DEF 14A 1 y74865ddef14a.htm DEFINITIVE PROXY STATEMENT DEF 14A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.
    )
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
o   Preliminary Proxy Statement
 
o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
 
þ   Definitive Proxy Statement
 
o   Definitive Additional Materials
 
o   Soliciting Material Pursuant to §240.14a-12
CITIGROUP INC.
 
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Citi Logo
 
Citigroup Inc.
399 Park Avenue
New York, NY 10043
 
March 20, 2009
 
Dear Stockholder:
 
We cordially invite you to attend Citi’s annual stockholders’ meeting. The meeting will be held on Tuesday, April 21, 2009, at 9am at the Hilton New York, 1335 Avenue of the Americas in New York City. The entrance to the Hilton is on Avenue of the Americas (6th Ave.) between West 53rd and West 54th Streets.
 
At the meeting, stockholders will vote on a number of important matters. Please take the time to carefully read each of the proposals described in the attached proxy statement.
 
The Board would also like to recognize our retiring directors, Sir Win Bischoff, Kenneth Derr, Roberto Hernandez, Robert Rubin, and Franklin Thomas for their many contributions to Citi. The collective wisdom and insight of these directors have been an invaluable source of strength for Citi.
 
Please join me in thanking them. And thank you for your support of Citi.
 
Sincerely,
 
-s- Richard D. Parsons
Richard D. Parsons
Chairman of the Board
 
This proxy statement and the accompanying proxy card are being mailed to
Citi’s stockholders beginning about March 20, 2009.


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Citi Logo
 
Citigroup Inc.
399 Park Avenue
New York, NY 10043
 
Notice of Annual Meeting of Stockholders
 
Dear Stockholder:
 
Citi’s annual stockholders’ meeting will be held on Tuesday, April 21, 2009, at 9am at the Hilton New York, 1335 Avenue of the Americas in New York City. The entrance to the Hilton is on Avenue of the Americas (6th Ave.) between West 53rd and West 54th Streets. You will need an admission ticket or proof of ownership of Citi stock to enter the meeting.
 
At the meeting, stockholders will be asked to
 
Ø  act on certain stockholder proposals,
 
Ø  ratify the selection of Citi’s independent registered public accounting firm for 2009,
 
Ø  elect directors,
 
Ø  approve Citi’s 2008 Executive Compensation,
 
Ø  approve the Citigroup 2009 stock incentive plan, and
 
Ø  consider any other business properly brought before the meeting.
 
The close of business on February 27, 2009 is the record date for determining stockholders entitled to vote at the annual meeting. A list of these stockholders will be available at Citi’s headquarters, 399 Park Avenue, New York City, before the annual meeting.
 
Please sign, date and promptly return the enclosed proxy card in the enclosed envelope, or vote by telephone or Internet (instructions are on your proxy card), so that your shares will be represented whether or not you attend the annual meeting.
 
By order of the board of directors
 
-s- Michael S. Helfer
 
Michael S. Helfer
Corporate Secretary
 
March 20, 2009


 

 
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About the Annual Meeting
 
Who is soliciting my vote?
The board of directors of Citi is soliciting your vote at the 2009 annual meeting of Citi’s stockholders.
 
Where and when will the annual meeting take place?
The meeting is scheduled to begin at 9am on April 21, 2009 at the Hilton New York at 1335 Avenue of the Americas in New York City. The entrance to the Hilton is on Avenue of the Americas (6th Ave.) between West 53rd and West 54th Streets.
 
What will I be voting on?
•  Nine stockholder proposals (see page 91).
•  Ratification of kpmg llp (kpmg) as Citi’s independent registered public accounting firm for 2009 (see page 71).
•  Election of directors (see page 20).
•  Approval of Citi’s 2008 Executive Compensation (see page 90).
•  Approval of the Citigroup 2009 Stock Incentive Plan (see page 73).
An agenda will be distributed at the meeting.
 
How many votes do I have?
You will have one vote for every share of Citi common stock you owned on February 27, 2009 (the record date).
 
How many votes can be cast by all stockholders?
5,512,970,301, consisting of one vote for each of Citi’s shares of common stock that were outstanding on the record date. There is no cumulative voting.
 
How many votes must be present to hold the meeting?
A majority of the votes that can be cast, or 2,756,485,152. We urge you to vote by proxy even if you plan to attend the annual meeting, so that we will know as soon as possible that enough votes will be present for us to hold the meeting.
 
Does any single stockholder control as much as 5% of any class of Citi’s voting stock?
Yes, according to a Schedule 13 G Information Statement filed by State Street Bank and Trust Company on February 17, 2009, State Street may be deemed to beneficially own 6.2% of Citi’s common stock. State Street, the custodian for Citi’s 401(k) Plan, disclaimed beneficial ownership of all such shares in the Information Statement.
 
In 2008 and 2009, Citi issued to the U.S. Treasury warrants to purchase 465,117,176 shares of common stock, of which warrants to purchase 360,075,159 shares of common stock are exercisable within 60 days. The exercise prices for the warrants are $10.61 and $17.85. The warrants exercisable within 60 days represent approximately 6.2% of Citi’s voting stock. However, none of the warrants have been exercised and the exercise prices are above Citi’s closing price on March 6 of $1.03. See Citi’s Annual Report on Form 10-K filed on February 27, 2009 for additional information.
 
For further information, see “Stock Ownership—Owners of More than 5% of Our Common Stock” in this proxy statement.
 
How do I vote?
You can vote either in person at the annual meeting or by proxy whether or not you attend the annual meeting.
 
To vote by proxy, you must either
 
•  fill out the enclosed proxy card, date and sign it, and return it in the enclosed postage-paid envelope,
•  vote by telephone (instructions are on the proxy card), or
•  vote by Internet (instructions are on the proxy card).
 
To ensure that your vote is counted, please remember to submit your vote by April 20, 2009.
 
Citi employees who participate in equity programs may receive their proxy cards separately.


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If you want to vote in person at the annual meeting, and you hold your Citi stock through a securities broker (that is, in street name), you must obtain a proxy from your broker and bring that proxy to the meeting.
 
Can I change my vote?
Yes. Just send in a new proxy card with a later date, or cast a new vote by telephone or Internet, or send a written notice of revocation to Citi’s Corporate Secretary at the address on the cover of this proxy statement. If you attend the annual meeting and want to vote in person, you can request that your previously submitted proxy not be used.
 
What if I don’t vote for some of the matters listed on my proxy card?
If you return a signed proxy card without indicating your vote, your shares will be voted, in accordance with the board’s recommendation, for the nominees listed on the card, for kpmg as independent registered public accounting firm for 2009, for the Citigroup 2009 Stock Incentive Plan, for Citi’s 2008 Executive Compensation and against the other proposals.
 
How are my votes counted?
You may vote for or against each director nominee, or abstain from voting on a director nominee. Each nominee for director will be elected if the votes for the director exceed the votes against the director. Abstentions will not be counted either for or against the director but will be counted for purposes of establishing a quorum.
 
You may vote for or against the ratification of kpmg, or abstain from voting on this proposal. If you abstain from voting on the ratification of kpmg, your shares will be counted as present for purposes of establishing a quorum, and the abstention will have the same effect as a vote against this proposal.
 
You may vote for or against Citi’s 2008 Executive Compensation, or abstain from voting on this proposal. If you abstain from voting on Citi’s 2008 Executive Compensation, your shares will be counted as present for purposes of establishing a quorum, and the abstention will have the same effect as a vote against this proposal.
 
You may vote for or against or you may abstain from voting on the other proposals. If you abstain from voting on the Citigroup 2009 Stock Incentive Plan or any stockholder proposal, your shares will be counted as present for purposes of establishing a quorum, and the abstention will have the same effect as a vote against that proposal.
 
How many votes are required to elect directors and to adopt the other proposals?
Citi has adopted a by-law providing a majority vote standard for director elections. The by-law amendment provides that if a nominee receives, in an uncontested election, a number of votes cast against his or her election that is greater than the number of votes cast for the election of the director, such director shall offer to resign from his or her position as a director. Unless the board decides to reject the offer or to postpone the effective date of the offer, the resignation shall become effective 60 days after the date of the election.
 
The ratification of kpmg’s appointment, the Citigroup 2009 Stock Incentive Plan, Citi’s 2008 Executive Compensation and the stockholder proposals each require the affirmative vote of a majority of the shares of common stock represented at the annual meeting and entitled to vote thereon in order to be approved.
 
Is my vote confidential?
In 2006, the board adopted a confidential voting policy as a part of its Corporate Governance Guidelines. Under the policy, all proxies, ballots, and vote tabulations are kept confidential for registered stockholders who request confidential treatment. If you are a registered stockholder and would like your vote kept confidential, please check the appropriate box on the proxy card or follow the instructions when submitting your vote by telephone or by the Internet. If you hold your shares in “street name” or through an employee benefit plan, your vote already receives confidential treatment and you do not need to request confidential treatment in order to maintain the confidentiality of your vote.
 
The confidential voting policy will not apply in the event of a proxy contest or other solicitation based on an opposition proxy statement. For


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further details regarding this policy, please see the Corporate Governance Guidelines attached as Annex A to this proxy statement.
 
Can my shares be voted if I don’t return my proxy card and don’t attend the annual meeting?
If you don’t vote your shares held in street name, your broker can vote your shares on matters that the New York Stock Exchange (nyse) has ruled discretionary. The election of directors, the ratification of kpmg’s appointment, and Citi’s 2008 Executive Compensation are discretionary items. nyse member brokers that do not receive instructions from beneficial owners may vote on these proposals in the following manner: (1) a Citi affiliated member is permitted to vote your shares in the same proportion as all other shares are voted with respect to each such proposal; and (2) all other nyse member brokers are permitted to vote your shares in their discretion. The brokers will not be able to vote your shares for the Citigroup 2009 Stock Incentive Plan and the stockholder proposals if you fail to provide instructions.
 
If you don’t vote your shares registered directly in your name, not in the name of a bank or broker, your shares will not be voted.
 
Could other matters be decided at the annual meeting?
We don’t know of any other matters that will be considered at the annual meeting. If a stockholder proposal that was excluded from this proxy statement is brought before the meeting, we will vote the proxies against the proposal. If any other matters arise at the annual meeting that are properly presented at the meeting, the proxies will be voted at the discretion of the proxy holders.
 
What happens if the meeting is postponed or adjourned?
Your proxy will still be good and may be voted at the postponed or adjourned meeting. You will
still be able to change or revoke your proxy until it is voted.
 
Do I need a ticket to attend the annual meeting?
Yes, you will need an admission ticket or proof of ownership of Citi stock to enter the meeting. When you arrive at the annual meeting, you may be asked to present photo identification, such as a driver’s license. If you are a stockholder of record, you will find an admission ticket attached to the proxy card sent to you. If you plan to attend the meeting, please so indicate when you vote and bring the ticket with you to the meeting. If your shares are held in the name of a bank, broker or other holder of record, your admission ticket will be included in your proxy materials. If you don’t bring your admission ticket, or opted to receive your proxy materials electronically, you will need proof of ownership to be admitted to the meeting. A recent brokerage statement or letter from a bank or broker is an example of proof of ownership. If you arrive at the meeting without an admission ticket, we will admit you only if we are able to verify that you are a Citi stockholder. Due to seating limitations, Citi will not be able to accommodate guests at the annual meeting. Any persons needing special assistance should contact Shareholder Relations at the following email address: shareholderrelations@citi.com.
 
How can I access Citi’s proxy materials and annual report electronically?
This proxy statement and the 2008 annual report are available on Citi’s website at www.citigroup.com. Click on “Corporate Governance,” then “Financial Disclosure,” and then “Annual Reports & Proxy Statements.” Most stockholders can elect not to receive paper copies of future proxy statements and annual reports and can instead view those documents on the Internet.


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If you are a stockholder of record, you can choose this option and save Citi the cost of producing and mailing these documents by following the instructions provided when you vote over the Internet. If you hold your Citi stock through a bank, broker or other holder of record, please refer to the information provided by that entity for instructions on how to elect not to receive paper copies of future proxy statements and annual reports.
 
If you choose not to receive paper copies of future proxy statements and annual reports, you will receive an e-mail message next year containing the Internet address to use to access Citi’s proxy statement and annual report. Your choice will remain in effect until you tell us otherwise. You do not have to elect Internet access each year. To view, cancel or change your enrollment profile, please go to www.InvestorDelivery.com.



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How We Have Done
 
Annual Report
If you received these materials by mail, you should have also received Citi’s annual report to stockholders for 2008 with them. The 2008 annual report is also available on Citi’s website at www.citigroup.com. We urge you to read
these documents carefully. In accordance with the Securities and Exchange Commission’s (sec) rules, the Five-Year Performance Graph appears in the 2008 Annual Report on Form 10-K.

 
 
[GRAPHIC]
 
Corporate Governance
 
Citi continually strives to maintain the highest standards of ethical conduct: reporting results with accuracy and transparency; and maintaining full compliance with the laws, rules and regulations that govern Citi’s businesses. Citi is active in ensuring its governance practices are at the leading edge of best practices. Among other initiatives, Citi in recent years has:
 
  Ø eliminated super-majority vote provisions contained in its charter;
 
  Ø amended our by-laws to give holders of at least 25% of the outstanding common stock the right to call a special meeting;
 
  Ø amended our by-laws to include a majority vote standard for director elections;
 
  Ø adopted a policy to recoup unearned compensation; and
 
  Ø adopted a Political Contributions Policy under which Citi will annually compile and publish a list of its political contributions. The policy and a list of our 2008 political contributions are available in the “Corporate Governance” section of Citi’s website: www.citigroup.com.
 
The current charters of the audit and risk management, nomination and governance, and personnel and compensation committees, as well as Citi’s Corporate Governance Guidelines, Code of Conduct and Code of Ethics, are available in the “Corporate Governance” section of Citi’s website: www.citigroup.com. Citi stockholders may obtain printed copies of these documents by writing to Citigroup Inc., Corporate Governance, 425 Park Avenue, 2nd floor, New York, NY 10022.
Nomination and Governance Committee
The nomination and governance committee’s mandate is to review and shape corporate governance policies and identify qualified individuals for nomination to the board of directors. All of the members of the committee meet the independence standards contained in the nyse corporate governance rules and Citi’s Corporate Governance Guidelines, which are attached to this proxy statement as Annex A. A copy of the committee’s charter is attached to this proxy statement as Annex C.
 
On January 21, 2009, Citi announced that Richard D. Parsons, the lead director and chair of the board’s nomination and governance committee, would succeed Sir Win Bischoff as chairman of the board of directors, effective February 23, 2009. During the period that Citi has an independent chair, there will not be a lead director. In 2004, Citi designated the chair of the nomination and governance committee as lead director. Since 2004 and until February 23, 2009, Citi has had an independent lead director. Details regarding the selection, duties, term, and tenure of the independent lead director are specified in Citi’s Corporate Governance Guidelines, attached as Annex A to this proxy statement.
 
The committee considers all qualified candidates identified by members of the committee, by other members of the board of directors, by senior management and by security holders. In 2008, the committee engaged Heidrick & Struggles for a portion of the year and Spencer Stuart thereafter to assist in identifying and evaluating potential nominees. Stockholders who would like to propose a director candidate for consideration by the committee may do so by


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submitting the candidate’s name, résumé and biographical information to the attention of the Corporate Secretary, Citigroup Inc., 399 Park Avenue, New York, NY 10043. All proposals for nominations received by the Corporate Secretary will be presented to the committee for its consideration.
 
The committee reviews each candidate’s biographical information and assesses each candidate’s independence, skills and expertise based on a variety of factors, including the following criteria, which have been developed by the committee and approved by the board:
 
•  Whether the candidate has exhibited behavior that indicates he or she is committed to the highest ethical standards and our Code of Conduct.
 
•  Whether the candidate has had business, governmental, non-profit or professional experience at the Chairman, Chief Executive Officer or Chief Operating Officer or equivalent policy-making and operational level of a large organization with significant international activities that indicates that the candidate will be able to make a meaningful and immediate contribution to the board’s discussion of and decision-making on the array of complex issues facing a large and diversified financial services business that operates on a global scale.
 
•  Whether the candidate has special skills, expertise and background that would complement the attributes of the existing directors, taking into consideration the diverse communities and geographies in which Citi operates.
 
•  Whether the candidate has the financial expertise required to provide effective oversight of a large and diversified financial services business that operates on a global scale.
 
•  Whether the candidate has achieved prominence in his or her business, governmental or professional activities, and has built a reputation that demonstrates the ability to make the kind of important and sensitive judgments that the board is called upon to make.
 
•  Whether the candidate will effectively, consistently and appropriately take into
 
account and balance the legitimate interests and concerns of all of Citi’s stockholders and our other stakeholders in reaching decisions, rather than advancing the interests of a particular constituency.
 
•  Whether the candidate possesses a willingness to challenge management while working constructively as part of a team in an environment of collegiality and trust.
 
•  Whether the candidate will be able to devote sufficient time and energy to the performance of his or her duties as a director.
 
Application of these factors involves the exercise of judgment by the committee and the board.
 
Based on its assessment of each candidate’s independence, skills and qualifications and the criteria described above, the committee will make recommendations regarding potential director candidates to the board.
 
The committee follows the same process and uses the same criteria for evaluating candidates proposed by stockholders, members of the board of directors and members of senior management.
 
For the 2009 annual meeting, we received timely notice of director nominations from thirteen stockholders who nominated themselves or another person to stand for election at the annual meeting. The qualifications of these individuals were discussed at meetings of the nomination and governance committee and the views of Spencer Stuart on the candidates were considered. After deliberation, the committee decided not to include these individuals on the slate of candidates it proposed to the full board for consideration. The committee used the above-mentioned criteria to evaluate the candidates.
 
Corporate Governance Guidelines
Citi’s Corporate Governance Guidelines embody many of our long-standing practices, policies and procedures, which are the foundation of our commitment to best practices. The Guidelines are reviewed at least annually, and revised as necessary, to continue to reflect best practices. The full text of the Guidelines, as approved by the board, is set forth in Annex A to this proxy statement. The Guidelines outline the responsibilities, operations, qualifications and composition of the board.


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Our goal is that at least two-thirds of the members of the board be independent. The board has recently announced that it unanimously decided to have a majority of new directors as soon as feasible. Certain nominees are included in this proxy statement for election by stockholders. When additional candidates are identified, approved and subsequently appointed as directors by the board, the Company will file a Form 8-K to announce the appointments. A description of our independence criteria and the results of the board’s independence determinations are set forth below.
 
The number of other public company boards on which a director may serve is subject to a case-by-case review by the nomination and governance committee, in order to ensure that each director is able to devote sufficient time to performing his or her duties as a director. Interlocking directorates are prohibited (inside directors and executive officers of Citi may not sit on boards of companies where a Citi outside director is an executive officer).
 
The Guidelines require that all members of the committees of the board, other than the public affairs committee and the executive committee, be independent. Committee members are appointed by the board upon recommendation of the nomination and governance committee. Committee membership and chairs are rotated periodically. The board and each committee have the power to hire and fire independent legal, financial or other advisors, as they may deem necessary, without consulting or obtaining the approval of management.
 
Meetings of the non-management directors are held as part of every regularly scheduled board meeting and are presided over by the independent chairman.
 
If a director has a substantial change in professional responsibilities, occupation or business association, he or she is required to notify the nomination and governance committee and to offer his or her resignation from the board. The nomination and governance committee will evaluate the facts and circumstances and make a recommendation to the board whether to accept the resignation or request that the director continue to serve on the board. If a director assumes a significant role in
 
a not-for-profit entity, he or she is asked to notify the nomination and governance committee.
 
Directors are expected to attend board meetings, meetings of the committees and subcommittees on which they serve and the annual meeting of stockholders. All of the directors then in office attended Citi’s 2008 annual meeting.
 
The nomination and governance committee nominates one of the members of the board to serve as chairman of the board on an annual basis. The nomination and governance committee also conducts an annual review of board performance, and each committee conducts its own self-evaluation. The board and committees may engage an outside consultant to assist in conducting the self-evaluations. The results of these evaluations are reported to the board.
 
Directors have full and free access to senior management and other employees of Citi. New directors are provided with an orientation program to familiarize them with Citi’s businesses and its legal, compliance, regulatory and risk profile. Citi provides educational sessions on a variety of topics, which all members of the board are invited to attend. These sessions are designed to allow directors to, for example, develop a deeper understanding of a business issue or a complex financial product.
 
The board reviews the personnel and compensation committee’s report on the performance of senior executives in order to ensure that they are providing the best leadership for Citi. The board also works with the nomination and governance committee to evaluate potential successors to the ceo.
 
If a director, or an immediate family member who shares the director’s household, serves as a director, trustee or executive officer of a foundation, university, or other not-for-profit organization and such entity receives contributions from Citi and/or the Citi Foundation, such contributions will be reported to the nomination and governance committee at least annually.
 
The Guidelines affirm Citi’s stock ownership commitment, which is described in greater detail in this proxy statement. In 2008, the stock ownership commitment was reviewed in


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connection with the reorganization of Citi’s senior management structure and was simplified as part of Citi’s continuing efforts to streamline the organization and become more efficient. The members of the management executive committee, consisting of the most senior executives of the Company, and the members of the board of directors have agreed to hold 75% of the shares of common stock they acquire through Citi’s equity programs as long as they remain subject to the stock ownership commitment. Those members of the senior leadership committee, which consists of the management executive committee and an additional 36 executives of the Company who are not also members of the management executive committee, have agreed to hold 50% of the shares of common stock they acquire through Citi’s equity programs as long as they remain subject to the stock ownership commitment.
 
The Guidelines restrict certain financial transactions between Citi and its subsidiaries on the one hand and directors, senior management and their immediate family members on the other. Personal loans to executive officers and directors of Citi and its public issuer subsidiaries and members of the management executive committee, or immediate family members who share any such person’s household, are prohibited, except for mortgage loans, home equity loans, consumer loans, credit cards, charge cards, overdraft checking privileges and margin loans to employees of a broker-dealer subsidiary of Citi made on market terms in the ordinary course of business. See Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation on page 10 of this proxy statement.
 
The Guidelines prohibit investments or transactions by Citi or its executive officers and those immediate family members who share an executive officer’s household in a partnership or other privately-held entity in which an outside director is a principal or in a publicly-traded company in which an outside director owns or controls more than a 10% interest. Directors and those immediate family members who share the director’s household are not permitted to receive initial public offering allocations. Directors and their immediate family members may participate in Citi-sponsored investment activities, provided
 
they are offered on the same terms as those offered to similarly situated non-affiliated persons. Under certain circumstances, or with the approval of the appropriate committee, members of senior management may participate in certain Citi-sponsored investment opportunities. Finally, there is a prohibition on certain investments by directors and executive officers in third-party entities when the opportunity comes solely as a result of their position with Citi.
 
Director Independence
The board has adopted categorical standards to assist the board in evaluating the independence of each of its directors. The categorical standards, which are set forth below, describe various types of relationships that could potentially exist between a director or an immediate family member of a director and Citi and set thresholds at which such relationships would be deemed to be material. Provided that no relationship or transaction exists that would disqualify a director under the categorical standards and no other relationships or transactions exist of a type not specifically mentioned in the categorical standards that, in the board’s opinion, taking into account all facts and circumstances, would impair a director’s ability to exercise his or her independent judgment, the board will deem such person to be independent.
 
In 2008, the board and the nomination and governance committee reviewed directors’ responses to a questionnaire asking about their relationships with Citi, and those of their immediate family members and primary business or charitable affiliations and other potential conflicts of interest, as well as data collected by Citi’s businesses related to transactions, relationships or arrangements between Citi on the one hand and a director, immediate family member of a director, or a primary business or charitable affiliation of a director, on the other. The board reviewed the relationships or transactions between the directors or immediate family members of the directors or their primary business or charitable affiliations on the one hand and Citi on the other and determined that the relationships or transactions complied with the Corporate Governance Guidelines and the related


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categorical standards. The board also determined that, applying the guidelines and standards, which are intended to comply with the nyse corporate governance rules, and all other applicable laws, rules and regulations, each of the following directors standing for re-election and the nominees standing for election are independent: C. Michael Armstrong, Alain J.P. Belda, John M. Deutch, Jerry A. Grundhofer, Andrew N. Liveris, Anne M. Mulcahy, Michael E. O’Neill, Richard D. Parsons, Judith Rodin, Robert L. Ryan, Anthony M. Santomero and William S. Thompson, Jr.
 
