DEF 14A 1 ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement
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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:

 

¨  Preliminary Proxy Statement

 

¨  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

x    Definitive Proxy Statement

 

¨  Definitive Additional Materials

 

¨  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)

 

 

Payment of Filing Fee (Check the appropriate box):

 

x  No fee required.

 

¨  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

  (1)    Title of each class of securities to which transaction applies:

 

  

 

  (2)    Aggregate number of securities to which transaction applies:

 

  

 

  (3)    Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

  

 

  (4)    Proposed maximum aggregate value of transaction:

 

  

 

  (5)    Total fee paid:

 

  

 

 

¨  Fee paid previously with preliminary materials.

 

¨  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  (1)    Amount Previously Paid:

 

  

 

  (2)    Form, Schedule or Registration Statement No.:

 

  

 

  (3)    Filing Party:

 

  

 

  (4)    Date Filed:

 

  

 


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LOGO

 

Citigroup Inc.

399 Park Avenue

New York, NY 10043

 

March 10, 2011

 

Dear Stockholder:

 

We cordially invite you to attend Citi’s annual stockholders’ meeting. The meeting will be held on Thursday, April 21, 2011, at 9AM at the Hilton New York, 1335 Avenue of the Americas in New York City. The entrance to the Hilton is on the 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 Andrew N. Liveris, who is retiring from the Board, for his many contributions to Citi. His wisdom and insight have been an invaluable source of strength for Citi.

 

Thank you for your support of Citi.

 

 

Sincerely,

 

LOGO

 

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 10, 2011.


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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 Thursday, April 21, 2011, at 9AM at the Hilton New York, 1335 Avenue of the Americas in New York City. The entrance to the Hilton is on the 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  

elect directors,

 

Ø  

ratify the selection of Citi’s independent registered public accounting firm for 2011,

 

Ø  

approve additional shares under the Citigroup 2009 Stock Incentive Plan,

 

Ø  

approve the 2011 Executive Performance Plan,

 

Ø  

consider an advisory vote on Citi’s 2010 executive compensation,

 

Ø  

consider an advisory vote on the frequency of future advisory votes on executive compensation,

 

Ø  

approve an extension of the Board’s authority to effect a reverse stock split,

 

Ø  

act on certain stockholder proposals, and

 

Ø  

consider any other business properly brought before the meeting.

 

The close of business on February 22, 2011 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 or any adjournment or postponement thereof.

 

We are pleased for the first time this year to utilize the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their shareholders over the Internet. The e-proxy process has allowed us to expedite our shareholders’ receipt of proxy materials, lower the costs of distribution and reduce the environmental impact of our Annual Meeting.

 

In accordance with this rule, on or about March 10, 2011 we sent certain of our shareholders at the close of business on February 22, 2011 a notice of the 2011 annual meeting containing a Notice of Internet Availability of Proxy Materials (the “Notice”). The Notice contains instructions on how to access our Proxy Statement and Annual Report and vote online. If you received a Notice and would like to receive a printed copy of our proxy materials from us instead of downloading a printable version from the Internet, please follow the instructions for requesting such materials included in the Notice.

 

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, voter instruction form, or Notice, as applicable), so that your shares will be represented whether or not you attend the annual meeting.

 

By order of the board of directors

 

LOGO

Michael S. Helfer

Corporate Secretary

 

March 10, 2011


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Contents

 

About the Annual Meeting

     1   

How We Have Done

     6   

Annual Report

     6   

Corporate Governance

     6   

Nomination and Governance Committee

     6   

Board Diversity

     8   

Corporate Governance Guidelines

     8   

Director Independence

     10   

Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation

     12   

Indebtedness

     15   

Business Practices

     16   

Code of Ethics

     16   

Ethics Hotline

     16   

Code of Conduct

     16   

Communications with the Board

     16   

Stock Ownership

     17   

Proposal 1: Election of Directors

     20   

Director Qualifications

     20   

The Nominees

     28   

Meetings of the Board of Directors and Committees

     36   

Meetings of Non-Management Directors

     36   

Board Leadership Structure

     36   

Board’s Role in Risk Oversight

     37   

Committees of the Board of Directors

     37   

Involvement in Certain Legal Proceedings

     41   

Directors’ Compensation

     41   

Audit Committee Report

     45   

Executive Compensation

        

Compensation Discussion and Analysis

     46   

Compensation Information

     62   

2010 Summary Compensation Table

     62   

The Personnel and Compensation Committee Report

     83   

Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm

     91   

Proposal 3: Approval of Amendment to the Citigroup 2009 Stock Incentive Plan (to increase authorized shares)

     93   

Proposal 4: Approval of Citi’s 2011 Executive Performance Plan

     110   

Proposal 5: Advisory Vote on Citi’s 2010 Executive Compensation

     113   

Proposal 6: Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation

     114   

Proposal 7: Approval of the Reverse Stock Split Extension

     115   

Stockholder Proposals

     124   

Submission of Future Stockholder Proposals

     133   

Cost of Annual Meeting and Proxy Solicitation

     133   

Householding

     133   

Section 16(a) Beneficial Ownership Reporting Compliance

     134   

ANNEX A
CITIGROUP INC.
CORPORATE GOVERNANCE GUIDELINES

     A-1   

ANNEX B
CITIGROUP 2009 STOCK INCENTIVE PLAN

     B-1   

ANNEX C
CITIGROUP INC.
2011 EXECUTIVE PERFORMANCE PLAN

     C-1   

ANNEX D
FORM  OF CERTIFICATE OF AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION OF CITIGROUP INC.

     D-1   
 


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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 2011 annual meeting of Citi’s stockholders.

 

Where and when will the annual meeting take place?

The meeting is scheduled to begin at 9:00AM on April 21, 2011 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.

 

Why did I receive a one-page Notice in the mail regarding the Internet availability of proxy materials this year instead of a full set of proxy materials?

Pursuant to rules adopted by the Securities and Exchange Commission (SEC), we have elected to use e-proxy as part of the distribution for our proxy materials. The e-proxy process has allowed us to expedite our shareholders’ receipt of proxy materials, lower the costs of distribution and reduce the environmental impact of our annual meeting. As a result, we are mailing to many of our stockholders a Notice about the Internet availability of the proxy materials instead of a paper copy of the proxy materials. All stockholders receiving the Notice will have the ability to access the proxy materials over the Internet and receive a paper copy of the proxy materials by mail on request. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. In addition, the Notice contains instructions on how you may access proxy materials in printed form by mail or electronically on an ongoing basis.

 

Why didn’t I receive a notice in the mail about the Internet availability of the proxy materials?

We are providing some of our stockholders, including stockholders who have previously asked to receive paper copies of the proxy materials and

some of our stockholders who are living outside of the United States, with paper copies of the proxy materials instead of a Notice about the Internet availability of the proxy materials. In addition, we are providing Notice of the availability of the proxy materials by e-mail to those stockholders who have previously elected delivery of the proxy materials electronically. Those stockholders should have received an e-mail containing a link to the website where those materials are available and a link to the proxy voting website.

 

How can I access Citi’s proxy materials and annual report electronically?

This proxy statement and the 2010 annual report are available on Citi’s website at www.citigroup.com. Click on “About Citi,” “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.

 

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 or until your consent is deemed to be revoked under applicable law. 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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What will I be voting on?

 

Election of directors (see page 20).

 

Ratification of KPMG LLP (KPMG) as Citi’s independent registered public accounting firm for 2011 (see page 91).

 

Approval of an Amendment to the Citigroup 2009 Stock Incentive Plan (to increase authorized shares) (see page 93).

 

Approval of Citi’s 2011 Executive Performance Plan (see page 110).

 

Consideration of an advisory vote on Citi’s 2010 executive compensation (see page 113).

 

Consideration of an advisory vote on the frequency of future advisory votes on executive compensation (see page 114).

 

Approval of an extension of the board’s authority to effect a reverse stock split (REVERSE STOCK SPLIT EXTENSION) (see page 115).

 

Five stockholder proposals (see page 124).

 

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 22, 2011 (the record date).

 

How many votes can be cast by all stockholders?

29,118,575,263, 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?

To constitute a quorum to transact business at the annual meeting, the holders of a majority of the votes that can be cast, or 14,559,287,633, must be present or represented by proxy at the meeting. 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. Persons voting by proxy will be deemed present at the meeting even if they abstain from voting on any or all of the proposals presented for stockholder action. Shares held by

brokers who vote such shares on any proposal will be counted as present for purposes of establishing a quorum, and broker non-votes will not affect the presence of a quorum.

 

Does any single stockholder control 5% or more of any class of Citi’s voting stock?

No.

 

How do I vote?

You can vote by proxy whether or not you attend the annual meeting. To vote by proxy, shareholders have a choice of voting over the Internet, by telephone or by using a traditional proxy card.

 

 

To vote by Internet, go to www.ProxyVote.com and follow the instructions there. You will need the 12-digit number included on your proxy card or voter instruction form.

 

To vote by telephone, shareholders should dial the number listed on your proxy card or your voter instruction form. You will need the 12-digit number included on your proxy card or voter instruction form.

 

If you received a Notice of Internet Availability of Proxy Materials and wish to vote by traditional proxy card, you can receive a full set of materials at no charge through one of the following methods:

 

  1)   by Internet: www.ProxyVote.com
  2)   by phone: use the phone number listed on the Notice of Internet Availability of Proxy Materials.

 

To reduce our administrative and postage costs, we ask that you vote through the Internet or by telephone, both of which are available 24 hours a day. To ensure that your vote is counted, please remember to submit your vote by 11:59 p.m. Eastern Time on April 20, 2011.

 

If you are a record holder of Citi stock, you may attend the annual meeting and vote in person. 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.

 

 

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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 voting instructions, 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 2011, for the amendment to the Citigroup 2009 Stock Incentive Plan, for the 2011 Executive Performance Plan, for Citi’s 2010 executive compensation, for an annual advisory vote on executive compensation, for the REVERSE STOCK SPLIT EXTENSION proposal and against the other proposals.

 

Can my broker vote my shares for me on the election of directors or executive compensation matters?

No. Please note that the rules that govern when brokers may vote your shares have changed. Brokers may no longer use discretionary authority to vote shares on the election of directors or on executive compensation matters if they have not received instructions from their clients. Please vote your proxy so your vote can be counted.

 

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.

Discretionary Items. KPMG’s appointment and the REVERSE STOCK SPLIT EXTENSION proposal are discretionary items. NYSE member brokers who 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.

 

Non-discretionary Items. Brokers will not be able to vote your shares on the election of directors, the amendments to the Citigroup 2009 Stock Incentive Plan, the 2011 Executive Performance Plan, the advisory vote on Citi’s 2010 executive compensation, the advisory vote on the frequency of future advisory votes on executive compensation and the stockholder proposals if you fail to provide instructions. Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given.

 

If your shares are registered directly in your name, not in the name of a bank or broker, you must vote your shares or your vote will not be counted.

 

If I hold shares through Citigroup’s employee benefit plans and do not provide voting instructions, how will my shares be voted?

If you hold shares of common stock through Citigroup’s employee benefit plans and do not provide voting instructions to the plans’ trustees or administrators your shares will be voted in the same proportion as the shares beneficially owned through the plans for which voting instructions are received, unless otherwise required by law.

 

 

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What vote is required, and how will my votes be counted, to elect directors and to adopt the other proposals?

The following chart describes the proposals to be considered at the meeting, the vote required to elect directors and to adopt each other proposal and the manner in which votes will be counted:

 

Proposal   Voting Options   Vote Required to Adopt the
Proposal
  Effect of
Abstentions
  Effect of
“Broker
Non-Votes”
Election of directors.   For, against or abstain on each nominee.   A nominee for director will be elected if the votes cast for such nominee exceed the votes cast against such nominee.   No effect.   No effect.
Ratification of KPMG.   For, against or abstain.   The affirmative vote of a majority of the shares of common stock represented at the annual meeting and entitled to vote thereon.   Treated as votes against.  

N/A

Amendment to the Citigroup 2009 Stock Incentive Plan.   For, against or abstain.   The affirmative vote of a majority of the shares of common stock represented at the annual meeting and entitled to vote thereon.   Treated as votes against.   No effect.
The 2011 Executive Performance Plan.   For, against or abstain.   The affirmative vote of a majority of the shares of common stock represented at the annual meeting and entitled to vote thereon.   Treated as votes against.   No effect.
Advisory vote on Citi’s 2010 executive compensation.   For, against or abstain.   The affirmative vote of a majority of the shares of common stock represented at the annual meeting and entitled to vote thereon.   Treated as votes against.   No effect.
Advisory vote on the frequency of future advisory votes on executive compensation.   Stockholders may select whether such votes should occur every year, every two years or every three years, or stockholders may abstain from voting.   The voting option, if any, that receives the affirmative vote of a majority of the shares of common stock represented at the annual meeting and entitled to vote thereon will be the option adopted by the stockholders.   Treated as votes against each voting option.   No effect.
Approval of the reverse stock split extension proposal.   For, against or abstain.   The affirmative vote of a majority of the outstanding shares of common stock.   Treated as votes against.  

N/A

Five stockholder proposals.   For, against or abstain.   The affirmative vote of a majority of the shares of common stock represented at the annual meeting and entitled to vote thereon.   Treated as votes against.   No effect.

 

If a nominee for director is not reelected by the required vote, he or she will remain in office until a

successor is elected and qualified or until his or her earlier resignation or removal. Citi’s by-laws

 

 

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provide that, in the event a director nominee is not re-elected, 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 results of the votes on the adoption of an advisory resolution on Citi’s 2010 executive compensation and on the frequency of future advisory votes are not binding on the board, whether or not any resolution is passed under the voting standards described above. In evaluating the stockholder votes on these advisory resolutions, the board will consider the voting results in their entirety.

 

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 further details regarding this policy, please see the Corporate Governance Guidelines attached as Annex A to this proxy statement.

 

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, the chairman will declare such proposal out of order and it will be disregarded, or 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 received a Notice of Internet Availability of Proxy Materials, you must bring the Notice to gain admission to the meeting. If you did not receive a Notice but received a paper copy of the proxy materials and your shares are held in your name, please bring the admission ticket printed on the top half of the proxy card supplied with your materials. If you did not receive a Notice but received a paper copy of the proxy materials and your shares are held in the name of a bank, broker or other holder of record, please bring the yellow admission ticket that was enclosed with your materials. If you receive your proxy materials by email, 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. If you hold your shares in a joint account, both owners can be admitted to the meeting, provided that proof of joint ownership is given. Citi will not be able to accommodate guests at the annual meeting. Any persons needing special assistance should contact Shareholder Relations at the following e-mail address: shareholderrelations@citi.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 2010 with them. The 2010 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 rules, the Five-Year Performance Graph appears in the 2010 Annual Report on Form 10-K.

 

 

LOGO

 

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  

amended our by-laws to provide that if Citi does not have an independent chairman of the board, the board shall elect a lead independent director;

 

  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  

separated the audit and risk management committee into two committees: the audit committee and a separate risk management and finance committee;

 

  Ø  

eliminated super-majority vote provisions contained in our charter;

 

  Ø  

amended our by-laws to include a majority vote standard for uncontested director elections;

 

  Ø  

adopted policies to recoup unearned compensation; and

 

  Ø  

adopted a Political Contributions and Lobbying Statement under which Citi annually compiles and publishes a list of our political contributions. The policy and a list of our 2010 political contributions are available in

   

the “Corporate Governance” section of Citi’s website: www.citigroup.com. In addition, following the Supreme Court’s decision permitting corporations to make independent expenditures in connection with political campaigns, the board of directors amended the Statement to reiterate the company’s long-standing practice of not using corporate funds for such independent expenditures.

 

The current charters of the audit, Citi Holdings oversight, nomination and governance, personnel and compensation, public affairs and risk management and finance 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 recommend to the board 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 available in the “Corporate Governance” section of Citi’s website: www.citigroup.com.

 

 

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On December 15, 2009, the board of directors adopted a by-law amendment which provides that, if the chairman of the board does not qualify as independent under NYSE rules, the board shall elect a lead independent director, and that lead director will be empowered (among other responsibilities) to lead the executive sessions of the non-management directors at board meetings. 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. During 2010, the committee engaged Spencer Stuart and Korn/Ferry International 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 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.

 

 

Whether the candidate has had business, governmental, non-profit or professional experience at the chairman, chief executive officer, 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 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 the company operates.

 

 

Whether the candidate has the financial expertise required to provide effective oversight of a 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 the company’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

 

 

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proposed by stockholders, members of the board of directors and members of senior management.

 

For the 2011 annual meeting, we received timely notice from three stockholders who proposed themselves or another person for consideration to be nominated by the nomination and governance committee 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.

 

Board Diversity

Diversity is among the critical factors that the nomination and governance committee considers when evaluating the composition of the board. For a company like Citi, which operates in over 100 countries around the globe, diversity includes race, ethnicity and gender as well as the diversity of the communities and geographies in which Citi operates. Included in the qualifications for directors listed in the company’s Corporate Governance Guidelines is “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 the company operates.” Citi’s board is committed to ensuring that it comprises individuals whose backgrounds reflect the diversity represented by our employees, customers and stakeholders. The candidates nominated for election at Citi’s 2011 annual meeting exemplify that diversity: two nominees are women (14%) and five nominees (35%) — including the chairman and the chief executive officer — are Asian, African-American or Hispanic. In addition, each director candidate contributes to the board’s overall diversity by providing a variety of perspectives, personal and professional experiences and backgrounds, as well as other characteristics, such as global and

international business experience. The board believes that the current nominees reflect an appropriate diversity of gender, age, race, geographical background and experience but is committed to continuing to consider diversity issues in evaluating the composition of the board.

 

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.

 

Our goal is that at least two-thirds of the members of the board be independent. 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 required committees of the board (audit, nomination and governance, and personnel and compensation) 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.

 

 

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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 2010 annual meeting, except for Mr. O’Neill, who was unable to attend due to the flight cancellations resulting from the Iceland volcanic ash, and Mr. Zedillo, who had a prior business commitment scheduled before he was nominated for election to the board.

 

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 highest quality leadership for Citi. The board also works with the nomination and governance and personnel and compensation committees 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 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. Members of senior management are generally required to retain at least 75% of the equity awarded to them as incentive compensation (other than cash equivalents and net of amounts required to pay taxes and exercise prices) as long as they are members of senior management. Certain other executives are required to retain at least 50% of the same categories of net equity awards for the same period of time. Directors are similarly required to retain at least 75% of the net equity awarded to them. In addition, Citi has adopted a personal trading policy which limits trading by directors, members of the senior leadership committee and certain employees in Citi stock and restricts these individuals from engaging in hedging, derivative or other transactions that have an economically similar effect that would undermine the incentives created by the stock ownership commitment and deferred stock compensation structures.

