DEF 14A 1 d291341ddef14a.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):

 

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

 

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¨  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.

 

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LOGO

 

Citigroup Inc.

399 Park Avenue

New York, NY 10043

 

March 8, 2012

 

Dear Stockholder:

 

We cordially invite you to attend Citi’s annual stockholders’ meeting. The meeting will be held on Tuesday, April 17, 2012, at 9AM (CDT) at the Hilton Anatole, 2201 North Stemmons Freeway in Dallas, Texas. Directions to the 2012 Annual Meeting are provided on page 114 of this proxy statement.

 

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.

 

Lastly, I have concluded that after 16 years on Citi’s board and three as chairman, the time has come for me to take my leave. The Board of Directors and I have complete confidence in the management team, the actions they have taken to strengthen Citi, and the course they have charted for one of the world’s truly great financial institutions. We would also like to recognize our retiring directors, Alain J.P. Belda and Timothy C. Collins for their many contributions. Alain’s leadership and wisdom over the past 15 years have been an invaluable asset for Citi. Tim joined the board at a critical moment in Citi’s history and his insights and guidance during this period have been extremely important as well.

 

Thank you for your support of Citi.

 

Sincerely,

 

LOGO

 

Richard D. Parsons

Chairman of the Board


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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 Tuesday, April 17, 2012, at 9AM (CDT) at the Hilton Anatole, 2201 North Stemmons Freeway in Dallas, Texas. Directions to the 2012 Annual Meeting are provided on page 114 of this proxy statement. 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 2012,

 

Ø  

approve additional shares under the Citigroup 2009 Stock Incentive Plan,

 

Ø  

consider an advisory vote on Citi’s 2011 executive compensation,

 

Ø  

act on certain stockholder proposals, and

 

Ø  

consider any other business properly brought before the meeting, or any adjournment or postponement thereof, by or at the direction of the board of directors.

 

The close of business on February 21, 2012 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, for at least 10 days before the annual meeting or any adjournment or postponement thereof.

 

This year, we have once again utilized the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their shareholders over the Internet. The e-proxy process allows 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 8, 2012 we sent certain of our shareholders at the close of business on February 21, 2012 a notice of the 2012 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 8, 2012


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Contents

 

About the Annual Meeting

     1   

How We Have Done

     6   

Annual Report

     6   

Corporate Governance

     6   

Nomination, Governance and Public Affairs Committee

     6   

Board Diversity

     8   

Corporate Governance Guidelines

     8   

Director Independence

     10   

Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation

     13   

Indebtedness

     15   

Business Practices

     16   

Code of Ethics for Financial Professionals

     16   

Ethics Hotline

     17   

Code of Conduct

     17   

Communications with the Board

     17   

Stock Ownership

     17   

Proposal 1: Election of Directors

     20   

Director Qualifications

     20   

The Nominees

     27   

Meetings of the Board of Directors and Committees

     34   

Meetings of Non-Management Directors

     34   

Board Leadership Structure

     34   

Board’s Role in Risk Oversight

     35   

Committees of the Board of Directors

     35   

Involvement in Certain Legal Proceedings

     39   

Directors’ Compensation

     39   

Executive Compensation

     44   

The Personnel and Compensation Committee Report

     44   

Compensation Discussion and Analysis

     44   

2011 Summary Compensation Table

    
60
  

Audit Committee Report

     79   

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

     81   

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

     83   
 


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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 2012 Annual Meeting of Citi’s stockholders.

 

Where and when will the annual meeting take place?

The meeting is scheduled to begin at 9:00AM (CDT) on April 17, 2012 at the Hilton Anatole, 2201 North Stemmons Freeway in Dallas, Texas. Directions to the 2012 Annual Meeting are provided on page 114 of this proxy statement.

 

Why are you holding the annual meeting in Dallas instead of New York City?

Citi’s board of directors chose Dallas as the location for the annual meeting because we have a large local employee and customer base and significant shareholder population in the area. Under the company’s by-laws, the board of directors designates the location for the annual meeting each year. The board has decided to alternate future meetings between New York City and other locations in the United States, starting this year in Dallas. The 2013 annual meeting will be held in New York.

 

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 of Internet Availability of the Proxy Materials (Notice) 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 2011 annual report are available on Citi’s website at www.citigroup.com. Click on “About Citi,” and then “Corporate Governance.” 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.

 

 

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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.

 

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 2012 (see page 81).

 

Approval of an amendment to the Citigroup 2009 Stock Incentive Plan (to increase authorized shares) (see page 83).

 

Approval of an advisory vote on Citi’s 2011 executive compensation (see page 102).

 

Four stockholder proposals (see page 105).

 

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 21, 2012 (the record date).

 

How many votes can be cast by all stockholders?

2,930,712,979, 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 1,465,356,491, 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 shares treated as broker non-votes for one or more proposals will nevertheless be deemed present for purposes of constituting a quorum for the annual meeting.

 

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

Yes, according to a Schedule 13 G Information Statement filed by BlackRock, Inc. and certain subsidiaries (BlackRock) on February 9, 2012, BlackRock may be deemed to beneficially own 5.26% of Citi’s common stock.

 

For further information, see “Stock Ownership—Owners of More than 5% of Our Common Stock” in this proxy statement.

 

How do I vote?

You can vote 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 control number included on your proxy card, voter instruction form or Notice.

 

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

 

If you received a Notice 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.
 

 

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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 16, 2012.

 

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.

 

How do I get a printed proxy card?

There are three ways for shareholders to request a proxy card if you received a Notice instead of the printed materials. In all three examples the shareholder will need the 12 digit Control Number printed on the Notice.

 

Requesting a proxy card

By telephone: 1-800-579-1639;

By Internet: www.proxyvote.com; and

By e-mail: sendmaterial@proxyvote.com (send a blank e-mail with the 12 digit Control Number in the subject line).

 

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 2012, for the amendment to the Citigroup 2009 Stock Incentive Plan, for Citi’s 2011 executive compensation, 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, including the advisory vote on compensation and the amendment to Citigroup’s 2009 Stock Incentive Plan, 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 is a discretionary item. NYSE member brokers who do not receive instructions from beneficial owners may vote on this proposal as follows: (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 advisory vote on Citi’s 2011 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.

 

 

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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 or stock

incentive 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.

 

 

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.
Advisory vote to approve Citi’s 2011 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.
Four 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 provide that, in the event a director nominee is not reelected, 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 approval of an advisory resolution on Citi’s 2011 executive compensation 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 the advisory resolution, the board will consider the voting results in their entirety.

 

 

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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 or stock incentive 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 by phone at 1-860-291-4262 or 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 2011 with them. The 2011 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 2011 Annual Report on Form 10-K.

 

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 include a majority vote standard for uncontested director elections;

 

  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 restated certificate of incorporation;

 

  Ø  

adopted policies to recoup unearned compensation;

 

  Ø  

amended the charter of the nomination, governance and public affairs committee to document the committee’s oversight responsibility for trade association payments;

 

  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 2011 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; and

 

  Ø  

requested that trade and business associations to which Citi pays dues confirm that no portion of such payments is used for independent expenditures.

 

The current charters of the audit; Citi Holdings oversight; nomination, governance and public affairs; personnel and compensation; 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, Governance and Public Affairs Committee

The nomination, governance and public affairs 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

 

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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. 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 2011, the committee engaged 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.

 

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Based on its assessment of each candidate’s independence, skills and qualifications and the criteria described above, the committee will make recommendations regarding potential director candidates to the board.

 

The committee follows the same process and uses the same criteria for evaluating candidates proposed by stockholders, members of the board of directors and members of senior management.

 

For the 2012 annual meeting, we received timely notice from one stockholder who proposed himself for consideration to be nominated by the nomination, governance and public affairs committee to stand for election at the annual meeting. The qualifications of the individual were discussed at a meeting of the nomination, governance and public affairs committee and the views of Korn/Ferry International were considered. After deliberation, the committee decided not to include this individual on the slate of candidates it proposed to the full board for consideration. The committee used the above-mentioned criteria to evaluate the candidate.

 

Board Diversity

Diversity is among the critical factors that the nomination, governance and public affairs 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 2012 annual meeting exemplify that diversity: three nominees are women (25%) and three nominees (25%) — including 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, governance and public affairs 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).

 

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The Guidelines require that all members of the required committees of the board (audit; nomination, governance and public affairs; and personnel and compensation) be independent. Committee members are appointed by the board upon recommendation of the nomination, governance and public affairs committee. Committee membership and chairs are rotated periodically. The board and each committee have the power to hire and fire independent legal, financial or other advisors, as they may deem necessary, without consulting or obtaining the approval of management. Meetings of the non-management directors are held as part of every regularly scheduled board meeting and are presided over by the independent chairman.

 

If a director has a substantial change in professional responsibilities, occupation or business association, he or she is required to notify the nomination, governance and public affairs committee and to offer his or her resignation from the board. The nomination, governance and public affairs 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, governance and public affairs 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 2011 annual meeting.

 

The nomination, governance and public affairs committee nominates one of the members of the board to serve as chairman of the board on an annual basis. The nomination, governance and public affairs committee also conducts an annual review of board performance, and each committee (except for the executive 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, governance and public affairs 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, governance and public affairs committee at least annually.

 

The Guidelines affirm Citi’s stock ownership commitment, which is described in greater detail in this proxy statement. As part of Citi’s stock ownership commitment, executive officers 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. This policy is intended to align further the interests of senior management with the interests of stockholders. 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 senior management and

 

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certain other 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. 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 13 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 2012, the board and the nomination, governance and public affairs 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 and the nominees standing for election are independent: Franz B. Humer, Michael E. O’Neill, Lawrence Ricciardi, Judith Rodin, Robert L. Ryan, Anthony M. Santomero, Joan E. Spero, Diana L. Taylor, William S. Thompson, Jr. and Ernesto Zedillo Ponce de Leon.

 

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Independence Standards

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

 

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.

 

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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 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

 

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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 on our website at www.citigroup.com. Click on “About Citi,” then “Corporate Governance,” and then “Governance Documents.” Under the policy, the nomination, governance and public affairs 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, governance and public affairs committee. The nomination, governance and public affairs 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, governance and public affairs committee or transaction review committee for approval.

 

The nomination, governance and public affairs 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.

 

Mr. Pandit has entered into an Aircraft Time Sharing Agreement with Citiflight, Inc. (a subsidiary of Citigroup Inc.) that allows him to reimburse Citi for the cost of his personal use of corporate aircraft based on the aggregate incremental cost of the flight to Citi. Aggregate incremental cost is calculated based on a

 

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cost-per-flight-hour charge developed by a nationally recognized and independent service. In 2011, the board determined that for security reasons, Mr. Pandit, and his immediate family, when accompanied by Mr. Pandit, should be required to use corporate aircraft for all personal travel, subject to reimbursement under Citi’s Luxury Expenditure Policy. Mr. Pandit reimbursed Citi $97,916.58 related to his personal use of corporate aircraft during 2011.

 

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 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 were required to be invested in an account at the Citi Private Bank for the remainder of the period ending July 2011. Since July 2011, these funds are no longer subject to any restrictions.

 

Pursuant to Citi’s Policy on Related Party Transactions, on December 14, 2011, the nomination, governance and public affairs committee approved the renewal of a consulting 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 2012 to the company and its subsidiaries and affiliates.

 

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 2011, 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 44 are the current members of the personnel and compensation committee. In addition, the following directors served on the personnel and compensation committee in 2011: Andrew Liveris and Anthony Santomero. No current or former member of the personnel and compensation committee was a part of a “compensation committee interlock” during fiscal year 2011 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.

 

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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 Manuel Medina-Mora, an executive officer, is employed by Citi’s Institutional Clients Group and received 2011 compensation of $169,601. An adult child of Mr. Humer, a candidate for director, is employed by Citi’s Institutional Clients Group and received 2011 compensation of $422,500. Mr. Humer’s adult child has been employed by Citi since 2010 and his employment preceded the identification and subsequent nomination of Mr. Humer as a candidate for election to Citi’s Board and was unrelated to the nomination. These employees are two of the approximately 266,000 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 2011 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. Citigroup Venture Capital International Growth Partnership (Employee) II, L.P. was formed in 2007. They invest 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 eligible 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.

 

In accordance with the funds’ offering memoranda, executive officers are not eligible to participate in the funds on a leveraged basis. If an employee has leverage in one of the funds and is later appointed an executive officer, then he or she is requested to repay the outstanding leverage and associated interest. The terms for leverage offered to employees are as follows: 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.