Categorical Standards
•  Advisory, Consulting and Employment Arrangements
  Ø During any 12 month period within the last three years, neither a director nor any immediate family member of a director shall have received from the Company, directly or indirectly, any compensation, fees or benefits in an amount greater than $120,000, other than amounts paid (a) pursuant to the Company’s Amended and Restated Compensation Plan for Non-Employee Directors or (b) to an immediate family member of a director who is a non-executive employee of the Company or another entity.
 
In addition, no member of the audit and risk management committee, nor any immediate family member who shares such individual’s household, nor any entity in which an audit and risk management committee member is a partner, member or executive officer shall, within the last three years, have received any payment for accounting, consulting, legal, investment banking or financial advisory services provided to the Company.
 
•  Business Relationships
  Ø All business relationships, lending relationships, deposit and other banking relationships between the Company and a director’s primary business affiliation or the primary business affiliation of an immediate family member of a director must be made in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated persons.
 
  Ø In addition, the aggregate amount of payments in any of the last three fiscal years
 
by the Company to, and to the Company from, any company of which a director is an executive officer or employee or where an immediate family member of a director is an executive officer, must not exceed the greater of $1 million or 2% of such other company’s consolidated gross revenues in any single fiscal year.
 
  Ø Loans may be made or maintained by the Company to a director’s primary business affiliation or the primary business affiliation of an immediate family member of a director, only if the loan: (a) is made in the ordinary course of business of the Company or one of its subsidiaries, is of a type that is generally made available to other customers, and is on market terms, or terms that are no more favorable than those offered to other customers; (b) complies with applicable law, including the Sarbanes-Oxley Act of 2002, Regulation O of the Board of Governors of the Federal Reserve, and the Federal Deposit Insurance Corporation (fdic) Guidelines; (c) when made does not involve more than the normal risk of collectibility or present other unfavorable features; and (d) is not classified by the Company as Substandard (II) or worse, as defined by the Office of the Comptroller of the Currency in its “Rating Credit Risk” Comptroller’s Handbook.
 
•  Charitable Contributions
Annual contributions in any of the last three calendar years from the Company and/or the Citigroup Foundation to a foundation, university, or other non-profit organization (“Charitable Organization”) of which a director, or an immediate family member who shares the director’s household, serves as a director, trustee or executive officer (other than the Citigroup Foundation and other Charitable Organizations sponsored by the Company) may not exceed the greater of $250,000 or 10% of the Charitable Organization’s annual consolidated gross revenue.
 
•  Employment/Affiliations
  Ø An outside director shall not:
 
  (i)  be or have been an employee of the Company within the last three years;
 
  (ii)  be part of, or within the past three years have been part of, an interlocking directorate in which an


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         executive officer of the Company serves or has served on the compensation committee of a company that concurrently employs or employed the director as an executive officer; or
 
  (iii)  be or have been affiliated with or employed by a present or former outside auditor of the Company within the five-year period following the auditing relationship.
 
  Ø An outside director may not have an immediate family member who:
 
  (i)  is an executive officer of the Company or has been within the last three years;
 
  (ii)  is, or within the past three years has been, part of an interlocking directorate in which an executive officer of the Company serves or has served on the compensation committee of a company that concurrently employs or employed such immediate family member as an executive officer; or
 
  (iii)  (A) is a current partner of the Company’s outside auditor, or a current employee of the Company’s outside auditor and personally works on the Company’s audit, or (B) was within the last three years (but is no longer) a partner of or employed by the Company’s outside auditor and personally worked on the Company’s audit within that time.
 
•  Immaterial Relationships and Transactions
The board may determine that a director is independent notwithstanding the existence of an immaterial relationship or transaction between the Company and (i) the director, (ii) an immediate family member of the director or (iii) the director’s or immediate family member’s business or charitable affiliations, provided Citi’s proxy statement includes a specific description of such relationship as well as the basis for the board’s determination that such relationship does not preclude a determination that the director is independent. Relationships or transactions between the Company and (i) the director, (ii) an immediate family member of the director or (iii) the director’s or immediate
 
 
family member’s business or charitable affiliations that comply with the Corporate Governance Guidelines, including but not limited to the director independence standards that are part of the Corporate Governance Guidelines and the sections titled Financial Services, Personal Loans and Investments/Transactions, are deemed to be categorically immaterial and do not require disclosure in the proxy statement (unless such relationship or transaction is required to be disclosed pursuant to Item 404 of sec Regulation S-K).
 
•  Definitions
For purposes of the Corporate Governance Guidelines, (i) the term “immediate family member” means a director’s or executive officer’s (designated as such pursuant to Section 16 of the Securities Exchange Act of 1934) spouse, parents, step-parents, children, step-children, siblings, mother- and father-in law, sons- and daughters-in-law, and brothers and sisters-in-law and any person (other than a tenant or domestic employee) who shares the director’s household; (ii) the term “primary business affiliation” means an entity of which the director or executive officer, or an immediate family member of such a person, is an officer, partner or employee or in which the director, executive officer or immediate family member owns directly or indirectly at least a 5% equity interest; and (iii) the term “related party transaction” means any financial transaction, arrangement or relationship in which (a) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, (b) the Company is a participant, and (c) any related person (any director, any executive officer of the Company, any nominee for director, any shareholder owning in excess of 5% of the total equity of the Company, and any immediate family member of any such person) has or will have a direct or indirect material interest.
 
Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation
The board has adopted a policy setting forth procedures for the review, approval and monitoring of transactions involving Citi and related persons (directors and executive officers or their immediate family members). A copy of


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Citi’s Policy on Related Party Transactions is available in the “Corporate Governance” section of Citi’s website: www.citigroup.com. Under the policy, the nomination and governance committee is responsible for reviewing and approving all related party transactions involving directors or an immediate family member of a director. Directors may not participate in any discussion or approval of a related party transaction in which he or she or any member of his or her immediate family is a related person, except that the director shall provide all material information concerning the related party transaction to the nomination and governance committee. The nomination and governance committee is also responsible for reviewing and approving all related party transactions valued at more than $50 million involving an executive officer or an immediate family member of an executive officer. The transaction review committee, comprised of the chief financial officer, chief risk officer, general counsel, chief compliance officer, and head of corporate affairs, is responsible for reviewing and approving all related party transactions valued at less than $50 million involving an executive officer or an immediate family member of an executive officer. The policy also contains a list of categories of transactions involving directors or executive officers, or their immediate family members, that are pre-approved under the policy, and therefore need not be brought to the nomination and governance committee or transaction review committee for approval.
 
The nomination and governance committee and the transaction review committee will review the following information when assessing a related party transaction:
 
•  the terms of such transaction;
 
•  the related person’s interest in the transaction;
 
•  the purpose and timing of the transaction;
 
•  whether Citi is a party to the transaction, and if not, the nature of Citi’s participation in the transaction;
 
•  if the transaction involves the sale of an asset, a description of the asset, including date acquired and cost basis;
 
•  information concerning potential counterparties in the transaction;
 
 
•  the approximate dollar value of the transaction and the approximate dollar value of the related person’s interest in the transaction;
 
•  a description of any provisions or limitations imposed as a result of entering into the proposed transaction;
 
•  whether the proposed transaction includes any potential reputational risk issues that may arise as a result of or in connection with the proposed transaction; and
 
•  any other relevant information regarding the transaction.
 
Robert Rubin entered into an Aircraft Time Sharing Agreement with Citiflight, Inc. (a subsidiary of Citigroup Inc.) on August 10, 2006 that allows him to reimburse Citi for the cost of his personal use of corporate aircraft. Mr. Rubin reimbursed Citi $633,918 related to his personal use of corporate aircraft during 2008. Vikram Pandit entered into an Aircraft Time Sharing Agreement with Citiflight on December 12, 2007, that allows him to reimburse Citi for any personal use of Citi’s aircraft. Mr. Pandit reimbursed Citi $171,808 related to his personal use of corporate aircraft during 2008.
 
During 2008, certain Citi and Banamex executives used, for Citi-related travel, private aircraft owned by Aeropersonal, a company in which Roberto Hernández has an ownership interest. The nomination and governance committee reviewed and ratified the executives’ business-related use of aircraft owned by Aeropersonal during 2008 and approved the business-related use of Aeropersonal’s services by Citi and Banamex executives in 2009. Citi reimbursed Aeropersonal $1,002,126 for business-related services provided to Citi and Banamex executives.
 
In April 2007, Citi entered into an agreement to purchase 100% of the outstanding partnership interests in Old Lane Partners L.P. (Old Lane), a hedge fund firm co-founded by Vikram Pandit and John Havens in which each of Vikram Pandit, John Havens and Brian Leach had an interest. At the time of the Old Lane acquisition in 2007, a substantial portion of the purchase price paid to the former owners of Old Lane was required to be invested in the Old Lane Fund until July 2011, the fourth anniversary of the closing of the transaction. Accordingly, on behalf


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of each of Vikram Pandit and John Havens $100,273,630 was invested (a substantial portion of which was subject to forfeiture until July 2011) and on behalf of Brian Leach $10,862,222 was invested in the Old Lane Fund. In June 2008, Citi purchased substantially all of the assets in the Old Lane Fund and redeemed substantially all of the interests of investors in the Old Lane Fund. In connection with the redemptions of investors’ interests, distributions were made in respect of a portion of the investments made by the former owners of Old Lane in the Old Lane Fund, including $79,706,630, each, in the case of Mr. Pandit and Mr. Havens, and $8,634,283, in the case of Mr. Leach. The amounts distributed are invested, and all future distributions will be invested, in an account at the Citi Private Bank for the remainder of the period ending July 2011. The funds may be earlier withdrawn in the event the executive dies or his employment with Citi terminates by reason of his disability or without cause or for good reason or, in the case of Mr. Leach, upon termination of his employment with Citi for any reason. A substantial portion of Mr. Pandit’s and Mr. Havens’ investment remains subject to forfeiture if the executive’s employment with Citi terminates for cause or without good reason before July 2011.
 
State Street may be deemed to be the beneficial owner of more than 5% of the outstanding shares of our common stock as a result of its role as custodian of our 401(k) plan and other unaffiliated accounts and investment funds. For further information, see “Stock Ownership — Owners of More than 5% of Our Common Stock” in this proxy statement. We and certain of our subsidiaries have engaged in transactions in the ordinary course of business with State Street and certain of its affiliates during 2008. These transactions were on substantially the same terms as comparable transactions with unrelated third parties.
 
Officers and employees of Citi and members of their immediate families who share their household or are financially dependent upon them who wish to purchase or sell securities in brokerage transactions are generally required by Citi’s policies to do so through a Citi broker-dealer affiliate. Certain of our directors and members of their immediate families have
 
brokerage accounts at our broker-dealer affiliates. Transactions in such accounts are offered on substantially the same terms as those offered to other similarly-situated customers. Citi’s affiliates also may, from time to time, enter into transactions on a principal basis involving the purchase or sale of securities, derivative products and other similar transactions in which our directors, officers and employees, or members of their immediate families have an interest. All of these transactions are entered into in the ordinary course of business on substantially the same terms, including interest rates and collateral provisions, as those prevailing at the time for comparable transactions with our other similarly situated customers. For certain transactions with officers and employees, these affiliates may offer discounts on their services.
 
Citi has established funds in which employees have invested. In addition, certain of our directors and executive officers have from time to time invested their personal funds directly or directed that funds for which they act in a fiduciary capacity be invested in funds arranged by Citi’s subsidiaries on the same terms and conditions as the other outside investors in these funds, who are not our directors, executive officers, or employees. Other than certain “grandfathered” investments, in accordance with sarbanes-oxley and the Citi Corporate Governance Guidelines, executive officers may invest in certain Citi-sponsored investment opportunities only under certain circumstances and with the approval of the appropriate committee.
 
In 2008, Citi performed investment banking, financial advisory and other services in the ordinary course of our business for certain organizations in which some of our directors are officers or directors. Citi may also, in the ordinary course of business, have sponsored investment opportunities in which such organizations participated. In addition, in the ordinary course of business, Citi may use the products or services of organizations in which some of our directors are officers or directors.
 
The persons listed on page 36 were the only members of the personnel and compensation committee during 2008. No member of the personnel and compensation committee was a


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part of a “compensation committee interlock” during fiscal year 2008 as described under sec rules. In addition, none of our executive officers served as a director or member of the compensation committee of another entity that would constitute a “compensation committee interlock.” No member of the committee had any material interest in a transaction with Citi or is a current or former employee of Citi or any of its subsidiaries.
 
Certain directors and executive officers have immediate family members who are employed by Citi or a subsidiary. The compensation of each such family member was established by Citi in accordance with its employment and compensation practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions. None of the directors or executive officers has a material interest in the employment relationships nor do any of them share a household with these employees. These employees are two of the approximately 326,000 employees of Citi. One of them reports to an executive officer of Citi. With respect to this one individual, and in any other instance where a relative may report to an executive officer, that individual’s compensation is reviewed by an independent compensation consultant. A sibling of Manuel Medina-Mora, an executive officer, is employed by Banamex, a subsidiary of Citi, and received 2008 compensation of $1,510,726. An adult spouse of an adult child of Lewis Kaden, an executive officer, is employed by Citi’s Global Consumer Group and received 2008 compensation of $292,333.
 
Indebtedness
Other than certain “grandfathered” margin loans, in accordance with sarbanes-oxley and the Citi Corporate Governance Guidelines, no margin loans may be made to any executive officer unless such person is an employee of a broker-dealer subsidiary of Citi and such loan is made in the ordinary course of business. Before and during 2008, certain executive officers have incurred indebtedness to Smith Barney, a division of Citi and a registered broker-dealer, and/or other broker-dealer subsidiaries of Citi, on margin loans against securities accounts. The margin loans were made in the ordinary course of business on substantially the same terms (including interest rates and collateral) as those
 
prevailing for comparable transactions for other persons, and did not involve more than the normal risk of collectibility or present other unfavorable features.
 
Certain transactions involving loans, deposits, credit cards, and sales of commercial paper, certificates of deposit, and other money market instruments and certain other banking transactions occurred during 2008 between Citibank and other Citi banking subsidiaries on the one hand and certain directors or executive officers of Citi, members of their immediate families, corporations or organizations of which any of them is an executive officer or partner or of which any of them is the beneficial owner of 10% or more of any class of securities, or associates of the directors, the executive officers or their family members on the other. The transactions were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, that prevailed at the time for comparable transactions with other persons not related to the lender and did not involve more than the normal risk of collectibility or present other unfavorable features. Personal loans made to any director, executive officer or member of the management committee must comply with sarbanes-oxley, Regulation O and the Corporate Governance Guidelines, and must be made in the ordinary course of business.
 
Citigroup Capital Partners I (Master Fund), LP (formerly SSB Capital Partners (Master Fund) I, LP) and Citigroup Employee Fund of Funds I, LP are funds that were formed in 2000. Citigroup Capital Partners II Employee Master Fund, L.P. was formed in 2006. Each invests either directly or via a master fund in private equity investments. Citi matches each dollar invested by an employee with an additional two dollar commitment to each fund, or feeder fund, in which an employee has invested, up to a maximum of $1 million for each fund in which the employee has invested. Citi’s match is made by a loan to the fund or funds in which the employee has invested. Each employee, subject to vesting, receives the benefit of any increase in the value of each fund in which he or she invested attributable to the loan made by Citi, less the interest paid by the fund on the loan, as well as any increase in the value of the fund attributable to the employee’s own investment.


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One-half of the loan is full recourse to the employee via a guaranty and the other half is non-recourse to the employee. Before any distributions (other than tax distributions) are made to an employee, distributions are paid by each fund to Citi to pay interest on and to repay the loan.
 
Interest on the loans accrues quarterly at a rate determined from time to time by Citi as of the first business day of each quarter equal to the greater of (i) the three-month London Inter-Bank Offered Rate plus 75 basis points (as determined by Citi), and (ii) the short-term applicable federal rate calculated in accordance with Section 1274(d) of the Internal Revenue Code of 1986, as amended (irc) (as determined by Citi).
 
In 2008, two employees who participated in the Citigroup Capital Partners II Employee Master Fund, L.P. became executive officers and, pursuant to the fund’s offering memorandum and in compliance with Sarbanes-Oxley, were required to repay their outstanding leverage. During 2008, Shirish Apte reimbursed Citi $664,000 and James Forese reimbursed Citi $1.66 million for leverage outstanding to the Citigroup Capital Partners II Employee Master Fund, L.P.
 
During 2008, no loans were made under the Citigroup Employee Fund of Funds I, LP to any current or former executive officer. For the Citigroup Capital Partners I (Master Fund), LP, no loans were made to any current or former executive officer that exceeded $120,000. The
 
 
following distributions with respect to investments in these two funds were made to current and former executive officers in 2008:
 
                 
    Citigroup
   
    Employee
  Citigroup Capital
    Fund of
  Partners I
    Funds I, LP
  (Master Fund), LP
    Cash
  Cash
Executive Officer   Distributions   Distributions
 
 
Sir Winfried Bischoff
  $ 146,435     $ *  
James Forese
  $ 178,150     $ *  
Michael Klein(A)
  $ *     $ 140,325  
 
 
(A)  As of July 21, 2008, Mr. Klein was no longer an executive officer of Citi.
 
 *  Amount does not exceed $120,000.
 
Business Practices
Citi’s business practices committees, at the corporate level and in each of its business units, review business activities, sales practices, products, potential conflicts of interest, complex transactions, suitability and other reputational concerns providing guidance to ensure that Citi’s business practices meet the highest standards of ethics, integrity and professional behavior. These committees, comprised of our most senior executives, focus on reputational risk while our businesses ensure that our policies are adhered to and emphasize our commitment to the franchise.
 
Business practices concerns may be surfaced by a variety of sources, including business practices working groups, other in-business committees or the control functions. The business practices committees guide the development of business practices and may change them when necessary or appropriate. These issues are reported on a regular basis to the Citi business practices committee and the board.


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Code of Ethics
The board has adopted a Code of Ethics for Financial Professionals governing the principal executive officers of Citi and its reporting subsidiaries and all Citi professionals worldwide serving in a finance, accounting, treasury, tax or investor relations role. A copy of the Code of Ethics is available on our website at www.citigroup.com. Click on “Corporate Governance” and then “Code of Ethics for Financial Professionals.” It has also been filed as an exhibit to our 2002 Annual Report on Form 10-K. We intend to disclose amendments to, or waivers from, the Code of Ethics, if any, on our website.
 
Ethics Hotline
Citi strongly encourages employees to raise possible ethical issues. Citi offers several channels by which employees and others may report ethical concerns or incidents, including, without limitation, concerns about accounting, internal controls or auditing matters. We provide an Ethics Hotline that is available 24 hours a day, seven days a week with live operators who can connect to translators in multiple languages, a dedicated e-mail address, fax line, a web-link and conventional mailing address. Individuals may choose to remain anonymous. We prohibit retaliatory actions against anyone who, in good faith, raises concerns or questions regarding ethics, discrimination or harassment matters, or reports suspected violations of other applicable laws, regulations or policies. Calls to the Ethics Hotline are received by a vendor, which reports
 
 
the calls to Citi’s Ethics Office of Global Compliance for review and investigation.
 
Code of Conduct
The board has adopted a Code of Conduct, which outlines the laws, rules, regulations and Citi policies that govern the activities of Citi and sets the standards of business behavior and ethics that apply across Citi. The Code of Conduct applies to every director, officer and employee of Citi and each of its subsidiaries. All employees, directors and officers are required to read and follow the Code of Conduct. In addition, other persons performing services for Citi may be subject to the Code of Conduct by contract or agreement. A copy of the Code of Conduct is available on our website at www.citigroup.com. Click on “Corporate Governance” and then “Code of Conduct.”
 
Communications with the Board
Stockholders or other interested parties who wish to communicate with a member or members of the board of directors, including the Chairman or the non-management directors as a group, may do so by addressing their correspondence to the board member or members, c/o the Corporate Secretary, Citigroup Inc., 399 Park Avenue, New York, NY 10043. The board of directors has approved a process pursuant to which the office of the Corporate Secretary will review and forward correspondence to the appropriate person or persons for response.


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Stock Ownership
 
Citi has long encouraged stock ownership by its directors, officers and employees to align their interests with the long-term interests of stockholders.
 
As part of our commitment to aligning employee and stockholder interests, members of the management executive committee and members of the board of directors have agreed to hold 75% of the shares of common stock they acquire through Citi’s equity programs as long as they remain subject to the stock ownership commitment. Senior leadership committee members have agreed to hold 50% of the shares of common stock they acquire through Citi’s
equity programs as long as they remain subject to the stock ownership commitment. A summary of the stock ownership commitment appears in Citi’s Corporate Governance Guidelines, which are attached to this proxy statement as Annex A.
 
Exceptions to the stock ownership commitment include gifts to charity, certain estate planning transactions, and certain other limited circumstances. In addition, the commitment relates to the net number of shares received in connection with the exercise of employee stock options or paying withholding taxes under other equity compensation programs.

 
 
[GRAPHIC]
 

The following table shows the beneficial ownership of Citi common stock by our directors, nominees and certain executive officers at February 27, 2009.
 
                               
 
          Amount and Nature of Beneficial
          Ownership
              Stock
   
          Common
  Options
   
          Stock
  Exercisable
  Total
          Beneficially
  Within
  Common
          Owned
  60 Days of
  Stock
          Excluding
  Record
  Beneficially
Name   Position     Options   Date(A)   Owned(A)
C. Michael Armstrong
  Director       161,829       30,497       192,326  
Ajaypal Banga
  Chief Executive Officer, Asia       770,248       231,504       1,001,752  
Alain J.P. Belda
  Director       80,186       52,350       132,536  
Sir Winfried Bischoff
  Director       385,016       384,801       769,817  
Gary Crittenden
  Chief Financial Officer       541,223       0       541,223  
Kenneth T. Derr
  Director       97,971       22,855       120,826  
John M. Deutch
  Director       148,227       26,639       174,866  
James A. Forese
  Co-Head, Global Capital Markets,
Markets & Banking
Institutional Clients Group
      1,809,499       261,628       2,071,127  
Jerry S. Grundhofer
  Nominee       24,789       0       24,789  
Roberto Hernández Ramirez
  Director       14,596,144       0       14,596,144  
Andrew N. Liveris
  Director       39,135       19,792       58,927  
Anne M. Mulcahy
  Director       53,066       0       53,066  
Michael E. O’Neill
  Nominee       0       0       0  
Vikram S. Pandit
  Chief Executive Officer       1,707,502       750,000       2,457,502  
Richard D. Parsons
  Chairman       133,272       55,747       189,019  
Lawrence R. Ricciardi
  Director       35,980       0       35,980  
Judith Rodin
  Director       53,487       17,473       70,960  
Robert E. Rubin
  Director       636,098       0       636,098  
Robert L. Ryan
  Director       52,917       0       52,917  
Anthony M. Santomero
  Nominee       0       0       0  
Franklin A. Thomas
  Director       146,074       29,746       175,820  
William S. Thompson
  Nominee       14,942       0       14,942  
Stephen R. Volk
  Vice Chairman       884,625       0       884,625  
All directors, nominees and executive officers as a group (36 persons)
      31,412,664       3,450,573       34,863,237  


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     (A) The share numbers in these columns have been restated to reflect equitable adjustments made to all Citi options outstanding on August 20, 2002 in respect of the distribution to all stockholders of shares of Travelers Property Casualty Corp. For each option grant, the number of options was increased by a factor
 
of 1.0721990 and the exercise price was decreased by a factor of .9326627. The expiration and vesting dates of each option did not change.
 
At February 27, 2009, no director, nominee or executive officer owned as much as 1% of Citi’s common stock.