 

 

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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 the most senior executives of the company, 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 12 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 2010, the board and the nomination and governance committee reviewed certain information obtained from 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 certain 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 certain relationships or transactions between the directors or immediate family members of the directors or their primary business or charitable affiliations and Citi and determined that the relationships or transactions complied with the Corporate Governance Guidelines and the related 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 is independent: Alain J.P. Belda, Timothy C. Collins, Jerry A. Grundhofer, Michael E. O’Neill, Richard D. Parsons, Lawrence Ricciardi, Judith Rodin, Robert L. Ryan, Anthony M. Santomero, Diana L. Taylor, William S. Thompson, Jr. and Ernesto Zedillo.

 

Independence Standards

To be considered independent, a director must meet the following categorical standards.

 

 

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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 committee, nor any immediate family member who shares such individual’s household, nor any entity in which an audit 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 for property or services 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 (SARBANES-OXLEY), Regulation O of the Board of Governors of the Federal Reserve, and the FDIC Guidelines; (c) when made does not involve more than the normal risk of collectability 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 (OCC) 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 Citi Foundation to a 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 Citi 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  

A 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 a current 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

 

 

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auditor of the company within the three-year period following the auditing relationship.

 

  Ø  

A 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 a current 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 the company’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 these 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 Citi’s Policy on Related Party Transactions is available in the “Corporate Governance” section of the “About

 

 

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Citi” 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 the 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.

 

In 2010, the following changes were made to Citi’s Policy on Related Party Transactions: (i) the definition of Related Person was expanded to include Section 16 officers and certain other senior executives and (ii) competitive bids were eliminated from the list of Pre-Approved Related Party Transactions that do not require approval by the nomination and governance committee or the transaction review committee.

 

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.

 

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 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

 

 

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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 withdrawn earlier 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.

 

On April 5, 2010, Citi entered into an agreement with Robert L. Joss, who serves as a director of Citi. Pursuant to the agreement, Mr. Joss would receive $350,000, payable quarterly in arrears, to provide consulting services during 2010 to the company and its subsidiaries and affiliates. Mr. Joss’ agreement was renewed for 2011. Pursuant to Citi’s Policy on Related Party Transactions, the nomination and governance committee approved the agreement with Mr. Joss.

 

In 2010, a Citi subsidiary entered into an agreement with a company that is majority owned by Mr. Jose Manuel Medina Mora, a son of Manuel Medina Mora, to provide web design services for a transactional website focusing on the subsidiary’s products and services. The vendor was paid approximately $800,000 for its services. The assignment has been fulfilled and the agreement is no longer in effect.

 

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 2010, 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 89 are the current members of the personnel and compensation committee. No current or former member of the personnel and compensation committee was a part of a “compensation committee interlock” during fiscal year 2010 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 officer of Citi, and no member of the committee is a current employee of Citi or any of its subsidiaries.

 

Certain 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 executive officers have a material interest in the employment relationships nor do any of them share a household with these employees. An adult spouse of an adult child of Lewis Kaden, an executive officer, was employed full time during part of 2010 by Citi’s Global Consumer Group. As of May 2010, this employee became a part-time employee. The total

 

 

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compensation paid to this employee in 2010 for the full-time and part-time work was $225,540. This employee is one of the approximately 260,000 employees of Citi.

 

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.

 

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 2010 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 collectability or present other unfavorable features. Personal loans made to any director, executive officer or member of the management executive 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 II, L.P. was formed in 2006. It 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. Citi’s match is made by a loan to the fund. Each employee, subject to vesting,

receives the benefit of any increase in the value of the fund 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.

 

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 the 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).

 

Alberto Verme, who participated in the Citigroup Capital Partners II Employee Master Fund, L.P., became an executive officer on December 30, 2009 and, pursuant to the fund’s offering memorandum and in compliance with SARBANES-OXLEY, was required to repay his outstanding leverage and associated interest. During 2010, he reimbursed Citi $1,853,156 for leverage and interest outstanding to Citigroup Capital Partners II, L.P.

 

During 2010, no loans were made under the Citigroup Capital Partners II, L.P. or Citigroup Capital Partners II Employee Master Fund, L.P. to any current or former executive officer that exceeded $120,000. The following distributions with respect to investments in Citigroup Capital Partners II, L.P. were made to current and former executive officers in 2010:

 

Executive Officer


   Citigroup Capital
Partners II, L.P.
Cash
Distributions

 

Shirish Apte

   $ 124,267   

Michael Corbat

   $ 169,781   

Manuel Medina Mora

   $ 247,866   

Alberto Verme

   $ 340,407   
 

 

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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 principles of responsible finance and protecting 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 public affairs committee of the board.

 

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,” then “Governance Documents” and then “Code of Ethics for Financial Professionals.” We will 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 to the extent permitted by applicable laws and regulations. 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, located in the U.S., which reports the calls to Citi’s Ethics Office for handling.

 

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 “About Citi,” then “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.

 

Members of senior management are generally required to retain at least 75% of the equity awarded to them as incentive compensation (other than cash equivalents and net of amounts required to pay taxes and exercise prices) as long as they are members of senior management. Certain other executives are required to retain at least 50% of the same categories of net equity awards for the same period of time. Directors are similarly required to retain at least 75% of the net equity awarded to them. In addition, Citi has adopted a personal trading policy which limits trading by directors,

members of the senior leadership committee and certain employees in Citi stock and restricts these individuals from engaging in hedging, derivative or other transactions that have an economically similar effect that would undermine the incentives created by the stock ownership commitment and deferred stock compensation structures.

 

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 and the payment of withholding taxes under equity compensation programs.

 

 

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The following table shows the beneficial ownership of Citi common stock by our directors, and certain executive officers at February 22, 2011.

 

Name    Position         

Common

Stock

Beneficially

Owned

Excluding

Options

   

Stock

Options

Exercisable

Within 60

Days of

Record

Date

   

Total

Common

Stock

Beneficially

Owned

 

Alain J.P. Belda

   Director              210,197        50,143        260,340   

Timothy C. Collins

   Director              88,903        —          88,903   

Michael Corbat

   Chief Executive Officer, Citi Holdings              2,374,587        24,200        2,398,787   

John C. Gerspach

   Chief Financial Officer              2,110,738        17,740        2,128,478   

Jerry A. Grundhofer

   Director              162,543        —          162,543   

John P. Havens

   President and Chief Operating Officer; Chief Executive Officer, Institutional Clients Group              4,443,791        305,084        4,748,875   

Robert L. Joss

   Director              114,704        —          114,704   

Andrew N. Liveris

   Director              111,952        56,600        168,552   

Manuel Medina-Mora

  

Chairman & Chief Executive Officer,

North America Consumer Banking

Latin America & Mexico

             8,642,239        832,726        9,474,965   

Michael E. O’Neill

   Director              159,589        —          159,589   

Vikram S. Pandit

   Chief Executive Officer & Director              2,200,179        2,250,000        4,450,179   

Richard D. Parsons

   Chairman of the Board              277,457        23,758        301,215   

Lawrence R. Ricciardi

   Director              108,798        —          108,798   

Judith Rodin

   Director              124,566        35,877        160,443   

Robert L. Ryan

   Director              125,459        —          125,459   

Anthony M. Santomero

   Director              152,334        —          152,334   

Diana L. Taylor

   Director              88,903        —          88,903   

William S. Thompson, Jr.

   Director              382,203 (1)      —          382,203 (1) 

Ernesto Zedillo

   Director              59,162       —          59,162  

All directors & executive officers as a group (30 persons)

             48,157,721        4,719,684        52,877,405   

 

(1)   Includes 124,365 shares of common stock that Mr. Thompson has the right to acquire as of February 22, 2011 through his ownership of 4,900 units of Citigroup Inc.’s Tangible Dividend Enhanced Common Stock.

 

At February 22, 2011, no director or executive officer owned as much as 1% of Citi’s common stock.

At February 22, 2011, all of the directors and executive officers as a group beneficially owned approximately 0.18% of Citi’s common stock.

 

 

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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:

 

 

Director/Officer    Receipt
Deferred
     Owned by or
Tenant in Common
with Family
Member, Trust or
Mutual Fund
     Voting Power,
but not
Dispositive
Power
     Restricted or
Deferred Shares
Subject to
Restriction on
Disposition
 

Alain J.P. Belda

     205,198         —           —           —     

Timothy C. Collins

     88,903         —           —           —     

Michael Corbat

     —           17,811         —           1,937,466   

John C. Gerspach

     —           —           —           1,695,723   

Jerry A. Grundhofer

     137,544         25,000         —           —     

John P. Havens

     —           —           —           3,661,271  

Robert L. Joss

     88,903        17,000        —           —     

Andrew N. Liveris

     108,722        1,200         —           —     

Manuel Medina-Mora

     —           —           —           3,715,838  

Michael E. O’Neill

     159,590         —           —           —     

Vikram S. Pandit

     —           1,659,000         —           250,000  

Richard D. Parsons

     219,657         —           —           —     

Lawrence R. Ricciardi

     72,542        —           —           —     

Judith Rodin

     124,200         366         —           —     

Robert L. Ryan

     110,345         —           —           —     

Anthony M. Santomero

     152,336         —           —           —     

Diana L. Taylor

     88,903         —           —           —     

William S. Thompson, Jr.

     109,818         148,020         —           —     

Ernesto Zedillo

     59,162         —           —           —     

All directors & executive officers as a group (30 persons)

     1,725,823         3,324,822         —           29,530,077   

 

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Proposal 1: Election of Directors

 

The board of directors has nominated all of the current directors for re-election at the 2011 annual meeting except for Andrew N. Liveris, who is

retiring from the board. Directors are not eligible to stand for re-election after reaching the age of 72.

 

 

LOGO

 

Director Qualifications

The nominees for the board of directors each have the qualifications and experience to approve and guide Citi’s strategy and to oversee management’s execution of that strategic vision. Citi’s board of directors consists of individuals with the skills, experience and backgrounds necessary to oversee Citi’s efforts toward continued growth and profitability while mitigating risk and operating within the complex financial and regulatory environment in which it operates.

 

The nominees listed below are leaders in business, the financial community and academia because of their intellectual acumen and analytic skills, strategic vision, their ability to lead and inspire others to work with them, and their records of outstanding accomplishments over a period of decades. Each has been chosen to stand for election in part because of his or her ability and willingness to ask difficult questions, understand Citi’s unique challenges and evaluate the strategies proposed by management, as well as their implementation.

 

Each of the nominees has a long record of professional integrity, a dedication to his or her profession and community, a strong work ethic that includes coming fully prepared to meetings and being willing to spend the time and effort needed to fulfill one’s professional obligations, the ability to maintain a collegial environment, and the experience of having served as a board member of a sophisticated global company.

 

In evaluating the composition of the board, the nomination and governance committee seeks to find and retain individuals who, in addition to having the qualifications set forth in Citi’s Corporate Governance Guidelines, have the skills, experience and abilities necessary to meet Citi’sunique needs as a highly regulated financial

services company with operations in the corporate and consumer business within the United States and over 100 countries around the globe. The committee has determined it is critically important to Citi’s proper operation and success that its board of directors has, in addition to the qualities described above, expertise and experience in the following areas:

 

 

International Business: As a company with a broad international reach, Citi’s board values the perspectives of directors with international business or governmental experience. Citi’s presence in markets outside the United States is an important competitive advantage for Citi, because it allows us to serve U.S. and foreign businesses and individual clients whose activities span the globe. Directors with international business experience can use the experience and relationships that they have developed through their own business dealings to assist Citi’s board and management in understanding and successfully navigating the business, political, and regulatory environments in countries in which Citi does, or seeks to do, business.

 

 

Financial Services Industry: Citi is a global diversified banking company whose businesses provide a broad range of financial services to consumer and corporate customers, making it critically important that its board include members who have deep financial services backgrounds. To deepen the financial services strength on its board, Citi announced on January 21, 2009 that it would ask experienced industry leaders with strong, proven financial and banking sector expertise to join its board of directors. We have done so and the nominees include many individuals with extensive financial institution experience.

 

 

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Risk Management: Risk management is a critical function of a complex global financial services company and its proper supervision requires board members with sophisticated risk management skills and experience. Directors provide oversight of the company’s risk management framework, including the significant policies, procedures and practices used in managing credit, market and certain other risks and review recommendations by management regarding risk mitigation. Citi’s board must include members with risk expertise to assist Citi in ensuring that it is properly identifying, measuring, monitoring, reporting, analyzing and controlling or mitigating risk.

 

 

Regulatory Compliance: Citi and its subsidiaries are regulated and supervised by numerous regulatory agencies, both domestically and internationally, including the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, state banking and insurance departments, and international financial services authorities. Having directors with experience serving at, or interacting with, regulators, or operating businesses subject to extensive regulation, is important to ensuring Citi’s continued compliance with its many regulatory requirements and ensuring ongoing productive relationships with its regulators.

 

 

Consumer Business: With more than 200 million accounts, Citi provides services to its retail customers in connection with its retail banking, credit card, consumer finance, real estate lending, personal loans, investment services, auto loans, small and middle market commercial banking and other financial services businesses. Citi looks to its board members with extensive consumer experience to assist it in evaluating its business model and strategies for reaching and servicing its retail customers domestically and around the world.

 

 

Corporate Business: Citi provides a wide variety of services to its corporate clients including strategic and financial advisory services, such as

   

mergers, acquisitions, financial restructurings, loans, foreign exchange, cash management, underwriting and distributing equity, and debt and derivative services; global transaction services, including treasury and trade solutions and securities and fund services; and an alternative asset management platform. With a corporate business as extensive and complex as Citi’s, it is crucial that members of the board have the depth of understanding and experience necessary to guide management’s conduct of these lines of business.

 

 

Corporate Affairs: Citi’s reputation is a vital asset in building trust with its clients and Citi makes every effort to communicate its corporate values to its shareholders and clients, its achievements in the areas of corporate social responsibility and philanthropy, and its efforts to improve the communities in which we live and work. Members of the board with experience in the areas of corporate affairs, philanthropy, communications, and corporate social responsibility assist management by reviewing Citi’s policies and programs that relate to significant public issues as well as by reviewing Citi’s relationships with external stakeholders and issues that impact Citi’s reputation.

 

 

Financial Reporting: Citi’s internal controls over financial reporting are designed to ensure that Citi’s financial reporting and its financial statements are prepared in accordance with generally accepted accounting principles. While the board and its committees are not responsible for preparing our financial statements, they have oversight responsibility, including the selection of outside independent auditors, subject to shareholder ratification. The board must include members with direct or supervising experience in the preparation of financial statements, as well as finance and accounting expertise.

 

 

Compensation: Citi’s personnel and compensation committee is responsible for determining the compensation of the CEO and approving the compensation structure for executive officers, other members of senior management and certain highly compensated employees. In order to properly carry out its

 

 

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responsibilities with respect to compensation, Citi’s board must include members who have experience evaluating the structure of compensation for senior executives. They must understand the various forms of compensation that can be utilized, the purpose of each type and how various elements of compensation can be used to motivate and reward executives and drive performance while not encouraging undue risk or simply short-term goals.

 

 

Corporate Governance: Citi aspires to the highest standards of corporate governance and ethical conduct: doing what we say, reporting results with accuracy and transparency, and maintaining full compliance with the laws, rules and regulations that govern the company’s businesses. The board is responsible for shaping corporate governance policies and practices, including adopting the corporate governance guidelines applicable to the company and monitoring the company’s compliance with governance policies and the guidelines. To carry out these responsibilities, the board must include experienced leaders in the area of corporate governance who must be familiar with governance issues, the constituencies most interested in those issues and the impact that governance policies have on the functioning of a company.

 

 

Legal Matters: In addition to the regulatory supervision described above, Citi is subject to myriad laws and regulations, and is party to many lawsuits and regulatory proceedings. Citi’s board has an important oversight function with respect to compliance with applicable requirements, monitors the progress of legal proceedings and evaluates major settlements. Citi’s board must include members with experience in complying with regulatory requirements as well as understanding complex litigation and litigation strategies.

 

Nominee Biographies:

Many of our nominees are either current or former Chief Executive Officers or Chairmen of other large international corporations or have experience operating large, complex academic, governmental

or philanthropic institutions or departments. As such, they have a deep understanding of, and extensive experience in, many of the areas that were outlined above as being of critical importance to Citi’s proper operation and success. For the purposes of our analysis, we have determined that nominees who have served as Chief Executive Officer or Chairman of a major corporation or large, complex institution have extensive experience with financial statement preparation, compensation determinations, regulatory compliance (if their businesses are or were regulated), corporate governance, public affairs and legal matters. Below please find a short biography of each of the nominees highlighting the particular skills, qualification and experience of each nominee that supports the conclusion of the nomination and governance committee that these individuals are extremely qualified to serve on Citi’s board. The more formal and complete biographies of the nominees can be found starting on page 28.

 

Alain J.P. Belda

Mr. Belda is an experienced executive and has been nominated to serve on the board because of his extensive experience in the areas of International Business, Financial Reporting, Financial Services, Compensation, Regulatory Compliance, Legal Matters, and Risk Management. Mr. Belda gained extensive experience in international business, regulatory compliance and litigation in his previous position as the Chair and Chief Executive Officer of, and in other executive positions at, Alcoa Inc., as well as in his previous service as a director of DuPont Co. and as a director of International Business Machines Corp. and Renault. As the Chief Executive Officer of Alcoa from 1999-2008, as a Managing Director of Warburg Pincus, where he heads investment activities in Latin America, and provides strategic counsel across that firm’s portfolio, as a former member of the audit and risk management committee of Citi and as former chair of the consumer subcommittee of Citi’s audit and risk management committee and former lead director, Mr. Belda has had extensive experience with, and gained expertise in, finance, financial reporting and

 

 

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risk management. As the former CEO of Alcoa, as a member of IBM’s executive compensation and management resources committee, and as Chair of Citi’s personnel and compensation committee, Mr. Belda has gained extensive experience with executive compensation. Please find his full biography on page 28.

 

Timothy C. Collins

Mr. Collins is an experienced investor and executive and has been nominated to serve on the board because of his extensive experience in the areas of Financial Services, Corporate Business, Financial Reporting, Risk Management and International Business. Mr. Collins, through his founding of, and current role as Chairman of the Investment Committee of Ripplewood Holdings L.L.C., an investment firm that invests in a broad array of industries, including financial services, automotive, manufacturing, consumer and business services, and his previously held executive positions with Lazard Frères & Co., and Booz Allen & Hamilton, has had extensive experience in financial markets, private equity, and other financial services and corporate businesses. Through his role with Ripplewood and through his service as the Chair of the audit committee of Weather Investments S.p.A., Mr. Collins has had extensive experience with the analysis and preparation of financial statements and risk management. Mr. Collins has developed compensation and governance expertise both through his board service, and on the governance and compensation committee of the Commercial International Bank of Egypt. Through his role as a director of RHJ International, S.A., Commercial International Bank of Egypt and Weather Investments S.p.A., Mr. Collins has had significant international business expertise. Please find his full biography on page 29.