 

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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).

 

The following distributions exceeding $120,000 with respect to investments in Citigroup Capital Partners II, L.P. and Citigroup Venture Capital International Growth Partnership (Employee) II, L.P. were made to current and former executive officers in 2011:

 

Current or Former Executive Officer


   Citigroup Capital
Partners II, L.P.
Cash
Distributions


 

Shirish Apte

   $ 169,610   

Michael Corbat

   $ 218,524   

Manuel Medina-Mora

   $ 346,519   

Alberto Verme

   $ 450,568   

 

Current or Former Executive Officer


   Citigroup Venture
Capital International
Growth Partnership
(Employee) II, L.P.
Cash
Distributions


 

Lewis Kaden

   $ 128,432   

Manuel Medina-Mora

   $ 321,079   

William Mills

   $ 160,540   

 

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 nomination, governance and public affairs committee of the board.

 

Code of Ethics for Financial Professionals

Citi has adopted a Code of Ethics for Financial Professionals governing the principal executive officer, principal financial officer, and principal accounting officer of Citi 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.

 

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Ethics Hotline

Citi strongly encourages employees to raise possible ethical issues. Citi offers several channels by which employees and others may report ethical concerns, 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 for raising concerns in good faith regarding ethics, discrimination or harassment matters, or who reports suspected violations of other applicable laws, regulations or policies, or who participates in a subsequent investigation of such concerns. 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 its consolidated 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.

 

Stock Ownership

Citi has long encouraged stock ownership by its directors, officers and employees to align their interests with the long-term interests of stockholders.

 

As part of Citi’s stock ownership commitment, executive officers 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. 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 operating committee and certain other 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 following table shows the beneficial ownership of Citi common stock by our directors, nominees and certain executive officers at February 21, 2012.

 

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          28,629        2,668        31,297   

Timothy C. Collins

   Director          7,900        —          7,900   

John C. Gerspach

   Chief Financial Officer          264,611        49,995        314,606   

John P. Havens

   President and Chief Operating Officer
Chief Executive Officer, Institutional Clients Group
         457,184        112,422        569,606   

Franz B. Humer

   Nominee          —          —          —     

Robert L. Joss

   Director          16,382        —          16,382   

Brian Leach

   Chief Risk Officer          357,222        80,503        437,725   

Manuel Medina-Mora

   Chief Executive Officer, Global Consumer Banking and Chairman, Mexico and Latin America          956,333        134,246        1,090,579   

Michael E. O’Neill

   Director          24,159        —          24,159   

Vikram S. Pandit

   Chief Executive Officer & Director          581,578        300,000        881,578   

Richard D. Parsons

   Chairman of the Board          34,910        —          34,910   

Lawrence R. Ricciardi

   Director          15,798        —          15,798   

Judith Rodin

   Director          19,693        2,668        22,361   

Robert L. Ryan

   Director          17,457        —          17,457   

Anthony M. Santomero

   Director          20,145        —          20,145   

Joan E. Spero

   Nominee          —          —          —     

Diana L. Taylor

   Director          13,809        —          13,809   

William S. Thompson, Jr.

   Director          48,500 (1)      —          48,500   

Ernesto Zedillo Ponce de Leon

   Director          10,834        —          10,834   

All directors, nominees & executive officers
as a group (26 persons)

         4,515,438        968,784        5,484,222   

 

(1)   Includes 15,568 shares of common stock that Mr. Thompson has the right to acquire as of February 21, 2012 through his ownership of 4,900 units of Citigroup Inc.’s Tangible Dividend Enhanced Common Stock.

 

 

At February 21, 2012, no director, nominee or executive officer owned as much as 1% of Citi’s common stock.

 

At February 21, 2012, all of the directors, nominees and executive officers as a group beneficially owned approximately 0.19% 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, nominee or executive officer. The following table details the various forms in which directors, nominees 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, nominee 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, nominee or executive officer has direct or indirect voting power but not dispositive power, or

 

 

for which the director, nominee 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

     28,131         —           —           —     

Timothy C. Collins

     7,900         —           —           —     

John C. Gerspach

     —           —           —           163,231   

John P. Havens

     —           —           —           388,661   

Franz B. Humer

     —           —           —           —     

Robert L. Joss

     7,900         1,700         —           —     

Brian Leach

     —           —                    276,842   

Manuel Medina-Mora

     —           —           —           349,271   

Michael E. O’Neill

     24,161         —           —           —     

Vikram S. Pandit

     —           195,017         —           371,678   

Richard D. Parsons

     29,131         —           —           —     

Lawrence R. Ricciardi

     7,903         —           —           —     

Judith Rodin

     19,659         36         —           —     

Robert L. Ryan

     15,946         —           —           —     

Anthony M. Santomero

     20,145         —           —           —     

Joan E. Spero

     —           —           —           —     

Diana L. Taylor

     12,173         —           —           —     

William S. Thompson, Jr.

     7,903         25,030         —           —     

Ernesto Zedillo Ponce de Leon

     10,834         —           —           —     

All directors, nominees & executive officers as a group (26 persons)

     191,786         324,124         —           2,594,396   

 

Owners of More than 5% of Our Common Stock(a)

 

Name and Address of Beneficial Owner    Beneficial Ownership     Percent of Class  

BlackRock Inc.

40 East 52nd Street, New York, New York 10022

                

Amount beneficially owned

     153,885,999 (a)      5.26

 

(a)   Based on the Schedule 13G filed with the SEC on February 9, 2012 by BlackRock, Inc. and certain subsidiaries (BlackRock). BlackRock reported that it had sole voting and dispositive power over all shares beneficially owned. The Schedule 13G states that the shares were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of Citi.

 

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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 2012 annual meeting, except for Alain J. P. Belda, Timothy C. Collins, and Richard D. Parsons who will not stand for re-election to the board. In addition, the board has nominated Franz B. Humer and Joan E. Spero for election to the board at the 2012 annual meeting. Directors are not eligible to stand for re-election after reaching the age of 72. With respect to Franz B. Humer and Joan E. Spero, each nominee was recommended to the board by Korn/Ferry International.

 

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 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, governance and public affairs 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’s unique 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

 

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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.

 

 

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 its efforts to properly identify, measure, monitor, report, analyze and control or mitigate 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, the Consumer Financial Protection Bureau, 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.

 

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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 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 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 its analysis, the board has 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, governance and public affairs 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 27.

 

Franz B. Humer

Mr. Humer is an experienced executive and has been nominated to serve on the board because of his extensive experience in the areas of International and Consumer Business, Financial Reporting, Compensation, Regulatory Compliance and Corporate Governance. Mr. Humer gained extensive experience in international and consumer business, compensation, regulatory compliance, financial reporting and corporate governance in his roles as CEO and Chair of Roche Holding and other executive positions at Roche, his roles as an executive at GlaxoSmithKline Plc and Schering Plough as well as in his service as Chair of Diageo plc. With his many years of experience leading large complex organizations in the U.S. and in Europe in an extensively regulated industry, Mr. Humer is able to offer insights in the implementation of business strategies in major global markets, advice on regulatory compliance, and to provide strategic

 

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guidance on the development and expansion of important franchises and brands. As a member of the International Advisory Board of Allianz, a member of the European Round Table of Industrialists and as a member of several philanthropic organizations he is able to provide important perspectives on international and consumer business and corporate affairs. Please find his full biography on page 27.

 

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 Philip H. Knight Professor and Dean, Emeritus, 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 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 28.

 

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 28.

 

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 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

 

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experience with respect to regulatory compliance issues as well as consumer and corporate business. Please find his full biography on page 29.

 

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 30.

 

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 30.

 

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 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 31.

 

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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 31.

 

Joan E. Spero

Ms. Spero is a person of wide ranging experience, having served as a senior Government official, a financial services executive, an academic, a seasoned board member and as a leader in the not-for-profit sector. She has been nominated to serve on the board because of her Corporate Governance, Regulatory Compliance, International and Consumer Business, Financial Services, Corporate Affairs, Compensation and Financial Reporting experience. Ms. Spero gained extensive regulatory compliance and international business experience during her tenure as U.S. Under Secretary of State for Economic, Business and Agricultural Affairs and U.S. Ambassador to the United Nations for Economic and Social Affairs. As an executive at American Express Company, including her roles as Executive Vice President of Corporate Affairs and Communications and as Senior Vice President and Treasurer she developed expertise in financial services, consumer business and corporate affairs. As a current or former member of the Boards of Directors of IBM, International Paper, ING, Delta Airlines and First Data Corporation, including her service on the compensation and audit committees of IBM, the governance committee of International Paper and the public policy and environment committee of International Paper, she gained extensive experience in corporate governance, consumer business, financial reporting, compensation, and corporate affairs. Her roles as the former President of the Doris Duke Foundation; her former position as the visiting fellow at the Foundation Center, where she conducted research on the role of American Private Foundations in U.S. foreign policy and in the global system; and her current role as senior research scholar at Columbia University School of International and Public Affairs where she researches and writes about international philanthropy and its role in the global system; as well as her other service in the non-profit sector, have given her extensive insights into corporate affairs matters. Please find her full biography on page 32.

 

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

 

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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, the New York Women’s Foundation, the YMCA of Greater NY and the Hudson River Park Trust, Ms. Taylor has gained additional experience in corporate affairs, corporate governance, financial reporting, compensation and legal matters. Please find her full biography on page 33.

 

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 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 33.

 

Ernesto Zedillo Ponce de Leon

Mr. Zedillo Ponce de Leon 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 Ponce de Leon has gained experience in financial reporting, risk management, corporate governance and corporate affairs. Please find his full biography on page 34.

 

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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

Franz B. Humer

65

 

LOGO

  

Chairman

Roche Holding Ltd

• Chairman, Roche Holding Ltd – 2008 to Present

• Chairman & Chief Executive Officer, Roche Group – 2001 to 2008

• Chief Executive Officer, Roche Group – 1998 to 2001

• Chief Operating Officer, F. Hoffmann-La Roche Ltd – 1996 to 1998

• Head of Pharmaceuticals, F. Hoffmann-La Roche Ltd – 1995 to 1996

• Other Directorship: Diageo plc (Chairman)

• Previous Directorships within the last five years: Allianz SE

• Other Activities: Friends of Phelophepa Foundation (Chairman), INSEAD (Chairman), International Centre for Missing and Exploited Children (Chairman), Member of the European Round Table of Industrialists (ERT), Salzburg University (Member of the Board) and Jacobs Holding AG (Member of the Board)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Robert L. Joss

70

 

LOGO

  

Philip H. Knight Professor and Dean, Emeritus

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)

Michael E. O’Neill

65

 

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: Honolulu Academy of Arts (Trustee) and The Export-Import Bank of the United States (Member of Advisory Board)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Vikram S. Pandit

55

 

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), The Clearing House Association (Chairman of the Supervisory Board) 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

Lawrence Ricciardi

71

 

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)

Dr. Judith Rodin

67

 

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), White House Project (Member), Council on Foreign Relations (Member), and National Academy of Sciences Institute of Medicine (Member)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Robert L. Ryan

68

 

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, and Stanley Black & Decker

• Previous Directorships within the last five years: Hewlett-Packard and United Health Group

• Other Activities: Cornell University (Trustee)

Anthony M. Santomero

65

 

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 and Columbia Funds

• Previous Directorships within the last five years: B of A Fund Series Trust

• Other Activities: Ben Franklin Technology Partners of Southeast Pennsylvania (Director)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Joan E. Spero

67

 

LOGO

  

Senior Research Scholar

Columbia University School of International and Public Affairs

• Senior Research Scholar, Columbia University School of International and Public Affairs - 2010 to present

• Visiting Fellow at the Foundation Center – 2009 to 2010

• President and CEO, Doris Duke Charitable Foundation – 1997 to 2008

• Under Secretary of State, Economics, Business and Agricultural
Affairs – 1993 to 1996

• Executive Vice President, American Express Company, Corporate Affairs and Communications – 1991 to 1993

• Senior Vice President and Treasurer – 1989 to 1991

• Vice President, Corporate Affairs – 1983 to 1989

• Vice President, Corporate Strategic Planning – 1981 to 1983

• Ambassador to the United Nations for Economic and Social Affairs – 1980 to 1981

• Assistant Professor, Columbia University – 1973 to 1979

• Other Directorships: IBM and International Paper

• Previous Directorships within the last five years: First Data Corporation and ING Groep N.V.