 
 
[GRAPHIC]
 
The following table shows the beneficial ownership of Citi preferred stock by our directors and certain executive officers at February 27, 2009.
             
Name   Position   Series of Preferred Stock   Shares Owned
 
 
C. Michael Armstrong
  Director   8.50% Non-Cumulative
Preferred Stock, Series F
  27,700
John M. Deutch
  Director   8.50% Non-Cumulative
Preferred Stock, Series F
  11,000
Vikram S. Pandit
  Chief Executive Officer   8.125% Non-Cumulative
Preferred Stock, Series AA
  50,000
        8.50% Non-Cumulative
Preferred Stock, Series F
  50,000
Brian Leach
  Chief Risk Officer   8.50% Non-Cumulative
Preferred Stock, Series F
  30,000
 
All of the directors, nominees and executive officers as a group beneficially owned approximately .63% of Citi’s common stock.
 
Of the shares shown on the preceding page, all of which are deemed to be beneficially owned under sec rules, some portion may not be held directly by the director or executive officer. The following table details the various forms in which directors or executive officers indirectly hold shares. Such indirectly-held shares may be shares:
 
•  for which receipt has been deferred under certain deferred compensation plans,
 
•  held as a tenant-in-common with a family member or trust, owned by a family member, held by a trust for which the director or executive officer is a trustee but not a beneficiary or held by a mutual fund which invests substantially all of its assets in Citi stock,
 
•  for which the director or executive officer has direct or indirect voting power but not dispositive power, or
 
•  for which the director or executive officer has direct or indirect voting power but that are subject to restrictions on disposition, as shown in the following table:



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        Owned by or
       
        Tenant-in-
  Voting
  Restricted or
        Common with
  Power,
  Deferred Shares
        Family Member,
  but Not
  Subject to
    Receipt
  Trust or Mutual
  Dispositive
  Restrictions on
Director/Officer   Deferred   Fund   Power   Disposition
 
 
C. Michael Armstrong
    156,084       15,150 1     0       0  
Ajaypal Banga
    0       50,701       0       593,275  
Alain J.P. Belda
    75,187       0       0       0  
Sir Winfried Bischoff
    0       0       0       156,982  
Gary Crittenden
    0       0       0       394,911  
Kenneth T. Derr
    72,236       0       0       0  
John M. Deutch
    83,256       0       0       0  
James A. Forese
    0       0       0       995,048  
Jerry S. Grundhofer
    0       24,789       0       0  
Roberto Hernández Ramirez
    0       14,596,144       0       0  
Andrew N. Liveris
    35,906       1,200       0       0  
Anne M. Mulcahy
    53,008       59       0       0  
Michael E. O’Neill
    0       0       0       0  
Vikram S. Pandit
    0       0       0       797,474  
Richard D. Parsons
    91,290       0       0       0  
Lawrence R. Ricciardi
    32,106       0       0       0  
Judith Rodin
    51,266       2,221       0       0  
Robert E. Rubin
    0       0       0       0  
Robert L. Ryan
    39,412       0       0       0  
Anthony M. Santomero
    0       0       0       0  
Franklin A. Thomas
    131,422       0       0       0  
William S. Thompson, Jr.
    0       0       0       0  
Stephen R. Volk
    0       1,100 1     0       644,818  
All directors, nominees and executive officers as a group (36 persons)
    821,171       14,817,572       9,324       8,821,945  
 
1 disclaims beneficial ownership


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Table of Contents

Owners of More than 5% of Our Common Stock*
 
                 
Name and Address of Beneficial Owner   Beneficial Ownership   Percent of Class
 
 
State Street Bank and Trust Company
225 Franklin Street, Boston, Massachusetts 02110
               
• As custodian for the Citigroup 401(k) Plans
    91,555,628 (A)     1.7 %
• As trustee or discretionary advisor for certain unaffiliated accounts and collective investment funds
    245,293,611 (B)     4.5 %
Total
    336,849,239       6.2 %
 
(A) This information is as of December 31, 2008 and was provided by State Street. Under our 401(k) plan, participants have the right to direct the voting by State Street of shares of common stock. State Street is generally obligated to vote shares for which it has not received voting instructions in the same proportion as shares for which it has received voting instructions. On the record date, there were 96,329,650 shares beneficially owned by the 401(k) plans.
 
(B) This information is as of December 31, 2008 and was obtained from a Schedule 13G filed with the sec on February 17, 2009 by State Street. State Street has sole voting power and shared dispositive power over these shares.
 
 * In 2008 and 2009, Citi issued to the U.S. Treasury warrants to purchase 465,117,176 shares of common stock, of which warrants to purchase 360,075,159 shares of common stock are exercisable within 60 days. The exercise prices for the warrants are $10.61 and $17.85. The warrants exercisable within 60 days represent approximately 6.2% of Citi’s voting stock. However, none of the warrants has been exercised and the exercise prices are above Citi’s closing price on March 6 of $1.03. See Citi’s Annual Report on Form 10-K filed on February 27, 2009 for additional information.


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Table of Contents


 
Proposal 1: Election of Directors
 
The board of directors has nominated all of the current directors for re-election at the 2008 annual meeting except for Sir Win Bischoff and Messrs. Derr, Hernandez, Rubin and Thomas, who are retiring from the board effective at the annual meeting. Directors are not eligible to stand for re-election after reaching the age of 72. The board has recently announced that it
 
unanimously decided to have a majority of new directors as soon as feasible. Certain nominees are included in this proxy statement for election by stockholders. When additional candidates are identified, approved and subsequently appointed as directors by the board, the Company will file Forms 8-K to announce the appointments.


 
[GRAPHIC]
 
The Nominees
The following tables give information — provided by the nominees — about their principal occupation, business experience, and other matters.
 
The board of directors recommends that you vote for each of
the following nominees.
 
     
Name and Age at
  Position, Principal Occupation, Business Experience
Record Date   and Directorships
 
 
C. Michael Armstrong
70


[ARMSTRONG PHOTO]
 
Chairman, Board of Trustees
Johns Hopkins Medicine, Health Systems and Hospital
• Chairman, Johns Hopkins Medicine, Health Systems and Hospital — July 2005 to present
• Chairman, Comcast Corporation — 2002 to 2004
• Chairman and Chief Executive Officer, AT&T Corp. — 1997 to 2002
• Chairman and Chief Executive Officer, Hughes Electronic Corporation — 1992 to 1997
• International Business Machines Corporation — 1961 to 1992
  Member, IBM Management Committee
  Chairman, IBM World Trade Corporation
• Director of Citigroup (or predecessor) since 1989
• Other Directorships: IDS Group, Inc., IHS Inc. (Lead Independent Director), and The Parsons Corporation
• Other Activities: Johns Hopkins University (Vice Chairman), President’s Export Council (Chairman, Retired), The Conference Board (member), Council on Foreign Relations (member), MIT Sloan School of Management (Visiting Professor), Telluride Foundation (Director), Tudor Venture Capital (Advisor), Miami University, Corporate Campaign (Chairman), A Better Chance of Darien, Connecticut (Co-Founder and Past President), and Darien, Connecticut YMCA (Past President)


20


Table of Contents

     
Name and Age at
  Position, Principal Occupation, Business Experience
Record Date   and Directorships
 
 
Alain J.P. Belda
65


[BELDA PHOTO]
 
Chairman and Chief Executive Officer
Alcoa Inc.
• Chairman, Alcoa Inc. — 2001 to present
• Chief Executive Officer — 1999 to 2008
• Director — 1999 to present
• President — 1997 to 2001
• Chief Operating Officer — 1997 to 1999
• Vice Chairman — 1995 to 1997
• Executive Vice President — 1994 to 1995
• President, Alcoa (Latin America) — 1991 to 1994
• Vice President — 1982 to 1991
• President, Alcoa Aluminio SA (Brazil) — 1979 to 1994
• Joined Alcoa — 1969
• Director of Citigroup (or predecessor) since 1997
• Other Directorships: IBM
• Other Activities: Brazil Project Advisory Board (Co-Chair) at The Woodrow Wilson International Center for Scholars, The Business Council (member), Business Roundtable (member), Committee to Encourage Corporate Philanthropy (member), World Business Council for Sustainable Development (member), and World Economic Forum — International Business Council (member)
     
John M. Deutch
70


[DEUTCH PHOTO]
 
Institute Professor
Massachusetts Institute of Technology
• Institute Professor, M.I.T. — 1990 to present
• Director of Central Intelligence — 1995 to 1996
• Deputy Secretary, U.S. Department of Defense — 1994 to 1995
• Under Secretary, U.S. Department of Defense — 1993 to 1994
• Provost and Karl T. Compton Professor of Chemistry, M.I.T. — 1985 to 1990
• Dean of Science, M.I.T. — 1982 to 1985
• Under Secretary, U.S. Department of Energy — 1979 to 1980
• Director, Energy Research of the U.S. Department of Energy — 1978
• Director of Citigroup (or predecessor) since 1996 (and 1987 to 1993)
• Director of Citibank, N.A. — 2009 to present; 1987 to 1993 and 1996 to 1998
• Other Directorships: Cheniere Energy and Raytheon Company
• Other Activities: Urban Institute (Life Trustee), Resources for the Future (Trustee), Museum of Fine Arts, Boston (Trustee), Center for American Progress (Trustee), and The National Petroleum Council (member)


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Table of Contents

     
Name and Age at
  Position, Principal Occupation, Business Experience
Record Date   and Directorships
 
 
Jerry A. Grundhofer
64


[GRUNDHOFER PHOTO]
 
Chairman Emeritus
U.S. Bancorp
• Chairman Emeritus, U.S. Bancorp — 2007 to present
• Chairman — 2002 to 2007
• Chief Executive Officer — 2001 to 2006
• President — 2001 to 2004
• Chairman, President and Chief Executive Officer, Firstar Corporation and Star Banc Corporation (predecessors to U.S. Bancorp) — 1993 to 2001
• Other Directorships: Ecolab Inc.
• Other Activities: Danny Thompson Charitable Foundation (Director)
     
Andrew N. Liveris
54


[LIVERIS PHOTO]
 
Chairman and Chief Executive Officer
The Dow Chemical Company
• Chairman, Chief Executive Officer and President, The Dow Chemical Company — 2006 to present
• President and Chief Executive Officer — 2004 to 2006
• President and Chief Operating Officer — 2003 to 2004
• Director — 2004 to present
• Joined The Dow Chemical Company — 1976
• Director of Citigroup since 2005
• Other Activities: Herbert H. and Grace A. Dow Foundation (Trustee), Tufts University (Trustee), United States Climate Action Partnership (member of CEO Board), The American Australian Association (patron), The Business Council (member), Business Roundtable (member), The Institute of Chemical Engineers (Fellow), The International Council of Chemical Associations (Chairman), The Société de Chimie Industrielle (member), and The U.S.-China Business Council (Chairman)
     
Anne M. Mulcahy
56


[MULCAHY PHOTO]
 
Chairman and Chief Executive Officer
Xerox Corporation
• Chairman, Xerox Corporation — 2002 to present
• Chief Executive Officer — 2001 to present
• President and Chief Operating Officer — 2000 to 2001
• President, General Markets Operations — 1999 to 2000
• Joined Xerox — 1976
• Director of Citigroup since 2004
• Other Directorships: Target Corporation and The Washington Post Company
• Other Activities: Business Roundtable (member), Catalyst (Director), and the John F. Kennedy Center for the Performing Arts — Corporate Fund Board (Vice Chairman)


22


Table of Contents

     
Name and Age at
  Position, Principal Occupation, Business Experience
Record Date   and Directorships
 
 
Michael E. O’Neill
62


(O'NEILL PHOTO)
  Former Chairman and CEO
Bank of Hawaii Corporation
• Chairman and Chief Executive Officer, Bank of Hawaii Corporation — 2000 to 2004
• Elected Chief Executive Officer, Barclay’s PLC — 1999
• Vice Chairman and Chief Financial Officer, Bank of America — 1995 to 1998
• Chief Financial Officer, Continental Bank — 1993 to 1995
• Other Directorships: FT Ventures
• Other Activities: Hawaii Pacific University (Trustee) and Honolulu Academy of Arts (Trustee)
     
Vikram S. Pandit
52


(PANDIT PHOTO)
 
Chief Executive Officer
Citigroup Inc.
• Chief Executive Officer, Citigroup Inc. — December 2007 to present
• Chairman and Chief Executive Officer, Institutional Clients Group — October 2007 to December 2007
• Chairman and Chief Executive Officer, Citi Alternative Investments — April 2007 to October 2007
• Founding member and Chairman of members committee, Old Lane Partners, LP — 2005 to April 2007
• President and Chief Operating Officer, Institutional Securities and Investment Banking, Morgan Stanley — 2000 to 2005
• Director of Citigroup since 2007
• Other Activities: Columbia University (Trustee), Columbia University Graduate School of Business (member of Board of Overseers), Indian School of Business (member of Governing Board), New York City Partnership (Director) and Financial Services Forum (member)


23


Table of Contents

     
Name and Age at
  Position, Principal Occupation, Business Experience
Record Date   and Directorships
 
 
Richard D. Parsons
60


(PARSONS PHOTO)
 
Chairman
Citigroup Inc.
• Chairman, Time Warner Inc. — 2003 to 2008
• Chief Executive Officer — 2002 to 2007
• Co-Chief Operating Officer — 2001 to 2002
• President — 1995 to 2000
• Director, Time Warner Inc. (or predecessor) — 1991 to present
• Chairman and Chief Executive Officer, Dime Savings Bank of New York — 1991 to 1995
• President and Chief Operating Officer — 1988 to 1990
• Associate, Partner and Managing Partner, Patterson, Belknap, Webb & Tyler — 1977 to 1988
• General Counsel and Associate Director, Domestic Council, White House — 1975 to 1977
• Deputy Counsel to the Vice President, Office of the Vice President of the United States — 1975
• Assistant and First Assistant Counsel to the Governor, State of New York — 1971 to 1974
• Chairman, Citigroup — 2009 to present
• Director of Citigroup (or predecessor) since 1996
• Director of Citibank, N.A. — 1996 to 1998
• Other Directorships: The Estee Lauder Companies Inc.
• Other Activities: Apollo Theatre Foundation (Chairman), Museum of Modern Art (Trustee), Howard University (Trustee), American Museum of Natural History (Trustee), New York City Partnership (Director), Smithsonian Institute of African American History and Culture (Co-Chairman of the Advisory Board), and Rockefeller Foundation (Trustee)
     
Lawrence R. Ricciardi
68


(RICCIARDI PHOTO)
 
Senior Vice President and Advisor to the Chairman, Retired
IBM Corporation
• Senior Vice President and Advisor to the Chairman, IBM — 2002
• Senior Vice President and General Counsel, IBM — 1995 to 2001
• Chief Financial Officer, IBM — 1997 to 1998
• President, RJR Nabisco, Inc. — 1993 to 1995
• Co-Chairman and Chief Executive Officer, RJR Nabisco, Inc. — 1993
• Executive Vice President and General Counsel, RJR Nabisco, Inc. — 1989 to 1995
• Executive Vice President and General Counsel, American Express Travel Related Services — 1983 to 1989
• Joined American Express — 1973
• Director of Citigroup — 2008 to present
• Director of Citibank, N.A. — 2009 to present
• Other Directorships: Royal Dutch Shell plc
• Other Activities: IBM Corporation (Senior Advisor), Jones Day (Senior Advisor), Lazard Frères & Co. (Senior Advisor), The Andrew W. Mellon Foundation (Trustee), National Humanities Center (Trustee), and The Pierpoint Morgan Library (Trustee)


24


Table of Contents

     
Name and Age at
  Position, Principal Occupation, Business Experience
Record Date   and Directorships
 
 
Dr. Judith Rodin
64


[RODIN PHOTO]
 
President
Rockefeller Foundation
• President, Rockefeller Foundation — 2005 to present
• President Emerita, University of Pennsylvania — 2004 to present
• President, University of Pennsylvania — 1994 to 2004
• Provost, Yale University — 1992 to 1994
• Director of Citigroup since 2004
• Other Directorships: Comcast Corporation and AMR Corporation
• Other Activities: World Trade Memorial Foundation (Director), Carnegie Hall (Director), Brookings Institution (Honorary Director), White House Project (member), Council on Foreign Relations (member), Institute of Medicine (member) and New York City Commission for Economic Opportunity (member)
     
Robert L. Ryan
65


[RYAN PHOTO]
 
Chief Financial Officer, Retired
Medtronic Inc.
• Senior Vice President and Chief Financial Officer, Medtronic Inc. — 1993 to 2005
• Vice President, Finance and Chief Financial Officer, Union Texas Petroleum Corporation — 1984 to 1993
• Controller — 1983 to 1984
• Treasurer — 1982 to 1983
• Joined Union Texas Petroleum Corporation — 1982
• Vice President, Citibank, N.A. — 1975 to 1982
• Management Consultant, McKinsey & Co. — 1970 to 1975
• Director of Citigroup since 2007
• Director of Citibank, N.A. — 2009 to present
• Other Directorships: Black & Decker, General Mills, and Hewlett-Packard
• Other Activities: Cornell University (Trustee) and Harvard Business School (member of Visiting Committee)
     
Anthony M. Santomero
62


[SANTOMERO PHOTO]
 
Former President
Federal Reserve Bank of Philadelphia
• Senior Advisor, McKinsey & Company — 2006 to 2008
• President, Federal Reserve Bank of Philadelphia — 2000 to 2006
• Richard K. Mellon Professor, Finance, The Wharton School at the University of Pennsylvania — 1984 to 2002
• Other Directorships: RenaissanceRe Holdings, Ltd., Penn Mutual Life Insurance Company and Columbia Funds
• Other Activities: Drexel University (Trustee), Drexel University College of Medicine (Vice Chair and Trustee) and The Mann Center for the Performing Arts (Director)


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Table of Contents

     
Name and Age at
  Position, Principal Occupation, Business Experience
Record Date   and Directorships
 
 
William S. Thompson, Jr.
63


[THOMPSON PHOTO]
 
Chief Executive Officer, Retired
Pacific Investment Management Company (PIMCO)
• Chief Executive Officer, PIMCO — 1993 to 2009
• Salomon Brothers Inc. — 1975 to 1993
  • Chairman, Salomon Brothers Asia Ltd — 1991 to 1993
  • Head of Corporate Finance, Western Region — 1988 to 1991
  • Managing Director and Head of Institutional Sales, Western Region — 1981-1988
  • Joined Salomon Brothers — 1975
• Other Directorships: Pacific Life Corporation
• Other Activities: Pacific Symphony Orchestra (Director), Thompson Foundation for Autism (Chair), Thompson Family Foundation (President) and University of Missouri (President’s Financial Advisory Council)
 
 
The one-year terms of all of Citi’s directors expire at the annual meeting.

 
Meetings of the Board of Directors and Committees
The board of directors met 25 times in 2008. During 2008, the audit and risk management committee met 12 times, the personnel and compensation committee met 15 times and the nomination and governance committee met 8 times.
 
Each director attended at least 75 percent of the total number of meetings of the board of directors and board committees of which he or she was a member in 2008.
Meetings of Non-Management Directors
Citi’s non-management directors meet in executive session without any management directors in attendance each time the full board convenes for a regularly scheduled meeting, which is usually 7 times each year, and, if the board convenes a special meeting, the non-management directors may meet in executive session. Until the appointment of Richard Parsons as Chairman, the lead director presided at each executive session of the non-management directors. The independent chairman now presides at such sessions.


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Table of Contents

 
Committees of the Board of Directors
The standing committees of the board of directors are:
 
The audit and risk management committee, which assists the board in fulfilling its oversight responsibility relating to (i) the integrity of Citi’s financial statements and financial reporting process and Citi’s systems of internal accounting and financial controls; (ii) the performance of the internal audit function — Audit and Risk Review; (iii) the annual independent integrated audit of Citi’s consolidated financial statements and internal control over financial reporting, the engagement of the independent registered public accounting firm and the evaluation of the independent registered public accounting firm’s qualifications, independence and performance; (iv) policy standards and guidelines for risk assessment and risk management; (v) the compliance by Citi with legal and regulatory requirements, including Citi’s disclosure controls and procedures; and (vi) the fulfillment of the other responsibilities set out in its charter, as adopted by the board. The report of the committee required by the rules of the sec is included in this proxy statement. Subcommittees of the audit and risk management committee cover Citi’s corporate and consumer businesses.
 
The board has determined that each of Mrs. Mulcahy, Dr. Rodin, and Messrs. Deutch, Liveris, Ricciardi and Ryan qualifies as an “audit committee financial expert” as defined by the sec and, in addition to being independent according to the board’s independence standards as set out in its Corporate Governance Guidelines, is independent within the meaning of applicable sec rules, the corporate governance rules of the nyse, and the fdic guidelines.
 
The audit and risk management committee charter, as adopted by the board, is attached to this proxy statement as Annex B. A copy of the charter is also available in the “Corporate Governance” section of Citi’s website: www.citigroup.com.
 
The nomination and governance committee, which is responsible for identifying individuals qualified to become board members and recommending to the board the director nominees for the next annual meeting of stockholders. It leads the board in its annual review of the board’s
 
performance and recommends to the board director candidates for each committee for appointment by the board. The committee takes a leadership role in shaping corporate governance policies and practices, including recommending to the board the Corporate Governance Guidelines and monitoring Citi’s compliance with these policies and the Guidelines. The committee is responsible for reviewing and approving all related party transactions involving directors or an immediate family member of a director and any related party transaction involving an executive officer or immediate family member of an executive officer, if the transaction is valued at $50 million or more. See Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation on page 10 of this proxy statement for a complete description of the Policy on Related Party Transactions. The committee, as part of its executive succession planning process, evaluates and nominates potential successors to the ceo and provides an annual report to the board on ceo succession. The committee also reviews director compensation and benefits, Citi’s Code of Conduct, the Code of Ethics for Financial Professionals and other internal policies to monitor that the principles contained in the Codes are being incorporated into Citi’s culture and business practices. The nomination and governance committee may also exercise all powers of the board of directors between meetings of the board.
 
The board has determined that, in addition to being independent according to the board’s independence standards as set out in its Corporate Governance Guidelines, each of the members of the nomination and governance committee is independent according to the corporate governance rules of the nyse. Each of such directors is a “non-employee director,” as defined in Section 16 of the Securities Exchange Act of 1934, and is an “outside director,” as defined by Section 162(m) of the irc.
 
The nomination and governance committee charter, as adopted by the board, is attached to this proxy statement as Annex C. A copy of the charter is also available in the “Corporate Governance” section of Citi’s website: www.citigroup.com.


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The personnel and compensation committee, which is responsible for determining the compensation for the ceo, and approving the compensation structure for senior management, including the management executive committee, members of the senior leadership committee, the most senior managers of corporate staff, and other highly paid professionals in accordance with guidelines established by the committee from time to time. The committee annually reviews and discusses the Compensation Discussion and Analysis (cd&a) with management. The committee has also produced an annual report on executive compensation that is included in this proxy statement (on page 36 below). Further, the committee approves broad-based and special compensation plans for all of Citi’s businesses.
 
The committee regularly reviews Citi’s management resources, succession planning and development activities, as well as the performance of senior management. The committee is also charged with monitoring Citi’s performance toward meeting its goals on employee diversity.
 
The committee is responsible for evaluating the performance of and determining the compensation for the ceo and approving the compensation for the management executive committee. The committee also approves the compensation structure for senior management, including members of the senior leadership committee, the most senior managers of corporate staff and other highly paid professionals, in accordance with guidelines established by the committee from time to time. The committee regularly reviews the design and structure of Citi’s compensation programs to ensure that management’s interests are aligned with stockholders and that the compensation programs are aligned with Citi’s strategic priorities. See the cd&a on page 37 of this proxy statement.
 
In order to ensure uninterrupted operation of Citi in the event of the unplanned departure or unavailability of Citi’s ceo, Citi’s personnel and compensation committee evaluates a number of individuals who could be asked to assume the ceo’s duties in the event of an unexpected vacancy. The committee then discusses the list with the board which then formalizes its choices
 
of one or more of such individuals. This process is conducted at a regularly scheduled board meeting on an annual basis.
 
