Jr.	41,603	0	0	11.32	6/30/2011	0	0	0	0
R. Scott Smith, Jr.	41,530	0	0	13.35	6/30/2012	0	0	0	0
R. Scott Smith, Jr.	41,344	0	0	14.44	6/30/2013	0	0	0	0
R. Scott Smith, Jr.	72,189	0	0	15.38	6/30/2014	0	0	0	0
R. Scott Smith, Jr.	0	65,625	0	17.12	6/30/2015	0	0	0	0
R. Scott Smith, Jr.	0	46,000	0	15.89	6/30/2016	0	0	0	0
R. Scott Smith, Jr.	0	46,000	0	14.415	6/30/2017	0	0	0	0
Charles J. Nugent	33,758	0	0	11.32	6/30/2008	0	0	0	0
Charles J. Nugent	30,911	0	0	10.45	6/30/2009	0	0	0	0
Charles J. Nugent	28,679	0	0	10.38	6/30/2010	0	0	0	0
Charles J. Nugent	35,815	0	0	11.32	6/30/2011	0	0	0	0
Charles J. Nugent	35,742	0	0	13.35	6/30/2012	0	0	0	0
Charles J. Nugent	35,832	0	0	14.44	6/30/2013	0	0	0	0
Charles J. Nugent	63,001	0	0	15.38	6/30/2014	0	0	0	0
Charles J. Nugent	0	56,437	0	17.12	6/30/2015	0	0	0	0
Charles J. Nugent	0	36,000	0	15.89	6/30/2016	0	0	0	0
Charles J. Nugent	0	36,000	0	14.415	6/30/2017	0	0	0	0
Richard J. Ashby, Jr.	25,927	0	0	10.45	6/30/2009	0	0	0	0
Richard J. Ashby, Jr.	23,930	0	0	10.38	6/30/2010	0	0	0	0
Richard J. Ashby, Jr.	29,846	0	0	11.32	6/30/2011	0	0	0	0
Richard J. Ashby, Jr.	29,738	0	0	13.35	6/30/2012	0	0	0	0
Richard J. Ashby, Jr.	30,319	0	0	14.44	6/30/2013	0	0	0	0
Richard J. Ashby, Jr.	52,501	0	0	15.38	6/30/2014	0	0	0	0
Richard J. Ashby, Jr.	0	47,250	0	17.12	6/30/2015	0	0	0	0
Richard J. Ashby, Jr.	0	36,000	0	15.89	6/30/2016	0	0	0	0
Richard J. Ashby, Jr.	0	36,000	0	14.415	6/30/2017	0	0	0	0

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James E. Shreiner	21,479	0	0	11.32	6/30/2008	0	0	0	0
James E. Shreiner	17,949	0	0	10.45	6/30/2009	0	0	0	0
James E. Shreiner	16,333	0	0	10.38	6/30/2010	0	0	0	0
James E. Shreiner	20,260	0	0	11.32	6/30/2011	0	0	0	0
James E. Shreiner	21,706	0	0	13.35	6/30/2012	0	0	0	0
James E. Shreiner	20,673	0	0	14.44	6/30/2013	0	0	0	0
James E. Shreiner	45,939	0	0	15.38	6/30/2014	0	0	0	0
James E. Shreiner	0	40,687	0	17.12	6/30/2015	0	0	0	0
James E. Shreiner	0	24,000	0	15.89	6/30/2016	0	0	0	0
James E. Shreiner	0	24,000	0	14.415	6/30/2017	0	0	0	0
E. Philip Wenger	13,808	0	0	11.32	6/30/2008	0	0	0	0
E. Philip Wenger	12,962	0	0	10.45	6/30/2009	0	0	0	0
E. Philip Wenger	13,295	0	0	10.38	6/30/2010	0	0	0	0
E. Philip Wenger	18,090	0	0	11.32	6/30/2011	0	0	0	0
E. Philip Wenger	19,898	0	0	13.35	6/30/2012	0	0	0	0
E. Philip Wenger	20,673	0	0	14.44	6/30/2013	0	0	0	0
E. Philip Wenger	45,939	0	0	15.38	6/30/2014	0	0	0	0
E. Philip Wenger	0	40,687	0	17.12	6/30/2015	0	0	0	0
E. Philip Wenger	0	24,000	0	15.89	6/30/2016	0	0	0	0
E. Philip Wenger	0	24,000	0	14.415	6/30/2017	0	0	0	0