 

Jerry A. Grundhofer

Mr. Grundhofer is a seasoned banker and has been nominated to serve on the board because of his extensive experience in the areas of Financial Services, Corporate and Consumer Business, Risk Management, Financial Reporting, Compensation and Regulatory Compliance. Through his previous

roles as Chairman and Chief Executive Officer of the Board of U.S. Bancorp, President and Chief Executive Officer of Firstar Corporation and its predecessor Star Banc, and Vice Chairman of Bank of America, Mr. Grundhofer has amassed extensive expertise in financial services, corporate and consumer business, regulatory compliance, financial reporting and compensation. As a member of the compensation committee and finance committee at Ecolab Inc., where he is a director, Mr. Grundhofer has developed extensive skills and expertise in compensation and financial matters. As former chair of the audit and risk management committee and current chair of the risk management and finance committee of Citi, Mr. Grundhofer has developed extensive skills and expertise in Risk Management and Financial Reporting. Please find his full biography on page 30.

 

Robert L. Joss

Dr. Joss is an experienced financial services executive and academic expert and has been nominated to serve as a member of the board because of his extensive experience in the areas of International Business, Financial Services, Financial Reporting, Compensation, Corporate and Consumer Business, Risk Management and Corporate Governance. Through his experience as Chief Executive Officer and Managing Director of Westpac Banking Corporation Ltd., one of the largest banking organizations in Australia and New Zealand, his executive positions at Wells Fargo & Company, including Vice Chairman, as well as his 10-year service as Dean and Philip H. Knight Professor of the Graduate School of Business at Stanford University, and previous service as Deputy to the Assistant Secretary for Economic Policy at the U.S. Department of the Treasury, he has gained wide-ranging experience and expertise in the areas of financial services, financial reporting, compensation, corporate and consumer business, risk management and corporate governance. Through his prior service on the boards of directors of Westpac, Shanghai Commercial Bank Ltd., Wells Fargo, where he served as chair of the credit committee and as member of the audit, compliance, nominating and

 

 

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governance and finance committees, and Sallie Mae, as well as his current service on the board of Bechtel Group, Inc., Dr. Joss has deepened his understanding of international business, financial services, compensation, financial reporting, corporate governance and risk management. Please find his full biography on page 30.

 

Michael E. O’Neill

Mr. O’Neill is an experienced financial services executive and has been nominated to serve on the board because of his extensive experience in the areas of Financial Services, International Business, Corporate and Consumer Business, Regulatory Compliance, Risk Management and Financial Reporting. As the former Chairman and Chief Executive Officer of the Bank of Hawaii, Vice Chairman and Chief Financial Officer at Bank of America and Chief Financial Officer of Continental Bank, Mr. O’Neill has had extensive experience and developed his expertise in the areas of financial services, international, corporate and consumer business, regulatory compliance, risk management and financial reporting. Under his leadership, Bank of Hawaii executed a successful three-year strategic turnaround and risk management procedures were overhauled. Furthering his regulatory compliance expertise, while at the Bank of Hawaii, Mr. O’Neill served as district member of the Federal Reserve Advisory Council. During his tenure at Continental Bank and while he was an independent financial consultant, Mr. O’Neill gained extensive international financial services experience. Please find his full biography on page 31.

 

Vikram S. Pandit

Mr. Pandit is an experienced financial services executive and finance professional and has been nominated to serve on the board because of his extensive experience and expertise in the areas of Financial Services, Risk Management, Financial Reporting, International Business, Corporate and Consumer Business, Regulatory Compliance and Corporate Affairs. In his role as Chief Executive Officer of Citigroup Inc., and his prior experience as Chairman and Chief Executive Officer of Citi’s Institutional Clients Group, Chairman and Chief

Executive Officer of Citi Alternative Investments, a founding member of Old Lane Partners, L.P., and President and Chief Operating Officer of the Institutional Securities and Investment Banking at Morgan Stanley, Mr. Pandit has gained extensive financial services, financial reporting, corporate business and risk management experience. The re-structuring of the independent Risk Management function at Citi was a major focus for Mr. Pandit when he was named CEO. As the CEO of Citi, Mr. Pandit has had extensive experience with respect to regulatory compliance issues as well as consumer and corporate business. Please find his full biography on page 31.

 

Richard D. Parsons

Mr. Parsons is an experienced executive with both financial services and non-financial services experience and has been nominated to serve on the board because of his extensive experience and skills in the areas of Financial Services, Regulatory Compliance, Consumer Business, International Business, Compensation, Legal Matters, Financial Reporting, Risk Management, and Corporate Affairs. Through his current role as Chairman of Citigroup Inc. and his prior experience as Chairman and Chief Executive Officer of Dime Savings Bank of New York from 1991 to 1995 and its President and Chief Operating Officer from 1988 to 1990, Mr. Parsons developed extensive skills and has had wide-ranging experience in the areas of financial services, regulatory compliance, consumer business and corporate affairs. As the Chairman of Time Warner from 2003 to 2008, its Chief Executive Officer from 2002 to 2007, its Co-Chief Operating Officer from 2001 to 2002, its President from 1995 to 2000, and a Director since 1991, Mr. Parsons has had extensive experience in international and consumer business, financial reporting, compensation, legal matters and corporate affairs. Mr. Parsons has had extensive legal, regulatory compliance and corporate affairs experience in roles as Managing Partner (as well as a Partner and an Associate) at the law firm of Patterson, Belknap, Webb & Tyler, as General Counsel and Associate Director, Domestic Council at the White House from 1975 to 1977, as Deputy Counsel to the Vice President at the Office of the

 

 

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Vice President of the United States in 1975, and as Assistant and First Assistant Counsel to the Governor of the State of New York from 1971 to 1974. In addition, through his service on Citi’s audit and risk management, personnel and compensation and nomination and governance committees, the compensation and nominating and board affairs committees at The Estee Lauder Companies Inc., where he is also a director, and the audit and compensation committees of Madison Square Garden, Inc., where he serves as a director, he has had extensive corporate governance, financial reporting, risk management, and compensation experience. Please find his full biography on page 32.

 

Lawrence R. Ricciardi

Mr. Ricciardi is an experienced executive and has been nominated to serve as a member of the board because of his extensive experience in the areas of Financial Services, Risk Management, Financial Reporting, International Business, Consumer Business, Corporate Governance and Legal Matters. Mr. Ricciardi’s experience as an executive includes senior leadership positions as well as senior legal and finance positions at international consumer products and technology companies giving him particular insight into those areas where law and business interact. From his positions as Chief Financial Officer and Senior Vice President and General Counsel at IBM, and President and General Counsel of RJR Nabisco, as well as his experience as the chairman of the audit committees of Citi, Royal Dutch Shell and Reader’s Digest, Mr. Ricciardi has had extensive experience in financial reporting, risk management and legal matters. In his roles as Senior Vice President and Advisor to the Chairman of IBM Corporation, and as President, Co-Chairman and Chief Executive Officer of RJR Nabisco, Inc., Mr. Ricciardi has had significant international and consumer business experience. As the lead independent director of Reader’s Digest and through his leadership roles at IBM and RJR Nabisco, he gained extensive corporate governance experience. While at IBM, he played a key role on the IBM management team that transformed and reinvigorated the corporation into

the competitive market leader that it is today. Please find his full biography on page 33.

 

Judith Rodin

Dr. Rodin is an experienced leader in the not-for-profit sector and has been nominated to serve on the board because of her skills and experience in the areas of Corporate Affairs, Corporate Governance, Compensation, Financial Reporting, Risk Management and Legal Matters. Through her current role as the President of the Rockefeller Foundation, and her previous positions as President of the University of Pennsylvania from 1994 until her retirement in 2004, and as Provost of Yale University from 1992 to 1994, together with her previous service on Citi’s audit and risk management committee and her service as a member of the Comcast audit committee, Dr. Rodin has had extensive experience in the areas of corporate affairs, financial reporting, risk management and legal matters. As the President of the University of Pennsylvania, which was the largest private employer in Philadelphia, as a member of the compensation committees of both AMR Corporation and Comcast Corporation and as a director of Comcast Corporation, AMR Corporation and Aetna Inc., Dr. Rodin has had extensive experience with compensation matters. Her service as a Director of the World Trade Memorial Foundation, and of Carnegie Hall, as an honorary director of the Brookings Institution, a member of the Council on Foreign Relations, a member of the Institute of Medicine and a member of the New York City Commission for Economic Opportunity have deepened her understanding of corporate affairs issues. Please find her full biography on page 33.

 

Robert L. Ryan

Mr. Ryan is an experienced finance executive and has been nominated to serve on the board because of his extensive skills and experience in the areas of Financial Reporting, Risk Management and Corporate Affairs. Mr. Ryan has developed extensive expertise in financial reporting and risk management through his roles as Senior Vice President and Chief Financial Officer of Medtronic

 

 

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from 1993 to 2005, Vice President, Finance and Chief Financial Officer of Union Texas Petroleum Corporation from 1984 to 1993, its Controller from 1983 to 1984, and its Treasurer from 1982 to 1983, as well as through his service on Citi’s audit committee, his prior service on Citi’s audit and risk management committee, and his service on the audit committees of General Mills and Hewlett-Packard. Through his service on the boards of Citi, Stanley Black & Decker, General Mills, and Hewlett-Packard and his roles as a Trustee of Cornell University and a member of the Visiting Committee of Harvard Business School, Mr. Ryan has gained valuable corporate affairs expertise and experience. Please find his full biography on page 34.

 

Anthony M. Santomero

Dr. Santomero is a seasoned economist and economic policy adviser and has been nominated to serve on the board of directors because of his extensive experience in the areas of Risk Management, Regulatory Compliance, and Financial Reporting. Among many other distinguished positions at which he had wide-ranging risk and regulatory experience, Dr. Santomero was most recently a Senior Advisor at McKinsey & Company, served as the President of the Federal Reserve Bank of Philadelphia from 2000 to 2006, and was Chair of the System’s Committee on Credit and Risk Management, and was a member of the Financial Services Policy Committee and the Payments System Policy Advisory Committee. As the Richard K. Mellon Professor of Finance at The Wharton School of the University of Pennsylvania and Deputy Dean of the School, Dr. Santomero’s particular focus was on issues related to managing risk at the firm level as well as ways to improve productivity and performance, while working closely with industry executives and practitioners to ensure that the research was informed by the operating realities and competitive demands facing industry participants as they pursue competitive excellence. Through his service on Citi’s risk management and finance and audit committees as well as the investment and risk management committee of RennaissanceRe Holdings, he has deepened his

risk management experience. Please find his full biography on page 34.

 

Diana L. Taylor

Ms. Taylor is an experienced financial services executive and regulator and has been nominated to serve on the board of directors because of her wide-ranging experience in the areas of Financial Services, Corporate Business, Regulatory Compliance, Risk Management, Corporate Affairs, Compensation, Corporate Governance, Financial Reporting and Legal Matters. Ms. Taylor has extensive bank regulatory and risk management experience having served as the Superintendent of Banks for the New York State Banking Department. Her financial services and corporate business experience includes in-depth private equity, fund management and investment banking experience as a Managing Director of Wolfensohn Fund Management, L.P., a fund manager, Founding Partner and President of M.R. Beal & Company, a full service investment banking firm, and through various executive positions with Donaldson, Lufkin & Jenrette, Lehman Brothers Kuhn Loeb, Inc., and Smith Barney, Harris Upham & Co. Earlier in her career, Ms. Taylor served as Chief Financial Officer of the Long Island Power Authority. In addition, through her work on the Sotheby’s compensation committee, the Brookfield Properties governance committee, on the compensation committee of, and as chair of the audit committee of, the Dartmouth Board of Trustees, and as chair of Accion International, Ms. Taylor has gained additional experience in corporate affairs, corporate governance, financial reporting, compensation and legal matters. Please find her full biography on page 35.

 

William S. Thompson, Jr.

Mr. Thompson is an experienced financial services executive and has been nominated to serve on the board of directors because of his extensive experience in the areas of Financial Services, Corporate Governance, Financial Reporting, Compensation, Legal Matters, International Business, Corporate and Consumer Business and Risk Management. As Chief Executive Officer of PIMCO from 1993 to 2009, Chairman of Salomon

 

 

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Brothers Asia Ltd. in Tokyo from 1991 to 1993, and head of Corporate Finance, Western Region and Head of Institutional Sales, Western Region, at Salomon Brothers, Mr. Thompson gained extensive financial services, and corporate, consumer and international business, skills and experience. As a Chief Executive Officer, and through his service on the compensation and personnel committee of Pacific Life Corporation, on whose board he serves, Mr. Thompson developed extensive skills and experience in corporate governance, financial reporting, compensation and legal matters. Please find his full biography on page 35.

 

Ernesto Zedillo

Mr. Zedillo is the former President of Mexico, a seasoned economist and academic expert and has been nominated to serve on the board of directors because of his extensive experience in the areas of International Business, Financial Services, Regulatory Compliance, Corporate Affairs, Financial Reporting, Risk Management and Corporate Governance. Through his extensive governmental experience, including his service from 1978 to 1987 at the Central Bank of Mexico, as undersecretary of budget for the Mexican government from 1987 to 1988, as secretary of economic programming and the budget from 1988 to 1992 and as President of Mexico from 1994 to 2000, as well as his academic experience, including

his roles as the director of the Center for the Study of Globalization at Yale and as Professor in the Field of International Economics and Politics and Professor of International and Area Studies at Yale, he has had extensive experience in the areas of international business, financial services, regulatory compliance and risk management. His service as chair of the Global Development Network, chair of the High Level Commission on Modernization of World Bank Group Governance; on the Group of Thirty, and on the international advisory boards of ACE Limited, Rolls-Royce, BP and the Coca-Cola Company have given him extensive international business, financial services and corporate affairs experience. As a member of the boards of Alcoa Inc., where he is on the audit committee, governance and nominating committee and public issues committee, and Procter & Gamble Company, where he is chair of the governance and public responsibility committee, a member of the innovation and technology committee and a past member of that board’s finance committee, Grupo Prisa of Spain and as a past director of the Union Pacific Corporation, where he served on the audit and finance committees, and as a director of EDS, where he served on the governance committee, Mr. Zedillo has gained experience in financial reporting, risk management, corporate governance and corporate affairs. Please find his full biography on page 36.

 

 

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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

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Alain J.P. Belda

67

LOGO

  

Managing Director

Warburg Pincus

•Managing Director, Warburg Pincus — August 2009 to present

•Chairman, Alcoa Inc. — 2001 to 2010

•Chief Executive Officer — 1999 to 2008

•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

•Director of Citigroup (or predecessor) since 1997

•Other Directorships: IBM Corporation and Renault

•Previous Directorships within the last five years: E.I. du Pont de Nemours and Company and Alcoa Inc.

•Other Activities: Brazil Project Advisory Board (Co-Chair) at The Woodrow Wilson International Center for Scholars, The Business Council (member), Business Roundtable (member), World Business Council for Sustainable Development (member), and World Economic Forum – International Business Council (member)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Timothy C. Collins

54

LOGO

  

Chairman of Investment Committee

Ripplewood Holdings L.L.C.

•Chairman of Investment Committee, Ripplewood Holdings L.L.C. —2010 to present

CEO and Senior Managing Director, Ripplewood Holdings L.L.C. — 1995 to 2010

•Chairman of the Investment & Strategy Committee of RHJ International S.A. — 2009 to present

•Co-CEO & Senior Managing Director, RHJ International S.A. — 2007 to 2009

CEO & Senior Managing Director, RHJ International S.A. — 2005 to 2007

•Managing Director, Onex Corporation — 1990 to 1995

•Vice President, Lazard Frères & Co., L.L.C. — 1984 to 1990

•Associate, Booz, Allen & Hamilton, Inc. — 1981 to 1984

•Financial Planning Manager, Cummins Engine Company — 1974 to 1975 and 1978 to 1980

•Director of Citigroup since 2009

•Director of Citibank, N.A. since 2009

•Other Directorships: RHJ International S.A., Weather Investments S.p.A., and AEG Power Solutions

•Previous Directorships within the last five years: Readers Digest Association, RSC Holdings Inc., WRC Media Inc., Asbury Automotive Group Inc., Shinsei Bank, Ltd. and Commercial International Bank of Egypt

•Other Activities: Trilateral Commission (member), Yale Divinity School Advisory Board (member), Yale School of Organization and Management Board of Advisors (member), Overseers of the Weill Cornell Medical College (member) , Council on Foreign Relations (member), Tony Blair Faith Foundation (member), Belfer Center for Science and International Affairs (member), and Hotel Carlyle Owners Corporation (member of the Board)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Jerry A. Grundhofer

66

LOGO

  

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

•Director — 1993 to 2007

•Chairman, President and Chief Executive Officer, Firstar Corporation and Star Banc Corporation (predecessors to U.S. Bancorp) — 1993 to 2001

•Director of Citigroup since 2009

•Director of Citibank, N.A. since 2009

•Other Directorships: Ecolab Inc.

•Previous Directorships within the last five years: The Midland Company, Inc. and Lehman Brothers Inc.

•Other Activities: Danny Thompson Charitable Foundation (Director)

Robert L. Joss

69

LOGO

  

Professor of Finance Emeritus and Former Dean

Stanford University Graduate School of Business

•Professor of Finance Emeritus — 2010 to present

•Dean of Stanford University Graduate School of Business — 1999 to 2009

CEO and Managing Director, Westpac Banking Corporation — 1993 to 1999

•Vice Chairman, Wells Fargo Bank — 1986 to 1993

•Executive Vice President — 1981 to 1986

•Senior Vice President — 1975 to 1981

•Vice President — 1972 to 1975

•Assistant Vice President — 1971 to 1972

•Deputy to the Assistant Secretary for Economic Policy, U.S. Treasury Department — 1969 to 1971

•White House Fellow — 1968 to 1969

•Director of Citigroup since 2009

•Director of Citibank, N.A. since 2010

•Other Directorships: Bechtel Group, Inc., Makena Capital Management

•Previous Directorships within the last five years: Agilent Technologies, Inc., Wells Fargo & Co., and Macquarie DDR Management Ltd.