With respect to regular succession of the ceo and senior management, Citi’s board evaluates internal, and, when appropriate, external, candidates. To find external candidates, Citi seeks input from the members of the board and senior management and/or from recruiting firms. To develop internal candidates, Citi engages in a number of practices, formal and informal, designed to familiarize the board with Citi’s talent pool. The formal process involves an annual talent review conducted by senior management at which the board studies the most promising members of senior management. The board learns about each person’s experience, skills, areas of expertise, accomplishments and goals. This review is conducted at a regularly scheduled board meeting on an annual basis. On an informal basis, members of senior management are periodically asked to make presentations to the board at board meetings and at the board strategy sessions. These presentations are made by senior managers at the various business units as well as those who serve in corporate functions. The purpose of the formal review and informal interaction is to ensure that board members are familiar with the talent pool inside Citi from which the board would be able to choose successors to the ceo and evaluate succession for other senior managers as necessary from time to time.
 
The committee also has the authority to retain and/or engage special consultants or experts to advise the committee, as the committee may deem appropriate or necessary in its sole discretion, and receives funding from Citi to engage such advisors. The committee has retained Independent Compensation Committee Adviser, LLC (icca) to provide the committee with comparative data on executive compensation and advice on Citi’s compensation programs for senior management. icca does no other work for Citi. The amount the personnel and compensation committee approved for payment to icca in 2008 is disclosed in the cd&a on page 50 of this proxy statement. Citi has retained Mercer Human Resource Consulting for benchmarking and analyses with respect to executive compensation and benefit practices, and other compensation matters for all


28


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employees, including the named executive officers. The committee instructed the consultants to meet with senior management to review Citi’s process, financial performance, and market data. The consultants were asked to evaluate the compensation recommendations for senior management in light of these factors and management’s description of the performance assessment. Towers Perrin also provided market data regarding compensation trends in the financial services industry.
 
The board has determined that in addition to being independent according to the board’s independence standards as set out in its Corporate Governance Guidelines, each of the members of the personnel and compensation committee is independent according to the corporate governance rules of the nyse. Each of such directors is a “non-employee director,” as defined in Section 16 of the Securities Exchange Act of 1934, and is an “outside director,” as defined by Section 162(m) of the irc.
 
The personnel and compensation committee charter is attached to this proxy statement as
 
Annex D. A copy of the charter, as adopted by the board, is also available in the “Corporate Governance” section of Citi’s website: www.citigroup.com.
 
The public affairs committee, which is responsible for reviewing Citi’s policies and programs that relate to public issues of significance to Citi and the public at large and reviewing relationships with external constituencies and issues that impact Citi’s reputation. The committee also has responsibility for reviewing public policy and reputation issues facing Citi, reviewing political and charitable contributions made by Citi and the Citi Foundation, reviewing Citi’s policies and practices regarding supplier diversity, and reviewing Citi’s sustainability policies and programs, including environmental and human rights.
 
The public affairs committee charter, as adopted by the board, is attached to this proxy statement as Annex E. A copy of the charter is also available in the “Corporate Governance” section of Citi’s website: www.citigroup.com.


 
[GRAPHIC]
 
The following table shows the current membership of each of the foregoing committees.
 
                 
    Audit and
  Personnel
  Nomination
   
    Risk
  and
  and
  Public
Director   Management   Compensation   Governance   Affairs
 
 
C. Michael Armstrong
      X   X    
Alain J.P. Belda
      Chair   X    
                 
Kenneth T. Derr
      X   X    
John M. Deutch
  Chair       X    
                 
Roberto Hernández Ramirez
              X
Andrew N. Liveris
  X            
                 
Anne M. Mulcahy
  X            
                 
Richard D. Parsons
      X   Chair    
Judith Rodin
  X           Chair
                 
Lawrence R. Ricciardi
  X            
Robert L. Ryan
  X           X
                 
Franklin A. Thomas
              X
 


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Involvement in Certain Legal Proceedings
Calpine Corporation, in connection with the departure of its Chairman, President and Chief Executive Officer, named Mr. Derr Chairman of the Board and Acting Chief Executive Officer in November 2005. Mr. Derr, who had previously held the position of Lead Director of Calpine, was Acting Chief Executive Officer for approximately two weeks. Mr. Derr continues to serve on Calpine’s Board. On December 20, 2005, Calpine Corporation filed for federal bankruptcy protection under Chapter 11.
 
There are no legal proceedings to which any director, officer, nominee or principal shareholder, or any affiliate thereof, is a party adverse to Citi or has a material interest adverse to Citi.
 
Directors’ Compensation
Directors’ compensation is determined by the board. Since its initial public offering in 1986, Citi has paid outside directors all or a portion of their compensation in common stock, to ensure that the directors have an ownership interest in common with other stockholders. The nomination and governance committee makes recommendations to the board with respect to compensation of directors. The committee periodically reviews benchmarking assessments in order to determine the level of compensation to attract qualified candidates for board service and to reinforce our practice of encouraging stock ownership by our directors. In 2008, the committee reviewed the current compensation program and determined that no changes were required. Effective January 1, 2005, the last time director compensation was adjusted, non-employee directors, other than Mr. Hernández, who, except as described below, has waived receipt of compensation for his services as a director, receive an annual cash retainer of $75,000 and a deferred stock award valued at $150,000. The deferred stock award is granted on the same date that annual incentives are granted to the senior executives. The deferred stock
 
award vests on the second anniversary of the date of the grant, and directors may elect to defer receipt of the award beyond that date. Directors may elect to receive all or a portion of their deferred stock award and cash retainer in the form of common stock, and directors may elect to defer receipt of this common stock. Directors also may elect to receive their cash retainer in the form of an option to purchase shares of Citi common stock. Stock options are also granted on the same date that stock options are granted to the senior executives. The options vest and become exercisable on the second anniversary of the grant date and expire six years after the grant date. Beginning in 2009, directors may no longer elect to receive stock options.
 
Directors who are employees of Citi or its subsidiaries do not receive any compensation for their services as directors.
 
Except as described below, directors receive no additional compensation for participation on board committees or subcommittees. Committee and subcommittee chairs receive additional compensation of $15,000 per year, except for the chairs of the audit and risk management committee and each subcommittee thereof, who receive additional compensation of $35,000 per year. This additional compensation is paid in the same manner as the annual cash retainer, but directors may not elect stock options for this portion of their fee. Additional compensation for special assignments may be determined on a case by case basis. On January 1, 2009, Messrs. Deutch, Ricciardi and Ryan were elected to the Citibank, N.A. Board of Directors and each will receive $50,000 as an annual retainer for his service. Citibank, N.A. is a wholly-owned subsidiary of Citi.
 
Citi reimburses its board members for expenses incurred in attending board and committee meetings or performing other services for Citi in their capacities as directors. Such expenses include food, lodging and transportation.



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Table of Contents

The following table provides information on 2008 compensation for non-employee directors.
 
Non-Employee Director Compensation Table
 
                                                         
                    Change
       
                    in
       
                    Pension
       
                    Value
       
                Non-
  and Non-
       
                Equity
  qualified
       
    Fees
          Incentive
  Deferred
       
    Earned
          Plan
  Compen-
  All Other
   
    or Paid
  Stock*
  Option*
  Compen-
  sation
  Compen-
   
    in Cash
  Awards
  Awards
  sation
  Earnings
  sation
  Total
Name   ($)(a)   ($)(a)(b)   ($)(c)   ($)   ($)   ($)   ($)
 
 
C. Michael Armstrong(d)
  $ 95,416     $ 135,937     $ 8,908     $ 0     $ 0     $ 2,877     $ 243,138  
Alain J.P. Belda
  $ 0     $ 130,625     $ 52,400     $ 0     $ 0     $ 0     $ 183,025  
George David(e)
  $ 0     $ 8,750     $ 104,801     $ 0     $ 0     $ 0     $ 113,551  
Kenneth T. Derr
  $ 0     $ 295,833     $ 0     $ 0     $ 0     $ 0     $ 295,833  
John M. Deutch
  $ 110,000     $ 156,250     $ 0     $ 0     $ 0     $ 0     $ 266,250  
Roberto Hernández Ramirez(f)
  $ 0     $ 0     $ 0     $ 0     $ 0     $ 2,218,000     $ 2,218,000  
Andrew N. Liveris
  $ 0     $ 67,656     $ 80,135     $ 0     $ 0     $ 0     $ 147,791  
Anne M. Mulcahy
  $ 75,000     $ 167,917     $ 0     $ 0     $ 0     $ 0     $ 242,917  
Richard D. Parsons
  $ 0     $ 240,000     $ 6,512     $ 0     $ 0     $ 0     $ 246,512  
Lawrence R. Ricciardi
  $ 37,500     $ 90,625     $ 0     $ 0     $ 0     $ 0     $ 128,125  
Judith Rodin
  $ 0     $ 130,625     $ 52,400     $ 0     $ 0     $ 0     $ 183,025  
Robert L. Ryan
  $ 75,000     $ 112,500     $ 0     $ 0     $ 0     $ 0     $ 187,500  
Franklin A. Thomas
  $ 90,000     $ 150,000     $ $0     $ 0     $ 0     $ 0     $ 240,000  
 
 
* As Citi’s stock price has declined significantly since the granting of these awards, the value of the awards shown in the table does not reflect their current value.
 
(a) Directors may elect to receive all or a portion of the cash retainer in the form of common stock and may elect to defer receipt of common stock. Directors also may elect to receive their cash retainer in the form of an option to purchase shares of Citi common stock. Directors may elect to receive a portion of their deferred stock awards in the form of an option to purchase shares of Citi common stock. Beginning in 2009, directors may no longer elect to receive any of their compensation in the form of options to purchase shares of common stock.
 
The following directors elected to receive all or a portion of their 2008 retainer and deferred stock award in stock options:
 
             
        Dollar
    Percentage   Value ($)
 
Mr. Belda
  50%   $ 112,500  
Mr. David
  100%   $ 225,000  
Mr. Liveris
  100%   $ 225,000  
Dr. Rodin
  50%   $ 112,500  
 
(b) The fair value of the stock awards and stock options appearing in the Non-Employee Director Compensation Table were calculated in accordance with the December 2006 sec regulations. In determining the compensation expense for all equity awards required to be disclosed in the table under the December 2006 sec regulations, it was assumed that sfas 123(r) was in effect on the grant date of each such equity award. The number of shares of deferred stock granted in 2008 and the grant date fair


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value of those awards, determined in accordance with sfas 123(r), are set forth below:
 
                 
    Deferred Stock
  Grant Date
    Granted in 2008
  Fair Value
    (#)   ($)
 
Mr. Armstrong
    5,696     $ 150,000  
Mr. Belda
    2,848     $ 75,000  
Mr. David
    0     $ 0  
Mr. Derr
    5,696     $ 150,000  
Mr. Deutch
    5,696     $ 150,000  
Mr. Liveris
    0     $ 0  
Mrs. Mulcahy
    5,696     $ 150,000  
Mr. Parsons
    5,696     $ 150,000  
Mr. Ricciardi*
    3,874     $ 75,000  
Dr. Rodin
    2,848     $ 75,000  
Mr. Ryan
    5,696     $ 150,000  
Mr. Thomas
    5,696     $ 150,000  
 
* Mr. Ricciardi, who joined the Board on July 21, 2008, received an award of deferred stock with a grant price of $19.356.
 
The Stock Awards column in the Non-Employee Director Compensation Table also includes shares of common stock that directors elected to receive in exchange for all or a portion of their cash retainer and chair fees, as applicable. These directors also elected to defer receipt of the shares.
 
The aggregate number of deferred stock awards outstanding at the end of 2008 was:
 
         
Mr. Armstrong
    123,978  
Mr. Belda
    37,749  
Mr. Derr
    49,391  
Mr. Deutch
    18,352  
Mr. Liveris
    4,933  
Mrs. Mulcahy
    20,901  
Mr. Parsons
    45,653  
Mr. Ricciardi
    3,874  
Dr. Rodin
    19,160  
Mr. Ryan
    7,306  
Mr. Thomas
    24,778  
 
(c) The amount reported in this column was calculated in accordance with the December 2006 sec regulations which are based on income statement expense under sfas 123(r), and which, depending on the circumstances of each director, may differ from the grant-date fair value formula applied uniformly for compensation purposes. The assumptions made when calculating the amounts in this column are found in footnote 8 to the Consolidated Financial Statements of Citigroup Inc. and its Subsidiaries, as filed with the sec on Form 10-K for 2008. Aggregate total
 
numbers of stock option awards outstanding are shown in the Director Stock Option Grant Table below. The grant date fair value of the options they received in 2008 was:
 
         
    Grant
    Date Fair
    Value ($)
 
Mr. Belda
  $ 68,864  
Mr. David
  $ 137,728  
Mr. Liveris
  $ 137,728  
Dr. Rodin
  $ 68,864  
 
For the awards granted to all directors who elected to receive options as part of their compensation for 2008, the exercise price was $24.45. The number of shares in the option grant is calculated by dividing the dollar amount elected by the fair market value of Citi common stock on the grant date and multiplying that amount by four.
 
(d) Travelers Property Casualty Corp., formerly a subsidiary of Citi, sponsored a Director’s Charitable Award Program originally adopted by the Travelers Corporation, a Citi predecessor, under which all members of its board of directors were eligible, subject to certain vesting requirements, to have the program make charitable contributions to eligible tax-exempt organizations recommended by the directors up to an aggregate of $1,000,000. In connection with Citi’s distribution of shares of Travelers to its stockholders, at which time Travelers became a separate public company, Citi assumed responsibility under the program with respect to the vested interests of all participants in the program. Travelers initially funded the program through the purchase of life insurance policies on the lives of the directors. Generally, eligible directors were paired for purposes of buying second-to-die life insurance policies. The proceeds of these policies are used to fund the contributions to the organizations selected by the directors immediately upon the death of both vested directors in five equal, annual installments. Mr. Armstrong, a current member of Citi’s board, was a director of Travelers and a participant in the Director’s Charitable Award Program. The annual costs Citi incurs in connection with the administration of this program which are attributable to Mr. Armstrong amount to $2,877.
 
(e) George David retired from the board on April 22, 2008.


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(f) In consideration of his service as non-executive chairman of Banco Nacional de México, an indirect wholly owned subsidiary of Citi, and other duties and services performed for such entity and its affiliates during 2008, including governmental and client relations and strategic development, Citi, or certain of its
 
Mexican affiliates, provided certain security services to Roberto Hernández and members of his immediate family as well as office, secretarial and related services, and aircraft usage for Citi business-related purposes. The aggregate amount of such expenses for Mr. Hernández for 2008 is estimated to be approximately $2,218,000.


 
The following chart shows the amount of dividend equivalents and interest paid to the non-employee directors in 2008 with respect to shares of Citi common stock held in their deferred stock accounts.
 
         
    Dividend Equivalents and
    Interest Paid on
    Deferred Stock
 Director   Account (A)
 
 
C. Michael Armstrong
  $ 139,149  
Alain J.P. Belda
  $ 37,299  
George David
  $ 4,496  
Kenneth T. Derr
  $ 48,432  
John M. Deutch
  $ 19,628  
Roberto Hernández Ramirez
  $ 0  
Andrew N. Liveris
  $ 4,063  
Anne M. Mulcahy
  $ 20,995  
Richard D. Parsons
  $ 43,556  
Lawrence R. Ricciardi
  $ 620  
Judith Rodin
  $ 17,418  
Robert L. Ryan
  $ 8,200  
Franklin A. Thomas
  $ 27,810  
 
(A) Dividend equivalents are paid quarterly, in the same amount per share and at the same time as dividends are paid to stockholders. Interest accrues on the amount of the dividend equivalent from the payment date until the end of the quarter, at which time the dividend equivalent is either distributed to the director in cash or reinvested in additional shares of deferred stock. Differences in the amounts paid to directors can be attributed to a variety of factors including length of service and elections
made by individual board members with respect to the form in which they receive their cash retainers or deferred stock awards. Generally, directors who have served on the board for longer periods of time have accumulated more shares in their deferred stock accounts than directors with a shorter tenure and as a result receive higher dividend equivalent payments. The number of shares owned by each director is reported on page 16.



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Director Stock Option Grant Table
 
                                 
                Shares
        Number of
      Exercisable
    Date of
  Shares
  Expiration
  as of
Director   Grant   Outstanding   Date   12/31/08
 
 
C. Michael Armstrong
    7/18/2000       2,680       7/18/2010       2,680  
      1/16/2001       5,361       1/16/2011       5,361  
      2/13/2002       5,361       2/13/2012       5,361  
      2/12/2003       5,000       2/12/2009       5,000  
      1/20/2004       5,000       1/20/2010       5,000  
      1/18/2005       4,736       1/18/2011       4,736  
      1/17/2006       4,599       1/17/2012       4,599  
      1/16/2007       2,758       1/16/2013       0  
Alain J.P. Belda
    7/18/2000       2,680       7/18/2010       2,680  
      1/16/2001       12,929       1/16/2011       12,929  
      2/13/2002       14,266       2/13/2012       14,266  
      2/12/2003       5,000       2/12/2009       5,000  
      1/20/2004       5,000       1/20/2010       5,000  
      1/17/2006       9,198       1/17/2012       9,198  
      1/16/2007       8,275       1/16/2013       0  
      1/22/2008       18,404       1/22/2014       0  
Kenneth T. Derr
    7/18/2000       2,680       7/18/2010       2,680  
      1/16/2001       5,361       1/16/2011       5,361  
      2/13/2002       9,813       2/13/2012       9,813  
      2/12/2003       12,800       2/12/2009       12,800  
      1/20/2004       5,000       1/20/2010       5,000  
John M. Deutch
    7/18/2000       2,680       7/18/2010       2,680  
      1/16/2001       9,144       1/16/2011       9,144  
      2/13/2002       9,813       2/13/2012       9,813  
      2/12/2003       5,000       2/12/2009       5,000  
      1/20/2004       5,000       1/20/2010       5,000  
Andrew N. Liveris
    1/1/2006       2,318       1/1/2012       2,318  
      1/17/2006       9,198       1/17/2012       9,198  
      1/16/2007       8,275       1/16/2013       0  
      1/22/2008       36,809       1/22/2014       0  
Richard D. Parsons
    7/18/2000       2,680       7/18/2010       2,680  
      1/16/2001       5,361       1/16/2011       5,361  
      2/13/2002       5,361       2/13/2012       5,361  
      1/20/2004       5,000       1/20/2010       5,000  
      1/18/2005       18,947       1/18/2011       18,947  
      1/17/2006       18,397       1/17/2012       18,397  
Judith Rodin
    1/17/2006       9,198       1/17/2012       9,198  
      1/16/2007       8,275       1/16/2013       0  
      1/22/2008       18,404       1/22/2014       0  
Franklin A. Thomas
    7/18/2000       2,680       7/18/2010       2,680  
      1/16/2001       11,718       1/16/2011       11,718  
      2/13/2002       10,347       2/13/2012       10,347  
      2/12/2003       12,800       2/12/2009       12,800  
      1/20/2004       5,000       1/20/2010       5,000  


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Audit and Risk Management Committee Report
 
The Audit and Risk Management Committee (“Committee”) operates under a charter that specifies the scope of the Committee’s responsibilities and how it carries out those responsibilities. A copy of the Committee charter is attached to Citigroup’s proxy statement as Annex B.
 
The Board of Directors has determined that all six members of the Committee are independent based upon the standards adopted by the Board, which incorporate the independence requirements under applicable laws, rules and regulations.
 
Management is responsible for the financial reporting process, the system of internal controls, including internal control over financial reporting, risk management and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. kpmg llp, Citigroup’s independent registered public accounting firm (“independent auditors”) is responsible for the integrated audit of the consolidated financial statements and internal control over financial reporting. The Committee’s responsibility is to monitor and oversee these processes and procedures. The members of the Committee are not professionally engaged in the practice of accounting or auditing and are not professionals in these fields. The Committee relies, without independent verification, on the information provided to us and on the representations made by management regarding the effectiveness of internal control over financial reporting, that the financial statements have been prepared with integrity and objectivity and that such financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The Committee also relies on the opinions of the independent auditors on the consolidated financial statements and the effectiveness of internal control over financial reporting.
 
The Committee’s meetings facilitate communication among the members of the Committee, management, independent risk managers, the internal auditors, and Citigroup’s independent auditors. The Committee separately met with each of the internal and independent auditors with and without management, to discuss the results of their examinations and their observations and recommendations regarding Citigroup’s internal controls. The Committee also discussed with Citigroup’s independent auditors all communications required by generally accepted auditing standards.
 
The Committee reviewed and discussed the audited consolidated financial statements of Citigroup as of and for the year ended December 31, 2008 with management, the internal auditors, and Citigroup’s independent auditors.
 
The Committee has received the written disclosures required by pcaob Rule 3526  — “Communication with Audit Committees Concerning Independence.” The Committee discussed with the independent auditors any relationships that may have an impact on their objectivity and independence and satisfied itself as to the auditors’ independence.
 
The Committee has reviewed and approved the amount of fees paid to the independent auditors for audit, audit related and tax compliance services. The Committee concluded that the provision of services by the independent auditors is compatible with the maintenance of their independence.
 
Based on the above-mentioned review and discussions, and subject to the limitations on our role and responsibilities described above and in the Committee charter, the Committee recommended to the Board that Citigroup’s audited consolidated financial statements be included in Citigroup’s Annual Report on Form 10-K for the year ended December 31, 2008 for filing with the sec.
 
The Audit And Risk Management Committee:
John M. Deutch (Chair)
Andrew N. Liveris
Anne M. Mulcahy
Lawrence R. Ricciardi
Judith Rodin
Robert L. Ryan
 
Dated: February 26, 2009


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Executive Compensation
 
 
The Personnel and Compensation Committee Report
 
 
In accordance with its written charter, the Personnel and Compensation Committee (the committee) evaluated the performance of and determined the compensation for the Chief Executive Officer and approved the compensation structure for senior management, including the senior leadership committee, the most senior managers of corporate staff, and other highly paid professionals.
 
The committee reviewed and discussed the Compensation Discussion and Analysis with members of senior management and, based on this review, the committee recommended to the Board of Directors of Citigroup Inc. that the Compensation Discussion and Analysis be included in Citi’s annual report on Form 10-K and proxy statement on Schedule 14A filed with the Securities and Exchange Commission.
 
The committee certifies that it has reviewed with Citi’s senior risk officer the senior executive officer incentive compensation arrangements and has made reasonable efforts to ensure that such arrangements do not encourage senior executive officers to take unnecessary and excessive risks that threaten the value of the financial institution.
 
The Personnel and Compensation Committee:
Alain J.P. Belda (Chair)
C. Michael Armstrong
Kenneth T. Derr
Richard D. Parsons
 
February 17, 2009


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Compensation Discussion and Analysis
 
Overview
Citi and the entire financial services industry are facing unprecedented challenges and profound change and 2008 was a particularly challenging year. Citi’s overarching priority has been to reposition the Company to capitalize on the best opportunities for global growth in a rapidly changing financial environment. This repositioning includes reducing the assets on the balance sheet, reducing expenses, and streamlining businesses for future profitable growth. It also includes a redesign of the compensation structure and a substantial turnover of top management.
 
The objectives of Citi’s executive compensation programs have been to attract and retain the best talent, motivate and reward executives to perform by linking incentive compensation to demonstrable performance-based criteria, align the long term interests of management with those of stockholders, and deliver compensation at levels that are competitive to the financial services market. These objectives still hold true and remain as part of Citi’s compensation philosophy; reflecting 2008 financial results and the evolving financial services landscape, Citi has made changes to the structure of compensation that will better result in meeting these objectives.
 
The extraordinary events of 2008 have significantly decreased total compensation for 2008. The final awards made by the committee are shown on page 45.
 
Objectives of Citi’s executive compensation programs
Citi’s compensation programs are designed to support:
 
•  Competitive pay: Citi aims to deliver compensation at levels that are competitive to the financial services market. Citi collected market data on both the direction and level of compensation in financial services and the size and structure of the awards are reflective of that market data.
 