____________________

¹ The number of securities underlying the options and the option exercise price have been adjusted for stock dividends and stock splits that have occurred since the grant date.
² There are no outstanding restricted stock awards to the Executives.
³ Options with an expiration date of June 30, 2015 will vest July 1, 2008, options with an expiration date of June 30, 2016 will vest July 1, 2009, and options with an expiration date of June 30, 2017 will vest July 1, 2010.

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OPTION EXERCISES AND STOCK VESTED

	Option Awards1		Stock Awards
Name	Number of	Value Realized	Number of	Value Realized
	Shares	on Exercise	Shares	on Vesting
	Acquired		Acquired
	on Exercise		on Vesting
	(#)	($)	(#)	($)
R. Scott Smith, Jr.	3,000	16,8902	0	0
R. Scott Smith, Jr.	11,837	53,2073	0	0
R. Scott Smith, Jr.	10,099	51,7444	0	0
Charles J. Nugent	4,000	22,5205	0	0
Charles J. Nugent	6,000	32,4306	0	0
Charles J. Nugent	3,192	16,0407	0	0
Charles J. Nugent	10,099	51,8088	0	0
Richard J. Ashby, Jr.	19,177	113,1449	0	0
Richard J. Ashby, Jr.	8,832	35,85810	0	0
Richard J. Ashby, Jr.	19,006	73,93311	0	0
James E. Shreiner	10,099	53,12112	0	0
James E. Shreiner	4,692	24,68513	0	0
E. Philip Wenger	9,591	57,69014	0	0

____________________

¹ The numbers of securities underlying the options and the option exercise price have been adjusted for stock dividends and stock splits that have occurred since the date of grant.
² Options exercised on January 19, 2007.
³ Options exercised on April 3, 2007.
⁴ Options exercised on May 31, 2007.
⁵ Options exercised on January 19, 2007.
⁶ Options exercised on March 1, 2007.
⁷ Options exercised on March 14, 2007.
⁸ Options exercised on June 15, 2007.
⁹ Options exercised on January 29, 2007.
¹⁰ Options exercised on August 9, 2007.
¹¹ Options exercised on September 19, 2007.
¹² Options exercised on May 31, 2007.
¹³ Options exercised on June 4, 2007.
¹⁴ Options exercised on February 12, 2007.

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PENSION BENEFITS

Name1	Plan Name	Number of Years	Present	Payments During
		Credited Service	Value of Accumulated	Last Fiscal Year
			Benefit
		(#)	($)	($)
R. Scott Smith, Jr.	NA	-	-	-
Charles J. Nugent	NA	-	-	-
Richard J. Ashby, Jr.	Fulton Financial
	Affiliate's Defined	7	292,161	0
	Benefit Pension Plan
James E. Shreiner	NA	-	-	-
E. Philip Wenger	NA	-	-	-

____________________

¹ Except for Mr. Ashby, none of the Executives participates in or has account balances in any qualified or non-qualified defined benefit plans sponsored by Fulton. Mr. Ashby was a Fulton employee when he accepted a position in 1992 with Lafayette Ambassador Bank, a Fulton affiliate bank. Mr. Ashby’s participation in this plan ended in 1998 when he accepted a new position at Fulton and started participation in the Fulton Profit Sharing Plan.

NONQUALIFIED DEFERRED COMPENSATION

Name	Executive	Registrant	Aggregate Earnings	Aggregate	Aggregate Balance
	Contributions in Last	Contributions in Last	in Last FY2	Withdrawals/	at Last FYE3
	FY	FY1		Distributions
	($)	($)	($)	($)	($)
R. Scott Smith, Jr.	0	80,732	42,290	0	591,143
Charles J. Nugent	0	38,010	15,255	0	319,661
Richard J. Ashby, Jr.	50,0004	27,000	22,754	0	529,2185
James E. Shreiner	0	12,150	3,923	0	54,452
E. Philip Wenger	0	18,750	1,403	0	48,260