•Other Activities: Committee for Economic Development (Trustee)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Michael E. O’Neill

64

LOGO

  

Former Chairman and CEO

Bank of Hawaii Corporation

•Chairman, Chief Executive Officer and Director, 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

•Director of Citigroup since 2009

•Director of Citibank, N.A. since 2009

•Other Directorships: FT Ventures (Advisory Board)

•Previous Directorships within the last five years: N/A

•Other Activities: Hawaii Pacific University (Trustee) and Honolulu Academy of Arts (Trustee)

Vikram S. Pandit

54

LOGO

  

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, L.P. — 2005 to April 2007

•President and Chief Operating Officer, Institutional Securities and Investment Banking, Morgan Stanley — 2000 to 2005

•Director of Citigroup since 2007

•Previous Directorships within the last five years: N/A

•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)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Richard D. Parsons

62

LOGO

  

Chairman

Citigroup Inc.

•Chairman, Citigroup Inc. — 2009 to present

•Senior Advisor, Providence Equity Partners Inc. — 2009 to present

•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 2008

•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

•Director of Citigroup (or predecessor) since 1996

•Citibank, N.A. Director — 1996 to 1998

•Other Directorships: The Estee Lauder Companies Inc. and Madison Square Garden, Inc.

•Previous Directorships within the last five years: Time Warner Inc.

•Other Activities: Apollo Theatre Foundation (Chairman), Museum of Modern Art (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), Rockefeller Foundation (Trustee), Jazz Foundation of America (Chairman of the Board), New York City Commission for Economic Opportunity (Co-Chair) and President’s Council on Jobs and Competitiveness (member)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Lawrence Ricciardi

70

LOGO

  

Senior Advisor, IBM Corporation, Jones Day and Lazard Frères & Co.

•Senior Advisor, IBM Corporation, Jones Day, Lazard Frères & Co. — 2003 to present

•Senior Vice President and Advisor to 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 since 2008

•Director of Citibank, N.A. since 2009

•Other Directorships: N/A

•Previous Directorships within the last five years: Reader’s Digest Association, Royal Dutch Petroleum and Royal Dutch Shell plc

•Other Activities: The Andrew W. Mellon Foundation (Trustee), National Humanities Center (Trustee), and The Morgan Library & Museum (President-elect)

Dr. Judith Rodin

66

LOGO

  

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

•Previous Directorships within the last five years: Aetna Inc.

•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)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Robert L. Ryan

67

LOGO

  

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. since 2009

•Other Directorships: General Mills, Hewlett-Packard and Stanley Black & Decker

•Previous Directorships within the last five years: United Health Group

•Other Activities: Cornell University (Trustee) and Harvard Business School (member of Visiting Committee)

Anthony M. Santomero

64

LOGO

  

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

•Director of Citigroup since 2009

•Director of Citibank, N.A. since 2009

•Other Directorships: RenaissanceRe Holdings, Ltd., Penn Mutual Life Insurance Company, Columbia Funds and B of A Fund Series Trust*

•Previous Directorships within the last five years: N/A

•Other Activities: Drexel University (Trustee), Drexel University College of Medicine (Vice Chair and Trustee) and Ben Franklin Technology Partners of Southeast Pennsylvania (Director)

 

*   Mr. Santomero will resign from B of A Fund Series Trust’s Board as of June 30, 2011.

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Diana L. Taylor

56

LOGO

  

Managing Director

Wolfensohn Fund Management, L.P.

•Managing Director, Wolfensohn Fund Management, L.P. — 2007 to present

•Superintendent of Banks, State of New York — 2003 to 2007

•Deputy Secretary, Governor Pataki, State of New York — 2002 to 2003

•Chief Financial Officer, Long Island Power Authority — 2001 to 2002

•Vice President, KeySpan Energy — 1999 to 2001

•Assistant Secretary, Governor Pataki, State of New York — 1996 to 1999

•Executive Vice President, Muriel Siebert & Company — 1993 to 1994

•President, M.R. Beal & Company — 1988 to 1993 and 1995 to 1996

•Senior Vice President, Donaldson Lufkin & Jenrette — 1984 to 1988

•Vice President, Lehman Brothers Kuhn Loeb — 1982 to 1984

•Associate, Smith Barney Harris Upham — 1980 to 1982

•Director of Citigroup since 2009

•Other Directorships: Brookfield Properties and Sotheby’s

•Previous Directorships within the last five years: Allianz Global Investors and FNMA

•Other Activities: Accion International (Chair), AMFAR (Secretary), Columbia Business School (Board of Overseers), Dartmouth College (Trustee), Hudson River Park Trust (Chair), International Women’s Health Coalition (Treasurer), Mailman School of Public Health (Board of Overseers), New York Women’s Foundation (Vice Chair), The After School Corporation (member), and YMCA of Greater New York (member)

William S. Thompson, Jr.

65

LOGO

  

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 to 1988

•Joined Salomon Brothers — 1975

•Director of Citigroup since 2009

•Other Directorships: Pacific Life Corporation

•Previous Directorships within the last five years: N/A

•Other Activities: Pacific Symphony Orchestra (Director), Thompson Foundation for Autism (Chair), Thompson Family Foundation (President) and University of Missouri (President’s Financial Advisory Council)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Ernesto Zedillo

59

LOGO

  

Director, Center for the Study of Globalization and Professor in the Field of International Economics and Politics, Yale University

•Director, Center for the Study of Globalization and Professor in the Field of International Economics and Politics, Yale University — 2002 to present

•President of Mexico — 1994 to 2000

•Secretary of Education, Government of Mexico — 1992 to 1993

•Secretary of Economic Programming and the Budget, Government of Mexico — 1988 to 1992

•Undersecretary of the Budget, Government of Mexico — 1987 to 1988

•Banco de Mexico — Economist, Deputy Manager of Economic Research, Director General of FICORCA, Deputy Director — 1978 to 1987

•Director of Citigroup since 2010

•Director of Citibank, N.A. since 2010

•Other Directorships: Alcoa Inc., Procter & Gamble Company and Grupo Prisa

•Previous Directorships within the last five years: Electronic Data Systems Corporation and Union Pacific Corporation

•Other Activities: ACE Limited (Member of International Advisory Board), Rolls-Royce (Member of International Advisory Board), BP (Member of International Advisory Board), Credit Suisse Research Institute (Advisor), World Economic Forum (Foundation Board), the Global Development Network (Chairman), and The Group of Thirty (Member)

 

The one-year term of all of Citi’s directors expires at the annual meeting.

 

Meetings of the Board of Directors and Committees

The board of directors met 18 times in 2010. During 2010, the audit committee met 12 times, the personnel and compensation committee met 15 times and the nomination and governance committee met 9 times.

 

Each director attended at least 75% of the total number of meetings of the board of directors and board committees of which he or she was a member in 2010.

 

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 seven times each year, and, if the board convenes a special meeting, the non-management directors ordinarily meet in executive session. Richard Parsons, as chairman, presided at each executive session of the non-management directors. The independent directors met in executive session during 2010.

 

Board Leadership Structure

Citi currently has an independent chairman separate from the CEO. The board believes it is important to maintain flexibility in its board leadership structure and has had in place different leadership structures over the past few years, depending on the company’s needs at the time, but firmly supports having an independent director in a board leadership position at all times. Accordingly, Citi’s

 

 

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board, on December 15, 2009, adopted a by-law amendment which provides that, if Citi does not have an independent chairman, the board shall elect a lead independent director, having similar duties to an independent chairman, including leading the executive sessions of the non-management directors at board meetings. Citi’s chairman provides independent leadership of the board. Having an independent chairman or lead director enables non-management directors to raise issues and concerns for board consideration without immediately involving management. The chairman or lead director also serves as a liaison between the board and senior management. Citi’s board has determined that the current structure, an independent chair, separate from the CEO, is the most appropriate structure at this time, while ensuring that, at all times, there will be an independent director in a board leadership position.

 

Board’s Role in Risk Oversight

The board oversees Citi’s global risk management framework. At each regularly scheduled board meeting, the board receives a risk report from the chief risk officer with respect to the company’s approach to management of major risks, including management’s risk mitigation efforts, where appropriate. Global Risk Management, led by the chief risk officer, is a company-wide function that is responsible for an integrated effort to identify, assess and manage risks that may affect Citi’s ability to execute on its corporate strategy and fulfill its business objectives. The board’s role is to oversee this effort. The risk management and finance committee enhances the board’s oversight of risk management. The committee’s role is one of oversight, recognizing that management is responsible for executing Citi’s risk management policies. The committee’s responsibilities include reviewing risk management and compliance policies and programs for, and reports on, Citi and its subsidiaries; approving and adjusting risk limits subject to ratification by the board; and consulting with management on the effectiveness of risk identification, measurement, and monitoring processes, and the adequacy of staffing and action plans, as needed. In addition, the public affairs committee reviews reputational issues and the

personnel and compensation committee reviews compensation programs to ensure that they do not, among other things, encourage unnecessary or excessive risk-taking.

 

Committees of the Board of Directors

The standing committees of the board of directors are:

 

The audit committee, which assists the board in fulfilling its oversight responsibility relating to (i) the integrity of Citi’s consolidated 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 effectiveness of Citi’s internal control over financial reporting, the engagement of the independent registered public accounting firm and the evaluation of the Independent Auditors’ 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.

 

The board has determined that each of Messrs. Ricciardi, Ryan and Santomero 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 committee charter, as adopted by the board, is available in the “Corporate Governance” section of Citi’s website: www.citigroup.com.

 

The Citi Holdings oversight committee, which is responsible for overseeing the management of the company’s Citi Holdings business segment, which

 

 

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consists of Brokerage and Asset Management, Local Consumer Lending and the Special Asset Pool. The committee monitors management’s strategy for the timely and economically efficient disposition or optimization of Citi Holdings’ assets and businesses, and monitors management’s execution of that strategy through appropriate milestones and metrics. Periodically, the committee will review and discuss with management the company’s risk exposures with respect to Citi Holdings’ assets and the steps management has taken to monitor and control such exposures.

 

The Citi Holdings oversight committee charter, as adopted by the board, is 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 makes recommendations as to the composition of the committees 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 practices and the Guidelines. The committee is responsible for reviewing and approving all related party transactions involving a director 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 12 of this proxy statement for a complete description of the Policy on Related Party Transactions. The committee, as part of the board’s executive succession planning process, in conjunction with the personnel and compensation committee 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 executive committee of the board of directors between meetings of the board.

 

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. In addition, 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 other 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 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.

 

 

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The nomination and governance committee charter, as adopted by the board, is available in the “Corporate Governance” section of Citi’s website: www.citigroup.com.

 

The personnel and compensation committee, which is responsible for determining the compensation for the CEO and approving the compensation structure for executive officers, other members of senior management and certain highly compensated employees, in accordance with guidelines established by the committee from time to time. The committee produces an annual report for inclusion in the company’s proxy statement and makes such other reports, certifications, and disclosures as may be required. Further, the committee approves broad-based and special compensation plans across the company.

 

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 certain other senior executives. The committee also approves the compensation structure for other highly paid employees, 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 46 of this proxy statement.

 

In order to facilitate 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 discusses the list with the board which then designates one or more of such individuals. This process is conducted at a

regularly scheduled board meeting on an annual basis.

 

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, L.L.C. (ICCA) to provide the committee with advice on Citi’s compensation programs for senior management. ICCA reports solely to the committee and the committee has sole authority to retain, terminate, and approve the fees of ICCA. ICCA does no other work for Citi. The amount paid to ICCA in 2010 is disclosed in the CD&A on page 60 of this proxy statement. For 2010, no other compensation consultant has been engaged by the personnel and compensation committee.

 

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 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 reputational issues facing Citi, reviewing political and charitable contributions made by Citi and the Citi Foundation, reviewing Citi’s policies and practices regarding supplier diversity, reviewing Citi’s

 

 

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business practices, and reviewing Citi’s sustainability policies and programs, including environmental policies and human rights. The committee’s focus is global, reflecting Citi’s global footprint.

 

The public affairs committee charter, as adopted by the board, is available in the “Corporate Governance” section of Citi’s website: www.citigroup.com.

 

The risk management and finance committee, which has the primary responsibility for (1) oversight of Citigroup’s risk management framework, including the significant policies, procedures and practices used in managing credit, market, operational and certain other risks and (2) oversight of Citigroup’s policies and practices

relating to Treasury matters, including capital, liquidity and financing, as well as merger, acquisition, and divestiture activity (M&A). The committee reports to the board regarding Citigroup’s risk profile, as well as its enterprise risk management framework, including the significant policies, procedures, and practices employed to manage risks in Citigroup’s businesses, as well as the overall adequacy of the Risk Management function. The committee’s role is one of oversight, recognizing that management is responsible for executing Citigroup’s risk management, Treasury and M&A policies.

 

The risk management and finance committee charter is available in the “Corporate Governance” section of Citi’s website: www.citigroup.com.

 

 

The following table shows the current membership of each of the foregoing committees.

 

Committees


  

Current Members


Audit Committee   

Lawrence Ricciardi (Chair)

Robert L. Ryan

Anthony M. Santomero

Citi Holdings Oversight Committee   

Timothy C. Collins

Robert L. Joss

Michael E. O’Neill (Chair)

Nomination and Governance Committee   

Alain J.P. Belda

Jerry A. Grundhofer

Richard D. Parsons

Diana L. Taylor (Chair)

William S. Thompson, Jr.

Personnel and Compensation Committee   

Alain J.P. Belda (Chair)

Andrew N. Liveris

Richard D. Parsons

Anthony M. Santomero

Diana L. Taylor

William S. Thompson, Jr.

Public Affairs Committee   

Andrew N. Liveris

Judith Rodin (Chair)

Ernesto Zedillo

Risk Management and Finance Committee   

Jerry A. Grundhofer (Chair)

Robert L. Joss

Michael E. O’Neill

Robert L. Ryan

Anthony M. Santomero

William S. Thompson, Jr.

Ernesto Zedillo

 

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Involvement in Certain Legal Proceedings

There are no legal proceedings to which any director, officer 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 2010, the committee reviewed the current compensation program and determined that no changes were appropriate. The last time director compensation was adjusted was in 2005. Non-employee directors receive an annual cash retainer of $75,000 and a deferred stock award valued at $150,000. The deferred stock award is generally 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. Starting with the 2011 deferred stock award grant, in the event a director leaves the board for personal reasons prior to the conclusion of the deferral period and before age 72, the director will not forfeit the deferred stock and the pro-rated

award will be distributed as scheduled. 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 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. Committee chairs receive additional compensation of $15,000 per year, except for the chairs of the audit committee, Citi Holdings oversight committee, and risk management and finance committee, who receive additional compensation of $35,000 per year. Additional compensation for special assignments may be determined on a case by case basis.

 

Messrs. Collins, Grundhofer, Joss, O’Neill, Ricciardi, Ryan, Santomero and Zedillo serve on Citibank, N.A.’s board of directors. Each independent director is entitled to receive $50,000 as an annual retainer; the chairman is entitled to receive an additional $50,000. Committee chairs receive additional compensation of $15,000 per year. All annual retainers and chair fees are paid in four equal quarterly installments per annum. Citibank, N.A. is a wholly-owned subsidiary of Citi. These fees are reported in the Non-Employee Director Compensation Table below.

 

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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The following table provides information on 2010 compensation for non-employee directors.

 

Non-Employee Director Compensation Table

 

Name  

Fees

Earned

or Paid

in Cash

($)(a)

   

Stock

Awards

($)(a)(b)

   

Option

Awards

($)(c)

   

Non- Equity

Incentive Plan

Compensation

($)

   

Change in

Pension Value

and

Nonqualified

Deferred

Compensation

Earnings

($)

   

All Other

Compensation

($)

   

Total

($)

 

C. Michael Armstrong(d)

  $ 18,750      $ 0      $ 0      $ 0      $ 0      $ 0      $ 18,750   

Alain J.P. Belda

  $ 0      $ 240,000      $ 0      $ 0      $ 0      $ 0      $ 240,000   

Timothy C. Collins

  $ 125,000      $ 150,000      $ 0      $ 0      $ 0      $ 0      $ 275,000   

John M. Deutch(d)

  $ 18,750      $ 0      $ 0      $ 0      $ 0      $ 0      $ 18,750   

Jerry A. Grundhofer

  $ 100,000      $ 260,000      $ 0      $ 0      $ 0      $ 0      $ 360,000   

Robert L. Joss (e)

  $ 112,500      $ 150,000      $ 0      $ 0      $ 0      $ 350,000      $ 612,500   

Andrew N. Liveris

  $ 100,000      $ 150,000      $ 0      $ 0      $ 0      $ 0      $ 250,000   

Anne M. Mulcahy(d)

  $ 18,750      $ 0      $ 0      $ 0      $ 0      $ 0      $ 18,750   

Michael E. O’Neill

  $ 50,000      $ 267,500      $ 0      $ 0      $ 0      $ 0      $ 317,500   

Richard D. Parsons

  $ 0      $ 232,500      $ 0      $ 0      $ 0      $ 0      $ 232,500   

Lawrence R. Ricciardi

  $ 175,000      $ 150,000      $ 0      $ 0      $ 0      $ 0      $ 325,000   

Judith Rodin

  $ 90,000      $ 150,000      $ 0      $ 0      $ 0      $ 0      $ 240,000   

Robert L. Ryan

  $ 125,000      $ 150,000      $ 0      $ 0      $ 0      $ 0      $ 275,000   

Anthony M. Santomero

  $ 72,500      $ 258,750      $ 0      $ 0      $ 0      $ 0      $ 331,250   

Diana L. Taylor

  $ 136,250      $ 150,000      $ 0      $ 0      $ 0      $ 0      $ 286,250   

William S. Thompson, Jr.

  $ 0      $ 225,000      $ 0      $ 0      $ 0      $ 0      $ 225,000   

Ernesto Zedillo

  $ 93,750      $ 112,500      $ 0      $ 0      $ 0      $ 0      $ 206,250   

 

(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. The Stock Awards column in the Non-Employee Director Compensation Table also includes the aggregate grant date fair value of 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 following directors elected to receive all or a portion of their

Citigroup 2010 retainer in deferred stock: Mr. Belda (100%); Mr. Grundhofer (100%); Mr. O’Neill (100%); Mr. Parsons (100%); and Dr. Santomero (100%). The number of shares they received was: Mr. Belda 22,684; Mr. Grundhofer 27,725; Mr. O’Neill 29,725; Mr. Parsons 20,904; and Dr. Santomero 27,393. Mr. Thompson elected to receive all of his retainer in stock (100%). Mr. Thompson did not elect to defer his retainer; therefore, his shares (18,902) were distributed to him on a quarterly basis.