•  Alignment: Compensation should align the long-term interests of management with stockholders.
 
 
•  Performance: Incentive awards should be based on financial measures that best reflect the state of ongoing operations and that reflect the impact of recognized and unrecognized gains and losses. Performance also must balance financial and non-financial measures.
 
•  Past and future performance: Performance-based compensation should incorporate both past performance as well as forward looking performance. Compensation should also be subject to a clawback in the event that it is based on results that at a later date prove to be incorrect.
 
•  Risk management: Compensation should encourage prudent decisions around both taking risks to improve Citi’s performance and avoiding unnecessary and excessive risk that can harm the franchise.
 
•  Meritocracy: Individual compensation decisions should be differentiated according to financial and non-financial performance. Compensation amounts should vary significantly up or down based on business and individual performance.
 
•  Partnership: Strong partnership across businesses and regions is critical to our success.
 
Compensation Structure
The compensation structure has been redesigned to better meet the objectives summarized above. In particular, awards are now more closely tied to future performance and risk management is now a more integrated part of the compensation. Set forth below is a discussion of each element of compensation, the reason Citi pays each element, how each amount is determined, and how that element fits into Citi’s compensation philosophy. Note that the American Recovery and Reinvestment Act of 2009, which is described in this report, and other subsequent legislation and regulations will modify or could modify the executive compensation policies set forth herein prospectively and/or retroactively.
 
•  Base pay. Base salary, while not specifically linked to Citi performance, is necessary to compete for talent and is a relatively small component of total compensation for members of the management executive committee including the named executive officers.


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Executives have a range of base salaries, and as a matter of company policy, annual base salary is capped at $1,000,000 for the members of the management executive
 
committee. Base pay was frozen for 2009 across Citi, and none of the members of the management executive committee received a base pay increase from 2008 to 2009.


 
Incentive Compensation Structure
 
                 
        Management Executive
    Named Executive Officer   Committee
 
 
2008 Cash Awards
    0 %     40 %
Deferred Cash Retention Awards
    60 %     20 %
Performance Vesting Equity Awards
    30 %     30 %
Performance Priced Options
    10 %     10 %
Total Awards
    100 %     100 %
 
 
•  Bonus and equity compensation awards.  Set forth below are the key structural elements of the cash and equity awards made by the committee to the members of the management executive committee in January 2009.
 
  •  Cash awards. Named executive officers did not receive any cash awards for 2008 and the ongoing incentive compensation structure for management executive committee members was amended to provide 40% of the total incentive in cash.
 
  •  Deferred cash retention awards. Named executive officers who received awards received 60% of the total award in the form of deferred cash. These awards are payable in cash in 25 percent increments over a four-year vesting period, and pay interest based on 90-day libor. Unless a named executive officer dies, becomes disabled or there is a change in control of Citi, the executive must be employed by Citi on the applicable vesting date in order to receive an award payment. The deferred cash retention awards made to the named executive officers do not have retirement provisions that would allow the executive to terminate employment and still receive an award payment. The general compensation structure for management executive committee members now provides for 20% of the total award to be delivered in deferred cash.
 
  •  Performance-vesting equity awards. The named executive officers (except the ceo and cfo) and other members of the management executive committee received 30% of their
 
 
     awards as performance-vesting equity awards. These awards are intended to link incentive compensation for Citi’s senior executives to the performance of Citi. The awards were made to balance the need to compensate key executives, who (if they received any awards at all) received significantly reduced cash and total awards, at market levels while linking their compensation to Citi’s future performance.
 
     These performance-vesting stock awards vest if the price of shares of Citi common stock meets specified price targets prior to January 14, 2013 (the delivery date), with a minimum one-year vesting period. Half of each executive’s award has a price target of $17.85 and half has a price target of $10.61, with the price target deemed met only if the nyse closing price of Citi stock equals or exceeds the applicable price target for at least 20 nyse trading days within any period of 30 consecutive nyse trading days ending on or before the delivery date. These price targets were chosen based on the conversion prices of the warrants to purchase common stock issued by Citi to the U.S. Department of the Treasury on October 28, 2008 and on December 31, 2008. Any shares that have not vested by the delivery date will vest according to a fraction, the numerator of which is the share price on the delivery date and the denominator of which is the price target of the nonvested shares. Vested shares are not distributed to the executive until the delivery date, and no dividend equivalents are paid on these awards prior to vesting. If a named executive officer who


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     received an award resigns, retires or is involuntarily terminated before the delivery date, all nonvested shares are forfeited; however, some or all of the shares will vest and become immediately deliverable if the executive terminates employment prior to the delivery date due to death or disability, and may vest if there is a change in control of Citi.
 
  •  Performance priced options. Members of the management executive committee, including the named executive officers, were eligible to receive 10% of their awards as performance priced stock options, which have an exercise price that places the awards significantly “out of the money” on the date of grant. These options were granted to the named executive officers who received awards and other members of the management executive committee and have the same purposes as the performance-vesting stock awards. Half of each executive’s options have an exercise price of $17.85 and half have an exercise price of $10.61 (as determined pursuant to the terms of the awards), and were granted on a day that Citi’s closing price was $4.53. The named executive officers who received awards accordingly will receive value from the options only if the Citi stock price increases significantly over its current levels. The options have no value unless Citi’s stock price exceeds the exercise price during the term. The options have a 10-year term and vest ratably over a four-year period. If the named executive officer resigns, retires or is involuntarily terminated before the delivery date, all nonvested options are forfeited; however, the options will vest if the executive terminates employment prior to the vesting date due to death or disability, and may vest if there is a change in control of Citi.
 
•  More restrictive “clawback.” All bonus and incentive compensation for senior executives (including the named executive officers) is subject to an even more meaningful “clawback” provision than had previously been in place. Under the new “clawback,” any bonus or incentive compensation for members of the senior leadership committee is subject to recovery by Citi (e.g., by forfeiture of
 
 
nonvested awards or repayment of vested awards) if such compensation is based on statements of earnings, gains or other criteria that are later shown to be materially inaccurate, without regard to whether the inaccuracy arose from any misconduct. The increase in the portion of compensation of senior executives that is awarded as deferred compensation will make it easier for Citi to “clawback” or cancel incentive or other compensation if the basis on which it was awarded or paid is later shown to be materially inaccurate.
 
Prior Award Structures
 
  •  No cap awards for senior executives. In most past years, 40 percent of the nominal amount of the annual incentive and retention awards payable to all named executive officers was made in shares of restricted or deferred stock of Citi under the terms of Citi’s broad-based equity program available widely throughout the Company, the Capital Accumulation Program (cap), with the remainder paid in cash. Stock awards under cap vest ratably over a four-year period. For 2008, no cap or other equity awards were made to the named executive officers that vested solely on the basis of continuing employment; instead, the performance-based vesting approach was introduced, thereby better aligning the executives’ interests with the long-term interests of stockholders. Members of the management executive committee, including the named executive officers who received awards, received 40 percent of their incentive compensation in the form of performance-based equity awards and did not receive cap awards.
 
  •  No Executive Performance Plan bonus pool for 2008. Citi failed to meet the minimum performance targets under its Executive Performance Plan, which is the stockholder-approved plan providing for tax deductible performance-based compensation under section 162(m) of the irc. Under the terms of the plan, a bonus pool is not generated if Citi’s return on equity is less than 10 percent. As a result, no bonus pool was generated for 2008 for eligible senior executives, and no bonuses or other awards,


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     including cap or other equity awards, were made under that plan. In January 2009, the plan was terminated by the committee effective for the 2009 compensation year due to changes in tax laws enacted as part of the Emergency Economic Stabilization Act of 2008 (the eesa).
 
  •  No ltip awards earned. In July 2007, the committee adopted the Management Committee Long-Term Incentive Program (ltip) to provide pay for performance for Citi’s senior executives in a manner that was consistent with the plans of competitors and to provide for a formulaic payout based on specific performance metrics. The objectives and purpose of the ltip are to (a) raise the level of performance of Citi and deliver value to the stockholders, (b) provide for a direct link between compensation and outperformance of peers, (c) retain key members of management by providing for a multi-year, long-term incentive plan like those existing at competitors, (d) provide clarity through an award that is based on clearly measurable reported data, (e) provide common focus for senior executives across Citi, and (f) satisfy stockholder demand for performance-based equity programs. During the first and second performance periods (the last half of 2007 and calendar year 2008), the ltip did not deliver any value to program participants because performance measures were not met. The program may deliver value for 2009 if performance metrics are met for that year. For a detailed discussion of the metrics of the program, see the discussion of the ltip in the General Discussion of the Summary Compensation Table and Grants of Plan-Based Awards Table.
 
•  Stock ownership. While stock ownership commitments are now overwhelmingly considered to be a hallmark of good corporate governance, Citi has had some form of a stock ownership commitment for well over a decade. As part of Citi’s stock ownership commitment, the named executive officers are generally required to retain at least 75 percent of the equity awarded to them as long as they are members of senior management. This policy has always been intended to align the
 
interests of the named executive officers even further with the interests of stockholders. Accordingly, the named executive officers held significant amounts of stock throughout 2008 and experienced a substantial diminution in wealth along with other stockholders. In addition, due to their significant stock holdings, the executive officers, like other stockholders, received an income reduction when the board of directors reduced the dividend to stockholders in 2008.
 
•  Retirement and other deferred compensation plans. Citi does not sponsor supplemental retirement plans or serps for any of its named executive officers. With the exceptions noted below, the named executive officers are eligible to participate in the Citigroup Pension Plan and the Citigroup 401(k) Plan, which are tax-qualified retirement plans available to all eligible U.S. Citi employees. The purpose of these programs is to provide employees with tax-advantaged savings opportunities and income after retirement or other termination from Citi. Basic broad-based, tax-qualified retirement benefits are provided to assist employees in saving and accumulating assets for their retirement. Eligible pay under these plans is limited to irc annual limits ($230,000 for 2008). More information on the terms of the Citigroup Pension Plan is provided in the narrative following the Pension Benefits Table. The Citigroup Pension Plan was closed to new entrants after December 31, 2006; accordingly, Mr. Pandit and Mr. Crittenden (who were hired in 2007) are not eligible to participate in that plan. The Citigroup Pension Plan ceased cash balance accruals for all eligible participants, including the eligible named executive officers, effective December 31, 2007. Eligible Citi employees, including the named executive officers, will receive a matching contribution for 2008 under the Citigroup 401(k) Plan. The 401(k) plan provides a matching contribution of up to 6 percent of eligible pay to all U.S. employees, subject to irc annual limits. The matching contributions made to the named executive officers’ 401(k) plan accounts for 2008 are disclosed in the All Other Compensation column of the Summary Compensation Table.
 
•  Health and insurance plans. The named executive officers are eligible to participate in


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the Company-sponsored U.S. benefit programs on the same terms and conditions as those made available to U.S. salaried employees or expatriates generally. Basic health benefits, life insurance, disability benefits and similar programs are provided to ensure that employees have access to healthcare and income protection for themselves and their family members. Under Citi’s U.S. medical plans, higher-paid employees are required to pay a significantly higher amount of the total premiums, while the premiums paid by lower paid employees receive a higher subsidy from Citi.
 
•  Other compensation. Citi pays additional compensation to its named executive officers in the form of personal benefits to the extent set forth in the Summary Compensation Table. A discussion of personal benefits is provided in the footnotes to the Summary Compensation Table.
 
As authorized by its stockholder-approved stock incentive plans, Citi pays dividend equivalents on nonvested restricted or deferred stock awards under cap and certain other equity awards on the same basis to all employees receiving such awards, which includes a significant percentage of all employees worldwide. (The performance-vesting stock awards granted on January 14, 2009 do not provide for dividend equivalents on nonvested shares.) Where dividend equivalents are paid on equity awards, the dividend rate is the same for the named executive officers as for other stockholders. This practice is consistent with and furthers the goal of aligning the interests of employees with those of stockholders. Accordingly, the named executive officers and other employees will receive a direct decrease in income, in proportion to their share holdings, as a result of reduced dividends.
 
Subsequent legislation. On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (the Act), amending eesa, was enacted. The Act, eesa, and other subsequent legislation and regulations will modify or could modify the executive compensation policies set forth herein prospectively and/or retroactively. In particular, during the period a tarp obligation remains outstanding, the Act (a) limits compensation to exclude incentives for senior executive officers to
 
take unnecessary and excessive risks that threaten the value of the financial institution, (b) provides for the recovery of any bonus, retention award, or incentive compensation paid to specified employees based on statements of earnings, revenues, gains, or other criteria that are later found to be materially inaccurate, (c) prohibits any golden parachute payment to a senior executive officer or any of the next five most highly compensated employees, and (d) prohibits the payment or accrual of any bonus, retention award, or incentive compensation, except that any such restriction does not apply to the payment of long-term restricted stock that meets specified conditions, including a limit on value to one-third of the total amount of annual compensation of the employee receiving the stock.
 
Process for determining executive officer compensation
 
The role of the Personnel and Compensation Committee. The committee is responsible for evaluating the performance of and determining the compensation for the ceo, and, in accordance with guidelines established by the committee from time to time, approves the compensation for the senior leadership committee. The committee regularly reviews the design and structure of Citi’s compensation programs to ensure that management’s interests are aligned with stockholders and that the compensation programs are aligned with Citi’s strategic priorities.
 
In furtherance of these goals, the committee has retained icca to provide independent evaluations and advice regarding executive compensation. icca does no other work for Citi, reports directly to the chair of the committee and meets with the committee in executive session, without the presence of Citi management. icca was asked to review the committee’s process, its decisions regarding current ceo compensation and the compensation of other members of senior management, and the reasons for reaching those decisions. The committee also relies on Mercer Human Resource Consulting to provide data, evaluations and advice regarding executive compensation. The committee instructed the consultants to meet with senior management to review Citi’s process, financial performance, and market data. The consultants were asked to


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evaluate the compensation recommendations for senior management in light of these factors and management’s description of the performance assessment. Towers Perrin also provided market data regarding compensation trends in the financial services industry.
 
Compensation process and approach for 2008. In November 2008, the committee met with senior management to review the approach to year-end compensation decisions. The proposed approach emphasized the following general principles: performance-based incentive pools, performance-based differentiation of individual compensation decisions, a mix of incentive and retention awards, and recovery or “clawback” of compensation where appropriate. The approach also emphasized partner-like behavior across the organization, to encourage behavior benefiting the franchise as a whole.
 
In December, the committee met with management to review preliminary financial data against the compensation philosophy in the determination of company-wide bonus pools and the bonus pools for senior management. In light of the extraordinary financial upheavals that occurred during 2008, market data provided limited meaningful guidance regarding contemporary compensation practices, as compensation data from 2007 and 2008 compensation surveys became an unreliable predictor of actual competitor compensation practices for 2008. The committee also reviewed and approved specific elements of the executive compensation structure, including the size of the executive bonus pools, the percentage of management executive committee compensation payable in deferred cash retention awards and performance-vesting stock and performance priced options, the “clawback” provisions and restrictions on executive severance. Their decisions also reflected the terms of the securities purchase agreement dated December 31, 2008 by and between Citi and the U.S. government (the securities purchase agreement).
 
Performance evaluations and determination of the nominal amount of the awards. In January 2009, the committee determined the size of the bonus pool for the senior leadership committee, and reduced the value of such pool by approximately 43 percent over the pool for
 
similar positions for the prior period. The amount of the reduction exceeded the reduction required by the terms of the securities purchase agreement. The committee then provided for the structure of executive compensation previously described, including an emphasis on deferred cash retention awards over currently payable cash awards and performance-vesting stock and performance priced options in lieu of traditional equity awards that vest solely according to the passage of time. The committee also made cash and equity awards subject to the “clawback,” which provides for a recovery of incentive or retention compensation that is based upon materially inaccurate performance metrics.
 
The committee awarded 40 percent of the incentive compensation in equity and 60 percent payable in cash to the named executive officers who received awards, in accordance with Citi’s longstanding approach to executive compensation. However, none of the cash payable to the named executive officers who received awards was payable at the time of the award, and all of the cash compensation was awarded in the form of a deferred cash retention award, as structuring the cash award as a deferred award (instead of an immediately payable cash award) should provide better value to stockholders to the extent that it induces a key executive to remain employed at Citi.
 
All of the equity awards made to the named executive officers who received awards as well as the awards made to the remainder of the management executive committee were made in the form of performance-vesting stock and performance priced options. The performance targets were chosen based on the conversion prices of the warrants to purchase common stock issued by Citi to the U.S. Department of the Treasury on October 28, 2008 and on December 31, 2008. The performance targets are $10.61 and $17.85 and Citi stock closed at $4.53 on the date of the awards, meaning that the stock must recover significantly for the executives to receive full value. This approach enables the alignment of executives’ interests with those of taxpayers and drives performance. The executives received 30 percent of their total incentive awards in stock and 10 percent in options, in recognition that each form of equity has a different type of value to the holder.


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In deciding the nominal amount of each individual’s incentive, senior management presented a general review and evaluation of the executive officers to the committee. The evaluation was based on a review of the performance of each of the executive officers, including consideration of (a) Citi’s financial performance (such as revenue growth, expense management, reduction of balance sheet assets, net income, return on equity, and total return to stockholders), including both ongoing operations and recognized gains and unrecognized gains and losses, (b) the business practices, including an evaluation of risk management, (c) talent development, including development of diverse talent, and (d) the ability of the applicable business to execute on Citi’s strategic plan, including through successful acquisitions or divestitures.
 
The committee then determined the nominal amount of each executive’s compensation. Each of the factors comprising the performance results was considered by the committee in determining the nominal amount of each executive’s compensation. Formulaic approaches were not used to weight these factors, consistent with the committee’s and Citi’s belief that the adoption of any given formula could inadvertently encourage undesirable behavior (e.g., favoring one financial measure to the exclusion of other important values).
 
Four senior executives — the ceo, the cfo the former Chairman, and former senior counselor Robert E. Rubin — declined to be considered for incentive or retention compensation, in light of Citi’s performance and other extraordinary circumstances of 2008. The committee decided to make awards in either stock or cash to the named executive officers other than the ceo and cfo in varying amounts on a case-by-case basis. The awards were focused on the need to retain the applicable executive to provide for the future performance of Citi while also taking into account the executive’s past performance. This non-formulaic approach led to significant differences in the compensation paid to the named executive officers, as in making individual awards, the committee took into account the competitive marketplace for individuals with widely differing job responsibilities at Citi, length of service with Citi, size of the business for which they are
 
responsible, and tenure in the financial services industry.
 
Review by the chief risk officer. Citi’s chief risk officer held informal discussions with management from time to time throughout the process of structuring executive compensation to provide his preliminary views on how excessive risk taking could be mitigated through the company’s approach to executive compensation. On January 14, 2009, he discussed with the committee the short-term and long-term risks that could threaten the value of Citi and the features of Citi’s compensation arrangements in light of those risks, and delivered his report to the committee on his review of the compensation structure for senior executive officers. The report concluded that the design of the incentive compensation structure for Citi’s senior executive officers does not encourage those individuals to take unnecessary or excessive risks that threaten the value of the institution. The report furthermore concluded that the structure provides strong incentive for those executives to appropriately balance risk and reward, and aligns the interests of the executives with those of stockholders and the U.S. government.
 
The chief risk officer reached those conclusions through a three-part process: the risks were identified, the behaviors of the individuals who were compensated through the structure were assessed, and finally the compensation structure was evaluated in light of the risks and behaviors.
 
•  First, the chief risk officer evaluated the disclosures in the company’s periodic financial statements made available to the public and determined that Citi’s long-term and short-term risks are clearly set forth in the risk factors identified therein.
 
•  The chief risk officer, with the assistance of other senior risk officers, then reviewed the behavior of members of senior management to determine whether the behaviors exhibited over the course of 2008 were consistent with the new risk culture outlined by the ceo and chief risk officer. Our risk culture is based on taking intelligent risk with shared responsibility, without forsaking individual accountability.


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•  Each member of senior management was assessed according to whether he or she appropriately recognizes the stature of risk managers and the risk management organization, whether the executive recognizes risk in his or her business, and whether the executive takes appropriate steps to mitigate risks.
 
•  The chief risk officer then reviewed the proposed compensation structure, including the cash element, the performance-vesting stock and performance priced options, the “clawback,” and the limit on severance pay, and the 75 percent stock ownership commitment. The chief risk officer found that:
 
  •  The “clawback” feature supports the accuracy of Citi’s financial statements and encourages the executives to focus on maintaining accurate books and records and on complying with relevant accounting policies.
 
  •  The vesting elements of the awards as well as the maturity schedule of the options align the interests of the executives with the long-term health of the Company, the quality of earnings, the interests of
 
stockholders, and the interests of the U.S. government.
 
  •  While the exercise prices of the options and the vesting triggers for the stock were well above Citi’s current stock price, the spread was not unduly wide and the prices appropriately aligned the interest of the executives with the U.S. government and stockholders.
 
  •  The mix of cash and equity awards provided an appropriate balance between short-term and long-term risk and reward decisions.
 
Independent consultant review. After the committee determined each named executive officer’s incentive and retention compensation, icca reviewed the committee’s decisions to determine whether the compensation paid to each executive was reasonable, based on the criteria described above that were used by the committee and related results. Based on its review of the total process and results, the independent consultant determined that the committee’s decision-making process was both thoughtful and thorough and its decisions were responsible and reasonable.


 
[GRAPHIC]
 
Awards made by the committee in January 2009
 
Compensation decisions were made in recognition of the extraordinary events of 2008 balanced against the need to retain resources critical to the future profitability of the Company. These decisions also reflect the terms of the securities purchase agreement.
 
•  No bonuses for top executives for 2008. ceo Vikram Pandit, former Chairman Sir Win Bischoff, cfo Gary Crittenden and former senior counselor Robert E. Rubin declined to be considered for bonuses or other incentive or retention compensation for 2008.
 
•  Limits on future ceo compensation. ceo Vikram Pandit has advised Citi’s board that he will accept no incentive compensation and will accept $1 base pay until Citi returns to profitability.
 
Significantly reduced bonus pools for senior executives. The securities purchase agreement
 
required that the bonus pool for the top 51 executives at Citi — the members of the senior leadership committee and the management executive committee (including the named executive officers) — be reduced by at least 40 percent from the amounts for the comparable prior periods. Accordingly, the bonus pool for the senior leadership committee was reduced by 43 percent from the prior period. In addition, the bonus pool for the 15 management executive committee members was reduced by 57 percent from the prior period. The structure of these awards was also significantly changed.



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Specifically, in January 2009 the committee approved the following awards to the named executive officers:
 
                                         
    Current
      Performance-
       
    Cash
  Deferred Cash
  Vesting
  Performance Priced
   
Name   Award   Retention Awards   Equity Awards   Options   Total
 
 
Vikram Pandit
  $ 0     $ 0     $ 0     $ 0     $ 0  
Gary Crittenden
  $ 0     $ 0     $ 0     $ 0     $ 0  
Ajaypal Banga
  $ 0     $ 3,600,000     $ 1,800,000     $ 600,000     $ 6,000,000  
James Forese
  $ 0     $ 5,265,000     $ 2,632,500     $ 877,500     $ 8,775,000  
Stephen Volk
  $ 0     $ 3,600,000     $ 1,800,000     $ 600,000     $ 6,000,000  
 
The committee made equity awards in 2009 and in prior years based on the grant date fair value of the awards and not on the accounting treatment of current or prior awards in Citi’s financial statements under the Statement of Financial Accounting Standards (sfas) No. 123 (revised 2004), “Share-Based Payment” (sfas 123(r)) or other applicable accounting standards. Under sec rules, the treatment in the
Summary Compensation Table of equity awards is based on those accounting principles. As a result of this requirement, equity awards with the same terms may differ in value as presented in the Summary Compensation Table depending on an executive’s age and length of service with Citi, and therefore, it may be difficult to discern the committee’s judgments about executive performance for 2008.