• Other Activities: Council of American Ambassadors (Member), Academy of Diplomacy (Member), American Philosophical Society (Member), Wisconsin Alumni Research Foundation (Trustee), Morgridge Institute for Research (Trustee), International Center for Transitional Justice (Trustee), Columbia University (Trustee Emeritus), Amherst College (Trustee Emeritus), Council on Foreign Relations (Trustee Emeritus) and Brookings Institution (Trustee Emeritus)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Diana L. Taylor

57

 

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), GEMs Hudson River Park Trust (Chair), International Women’s Health Coalition (Treasurer), Mailman School of Public Health (Board of Overseers), New York Women’s Foundation (Chair), The After School Corporation (Member), and YMCA of Greater New York (Chair)

William S. Thompson, Jr.

66

 

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 Life (Director), Thompson Foundation for Autism (Chair), Thompson Family Foundation (President), University of Missouri (President’s Financial Advisory Council) and Orange County Community Foundation (Advisory Director)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Ernesto Zedillo Ponce de Leon

60

 

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), The Group of Thirty (Member) and Inter-American Dialogue (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 22 times in 2011. During 2011, the audit committee met 12 times, the personnel and compensation committee met 13 times and the nomination, governance and public affairs committee met 8 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 2011.

 

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 eight 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 2011.

 

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

 

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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 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 nomination, governance and 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; (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, Santomero and Thompson 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.

 

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The audit committee charter, as adopted by the board, is available on our website at www.citigroup.com. Click on “About Citi,” then “Corporate Governance,” then “Governance Documents,” and then “Board of Directors’ Committee Charters.”

 

The Citi Holdings oversight committee, which is responsible for overseeing the management of the company’s Citi Holdings business segment, which 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 on our website at www.citigroup.com. Click on “About Citi,” then “Corporate Governance,” then “Governance Documents,” and then “Board of Directors’ Committee Charters.”

 

The executive committee, which acts on behalf of the board if a matter requires board action before a meeting of the full board can be held.

 

The nomination, governance and public affairs 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 13 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, governance and public affairs committee is also 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, and payments to trade associations made by Citi; reviewing Citi’s policies and practices regarding supplier diversity; reviewing Citi’s 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.

 

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

 

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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, governance and public affairs committee is independent according to the corporate governance rules of the NYSE.

 

The nomination, governance and public affairs committee charter, as adopted by the board, is available on our website at www.citigroup.com. Click on “About Citi,” then “Corporate Governance,” then “Governance Documents,” and then “Board of Directors’ Committee Charters.”

 

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 44 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 2011 is disclosed

 

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in the CD&A on page 59 of this proxy statement. For 2011, 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 on our website at www.citigroup.com. Click on “About Citi,” then “Corporate Governance,” then “Governance Documents,” and then “Board of Directors’ Committee Charters.”

 

The risk management and finance committee, which has the primary responsibility for (1) oversight of Citigroup’s risk management framework, including the significant policies 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 to merger, acquisition, and divestiture activity (M&A). The committee reports to the board regarding Citigroup’s risk profile, as well as its risk management framework, including the significant policies 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 on our website at www.citigroup.com. Click on “About Citi,” then “Corporate Governance,” then “Governance Documents,” and then “Board of Directors’ Committee Charters.”

 

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

 

Committees


  

Current Members


Audit Committee   

Lawrence R. Ricciardi (Chair)

Robert L. Ryan

Anthony M. Santomero

William S. Thompson, Jr.

Citi Holdings Oversight Committee   

Timothy C. Collins

Robert L. Joss

Michael E. O’Neill (Chair)

Judith Rodin

Executive Committee   

Alain J.P. Belda

Michael E. O’Neill

Richard D. Parsons (Chair)

Lawrence R. Ricciardi

Anthony M. Santomero

Diana L. Taylor

Nomination, Governance and Public Affairs
Committee
  

Alain J.P. Belda

Richard D. Parsons

Judith Rodin

Diana L. Taylor (Chair)

William S. Thompson, Jr.

Personnel and Compensation Committee   

Alain J.P. Belda (Chair)

Michael E. O’Neill

Richard D. Parsons

Diana L. Taylor

William S. Thompson, Jr.

Risk Management and Finance Committee   

Robert L. Joss

Robert L. Ryan

Anthony M. Santomero (Chair)

Ernesto Zedillo Ponce de Leon

 

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, governance and public affairs 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 2011, 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

 

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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. Beginning in 2012, all committee chairs will receive $35,000 per year. Additional compensation for special assignments may be determined on a case by case basis.

 

Messrs. Collins, Joss, O’Neill, Ricciardi, Ryan, Santomero and Zedillo Ponce de Leon 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. Citibank, N.A. is a wholly-owned subsidiary of Citi. All annual retainers and chair fees are paid in four equal quarterly installments per annum. 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 2011 compensation for non-employee directors.

 

Director Compensation

 

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
($)
 

Alain J.P. Belda

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

Timothy C. Collins

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

Jerry A. Grundhofer(d)

  $ 112,500      $ 75,000        0        0        0      $ 0      $ 187,500   

Robert L. Joss(e)

  $ 125,000      $ 150,000        0        0        0      $ 350,000      $ 625,000   

Andrew N. Liveris(f)

  $ 18,750      $ 37,500        0        0        0      $ 0      $ 56,250   

Michael E. O’Neill

  $ 172,500      $ 150,000        0        0        0      $ 0      $ 322,500   

Richard D. Parsons

  $ 75,000      $ 150,000        0        0        0      $ 0      $ 225,000   

Lawrence R. Ricciardi

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

Judith Rodin

  $ 78,750      $ 150,000        0        0        0      $ 0      $ 228,750   

Robert L. Ryan

  $ 177,500      $ 150,000        0        0        0      $ 0      $ 327,500   

Anthony M. Santomero

  $ 171,250      $ 150,000        0        0        0      $ 0      $ 321,250   

Diana L. Taylor

  $ 166,250      $ 150,000        0        0        0      $ 0      $ 316,250   

William S. Thompson

  $ 75,000      $ 150,000        0        0        0      $ 0      $ 225,000   

Ernesto Zedillo Ponce de Leon

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

 

(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. These directors also elected to defer receipt of the shares. The following directors elected to receive all or a portion of their Citigroup 2011 retainer and/or chair fee in deferred stock: Mr. Belda (100%); Mr. Grundhofer (100%); Mr. O’Neill (100%); Mr. Parsons (100%); and Dr. Rodin (100%). The number of shares they received was: Mr. Belda 2,678; Mr. Grundhofer 1,312; Mr. O’Neill 3,273; Mr. Parsons 2,231; and Dr. Rodin 2,313. Mr. Thompson elected to receive all of his retainer in stock (100%). Mr. Thompson did not elect to defer his retainer; therefore, his shares (2,230) 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 2011 was:

 

Name   

Number of

Shares*

 

Mr. Belda

     22,680   

Mr. Collins

     7,254   

Mr. Grundhofer

     1,495   

Mr. Joss

     7,254   

Mr. Liveris

     747   

Mr. O’Neill

     19,249   

Mr. Parsons

     22,853   

Mr. Ricciardi

     7,261   

Dr. Rodin

     14,746   

Mr. Ryan

     11,034   

Mr. Santomero

     15,233   

Ms. Taylor

     7,261   

Mr. Thompson

     7,927   

Mr. Zedillo Ponce de Leon

     5,921   

 

*All share totals have been adjusted to reflect the ten-for-one reverse split of the issuer’s common stock that was effective at the close of business on May 6, 2011.

 

(b) The values in this column represent the aggregate grant date fair values of the 2011 deferred stock awards. The grant date fair value is based on a grant date of January 18, 2011 and a grant price determined by the average NYSE closing price of Citi’s common stock for the 5 trading days from January 10, 2011 to January 14, 2011. 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:

 

Name   Deferred Stock
Granted in 2011 (#)*
  Grant Date Fair
Value ($)

Mr. Belda

  2,988.0478   $150,000

Mr. Collins

  2,988.0478   $150,000

Mr. Grundhofer

  1,494.0239**   $  75,000

Mr. Joss

  2,988.0478   $150,000

Mr. Liveris

  747.0120**   $  37,500

Mr. O’Neill

  2,988.0478   $150,000

Mr. Parsons

  2,988.0478   $150,000

Mr. Ricciardi

  2,988.0478   $150,000

Dr. Rodin

  2,988.0478   $150,000

Mr. Ryan

  2,988.0478   $150,000

Mr. Santomero

  2,988.0478   $150,000

Ms. Taylor

  2,988.0478   $150,000

Mr. Thompson

  2,988.0478   $150,000

Mr. Zedillo Ponce de Leon

  2,988.0478   $150,000

 

*All share totals have been adjusted to reflect the ten-for-one reverse split of the issuer’s common stock that was effective at the close of business on May 6, 2011.

 

**Messrs. Grundhofer’s and Liveris’ Deferred Stock Awards were pro-rated because their service on the board terminated on June 23, 2011 and April 21, 2011, respectively.

 

(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 on page 43.

 

(d) Jerry A. Grundhofer resigned from the board on June 23, 2011.

 

(e) Robert L. Joss earned $350,000 for consulting services provided to the Company during 2011.

 

(f) Andrew N. Liveris resigned from the board on April 21, 2011.

 

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The following chart shows the amount of dividend equivalents and interest paid to the non-employee directors in 2011 with respect to shares of Citi common stock held in their deferred stock accounts.

 

Director   

Dividend Equivalents and

Interest Paid on

Deferred Stock

Account(1)

 

Alain J.P. Belda

   $ 634   

Timothy C. Collins

     250   

Jerry A. Grundhofer

     158   

Robert L. Joss

     250   

Andrew N. Liveris

     59   

Michael E. O’Neill

     521   

Richard D. Parsons

     647   

Lawrence R. Ricciardi

     218   

Judith Rodin

     404   

Robert L. Ryan

     331   

Anthony M. Santomero

     457   

Diana L. Taylor

     250   

William S. Thompson

     254   

Ernesto Zedillo Ponce de Leon

     178   

 

(1) Dividend equivalents are paid quarterly, in the same amount per share and at the same time as dividends are paid to stockholders. Interest accrues on the amount of the dividend equivalent from the payment date until the end of the quarter, at which time the dividend equivalent is either distributed to the director in cash or reinvested in additional shares of deferred stock. Citi resumed paying quarterly dividends in June, 2011. Differences in the amounts paid to directors can be attributed to a variety of factors including length of service and elections made by individual board members with respect to the form in which they receive their cash retainers or deferred stock awards. Generally, directors who have served on the board for longer periods of time have accumulated more shares in their deferred stock accounts than directors with a shorter tenure and as a result receive higher dividend equivalent payments. The number of shares owned by each director is reported on page 18.

 

Director Stock Option Holdings Table

 

Director   

Date of

Grant

    

Number of

Shares

Outstanding
and
Exercisable*

    

Expiration

Date

 

Alain J.P. Belda

     1/16/2007         827         1/16/2013   
       1/22/2008         1,840         1/22/2014   

Andrew N. Liveris

     1/16/2007         827         1/16/2013   
       1/22/2008         3,680         1/22/2014   

Judith Rodin

     1/16/2007         827         1/16/2013   
       1/22/2008         1,840         1/22/2014   

 

*All share totals have been adjusted to reflect the ten-for-one reverse split of the issuer’s common stock that was effective at the close of business on May 6, 2011.

 

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Executive Compensation

 

The Personnel and Compensation Committee Report

 

The Personnel and Compensation Committee (the committee) evaluated the performance of and determined the compensation for the Chief Executive Officer, approved the compensation of members of the operating committee (including the named executive officers), and approved the compensation structure for other members of senior management and certain highly compensated employees.

 

The committee reviewed and discussed the Compensation Discussion and Analysis with members of senior management and, based on this review, the committee recommended to the Board of Directors of Citigroup Inc. that the Compensation Discussion and Analysis be included in Citi’s annual report on Form 10-K and proxy statement on Schedule 14A filed with the Securities and Exchange Commission.

 

THE PERSONNEL AND COMPENSATION COMMITTEE:

 

Alain J.P. Belda (Chair)

Michael E. O’Neill

Richard D. Parsons

Diana L. Taylor

William S. Thompson, Jr.

