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C » Topics » Current Grant Practices and Shares Available for Grant under Existing and Proposed PlansThis excerpt taken from the C DEF 14A filed Mar 20, 2009. Current
Grant Practices and Shares Available for Grant under Existing
and Proposed Plans
Upon the approval of the amended and restated 1999 plan in April
2005, all of our other equity incentive plans were terminated as
sources of shares for new awards, except for the Citigroup
2000 employee stock purchase plan (which is a broad-based
plan that was approved by stockholders in January 2000 and that
is qualified under Section 423 of the
irc) (stock
purchase plan), and a plan that was not terminated until the
sale of Travelers Life & Annuity Company to MetLife,
Inc. later in 2005.
Since that time we have granted equity awards in the form of
restricted and deferred stock awards and non-qualified stock
options to employees in nearly 100 countries pursuant to a
variety of equity award programs, including annual grants and
sign-on awards. Generally, annual grants are made pursuant to
our cap programs;
sign-on awards are made throughout the year as needed to induce
outside talent to accept employment with Citi. Smith Barney
financial advisors and certain other employees participate in
voluntary cap
programs pursuant to which they may elect to receive restricted
or deferred stock awards vesting over two-year periods (and/or
six-year stock options vesting 25% per year) in lieu of
commissions or other compensation. Awards under voluntary
cap are made each
July and January based on production in the preceding six-month
periods. Other salaried employees at Citi are eligible to
receive annual discretionary awards of restricted or deferred
stock vesting over four-year periods pursuant to global
cap if their
annual incentive awards exceed a specified threshold. The number
of shares awarded equals a pre-
established percentage of the total annual incentive award. The
percentage delivered as a
cap award
increases with the size of the total incentive award. Prior to
2009, the minimum percentage of an annual incentive delivered in
the form of a global
cap award was 25%
and the maximum was 40%. Also prior to 2009, participants in
global cap were
given the same opportunity to receive stock options in lieu of
all or some of their stock award (receiving four option shares
for each share of restricted or deferred stock they elected not
to receive) as participants in voluntary
cap. This stock
option election was eliminated for global
cap participants
effective with the 2009 awards.
In 2009, global
cap awards were
made to employees worldwide with incentive compensation in
excess of $100,000. This threshold is higher than the threshold
used in prior years ($20,000 in the U.S. and approximately
$40,000 - $45,000 outside the U.S.), and we expect to continue
to make equity awards to individuals with higher levels of
incentive compensation. The change in the eligibility threshold
reduced the number of countries in which we offer
cap; awards were
made in 2009 in the U.S. and in 61 other countries.
In 2009, we also introduced performance-vesting awards as a
significant element of the executive compensation structure.
Members of the management executive committee did not receive
cap awards in
January 2009. However, members who did receive incentive awards
received 40% of the award in the form of a performance vesting
stock award and a performance priced option grant.
For
2009-2010,
we expect that awards will no longer be made to Smith Barney
financial advisors and other employees following their transfer
to the joint venture to be formed with Morgan Stanley.
Additional information regarding this transaction can be found
in our 2008 annual report on
Form 10-K.
Planning for other equity award programs is still underway and
is dependent on approval by stockholders of the 2009 plan, and
possibly a charter amendment increasing the authorized shares.
Additional information on our equity plans and grant practices
can be found elsewhere in this proxy statement under the
headings
Table of Contents
“Compensation Discussion and Analysis,”
“Compensation Tables,” “Equity Compensation Plan
Information,” and in Note 8 to the financial
statements contained in our 2008 annual report on
Form 10-K.
Under the heading “Equity Compensation Plan
Information” on page 87, as required by
sec rules, we
provide information about shares of common stock that may be
issued under our existing equity compensation plans as of
December 31, 2008. The tables below update and supplement
that data. We believe this additional
information is useful for gaining a complete understanding of
the 2009 plan proposal.
Tables I and II illustrate the “overhang” from
our equity plans, and Table III shows our “burn
rates” over the prior three calendar years.
“Overhang” refers to a ratio used to measure the
potential stockholder dilution represented by outstanding
employee equity awards and shares available for future grants.
We monitor simple overhang and fully diluted overhang, which are
calculated as follows:
The following table shows — as of the
February 27, 2009 record date — the number of
shares remaining available for grant under the 1999 plan, the
number of shares subject to outstanding (vested and unvested) and
unexercised stock options, and the number of shares subject to
outstanding (unvested) “full-value” awards
(i.e., restricted and deferred stock awards).
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