 
 


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Amounts shown in the Summary Compensation Table are larger than the committee’s 2009 awards
 
The table set forth below summarizes the difference between the actions taken by the committee in January 2009 regarding equity awards and the equity award values appearing in this year’s Summary Compensation Table. The first column (after the executives’ names)
below shows the equity awards that were made by the committee in January 2009. The second column shows the values for equity awards required to be shown in the Summary Compensation Table in accordance with sec rules. The last column shows the difference between the first column (the committee action) and the second column (values required by sec rules).


                         
            Difference Between
        Value of Stock
  Stock Awarded and
        Awards Shown in
  Summary
    Stock Awarded in
  2008 Summary
  Compensation Table
Name   January 2009   Compensation Table   Values
 
 
Vikram Pandit
  $ 0     $ 8,230,244     $ (8,230,244 )
Gary Crittenden
  $ 0     $ 11,582,039     $ (11,582,039 )
Ajaypal Banga
  $ 1,800,000     $ 5,116,142     $ (3,316,142 )
James Forese
  $ 2,632,500     $ 7,328,681     $ (4,696,181 )
Stephen Volk
  $ 1,800,000     $ 6,409,749     $ (4,609,749 )
 
Note that the value of the stock awards shown in the Summary Compensation Table is based on the value on the date of grant. As Citi’s stock price has declined significantly, the value of the awards shown in the Summary Compensation Table does not reflect their current value.
 
The above table shows that equity incentive compensation actually awarded in January 2009 was significantly less than the amounts shown in the Summary Compensation Table, as the amounts reported in the Summary Compensation Table included values for equity awarded in prior years. The differences shown in the table between committee action and the Summary Compensation Table are largely attributable to the fact that the Summary Compensation Table, prepared in accordance with sec regulations, values equity awards based principally on the treatment of compensation expense in the income statement of the employer under sfas 123(r). In general, under that rule, the grant date fair value of an equity award (which is based on the stock price on date of grant) is expensed over the vesting period of the equity award, unless the employee is eligible to retire. If the employee is eligible to retire, then the award must be expensed on the grant date or accrued over a service period prior to the grant date.
 
The equity awards made by the committee in January 2009 for the named executive officers were performance-vesting equity awards and
performance priced options that vest over future periods. No sfas 123(r) expense was incurred for these awards during 2008, so they are not reflected in the 2008 Summary Compensation Table. These awards will be expensed under sfas 123(r) over the shorter of their vesting periods or the period over which the performance target is projected to be met, and therefore will be disclosed in future Summary Compensation Tables. Furthermore, under sfas 123(r), charges are made for ltip awards even in years, such as 2008, for which the executives forfeit the awards because performance targets were not met. The ltip awards are also expensed over their vesting periods.
 
Although Citi’s equity programs do not expressly contain retirement provisions, Citi’s cap program has terms that result in retirement treatment under the applicable accounting standards. Under cap, if an employee’s age and years of service total at least 75, all of his or her equity awards will continue to vest on schedule after termination of employment under most circumstances (the Rule of 75). Accordingly, under sfas 123(r), awards made to individuals who meet the Rule of 75 must be expensed on or prior to the grant date. If an employee’s age and service total at least 60 and certain other age and service requirements are satisfied, a portion of his or her equity awards will continue to vest on schedule after termination of employment under


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most circumstances (the Rule of 60). The employee will forfeit a portion of his “premium shares” (explained in more detail below under the discussion of the cap program). Accordingly, under sfas 123(r), that portion of the awards made to an individual who meets the Rule of 60 must be expensed on or prior to the grant date. The differences between the stock awards made by the committee and the values in the Summary Compensation Table are explained as follows:
 
•  Mr. Pandit: Mr. Pandit does not meet the Rule of 60 or the Rule of 75, which means that under sfas 123(r), all of his equity awards are expensed over their vesting periods. Accordingly, the amount shown in the Summary Compensation Table for Mr. Pandit includes the amortization charges for the awards made in prior years that are still vesting and the ltip. Mr. Pandit did not receive any equity awards in January 2009 and did not earn any awards under the ltip for 2007 or 2008.
 
•  Mr. Crittenden: Mr. Crittenden does not meet the Rule of 60 or the Rule of 75, which means that under sfas 123(r), all of his equity awards are expensed over their vesting periods. Accordingly, the amount shown in the Summary Compensation Table for Mr. Crittenden includes the amortization charges for the awards made in prior years that are still vesting and the ltip. Mr. Crittenden did not receive any equity awards in January 2009 and did not earn any awards under the ltip for 2007 or 2008.
 
•  Mr. Banga: Mr. Banga does not meet the Rule of 60 or the Rule of 75, but is expected to do so later in 2009. Accordingly, under sfas 123(r), all of his equity awards that have
 
Rule of 60 provisions are expensed over the shorter of the period until he meets the Rule of 60 or the vesting period. Accordingly, the amount shown in the Summary Compensation Table for Mr. Banga includes the amortization charges for the awards made in prior years that are still vesting and the ltip, and does not reflect any equity awards made in January 2009. No executive earned any awards under the ltip for 2007 or 2008.
 
•  Mr. Forese: Mr. Forese meets the Rule of 60. Accordingly, some (but not all) of Mr. Forese’s cap and other equity awards from prior years are still vesting, and under sfas 123(r), the amount shown in the Summary Compensation Table for Mr. Forese includes the amortization charges for awards made in prior years that are still vesting and the ltip, and does not reflect any equity awards made in January 2009. No executive earned any awards under the ltip for 2007 or 2008.
 
•  Mr. Volk: Mr. Volk met the Rule of 75 on April 22, 2008 for some of his cap and other equity awards; under sfas 123(r), these equity awards have been expensed through April 22, 2008, and the amount shown in the Summary Compensation Table for Mr. Volk includes the amortization charges for these awards that vested on this date. Some of Mr. Volk’s cap and other equity awards from prior years are still vesting due to the fact that they do not have Rule of 75 provisions; under sfas 123(r), the amount shown in the Summary Compensation Table for Mr. Volk includes the amortization charges for these awards made in prior years that do not have Rule of 75 provisions and are still vesting, as well as the ltip, and does not reflect any equity awards made in January 2009. No executive earned any awards under the ltip for 2007 or 2008.


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The values for the stock option awards disclosed in the Summary Compensation Table also differ from committee action in January 2009, as shown in the table below.
 
                         
            Difference Between
        Value of Options
  Options Awarded and
    Performance Priced
  Shown in
  Summary
    Options Awarded in
  2008 Summary
  Compensation Table
Name   January 2009   Compensation Table   Values
 
 
Vikram Pandit
  $ 0     $ 1,610,493     $ (1,610,493 )
Gary Crittenden
  $ 0     $ 0     $ 0  
Ajaypal Banga
  $ 600,000     $ 13,265     $ 586,735  
James Forese
  $ 877,500     $ 20,077     $ 857,423  
Stephen Volk
  $ 600,000     $ 0     $ 600,000  
 
The performance options have exercise prices of $17.85 and $10.61, as previously described. These price targets were chosen based on the conversion prices of the warrants to purchase common stock issued by Citi to the U.S. Department of the Treasury on October 28, 2008 and on December 31, 2008, respectively. The committee determined the number of performance priced options by dividing the nominal amount of the option award by the closing price on the day before the award date ($5.90), then multiplying the result by four. Under Citi’s past practices, a four-to-one ratio had been used for valuing options that were granted at current market prices, and a higher multiple would have been used for performance priced options. However, due to the high volatility and low absolute value of Citi stock, the committee determined that the four-to-one ratio reflects the currently estimated economic value of the “out of the money” options awarded in 2009.
 
In accordance with sec rules, the value of stock options shown in the 2008 Summary Compensation Table includes certain sfas 123(r) charges for options granted in years prior to 2009. The Summary Compensation Table shows the sfas 123(r) charges for the sign-on options granted to Mr. Pandit in January 2008. Options granted to Mr. Banga and Mr. Forese in prior years were expensed in Citi’s income statement in 2008 over the applicable vesting periods, and accordingly, the amounts disclosed in the Summary Compensation Table for Mr. Banga and Mr. Forese include some expense recorded in 2008 in respect of their prior years’ awards and do not show the results of actions taken by the committee in January 2009.
 
Other important compensation policies affecting named executive officers
 
•  Timing of awards. The awards to the executive officers were made on January 14, 2009 and were structured to provide value to executives when specified price targets are met, and those price targets were set at prices related to the warrants issued to the U.S. Treasury in October and December 2008, without regard to the price of Citi stock on the award date. The awards of performance-vesting stock made to executive officers on January 14, 2009 were made at fair market value; the number of shares awarded was determined by dividing the amount awarded by the committee by the average of the closing prices during the five trading days during the third full week in January, which has been Citi’s consistently applied approach to valuing restricted stock awards. The award of performance priced options was unprecedented, and as previously disclosed, the number of performance options for 2009 was determined by dividing the amount awarded by the closing price on the date prior to the award date ($5.90) and multiplying by four.
 
•  Grants of stock options. The committee believes that performance priced options can be an important component of aligning executives’ interests with those of stockholders by compensating executives only if the stock price attains specified targets. None of the named executive officers received reload options in 2008, which would have been issued only with respect to rights granted as part of earlier option grants and under Citi’s stockholder-approved equity compensation plans. Since 2003, Citi has not granted reload options except to the extent required by the terms of previously granted options.
 


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•  Pricing of stock options. Citi’s equity plans generally provide that the exercise price of options is no less than the closing price of a share of Citi common stock on the nyse on the trading date immediately preceding the date on which the option was granted. (Consistent with that rule, the performance priced options have exercise prices of $10.61 and $17.85, well above the closing price on the date of grant.) However, the exercise price of a reload or sign-on or other extraordinary option intended to be granted at market is no less than the closing price of a share of Citi common stock on the nyse on the date on which the option is granted. Citi believes that both pricing approaches are appropriate measures of fair market value for options with exercise prices that intended to be at (and not above) market on the date of grant.
 
•  Tax deductibility of the named executive officers’ incentive and retention compensation. The Executive Performance Plan was approved by stockholders in 1999 and establishes criteria for determining the maximum amount of tax-deductible bonus compensation available for executives covered by the plan. In 2008, the Executive Performance Plan did not provide for a bonus pool as the plan’s financial performance target was not achieved, and eligible executives did not receive incentive compensation in respect of 2008 under the plan. While Citi currently seeks to preserve deductibility of compensation paid to the named executive officers, Citi has retained the flexibility to provide compensation arrangements necessary to recruit and retain outstanding executives. Non-deductible compensation was paid to some named executive officers in January 2009, to the extent determined by the committee to be necessary to compensate the executives considered to be critical to improving Citi’s performance in the future. In January 2009, the Executive Performance Plan was terminated by the committee effective for the 2009 compensation year due to changes in tax laws enacted as part of eesa.
 
•  Change in control agreements. In 2002, Citi’s board adopted a resolution specifically prohibiting cash payments to a departing executive officer in the event of a change in control that would equal or exceed three times
 
the executive officer’s annual income. Citi generally does not provide for change in control protection as part of individual employment arrangements. None of the named executive officers has change in control arrangements, except for those applicable to their equity awards under Citi’s equity programs or deferred cash retention awards, as described in detail below under Potential Payments upon Termination or Change in Control.
 
•  Policy on “clawbacks.” Citi’s executive compensation policies provide that all incentive compensation paid to members of the senior leadership committee is subject to recovery or “clawback.” Any bonus or incentive compensation for members of the senior leadership committee is subject to recovery by Citi (e.g., by forfeiture of unvested awards or repayment of vested awards) if such bonus or incentive compensation is based on statements of earnings, gains or other criteria that are later shown to be materially inaccurate. Prior to the adoption of this policy in 2008, the board had adopted a narrower “clawback” policy based upon the Sarbanes-Oxley. As part of Citi’s Corporate Governance Guidelines, Citi required reimbursement, in all appropriate cases, of any bonus or incentive compensation awarded to an executive officer or effecting the cancellation of nonvested restricted or deferred stock awards previously granted to the executive officer if: (a) the amount of the bonus or incentive compensation was calculated based upon the achievement of certain financial results that were subsequently the subject of a restatement, (b) the executive engaged in intentional misconduct that caused or partially caused the need for the restatement, and (c) the amount of the bonus or incentive compensation that would have been awarded to the executive had the financial results been properly reported would have been lower than the amount actually awarded.
 
•  Policy on severance pay and “golden parachutes.” Citi’s executive compensation policies provide that the named executive officers cannot receive any severance pay. The severance pay of other members of Citi’s senior leadership committee is subject to
 


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limits such that no payments in the nature of “golden parachute” payments may be made. The policy against “golden parachute” payments generally prohibits severance payments in excess of three times the executive’s annualized compensation, as defined in applicable regulations.
 
•  Policy on employment agreements. Citi will enter into a new employment agreement with an executive officer or a candidate only when necessary to attract or retain exceptional personnel. Any employment agreement with an executive officer (a) must be approved by the committee; (b) should have as short a term as possible and provide as few terms and conditions as are necessary to accomplish its purpose; and (c) if required by law to be available for public review, must be filed promptly with the appropriate regulatory authority. Employment agreements with executive officers may not provide for post-retirement personal benefits of a kind not generally available to employees or retirees, except with the express prior approval of the board.
 
•  Use of compensation consultants. The committee charter provides that its compensation determinations regarding the ceo and other members of senior management should reflect the advice of an independent compensation consultant. The committee retained icca starting in 2006 as part of its effort to ensure the independence of the advice it receives. icca advises the committee on its compensation decisions, provides it with a report and evaluates the quality of the comparative peer and other data provided to
 
the committee by Mercer, Towers Perrin and Citi management, as well as the due diligence performed by all. icca performs no work for Citi other than its assignments from the committee, and received a fee of $11,000 in respect of services performed in connection with the incentive awards made for 2008. icca meets separately with the committee and its chair outside the presence of management at meetings at which compensation decisions are made.
 
   The committee also receives data, evaluations and advice regarding executive compensation from Mercer and Towers Perrin, which have the resources and expertise to collect, analyze and provide comprehensive compensation information to both the board and management. In particular, Towers Perrin provided information on industry compensation trends as they developed during 2008. Mercer provides substantial other services to Citi, including consulting on broad-based medical plans offered to U.S. active and retired employees (e.g., healthcare vendor management, health plan design strategy and development of offerings for annual enrollment, and development of wellness programs and health savings accounts), administration of hmo networks, compliance assistance, cobra administration, administration of Citi’s flexible spending accounts, and administration of the Citi intranet site that provides information on employees’ total compensation. Towers Perrin also provides substantial other services to Citi, including actuarial consulting services to its U.S. pension plan.



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Compensation Information
 
No 2008 Current Cash Bonus Awards
 
For a complete understanding of actions taken by the committee with respect to compensation awards for 2008, please see the Awards made by the Committee section of the Compensation Discussion and Analysis.
 
As described previously in the cd&a on p. 38, the committee decided not to make current cash awards to any of the named executive officers. The following table shows the awards made by the committee which are required to be reported as “Bonus” in the Summary Compensation Table:
 
                 
    Current
   
    Cash
  Deferred Cash
Name   Award   Retention Awards
 
 
Vikram Pandit
  $ 0     $ 0  
Gary Crittenden
  $ 0     $ 0  
Ajaypal Banga
  $ 0     $ 3,600,000  
James Forese
  $ 0     $ 5,265,000  
Stephen Volk
  $ 0     $ 3,600,000  
 
Following are the compensation tables required by sec regulations.
 
The following tables show Citi’s compensation for any person serving as Chief Executive Officer or Chief Financial Officer during 2008 and Citi’s three other most highly compensated executive officers. The form of the tables is set by sec regulations and reflects accounting charges for awards made in prior years.
 
Summary Compensation Table
 
                                                                         
                            Change
       
                            in
       
                            Pension
       
                            Value
       
                        Non-
  and Non-
       
                        Equity
  qualified
       
                        Incentive
  Deferred
       
                        Plan
  Compen-
  All Other
   
                Stock
  Stock
  Compen-
  sation
  Compen-
   
Name and
      Salary
  Bonus
  Awards
  Options
  sation
  Earnings
  sation
  Total
Principal Position   Year   ($)   ($)(1)   ($)(2)   ($)(3)   ($)   ($)(4)   ($)(5)   ($)
 
 
Vikram Pandit     2008     $ 958,333     $ 0     $ 8,230,244 (6)   $ 1,610,493 (7)   $ 0     $ 0     $ 16,193     $ 10,815,263  
ceo     2007     $ 250,000     $ 0     $ 323,813 (8)   $ 0     $ 0     $ 0     $ 0     $ 573,813  
Gary Crittenden     2008     $ 500,000     $ 0     $ 11,582,039 (9)   $ 0     $ 0     $ 0     $ 140,056     $ 12,222,095  
cfo     2007     $ 403,410     $ 14,030,000     $ 4,850,872 (10)   $ 0     $ 0     $ 0     $ 85,224     $ 19,369,506  
Ajaypal Banga     2008     $ 500,000     $ 3,600,000     $ 5,116,142 (11)   $ 13,265 (12)   $ 0     $ 0     $ 348,206     $ 9,577,613  
ceo, Asia Pacific                                                                        
James Forese     2008     $ 225,000     $ 5,265,000     $ 7,328,681 (13)   $ 20,077 (14)   $ 0     $ 0     $ 16,314     $ 12,855,072  
Co-Head, Global Markets                                                                        
Stephen Volk     2008     $ 500,000     $ 3,600,000     $ 6,409,749 (15)   $ 0     $ 0     $ 1,514     $ 21,010     $ 10,532,273  
Vice Chairman     2007     $ 212,500     $ 1,300,000     $ 6,061,786 (16)   $ 0     $ 0     $ 11,114     $ 12,447     $ 7,597,847  
      2006     $ 200,000     $ 5,670,000     $ 3,915,520 (17)   $ 0     $ 0     $ 10,928     $ 29,488     $ 9,825,936  
 
 
(1) The values in this column for 2008 (and 2007 for Mr. Volk) are deferred cash retention awards, as described in more detail in the General Discussion of the Summary Compensation Table and Grants of Plan-Based Awards Table. The amount paid to Mr. Crittenden for 2007 includes a sign-on bonus of $11,180,000 paid in respect of forfeited options on stock of his former employer.
 
 
(footnotes continued on following page)


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(footnotes continued from previous page)
 
 
(2) The values in this column represent the applicable portions of the fair values on the grant dates of the shares awarded to the named executive officers, as described in more detail in the applicable footnotes below.
 
(3) The assumptions made when calculating the amounts in this column for 2008, 2007 and 2006 awards are found in footnote 8 to the Consolidated Financial Statements of Citigroup Inc. and its Subsidiaries, as filed with the sec on Form 10-K for 2008. The assumptions made when calculating the sec amounts in this column for 2005 awards are found in footnote 8 to the Consolidated Financial Statements of Citigroup Inc. and its Subsidiaries, as filed with the sec on Form 10-K for 2007.
 
(4) These amounts are the positive changes in the present value of the pension benefit for each named executive officer under the Citigroup Pension Plan. In 2008, the present value of Mr. Banga’s pension decreased by ($2,939) and the present value of Mr. Forese’s pension decreased by ($8,083), but in accordance with the applicable sec requirements, these decreases are not shown in the Summary Compensation Table. The amount of each named executive officer’s above-market or preferential earnings on compensation that was deferred on a basis that was not tax-qualified was $0.
 
(5) Set forth below is a breakdown of All Other Compensation (including personal benefits):
 
                                                 
    Security
              Medical
  Hart-Scott-
    Services/
      Ground
  Financial and
  and Dental
  Rodino
    Systems
  Aircraft
  Transportation
  Tax Planning
  Benefits
  Filing Fees
Name   ($)   ($)   ($)   ($)   ($)   ($)
 
Vikram Pandit
  $ 0     $ 0     $ 2,393     $ 0     $ 0     $ 0  
Gary Crittenden
  $ 0     $ 0     $ 126,256     $ 0     $ 0     $ 0  
Ajaypal Banga
  $ 0     $ 0     $ 2,557     $ 0     $ 0     $ 0  
James Forese
  $ 0     $ 0     $ 2,514     $ 0     $ 0     $ 0  
Stephen Volk
  $ 0     $ 0     $ 7,210     $ 0     $ 0     $ 0  
 
                                                 
            Housing/
           
    401(k) Plan
  Temporary
  Cost of
           
    Matching
  Living and
  Living
  Tax
  Other
   
    Contributions
  Home Leave
  Allowance
  Reimbursements
  Income
   
Name   ($)   ($)   ($)   ($)   ($)   Total ($)
 
Vikram Pandit
  $ 13,800     $ 0     $ 0     $ 0     $ 0     $ 16,193  
Gary Crittenden
  $ 13,800     $ 0     $ 0     $ 0     $ 0     $ 140,056  
Ajaypal Banga
  $ 13,800     $ 89,114     $ 93,821     $ 148,914     $ 0     $ 348,206  
James Forese
  $ 13,800     $ 0     $ 0     $ 0     $ 0     $ 16,314  
Stephen Volk
  $ 13,800     $ 0     $ 0     $ 0     $ 0     $ 21,010  
 
In accordance with applicable law, Mr. Pandit has entered into an Aircraft Time Sharing Agreement with Citiflight, Inc. (a subsidiary of Citigroup Inc.) that allows him to reimburse Citi for the cost of his personal use of corporate aircraft. Each named executive officer’s personal use of corporate aircraft is calculated based on the aggregate incremental cost of the flight to Citi. Aggregate incremental cost is calculated based on a cost-per-flight-hour charge developed by a nationally recognized and independent service.
 
The named executive officers received 401(k) plan matching contributions pursuant to the formula available to all eligible U.S. employees. Mr. Banga’s temporary living, home leave, housing, cost of living allowance, and tax reimbursement benefits are delivered pursuant to Citi’s formal Expatriate Program available to all participants who are transferred from the U.S. on temporary assignments to other countries. As ceo for Asia Pacific, Mr. Banga has been assigned as an expatriate employee to Hong Kong pursuant to the terms of Citi’s Expatriate Program. In addition to providing developmental opportunities to employees and filling specific business needs, the purpose of the Expatriate Program is to neutralize the tax and other financial advantages or disadvantages of accepting an assignment outside an employee’s home country, thereby removing personal financial considerations from the decision of whether to accept an assignment. All participants in the Expatriate Program are tax equalized to the U.S. (the U.S. is considered their home country for these purposes), unless they originate in the U.K. (in which case they are tax equalized to the U.K.). The tax equalization policies are designed so that
 
 
(footnotes continued on following page)


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(footnotes continued from previous page)
 
 
expatriate employees will bear the same or similar tax burdens as they would if they were employed in their home country. Expatriates are also eligible for certain other benefits designed to facilitate their (and their families’) transition to expatriate status and to minimize additional costs and hardships that may be experienced while living and working in the assignment country. These benefits include cash allowances and reimbursements for moving, housing, cost-of-living, and home travel expenses. Citi pays all taxes on these benefits because they are unique to the expatriate assignment and would not be provided had the expatriate remained employed in his or her home country. The amounts reported are tax payments or reimbursements made in respect of 2008 and include U.S. federal, state and local taxes on compensation and certain benefits of the Expatriate Program. They are intended to limit Mr. Banga’s tax liabilities to what they would have been had he remained employed in the U.S. Any increases or decreases to these estimates reflecting tax liabilities shown on tax returns as filed will be disclosed in subsequent proxy statements if Mr. Banga is a named executive officer in future years.
 
(6) This amount represents the sfas 123(r) accounting cost that Citi recorded in its income statement in 2008 for the Special Retention Awards and the sign-on awards granted to Mr. Pandit in January 2008 ($7,728,333). It also includes $501,911 in sfas 123(r) accounting cost attributable to Mr. Pandit’s participation in the ltip. No awards were earned by any executive under the ltip for 2008.
 
(7) This amount represents the sfas 123(r) accounting cost that Citi recorded in its income statement in 2008 in respect of the stock options Mr. Pandit was granted in 2008 as a sign-on award ($1,610,493). These options do not have a reload feature.
 