 

February 7, 2012

 

Compensation Discussion and Analysis

 

Executive Summary

Citi is committed to responsible and effective compensation practices. 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. Citi’s programs aim to: enhance stockholder value through the practice of responsible finance, facilitate competitiveness by attracting and retaining the best talent, promote meritocracy by recognizing employee contributions, and manage risk through sound incentive compensation practices.

 

Exceptional employees, and exceptional efforts by those employees, have been required to implement Citi’s strategy when there continues, despite the downturn in certain businesses, to be worldwide competition for proven talent in many parts of the financial services industry and a difficult global economic climate. Accordingly, Citi has awarded executive compensation taking into account the following:

 

 

In 2011, Citi sustained solid profitability by executing on its long-term strategy. Citigroup net income was $11.1 billion in 2011, an increase of 4.4% over 2010. Citi has now had eight consecutive quarters of profitability. Citi continues to be one of the best capitalized large banks in the world, and has taken aggressive actions to manage and reduce risk-weighted assets; Citi Holdings assets continued to decline and comprised just 14% of Citigroup’s balance sheet at the end of 2011 (12% after the move of Retail Partner Cards from Citi Holdings to Citicorp in the first quarter of 2012).

 

 

Compensation paid to the named executive officers appropriately reflects Citi’s current results and prospects for growth. The committee awarded annual incentive compensation, in addition to salary, to Mr. Pandit for the first time in four years in a manner commensurate with his responsibilities and the success of his implementation of Citi’s long term strategies.

 

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Important changes in Citi’s programs for 2011. Citi repaid Troubled Asset Relief Program (TARP) funds in 2010, and in 2011 was not subject to TARP-related requirements governing the structure of executive compensation. Citi continues to be subject to bank regulatory guidance in the US and other countries regarding sound incentive compensation practices. The structure of the annual incentive awards for 2011 reflects the committee’s judgment and is also responsive to regulatory guidelines. The structure includes deferred cash awards with a performance-based vesting feature as an element of Citi’s approach to aligning incentive compensation with risk-balancing principles.

 

 

Citi continues to limit immediate cash bonuses. In 2011, 60% of the annual incentive award to each named executive officer is deferred and vests over a four year period; the four-year deferral period exceeds the length of the standard deferral period at many of Citi’s competitors. The remaining 40% of each annual incentive award is delivered as a cash payment. Half of the deferred incentive award is delivered as deferred cash and the remaining half is delivered as deferred stock, as described below.

 

 

Citi’s deferred awards include a performance-based vesting feature. Half of each senior manager’s deferred incentive award is a fixed value deferred cash award that is subject to performance-based vesting over four years and is subject to clawbacks. Under the performance-based vesting provision, if Citi incurs losses during the vesting period, the value of the deferred cash award is reduced on a formulaic basis. In addition, the clawback feature permits the committee to reduce or eliminate the award in specified circumstances, such as a material violation of risk limits. The committee structured the deferred cash award to limit incentives to take imprudent or excessive risks that could result in Citi losses; the award earns a notional fixed interest rate but does not increase in value through risk-taking activities or otherwise.

 

 

Stock awards are subject to holding requirements and anti-hedging policies. Half of the deferred award was made in the form of Citi common stock and is therefore inherently performance-based, and in addition is subject to clawbacks. The committee awarded deferred stock as a component of senior management’s annual incentive awards to align their interests with stockholders and other stakeholders. The awards to executive officers are generally subject to a stock ownership commitment, and Citi has trading policies that limit hedging strategies that might otherwise undercut the purpose of the stock ownership commitment. In addition, executives’ interests remain aligned with those of stockholders even after termination of employment through stock that vests over time after termination of employment.

 

 

No special benefits. The named executive officers are not eligible for tax gross-ups and had no employment or compensation guarantees. They do not have special severance or change in control agreements. Citi froze or eliminated most supplemental executive retirement benefits (SERPs) a decade ago and the named executive officers are not eligible for new SERP benefits. Like other highly paid Citi employees, they pay more for medical benefits than lower-paid employees.

 

 

Citi’s executive compensation structure is designed to incentivize the delivery of long-term results aligned with risk balancing principles. Citi continues to refine its incentive compensation policies as part of its efforts to align its processes with regulatory guidance in the US and other countries regarding sound incentive compensation policies and to enhance the balancing of risk and financial results in a manner that does not encourage employees to expose Citi to imprudent risks.

 

   

Citi enhanced its performance evaluation process to formally integrate opinions of personnel from the compliance, finance, independent risk, internal audit and legal functions (the control functions) in the performance evaluations of several hundred senior employees worldwide, including the named executive officers.

 

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Deferred compensation awarded to all individual employees who have influence over Citi’s material risks (covered employees), including the named executive officers, continues to be at risk during the vesting period through clawbacks, performance-based vesting, and fluctuations in Citi’s stock price.

 

   

If a covered employee received the award based on materially inaccurate financial statements or if the employee materially violates risk limits, incentive compensation for 2011 may be forfeited (i.e., is subject to a “clawback”).

 

   

The cash portion of the deferred incentive compensation awarded for 2011 to Citi’s covered employees, including the named executive officers, vests over four years and is subject to an additional performance-based vesting condition.

 

   

The stock component of the awards vests over four years and is subject to changes in Citi’s stock price during that period.

 

   

Vesting of the deferred awards does not accelerate upon termination of employment except in the case of death.

 

   

Citi’s incentive compensation pools are adjusted for the amount of risks taken to achieve results, thereby curtailing incentives for employees to take imprudent risks.

 

 

In 2011, the committee made long-term performance retention awards to senior executives to retain and ensure the stability of Citi’s post-crisis leadership team and to enable them to focus on executing a strategy for sustainable future growth of the franchise. These awards have substantial vesting and performance conditions and will deliver value to the extent Citi’s long-term business strategy is successful. The awards have several features designed to curtail imprudent or excessive risk-taking in the achievement of the performance conditions. See “Long-Term Performance Retention Awards” below.

 

 

Citi has a strong compensation governance process. The composition of the committee reflects its strong governance focus; each of the five 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 2011, the committee continued to engage in active oversight of Citi’s incentive compensation programs. In addition, Citi has instituted a global incentive council and management remuneration committees to provide for consistency in its approach to compensation around the world.

 

 

Independent compensation consultant. For the 2011 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.

 

 

Involvement of independent risk management function. The committee meets regularly with Citi’s Chief Risk Officer (CRO), other senior risk officers and other members of senior management to discuss and evaluate risk and Citi’s compensation programs, thereby further integrating Citi’s independent risk function into compensation governance and oversight. Management, led by Citi’s CRO, continuously reviews risk in Citi’s compensation plans globally and has concluded that the plans do not create excessive risks for the company.

 

Citi’s compensation philosophy. The committee made compensation decisions consistent with Citi’s compensation philosophy, which is founded on the alignment of the way we pay our employees with our Mission Statement. We are committed to achieving the long-term best interests of stockholders, clients and customers through the practice of Responsible Finance in every area of our business, including the way we attract, retain, compensate and motivate our colleagues around the world. Our compensation philosophy, stated in the form of the following six objectives, provides key elements of the committee’s reasons for making compensation decisions. The complete philosophy is available on our website.

 

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Enhance shareholder value through the practice of Responsible Finance. We aim to compensate our employees in a manner that encourages them to work together towards our common purpose of achieving risk-adjusted stockholder returns through conduct that is transparent, prudent and dependable. We also provide meaningful portions of senior management incentive compensation in the form of equity in order to foster partnership behavior and to align employee interests with those of shareholders.

 

 

Facilitate competitiveness to attract and retain the best talent. We provide compensation programs that are competitive within the global financial services industry in order to support the attraction and retention of the talented employees necessary to sustain and grow our business. Accordingly, we continue to award significant percentages of incentive compensation on a deferred basis (such as deferred stock or deferred cash) to senior executives and others with control or significant influence over Citi’s material risks.

 

 

Promote meritocracy by recognizing employee contributions. We provide discretionary incentive compensation to management and other employees that is variable, intending to differentiate compensation awards to reflect employees’ current contributions and Citi’s desire to retain talent, based on financial results as well as non-financial performance such as risk and compliance behavior. We have communicated clearly to all employees that poor risk management practices and imprudent risk-taking activity can and should lead to an adverse impact on incentive compensation, including the award of no incentive compensation.

 

 

Manage risk through sound incentive compensation practices. We have complemented effective risk management controls by reducing incentives to create imprudent risks for Citi and its businesses, and by rewarding a thoughtful balance of risk and return. Specifically, the committee exercises its discretion in a documented manner that recognizes the characteristics of risks taken as well as profits or losses generated, given the magnitude of risk taken, and has directed management to do so as well.

 

 

Provide strong, independent oversight of compensation practices. The committee is comprised only of independent directors who set expectations of management regarding incentive compensation programs utilizing, where appropriate, an independent adviser.

 

 

Provide for transparency to employees, shareholders, and other stakeholders. We aim to communicate Citi’s approach to compensation throughout the year, cascading such communications broadly.

 

Assessing Company and Individual Performance

 

Active oversight role of the 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. 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 of members of the operating committee, including the named executive officers. In 2011, the committee adopted and published Citi’s compensation philosophy, as described above, which articulates the committee’s objectives in awarding incentive compensation.

 

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.

 

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Structure of incentive compensation awards for all covered employees. The committee is responsible for the oversight of modifications to the structure of Citi’s incentive compensation programs for covered employees. Management’s continuous focus throughout 2011 on the incentive compensation for covered employees involved classifying risks taken by Citi’s material business units, identifying employees who had influence over those risks, expanding the process by which the risk behaviors of covered employees were evaluated, and structuring annual incentive awards to avoid potential incentives for covered employees to take imprudent risks. Management developed a process for adjusting incentive compensation pools for the amount of risks taken. The committee provided specific instructions to management to exercise discretion in awarding incentive compensation in a way that did not reward imprudent risk-taking. More information on risk-balancing features of Citi’s incentive compensation plans is set forth below under “Management Analysis of Potential Adverse Effects of Compensation Plans.”

 

Say-on-pay and stockholder outreach. As part of the process for making incentive awards to the named executive officers for 2011, the committee considered the most recent “say on pay” non-binding stockholder advisory vote held in April 2011 regarding the named executive officers’ 2010 compensation. The resolution approving 2010 executive compensation received a 92.9% favorable vote. Several key features of the 2010 program for named executive officers are carried forward to this year, such as substantial deferred amounts, performance-based vesting of certain deferred incentive awards, a four-year deferral period, significant stock awards that are subject to clawbacks and a stock ownership commitment, and limitations on perks. To better understand the reasons for the favorable say-on-pay vote and potential stockholder concerns for 2011, management engaged in stockholder outreach at various times during 2011 to discuss executive compensation in the context of Citi’s sustained profitability. In particular, management sought a better understanding of stockholder views on Citi’s disclosure and compensation processes and the priorities of our investors. The committee considered the outcome of the most recent say-on-pay vote and stockholder perspectives generally as factors in the 2011 compensation process in addition to currently applicable regulatory requirements, market considerations, and company and individual performance.

 

Committee process and results of decisions regarding incentive compensation. In January 2012, the committee made incentive compensation decisions for 2011 regarding the named executive officers in the context of Citi’s performance in 2011. Awards were made under Citi’s Discretionary Incentive and Retention Award Plan (DIRAP), Citi’s generally applicable annual incentive program which provides for discretionary annual incentive awards, and under Citi’s stockholder-approved 2011 Executive Performance Plan (the EPP). The committee considered the following in determining the amount of the awards:

 

  1.   Overall company performance. The committee considered Citi’s sustained profitability despite difficult market conditions, continued execution on long-term strategic goals, and returns on capital in awarding incentive compensation to the named executive officers. Where the named executive officer was responsible for a business unit in addition to Citi-wide responsibilities, the performance of the applicable business unit was considered as well.

 

  2.   Individual performance and significance of role. The named executive officers each had a record of positive performance, including noteworthy achievements in 2011.

 

  3.   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.

 

Applicable regulatory requirements were of particular importance in determining the structure of the awards.

 

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1. Overall company performance. In awarding incentive compensation to the named executive officers and other senior executives for 2011, the committee took into account Citi’s 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 focused on the key forces driving growth in financial services: value-added services such as cash management; the flows of world trade, capital and business; and the growth of emerging markets.