____________________

¹ Fulton’s contributions toward nonqualified deferred compensation for each of the Executives are listed in this column. See the table contained in footnote 6 of the Summary Compensation Table on page 27. Amounts listed as registrant contributions in this Nonqualified Deferred Compensation Table are also included as part of the Executives’ “Total All Other Compensation” in the Summary Compensation Table. 2007 contributions were credited to each of the Executive’s accounts in January 2008.
² The Executives direct the investment of their nonqualified deferred compensation contributions into various standard investment options offered from a set menu of investment funds. In 2007, the available investment funds included Goldman Sachs Financial Square Money Market Fund, Goldman Sachs Core Fixed Income I Fund, Vanguard Windsor II Fund, T. Rowe Price Growth Stock Fund, Vanguard 500 Index Fund, Goldman Sachs Growth Opportunity I Fund, Vanguard Small Cap Index Fund, Fidelity Adv Small Cap I Fund and Fidelity Adv Div International I Fund. The Executives may change their individual elections by completing a new election form. There is a discussion of the Deferred Compensation Agreements and Defined Benefit Pension Plans on pages 20 and 21.
³ Balances include the 2007 contributions made by Fulton and credited to the Executives’ accounts in January 2008.
⁴ Mr. Ashby was the only individual to make personal contributions in 2007 to a nonqualified deferred compensation account and this amount is not included in the “Total All Other Compensation” amount in the Summary Compensation Table and was not additional compensation paid to him by Fulton.
⁵ Amount listed does not include approximately $54,000 potentially available as of December 31, 2007 under Mr. Ashby’s April 7, 1992 Deferred Compensation Agreement described on page 20. Neither Mr. Ashby nor Fulton made any contributions to this plan in 2007. Based on an actuarial calculation, this amount decreased by $45,000 since the December 31, 2006 actuarial estimate.

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DIRECTOR COMPENSATION

Name1	Fees	Stock	Option	Non-Equity	Change in Pension	All Other	Total
	Earned or	Awards	Awards	Incentive Plan	Value and	Compensation2
	Paid in			Compensation	Nonqualified
	Cash				Deferred
					Compensation
					Earnings
	($)	($)	($)	($)	($)	($)	($)
Jeffrey G. Albertson	42,750	0	0	0	0	10,8333	53,583
John M. Bond	40,750	0	04	0	0	30,0005	70,750
Donald M. Bowman, Jr.	47,000	0	0	0	0	8,0006	55,000
Dana A. Chryst7	0	0	0	0	0	12,0008	12,000
Craig A. Dally	40,750	0	0	0	0	10,0009	50,750
Patrick J. Freer	51,000	0	0	0	0	8,50010	59,500
Rufus A. Fulton Jr.	38,750	0	011	0	0	14,66612	53,416
George W. Hodges	58,750	0	013	0	0	0	58,750
Carolyn R. Holleran	41,750	0	0	0	0	6,00014	47,750
Thomas W. Hunt15	10,333	0	016	0	0	0	10,333
Willem Kooyker	45,750	0	0	0	0	16,50017	62,250
Donald W. Lesher Jr.	50,250	0	0	0	0	4,95818	55,208
Abraham S. Opatut	38,750	0	0	0	0	163,60019	202,350
John O. Shirk	41,750	0	0	0	0	12,00020	53,750
Gary A. Stewart	41,750	0	0	0	0	0	41,750