(8) The amount represents the portion of the sfas 123(r) accounting cost attributable to Mr. Pandit’s participation in the ltip. No awards were earned by any executive under the ltip for 2007.
 
(9) This amount represents the sfas 123(r) accounting cost that Citi recorded in its income statement in 2008 for the Special Incentive Awards and Special Retention Awards granted to Mr. Crittenden in January 2008 ($1,879,166), and the cap shares granted in January 2008 in respect of 2007 performance ($1,052,257). This amount also includes $8,148,705 in respect of the sfas 123(r) accounting cost of Mr. Crittenden’s sign-on awards, plus $501,911 in sfas 123(r) accounting cost attributable to the ltip. No awards were earned by any executive under the ltip for 2008.
 
(10) This amount includes $4,527,059 in respect of the sfas 123(r) fair value of Mr. Crittenden’s sign-on equity awards, plus $323,813 in sfas 123(r) accounting cost attributable to the ltip. No awards were earned by any executive under the ltip for 2007.
 
(11) This amount represents the sfas 123(r) accounting cost that Citi recorded in its income statement in 2008 for the Special Incentive Awards and Special Retention Awards granted to Mr. Banga in January 2008 ($1,191,667), the cap shares granted in January 2008 in respect of 2007 performance ($1,533,681), the cap shares granted in January 2007 in respect of 2006 performance ($883,137), the cap shares granted in January 2006 in respect of 2005 performance ($725,000), and the cap shares granted in January 2005 in respect of 2004 performance ($349,759). This amount also includes $432,898 in sfas 123(r) accounting cost attributable to the ltip. No awards were earned by any executive under the ltip for 2008.
 
(12) This amount represents the sfas 123(r) accounting cost that Citi recorded in its income statement in 2008 in respect of the stock options Mr. Banga was granted in 2005 ($13,265). These options do not have a reload feature.
 
(13) This amount represents the sfas 123(r) accounting cost that Citi recorded in its income statement in 2008 for the Special Incentive Awards granted to Mr. Forese in January 2008 ($5,839,167), the cap shares granted in January 2008 in respect of 2007 performance ($104,271), the cap shares granted in January 2007 in respect of 2006 performance ($360,416), the cap shares granted in January 2006 in respect of 2005 performance ($287,500), and the cap shares granted in January 2005 in respect of 2004 performance ($235,416). This amount also includes $501,911 in sfas 123(r) accounting cost attributable to the ltip. No awards were earned by any executive under the ltip for 2008.
 
(14) This amount represents the sfas 123(r) accounting cost that Citi recorded in its income statement in 2008 in respect of the stock options Mr. Forese was granted in 2005 ($20,077). These options do not have a reload feature.
 
(15) This amount represents the sfas 123(r) accounting cost that Citi recorded in its income statement in 2008 for the Special Incentive Awards and Special Retention Awards granted to Mr. Volk in January 2008 ($3,418,403), the cap shares granted in January 2007 in respect of 2006 performance ($1,218,000), the cap shares granted in January 2006 in respect of 2005 performance ($558,518),
 
 
(footnotes continued on following page)

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(footnotes continued from previous page)
 
 
and the cap shares granted in January 2005 in respect of 2004 performance ($712,917). This amount also includes $501,911 in sfas 123(r) accounting cost attributable to the ltip. No awards were earned by any executive under the ltip for 2008.
 
(16) This amount includes the sfas 123(r) accounting cost that Citi recorded in its income statement in 2007 in respect of the cap shares awarded to Mr. Volk in January 2007 in respect of 2006 performance ($3,349,500), in January 2006 in respect of 2005 performance ($1,675,556), and in January 2005 in respect of 2004 performance ($712,917). It also includes $323,813 in sfas 123(r) accounting cost attributable to the ltip. No awards were earned by any executive under the ltip for 2007.
 
(17) This amount includes the sfas 123(r) accounting cost that Citi recorded in its income statement in 2006 in respect of the cap shares awarded to Mr. Volk in January 2006 in respect of 2005 performance ($1,535,926) and in January 2005 in respect of 2004 performance ($712,917). It also includes a portion of the fair value of the sign-on stock award Mr. Volk received in 2004 ($1,666,677).


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Discussion of Equity Award Values
 
The fair value of the stock awards and stock options appearing in the Summary Compensation Table were calculated in accordance with sec regulations. The regulations require disclosure of the cost of equity awards if compensation expense was recorded in the income statement of the employer for each such award in 2008, as required by the applicable accounting rule (sfas 123(r)). The amounts disclosed in the Summary Compensation Table are not the same as the amounts reported in Citi’s financial statements, because sec regulations do not permit estimates of forfeitures
 
 
related to service-based vesting conditions to be used in determining the amount of equity-based compensation required to be disclosed. In addition, in determining the compensation expense for all equity awards required to be disclosed in the Summary Compensation Table under sec regulations, it was assumed that sfas 123(r) was in effect on the grant date of each such equity award. The Awards made by the Committee section of the Compensation Discussion and Analysis provides information on the actions relating to equity awards taken in January 2009.


 
Grants of Plan-Based Awards
                                                                                         
                                    All Other
       
                                All Other
  Option
       
                                Stock
  Awards:
       
        Estimated Future
  Estimated Future
  Awards:
  Number
       
        Payouts Under
  Payouts Under
  Number
  of
  Exercise
  Grant
        Non-Equity Incentive
  Equity Incentive
  Of
  Securities
  or Base
  Date Fair
        Plan Awards   Plan Awards   Shares
  Under-
  Price of
  Value of
        Thresh-
      Maxi-
  Thresh-
      Maxi-
  of Stock
  lying
  Option
  Stock and
        old
  Target
  mum
  old
  Target
  mum
  or Units
  Options
  Awards
  Option
Name   Grant Date   ($)   ($)   ($)   (#)   (#)   (#)   (#)(1)   (#)   ($/Sh)   Awards(2)
 
 
Vikram Pandit
    1/22/2008                                           94,948 (3)               $ 2,500,000  
      1/22/2008                                           1,000,000 (4)               $ 26,330,000  
      1/22/2008                                                 1,000,000 (4)   $ 36.60     $ 1,764,764  
      1/22/2008                                                 1,000,000 (4)   $ 30.50     $ 2,620,008  
      1/22/2008                                                 1,000,000 (4)   $ 24.40     $ 4,048,139  
Gary Crittenden
    1/22/2008                                           174,389 (5)               $ 4,591,667  
      1/22/2008                                           108,241 (6)               $ 2,850,000  
      1/22/2008                                           94,948 (7)               $ 2,500,000  
Ajaypal Banga
    1/22/2008                                           128,497 (5)               $ 3,383,333  
      1/22/2008                                           79,756 (6)               $ 2,100,000  
      1/22/2008                                           37,979 (7)               $ 1,000,000  
James Forese
    1/22/2008                                           100,227 (5)               $ 2,639,000  
      1/22/2008                                           483,858 (6)               $ 12,740,000  
Stephen Volk
    1/22/2008                                           226,610 (6)               $ 5,966,667  
      1/22/2008                                           113,305 (7)               $ 2,983,333  
 
 
(1) In accordance with sec regulations, the stock awards granted in January 2008 in respect of the executives’ performance during 2007 are required to be reported in this table, even though this proxy statement generally describes awards made in respect of performance in 2008. Barring a change in the sec regulations, the stock awards granted in January 2009 in respect of an executive’s 2008 performance will be reported in the Grants of Plan-Based Awards Table in next year’s proxy statement if the executive is a named executive officer in 2009.
 
(2) The grant date fair value of the January 2009 awards granted to the named executive officers can be found in the Awards made by the Committee section of the Compensation Discussion and Analysis.
 
(3) This award is a 2008 Special Retention Award with a two-year vesting period, described in more detail below.
 
(4) This award is a component of the one-time sign-on awards made to the ceo in January, 2008, described in more detail below.
 
(5) This award was made under cap, described in more detail below.
 
(6) This award is a 2008 Special Incentive Award, described in more detail below.
 
(7) This award is a 2008 Special Retention Award, described in more detail below.


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Set forth below is a chart showing as of March 12, 2009, the value of the stock awards and the intrinsic value of the stock options shown in the Grants of Plan Based Awards Table above.
 
                         
        Grant
   
        Date Fair
   
        Value of
   
        Stock and
  Value of Awards
        Option
  using price of
Name   Grant Date   Awards   $1.67/share
 
 
Vikram Pandit
    1/22/2008     $ 2,500,000     $ 158,563  
      1/22/2008     $ 26,330,000     $ 1,670,000  
      1/22/2008     $ 1,764,764     $ 0  
      1/22/2008     $ 2,620,008     $ 0  
      1/22/2008     $ 4,048,139     $ 0  
Gary Crittenden
    1/22/2008     $ 4,591,667     $ 291,230  
      1/22/2008     $ 2,850,000     $ 180,762  
      1/22/2008     $ 2,500,000     $ 158,563  
Ajaypal Banga
    1/22/2008     $ 3,383,333     $ 214,590  
      1/22/2008     $ 2,100,000     $ 133,193  
      1/22/2008     $ 1,000,000     $ 63,425  
James Forese
    1/22/2008     $ 2,639,000     $ 167,379  
      1/22/2008     $ 12,740,000     $ 808,043  
Stephen Volk
    1/22/2008     $ 5,966,667     $ 378,439  
      1/22/2008     $ 2,983,333     $ 189,219  
 
General Discussion of the Summary Compensation Table and Grants of Plan-Based Awards Table
 

Set forth below is a discussion of Citi’s compensation policies that are applicable to the Summary Compensation Table and the Grants of Plan-Based Awards Table.
 
Key Policies
The current structure of compensation includes the following guidelines:
 
•  Senior executives must receive 40 percent of their nominal incentive and retention awards in shares of restricted or deferred stock, and the remainder in currently payable or deferred cash retention awards.
 
•  To the extent that Citi has entered into employment agreements with senior executives, they have generally been limited in duration and scope. Accordingly, the compensation described in the Summary Compensation Table was not generally paid pursuant to employment agreements, except as noted below.
Cash Awards for 2008
As noted previously, Mr. Pandit and Mr. Crittenden declined to be considered for incentive or retention awards in January 2009. In addition, none of the other named executive officers received any currently payable cash awards for 2008. Mr. Banga, Mr. Forese, and Mr. Volk each received deferred cash retention awards that vest ratably over a four year period, and are credited with a notional interest rate based on 90-day libor. Unless the executive dies, becomes disabled or there is a change in control of Citi, the executive must be employed on the applicable vesting dates in order to receive an award payment. The awards for the named executive officers have no retirement provisions that would permit an executive to terminate his employment with Citi and receive payment of the award.
 
2008 Special Incentive Awards and 2008 Special Retention Awards
As indicated in the Grants of Plan-Based Awards Table, these awards were made in January 2008 to the named executive officers and other


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members of senior management who the committee considered to have skills essential to managing Citi towards short-term and long-term recovery and performance. The awards were made to balance the need to retain key executives, who received significantly reduced cash and total awards, at market levels while linking their compensation to Citi’s future performance. In determining the size of the awards, the committee took into account the executives’ past compensation history, past individual performance, expected roles in the future of Citi, and Citi’s need to retain executives with skills needed to assist in the future performance of Citi. In general, Special Incentive Awards vest over a two-year period and Special Retention Awards vest over a four-year period. The executive must be employed on the date the award vests; however, the awards will also vest if the executive terminates employment prior to the scheduled vesting date due to death, disability, or involuntary termination other than for gross misconduct, or if there is a change in control of Citi. Unlike cap, these awards do not continue to vest after termination of employment for executives whose combined years of age and service total at least 60 (subject to additional service requirements) or 75. These awards, along with cap, link total compensation for Citi’s senior executives to the performance of Citi and its stock.
 
2008 Sign-On Awards for Mr. Pandit
In connection with his appointment as ceo, the committee made equity awards to Mr. Pandit in January 2008 that are designed to incentivize and reward him based on the future performance of Citi. These awards consisted of (a) 1 million shares of restricted stock vesting ratably on the first four anniversaries of the date he became ceo (the sign-on stock award) and (b) options for 3 million shares of stock vesting ratably over a four-year period (the sign-on options). The sign-on options have a ten-year term. The exercise price of one-third of the sign-on options is equal to the grant date price ($24.40), another third have an exercise price that is 25 percent above the grant date price ($30.50) and one-third have an exercise price that is 50 percent above the grant date price ($36.60). The grant date price of $24.40 is the closing price of Citi stock on the nyse on the date of grant (January 22, 2008). The options will only have
 
value to the extent that the Citi stock price exceeds each exercise price after the vesting of such options.
 
Mr. Crittenden’s Employment Agreement
Mr. Crittenden’s compensation reflected in the Summary Compensation Table was awarded pursuant to the terms of his employment agreement dated February 23, 2007, which has been publicly filed. As cfo of Citi, he is paid a base salary at an annual rate of $500,000 and was generally entitled to receive incentive awards with a pre-tax nominal value of $9,500,000 in respect of 2008. Despite the terms of his employment agreement, Mr. Crittenden declined to be considered for an incentive or retention award for 2008 and did not receive any such award.
 
Pursuant to the agreement, Citi provides a stipend for ground transportation, and he is eligible to receive personal security protection to the extent that other senior executives receive such protection. Pursuant to the employment agreement, in the event that Mr. Crittenden’s employment with Citi terminates for any reason, he has agreed to not directly or indirectly solicit, induce or otherwise encourage any person to leave the employment of, or terminate any customer relationship with, Citi. Covenants protecting Citi’s confidential and proprietary information also apply during employment and thereafter.
 
The Capital Accumulation Plan
None of the January 2009 awards made to the named executive officers were made pursuant to the terms of cap; however, the Summary Compensation Table shows certain amortization charges for cap awards made in prior years to the named executive officers. The Grants of Plan-Based Awards Table also shows that some stock awards were made to the named executive officers under cap in January 2008.
 
The incentive and retention awards made to the named executive officers under cap in 2008 consisted generally of a core cap award and a supplemental cap award. Core cap awards for 2008 were discounted 25 percent from market value and typically represented 25 percent of the executive’s total incentive compensation. The additional shares that were awarded as a result of the discount are referred to as premium cap


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shares. Supplemental cap awards were not discounted and represented 15 percent of the executive’s total incentive compensation. cap is available to all Citi employees whose incentive awards exceed a certain threshold (in 2008, $20,000 for U.S. employees and approximately $40,000 to $45,000 for non-U.S. employees; in 2009 the threshold was raised to $100,000 for all employees worldwide). The discount feature was eliminated for 2009 and future awards. cap awards vest 25 percent per year over a four-year period, and are cancelled upon a voluntary termination of employment unless the recipient has met certain age and years of service requirements. Following the vesting of each portion of a cap award, the freely transferable shares (subject only to the Citi Stock Ownership Commitment) are delivered to the cap participants.
 
cap awards are granted as a part of incentive and retention compensation to a select group of Citi’s global workforce. Approximately 74,500,000 shares were awarded to approximately 6,200 employees in 62 countries around the world under cap in January 2009 in respect of 2008 performance. Of the total number of cap shares granted in January 2009, none were granted to the named executive officers.
 
While cap awards are generally intended to be made in the form of restricted stock, awards to participants who meet certain age and years of service rules or who are residents of certain countries are made in the form of deferred stock. With respect to awards of restricted stock, as of the date of award, the recipient may direct the vote and receives dividend equivalents on the underlying shares. With respect to awards of deferred stock, the recipient receives dividend equivalents but does not have voting rights with respect to the shares until the shares are delivered. The dividend equivalent payment is the same amount as the dividend paid on shares of Citi common stock. In 2008 the named executive officers received the following amounts as dividend equivalents on nonvested restricted or deferred stock (note that not all Citi
 
equity awards provide for payment of dividend equivalents on nonvested shares):
 
         
    Amount Paid as
    Dividend Equivalents
    in 2008 on Restricted
    and/or Deferred
Name   Stock Awards
 
 
Vikram Pandit
  $ 1,226,343  
Gary Crittenden
  $ 622,742  
Ajaypal Banga
  $ 364,962  
James Forese
  $ 899,528  
Stephen Volk
  $ 511,097  
 
Employees who received cap awards prior to January 2009 may have elected to receive all or a portion of the award in nonqualified stock options, in 25 percent increments, rather than restricted or deferred stock. The options shown in the Summary Compensation Table for Mr. Banga and Mr. Forese are option grants made in prior years pursuant to this stock option election. The options vest on the same schedule as the restricted or deferred stock award, have a six-year term, and, under the stockholder-approved 1999 Stock Incentive Plan, have an exercise price no less than 100 percent of the closing price of a share of Citi common stock on the nyse on the trading date immediately preceding the date on which the option was granted. If options are elected, an option for four shares would be granted for each share by which the restricted or deferred stock award is correspondingly reduced. The committee has eliminated the stock option election for future cap awards, due to low utilization by employees and the relatively high cost and complexity of administration.
 
The committee made incentive awards in January 2009 and in prior years based on the fair value of the awards and not on the accounting treatment of those or prior awards in Citi’s financial statements under sfas 123(r) or other applicable accounting standards. The table in the Awards Made by the Committee section of the Compensation Discussion and Analysis contains the grant date fair value of equity awards granted to each named executive officer in January 2009.


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The 2007 Long-Term Incentive Program
On July 17, 2007, the committee approved the ltip, under the terms of the 1999 Stock Incentive Plan. The ltip provides members of the Citi senior management, including the named executive officers, an opportunity to earn deferred stock awards based on Citi financial performance. No awards were made under the ltip in 2008; however amortization charges relating to 2007 awards under the ltip are shown in the Summary Compensation Table.
 
Each participant in the ltip is eligible to receive an equity award that will be earned based on Citi’s financial performance for the period from July 1, 2007 to December 31, 2009. Three periods will be measured for financial performance (July 1, 2007 to December 31, 2007, full year 2008 and full year 2009). The ultimate value of the award will be based on Citi’s performance in each of these periods with respect to (a) tsr versus Citi’s current key competitors and (b) roe targets measured at the end of each performance period. If, in any of the three performance periods, Citi’s total stockholder return does not exceed the median performance of the peer group, the participants, including the named executive officers, will not earn award shares for that period.
 
The maximum number of shares that a named executive officer may receive under the ltip is based on the fair market value of Citi common stock on the July 17, 2007 award date ($52.19) and the executive’s “basis” in his or her award. A named executive officer’s “basis” in his or her award is equal to the lesser of (a) his or her base salary as of July 17, 2007 plus the nominal amount of his or her annual incentive award granted in January 2007, or (b) $8 million.
 
As stated above, the award of deferred stock under the ltip is conditioned on Citi’s meeting certain performance criteria during three performance periods. In addition, a participant must remain continuously employed by Citi through January 5, 2010, the vesting date of the award, in order to receive any of the shares earned during the performance periods. A participant will be entitled to receive a pro-rata award if the participant’s employment is terminated on account of death, disability, or involuntary termination other than for gross misconduct, or there is a change in control, and
 
Citi met the performance conditions during one or more of the performance periods in which the participant was employed. Dividend equivalents are not paid on nonvested ltip shares.
 
The performance metrics for each of the three performance periods is (a) tsr Score, which ranges between 0 percent and 125 percent and is based on Citi’s total stockholder return versus Citi’s current key competitors, and (b) roe Score, which ranges between 50 percent and 150 percent and is based on publicly stated roe targets measured at the end of each calendar year.
 
The key competitor companies that were used to determine Citi’s tsr Score for the performance periods ending December 31, 2007 and December 31, 2008 are American Express, Bank of America, Bank of New York Mellon, Capital One, Credit Suisse Group, Deutsche Bank, General Electric, Goldman Sachs, HSBC, JP Morgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley, UBS, Wachovia and Wells Fargo. For the performance period ending December 31, 2009, Lehman Brothers, Merrill Lynch and Wachovia were removed.
 
As indicated above, if, in any of the three performance periods, Citi’s total stockholder return does not exceed the median performance of the key competitor companies, the tsr Score will be 0 percent, and the participants, including the named executive officers, will not earn award shares for that period. If Citi’s publicly stated roe for the performance period is 20 percent or greater, the roe Score will be 150 percent, if it is between 18 percent and 20 percent, the roe Score will be 100 percent, and if it is below 18 percent, the roe Score will be 50 percent.
 
If the maximum performance level is met for each performance period, a participant’s maximum award will be equal to 187.5 percent of the participant’s “basis” (i.e., 187.5 percent = participant’s “basis” x 125 percent (the maximum tsr Score) x 150 percent (the maximum roe Score)). Thus, the maximum number of shares that a participant can receive is 187.5 percent of his or her basis divided by $52.19, the award date fair market value of Citi common stock.


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For each performance period, the potential number of shares that may be earned is equal to the product of (a) 1/3 of a participant’s basis, (b) the tsr Score for the performance period, and (c) the roe Score for the performance period. Assuming a participant is continuously employed through the January 5, 2010 vesting date, any shares earned during the three performance periods will be distributed to the participant in 2010.
 
For each of the performance periods ending on December 31, 2007 and December 31, 2008, the
 
tsr Score was 0 percent and the roe Score was 50 percent, meaning that the awards formula for each participant yielded zero (i.e., basis x 0 x 50 percent = 0). Thus, none of the participants in the ltip, including the named executive officers, earned any shares for the performance periods ending on December 31, 2007 and December 31, 2008. However, as discussed above, Citi is required to include amounts accrued for ltip awards under sfas 123(r) in the Summary Compensation Table.