 

   

Although Citi’s reported financial performance was mixed, underlying client trends point to continued progress on our operating goals. Citigroup net income was $11.1 billion in 2011, an increase of 4.4% over 2010. Loan growth accelerated in Citicorp (total loans increased 14% year-over-year) and core deposit balances increased in Regional Consumer Banking (RCB) and Global Transaction Services (GTS); however, the year ended with lower than expected earnings in Securities and Banking (S&B), generally resulting from global market and political uncertainties. Citi performed in line with its peer groups across most businesses.

 

   

Citi continued to execute on its strategy in a difficult environment, positioning itself for future growth to serve the interests of stockholders. Despite disappointing recent total shareholder returns, Citi is well situated for future growth.

 

   

RCB continues to grow, especially in emerging markets countries, as evidenced by increases in loans and deposits in many markets; International Consumer Banking revenues of $19.0 billion were up 8% year-over-year.

 

   

GTS continues to experience accelerated expansion in key markets and improved client satisfaction.

 

   

S&B achieved competitive results in a challenging global markets environment.

 

   

Citi is one of the best capitalized banks in the world and continues to maintain a strong capital and liquidity base. At December 31, 2011, Citi’s Tier 1 common ratio was 11.8%, compared to 10.8% at December 31, 2010. At December 31, 2011, Citi’s book value per share was $60.70 and tangible book value per share was $49.74, 8.1% and 11.6% increases, respectively, over values at December 31, 2010. Tangible book value per share is a non-GAAP measure and the reconciliation to GAAP appears on page 43 of the 2011 Form 10-K.

 

   

Citi continued to execute successfully on its strategy to optimize the value of Citi Holdings through divestitures and prudent management. Citi reduced assets within Citi Holdings by $90 billion in 2011 to $269 billion. Citi Holdings assets will represent about 12% of Citigroup’s assets, after the transfer of Retail Partner Cards from Citi Holdings into Citicorp in the first quarter of 2012.

 

   

Performance against peers. The committee also considered Citigroup’s and Citicorp’s performance compared to a group of its peers across a wide range of metrics, such as return on assets, return on equity, expense growth, and total shareholder return. Bank of America, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley and Wells Fargo were included in this group because they compete with Citi for business and talent across a range of global market segments.

 

2.

Individual performance and significance of role. The committee weighed the size of the individual’s responsibilities and the individual contributions of each of the named executive officers against Citi’s

 

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  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. Pandit, Chief Executive Officer: Mr. Pandit has led Citi’s return to profitability and has positioned the company for future growth. Mr. Pandit’s numerous accomplishments are reflected in the company-wide achievements previously discussed. In addition:

 

   

Mr. Pandit has championed in multiple forums Citi’s mission to serve clients and stakeholders through Responsible Finance — conduct that is transparent, prudent and dependable.

 

   

He has led Citi as it has achieved well-managed risk and controlled growth. Citi reduced its exposure to European markets significantly throughout 2011. In the US mortgage business, risk controls were enhanced and the business executed innovative loss mitigation strategies to improve asset quality. The consumer businesses took action to tighten unsecured underwriting criteria in emerging markets.

 

   

Citi had constant access to the capital markets in 2011, including in the fourth quarter.

 

   

Employee satisfaction scores significantly improved over 2010 and prior years, demonstrating Mr. Pandit’s ability to lead and communicate Citi’s strategy and plans for future growth throughout the company across a wide spectrum of employees.

 

   

The focus on senior talent management continued in 2011, with notable additions of key talent in the businesses and global functions and moves to develop senior executives and utilize them in positions well suited for their skill sets.

 

   

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 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. He oversaw the response to rapidly changing market concerns regarding the Euro zone by working with Independent Risk to expand Citi’s disclosures. He led Citi’s significant improvements in effective communications with investors and stakeholders regarding Citi’s multiple and complex businesses, and has had a leadership role in developing Citi’s responses to regulatory reform. He established an integrated investment function to strengthen the management of global liquidity pools and improve earnings through a more diversified investment portfolio. He is leading efforts to manage the utilization of Citi’s deferred tax asset and has provided leadership for Citi’s firm-wide plans for implementing regulatory reform including Basel III capital requirements and the Dodd-Frank Act. His function executed numerous efficiencies in 2011, including the consolidation of bank legal entities and improved controls over balance sheet usage and accounts payable.

 

   

Mr. Havens, President and COO of Citi; CEO, Institutional Clients Group: Mr. Havens is President and Chief Operating Officer of Citi, responsible for the day-to-day management of the entire firm. He is also responsible for the management of S&B and GTS, among other businesses, as CEO of the Institutional Clients Group (ICG), which provides a full range of financial products and services to corporations, other financial institutions, and governments. ICG’s international presence is supported by trading floors in approximately 75 countries and jurisdictions and a proprietary network within GTS in over 95 countries and jurisdictions. His performance assessment took into account his promotion into his firm-wide roles in early 2011 and the overall performance of Citi in light of his firm-wide roles, in addition to the performance of ICG. Although 2011 was a challenging year for Citi and particularly for S&B, Mr. Havens provided steady leadership, a focus on longer-term goals, and

 

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an emphasis on diligent risk management, thereby enabling Citi to reduce overall risk levels, continue solid profitability and maintain or increase market share across businesses. Mr. Havens has been devoted to rebuilding the capabilities of businesses in the ICG, with a particular emphasis on strategic recruiting of selected additional talent in targeted businesses.

 

   

Mr. Leach, Chief Risk Officer: Mr. Leach is responsible for managing financial, operational and franchise risk for the entire company in partnership with the businesses, consistently with Citi’s risk appetite as established by senior management and the board. His role is critical to ensuring the safety and soundness of the organization. He has led the development of standard risk metrics, processes and procedures that have resulted in demonstrable improvements in Citi’s ability to manage a wide spectrum of risks. He has led the regulatory capital assessment and stress-testing functions, and his efforts have resulted in the consideration of impact on capital levels as an element of day-to-day decision-making throughout Citi. Citi’s capital levels and risk discipline have been consistent through a challenging period; Citi’s risk discipline across businesses is evidence of Mr. Leach’s strong leadership. He has added significant resources to risk management processes through the creation of the Enterprise Risk Management unit and has led improvements in timely reporting on Citi’s risk exposures through enhanced Risk Architecture systems. He has mobilized resources and investments to strengthen the overall control environment for the global consumer businesses in key markets and the credit decision-making process.

 

   

Mr. Medina-Mora, CEO, Consumer Banking for the Americas and Chairman of the Global Consumer Council; Chairman and CEO, Mexico and Latin America (title held during 2011): In awarding compensation for 2011, the committee considered Mr. Medina-Mora’s three principal roles held during that year. He was 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. The North America consumer bank delivered strong earnings and revenue results, and also showed strong results on cost of credit, loan growth and deposit growth. The businesses have shown significant improvements in Net Promoter Score (NPS) ratings and employee satisfaction surveys. As Chairman of the Global Consumer Council, key accomplishments included establishing the new consumer banking strategy, building governance to improve execution of that strategy, and driving implementation of global systems improvements to better integrate customer-facing applications. He has led numerous efforts to strengthen controls in the consumer businesses, such as anti-money laundering initiatives, improvement in the quality of the mortgage loan origination process, and fraud detection systems. In Latin America, a strong market focus enabled the rapid growth of the franchise through growth in loans and deposits and improvement in customer satisfaction metrics.

 

Each covered employee was evaluated on risk behaviors by (a) a group of representatives from independent control functions such as Compliance, Finance, Independent Risk and Legal and (b) his or her manager. This process reviewed qualitative behaviors with a focus on identifying instances in which covered employees did not demonstrate prudent risk-taking behaviors or attitudes. As part of this process, Mr. Gerspach, Mr. Havens, Mr. Leach and Mr. Medina-Mora were assessed on risk behaviors by a group of independent control function leaders and/or their manager, while Mr. Pandit was assessed on risk behaviors by the committee. These reviews resulted in positive ratings or assessments. The positive ratings were not determinative of the size of the annual incentive awards for 2011, as a positive risk rating is an expected element of job performance in senior executive roles.

 

3.

Market data. As part of its consideration of awards to members of the operating committee (including the named executive officers), the committee reviewed general market data regarding compensation in the financial services industry and, where available, market compensation for an executive’s role in a

 

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  major financial services institution. The information was collected by management from publicly available sources and third-party proprietary databases based on parameters set by management. American Express, Bank of America, Capital One, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, U.S. Bancorp and Wells Fargo are the companies Citi considers to be the peer group for purposes of senior executive compensation for most roles. These companies were selected because they compete for executive talent with Citi and they are global financial services institutions with substantial US operations and lines of business that are sufficiently similar to Citi’s material lines of business. Other financial services institutions based in the US 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 for 2011 was modified slightly from the 2010 group to reflect Citi’s growing focus on consumer and global payment systems. The committee reviewed CEO compensation at American Express, Bank of America, Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, UBS and Wells Fargo to provide context for the decisions regarding Mr. Pandit’s compensation; the committee considered this peer group of the larger global financial services institutions to have businesses and global presences such that CEO roles are comparable to the Citi CEO role. The market information on total annual compensation provided background and context for committee decisions; the information regarding pay practices of the peer groups informed but did not govern the committee’s award determination for any individual named executive officer or any other executive.

 

Determination process. After reviewing the comparison data and evaluating the factors outlined above, the committee then determined the nominal amount of each named executive officer’s annual incentive compensation. In making its decisions regarding Mr. Gerspach, Mr. Havens, Mr. Leach and Mr. Medina-Mora, the committee considered the recommendations made by the CEO, which reflected the factors previously discussed. The committee considered the views of its independent compensation consultant, ICCA, that the process the committee followed (and the various factors the committee considered) was appropriate and that the annual incentive compensation level was competitive. The committee also considered company performance, business unit performance where applicable, and individual achievements, framed by market or comparable data. Formulaic approaches or targets were not used to determine the amounts, consistent with the committee’s 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). Before finalizing the decisions, the committee determined that the awards were permitted under the EPP and were consistent with applicable regulatory guidance.

 

Awards made by the committee for 2011

On the basis of the foregoing decision-making process, the committee approved the following compensation amounts as salary and annual incentive awards in respect of performance in 2011 to the named executive officers:

 

Name   

Base

Salary

     Cash
Bonus
     Deferred
Stock
(CAP)*
    

Deferred
Cash

(DCAP)*

     Total  

Vikram Pandit

   $ 1,671,370       $ 5,331,452       $ 3,998,589       $ 3,998,589       $ 15,000,000   

John Gerspach

   $ 500,000       $ 2,200,000       $ 1,650,000       $ 1,650,000       $ 6,000,000   

John Havens

   $ 500,000       $ 5,000,000       $ 3,750,000       $ 3,750,000       $ 13,000,000   

Brian Leach

   $ 500,000       $ 3,400,000       $ 2,550,000       $ 2,550,000       $ 9,000,000   

Manuel Medina-Mora

   $ 546,966       $ 4,181,214       $ 3,135,910       $ 3,135,910       $ 11,000,000   

 

* The terms of the deferred stock awards and the deferred cash awards are described below under the headings Capital Accumulation Program (CAP) and Deferred Cash Award Plan (DCAP).

 

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The table above shows how the committee viewed its compensation decisions for 2011 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 2011 Equity Awards section of this Compensation Discussion and Analysis below. The awards made by the committee shown in the above table reflect reductions from the 2010 awards made by the committee for executives other than Mr. Pandit, who declined to accept incentive compensation in 2009 and 2010. This decrease is not reflected in the Summary Compensation Table due to SEC reporting requirements but is reflected in a comparison of the awards made by the committee for 2010 and 2011.

 

The compensation structure for 2011 for the named executive officers is described below.

 

 

Base salary. Citi believes that most compensation payable to the named executive officers should be at risk to incentivize performance and encourage proper risk management and compliance behavior. At the same time, the payment of cash compensation reflects the need to provide some liquidity to attract and retain executives. Effective January 18, 2011, Mr. Pandit’s annual rate of base salary was increased from $1 to $1,750,000.

 

 

Annual Incentive Award. Each named executive officer received an annual incentive award under DIRAP for 2011. Mr. Pandit, who received an annual incentive award for the first time since early 2008, received his award under the same structure generally applicable to all executive officers and other highly compensated employees. The structure of the 2011 annual incentive award for each named executive officer is as follows:

 

     Cash
Bonus


    Deferred
Stock
(CAP)


    Deferred
Cash
(DCAP)


 

Percentage of annual incentive award under DIRAP

     40     30     30

 

The committee decided to apply the same general structure to the executive officers, including the named executive officers, to provide focus on managing Citi as a unified enterprise. In determining the percentages to award as current and deferred compensation, the committee considered applicable regulatory requirements and guidelines for deferral, noting that a 60% deferral rate for senior executives is required in many countries outside the US. The committee furthermore determined that a 60% deferral over four years should be sufficient in amount and length of deferral to avoid incentives for the executives to take imprudent risks. The decision to award half of deferred compensation in stock and the remaining half in deferred cash was based on a view that each type of award encouraged actions that should deliver value to stockholders.