 

 

 

(footnotes continued on following page)

 

 

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(footnotes continued from previous page)

The aggregate number of shares of deferred stock outstanding at the end of 2010 was:

 

Mr. Belda

     169,937   

Mr. Collins

     59,023   

Mr. Deutch

     8,305   

Mr. Grundhofer

     107,663   

Mr. Joss

     59,023   

Mr. Liveris

     78,842   

Mrs. Mulcahy

     18,811   

Mr. O’Neill

     129,709   

Mr. Parsons

     176,121   

Mr. Ricciardi

     75,013   

Dr. Rodin

     94,320   

Mr. Ryan

     80,465   

Dr. Santomero

     122,455   

Ms. Taylor

     59,023   

Mr. Thompson

     79,938   

Mr. Zedillo

     29,281   

 

(b) The values in this column represent the aggregate grant date fair values of the 2010 deferred stock awards. The grant date fair value is based on a grant date of January 19, 2010 and a grant price determined by the average NYSE closing price of Citi’s common stock for the 5 trading days from January 11, 2010 to January 15, 2010. The amounts in the below chart represent deferred stock awards only and not shares awarded in lieu of the cash retainer and/or committee chair fees. The grant date fair value of the deferred stock awards are set forth below:

 

    

Deferred Stock

Granted in 2010 (#)

 

Grant Date

Fair Value ($)

Mr. Armstrong

   0*   N/A

Mr. Belda

   42,662   $150,000

Mr. Collins

   42,662   $150,000

Mr. Deutch

   0*   N/A

Mr. Grundhofer

   42,662   $150,000

Mr. Joss

   42,662   $150,000

Mr. Liveris

   42,662   $150,000

Mrs. Mulcahy

   0*   N/A

Mr. O’Neill

   42,662   $150,000

Mr. Parsons

   42,662   $150,000

Mr. Ricciardi

   42,662   $150,000

Dr. Rodin

   42,662   $150,000

Mr. Ryan

   42,662   $150,000

Dr. Santomero

   42,662   $150,000

Ms. Taylor

   42,662   $150,000

Mr. Thompson

   42,662   $150,000

Mr. Zedillo

   29,281*   $112,500

 

* In accordance with the terms of the Citigroup Inc. Non-Employee Directors Compensation Plan, because Mrs. Mulcahy and Messrs. Armstrong and Deutch retired before the mandatory retirement

age of 72, they forfeited their 2009 and 2010 Deferred Stock Awards in the following amounts: Armstrong 2010: 42,662 and 2009: 32,351; Deutch 2010: 10,665 and 2009: 32,351; and Mulcahy 2010: 42,662 and 2009: 32,106. Mr. Zedillo’s Deferred Stock Award was pro-rated because his service on the board commenced on April 20, 2010.

 

(c) Beginning in 2009, directors were no longer able to elect to receive any of their compensation in the form of options to purchase shares of common stock. Information regarding the number of stock options held by non-employee directors can be found in the Director Stock Option Holdings Table below.

 

(d) C. Michael Armstrong, John M. Deutch and Anne M. Mulcahy retired from the board on April 20, 2010.

 

(e) Dr. Joss earned $350,000 for consulting services provided to the company during 2010.

 

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Director Stock Option Holdings Table

 

Director   

Date of

Grant

    

Number of

Shares

Outstanding
and
Exercisable

at 12/31/10

    

Expiration

Date

    

Shares

Exercisable

as of

12/31/10

 

C. Michael Armstrong

     1/16/2001         5,361         1/16/2011         5,361   
       2/13/2002         5,361         2/13/2012         5,361   
       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         2,758   

Alain J.P. Belda

     1/16/2001         12,929         1/16/2011         12,929   
       2/13/2002         14,266         2/13/2012         14,266   
       1/17/2006         9,198         1/17/2012         9,198   
       1/16/2007         8,275         1/16/2013         8,275   
       1/22/2008         18,404         1/22/2014         18,404   

John M. Deutch

     1/16/2001         9,144         1/16/2011         9,144   
       2/13/2002         9,813         2/13/2012         9,813   

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         8,275   
       1/22/2008         36,809         1/22/2014         36,809   

Richard D. Parsons

     1/16/2001         5,361         1/16/2011         5,361   
       2/13/2002         5,361         2/13/2012         5,361   
       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         8,275   
       1/22/2008         18,404         1/22/2014         18,404   

 

 

 

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Audit Committee Report

 

The Audit Committee (“Committee”) operates under a charter that specifies the scope of the Committee’s responsibilities and how it carries out those responsibilities.

 

The Board of Directors has determined that all three 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, 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, 2010 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, 2010 for filing with the SEC.

 

THE AUDIT COMMITTEE:

 

Lawrence R. Ricciardi (Chair)

Robert L. Ryan

Anthony M. Santomero

 

Dated: February 22, 2011

 

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Executive Compensation

 

Compensation Discussion and Analysis

 

Overview

Citi is committed to responsible compensation practices and structures. Citi seeks to balance the need to compensate its employees fairly and competitively based on their performance, while assuring that their compensation reflects principles of risk management and performance metrics that reward long-term contributions to sustained profitability. As explained in more detail in the discussion of the objectives of Citi’s compensation philosophy, Citi’s programs aim to discourage unnecessary or excessive risk-taking, facilitate competitiveness, reward performance over an appropriate period, promote meritocracy by recognizing individual employee contributions, and enhance Citi’s franchise value.

 

Exceptional employees, and exceptional efforts by those employees, have been required to move Citi towards sustained and responsible profitability when there continues to be worldwide competition for proven talent in the financial services industry. Accordingly, Citi has compensated executives within legal parameters and has awarded executive compensation taking into account the following:

 

 

In 2010, Citi returned to profitability by executing on its long-term strategy. Citigroup net income was $10.6 billion in 2010, compared to a net loss of $1.6 billion in 2009. Citi substantially increased its capital base and is now one of the best capitalized large banks in the world. The US Treasury has recovered all of the $45 billion invested by the US government in Citi, plus approximately $12.3 billion in profits, consisting of dividends, interest, and gains on the sale of Citigroup common stock and other securities.

 

 

Citi’s CEO declined substantial compensation for 2009 and 2010. As announced in February 2009, CEO Vikram Pandit has earned base pay at a rate of $1 per year and declined any other compensation until Citi has returned to sustained profitability. The personnel and

   

compensation committee (the committee) determined that Mr. Pandit’s performance in 2010 merited an incentive award, but the committee respected Mr. Pandit’s decision and awarded no additional compensation for 2010.

 

 

The structure of Citi’s executive compensation for 2010 was prescribed by statute to a significant extent. Because Citi had repaid exceptional governmental assistance in 2009, Citi was not subject to the determinations of the Special Master for TARP Executive Compensation (the Special Master) for 2010. However, because the US Treasury owned Citi common stock throughout most of 2010, the Emergency Economic Stabilization Act of 2008, as amended (EESA), dictated the structure of 2010 compensation for the senior executive officers and the next 20 most highly compensated employees, as determined for 2010 (the 2010 Top 25). Under EESA, the incentive compensation paid to each member of the 2010 Top 25, including the affected named executive officers, was limited to one-third of annual compensation. These TARP-related restrictions on the structure of executive compensation will not apply starting in 2011, as the US Treasury completed its sale of Citi common stock in December, 2010.

 

 

Citi’s executive compensation structure for 2010 is aligned with risk balancing principles. Citi has taken a number of steps to align its incentive compensation practices with regulatory guidance in the US and other countries regarding sound incentive compensation policies, to enhance the balancing of risk and financial results in a manner that does not encourage employees to expose Citi to imprudent risks.

 

   

In particular, deferred incentive compensation awarded for 2010 to Citi’s executive officers, including the named executive officers, is subject to performance based vesting, which is a form of ex-post balancing incentive compensation for adverse risk outcomes. Under Citi’s performance based vesting approach, if Citigroup has pre-tax net losses in

 

 

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any year of the award’s deferral period, the committee may determine that some or all of an executive officer’s incentive award for 2010 that is scheduled to vest after the end of the loss year will be reduced or eliminated.

 

   

The structure for executive officers includes clawbacks. If 2010 performance turns out to be based on materially inaccurate performance criteria or if an executive materially violates risk limits, incentive compensation for 2010 will be forfeited (i.e., is subject to a “clawback”) .

 

   

Citi also made important changes to its principal discretionary incentive compensation program, Citi’s Capital Accumulation Program (CAP). Citi amended the termination provisions of CAP to provide that awards that vest upon termination will only be delivered on the regularly scheduled vesting dates, with no delivery on an accelerated basis upon involuntary termination of employment, with the awards thereby remaining subject to changes in Citi’s stock price. The clawback for executive officers also now applies to all deferred CAP awards, including those that are delivered after termination of employment.

 

   

The Personnel and Compensation Committee Report following this Compensation Discussion and Analysis provides additional detail on the steps Citi has taken during 2010 toward risk balancing, including changes in its performance management system to enhance senior managers’ focus on risk-taking behaviors.

 

 

Citi continues to limit cash bonuses and has increased the standard percentage of senior executive incentive compensation that is awarded as deferred stock. Citi has long awarded a significant percentage of incentive compensation to senior management in stock that vests over a period of at least three years. In 2010, three named executive officers received no cash incentive compensation and received their entire incentive award in deferred stock, as prescribed by EESA, that vests at the end of three

   

years; one named executive officer whose structure was not dictated by EESA received 60% of his incentive award in deferred stock vesting over four years with 40% of his annual incentive award payable in immediately vested cash. The structure providing for the four-year deferral of 60% of the total incentive was generally applied to the employees with the largest incentive awards throughout the company, and represents a change from past practice, under which the maximum amount deferred was 40% of the total incentive award. The fifth named executive officer, Mr. Pandit, received no incentive compensation, as stated above.

 

 

Stock awards are an effective means of aligning executive officer interests with those of stockholders and other stakeholders. Citi believes that awarding deferred stock instead of deferred cash to executive officers better aligns their interests with stockholders and other stakeholders by fostering partnership behavior among executive officers and incentivizes them to act consistently with risk mitigation principles. The incentive award portion of the compensation payable to the named executive officers is subject to a stock ownership commitment, and Citi has trading policies that limit hedging strategies that undercut the purpose of the stock ownership commitment, as described in more detail under “Important compensation policies affecting named executive officers for 2010.” In addition, executives’ interests remain aligned with those of stockholders even after termination of employment through stock that vests or is subject to sale restrictions after termination of employment.

 

 

Citi has a strong compensation governance process. The composition of the committee reflects its strong governance focus; each of the six committee members is a non-executive independent director who has served as CEO of a public company or who has significant senior regulatory experience. Throughout 2010, the committee continued to engage in active oversight of, and enhanced its focus on, risks to

 

 

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Citi that can be reduced through changes to Citi’s incentive compensation programs, as explained in detail in the Personnel and Compensation Committee Report. In addition, Citi has instituted global incentive councils or management remuneration committees to provide for consistency in its approach to compensation around the world.

 

 

Involvement of independent risk management function. The committee met three times in 2010 with Citi’s Chief Risk Officer (CRO) to discuss and evaluate risk and Citi’s compensation programs, thereby further integrating Citi’s independent risk function into compensation governance and oversight. As explained in detail in the Personnel and Compensation Committee Report, Citi’s CRO conducted a review of risk in Citi’s compensation plans and concluded that the plans do not pose unnecessary or excessive risks to the company. The structure of these meetings was governed by EESA, but even after the TARP period, Citi expects that the CRO and the Independent Risk function will continue to work with the committee and play a significant role in the evaluation and monitoring of Citi’s compensation programs.

 

 

Independent compensation consultant. For the 2010 compensation year, the only consultant retained by the committee to advise the committee on its compensation determinations was Independent Compensation Committee Adviser, LLC (ICCA). ICCA has advised the committee since 2006 and has never performed work for Citi other than its assignments from the committee.

Citi’s compensation principles. The committee made compensation decisions consistent with Citi’s compensation philosophy or principles, which state the objectives of Citi’s executive compensation programs and are designed to advance Citi’s business strategy by attracting, retaining and motivating the best talent available to execute the strategy. These principles have been updated for 2010, and are directly linked to Citi’s business strategy and mission statement. Citi’s compensation programs are designed to effect the following:

 

 

Encourage long-term profitability through the principles of responsible finance. Compensation programs should be designed to avoid unnecessary or excessive risks that can harm the franchise, while encouraging appropriate entrepreneurial activity, as a cornerstone of Citi’s culture of responsible finance. The structure of compensation should reduce risks to the franchise, meet regulatory requirements, and be aligned with company-wide goals and the furtherance of risk-adjusted stockholder returns. The structure of compensation should also reward long-term profitability and long-term sustainable increases in Citi’s stock price. Citi should use a wide range of tools to implement this principle, including equity awards that are deferred over an appropriate period and a range of clawbacks, especially for senior executives.

 

 

Enhance Citi franchise value. Compensation should align the long-term interests of management with stockholders by having management share both upside opportunities and downside risk. Citi’s compensation structure must support and promote company integrity and stability by encouraging sustainable and responsible business performance and long-term retention of key employees. Strong partnership across internal businesses and regions is critical.

 

 

Facilitate competitiveness. Compensation structure and amounts, including fixed compensation, should be competitive within the global financial services market. Compensation programs must support the attraction and retention of talented employees. Compensation should be used as a tool to reduce employee

 

 

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turnover, as a means of minimizing replacement costs and maintaining a pipeline of talent.

 

 

Reward performance over an appropriate period. Incentives should reward sustainable individual, business unit, and company performance, as well as behavior that is consistent with Citi’s culture and effective risk management practices. Incentive compensation should also be based on financial measures that best reflect the state of ongoing operations, including risk-related metrics. Performance rewards must balance financial and non-financial measures.

 

 

Promote meritocracy by recognizing employee contributions. Individual compensation decisions should be differentiated considerably based on financial and non-financial performance and reflect current or prospective contributions to the value of Citi. Business unit and corporate goals should be balanced with individual contributions depending on an individual’s role within the organization.

 

Assessing Company and Individual Performance

 

The role of the Personnel and Compensation Committee.    The committee regularly reviews the design and structure of Citi’s compensation programs to ensure that management’s interests are aligned with those of stockholders and other stakeholders and that the compensation programs are aligned with Citi’s strategic priorities and principles described above. The committee is responsible for evaluating the performance of and determining the compensation for the CEO, and in accordance with its guidelines, the committee approved the compensation for members of senior management.

 

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 and advise regarding the committee’s process, its decisions regarding the compensation of members of senior management, and the reasons for reaching those decisions.

 

Salary stock awards.    In September 2010, the committee approved the payment of salary stock to the 2010 Top 25. The salary stock program was developed in 2009 to comply with the compensation structure mandated by EESA. Under this structure, incentive compensation cannot exceed one-third of an executive’s annual compensation, and the remaining portion of annual compensation must be paid as salary, either in the form of cash salary or salary stock. In determining the amount of salary stock to pay to each eligible named executive officer, the committee considered company results through the award date, market compensation information, compensation history, role and responsibilities, and the committee’s preliminary views of overall company and management performance in 2010.

 

Committee process and results of decisions regarding incentive compensation.    In January 2011, the committee made executive incentive compensation decisions for 2010 in the context of Citi’s performance in 2010. Awards were made under Citi’s Discretionary Incentive and Retention Plan (DIRAP), Citi’s generally applicable annual incentive program, which provides for discretionary annual incentive awards. The committee approved the CEO’s recommendations through a process in which it considered the following:

 

  1.   Overall company performance. For 2010, Citi’s improved financial performance was the most significant determinant of executive officer compensation.
  2.   Risk rating. Each named executive officer received an independent rating on risk behaviors, which was considered as a threshold or “gating” factor.
  3.   Individual performance and significance of role. The named executive officers each had a record of performance, including noteworthy achievements in 2010.
 

 

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  4.   Market data. The committee considered market compensation data to put its decisions in context, and also considered the nature of the executive’s role and compensation of others at Citi with somewhat similar roles.

 

1. Overall company performance. In awarding incentive compensation to the named executive officers and other senior executives for 2010, the committee took into account Citi’s improved financial results and the substantial progress made against Citi’s strategic priorities.

 

   

Senior management, including the named executive officers, continued to refine Citi’s strategic direction and to execute on the strategy. Citi is focusing on its core historical strengths and clients’ needs, with an emphasis on the growing segments of financial services. Citi is committed to generating sustained and responsible long-term profitability and growth from Citicorp, which comprises its core franchise, as well as managing and optimizing the assets and businesses within Citi Holdings. Citi is committed to executing its strategy on the basis of four key principles:

 

1. Common Purpose — One team, with one goal: serving our clients and stakeholders.
2. Responsible Finance — Conduct that is transparent, prudent and dependable.
3. Ingenuity — Enhancing our clients’ lives through innovation that harnesses the breadth and depth of our information, global network and world-class products.
4. Leadership — Talented people with the best training who thrive in a diverse meritocracy that demands excellence, initiative and courage.

 

   

Citi has become profitable again. Whereas Citi focused on recapitalizing the firm and implementing a new strategy in 2009, Citi returned to profitability in 2010; also, earnings of Citicorp were nearly $15 billion

   

and losses in Citi Holdings were reduced by over 50%. In addition to earning $10.6 billion in 2010, Citi reduced credit costs and its share price increased. Credit costs were $26 billion, reduced by 50% from prior year levels on a comparable basis. The price of Citi common stock rose 42.9% in 2010, from $3.31 at close on December 31, 2009 to $4.73 at close on December 31, 2010. Global credit continued to recover, with six consecutive quarters of sustained improvement in credit costs.

 

   

Citi improved key ratios in 2010. Citi also substantially increased its capital and improved its liquidity position in 2010. At December 31, 2010, Citi’s Tier 1 Common ratio was 10.7% and its Tangible Common Equity (TCE) ratio was 12.9%, compared to 9.6% and 10.9% at December 31, 2009, respectively. Citi is now one of the best capitalized large banks in the world. Deposits increased in 2010, to a total of $845 billion as of year end, up 1% from year-end 2009.

 

   

Citi demonstrated continued expense discipline in 2010. Full year expenses for 2010 for Citigroup were $47.4 billion, down 1% against 2009. In 2010, Citi repositioned many Citicorp businesses and invested in a strong foundation for their future growth. Total Citicorp expenses in 2010 were $35.9 billion, up 10% from 2009 levels, reflecting these selective investments. Conversely, in Citi Holdings, as businesses were sold, cost savings were achieved. In Citi Holdings, expenses were $9.6 billion for 2010, down 31% against 2009. Taken together, expenses for 2010 were consistent with Citi’s strategy to invest in Citicorp while reducing the size of Citi Holdings in an optimal manner.

