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Citigroup DEF 14A 2007
Definitive Proxy Statement
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.      )

 

 

 

 

Filed by the Registrant x

Filed by a Party other than the Registrant ¨

 

 

Check the appropriate box:

 

¨    Preliminary Proxy Statement

 

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

 

x    Definitive Proxy Statement

 

¨    Definitive Additional Materials

 

¨    Soliciting Material Pursuant to §240.14a-12

 

 

 

 

CITIGROUP INC.


(Name of Registrant as Specified In Its Charter)

 

 

 

 


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

 

Payment of Filing Fee (Check the appropriate box):

 

x    No fee required.

 

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

 

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

 

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

 

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

 

 
  (4)    Proposed maximum aggregate value of transaction:

 

 
  (5)    Total fee paid:

 

 

 

¨    Fee paid previously with preliminary materials.

 

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

 

  (1)    Amount Previously Paid:

 

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

 

 
  (3)    Filing Party:

 

 
  (4)    Date Filed:

 

 


Table of Contents

 

LOGO

 

Citigroup Inc.

399 Park Avenue

New York, NY 10043

 

March 13, 2007

 

Dear Stockholder:

 

We cordially invite you to attend Citigroup’s annual stockholders’ meeting. The meeting will be held on Tuesday, April 17, 2007, at 9AM at Carnegie Hall, 154 West 57th Street in New York City. The entrance to Carnegie Hall is on West 57th Street just east of Seventh Avenue.

 

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.

 

Thank you for your support of Citigroup.

 

Sincerely,

 

LOGO

Charles Prince

Chairman of the Board

and Chief Executive Officer

 


This proxy statement and the accompanying proxy card are being mailed to Citigroup stockholders beginning about March 13, 2007.


Table of Contents

 

LOGO

 

Citigroup Inc.

399 Park Avenue

New York, NY 10043

 

 

Notice of Annual Meeting of Stockholders

 

Dear Stockholder:

 

Citigroup’s annual stockholders’ meeting will be held on Tuesday, April 17, 2007, at 9AM at Carnegie Hall, 154 West 57th Street in New York City. The entrance to Carnegie Hall is on West 57th Street just east of Seventh Avenue. You will need an admission ticket or proof of ownership of Citigroup stock to enter the meeting.

 

At the meeting, stockholders will be asked to

 

Ø  

elect directors,

 

Ø  

ratify the selection of Citigroup’s independent registered public accounting firm for 2007,

 

Ø  

act on certain stockholder proposals, and

 

Ø  

consider any other business properly brought before the meeting.

 

The close of business on February 21, 2007 is the record date for determining stockholders entitled to vote at the annual meeting. A list of these stockholders will be available at Citigroup’s headquarters, 399 Park Avenue, New York City, before the annual meeting.

 

Please sign, date and promptly return the enclosed proxy card in the enclosed envelope, or vote by telephone or Internet (instructions are on your proxy card), so that your shares will be represented whether or not you attend the annual meeting.

 

By order of the board of directors

 

LOGO

 

Michael S. Helfer

Corporate Secretary

 

March 13, 2007

 

 


Table of Contents

Contents

 

About the Annual Meeting

   1

How We Have Done

   4

Annual Report

   4

Corporate Governance

   4

Nomination and Governance Committee

   4

Corporate Governance Guidelines

   6

Director Independence

   7

Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation

  


10

Indebtedness

   12

The Five Point Plan

   13

Business Practices

   13

Code of Ethics

   13

Ethics Hotline

   14

Code of Conduct

   14

Communications with the Board

   14

Stock Ownership

   15

Proposal 1: Election of Directors

   18

The Nominees

   18

Meetings of the Board of Directors and Committees

  

25

Meetings of Non-Management Directors

   25

Committees of the Board of Directors

   26

Involvement in Certain Legal Proceedings

   29

Directors’ Compensation

   29

Audit and Risk Management Committee Report

  

34

Executive Compensation

   35

The Personnel and Compensation Committee Report

  

35

Compensation Discussion and Analysis

   36

Compensation Tables

   44

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

  


63

Disclosure of Independent Registered Public Accounting Firm Fees

  

63

Approval of Independent Registered Public Accounting Firm Services and Fees

  

63


 


Table of Contents

About the Annual Meeting

 

Who is soliciting my vote?

The board of directors of Citigroup is soliciting your vote at the 2007 annual meeting of Citigroup’s stockholders.

 

What will I be voting on?

 

Election of directors (see page 18).

 

Ratification of KPMG LLP (KPMG) as Citigroup’s independent registered public accounting firm for 2007 (see page 63).

 

Nine stockholder proposals (see page 65).

 

How many votes do I have?

You will have one vote for every share of Citigroup common stock you owned on February 21, 2007 (the record date).

 

How many votes can be cast by all stockholders?

4,947,999,593, consisting of one vote for each of Citigroup’s shares of common stock that were outstanding on the record date. There is no cumulative voting.

 

How many votes must be present to hold the meeting?

A majority of the votes that can be cast, or 2,473,999,798 votes. We urge you to vote by proxy even if you plan to attend the annual meeting, so that we will know as soon as possible that enough votes will be present for us to hold the meeting.