____________________

¹ Directors listed represent all the non-management directors of Fulton during 2007. Mr. Smith, who was compensated as an officer of Fulton, did not receive any additional compensation for his service as a director of Fulton.
² Unless otherwise noted, excludes perquisites and other personal benefits with an aggregate value of less than $10,000. Fulton’s methodology to calculate the aggregate incremental cost of perquisites and other personal benefits was to use the amount disbursed for the item. Where a benefit involved assets owned by Fulton, an estimate of the incremental cost was used.
³ Represents the annual retainer fee Mr. Albertson received for service on the Board of Directors of The Bank.
⁴ Fulton directors did not receive options as part of their 2007 compensation, however, as of December 31, 2007, Mr. Bond had 196,851 exercisable options and 21,513 options not vested that previously were awarded to him by Columbia Bancorp, which was acquired by Fulton in February 2006.
⁵ Represents the annual retainer fee Mr. Bond received for service as non-employee Chairman of The Columbia Bank.
⁶ Represents the annual retainer fee Mr. Bowman received for service on the Board of Directors of Hagerstown Trust Company.
⁷ Ms. Chryst became a director effective March 17, 2008.
⁸ Represents the annual retainer fee Ms. Chryst received for service on the Board of Directors of Fulton Bank.
⁹ Represents the annual retainer fee Mr. Dally received for service on the Board of Directors of Lafayette Ambassador Bank.
¹⁰ Represents the annual retainer fee Mr. Freer received for service on the Board of Directors of Lebanon Valley Farmers Bank and the Fulton Bank Lebanon Valley Division Board.
¹¹ Fulton directors did not receive options as part of their 2007 compensation. However, as of December 31, 2007, Mr. Fulton had 85,314 exercisable options that were awarded to him prior to his retirement as an officer of Fulton. Since these options were not exercised, they expired on 1/1/08 by the terms of the option plan and option agreements issued.
¹² Includes $10,346 for club fees, $2,340 office use and $1,980 for other perquisites that are individually less that ten percent of the total perquisites received by Mr. Fulton in 2007.

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¹³ Fulton directors did not receive options as part of their 2007 compensation. However, as of December 31, 2007, Mr. Hodges had 8,103 exercisable options that previously were awarded to him by Drovers Bancshares Corporation, which was acquired by Fulton in July 2001.
¹⁴ Represents the annual retainer fee Mrs. Holleran received for service on the Regional Board of the Fulton Bank Great Valley Division.
¹⁵ Mr. Hunt decided to not stand for reelection as a director, and his term as a director and a member of the Audit and Nominating Committees of Fulton ended on May 7, 2007. Retainer fees for Mr. Hunt were pro rated based on the date his service ended.
¹⁶ Fulton directors did not receive options as part of their 2007 compensation. However, as of December 31, 2007, Mr. Hunt had 3,942 exercisable options that previously were awarded to him by Resource Bankshares Corporation, which was acquired by Fulton in April 2004.
¹⁷ Represents fees Mr. Kooyker received for service on the Board of Directors of Somerset Valley Bank, which includes a $5,000 retainer, $650 for each Board meeting attended and $200 for each committee meeting attended. Also includes $12,700 for service on the Somerset Valley Bank Regional Board.
¹⁸ Represents the annual retainer fee Mr. Lesher received for service on the Board of Directors of Lebanon Valley Farmers Bank and the Fulton Bank Lebanon Valley Division Board.
¹⁹ Includes $153,600 in fees Mr. Opatut received for service as Chairman of the Board of Directors of First Washington State Bank and the First Washington Division Board. First Washington State Bank was merged into The Bank in 2007. Mr. Opatut is now a director of The Bank and in 2007 he received $10,000 in retainer fees for service as a director of The Bank.
²⁰ Represents the annual retainer fee Mr. Shirk received for service on the Board of Directors of Fulton Bank.

 

Compensation of Directors

     Each member of the Board of Directors of Fulton is paid a retainer fee and meeting fees for his or her services as a director, except that no fee is paid to any director who is also a salaried officer of Fulton or one of its subsidiary banks. Thus, Mr. Smith did not receive any director fees in 2007 for serving as a member of the Board of Directors. For the first three quarters of 2007, non-management directors received a quarterly retainer of $5,000. After a study in 2007 by the Hay Group, an outside compensation consultant, and upon the recommendation of the Executive Compensation Committee, the Board of Directors on September 18, 2007 increased the non-employee director quarterly retainer to $8,750 effective October 1, 2007. In addition, directors are paid a fee of $1,000 for each Board of Directors meeting attended and $1,000 for each committee meeting attended on non-board meeting days. The chairperson of the Audit Committee is paid a quarterly fee of $2,500 and the chairpersons of the Executive Committee and the Executive Compensation Committee are paid a quarterly fee of $625. Directors are also paid $1,000 for attendance at Fulton sponsored educational seminars, but these seminars are not included for purposes of calculating director attendance rates since they are a voluntary activity. Fulton also reimburses directors for certain expenses incurred in the performance of their service as directors of Fulton. Certain directors have elected to participate in the Fulton Deferred Compensation Plan, under which a director may elect not to receive the normal director's fees when earned, but instead, to receive them, together with interest, in a lump sum or in installments over a period of up to twenty (20) years following retirement. The only current non-management Fulton directors who have established accounts to defer fees are Directors Albertson, Bond, Chryst and Holleran.

