Citigroup (C)

certain age and years of service rules or who are residents of certain countries are made in the form of deferred stock.

The incentive and retention awards made to the named executive officers under CAP consist generally of a core CAP award and a supplemental CAP award. Core CAP awards are discounted 25 percent from market value and typically represent 25 percent of the executive’s total incentive compensation. The additional shares that are awarded as a result of the discount are referred to as premium CAP shares. Supplemental CAP awards are not discounted and represent 15 percent of the executive’s total incentive compensation. CAP is available to all Citi employees whose incentive awards exceed a certain threshold ($20,000 for U.S. employees and approximately $40,000 to $45,000 for non-U.S. employees). CAP awards vest 25 percent per year over a four-year period, and are cancelled upon a voluntary termination of employment unless the recipient has met certain age and years of service requirements described in detail under Potential Payments upon Termination or Change in Control below. Following the vesting of each portion of a CAP award, the freely transferable shares (subject only to the Citi Stock Ownership Commitment) are delivered to the CAP participants.

CAP awards are granted to a significant percentage of Citi’s global workforce. Approximately 98,100,000 shares were awarded to approximately 36,400 employees in 83 countries around the world under CAP in January 2008 in respect of 2007 performance. Of the total number of CAP shares granted in January 2008, 469,883 shares were granted to the named executive officers, representing approximately 0.5 percent of the total number of shares granted.

With respect to awards of restricted stock, as of the date of award, the recipient may direct the vote and receives dividend equivalents on the underlying shares. With respect to awards of deferred stock, the recipient receives dividend equivalents but does not have voting rights with respect to the shares until the shares are delivered.

The dividend equivalent payment is the same amount as the dividend paid on shares of Citi common stock. In 2007 the named executive officers received the following amounts as dividend equivalents on restricted or deferred stock:

Employees who received CAP awards in January 2008 may have elected to receive all or a portion of the award in nonqualified stock options, in 25 percent increments, rather than restricted or deferred stock. The options vest on the same schedule as the restricted or deferred stock award, have a six-year term, and, under the stockholder-approved 1999 Stock Incentive Plan, have an exercise price no less than 100 percent of the closing price of a share of Citi common stock on the NYSE on the trading date immediately preceding the date on which the option was granted. If options are elected, an option for four shares would be granted for each share by which the restricted or deferred stock award is correspondingly reduced. None of the named executive officers received an option grant as part of his or her incentive awards granted in January 2007 or 2008, although Mr. Pandit was awarded special performance-based options in January 2008 in connection with his new role as CEO. The committee has eliminated the stock option election for future CAP awards, due to low utilization by employees and the relatively high cost and complexity of administration.

The terms and conditions of the restricted and deferred stock awards made to the named executive

officers under CAP in January 2008 (in respect of 2007 performance) are generally the same as the terms and conditions of the CAP stock awards made in January 2007. Barring a change in the SEC regulations, the terms and conditions of the January 2008 CAP awards will be reported in the 2009 proxy statement. The committee made incentive awards for 2007 and in prior years based on the fair value of the awards and not on the accounting treatment of those or prior awards in Citi’s financial statements under SFAS 123(R) or other applicable accounting standards. The table in the Awards made by the Committee section of the Compensation Discussion and Analysis contains the full fair value of the CAP shares granted to each named executive officer in respect of 2007 performance.

The Grant of Plan-Based Awards Table shows 2007 stock option grants received by some of the named executive officers. None of the options were discretionary awards granted by the committee during 2007 (or in 2008). Rather they were reload options whose issuance resulted from rights that were granted as part of an earlier option grant. Under the reload program, if an option holder uses Citi common stock that the option holder has owned for at least six months to pay the exercise price of his or her option and income taxes due on exercise, the option holder receives a new reload option to make up for the shares he or she used to pay the exercise price and taxes. The reload option does not vest (i.e., become exercisable) for six months and expires on the expiration date of the initial grant. A reload option will not be granted upon the exercise of an option with a reload feature unless the market price on the date of exercise is at least 20 percent greater than the option exercise price. Since 2003, Citi has ceased granting reload options except to the extent required by the terms of previously granted options.