 

   

Citi continued to execute successfully on its strategy to optimize the value of Citi Holdings through divestitures or prudent management. Citi has reduced assets within Citi Holdings by more than half since their peak in the first quarter of 2008, and assets

 

 

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of Citi Holdings declined by $128 billion in 2010, or 26% versus 2009. With the divestiture of the Student Loan Corporation for $31 billion, at December 31, 2010, the assets of Citi Holdings were 19% of Citi’s balance sheet and losses in Citi Holdings are down more than 50% year over year.

 

   

TARP. In October 2010, the U.S. Treasury sold $2.2 billion in Citigroup trust preferred securities (TruPs). In December 2010, the U.S. Treasury completed the sale of its common stock holdings in Citi, and in January 2011, the U.S. Treasury sold 465.1 million warrants for shares of Citigroup common stock equal to positions received in consideration for investments made under the Capital Purchase Program, the Targeted Investment Program and as part of a loss-sharing agreement that has been terminated. As previously mentioned, the U.S. Treasury has recovered all of the $45 billion invested by the U.S. government in Citi, plus approximately $12.3 billion in profits.

 

2. Risk rating. As a threshold or “gating” issue in awarding incentive compensation, the committee considered the risk-related results of Citi’s performance evaluation process. This process was significantly changed for 2010, particularly for individuals who have influence over material risks to Citi or to Citi’s material lines of business (“material risk takers,” or MRTs), including all of the named executive officers. Each MRT was evaluated on risk behaviors; those MRTs with more influence over Citi’s risks (including the named executive officers) were assigned a risk-related rating by a group of representatives from independent control functions such as Risk, Finance, Compliance, or Legal. The rating was based in part on information provided through a balanced scorecard. The scorecard provided information on the 2010 results for the businesses or functions led by the executive using objective metrics, such as revenue and net income, risk capital, risk adjusted assets, return on assets and return on
 

risk capital, including increases or decreases from the prior year. The scorecard also included risk metrics such as potential stressed losses and value at risk, and included information on performance against key risk-related metrics, such as operational risk losses, internal audit results, and legal or regulatory compliance matters. This separate assessment by independent control functions reviewed the applicable executive’s performance against these quantitative risk measures and also provided a qualitative assessment of the applicable executive’s actions in managing risk. The result of this assessment by independent control functions was provided to the applicable MRT’s manager, and, where the committee makes the decision regarding compensation for the executive, to the committee. Each MRT’s manager also provided a separate rating on risk to be included in the performance evaluation process.

 

In addition to focusing on the assessment by the independent raters, the committee devoted a substantial amount of time to analyzing risk in Citi incentive compensation programs broadly throughout the 2010 compensation process. Additional details of the committee’s analysis of risk in compensation programs are included in the Personnel and Compensation Committee Report following this Compensation Discussion and Analysis.

 

3. Individual performance and significance of role. Mr. Pandit presented to the committee his performance evaluation of the executive officers who report to him. In addition to Mr. Pandit’s evaluation, the committee weighed the individual contributions of each of the named executive officers who received incentive compensation against Citi’s results, including progress made against strategic priorities. In making its decisions, in addition to the other factors previously described, the committee took into account the following:

 

   

Mr. Gerspach, Chief Financial Officer: Mr. Gerspach is responsible for the financial management of the company and leads the Citi Finance function. Citi Finance maintains

 

 

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key financial information and controls for Citi, serving both internal and external facing functions. Under Mr. Gerspach’s leadership, Citi Finance is responsible for decisions on capital planning, liquidity, budgeting, tax, strategic direction and policy management. Mr. Gerspach and his leadership team also provide the data and analysis to enable Citi’s leaders to make sound decisions in support of the business objectives. Mr. Gerspach played a key role in prudently and proactively managing Citi’s capital and liquidity while managing Citi’s balance sheet in a manner that enabled TARP repayment and significant decreases in Citi’s credit spreads. Mr. Gerspach helped lead Citi’s expense reduction initiatives and he made continued and substantial efforts to communicate effectively with analysts and investors throughout the year.

 

   

Mr. Corbat, CEO, Citi Holdings: Mr. Corbat oversees the execution of the Citi Holdings strategy, which is to manage risk and losses, to reduce assets and to divest non-core businesses. His role is critical to Citi’s larger strategy of simplifying the organization and allowing Citi to allocate capital to fund its longer-term strategic business priorities. Mr. Corbat had a leadership role in reducing losses at Citi Holdings, as well as in the decrease in assets of Citi Holdings ahead of schedule and in a manner that minimized losses and risks to Citi and maximized gains in an uncertain market for many illiquid assets held by Citi Holdings. In particular, he prioritized attention on divestitures of the assets with greater risks to Citi. He was able to retain management teams in businesses that are not part of Citi’s strategy for the future with minimum retention costs to Citi. As noted previously, the assets of Citi Holdings are 19% of Citi’s assets at the end of 2010 as compared to 38% at the end of 2009. Citi Holdings has completed over 40 divestitures since the end of 2007.

   

Mr. Havens, CEO, Institutional Clients Group: Mr. Havens is responsible for the management of Securities and Banking and Global Transaction Services, among other businesses, as CEO of the Institutional Clients Group, which provides financial services to corporations, other financial institutions, and governments. The Institutional Clients Group has physical presence in nearly 100 countries and jurisdictions and serves clients in over 160, and had average GAAP assets of $946 billion. Securities and Banking had strong financial results in 2010 including $6.4 billion in net income, despite declines in revenues and net income from 2009, which was an exceptional year. Global Transaction Services also performed well in 2010. Revenue increased from 2009 to 2010 by 3%, and the business also continued to record improvements in other key financial metrics such as average deposits (up 10% for the year) and assets under custody (up 4% for the year). Mr. Havens has been devoted to rebuilding the capabilities of businesses in the Institutional Clients Group, with a particular emphasis on recruiting additional talent in targeted businesses. He has also focused the Institutional Clients Group on developing deeper relationships that can most benefit from Citi’s business and geographic diversity, and has proactively engaged in changing the business focus from driving revenues to serving clients.

 

   

Mr. Medina-Mora, CEO, Consumer Banking for the Americas and Chairman of the Global Consumer Council; Chairman and CEO, Latin America and Mexico: In awarding compensation, the committee considered Mr. Medina-Mora’s three principal roles. He is responsible for: consumer banking in the Americas, driving Citi’s global consumer strategy as chairman of the Global Consumer Council, and regional leadership of the entire Citi franchise in Latin America. Accordingly, Mr. Medina-Mora

 

 

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occupies a position that is unique in the financial services industry. Mr. Medina-Mora has assumed responsibilities for consumer banking across North America and has been effective in attracting new leadership with strong consumer banking skills. Latin America is a region that has generated significant growth and has the potential for continued growth in the future. For the year ending December 31, 2010, the Latin America region had $12.7 billion in revenue and $3.6 billion in net income for Citicorp.

 

4. Market data. The committee reviewed market data regarding compensation in the financial services industry and, where available, market compensation for an executive’s role in a major financial services institution. This data on total annual compensation (base plus annual incentive) was collected by management from publicly available sources and third-party proprietary databases based on parameters set by management. Bank of America, Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS are the companies Citi considers to be the peer group for purposes of senior executive compensation. These companies were selected because they compete for executive talent with Citi and they comprise the complete set of global financial services institutions with substantial U.S. operations and lines of business that are sufficiently similar to Citi’s material lines of business. Other financial services institutions based in the U.S. and elsewhere do not have senior management roles with comparable responsibilities, even though some of their lines of business may compete with Citi in particular markets. The peer group is unchanged from last year, and Citi is seeking to maintain consistency in the peer group going forward. The market information on total annual compensation provided background and context for committee decisions; the information regarding pay practices of the peer group informed but did not govern the committee’s award determination for any individual named executive officer or any other
 

executive. In 2010, Citi did not benchmark the performance of the peer group against Citi’s performance as part of the compensation comparison, as continued market volatility made such comparisons less meaningful, although such comparisons to peer performance may be considered in the future.

 

Management and the committee determined that Mr. Corbat’s and Mr. Medina-Mora’s roles were not replicated at other financial institutions, and therefore market data did not frame the compensation decisions for those executives. Instead, the committee considered their past compensation history and compensation of others at Citi with related or somewhat similar roles to provide context for the compensation recommendation amounts.

 

Determination process. After reviewing the comparison data, the committee then determined the nominal amount of each named executive officer’s incentive compensation, based on recommendations made by the CEO. In summary, the committee considered company performance, risk ratings and individual achievements, framed by market or comparable data. Formulaic approaches or targets were not used to determine the amounts, consistent with the committee and Citi’s belief that the lack of flexibility inherent in formulas could inadvertently encourage undesirable behavior (e.g., favoring one financial measure to the exclusion of other important metrics and values, including non-financial values).

 

Assessment of CEO performance.    As stated previously, Mr. Pandit declined salary in excess of $1 and an incentive award for 2010. Nonetheless, Mr. Pandit has led the restructuring that has returned the company to profitability and has positioned the company for future growth. Mr. Pandit’s numerous accomplishments are reflected in the following company-wide achievements:

 

 

Citi’s return to profitability through execution on articulated strategies. Citi earned $10.6 billion in 2010, compared to a net loss in 2009.

 

 

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The price of Citi common stock increased by over 42% in 2010, and Citi strengthened its capital base, such that Citi is now one of the best capitalized large banks in the world. This has been accomplished by focusing on growth within Citicorp while reducing Citi Holdings.

 

 

Citi’s exit from TARP. The U.S. government has recovered all of the $45 billion invested in Citi, plus approximately $12.3 billion in profits. Sales of the U.S. government holdings in Citi common stock were completed in 2010, along with sales of other securities held by the U.S. government.

 

 

Successful Citi Holdings strategy. Citi Holdings has been reduced more rapidly than anticipated. At December 31, 2010, the assets of Citi Holdings were less than 20% of Citi’s balance sheet and losses in Citi Holdings have declined by more than 50% since 2009.

 

 

Reorganization of senior leadership. Senior management has been reframed to better align management approaches with the execution of Citi’s strategy.

 

Mr. Pandit has also led the following initiatives, among many:

 

   

Deriving momentum from Citi’s businesses in those regions generating the lion’s share of global growth. As an element of execution on Citi’s global strategy, Citi’s business in the Asia/Pacific region has been the largest contributor to the company’s net income. Citi’s deposits in the region stand at record highs, and Citi assisted Asian clients with raising more than $150 billion from the capital markets, including the largest-ever initial public offerings in Hong Kong, India, Singapore and the Philippines. In Latin America, Citi executed a $67 billion equity offering by Petrobras, the largest transaction in

   

global capital markets’ history. In 2010, Banamex added almost one million new customers to its rolls. Banamex’s total deposits and assets under management grew 10% in the last year and currently represent more than 20% of all financial savings in Mexico.

 

   

Attraction of new leadership in key areas throughout Citi. In 2010, Mr. Pandit was instrumental in attracting significant new leadership to Citi, particularly in the credit cards and North America consumer areas, in investment banking, and in public affairs.

 

   

Creating a culture of responsible finance. Mr. Pandit has led Citi’s multiple initiatives to strengthen its culture of responsible finance. In addition to continuous improvements in Citi’s risk management systems, Citi has become a leader in helping people affected by the financial crisis remain in their homes. Since 2007, Citi has helped more than one million borrowers in their efforts to avoid potential foreclosure proceedings. In 2010, Citi worked with two non-profit partners to create the Communities at Work Fund — at $200 million, one of America’s largest vehicles for connecting private capital with underserved communities.

 

Although the committee respects Mr. Pandit’s decision again to decline salary or an incentive award for 2010, the committee believes that his performance would merit a different outcome, and beginning in 2011, the committee intends to compensate Mr. Pandit commensurate with the job of CEO of Citi. Effective January 18, 2011, the committee increased Mr. Pandit’s rate of base salary to $1,750,000 per year.

 

 

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Awards Made by the Committee for 2010

On the basis of the foregoing decision-making process, the committee approved the following compensation amounts for 2010 to the named executive officers:

 

Name   

Cash

Salary

     Cash
Bonus
     Salary
Stock
    


CAP

Award

     Long Term
Restricted
Stock Award
     Total  

Vikram Pandit

   $ 1       $ 0       $ 0       $ 0       $ 0       $ 1   

John Gerspach

   $ 500,000       $ 0       $ 4,166,667       $ 0       $ 2,333,333       $ 7,000,000   

Michael Corbat

   $ 500,000       $ 3,400,000       $ 0       $ 5,100,000       $ 0       $ 9,000,000   

John Havens

   $ 500,000       $ 0       $ 9,000,000       $ 0       $ 4,750,000       $ 14,250,000   

Manuel Medina-Mora

   $ 546,966       $ 0       $ 7,450,911       $ 0       $ 3,998,939       $ 11,996,816   

 

The terms of these awards are described in the next section. The table above shows how the committee viewed its compensation decisions for 2010 but is not a replacement for the disclosure required by the Summary Compensation Table. More detail on the differences between the committee’s decisions and the disclosure in the Summary Compensation Table is included in the 2010 Equity Awards section of this Compensation Discussion and Analysis below.

 

Annual Incentive Compensation Structure

The compensation structures for 2010 for the named executive officers are described below. The compensation structure for Mr. Pandit, Mr. Gerspach, Mr. Havens and Mr. Medina-Mora was regulated by EESA, as these four executive officers are members of the 2010 Top 25. Another named executive officer, Mr. Corbat, is not part of the 2010 Top 25 and accordingly his compensation structure is the same as the generally applicable structure for Citi’s other most highly compensated employees. As required by EESA and the regulations thereunder, the 2010 Top 25 employees were identified based on 2009 compensation determined under SEC rules governing proxy disclosures, which is a different basis than that required to be used to identify the named executive officers for this Compensation Discussion and Analysis.

 

 

Mr. Pandit. In February 2009, CEO Vikram Pandit advised Citi’s board that he would accept no incentive compensation and would accept base pay at a rate of $1 per year until Citi returns to

   

sustained profitability. Based on Mr. Pandit’s performance against the company’s strategic priorities, in September 2010 the committee determined that Mr. Pandit merited consideration for an incentive award for 2010; however, based on Mr. Pandit’s commitment, the committee agreed to award him no other compensation for 2010. Effective January 18, 2011, Mr. Pandit’s base salary was increased to $1,750,000 annually in recognition of his current role and continuing value to the franchise, and he will be considered for incentive compensation in 2011.

 

 

Other named executive officers. The awards made to other named executive officers are generally subject to deferral (including sale restrictions) or clawback, or both, as explained in more detail below:

 

   

Cash base salary. Citi generally limits the base salary of most senior executives to $500,000. The payment of cash compensation reflects the need to provide some liquidity to attract and retain executives. In general, Citi believes that most compensation payable to executive officers should be at risk to incentivize performance.

 

   

Salary stock. As a component of compliance with EESA, the committee paid salary stock to the members of the 2010 Top 25 in a manner consistent with the salary stock payments made in 2009 under the Special Master rulings, pursuant to which compensation in the form of immediately vested stock (salary stock) was considered to be consistent with the public

 

 

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interest if structured in the long-term interest of stakeholders. Accordingly, salary stock is immediately vested but is subject to sale restrictions. The salary stock paid to Mr. Gerspach, Mr. Havens and Mr. Medina-Mora for 2010 net of tax withholdings is transferable over a 12-month period beginning in January 2011. There are no provisions for early release of these transfer restrictions in the event of retirement, involuntary termination of employment or change in control, or for any other reason. Citi does not intend to award salary stock in 2011 or future years, as it is no longer a TARP company; Citi believes that executive behavior can in many cases be better aligned with stockholder interests and risk mitigation principles by paying a small portion of total compensation of some executive officers in cash salary and maintaining the flexibility to award more than one-third of total compensation in properly structured incentive compensation.

 

   

Long-term restricted stock. Annual incentive awards for 2010 were awarded to Mr. Gerspach, Mr. Havens and Mr. Medina-Mora in the form of “long-term restricted stock” (LTRS) as required by EESA, and they received no other incentive compensation for 2010. The LTRS awards will not vest unless the executive remains employed until January 20, 2014 and are subject to an additional performance-based vesting condition applicable to LTRS awards to executive officers, namely, if Citi has had pre-tax net losses during any of the years of the deferral period, the committee may exercise its discretion to eliminate or reduce the number of shares that vest for that year. The LTRS awards are subject to clawbacks satisfying legal requirements and an additional clawback for noncompliance with risk policies, as described in more detail below under “Clawbacks applicable to named executive officer compensation.” LTRS awards do not vest in the event of retirement, involuntary termination of employment or change in control, but vesting would occur upon death or disability. As it is no longer a

   

TARP company, Citi does not intend to award LTRS in the future, although Citi’s deferred stock awards will incorporate some of the same features. Citi believes that it may be appropriate to award deferred stock that vests on a ratable basis and over a period longer than three years to provide for competitive compensation opportunities and better alignment with risk mitigation principles.

 

   

Capital Accumulation Program. Mr. Corbat’s incentive compensation was awarded under the structure generally applicable throughout the company for executive officers and other highly compensated employees who did not receive LTRS, except as may have been required by local regulators. Under the structure, 40% of his total incentive was payable in immediately vested cash, and the remaining 60% was awarded in Citi common stock under CAP. Mr. Corbat’s CAP awards, like most other CAP awards, vest 25 percent per year over a four-year period, and the CAP awards made to executive officers for 2010 are also subject to a performance-based vesting condition. If Citi has had pre-tax net losses during any of the years of the deferral period, the committee may exercise its discretion to eliminate or reduce the number of shares that are scheduled to vest after the end of the loss year. CAP awards are also subject to clawbacks satisfying legal requirements and an additional clawback for noncompliance with risk policies, as described in more detail below under “Clawbacks applicable to named executive officer compensation.”

 

   

No perquisites. Citi has imposed substantial limits on perquisites for many years, as Citi believes that perquisites are in most cases inconsistent with its philosophy of pay for performance. At the same time, incidental perquisites may have advantages to Citi if they enable a senior executive to fulfill his or her employment duties. None of the named executive officers received any perquisites for 2010.

 

 

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No supplemental executive retirement plans (SERPs) or nonqualified retirement plans. Citi does not generally provide for current benefit accruals under nonqualified executive retirement programs except to specified grandfathered and expatriate populations. None of the named executive officers was eligible for additional benefit accruals under any of these plans in 2010, although Mr. Gerspach is eligible for certain grandfathered benefits that were frozen at December 31, 2001.