     As disclosed in the Director Compensation Table and footnotes above, certain Fulton directors also serve on the boards of various Fulton subsidiary banks, or other Fulton affiliate boards, and the directors are compensated with a retainer, meeting fees or both a retainer and meeting fees for their service on each of the individual boards.

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INFORMATION CONCERNING DIRECTORS

Meetings and Committees of the Board of Directors

     The Board of Directors of Fulton has a standing Executive Committee, Audit Committee, Nominating Committee, Executive Compensation Committee, Trust Committee and Human Resources Committee. The following table represents the membership on each Fulton committee as of the date of this proxy statement:

	Executive	Executive	Nominating	Audit	Human	Trust
		Compensation			Resources
Jeffrey G. Albertson*	Member	Member	Chair		Member
John M. Bond, Jr.						Vice Chair
Donald M. Bowman, Jr.*	Member	Member				Member
Dana A. Chryst*						Member
Craig A. Dally*			Member		Member
Patrick J. Freer*	Member	Chair		Member
Rufus A. Fulton, Jr.						Chair
George W. Hodges **	Vice Chair	Member		Chair
Carolyn R. Holleran*			Member		Chair
Willem Kooyker **				Member
Donald W. Lesher, Jr.*	Chair	Member		Vice Chair
Abraham S. Opatut					Vice Chair
John O. Shirk*	Member	Vice Chair	Vice Chair			Member
R. Scott Smith, Jr.	Member				***	***
Gary A. Stewart*			Member	Member

* Independent Director

** Independent Director and Audit Committee Financial Expert

*** Ex-officio member

Compensation Committee Interlocks and Insider Participation

     In March 2004, the Executive Compensation Committee was formed, and its membership consists only of independent directors. More information regarding the Executive Compensation Committee can be found in "Compensation Discussion and Analysis" on page 12. There are no interlocking relationships, as defined in regulations of the SEC, involving members of the Executive Compensation Committee. Directors Albertson and Bowman have indirect relationships described in "Related Person Transactions with Directors and Executive Officers" on page 38, and there are similar relationships with law firms where other directors are employed. The Executive Compensation Committee is responsible for, among other things, recommending the compensation and stock option awards for Senior Management to the Board of Directors. The Executive Compensation Committee met nine times in 2007. The Executive Compensation Committee is governed by a formal charter, which was last amended in 2008, and which is available on Fulton’s website at www.fult.com.

Other Board Committees

     All members of the Audit Committee meet the experience and independence requirements of the NASDAQ listing standards, and the rules and regulations of the SEC. Directors Hodges and Kooyker were determined to qualify, and agreed to serve, as the Audit Committee's "financial experts" as defined by the SEC regulations. The Audit Committee met fourteen times during the year. The Audit Committee is governed by a formal charter, which was last amended in 2007, and which is available on Fulton’s website at www.fult.com. The Audit Committee's pre-approval policy and procedure for audit and non-audit services is set forth in its charter. The functions of the Audit Committee include, among other things: sole authority to appoint or replace the independent auditor; direct responsibility for the compensation and oversight of the work of the independent auditor; oversight of the overall relationship with the independent auditor; meeting with the independent auditor to review the scope of audit services; reviewing and discussing with management and the independent auditor annual and quarterly financial statements and related disclosures; overseeing the internal

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audit function, including hiring and replacing the chief audit executive; reviewing periodic reports from the loan review function; reviewing and approving of all changes to Fulton's Code of Conduct; reviewing and approving of related person transactions; establishing procedures and handling complaints concerning accounting, internal accounting controls, or auditing matters and oversight of Fulton's risk management process.