 

   

Capital Accumulation Program (CAP). Shares of Citi common stock awarded under CAP vest in four equal annual installments beginning on January 20 of the year following the year of grant. This means that unvested shares remain subject to fluctuations in Citi’s stock price as well as applicable clawbacks. The number of shares awarded to each participant is determined by dividing the nominal amount of the award by the average of the closing prices of Citi common stock on the New York Stock Exchange for the five trading days preceding the grant date. CAP provisions applicable upon termination of employment are explained in more detail after the 2011 Grants of Plan Based Awards Table.

 

   

Deferred Cash Award Plan (DCAP). DCAP awards also vest in four equal annual installments beginning on January 20 of the year following the year of grant and remain subject to applicable clawbacks during the vesting period. An additional performance-based vesting condition applies to these awards. If Citigroup has pre-tax losses in any year of the deferral period, the portion of the deferred cash award that is scheduled to vest in the year following the loss year will be reduced by a fraction, the numerator of which is the amount of the pre-tax loss, and the denominator of which is the highest level of annual

 

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pre-tax profit for Citigroup in the three years immediately prior to the loss year. Cancellation of vesting will occur on a formulaic basis. The unvested portion of the award earns notional interest at a rate of 3.55%, compounded annually. The treatment of DCAP awards upon termination of employment is the same as CAP awards.

 

 

Limits on perquisites.

 

   

Citi has imposed substantial limits on perquisites for many years.

 

   

None of the executive officers received tax gross-ups, private club dues reimbursement or financial planning benefits.

 

   

Citi does not provide for special medical, dental, insurance or disability benefits for executives; like other highly compensated employees, they pay more for these benefits than lower-paid employees.

 

 

No special pension benefits or supplemental executive retirement plans (SERPs).

 

   

Citi does not have special pension credits or benefits for executives.

 

   

Citi’s plans do not 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 supplemental plans in 2011, although Mr. Gerspach is eligible for certain grandfathered benefits that were frozen as of December 31, 2001.

 

 

No golden parachutes or severance agreements.

 

   

The named executive officers are not eligible for any “golden parachutes” or 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.

 

   

The named executive officers do not have employment contracts or change in control contracts. Recent equity awards do not provide for acceleration of vesting upon change in control of Citi or termination of employment.

 

 

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 2011). Eligible Citi employees, including the eligible named executive officers, will receive a matching contribution for 2011 under the Citigroup 401(k) Plan of up to 6% of eligible pay, subject to IRC annual limits. 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 US benefit programs for active employees on the same terms and conditions as those made available to US 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. Deferred incentive compensation awarded under DIRAP to any Citi employee, including the named executive officers, is subject to clawbacks (the Citi clawbacks). Deferred incentive compensation that continues to vest after termination of employment will remain subject to the Citi clawbacks after termination of employment. In general, the Citi clawbacks provide for the forfeiture or cancellation of unvested incentive compensation if the committee determines that the employee (a) received an award based on materially inaccurate publicly reported

 

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financial statements, (b) knowingly engaged in providing materially inaccurate information relating to publicly reported financial statements, (c) materially violated any risk limits established or revised by senior management and/or risk management, or (d) engaged in gross misconduct.

 

Additionally, and as part of the Citi clawbacks, 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 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.

 

Long-Term Performance Retention Awards

CEO Performance Retention Award. On May 17, 2011 the committee approved a retention award to Mr. Pandit which delivers value over time, to provide for stability in leadership as the franchise’s capacity for sustainable growth continues to be demonstrated. The award was designed with an appropriate balance of short-, medium- and long-term goals with an emphasis on long-term stockholder value creation and risk management. Because each component of the retention award has performance conditions, the ultimate value to Mr. Pandit will depend on the successful deployment and execution of strategies approved by the board.

 

Mr. Pandit’s award has three components: (a) a deferred stock award that will vest upon the achievement of specified non-financial goals in three key areas related to the sustainability of Citi; (b) a 2011 Key Employee Profit Sharing Plan (KEPSP) award, the value of which is based on Citi’s financial performance above certain thresholds for all senior executives participating in the KEPSP; and (c) stock options with exercise prices at or above the then current market price of Citi common stock, which provide value based on total shareholder return.

 

 

CEO Deferred Stock Award. Mr. Pandit’s deferred stock award is intended to reward him for enhancing the franchise’s standing based on non-financial metrics, as a balance to the focus on financial performance provided by the other components of his retention award. Mr. Pandit’s deferred stock award will vest in three equal installments at December 31, 2013, December 31, 2014 and December 31, 2015 only if the committee determines that Mr. Pandit has satisfied objectives in three areas that the committee believes are central to Citi’s future success. These areas are: (a) regulatory considerations (such as the results of Citi-wide risk management efforts), (b) an organizational culture focused on responsible finance, conducting business with integrity and serving Citi’s customers (measured through performance metrics such as opinion surveys), and (c) talent development (such as the quality of succession and development plans across a broad group of senior managers). Before each vesting date, the committee will decide whether to vest the applicable tranche in full or cause the tranche to be entirely forfeited, based on Mr. Pandit’s performance in meeting the discretionary criteria in these three key areas. The committee is monitoring Mr. Pandit’s progress in the target areas throughout the vesting period. Vested shares will be subject to a sale restriction until December 31, 2015, meaning that the value of the entire award is at risk for the entire vesting period. The Citi clawbacks are terms of the award. The award consisted of 240,732 shares with fair value of $10 million on the award date, and is expected to be reported in the Summary Compensation Table if and when the award vests.

 

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CEO Key Employee Profit Sharing Plan (KEPSP) Award. The committee made Mr. Pandit’s KEPSP award, like other KEPSP awards, in furtherance of the goal of preserving and incenting Citigroup’s key executive team. The value that Mr. Pandit and other executive participants realize with respect to the award will depend on Citi’s performance over a forward-looking multi-year period. As such, KEPSP awards are intended to maintain the executives’ focus on the long-term performance of Citi in a manner that appropriately balances incentives and risk, thereby aligning the executives’ interests with those of Citi’s stockholders and other stakeholders.

 

The KEPSP award provides Mr. Pandit with the opportunity to receive payments based on a specified percentage of the cumulative pre-tax income of Citicorp for 2011 and 2012, as set forth in the 2011 Grants of Plan-Based Awards Table below. “Cumulative pre-tax income” is generally defined as the income (loss) from continuing operations before taxes of Citigroup Inc. minus the income (loss) from continuing operations before taxes of Citi Holdings for the two-year performance period (2011 and 2012). Mr. Pandit will not be entitled to any payments unless cumulative pre-tax income for the performance period is at least $12 billion. If the conditions to vesting are satisfied, the initial two-thirds of Mr. Pandit’s award (the “initial payment”) will be payable on May 17, 2013 and the remaining one-third (the “holdback payment”) will be payable on May 17, 2014. The holdback payment will be reduced pro rata to the extent of any Citicorp pre-tax losses for 2013. Holdback payments will be credited with notional interest equal to the 90-day, U.S. dollar-based London Interbank Offered Rate (“90-day LIBOR”).

 

Each payment under the KEPSP to Mr. Pandit is subject to additional specified conditions. Before any payment may be made to anyone under the KEPSP, the committee, in consultation with Citi’s Chief Risk Officer, must determine that there has not been a material adverse change in the risk profile of Citigroup or Citibank, N.A. during the applicable performance period. Mr. Pandit must remain employed with Citi through the applicable payment date, although the award is subject to accelerated vesting and payment upon his death or disability. The KEPSP award is also subject to the Citi clawbacks.

 

 

CEO Option Grant. The committee awarded stock options with exercise prices at or above the market price of Citi common stock on the grant date, as set forth in the 2011 Grants of Plan-Based Awards Table below. The price of Citi common stock on the grant date was $41.54 and the committee awarded options with exercise prices of $41.54, $52.50 and $60.00. The options are intended to provide value based on total shareholder return, complementing the different performance measures used in the other elements of the retention awards. These options vest in three equal installments on the first three anniversaries of the grant date, and vested options remain exercisable for their entire 10 year term. Mr. Pandit forfeits unvested options if he terminates employment with Citi for any reason before the applicable vesting date, except in the event of his death or disability. The options have risk-adjustment features such as a one year holding period for incremental shares if the options are exercised before the fifth anniversary of the grant date, and unvested and vested but unexercised option shares may be canceled or forfeited pursuant to the Citi clawbacks.

 

Executive Long-Term Performance Retention Awards. On February 14, 2011 the committee made similar KEPSP awards and stock option grants to provide stability to the senior management team.

 

 

2011 Key Employee Profit Sharing Plan (KEPSP). The committee approved awards under the 2011 KEPSP for Mr. Gerspach, Mr. Havens, Mr. Medina-Mora and other executives, in furtherance of the corporate purposes described in connection with Mr. Pandit’s KEPSP award. The awards to Mr. Gerspach, Mr. Havens and Mr. Medina-Mora have terms that are generally the same as the terms of the KEPSP award to Mr. Pandit; however, the initial payment under the KEPSP awards to these executives will be payable on January 20, 2013 and the holdback payment will be payable on January 20, 2014. In addition, the awards made to Mr. Gerspach, Mr. Havens and Mr. Medina-Mora generally forfeit upon termination of

 

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employment, but are subject to accelerated vesting and payment on the executive’s death, disability or the sale of the executive’s business. Mr. Leach did not receive a KEPSP award as his perspective on Citi’s risk profiles will be used to determine whether payouts may be made under the plan; however in 2010 he received a deferred cash retention award under the Key Risk Employee Plan that is not contingent on his determinations but is in furtherance of the purposes of the KEPSP.

 

 

2011 Executive Option Grant (EOG). The committee granted stock options to Mr. Gerspach, Mr. Havens, Mr. Leach, Mr. Medina-Mora and other senior executives with exercise prices equal to the closing price of Citi stock on the grant date ($49.10). EOG options were intended to align employee and stockholder interests and promote employee retention by rewarding employees based on the future performance of Citigroup stock. The options have a six year term and vest in three equal installments on the first three anniversaries of the grant date. Vested options are exercisable for the entire six year term. If an option is exercised before February 14, 2016, the incremental shares received on exercise may not be sold or transferred for one year from the date of exercise. All or a portion of the options vest in the event of death, disability, involuntary termination of employment other than for gross misconduct, termination of employment after attaining the Rule of 75 (where a participant’s age plus years of service equal at least 75) and in connection with the sale of an executive’s business. In addition, unvested and vested but unexercised option shares may be canceled or forfeited pursuant to the Citi clawbacks.

 

2011 Stock Awards

SEC regulations generally require 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 2011 Summary Compensation Table may not relate to performance in 2011. The table set forth below summarizes the difference between (a) the stock award values granted by the committee in January 2012 as an element of the annual incentive awards for 2011 and (b) the aggregate stock award values appearing in the 2011 Summary Compensation Table. The first column (after the executives’ names) below shows values for the stock awards that were made by the committee in January 2012 as part of the 2011 annual incentive awards based on the fair value on the date of grant. The second column shows the values for stock awards made for 2010 required to be shown in the 2011 Summary Compensation Table in accordance with SEC rules. The last column shows the difference between the first column (the values for 2011) and the second column (the values required by SEC rules to be included in the 2011 Summary Compensation Table).

 

Name


   Stock
Awarded
for 2011


     Value of
Stock Awards
Shown in
2011
Summary
Compensation
Table


     Difference
Between Stock
Awarded for
2011 and
Summary
Compensation
Table Values


 

Vikram Pandit

   $ 3,998,589       $ 0       $ 3,998,589   

John Gerspach

   $ 1,650,000       $ 2,333,333       $ (683,333

John Havens

   $ 3,750,000       $ 4,750,000       $ (1,000,000

Brian Leach

   $ 2,550,000       $ 5,400,000       $ (2,850,000

Manuel Medina-Mora

   $ 3,135,910       $ 3,998,939       $ (863,029

 

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Important compensation policies affecting named executive officers for 2011

 

 

Stock ownership commitment. Citi was an early proponent of executive stock ownership requirements, having had some form of a stock ownership commitment for well over a decade. As part of Citi’s stock ownership commitment, executive officers 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. 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 performance vesting senior executive stock awards, such as the May 2011 CEO Deferred Stock Award and 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. In May 2011, Citi reinstated a dividend of $0.01 per share of common stock.