 

   

No severance agreements. The named executive officers are not eligible for any severance pay upon termination of employment in excess of any benefit that may be available under Citi’s broad-based separation pay plans or local law.

 

 

Qualified retirement plans. The purpose of qualified retirement plans is to provide employees with tax-advantaged savings opportunities and income after retirement or other termination from Citi. Eligible pay under these plans is limited to Internal Revenue Code (IRC) annual limits ($245,000 for 2010). Eligible Citi employees, including the named executive officers, will receive a matching contribution for 2010 under the Citigroup 401(k) Plan. For 2010, the 401(k) plan provided a matching contribution of up to 4% of eligible pay to all U.S. employees, subject to IRC annual limits, and that maximum has been increased to 6% of eligible compensation for 2011. Additional information regarding the pension benefits of the named executive officers follows the Pension Benefits Table.

 

 

Health and insurance plans. The named executive officers, other than Mr. Medina-Mora, are eligible to participate in the company-sponsored U.S. benefit programs for active employees on the same terms and conditions as those made available to U.S. salaried employees generally. Mr. Medina-Mora is eligible to participate in the company-sponsored benefit programs for active Mexico employees on the same terms and conditions as those made available to Mexico salaried employees.

Clawbacks applicable to named executive officer compensation.    For 2010, all deferred stock awarded under CAP to any employee worldwide, including executive officers, is subject to the following clawback. Nonvested amounts may be forfeited if the incentive award was based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, or if the employee’s employment terminates on account of misconduct. Specifically, incentive awards are subject to cancellation or forfeiture by Citi if the committee determines that the employee (a) received an award based on materially inaccurate financial statements (which includes, but is not limited to, statements of earnings, revenues or gains) or any other materially inaccurate performance metric criteria, (b) knowingly engaged in providing inaccurate information (including knowingly failing to timely correct inaccurate information) relating to financial statements or performance metrics, or (c) materially violated any risk limits established or revised by senior management, a business head and/or risk management, or any balance sheet or working or regulatory capital guidance provided by a business head. Incentive compensation is also subject to cancellation by Citi if the employee’s employment terminates on account of misconduct. The clawback applies to the vested and nonvested LTRS awarded to the named executive officers. As stated previously, CAP awards granted in the form of deferred stock that continues to vest after termination of employment will remain subject to clawback after termination of employment.

 

Additionally, since 2002, the board has had in effect a “clawback” policy based upon SARBANES-OXLEY. Citi’s Corporate Governance Guidelines require 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

 

 

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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.

 

2010 Equity Awards

In December 2009, the SEC issued final regulations generally requiring that the grant date fair value of equity awards be disclosed in the Summary Compensation Table for the year in which the equity awards were granted, not the year to which the services relate. As a result, the equity awards shown in the Summary Compensation Table may not relate to performance in 2010. The table set

forth below summarizes the difference between the equity award values granted by the committee for service during 2010 and the aggregate equity award values appearing in this year’s Summary Compensation Table for awards granted in 2010. The first column (after the executives’ names) below shows values for the stock awards that were made by the committee for 2010. The second column shows the values for stock 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 values for 2010) and the second column (the values required by SEC rules to be included in the Summary Compensation Table).

 

 

Name


   Stock
Awarded
for 2010


     Value of
Stock Awards
Shown in
2010
Summary
Compensation
Table


     Difference
Between Stock
Awarded for
2010 and
Summary
Compensation
Table Values


 

Vikram Pandit

   $ 0       $ 0       $ 0   

John Gerspach

   $ 6,500,000       $ 4,166,667       $ 2,333,333   

Michael Corbat

   $ 5,100,000       $ 4,108,500       $ 991,500   

John Havens

   $ 13,750,000       $ 9,000,000       $ 4,750,000   

Manuel Medina-Mora

   $ 11,449,850       $ 7,450,911       $ 3,998,939   

 

2010 Key Employee Profit Sharing Plan (KEPSP). Certain key business and functional leaders, including Mr. Corbat, received awards under the KEPSP in 2010. Unlike Citi’s annual discretionary incentive awards, KEPSP awards provide an incentive award based on a multi-year period and therefore are intended to encourage a focus on the long-term performance of Citi in a manner that appropriately balances incentives and risk, thereby aligning these employees’ interests with those of Citi’s stockholders and other stakeholders. The structure of the program is also intended to encourage partnership behavior across a specified group of key executives who together constitute part of the management team the committee seeks to incent and retain. For the 2010 KEPSP awards, the performance measurement period is January 1, 2010 through December 31, 2012. On February 14, 2011, the committee approved awards under the 2011 KEPSP for Mr. Gerspach, Mr. Havens,

Mr. Medina-Mora and other executives. The 2011 KEPSP awards are similar to the 2010 KEPSP awards; however, the performance measurement period for the 2011 awards is January 1, 2011 through December 31, 2012. A discussion of the terms of the 2010 KEPSP is provided under the “General discussion of the Summary Compensation Table and Grants of Plan-Based Awards Table.”

 

Important compensation policies affecting named executive officers for 2010

 

Stock ownership commitment. While stock ownership commitments recently have become widely recognized hallmarks 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 members of senior management are generally required to retain at least 75% of the equity awarded to them as incentive

 

 

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compensation (other than cash equivalents and net of amounts required to pay taxes and exercise prices) as long as they are members of senior management. Certain other executives are required to retain at least 50% of the same categories of net equity awards for the same period of time. This policy is intended to align further the interests of senior management with the interests of stockholders.

 

 

Personal trading and anti-hedging policies. Citi has adopted a personal trading policy that limits trading by management and other employees in Citi stock and restricts covered employees from engaging in hedging, derivative or other transactions that have an economically similar effect that would undermine the incentives created by deferred stock compensation structures and stock ownership commitments. The named executive officers are among those covered by these policies.

 

 

Dividend equivalents. As authorized by its stockholder-approved stock incentive plans, Citi pays dividend equivalents on most nonvested restricted or deferred stock awards under CAP and certain other stock awards on the same basis to all employees receiving such awards. Outstanding option awards are not eligible for dividend equivalents. Certain outstanding senior executive incentive awards, such as the performance vesting stock awards made in respect of 2010 and 2008 performance, do not pay dividend equivalents on nonvested stock. 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. Since February 2009, Citi has not paid dividends or dividend equivalents on its common stock. In 2010, the named executive officers received dividend equivalents as follows:

Name


   Amount Paid as
Dividend Equivalents
in 2010 on Restricted
and/or Deferred
Stock Awards


 

Vikram Pandit

   $ 0   

John Gerspach

   $ 0   

Michael Corbat

   $ 0   

John Havens

   $ 0   

Manuel Medina-Mora

   $ 0   

 

 

Timing of awards. The incentive awards to the named executive officers for performance in 2010 were made on January 18, 2011, in accordance with Citi’s customary practice of making incentive awards in January for performance in the prior year. The closing price of Citi common stock on the date of grant was used to determine the number of LTRS shares awarded to the named executive officers who received the awards in accordance with last year’s practices as approved by the Special Master, and the average of the closing prices of the five trading days immediately prior to the grant date was used to determine the number of shares awarded to all eligible employees under CAP in accordance with longstanding Citi practice regarding CAP. Different approaches were used as a result of the differing histories of the awards.

 

 

Grants of stock options. The committee did not award any options to the named executive officers for or during 2010. In addition, none of the named executive officers received reload options in 2010, 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 to anyone except to the extent required by the terms of previously granted options.

 

 

Pricing of stock options. To facilitate compliance with SEC disclosure rules, Citi’s current equity plan generally provides that for executive officers, the exercise price of options is no less than the closing price of a share of Citi common stock on the NYSE on the date on which the option was granted. For other employees, the exercise price is no less than the closing price of a share of Citi common stock on the NYSE on the

 

 

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trading date immediately preceding the date on which the option was granted, so that on the date of grant, the committee has information available that describes the cost of the actual grant to Citi. Citi believes that both pricing approaches are appropriate measures of fair market value for options with exercise prices that are intended to be at market on the date of grant.

 

 

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 regarding executive compensation and other compensation matters as requested by the committee. ICCA performs no work for Citi other than its assignments from the committee, and was paid total fees of $51,775 in 2010. ICCA meets separately with the committee and its chair outside the presence of management. For the 2010 compensation year, the committee did not engage any other compensation consultant.

 

 

Tax deductibility of the named executive officers’ incentive and retention compensation. While Citi seeks to preserve deductibility of compensation paid to the named executive officers to the extent permitted by law, Citi retains the flexibility to provide nondeductible compensation arrangements necessary to recruit and retain its executives. The committee decided to award compensation to the named executive officers for 2010 based on the principles previously described in order to compensate the executives considered to be critical to managing and improving Citi’s performance in the future, and portions of those awards were not deductible for federal income tax purposes. Non-deductible compensation was paid to the named executive officers for 2010 due to EESA’s limitations on deductions for compensation paid to the named executive officers. Under EESA, Citi

   

must not claim deductions for federal income tax purposes in excess of $500,000 for any senior executive officer’s compensation for 2010 that would not be deductible under IRC section 162(m)(5). Since December 2010, EESA’s restrictions on the deductibility of executive compensation no longer applied to compensation paid by Citi. As noted herein, Proposal 4 in this proxy statement is a proposal requesting that stockholders approve a new plan intended to preserve the deductibility of incentive compensation paid to executive officers for 2011 and future years. Citi does not currently have such a plan in place.

 

 

Policy on tax “gross-ups. Citi does not allow tax gross-ups, either directly or indirectly, for any of the named executive officers or the 2010 Top 25, except through bona fide tax equalization programs for expatriates as provided under Citi’s Expatriate Program. None of the current named executive officers are expatriates. The policy against tax gross-ups is part of Citi’s pay for performance philosophy.

 

 

Change in control agreements. Citi’s omnibus 2009 Stock Incentive Plan provides that no awards made under that plan may vest or be paid solely as a result of a change in control of Citi, although the named executive officers are entitled to some payments in the event of a change in control of Citi under the terms of prior equity awards. 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 does not provide for change in control protection as part of individual employment arrangements.

 

 

Policy on severance pay and “golden parachutes.” The named executive officers do not participate in any executive severance programs and do not have pre-negotiated severance agreements, although they may be eligible to participate in broad-based separation pay programs. In 2010, Citi changed CAP to eliminate circumstances in which the vesting and/or delivery of awards could accelerate in

 

 

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the event of involuntary termination of employment. This change was made to keep terminated employees at risk for changes in Citi’s stock price to the same extent as current employees.

 

 

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 be as short 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. None of the named executive officers has an employment agreement with Citi.

 

 

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Compensation Information

For a complete understanding of actions taken by the committee with respect to compensation awards for 2010, please see the “Awards Made by the Committee for 2010” section of the Compensation Discussion and Analysis.

 

2010 Summary Compensation Table

The following table shows Citi’s compensation for any person serving as chief executive officer or chief financial officer during 2010 and Citi’s three other most highly compensated executive officers, with their titles in effect on December 31, 2010. The form and content of the table are prescribed by SEC regulations.

 

Name and

Principal Position

  Year(1)    

Salary

($)

   

Bonus

($)(2)

   

Stock

Awards

($)(3)

   

Option

Awards

($)(4)

   

Non-

Equity

Incentive

Plan

Compen-

sation

($)

   

Change
in

Pension

Value

and
Nonqualified

Deferred

Compen-

sation

Earnings

($)(5)

   

All Other

Compen-

sation

($)(6)

   

Total

($)

 

Vikram Pandit

CEO

    2010      $ 1 (7)    $ 0      $ 0      $ 0      $ 0      $ 0      $ 0      $ 1   
    2009      $ 125,001      $ 0      $ 0      $ 0      $ 0      $ 0      $ 3,750      $ 128,751   
    2008      $ 958,333      $ 0      $ 28,830,000 (8)    $ 8,432,911 (9)    $ 0      $ 0      $ 16,193      $ 38,237,437   

John Gerspach

CFO

    2010      $ 500,000      $ 0      $ 4,166,667      $ 0      $ 0      $ 51,995      $ 9,800      $ 4,728,462   
    2009      $ 416,667      $ 0      $ 4,583,333 (10)    $ 0      $ 0      $ 49,117      $ 14,700      $ 5,063,817   

Michael Corbat

CEO, Citi Holdings

    2010      $ 500,000      $ 3,400,000      $ 4,108,500 (11)    $ 0      $ 0      $ 4,460      $ 9,800      $ 8,022,760   

John Havens(12)

CEO, Institutional Clients Group

    2010      $ 500,000      $ 0      $ 9,000,000      $ 0      $ 0      $ 0      $ 9,800      $ 9,509,800   
    2009      $ 500,000      $ 0      $ 10,327,374 (13)    $ 434,380 (14)    $ 0      $ 0      $ 14,700      $ 11,276,454   
                                                                       

Manuel Medina- Mora

CEO,

Consumer Banking for the Americas and Chairman of the Global Consumer Council Chairman and CEO, Latin America & Mexico

    2010      $ 546,966 (15)    $ 0      $ 7,450,911      $ 0      $ 0      $ 2,119,018      $ 0      $ 10,116,895   
    2009      $ 546,966      $ 0      $ 9,328,010 (16)    $ 361,984 (14)    $ 0      $ 163,047      $ 0      $ 10,400,007   

(1)

Compensation for Mr. Gerspach, Mr. Havens and Mr. Medina-Mora is provided only for 2010 and 2009, because they were not named executive officers in 2008. Compensation for Mr. Corbat is provided only for 2010, because he was not a named executive officer in 2009 or 2008.

(2)

Amounts in this column show cash bonuses. Because EESA governed the structure of executive compensation for 2010, Mr. Corbat was the only named executive officer eligible for a cash bonus.

(3)

The values in this column represent the aggregate grant date fair values of the awards. Any 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 2010. The values shown include salary stock amounts paid consistent with applicable legal requirements. Salary stock

 

(footnotes continued on following page)

 

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(footnotes continued from previous page)

 

 

payments were made to the named executive officers in 2010 for service in 2010 as follows: $4,166,667 to Mr. Gerspach, $9,000,000 to Mr. Havens and $7,450,911 to Mr. Medina-Mora.

(4)

The values in this column represent the aggregate grant date fair values of the awards, as described in more detail in the applicable footnotes below. The assumptions made when calculating the amounts in this column for 2009 and 2008 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 2009.

(5)

These amounts represent the increases in the present value of pension benefits for Mr. Gerspach, Mr. Corbat and Mr. Medina-Mora, as more fully described in the Pension Benefits Table. Mr. Gerspach’s benefit under The Citigroup Pension Plan increased $30,946 and his benefit under the Supplemental ERISA Compensation Plan of Citibank, N.A. and Affiliates increased $21,049. Mr. Corbat’s entire pension benefit is provided under The Citigroup Pension Plan. Mr. Medina-Mora’s benefit under the Banamex Pension Plan increased by $2,118,255 and his statutory seniority premium increased by $763. 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.

(6)

Set forth below is a breakdown of All Other Compensation (including personal benefits):

 

Name   

Security

Services/

Systems

($)

    

Aircraft

($)

    

Ground

Transportation

($)

    

Financial and

Tax Planning

($)

 

Vikram Pandit

   $ 0       $ 0       $ 0       $ 0   

John Gerspach

   $ 0       $ 0       $ 0       $ 0   

Michael Corbat

   $ 0       $ 0       $ 0       $ 0   

John Havens

   $ 0       $ 0       $ 0       $ 0   

Manuel Medina-Mora

   $ 0       $ 0       $ 0       $ 0   
Name   

Medical

and
Dental

Benefits

($)

    

401(k) Plan

Matching

Contributions

($)

    

Tax

Reimbursements

($)

     Total ($)  

Vikram Pandit

   $ 0       $ 0       $ 0       $ 0   

John Gerspach

   $ 0       $ 9,800       $ 0       $ 9,800   

Michael Corbat

   $ 0       $ 9,800       $ 0       $ 9,800   

John Havens

   $ 0       $ 9,800       $ 0       $ 9,800   

Manuel Medina-Mora

   $ 0       $ 0       $ 0       $ 0   

 

Mr. Gerspach, Mr. Corbat and Mr. Havens received 401(k) plan matching contributions pursuant to the formula used for all eligible U.S. employees.

 

(7)

Mr. Pandit agreed to accept $1 per year in salary effective in February 2009. Amounts in excess of $1 for 2009 reflect compensation paid in 2009 prior to his announcement. Effective January 18, 2011, Mr. Pandit’s annual rate of base salary was increased to $1,750,000.

(8)

In connection with his appointment as CEO, the committee made equity awards to Mr. Pandit in January 2008 that were designed to incentivize and reward him based on the future performance of Citi. The award of 1 million shares, with an aggregate grant date fair value of $26,330,000 on the award date, had a market value of $4,730,000 on December 31, 2010.

(9)

These options were granted in connection with Mr. Pandit’s promotion to CEO and have a 10-year term. One-third of the options have an exercise price equal to the grant date price ($24.40), one-third have an exercise price that is 25% above the grant date price ($30.50), and one-third have an exercise price that is

 

(footnotes continued on following page)

 

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50% above the grant date price ($36.60). The options will only have value to the extent that the Citi stock price exceeds each exercise price after the vesting of such options, and they currently are significantly “out of the money.”

(10)

This amount was awarded for performance in 2009 and includes a salary stock payment with a grant date fair value of $2,916,666 and an award under the Long Term Restricted Stock (LTRS) program of $1,666,667. See “General Discussion of the Summary Compensation Table and Grants of Plan-Based Awards Table” following the Grants of Plan-Based Awards Table for a more detailed discussion of award terms.

(11)

This amount was awarded for performance in 2009 and includes salary stock with a grant date fair value of $373,500 and an award under the Stock Incentive Payment Program (SIPP) of $3,735,000. See “General Discussion of the Summary Compensation Table and Grants of Plan-Based Awards Table” following the Grants of Plan-Based Awards Table for a more detailed discussion of award terms.

(12)

Effective January 19, 2011, Mr. Havens was named to the additional roles of President and Chief Operating Officer of Citigroup Inc.

(13)

This amount includes $1,327,374 attributable to performance-vesting equity awards made to Mr. Havens in January 2009 in connection with 2008 performance, a salary stock payment of $475,000 and LTRS awards and Stock Incentive Awards (SIAs) in an aggregate amount of $8,525,000 in respect of 2009 performance. If Citi’s stock price achieves the targets of $10.61 and $17.85 set forth in the awards before January 14, 2013, the performance-vesting equity awards will have an aggregate value of $8,223,673 on the target price attainment dates. See “General Discussion of the Summary Compensation Table and Grants of Plan-Based Awards Table” following the Grants of Plan-Based Awards Table.