     All the members of the Nominating Committee meet the independence requirements of the NASDAQ listing standards. The Nominating Committee met one time during the year. The Nominating Committee is responsible for, among other things, recommending to the Board of Directors the nominees for election to the Board of Directors. The Nominating Committee operates pursuant to its charter, which is available on Fulton’s website at www.fult.com.

     The Executive Committee met nine times during the year. Except for the powers expressly excluded in Section 5 of Article III of the Bylaws, the Executive Committee exercises the powers of the Board of Directors between board meetings.

     The Trust Committee met eight times during the year. The Trust Committee is responsible for consulting with management of Fulton Financial Advisors, National Association, a subsidiary of Fulton, and overseeing all trust, investment, insurance and related financial services which Fulton performs, directly or indirectly through an affiliate.

     Fulton’s Board of Directors has delegated certain compensation matters to the Human Resources Committee including, but not limited to, administration of Fulton’s Employee Stock Purchase Plan, Fulton’s 401(k) Retirement Plan and 401(k) plans for affiliate banks, approving employment agreements for non-executive officers of Fulton and fulfilling other broad based human resources duties. The Human Resources Committee met eight times during the year to review benefit and salary administration programs for Fulton employees other than Senior Management of Fulton, and other human resources matters affecting Fulton and its subsidiaries.

     There were thirteen meetings of the Board of Directors of Fulton and forty-nine meetings of the standing committees of the Board of Directors of Fulton during 2007. No director attended fewer than 75% of the aggregate number of meetings of the Board of Directors and of the board committees on which he or she served in 2007.

Executive Sessions

     The independent directors of the board met three times in executive session in 2007. Director Lesher, as the Chairman of the Executive Committee, conducted these executive sessions of the independent directors of the board.

Annual Meeting Attendance

     Fulton does not have a formal policy requiring the individual members of the Board of Directors to attend the Annual Meeting, although all directors are encouraged to attend the meeting in person. Fulton held its 2007 Annual Meeting, which began at 12:00 noon on May 7, 2007, at the Hershey Lodge and Convention Center, and all of the Fulton directors in office as of the day of the Annual Meeting were present in 2007.

Related Person Transactions with Directors and Executive Officers

     Financial Products and Services. Some of the directors and executive officers of Fulton and the companies with which they are associated were customers of, and/or had banking transactions with, Fulton bank subsidiaries during 2007. These transactions included deposit accounts, trust relationships and loans in the ordinary course of business with different Fulton bank subsidiaries. All loans and commitments to

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lend made to such persons and to the companies with which they are associated were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender, and did not involve more than a normal risk of collectibility or present other unfavorable features. It is anticipated that similar transactions will be entered into in the future. By using Fulton’s products and services, directors and officers have the opportunity to become familiar with the wide array of products and services offered by Fulton’s affiliate banks to customers.

     Other Transactions. Applicable SEC regulations require Fulton to disclose transactions with certain related persons where the amount involved exceeds $120,000. However, a person who has a position or relationship with a firm, corporation, or other entity that engages in a transaction with Fulton is not deemed to have a material interest in a transaction where the interest arises only from such person’s position as a director of the other entity and/or arises only from the ownership by such person in the other entity if that ownership is under ten percent, excluding partnerships. Amounts paid to entities in which a related person does not have a material interest are not required to be disclosed.

     Some of the directors of Fulton are members of law firms which provided legal services to Fulton or its subsidiaries in 2007 and in prior years. It is expected that these firms will continue to provide services to Fulton or its subsidiaries in the future. The law firm of Albertson Ward, Woodbury, New Jersey, has provided legal services to subsidiaries of Fulton for several years. Director Albertson is a partner in this law firm with more than a ten percent interest in the firm. In 2007, Fulton paid Albertson Ward $152,835 in fees and expense reimbursements for such services.

     In 2007, affiliate bank subsidiaries of Fulton paid annual rent and related expenses of $101,534 for a branch office to The Bowman Group, LLP, and annual rent and related expenses of $120,236 for a branch office to Bowman 2000 LLC. Director Donald M. Bowman, Jr. is a limited partner in The Bowman Group, LLP and is the manager of Bowman 2000 LLC.