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Outstanding Equity Awards at Fiscal Year-End
 
The market values in this table were computed using the closing price of a share of Citi common stock on December 31, 2008, which was $6.71.
                                                                                                 
                                    Stock Awards
                                                Equity
                                                Incentive
                                                Plan
        Option Awards
          Equity
  Awards:
                        Equity
                  Incentive
  Market or
                        Incentive
                  Plan Awards:
  Payout
                        Plan
              Market
  Number of
  Value of
                        Awards:
              Value
  Unearned
  Unearned
        Number of Securities
  Number of Securities
  Number of
          Number of
  of Shares or
  Shares, Units
  Shares, Units
        Underlying Unexercised
  Underlying Unexercised
  Securities
          Shares or
  Units of
  or Other
  or Other
        Options (#)
  Options (#)
  Underlying
  Option
  Option
  Units of Stock
  Stock That
  Rights That
  Rights That
        Exercisable(1)
  Unexercisable(2)
  Unexercised
  Exercise
  Expiration
  That Have
  Have Not
  Have Not
  Have Not
Name   Grant Date   Initial   Reloads   Initial   Reloads   Options (#)   Price ($)   Date   Not Vested (#)   Vested ($)   Vested (#)   Vested ($)
 
 
Vikram Pandit     7/17/2007                                                             95,804 (3)   $ 642,844  
      1/22/2008                   1,000,000 (4)               $ 36.6000       1/22/2018                          
      1/22/2008                   1,000,000 (4)               $ 30.5000       1/22/2018                          
      1/22/2008                   1,000,000 (4)               $ 24.4000       1/22/2018                          
      1/22/2008                                                 94,948 (5)   $ 637,101              
      1/22/2008                                                 750,000 (6)   $ 5,032,500              
Gary Crittenden     7/17/2007                                                             95,804 (3)   $ 642,844  
      7/17/2007                                                 138,787 (7)   $ 931,261              
      1/22/2008                                                 174,389 (8)   $ 1,170,150              
      1/22/2008                                                 108,241 (5)   $ 726,297              
      1/22/2008                                                 94,948 (8)   $ 637,101              
Ajaypal Banga     4/18/2000       57,183 (9)                           $ 41.4452       4/18/2010                            
      1/16/2001       26,804 (10)                           $ 49.5477       1/16/2011                            
      2/13/2002       53,609 (11)                           $ 42.1097       2/13/2012                          
      2/12/2003       50,000 (12)                           $ 32.0500       2/12/2009                          
      1/20/2004       55,000 (13)                           $ 49.5000       1/20/2010                          
      1/18/2005                                                 7,294 (14)   $ 48,943              
      1/18/2005       38,905 (15)                           $ 47.5000       1/18/2011                            
      1/17/2006                                                 29,730 (16)   $ 199,488              
      1/16/2007                                                 42,600 (17)   $ 285,846              
      7/17/2007                                                             82,631 (3)   $ 554,454  
      1/22/2008                                                 128,497 (8)   $ 862,215              
      1/22/2008                                                 79,756 (5)   $ 535,163              
      1/22/2008                                                 37,979 (8)   $ 254,839              


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                                    Stock Awards
                                                Equity
                                                Incentive
                                                Plan
        Option Awards
          Equity
  Awards:
                        Equity
                  Incentive
  Market or
                        Incentive
                  Plan Awards:
  Payout
                        Plan
              Market
  Number of
  Value of
                        Awards:
              Value
  Unearned
  Unearned
        Number of Securities
  Number of Securities
  Number of
          Number of
  of Shares or
  Shares, Units
  Shares, Units
        Underlying Unexercised
  Underlying Unexercised
  Securities
          Shares or
  Units of
  or Other
  or Other
        Options (#)
  Options (#)
  Underlying
  Option
  Option
  Units of Stock
  Stock That
  Rights That
  Rights That
        Exercisable(1)
  Unexercisable(2)
  Unexercised
  Exercise
  Expiration
  That Have
  Have Not
  Have Not
  Have Not
Name   Grant Date   Initial   Reloads   Initial   Reloads   Options (#)   Price ($)   Date   Not Vested (#)   Vested ($)   Vested (#)   Vested ($)
 
 
James Forese     8/4/2000             2,869                       $ 49.8392       1/19/2009                          
      1/16/2001       40,176 (18)                           $ 49.8625       1/16/2011                          
      1/16/2001       53,609 (10)                           $ 49.5477       1/16/2011                          
      2/14/2001             2,957                       $ 50.9141       1/19/2009                          
      2/12/2003       27,146 (12)                           $ 32.0500       2/12/2009                          
      10/28/2003             2,897                       $ 46.7000       1/19/2009                          
      1/6/2004             26,843                       $ 49.7900       4/18/2010                          
      1/20/2004       26,666 (13)                           $ 49.5000       1/20/2010                          
      1/20/2004             2,862                       $ 49.5000       1/19/2009                          
      1/23/2004             19,072                       $ 50.6900       2/13/2012                          
      1/18/2005                                                 28,478 (14)   $ 191,087              
      2/7/2005             9,080                       $ 49.7800       4/18/2010                              
      1/17/2006                                                 68,379 (16)   $ 458,823              
      1/17/2006                                                 7,052 (16)   $ 47,319              
      5/1/2006             9,050                       $ 49.9500       4/18/2010                          
      10/5/2006             58,013                       $ 51.0300       2/13/2012                          
      12/19/2006             2,713                       $ 55.4400       1/19/2009                          
      1/16/2007                                                 115,153 (17)   $ 772,677              
      7/17/2007                                                             95,804 (3)   $ 642,844  
      7/17/2007             19,117                       $ 52.4600       2/13/2012                          
      1/22/2008                                                 100,227 (8)   $ 672,523              
      1/22/2008                                                 483,858 (5)   $ 3,246,687              
Stephen Volk     1/18/2005                                                 14,869 (14)   $ 99,771              
      1/17/2006                                                 38,649 (16)   $ 259,335              
      1/16/2007                                                 62,901 (17)   $ 422,066              
      7/17/2007                                                             95,804 (3)   $ 642,844  
      1/22/2008                                                 226,610 (5)   $ 1,520,553              
      1/22/2008                                                 113,305 (8)   $ 760,277              

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(1) The options shown in this column are vested.
 
(2) The options shown in this column are nonvested as of December 31, 2008.
 
(3) The portion of the ltip award granted on July 17, 2007 shown as outstanding vests on January 5, 2010 only if performance targets for 2009 are met; performance targets were not met for 2007 or 2008 and executives did not vest in any ltip shares in respect of 2007 or 2008.
 
(4) This option granted on January 22, 2008 vests in four equal annual installments beginning on January 22, 2009.
 
(5) This stock award granted on January 22, 2008 vests in two equal annual installments beginning on January 20, 2009, except the award granted to Mr. Pandit which vests in two equal annual installments beginning on January 22, 2009.
 
(6) This stock award granted on January 22, 2008 vests in four equal annual installments beginning on December 11, 2008.
 
(7) This stock award granted on July 17, 2007 vests in two equal installments on March 12, 2008 and March 12, 2009.
 
(8) This stock award granted on January 22, 2008 vests in four equal annual installments beginning on January 22, 2009.
 
(9) This option granted on April 18, 2000 vested in five equal annual installments beginning on July 18, 2001.
 
(10) This option granted on January 16, 2001 vested in five equal annual installments beginning on July 16, 2002.
 
(11) This option granted on February 13, 2002 vested in five equal annual installments beginning on July 13, 2003.
 
(12) This option granted on February 12, 2003 vested in three equal annual installments beginning on July 12, 2004.
 
(13) This option granted on January 20, 2004 vested in three equal annual installments beginning on July 20, 2005.
 
(14) This stock award granted on January 18, 2005 vested in four equal annual installments beginning on January 20, 2006.
 
(15) This option granted on January 18, 2005 vested in four equal annual installments beginning on January 20, 2006.
 
(16) This stock award granted on January 17, 2006 vests in four equal annual installments beginning on January 20, 2007.
 
(17) This stock award granted on January 16, 2007 vests in four equal annual installments beginning on January 20, 2008.
 
(18) This option granted on January 16, 2001 vested in five equal annual installments beginning on January 16, 2002.


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The Outstanding Equity Awards Table describes options as either “initial” or “reload.” Initial option grants made in 2003 or later do not have a reload feature; however, options granted prior to 2003 retain that feature, as do any options granted upon exercise of an option using the reload feature. The grant of a reload option is not a discretionary award for the year in which the reload right is exercised; rather, the grants are made pursuant to the terms of previously granted options. Under the reload program, if shares of Citi common stock that have been owned for at least six months are used to pay the exercise price of an option and the income taxes due on exercise of the option, the option
 
holder will receive a new reload option to make up for the shares the option holder used and had withheld. The reload option does not vest (i.e., become exercisable) for six months and expires on the expiration date of the initial grant. A reload option will not be granted upon the exercise of an option with a reload feature unless the market price of Citi common stock on the date of exercise is at least 20 percent greater than the option exercise price. The purpose of granting reload options was to maintain the option holder’s commitment to Citi by maintaining as closely as possible the option holder’s net equity position — the sum of shares owned and shares subject to option.

 
Option Exercises and Stock Vested
 
                                 
    Option Awards   Stock Awards
    Number of Shares
      Number of Shares
   
    Acquired on
  Value Realized
  Acquired
  Value Realized
    Exercise
  on Exercise
  on Vesting
  on Vesting
Name   (#)   ($)   (#)   ($)
 
 
Vikram Pandit
    0     $ 0       130,500     $ 1,961,250  
Gary Crittenden
    0     $ 0       72,446     $ 3,038,741  
Ajaypal Banga
    0     $ 0       22,401     $ 880,002  
James Forese
    0     $ 0       62,662     $ 2,531,064  
Stephen Volk
    0     $ 0       32,684     $ 1,335,034  
 
The values shown above reflect the market value of Citi stock as of the vesting dates. These prices ranged from $7.8450 to $24.2025.
 
Pension Benefits
 
                             
        Number
  Present
   
        of Years
  Value of
  Payments
        Credited
  Accumulated
  During Last
        Service
  Benefit
  Fiscal Year
Name   Plan Name   (#)   ($)(1)   ($)
 
 
Vikram Pandit
  N/A     N/A     $ N/A     $ 0  
Gary Crittenden
  N/A     N/A     $ N/A     $ 0  
Ajaypal Banga
  The Citigroup Pension Plan     11.42     $ 29,473     $ 0  
James Forese
  The Citigroup Pension Plan     22.83     $ 60,177     $ 0  
Stephen Volk
  The Citigroup Pension Plan     3.42     $ 32,403     $ 0  
 
 
(1) The material assumptions used in determining the present value of the plan benefits are (a) the irs 2009 annuitant mortality table, (b) a discount rate of 6.10 percent, and (c) an interest credit rate on cash balance plan benefits of 4.10 percent. The plan discount rates are the same as the year-end 2008 rates used to prepare footnote 9 to the Consolidated Financial Statement of Citigroup Inc. and its subsidiaries, as filed with the sec on Form 10-K for 2008. The other assumptions are not required to be stated in that footnote 9.
 
Citi’s current general policy on pension plans is that executives should accrue retirement benefits on the same basis available to Citi employees
 
generally under Citi’s broad-based, tax-qualified retirement plans. This approach reflects Citi’s senior executive compensation principles, which


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generally provide that most compensation for senior executives should be based on performance.
 
Citi has not granted extra years of credited service under any retirement plan to any of the named executive officers, and none of the named executive officers are eligible to participate in supplemental executive retirement plans or have any other special retirement benefit.
 
The following describes the Citigroup Pension Plan listed in the Pension Benefits Table, which is the only pension plan under which the named executive officers have accrued benefits. Effective for 2008, the Citigroup 401(k) Plan provides a matching contribution of 6 percent of eligible pay to eligible employees, up to irc annual limits, and matching contributions to that plan are disclosed in the All Other Compensation Column of the Summary Compensation Table.
 
The Citigroup Pension Plan.  The purpose of this broad-based, tax-qualified retirement plan is to provide retirement income on a tax-deferred basis to all U.S. employees. Effective December 31, 2006, the Citigroup Pension Plan was closed to new members, and effective December 31, 2007, future cash balance plan accruals ceased. Mr. Pandit and Mr. Crittenden are not eligible for a benefit under this plan because they joined Citi in 2007. All other named executive officers were eligible for benefit accruals under this plan and continue to earn interest credits, like other participants.
 
Prior to January 1, 2008, the plan generally provided for a single cash balance benefit formula for most of the covered population, including the applicable named executive officers. This benefit is expressed in the form of a hypothetical account balance. Benefit credits accrued annually at a rate between 1.5 percent and 6 percent of eligible compensation; the rate increased with age and service. Interest credits are applied annually to the prior year’s balance; these credits are based on the yield on 30-year Treasury bonds (as published by the Internal
 
Revenue Service). Employees became eligible to participate in the Citigroup Pension Plan after one year of service, and benefits generally vested after three years of service.
 
Eligible compensation generally includes base salary and wages, plus shift differential and overtime (including any before-tax contributions to a 401(k) plan or other benefit plans), incentive awards paid in cash during such year, including any amount payable for such year but deferred under a deferred compensation agreement, commissions paid during such year, any incentive bonus or commission granted during such year in the form of restricted stock and/or stock options under core cap, but excluding compensation payable after termination of employment, sign-on and retention bonuses, severance pay, cash and non-cash fringe benefits, reimbursements, tuition benefits, payment for unused vacation, any amount attributable to the exercise of a stock option, or attributable to the vesting of, or an 83(b) election with respect to, an award of restricted stock, moving expenses, welfare benefits, and payouts of deferred compensation. Annual eligible compensation was limited by Internal Revenue Service rules to $225,000 for 2007 (the final year of cash balance benefit accrual).
 
The normal form of benefit under the Citigroup Pension Plan is a joint and survivor annuity for married participants (payable over the life of the participant and spouse) and a single life annuity for single participants (payable for the participant’s life only). Although the normal form of the benefit is an annuity, the hypothetical account balance is also payable as a single lump sum, at the election of the participant. The Citigroup Pension Plan’s normal retirement age is age 65. All optional forms of benefit under this formula available to the applicable named executive officers are actuarially equivalent to the normal form of benefit. Benefits are eligible for commencement under the plan upon termination of employment at any age, so there is no separate eligibility for early retirement.

 


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Nonqualified Deferred Compensation
                                         
            Aggregate
       
    Executive
  Registrant
  Earnings
      Aggregate
    Contributions
  Contributions
  in Last
  Aggregate
  Balance at
    in Last Fiscal
  in Last Fiscal
  Fiscal
  Withdrawals/
  Last Fiscal
Name   Year($)   Year($)   Year($)   Distributions($)   Year End($)
 
 
Stephen Volk
  $ 0     $ 1,300,000 (1)   ($ 923,723 )   $ 0     $ 376,277  
 
(1)  This amount is the initial principal amount of the deferred cash retention award and was previously reported as compensation in the Summary Compensation Table for 2007.
 
On January 22, 2008, Mr. Volk received a deferred cash retention award in connection with his status as a named executive officer based on compensation for 2007. He received no cash incentive award for 2007. The award was deferred in accordance with its terms and was not deferred at the election of Mr. Volk. The value of the award is increased or decreased according to the total return on Citi stock; the earnings measure is determined under the terms of the award and not by Mr. Volk. The award vests over two years and under its terms, is payable in the event of death, disability, change of control of Citi, or involuntary termination not for gross misconduct. The award does not allow for payout on voluntary retirement and is subject to the limitations on severance pay imposed by eesa.
 
Potential Payments upon Termination or Change in Control
 
General Policies.  In 2002, Citi’s board of directors adopted a resolution specifically prohibiting cash payments to a departing executive officer in the event of a change in control that would equal or exceed three times the executive officer’s annual income. As a general policy, Citi does not enter into employment agreements with executives that provide for severance payments unless the agreement meets certain conditions. The agreement (a) must be approved by the committee; (b) must have as short a term as possible and provide as few terms and conditions as are necessary to accomplish its purpose; and (c) if required by law to be available for public review, must be filed promptly with the appropriate regulatory authority. In addition, employment agreements with executive officers may not provide for post-retirement personal benefits of a kind not generally available to employees or retirees,
 
except with the express prior approval of the board.
 
Citi does not routinely provide guaranteed levels of severance or change in control agreements.
 
The named executive officers are not eligible for severance pay in accordance with the terms of eesa and the securities purchase agreement. The description of the awards below reflects those restrictions, which override potentially inconsistent original terms of the awards.
 
Equity Awards.  The equity awards described below were fully disclosed in the summary compensation tables of prior proxy statements as long-term or other equity compensation awards, except for executives who were not in prior proxy statements. No executive is entitled to a grant of any additional equity awards in connection with his or her termination of employment. In developing the estimates in this section, the closing price of Citi’s common stock on December 31, 2008 ($6.71) was used, and it was assumed that all events took place at December 31, 2008. It was also assumed that the restrictions of eesa prohibiting severance pay to senior executive officers applied to all of the named executive officers as of December 31, 2008. The discussion below does not assign values to awards that were made in January 2009 because no such awards were outstanding as of December 31, 2008.
 
Set forth below is a table showing the value of equity awards at December 31, 2008 had the applicable event occurred for each named executive officer under the circumstances described below. All outstanding options were assigned a zero value as they had no intrinsic value as of December 31, 2008 (i.e., the exercise prices were above the Citi stock closing price on that date). The closing price of Citi stock on December 31, 2008 was $6.71.


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        Death, Disability
   
    Termination for
  or upon Change in
   
Name   Gross Misconduct   Control   Other Termination
 
 
Vikram Pandit
  $ 0     $ 5,669,606     $ 0  
Gary Crittenden
  $ 0     $ 3,464,819     $ 0  
Ajaypal Banga
  $ 0     $ 2,186,513     $ 0  
James Forese
  $ 0     $ 5,389,136     $ 1,781,216  
Stephen Volk
  $ 0     $ 3,062,019     $ 781,179  
 
 
Termination for Gross Misconduct
Under the terms of cap, the ltip and other equity awards made to the named executive officers, if a participant’s employment is terminated for gross misconduct, his or her nonvested stock awards and outstanding options will be forfeited or cancelled on his or her termination date.
 
Death or Disability
Under the terms of cap and other equity awards made to the named executive officers outstanding at December 31, 2008, if a participant’s employment terminates on account of death or disability, the participant’s stock awards will vest immediately and will be distributed to the participant (or his or her estate). The participant’s nonvested stock options will vest and the participant (or his or her estate) will have up to the earlier of (a) the original option expiration date or (b) two years, to exercise his or her stock options.
 
A participant’s earned ltip awards, if any, are prorated for the year in which employment termination by reason of death or disability occurs and ltip awards in respect of future years are forfeited.
 
Change in Control
Equity awards are made in accordance with the terms of Citi’s equity plans. Citi’s equity plans provide that in the event of a change in control of Citigroup Inc., as defined in the equity plans, the committee may, in its discretion, accelerate, purchase, adjust, modify or terminate all awards made under the equity plans, including cap and ltip awards. Accordingly, the chart above shows the maximum value an executive may receive in the event of a change in control; it is possible that an executive could receive a lesser amount. Under Citi’s equity plans, a change in control is generally defined to mean the following events:
 
•  any person (as defined under applicable securities laws) or persons acting together becomes a beneficial owner of securities of Citi representing 25 percent or more of the combined voting power of Citi’s then outstanding securities;
 
•  any transaction that occurs with respect to Citi that is subject to the prior notice requirements of the Change in Bank Control Act of 1978;
 
•  any transaction that occurs with respect to Citi that will require a party to the transaction to obtain prior approval of the Federal Reserve Board under Regulation Y;
 
•  the adoption by Citi stockholders of a plan or proposal for the dissolution or liquidation of Citi;
 
•  the incumbent members of Citi’s board of directors ceasing to constitute a majority of the board of directors as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the board;
 
•  all or substantially all of the assets of Citi are sold, transferred or distributed; or
 
•  there occurs a transaction, such as reorganization, merger, consolidation or other corporate transaction involving Citi, in which the stockholders of Citi immediately prior to such transaction do not own more than 50 percent of the combined voting power of Citi or other corporation resulting from such transaction in substantially the same proportions as they held immediately prior to such transaction.
 
The committee may also, in its discretion, cause awards made under the equity plans to be assumed by the surviving corporation in a corporate transaction.


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With respect to equity awards subject to Section 409A of the irc, Citi’s equity plans provide that the effect of a change in control and what constitutes a change in control will be specified in an executive’s award agreement. The award agreements generally define a change in control as the acquisition of an executive’s employer by another entity in a transaction that constitutes a change in control under Section 409A of the irc and provide that, in the event of a change in control, the executive’s award will either be 100 percent vested or that the executive will receive the same treatment as an executive whose employment is involuntarily terminated other than for gross misconduct. The change in control provision in the award agreements also applies to awards that are not subject to Section 409A of the irc.
 
The committee has determined that the consummation of the proposed issuance of Citi’s common stock in exchange for existing preferred securities will not result in a “change in control” under outstanding equity incentive and deferred compensation awards, in accordance with the terms of those awards.
 
Other Termination
In general, Citi’s equity awards provide for forfeiture of nonvested equity awards and cancellation of unexercised stock options in the event of voluntary resignation. More favorable treatment, including accelerated vesting in the event of involuntary termination and limited post-termination periods to exercise stock options, may be available for specified awards in the event of involuntary termination of employment other than for gross misconduct. However, due to the restrictions of eesa on severance payable to the named executive officers, the more favorable treatment is not available to Citi’s named executive officers and accordingly these more favorable provisions are not reflected in the above chart.
 
Some of Citi’s equity programs contain provisions for continued vesting after retirement.
 
•  If a participant meets the Rule of 75 and voluntarily terminates his or her employment, the participant’s restricted or deferred stock awards will continue to vest on schedule, provided that the participant does not compete with Citi’s business operations. In
 
 
   addition, if a participant meets the Rule of 75 and terminates his or her employment, the participant’s stock options will vest on the last day of employment and the participant will have up to two years to exercise his or her vested stock options, provided that he or she does not compete with Citi’s business operations. If the participant meets the Rule of 75 at the time of involuntary termination other than for gross misconduct, the participant is eligible for the same value of benefits but the noncompetition provisions are not applicable. At December 31, 2008, Mr. Volk met the Rule of 75.
 
•  If a participant does not meet the Rule of 75, but meets the Rule of 60 and voluntarily terminates his or her employment, the participant’s basic and supplemental cap shares vest on schedule, provided that he or she does not compete with Citi’s business operations, and nonvested premium shares are forfeited. In addition, if a cap participant meets the Rule of 60 and terminates his or her employment, vesting of the participant’s stock options will stop on his or her last day of employment and the participant may have up to two years to exercise his or her vested stock options. If a participant does not meet the Rule of 75, but meets the Rule of 60 at the time his or her employment is terminated other than for gross misconduct, the participant’s basic and supplemental cap shares and a pro-rated portion of his or her premium cap shares will continue to vest on schedule, and the continued vesting for all shares is not subject to noncompetition provisions. (This general rule would not apply to the extent that eesa precludes the vesting of the pro-rata portion of the premium shares as prohibited severance, and that prohibition is reflected in the chart above.) In addition, if a cap participant meets the Rule of 60 at the time his or her employment is terminated other than for gross misconduct, the vesting of the participant’s stock options will stop on his or her last day of employment and the participant may have an extended period of time, in some cases up to two years, to exercise his or her vested stock options. At December 31, 2008, Mr. Forese met the Rule of 60 as defined for certain equity awards.


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Deferred cash awards.  Set forth below is a table showing the value of deferred cash awards at December 31, 2008 had the applicable event occurred for each named executive officer under the circumstances described below. The cash award shown for Mr. Volk is also reflected in the Nonqualified Deferred Compensation Table. It was also assumed that the restrictions of eesa
 
prohibiting severance pay to senior executive officers applied to all of the named executive officers as of December 31, 2008. The discussion below does not assign values to awards that were made in January 2009 because no such awards were outstanding as of December 31, 2008.

                                 
    Termination
           
    for Gross
  Death or
  Change
  Other
Name   Misconduct   Disability   in Control   Termination
 
 
Vikram Pandit
  $ 0     $ 0     $ 0     $ 0  
Gary Crittenden
  $ 0     $ 0     $ 0     $ 0  
Ajaypal Banga
  $ 0     $ 0     $ 0     $ 0  
James Forese
  $ 0     $ 0     $ 0     $ 0  
Stephen Volk
  $ 0     $ 376,277     $ 376,277     $ 0  
 
The definition of a change in control under the deferred cash retention awards granted to certain named executive officers is the same as the equity plan definition for awards that are subject to Section 409A of the irc. The deferred cash retention awards provide that in the event of a change in control, an executive’s awards will be 100 percent vested.
 
Mr. Crittenden
Mr. Crittenden’s employment agreement dated February 23, 2007 has provisions that apply in the event of his termination of employment before March 12, 2009. If his termination of employment had occurred due to death or disability before his incentive award, if any, in respect of 2008 was paid, then (a) he would have received a cash payment equal to $9,500,000, multiplied by a fraction, which is the number of days worked in 2008 until his death or disability divided by 366, and (b) any nonvested make-whole equity awards will vest immediately. Mr. Crittenden agreed to waive all incentive or retention compensation for 2008, and accordingly, the amount shown above in the chart is $0.
 
In addition, if Mr. Crittenden resigns without good cause or is terminated for cause, any outstanding but nonvested equity award will be cancelled, he will not be eligible to receive any future incentive awards, and, if such resignation or termination occurs before March 12, 2009, all make-whole cash or equity awards will be forfeited or repaid by Mr. Crittenden. Good cause is defined as (a) a material reduction in
 
responsibility or position, (b) removal from the business heads committee, management committee, or operating committee (or their successors), (c) a significant reduction in compensation that is either not related to his performance or not applicable to senior executives at his level, (d) a change in reporting relationship that results in his reporting to someone other than the ceo of Citi, or (e) the material interference by Citi with his authority to perform his duties in a manner consistent with applicable regulatory requirements and sound business practices.
 
The agreement does not provide for payments in connection with a change in control, but does provide for nonsolicitation of employees and customers for one year after termination of employment as well as protection of confidential and proprietary information.
 
Mr. Volk
On January 22, 2008, Mr. Volk received a deferred cash retention award in connection with his status as a named executive officer based on compensation for 2007, shown in the Nonqualified Deferred Compensation Table. The award vests over two years and under its terms, is payable in the event of death, disability, change of control of Citi, or involuntary termination not for gross misconduct. The award does not allow for payout on voluntary retirement and is subject to the limitations on severance pay imposed by eesa.