(14)

These options were awarded in January 2009 in connection with 2008 performance and have exercise prices of $10.61 or $17.85. The options will only have value to the extent that the Citi stock price exceeds each exercise price after the vesting of such options, and they currently are significantly “out of the money.” See “General Discussion of the Summary Compensation Table and Grants of Plan-Based Awards Table” following the Grants of Plan-Based Awards Table.

(15)

Mr. Medina-Mora’s base U.S. dollar salary is converted to pesos on a monthly basis using the exchange rate in effect at the time of payment.

(16)

This amount includes $849,807 attributable to performance-vesting equity awards made to Mr. Medina-Mora in January 2009 in connection with 2008 performance, a salary stock payment of $450,000 and LTRS awards and SIAs in an aggregate amount of $8,028,203 in respect of 2009 performance. If Citi’s stock price achieves the targets of $10.61 and $17.85 set forth in the awards before January 14, 2013, the performance-vesting equity awards will have an aggregate value of $5,264,933 on the target price attainment dates. See “General Discussion of the Summary Compensation Table and Grants of Plan-Based Awards Table” following the Grants of Plan-Based Awards Table.

 

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2010 Grants of Plan-Based Awards

The table below provides information regarding awards made by the committee in 2010, including each equity award’s grant date fair value. The equity awards made in January 2010 were made for the 2009 performance year, and the other equity awards listed in the table are salary stock awards granted for service in 2010. The table accordingly shows equity awards attributable to more than one performance year, in accordance with SEC requirements.

 

Name  

Grant Date

   

Estimated Future

Payouts Under

Non-Equity
Incentive

Plan Awards

 

   

Estimated Future

Payouts Under

Equity Incentive

Plan Awards

 

   

All Other

Stock

Awards:

Number

of

Shares

of Stock

or Units(1)

(#)

   

All Other

Option

Awards:

Number

of

Securities

Under-
lying

Options

(#)

   

Exercise

or Base

Price of

Option

Awards

($/Sh)

   

Grant

Date Fair

Value of

Stock and

Option

Awards($)

 
   

Thresh-

old

($)

   

Target

($)

   

Maxi-

mum

($)

   

Thresh-

old

(#)

   

Target

(#)

   

Maxi-

mum

(#)

         

Vikram Pandit

    —          —          —          —          —          —          —          —          —          —          —     

John Gerspach

    9/30/2010        —          —          —          —          —          —          801,282        —          —        $ 3,125,000   
      10/29/2010        —          —          —          —          —          —          83,266        —          —        $ 347,222   
      11/30/2010        —          —          —          —          —          —          82,671        —          —        $ 347,222   
      12/30/2010        —          —          —          —          —          —          72,945        —          —        $ 347,222   

Michael Corbat

    1/19/2010        —          —          —          —          —          —          105,508 (2)      —          —        $ 373,500   
      1/19/2010        —          —          —          —          —          —          1,062,286 (3)      —          —        $ 3,735,000   
      10/25/2010      $ 2,208,360      $ 2,493,680 (4)      —          —          —          —          —          —          —        $ —     

John Havens

    9/30/2010        —          —          —          —          —          —          1,730,769        —          —        $ 6,750,000   
      10/29/2010        —          —          —          —          —          —          179,856        —          —        $ 750,000   
      11/30/2010        —          —          —          —          —          —          178,571        —          —        $ 750,000   
      12/30/2010        —          —          —          —          —          —          157,563        —          —        $ 750,000   

Manuel Medina-Mora

    9/30/2010        —          —          —          —          —          —          1,432,867        —          —        $ 5,588,183   
      10/29/2010        —          —          —          —          —          —          148,899        —          —        $ 620,909   
      11/30/2010        —          —          —          —          —          —          147,835        —          —        $ 620,909   
      12/30/2010        —          —          —          —          —          —          130,443        —          —        $ 620,909   

(1)

Unless otherwise indicated, awards in this column were made for 2010 service, are fully vested as “salary stock” and are subject to transfer restrictions for 12 months from the date earned. See discussion below under “Citi Stock Payment Program.” The awards were made under the 2009 Stock Incentive Plan.

(2)

This award was made for 2009 service, is fully vested as “salary stock” and is subject to transfer restrictions for 12 months from the date earned. See discussion below under “Citi Stock Payment Program.” The award was made under the 2009 Stock Incentive Plan.

(3)

This stock incentive award vests over three years. See discussion below under “2009 Stock Incentive Payment Program.” The award was made under the 2009 Stock Incentive Plan.

(4)

This award was made under KEPSP. KEPSP terms do not provide for a target award amount, and in cases of non-equity incentive plans without target award amounts, SEC rules require that an estimate be provided in this column based on the prior year’s financial results. Accordingly, the amount shown as a target is the amount that would have been earned if awards were based on performance through December 31, 2010. Actual awards under the program will be based on cumulative financial results for the three-year period January 1, 2010 through December 31, 2012. KEPSP will not provide payouts unless minimum financial targets are exceeded, and the amount shown as a threshold is the award amount payable to Mr. Corbat if the minimum target is achieved. KEPSP does not provide for a maximum award amount. See discussion below under “2010 Key Employee Profit Sharing Plan (KEPSP).”

 

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General Discussion of the Summary

Compensation Table and Grants of Plan-Based

Awards Table

 

Set forth below is a discussion of the awards disclosed in the Summary Compensation Table and the Grants of Plan-Based Awards Table, to the extent not described in the Compensation Discussion and Analysis. Specifically, the LTRS and CAP programs are discussed under the “Compensation Structure” section above.

 

Citi Stock Payment Program (CSPP).    As indicated in the Summary Compensation Table and Grants of Plan-Based Awards Table, Mr. Gerspach, Mr. Corbat, Mr. Havens and Mr. Medina-Mora received payments under the CSPP in 2010. Under the CSPP, eligible employees have a portion of their compensation paid in the form of fully vested Citigroup common stock (salary stock), subject to a restriction on sale or transfer. Certain employees who were either (a) senior executive officers for 2010 or 2009, (b) among the top 100 highest paid employees of Citi for 2009 or (c) among the top 20 highest paid employees Citi for 2010 were eligible to receive CSPP payments. For 2010 service, stock payments were made to eligible employees beginning on September 30, 2010 and on each month-end thereafter during 2010, and shares are subject to a 12-month sale restriction effective from the date earned, such that sales restrictions lift on a ratable monthly basis beginning in January 2011. Stock payments were made to eligible employees for 2009 service on January 19, 2010 and fully vested on that date subject to a sale restriction, which was lifted in 12 monthly installments beginning on January 20, 2010.

 

2009 Stock Incentive Payment Program (SIPP). Mr. Corbat received a SIPP award in January 2010 for performance in 2009. The SIPP is a discretionary award program consisting of awards of restricted or deferred shares of Citigroup common stock that contain terms prescribed by the Special Master. Employees who were among the top 100 highest paid employees of Citi for 2009, other than senior executive officers and employees who were among the top 20 highest paid employees of Citi for 2009, were eligible for awards under the SIPP. One third

of SIPP shares granted on January 19, 2010 are scheduled to vest on each of January 20, 2011, January 20, 2012, and January 20, 2013. All vested SIPP shares are subject to a sale restriction and may not be sold or transferred prior to the later of January 20, 2013 or one year after the regularly scheduled vesting date of such shares. In the event of termination of employment during the vesting period, SIPP shares may be forfeited or may vest in accordance with rules that are the same as the rules for the January 2009 CAP awards. Under those rules, employees who die, become disabled, or terminate employment after attaining the Rule of 60 or the Rule of 75 may continue to vest in their shares. For a complete discussion of the Rule of 60 and the Rule of 75, see the discussion following the Nonqualified Deferred Compensation Table. Mr. Corbat has attained the Rule of 75, so if he resigns, prior awards will continue to vest on schedule provided that he does not work for a significant competitor, as listed under the provisions of CAP. In addition, Citi’s standard clawback is part of the terms of the SIPP awards.

 

2009 Stock Incentive Awards (SIAs). Mr. Havens and Mr. Medina-Mora received SIAs in December 2009 for performance in 2009. SIAs are discretionary awards consisting of awards of fully vested restricted or deferred shares of Citigroup common stock awarded in lieu of cash incentive compensation with terms that are designed to comply with the Special Master rulings. Although the Special Master determined that a portion of the incentive compensation for 2009 payable to Mr. Havens and Mr. Medina-Mora could have been paid in cash, the committee determined that none of the named executive officers should receive any cash incentive awards for 2009 to align their interests with stockholders and other stakeholders. Accordingly, a portion of incentive compensation for 2009 was awarded to Mr. Havens and Mr. Medina-Mora in fully vested common stock, but 50% of the fully vested SIAs awarded to Mr. Havens and Mr. Medina-Mora is sale-restricted and becomes transferable on the third anniversary

 

 

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of the date of grant. There are no provisions for early release of sale restrictions in the event of retirement, involuntary termination of employment or change in control, or any other reason. These incentive awards are also subject to Citi’s clawbacks.

 

2010 Key Employee Profit Sharing Plan (KEPSP). Mr. Corbat received a KEPSP award during 2010, and the following describes the terms of the 2010 KEPSP. Each participant in the KEPSP was awarded a percentage of Citicorp’s cumulative pre-tax income earned over the performance period (the participant’s applicable percentage), provided certain conditions are met. The performance measurement period is January 1, 2010 through December 31, 2012. Under the KEPSP, Citicorp’s cumulative pre-tax income is defined as Citigroup Inc.’s income (loss) from continuing operations less the income (loss) from continuing operations of Citi Holdings, in each case as reported in the applicable Quarterly Financial Data Supplements that are filed as exhibits to the quarterly earnings releases that are publicly disclosed by Citi on SEC Forms 8-K.

 

If all conditions to vesting and payment are satisfied, the participant will generally be entitled to an initial payment equal to two-thirds of the percentage of the cumulative pre-tax income earned over the initial performance period that was awarded to the participant. The participant will also be entitled to a holdback payment equal to the remaining one-third of his or her KEPSP award, provided however, that the participant’s holdback payment will be reduced, but not below zero, if cumulative pre-tax income for the holdback period is less than zero. In general, the holdback period commences on January 1, 2013 and ends on December 31, 2013.

 

Generally, participants must remain employed by Citi through January 20, 2013 in order to vest in their KEPSP awards. Special vesting and payment conditions apply in the case of an acceleration event, which includes a participant’s death, disability, retirement, a qualifying termination or the occurrence of a qualifying transaction with

respect to the participant’s Citi employer. A participant whose employment with Citi terminates due to retirement, which is defined as a participant’s termination of employment on or following the later of January 1, 2011 and the date on which such participant is at least age 65 and the sum of such participant’s age and full completed years of service with Citi equals at least 75, will generally be entitled to a pro-rata portion of his or her KEPSP award. A “qualifying termination” generally means either (a) a termination of employment in connection with a sale or other disposition of assets of the business unit to which the participant provides substantial services or (b) the outsourcing of a participant’s job. The employer of a participant will undergo a “qualifying transaction” if, in connection with the sale or other disposition of the stock or other equity interest in the participant’s employer, Citi ceases to control or own a significant equity interest in the participant’s employer. However, if the participant is a U.S. taxpayer, the sale or disposition of the participant’s employer will not constitute a qualifying transaction with respect to such participant’s award under the plan unless such sale or disposition also constitutes a change in control under IRC Section 409A.

 

In addition to satisfying the vesting conditions, two performance conditions must be satisfied in order for participants to receive payment of vested awards. First, the committee, in conjunction with Citi’s CRO, must determine that there has not been a material adverse change in Citi’s or Citibank, N.A.’s risk profile during the applicable performance period. Second, vested awards will only be paid if the cumulative pre-tax income for Citicorp in the applicable performance periods is at least $17.5 billion.

 

If the vesting and performance conditions are satisfied, a participant’s initial payment will equal two-thirds of the product of the cumulative pre-tax income for the initial performance period and the participant’s applicable percentage. The initial payment will be paid after January 20, 2013 but no later than March 15, 2013. The participant’s holdback payment, if any, will equal the amount

 

 

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determined by multiplying (a) the lesser of cumulative pre-tax income for the initial performance period and cumulative pre-tax income for the period commencing January 1, 2010 and ending on December 31, 2013 (the entire performance period), and (b) the participant’s applicable percentage, with such amount reduced by the initial payment; provided in no case will the holdback payment be less than zero. The holdback payment, if any, will be paid after January 20, 2014 but no later than March 15, 2014. The holdback payment will be credited with notional interest equal to the 90-day, U.S. dollar-based London Interbank Offered Rate (90-day LIBOR) during the holdback period. Both the initial payment and holdback payment will be paid in cash, unless equity awards are required by regulators.

 

In addition to the vesting and performance conditions described above, nonvested or undelivered KEPSP payments are subject to forfeiture or reduction if a participant (a) received a payment based on materially inaccurate financial statements (including, but not limited to, statements of earnings, revenues or gains) or any other materially inaccurate performance metric criteria, (b) knowingly engaged in providing inaccurate information (including such participant’s knowingly failing to timely correct inaccurate information) relating to financial statements or performance metrics, (c) materially violated any risk limits established by senior management, a business head and/or risk management, or any balance sheet or working capital guidance provided by a business head, or (d) is terminated on account of gross misconduct. In the event of any material unusual or non-recurring events affecting cumulative pre-tax net income, any change in applicable tax laws or accounting principles, or any other factor as the committee may determine, the committee is required to make appropriate equitable adjustments to cumulative pre-tax income or any other provision of the KEPSP or any KEPSP award. Subject to certain limited exceptions, the committee may, in its sole discretion, modify, amend, terminate or suspend the KEPSP or any KEPSP award at any time.

2008 Performance-Vesting Stock. Mr. Havens and Mr. Medina-Mora received awards of performance-vesting stock in January 2009 for performance in 2008. Members of the management executive committee as of January 2009 (except the CEO and CFO) received 30% of their total annual incentive awards for performance in 2008 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 total annual incentive awards at market levels while linking their compensation to Citi’s future performance.

 

These performance-vesting stock awards vest if the price of a share 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 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 received an award resigns 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 shares will remain eligible to vest upon retirement for any executive who was not a named

 

 

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executive officer on the grant date after meeting an age and service rule, provided that the executive does not compete with the company’s business operations. The age and service rules are described in the narrative following the Nonqualified Deferred Compensation Table.

 

2008 Options. Mr. Havens and Mr. Medina-Mora received an option grant in January 2009 for performance in 2008. Members of the management executive committee as of January 2009 (except the CEO and CFO) received 10% of their total annual incentive awards for performance in 2008 as stock options which have an exercise price that placed the awards significantly “out of the money” on the date of grant. These options 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 January 14, 2009, when the closing price of Citi common stock 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 price. 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 vest if the executive terminates employment prior to the vesting date due to death or disability.

 

 

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Outstanding Equity Awards at 2010 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, 2010, which was $4.73.

 

          Option Awards     Stock Awards  
         

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)

 

   

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(2)

 

   

Equity

Incentive

Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned

Options (#)

    Option
Exercise
Price ($)
    Option
Expiration
Date
    Number of
Shares or
Units of Stock
That Have
Not Vested (#)
    Market Value
of Shares or
Units of Stock
That Have
Not Vested ($)
   

Equity
Incentive
Plan
Awards:

Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested (#)

   

Equity
Incentive
Plan
Awards:

Market or
Payout
Value of
Unearned
Shares,
Units
or Other
Rights That
Have Not
Vested ($)

 
Name   Grant Date     Initial     Reloads     Initial     Reloads                
Vikram Pandit     1/22/2008        500,000 (3)      —          500,000        —          —        $ 24.4000        1/22/2018        —          —          —          —     
      1/22/2008        500,000 (3)      —          500,000        —          —        $ 30.5000        1/22/2018        —          —          —          —     
      1/22/2008        500,000 (3)      —          500,000        —          —        $ 36.6000        1/22/2018        —          —          —          —     
      1/22/2008                —          —          —          —          —          —          250,000 (4)    $ 1,182,500        —          —     
John Gerspach     1/16/2001        16,082 (5)      —          —          —          —        $ 49.5477        1/16/2011        —          —          —          —     
      2/13/2002        3,860 (6)      —          —          —          —        $ 42.1097        2/13/2012        —          —          —          —     
      1/23/2004        —          3,433        —          —          —        $ 50.6900        2/13/2012        —          —          —          —     
      10/6/2006        —          10,447        —          —          —        $ 50.9900        2/13/2012        —          —          —          —     
      1/22/2008        —          —          —          —          —          —          —          7,595 (7)    $ 35,924        —          —     
      12/30/2009        —          —          —          —          —          —          —          502,008 (8)    $ 2,374,498        —          —     
Michael Corbat     1/16/2001        16,082 (5)      —          —          —          —        $ 49.5477        1/16/2011        —          —          —          —     
      1/23/2004        —          4,764        —          —          —        $ 50.6900        2/13/2012        —          —          —          —     
      10/5/2006        —          14,616        —          —          —        $ 51.0300        2/13/2012        —          —          —          —     
      7/17/2007        —          4,820        —          —          —        $ 52.4600        2/13/2012        —          —          —          —     
John Havens     1/14/2009        —          —          —          —          —          —          —          —          —          577,910 (9)    $ 2,733,514   
      1/14/2009        76,271 (10)      —          228,813        —          —        $ 10.6100        1/14/2019        —          —          —          —     
      1/14/2009        76,271 (10)      —          228,813        —          —        $ 17.8500        1/14/2019        —          —          —          —     
      12/30/2009        —          —          —          —          —          —          —          715,361 (8)    $ 3,383,658        —          —     

 

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70


Table of Contents

(table continued from previous page)

 

          Option Awards     Stock Awards  
         

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)

 

   

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(2)

 

   

Equity

Incentive

Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned

Options (#)

    Option
Exercise
Price ($)
    Option
Expiration
Date
    Number of
Shares or
Units of Stock
That Have
Not Vested (#)
    Market Value
of Shares or
Units of Stock
That Have
Not Vested ($)
   

Equity
Incentive
Plan
Awards:

Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested (#)

   

Equity
Incentive
Plan
Awards:

Market or
Payout
Value of
Unearned
Shares,
Units
or Other
Rights That
Have Not
Vested ($)

 
Name   Grant Date     Initial     Reloads     Initial     Reloads                
Manuel Medina-Mora     10/16/2001        107,219 (11)      —          —          —          —        $ 41.7833        10/16/2011        —          —          —          —     
      2/13/2002        107,219 (6)      —          —          —          —        $ 42.1097        2/13/2012        —          —          —          —     
      2/13/2002        16,259 (12)      —          —          —          —        $ 41.8971