     Fulton considered all of the above related person transactions, and other similar transactions, when it made the determinations that eleven of Fulton’s fifteen nominees and continuing directors are independent in accordance with the NASDAQ listing standards. See “Information about Nominees, Continuing Directors and Independence Standards” on page 6 for more information.

     Family Relationships. There are no family relationships among any of the directors and Senior Management of Fulton. However, family relationships do exist among Senior Management and some of the approximately 3,680 employees of Fulton and its subsidiaries. These employees participate in compensation, benefit and incentive plans on the same basis as other similarly situated employees. SEC regulations require disclosure of any transaction with a related person where the amount involved exceeds $120,000. In fiscal year 2007, the only immediate family member of Senior Management who was compensated in excess of that amount was Mr. Craig A. Roda, the brother-in-law of Mr. Wenger. In 2007, Mr. Roda received annual compensation consisting of base salary and cash bonus totaling $308,750, plus other benefits on the same basis as other similarly situated employees. Mr. Roda became President and Chief Operating Officer of Fulton Bank in January 2006, and in October 2006 he became the President and Chief Executive Officer of Fulton Bank. He has been employed by Fulton in various positions since 1979.

     Related Person Transaction Policy and Procedures. Fulton does not have a separate policy specific to related person transactions. Under Fulton’s Code of Conduct (“Code”), however, employees and directors are expected to recognize and avoid those situations where personal or financial interests or relationships might influence, or appear to influence, the judgment of the employee or director on matters affecting Fulton. The Code also requires thoughtful attention to the problem of conflicts and the exercise of the highest degree of good judgment. Under the Code, directors must provide reasonable notice to Senior Management of all changed or new business activities, related person relationships and board directorships as they arise.

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     In addition, Fulton and its affiliate banks are subject to Federal Reserve Regulation O, which governs loans by federally regulated banks to certain insiders, including an executive officer, director or 10% controlling shareholder of the applicable bank or bank holding company, or an entity controlled by such executive officer, director or controlling shareholder (an “Insider”). Each Fulton affiliate bank follows a Regulation O policy that prohibits the affiliate bank from making loans to an Insider unless the loan (i) is made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender; and (ii) does not involve more than the normal risk of repayment or present other unfavorable features. Fulton and its affiliate banks are examined periodically by different bank regulators for compliance with Regulation O. Internal controls exist within Fulton and its affiliate banks to ensure that compliance with Regulation O is maintained on an ongoing basis.

     In accordance with Fulton's Audit Committee Charter and NASDAQ listing standards, the Audit Committee is charged with the responsibility to review the terms of and approve related person transactions. This responsibility includes reviewing an annual report regarding the related person transactions with each director and Executive during the prior year, if any. At the February 2008 Audit Committee meeting, the Audit Committee reviewed all existing related person transactions involving Fulton’s directors and executive officers. The Audit Committee concluded that the loans and other banking services to the directors of Fulton, Executives and their related interests were provided in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with others. The Audit Committee also conducted a review of all other related person transactions for any potential conflict of interest situations with the directors of Fulton and the Executives, and concluded that there were no conflicts present, and ratified and approved all the transactions reviewed.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires the directors and certain officers of Fulton to file with the Securities and Exchange Commission initial reports of ownership and reports of change in ownership of common stock and other equity securities of Fulton. Based solely on its review of copies of such reports, forms or written representations from certain reporting persons that no Form 5’s were required for those persons, Fulton believes that all Section 16(a) filing requirements applicable to its directors and officers have been complied with and reports were timely filed in 2007.

Board Evaluations

     In an effort to improve board, committee and individual director performance, all of the members of the Board of Directors were asked to complete a board evaluation questionnaire in December 2007. The results were compiled by the Corporate Secretary and presented to the Board of Directors at the January 2008 meeting for the directors to discuss the results without management present. Initially all the directors were present, however, the independent directors continued the discussion during an executive session of the Board of Directors.

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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

     For the year ended December 31, 2007, and December 31, 2006, Fulton engaged KPMG LLP ("KPMG"), independent certified public accountants, to audit Fulton's financial statements. The fees incurred for services rendered by KPMG for the years ended December 31, 2007 and 2006 are summarized in the following table.