 

Name


   Amount Paid as
Dividend Equivalents
in 2011 on Restricted
and/or Deferred
Stock Awards


 

Vikram Pandit

   $ 750   

John Gerspach

   $ 1,547   

John Havens

   $ 2,146   

Brian Leach

   $ 1,991   

Manuel Medina-Mora

   $ 2,145   

 

 

Timing of awards. The incentive awards to the named executive officers for performance in 2011 were made on January 17, 2012, in accordance with Citi’s customary practice of making incentive awards in January for performance in the prior year. The average of the closing prices of Citi common stock on the five trading days immediately prior to the grant date was used to determine the number of shares awarded to the named executive officers and all other eligible employees under CAP in accordance with longstanding Citi practice regarding CAP.

 

 

Grants of reload options. None of the named executive officers received reload options in 2011, 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

 

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on the 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 $53,000 in 2011. ICCA meets separately with the committee and its chair outside the presence of management. For the 2011 compensation year, the committee did not engage any other compensation consultant.

 

 

Tax deductibility of the named executive officers’ incentive and retention compensation. In 2011, stockholders approved the EPP, a new plan intended to preserve the deductibility of incentive compensation paid to executive officers for 2011 and future years. Each named executive officer’s annual incentive award for 2011 is awarded under the EPP to secure the deductibility thereof. The committee certified the maximum amount payable to each named executive officer under the EPP for 2011 and exercised its discretion to award lesser amounts under the plan. While Citi typically seeks to preserve deductibility of incentive 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, incentivize and retain its executives.

 

 

Policy on tax “gross-ups. Citi does not allow tax gross-ups, either directly or indirectly, for any of the named executive officers or other executive officers, 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.

 

 

Change in control agreements. Citi’s stockholder-approved 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. Citi changed CAP effective in January 2011 to eliminate circumstances in which the vesting and/or delivery of awards could accelerate in 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 and to facilitate clawbacks.

 

 

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 2011, please see the “Awards made by the committee for 2011” section of the Compensation Discussion and Analysis.

 

2011 Summary Compensation Table

The following table shows Citi’s compensation for any person serving as Chief Executive Officer or Chief Financial Officer during 2011 and Citi’s three other most highly compensated executive officers, with their titles in effect on December 31, 2011. The form and content of the table are prescribed by SEC regulations.

 

Name and

Principal Position

  Year(1)    

Salary

($)

   

Bonus

($)(2)

   

Stock

Awards

($)(3) (19)

   

Option

Awards

($)(4) (19)

   

Non-

Equity

Incentive

Plan

Compen-

sation

($)

   

Change
in

Pension

Value

and Non-

qualified

Deferred

Compensation

Earnings

($)(5)

   

All
Other

Compen-

sation

($)(6)

   

Total

($)

 
Vikram Pandit     2011      $ 1,671,370 (7)    $ 5,331,452      $ 0      $ 7,839,581 (8)    $ 0      $ 0      $ 14,700      $ 14,857,103   
CEO     2010      $ 1      $ 0      $ 0      $ 0      $ 0      $ 0      $ 0      $ 1   
      2009      $ 125,001 (7)    $ 0      $ 0      $ 0      $ 0      $ 0      $ 3,750      $ 128,751   

John Gerspach-

CFO

   

 

2011

2010

  

  

  $

$

500,000

500,000

  

  

  $

$

2,200,000

0

  

  

  $

$

2,333,333

4,166,667

(9) 

(11) 

  $

$

2,039,836

0

(10) 

  

  $

$

0

0

  

  

  $

$

73,047

51,995

  

  

  $

$

14,700

9,800

  

  

  $

$

7,160,916

4,728,462

  

  

      2009      $ 416,667      $ 0      $ 4,583,333 (12)    $ 0      $ 0      $ 49,117      $ 14,700      $ 5,063,817   
John Havens     2011      $ 500,000      $ 5,000,000      $ 4,750,000 (9)    $ 2,719,781 (10)    $ 0      $ 0      $ 14,700      $ 12,984,481   
President and COO,     2010      $ 500,000      $ 0      $ 9,000,000 (11)    $ 0      $ 0      $ 0      $ 9,800      $ 9,509,800   
Citigroup CEO,     2009      $ 500,000      $ 0      $ 10,327,374 (13)    $ 434,380 (14)    $ 0      $ 0      $ 14,700      $ 11,276,454   
Institutional Clients                                                                        
Group                                                                        

Brian Leach

Chief Risk Officer

    2011      $ 500,000      $ 3,400,000      $ 5,400,000 (15)    $ 2,039,836 (10)    $ 0      $ 0      $ 14,700      $ 11,354,536   
Manuel Medina-Mora (16)     2011      $ 546,966 (17)    $ 4,181,214      $ 3,998,939 (9)    $ 2,719,781 (10)    $ 0      $ 0      $ 0      $ 11,446,900   
CEO, Consumer     2010      $ 546,966 (17)    $ 0      $ 7,450,911 (11)    $ 0      $ 0      $ 2,119,018      $ 0      $ 10,116,895   
Banking for the     2009      $ 546,966 (17)    $ 0      $ 9,328,010 (18)    $ 361,984 (14)    $ 0      $ 163,047      $ 0      $ 10,400,007   
Americas and Chairman of the Global Consumer Council Chairman and                                                                        
CEO, Latin America & Mexico                                                                        

(1) 

Compensation for Mr. Leach is provided only for 2011, because he was not a named executive officer in 2009 or 2010.

(2) 

Amounts in this column show cash bonuses for performance in 2011.

(3) 

The values in this column represent the aggregate grant date fair values of the awards computed in accordance with FASB ASC Topic 718.

(4) 

The values in this column represent the aggregate grant date fair values of the awards computed in accordance with FASB ASC Topic 718, as described in more detail in the applicable footnotes below. The assumptions made when calculating the amounts in this column for 2011 and 2009 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 2011.

 

(footnotes continued on following page)

 

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(footnotes continued from previous page)

(5) 

These amounts represent the increases in the present value of pension benefits for Mr. Gerspach and Mr. Medina-Mora, as more fully described in the Pension Benefits Table. The value of Mr. Gerspach’s benefit under The Citigroup Pension Plan increased $43,166 and the value of his benefit under the Supplemental ERISA Compensation Plan of Citibank, N.A. and Affiliates increased $29,881. The value of Mr. Medina-Mora’s benefit under the Banamex Pension Plan decreased by $901,674 and the value of his statutory seniority premium decreased by $367, primarily due to changes in exchange rates. Although the value of Mr. Medina-Mora’s pension benefits have declined, $0 change is reported in this column in accordance with SEC rules. 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. Mr. Pandit, Mr. Havens and Mr. Leach are not eligible for pension benefits as they were hired after The Citigroup Pension Plan was closed to new members.

(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   

John Havens

   $ 0       $ 0       $ 0       $ 0   

Brian Leach

   $ 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       $ 14,700       $ 0       $ 14,700   

John Gerspach

   $ 0       $ 14,700       $ 0       $ 14,700   

John Havens

   $ 0       $ 14,700       $ 0       $ 14,700   

Brian Leach

   $ 0       $ 14,700       $ 0       $ 14,700   

Manuel Medina-Mora

   $ 0       $ 0       $ 0       $ 0   

 

Mr. Pandit, Mr. Gerspach, Mr. Havens and Mr. Leach received 401(k) plan matching contributions pursuant to the formula applicable to all eligible US employees. In accordance with applicable law, Mr. Pandit has entered into an Aircraft Time Sharing Agreement with Citiflight, Inc. (a subsidiary of Citigroup Inc.) that allows him to reimburse Citi for the cost of his personal use of corporate aircraft based on the aggregate incremental cost of the flight to Citi. Aggregate incremental cost is calculated based on a cost-per-flight-hour charge developed by a nationally recognized and independent service.

(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) 

Mr. Pandit’s options are an element of his retention award granted in May 2011, as described in the Compensation Discussion and Analysis. The options have a 10-year term and vest ratably over three years. The exercise prices are at or above the market price of Citi common stock on the grant date, and the exercise prices are as follows: $41.54 (300,000 options), $52.50 (100,000 options) and $60.00 (100,000 options). 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 were “out of the money” on December 31, 2011.

 

(footnotes continued on following page)

 

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(9) 

These awards were made under the Long Term Restricted Stock (LTRS) program for performance in 2010. 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.

(10) 

These options are part of the February 2011 Executive Option Grant, as described in the Compensation Discussion and Analysis. They have a six-year term and vest ratably over three years. The exercise price is $49.10, which was the fair market value of Citi common stock on the grant date. The options will only have value to the extent that the Citi stock price exceeds the exercise price after the vesting of such options, and they currently are “out of the money.”

(11) 

The values shown include salary stock amounts paid consistent with applicable legal requirements. 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) 

This amount was awarded to Mr. Gerspach 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 2009 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.

(13) 

This amount includes $1,327,374 attributable to a performance-vesting equity award 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 $106.10 and $178.50, respectively, set forth in the performance-vesting awards before January 14, 2013, the 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 to Mr. Havens and Mr. Medina-Mora in January 2009 in connection with 2008 performance and have exercise prices of $106.10 or $178.50. 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) 

This award to Mr. Leach under CAP was granted for performance in 2010. See “General Discussion of the Summary Compensation Table and Grants of Plan-Based Awards Table” following the Grants of Plan-Based Awards Table.

(16) 

Mr. Medina-Mora is currently CEO, Global Consumer Banking and Chairman, Mexico and Latin America.

(17) 

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

(18) 

This amount includes $849,807 attributable to a performance-vesting equity award 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 $106.10 and $178.50, respectively, set forth in the awards before January 14, 2013, the performance-vesting 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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Table of Contents
(19) 

The following table compares the equity award values shown in the Summary Compensation Table to the market value of the same awards at December 30, 2011.

 

Equity Value Table

 

Name    Year      Value of Stock Awards
Shown in Summary
Compensation Table
     Value of Option Awards
Shown in Summary
Compensation Table
     Combined Equity
Award Value at
December 30,
2011
     Difference between
Combined Equity
Value and Stock
and Option Award
Values in
Summary
Compensation
Table
 

Vikram Pandit

     2011       $ 0       $ 7,839,581       $ 0       $ (7,839,581
       2010       $ 0       $ 0       $ 0       $ 0   
       2009       $ 0       $ 0       $ 0       $ 0   

John Gerspach

     2011       $ 2,333,333       $ 2,039,836       $ 1,278,958       $ (3,094,211
       2010       $ 4,166,667       $ 0       $ 2,736,678       $ (1,429,989
       2009       $ 4,583,333       $ 0       $ 3,187,875       $ (1,395,458

John Havens

     2011       $ 4,750,000       $ 2,719,781       $ 2,603,594       $ (4,866,187
       2010       $ 9,000,000       $ 0       $ 5,911,225       $ (3,088,775
       2009       $ 10,327,374       $ 434,380       $ 7,432,805       $ (3,328,949

Brian Leach

     2011       $ 5,400,000       $ 2,039,836       $ 2,830,159       $ (4,609,677

Manuel Medina-Mora

     2011       $ 3,998,939       $ 2,719,781       $ 2,191,918       $ (4,526,802
       2010       $ 7,450,911       $ 0       $ 4,893,779       $ (2,557,132
       2009       $ 9,328,010       $ 361,984       $ 6,911,154       $ (2,778,840

 

The combined equity award value at December 30, 2011 reflects the sum of (a) the number of shares granted in each year shown times the Citigroup closing stock price at December 30, 2011 of $26.31, and (b) the intrinsic value of the option awards granted in each year shown based on the Citigroup closing stock price at December 30, 2011 of $26.31. Some of the named executive officers were granted performance vesting stock awards in January 2009. For those awards, the shares used for this purpose are the granted shares multiplied by a fraction, the numerator of which is the Citigroup closing stock price at December 30, 2011 of $26.31, and the denominator which is (a) $106.10 for 50% of the shares, and (b) $178.50 for the other 50% of the shares, with the resulting shares multiplied by the Citigroup closing stock price at December 30, 2011 of $26.31. The intrinsic value of each option award in the above table is $0, as all of them were “out of the money” as of December 30, 2011.