	2007			2006
Audit Fees – Annual Audit and Quarterly Reviews (1)	$	1,707,825		$	1,638,000
Audit Fees – Issuance of Comfort Letters and Consents		120,380			66,040
Audit Fees Subtotal		1,828,205			1,704,040
Audit Related Fees		24,320			25,780
Tax Fees		0			0
All Other Fees (2)		122,062			19,310
TOTAL	$	1,974,587		$	1,749,130

	(1) Amounts presented for 2007 are based upon the audit engagement letter and additional billings if applicable. Final billings for 2007 may differ.
	(2) All Other Fees were for services rendered to the trust subsidiary (primarily for a SAS 70 report on the processing of transactions by the retirement services area). Amounts totaling $12,000 in 2007 and $253,500 in 2006 for audit and tax services to Columbia Bancorp, Inc. for periods prior to its acquisition have been excluded.

     The appointment of KPMG for the fiscal year ended December 31, 2008 was approved by the Audit Committee of the Board of Directors of Fulton (the “Committee”) at a meeting on February 26, 2008. Representatives of KPMG are expected to be present at the 2008 Annual Meeting with the opportunity to make a statement and to be available to respond to appropriate questions.

     The Committee has carefully considered whether the provision of the non-audit services described above which were performed by KPMG in 2007 would be incompatible with maintaining the independence of KPMG in performing its audit services and has determined that, in its judgment, the independence of KPMG has not been compromised.

     All fees paid to KPMG in 2007 and 2006 were preapproved by the Committee. The Committee preapproves all auditing and permitted non-auditing services, including the fees and terms thereof, to be performed by its independent auditor, subject to the de minimus exceptions for non-auditing services permitted by the Securities Exchange Act of 1934. However, these types of services are approved prior to completion of the services. The Committee may form and delegate authority to subcommittees consisting of one or more members, when appropriate, including the authority to grant preapprovals of audit and permitted non-audit services. Any decisions of such subcommittees to grant preapprovals are presented to the full Committee for ratification at its next scheduled meeting.

     Based on its review and discussion of the audited 2007 financial statements of Fulton with management and KPMG, the Committee recommended to the Board of Directors that the financial statements be included in the Annual Report on Form 10-K for filing with the Securities and Exchange Commission. A copy of the report of the Audit Committee of its findings that resulted from its financial reporting oversight responsibilities is attached as Exhibit A.

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ADDITIONAL INFORMATION

     A copy of the Annual Report of Fulton on Form 10-K as filed with the Securities and Exchange Commission, including financial statements, is available without charge to shareholders upon written request addressed to the Corporate Secretary, Fulton Financial Corporation, P.O. Box 4887, Lancaster, Pennsylvania 17604.

     Only one proxy statement is being delivered to multiple security holders sharing an address unless Fulton has received contrary instructions from one or more of the security holders. Fulton will promptly deliver, upon written or oral request, a separate copy of the proxy statement to a security holder at a shared address to which a single copy of the document was delivered. Such a request should be made to the Corporate Secretary, Fulton Financial Corporation, P.O. Box 4887, Lancaster, Pennsylvania 17604, (717) 291-2411. Requests to receive a separate mailing for future proxy statements should be made orally or in writing to the Corporate Secretary at the foregoing address or phone number.

     The Fulton Annual Report on Form 10-K for year ended December 31, 2007 and proxy statement are posted and available on Fulton's website at www.fult.com. Copies of the current governance documents and future updates, including but not limited to the Fulton Code of Conduct, Audit Committee Charter, Executive Compensation Committee Charter and Nominating Committee Charter, are also posted and available on Fulton's website at www.fult.com.

 

 

OTHER MATTERS

     The Board of Directors of Fulton knows of no matters other than those discussed in this Proxy Statement which will be presented at the 2008 Annual Meeting. However, if any other matters are properly brought before the meeting, any proxy given pursuant to this solicitation will be voted in accordance with the recommendations of the Board of Directors of Fulton.

 

	BY ORDER OF THE BOARD OF DIRECTORS
	R. SCOTT SMITH, JR.
	Chairman of the Board, President
	and Chief Executive Officer
Lancaster, Pennsylvania
March 20, 2008

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