 

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2011 Grants of Plan-Based Awards

The table below provides information regarding awards made by the committee in 2011, including each equity award’s grant date fair value.

 

   

Grant Date

   

Estimated Future

Payouts Under

Non-Equity
Incentive

Plan Awards(1)

   

Estimated Future

Payouts Under

Equity Incentive

Plan Awards

   

All
Other

Stock

Awards:

Number

of

Shares

of Stock

or
Units(2)

(#)

   

All Other

Option

Awards:

Number

of

Securities

Under-
lying

Options(2)

(#)

   

Exercise

or Base

Price of

Option

Awards

($/Sh)

   

Grant

Date Fair

Value of

Stock and

Option

Awards($)

 
Name    

Thresh-

old

($)

   

Target

($)

   

Maxi-

mum

($)

   

Thresh-

old

(#)

   

Target

(#)

   

Maxi-

mum

(#)

         

Vikram Pandit

    5/17/2011        —          —          —          —          —          —          —          300,000      $ 41.54      $ 5,023,548   
      5/17/2011        —          —          —          —          —          —          —          100,000      $ 52.50     $ 1,467,511   
      5/17/2011        —          —          —          —          —          —          —          100,000      $ 60.00      $ 1,348,522   
      5/17/2011      $ 6,651,600      $ 10,148,679        —          —          —          —          —          —          —        $ —     

John Gerspach

    1/18/2011        —          —          —          —          —          —          48,611        —          —        $ 2,333,333   
      2/14/2011        —          —          —          —          —          —          —          150,000      $ 49.10      $ 2,039,836   
      2/14/2011      $ 1,730,064      $ 2,639,645        —          —          —          —          —          —          —        $ —     

John Havens

    1/18/2011        —          —          —          —          —          —          98,958        —          —        $ 4,750,000   
      2/14/2011        —          —          —          —          —          —          —          200,000      $ 49.10      $ 2,719,781   
      2/14/2011      $ 5,190,192      $ 7,918,935        —          —          —          —          —          —          —        $ —     

Brian Leach

    1/18/2011        —          —          —          —          —          —          107,569        —          —        $ 5,400,000   
      2/14/2011        —          —          —          —          —          —          —          150,000      $ 49.10      $ 2,039,836   

Manuel Medina-Mora

    1/18/2011        —          —          —          —          —          —          83,311        —          —        $ 3,998,939   
      2/14/2011        —          —          —          —          —          —          —          200,000      $ 49.10      $ 2,719,781   
      2/14/2011      $ 2,661,636      $ 4,060,991        —          —          —          —          —          —          —        $ —     

(1) 

These awards were made under the Key Employee Profit Sharing Plan (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, 2011. Actual awards under the program will be based on cumulative pre-tax income (as defined in the KEPSP) for the two-year period January 1, 2011 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 the named executive officers if the minimum target is achieved. KEPSP does not provide for a maximum award amount.

(2) 

These awards were made under the 2009 Stock Incentive Plan.

 

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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.

 

2010 Long-Term Restricted Stock.    Annual incentive awards for 2010 were made to Mr. Gerspach, Mr. Havens and Mr. Medina-Mora in January 2011 in the form of “long-term restricted stock” (LTRS), as required by the Emergency Economic Stabilization Act of 2008, as amended (EESA). 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 2010 LTRS awards to executive officers. If Citi has 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 Citi’s clawbacks, as described 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, as 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.

 

2010 Capital Accumulation Program; Rule of 60 and Rule of 75.    The deferred portion of the annual incentive award for 2010 was awarded to Mr. Leach in January 2011 under the CAP program. Shares of Citi common stock awarded under CAP vest in four equal annual installments beginning on January 20 of the year following the year of grant. In general, shares vest on schedule and therefore unvested shares remain subject to fluctuations in Citi’s stock price as well as applicable clawbacks. These awards have special provisions applicable to employees who meet the Rule of 60 or the Rule of 75 at the time of termination of employment. Under the current CAP terms, a participant meets the Rule of 60 if his or her age plus years of service equal at least 60 and he or she either (a) is at least age 50 with at least five years of service, or (b) is under age 50 with at least 20 years of service. A participant meets the Rule of 75 if his or her age plus years of service equal at least 75. If a participant meets the Rule of 60 or the Rule of 75 and voluntarily terminates his or her employment, the participant’s CAP shares will be distributed to the participant on the regularly scheduled vesting dates, provided that during the vesting period, he or she does not work for a “significant competitor” as defined under CAP terms. In contrast, if a participant does not meet either of these rules, upon voluntary resignation, CAP shares are forfeited. CAP awards provide for accelerated vesting in the event of a participant’s death and vesting on schedule in all other cases. Mr. Gerspach and Mr. Medina-Mora have attained the Rule of 75; Mr. Pandit and Mr. Havens have attained the Rule of 60; Mr. Leach has not attained either the Rule of 60 or the Rule of 75.

 

In addition to the foregoing terms, the CAP award to Mr. Leach and other executive officers for 2010 was 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 vest for that year. This CAP award is subject to Citi’s clawbacks, as described under “Clawbacks applicable to named executive officer compensation.”

 

2010 and 2009 Salary Stock.    The committee paid salary stock to Mr. Gerspach, Mr. Havens and Mr. Medina-Mora in 2009 and 2010 as a component of compliance with EESA. Salary stock payments were made in accordance with the rulings of the Special Master for TARP Executive Compensation (the Special Master), pursuant to which compensation in the form of stock was immediately vested but was subject to sale restrictions for periods of up to 36 months. There were no provisions for early release of these transfer restrictions in the event of retirement, involuntary termination of employment or change in control. Citi does not anticipate awarding salary stock in the future.

 

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Table of Contents

2009 Long-Term Restricted Stock.    Annual incentive awards for 2009 were made to Mr. Gerspach, Mr. Havens and Mr. Medina-Mora in December 2009 in the form of LTRS, as required by EESA. These LTRS awards will not vest unless the executive remains employed until January 20, 2013 and are subject to Citi’s clawbacks. Like the 2010 LTRS awards, these LTRS awards do not vest in the event of retirement, involuntary termination of employment or change in control, but accelerated vesting would occur upon death or disability. Unlike the 2010 LTRS awards, these awards do not have a performance-based vesting condition.

 

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 shares of Citigroup common stock awarded in lieu of cash incentive compensation with terms that are designed to comply with the Special Master rulings. Half of the SIAs awarded to Mr. Havens and Mr. Medina-Mora was immediately vested and transferable; the other half is sale-restricted and becomes transferable on the third anniversary 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, and these awards are also subject to Citi’s clawbacks.

 

2008 Performance-Vesting Stock.    Mr. Havens and Mr. Medina-Mora received awards of performance-vesting stock in January 2009 for performance in 2008, constituting 30% of their total annual incentive awards for performance in 2008. These awards vest if the price of a share of Citi common stock meets specified price targets prior to January 14, 2013 (the delivery date). Half of each executive’s award has a price target of $178.50 and half has a price target of $106.10, with the price target deemed met only if the NYSE closing price of Citi stock equals or exceeds the applicable price target for at least 20 NYSE trading days within any period of 30 consecutive NYSE trading days ending on or before the delivery date. These price targets were chosen based on the conversion prices of the warrants to purchase common stock issued by Citi to the US Treasury Department 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. 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 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.

 

2008 Options.    Mr. Havens and Mr. Medina-Mora received option grants in January 2009 for performance in 2008, constituting 10% of their total annual incentive awards for performance in 2008. Half of each executive’s options have an exercise price of $178.50 and half have an exercise price of $106.10, and were granted on January 14, 2009, when the closing price of Citi common stock was $45.30. 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 2011 Fiscal Year-End

 

The market values in this table were computed using the closing price of a share of Citi common stock on December 30, 2011, which was $26.31. The number of securities and values in this table and throughout this proxy statement have been adjusted for the reverse stock split effective May 6, 2011.

 

Name   Grant Date     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 ($)

 
    Initial     Reloads     Initial     Reloads                

Vikram Pandit

    1/22/2008        75,000 (3)      —          25,000        —          —        $ 244.0000        1/22/2018        —          —          —          —     
      1/22/2008        75,000 (3)      —          25,000        —          —        $ 305.0000        1/22/2018        —          —          —          —     
      1/22/2008        75,000 (3)      —          25,000        —          —        $ 366.0000        1/22/2018        —          —          —          —     
      5/17/2011        —          —          300,000 (4)      —          —        $ 41.5400        5/17/2021        —          —          —          —     
      5/17/2011        —          —          100,000 (4)      —          —        $ 52.5000        5/17/2021        —          —          —          —     
      5/17/2011        —          —          100,000 (4)      —          —        $ 60.0000        5/17/2021        —          —          —          —     

John Gerspach

    2/13/2002        386 (5)      —          —          —          —        $ 421.0972        2/13/2012        —          —          —          —     
      1/23/2004        —          343        —          —          —        $ 506.9000        2/13/2012        —          —          —          —     
      10/6/2006        —          1,044        —          —          —        $ 509.9000        2/13/2012        —          —          —          —     
      1/22/2008        —          —          —          —          —          —          —          379 (6)    $ 9,971        —          —     
      12/30/2009        —          —          —          —          —          —          —          50,200 (7)    $ 1,320,762        —          —     
      1/18/2011        —          —          —          —          —          —          —          48,611 (8)    $ 1,278,955        —          —     
      2/14/2011        —          —          150,000 (9)      —          —        $ 49.1000        2/14/2017        —          —          —          —     

John Havens

    1/14/2009        —          —          —          —          —          —          —          —          —          57,791 (10)    $ 1,520,481   
      1/14/2009        15,254 (11)      —          15,254        —          —        $ 106.1000        1/14/2019        —          —          —          —     
      1/14/2009        15,254 (11)      —          15,254        —          —        $ 178.5000        1/14/2019        —          —          —          —     
      12/30/2009        —          —          —          —          —          —          —          71,536 (7)    $ 1,882,112        —          —     
      1/18/2011        —          —          —          —          —          —          —          98,958 (8)    $ 2,603,585        —          —     
      2/14/2011        —          —          200,000 (9)      —          —        $ 49.1000        2/14/2017        —          —          —          —     

 

(table continued on next page)

 

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(table continued from previous page)

 

Name   Grant Date     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 ($)

 
    Initial     Reloads     Initial     Reloads                

Brian Leach

    1/14/2009        —          —          —          —          —          —          —          —          —          38,527 (10)    $ 1,013,645   
      1/14/2009        10,169 (11)      —          10,169        —          —        $ 106.1000        1/14/2019        —          —          —          —     
      1/14/2009        10,169 (11)      —          10,169        —          —        $ 178.5000        1/14/2019        —          —          —          —     
      1/19/2010        —          —          —          —          —          —          —          66,366 (12)    $ 1,746,089        —          —     
      1/18/2011        —          —          —          —          —          —          —          107,569 (13)    $ 2,830,140        —          —     
      2/14/2011        —          —          150,000 (9)      —          —        $ 49.1000        2/14/2017        —          —          —          —     

Manuel Medina-Mora

    2/13/2002        10,722 (5)      —          —          —          —        $ 421.0972        2/13/2012        —          —          —          —     
      2/13/2002        1,625 (14)      —          —          —          —        $ 418.9707        2/13/2012        —          —          —          —     
      1/17/2006        12,690 (15)      —          —          —          —        $ 489.2000        1/17/2012        —          —          —          —     
      1/22/2008        —          —          —          —          —          —          —          1,898 (6)    $ 49,936        —          —     
      1/22/2008        22,089 (16)      —          7,363        —          —        $ 244.5000        1/22/2014        —          —          —          —     
      1/14/2009        —          —          —          —          —          —          —          —          —          36,998 (10)    $ 973,417   
      1/14/2009        12,711 (11)      —          12,711        —          —        $ 106.1000        1/14/2019        —          —          —          —     
      1/14/2009        12,711 (11)      —          12,711        —          —        $ 178.5000        1/14/2019        —          —          —          —     
      12/30/2009        —          —          —          —          —          —          —          67,771 (7)    $ 1,783,055        —          —     
      1/18/2011        —          —          —          —          —          —          —          83,311 (8)    $ 2,191,912        —          —     
      2/14/2011        —          —          200,000 (9)      —          —        $ 49.1000        2/14/2017        —          —          —          —     

(1) 

The options shown in this column are vested as of December 31, 2011.