 

Does any single stockholder control as much as 5% of any class of Citigroup’s voting stock?

No.

 

How do I vote?

You can vote either in person at the annual meeting or by proxy whether or not you attend the annual meeting.

 

To vote by proxy, you must either

 

 

fill out the enclosed proxy card, date and sign it, and return it in the enclosed postage-paid envelope,

 

vote by telephone (instructions are on the proxy card), or

 

vote by Internet (instructions are on the proxy card).

 

To ensure that your vote is counted, please remember to submit your vote by April 16, 2007.

 

Citigroup employees who participate in equity programs may receive their proxy cards separately.

 

If you want to vote in person at the annual meeting, and you hold your Citigroup stock through a securities broker (that is, in street name), you must obtain a proxy from your broker and bring that proxy to the meeting.

 

Can I change my vote?

Yes. Just send in a new proxy card with a later date, or cast a new vote by telephone or Internet, or send a written notice of revocation to Citigroup’s Corporate Secretary at the address on the cover of this proxy statement. If you attend the annual meeting and want to vote in person, you can request that your previously submitted proxy not be used.

 

What if I don’t vote for some of the matters listed on my proxy card?

If you return a signed proxy card without indicating your vote, in accordance with the board’s recommendation, your shares will be voted for the nominees listed on the card, for KPMG as independent registered public accounting firm for 2007, and against the other proposals.

 

How are my votes counted?

You may vote for or against a director. Each nominee for director will be elected if the votes for the director exceed the votes against the director. Abstentions will not be counted either for or against the director but will be counted for purposes of establishing a quorum.

 

You may vote for or against or you may abstain on the other proposals. If you abstain from voting on


 

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any stockholder proposal, your shares will be counted as present for purposes of establishing a quorum, and the abstention will have the same effect as a vote against that proposal.

 

How many votes are required to elect directors and to adopt the other proposals?

In January 2007, the board adopted a by-law containing a majority vote standard for director elections, replacing the majority vote corporate governance standard. The new by-law amendment provides that if a nominee receives, in an uncontested election, a number of votes against his or her election that is greater than the number of votes cast for the election of the director, such director shall offer to resign from his or her position as a director. Unless the board decides to reject the offer or to postpone the effective date of the offer, the resignation shall become effective 60 days after the date of the election. The ratification of KPMG’s appointment and the stockholder proposals each require the affirmative vote of a majority of the shares of common stock represented at the annual meeting and entitled to vote thereon in order to be approved.

 

Is my vote confidential?

Last year, the board adopted a confidential voting policy as a part of its Corporate Governance Guidelines. Under the policy, all proxies, ballots, and vote tabulations are kept confidential for registered stockholders who request confidential treatment. If you are a registered stockholder and would like your vote kept confidential please check the appropriate box on the proxy card or follow the instructions when submitting your vote by telephone or by the Internet. If you hold your shares in “street name” or through an employee benefit plan, your vote already receives confidential treatment and you do not need to request confidential treatment in order to maintain the confidentiality of your vote.

 

The confidential voting policy will not apply in the event of a proxy contest or other solicitation based on an opposition proxy statement. For further

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

 

Can my shares be voted if I don’t return my proxy card and don’t attend the annual meeting?

If you don’t vote your shares held in street name, your broker can vote your shares on matters that the New York Stock Exchange (NYSE) has ruled discretionary. The election of directors and the ratification of KPMG’s appointment are discretionary items. NYSE member brokers that do not receive instructions from beneficial owners may vote on these proposals in the following manner: (1) a Citigroup 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.

 

If you don’t vote your shares registered directly in your name, not in the name of a bank or broker, your shares will not be voted.

 

Could other matters be decided at the annual meeting?

We don’t know of any other matters that will be considered at the annual meeting. If a stockholder proposal that was excluded from this proxy statement is brought before the meeting, we will vote the proxies against the proposal. If any other matters arise at the annual meeting, 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 Citigroup stock to enter the meeting.


 

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When you arrive at the annual meeting, you may be asked to present photo identification, such as a driver’s license. If you are a stockholder of record, you will find an admission ticket attached to the proxy card sent to you. If you plan to attend the meeting, please so indicate when you vote and bring the ticket with you to the meeting. If your shares are held in the name of a bank, broker or other holder of record, your admission ticket will be included in your proxy materials. If you don’t bring your admission ticket, or opted to receive your proxy materials electronically, you will need proof of ownership to be admitted to the meeting. A recent brokerage statement or letter from a bank or broker is an example of proof of ownership. If you arrive at the meeting without an admission ticket, we will admit you only if we are able to verify that you are a Citigroup stockholder.

 

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

This proxy statement and the 2006 annual report are available on Citigroup’s website at www.citigroup.com. Click on “Corporate

Governance,” then “Financial Disclosure,” and then “Annual Reports & Proxy Statements.” Most stockholders can elect not to receive paper copies of future proxy statements and annual reports and can instead view those documents on the Internet.

 

If you are a stockholder of record, you can choose this option and save Citigroup the cost of producing and mailing these documents by following the instructions provided when you vote over the Internet. If you hold your Citigroup stock through a bank, broker or other holder of record, please refer to the information provided by that entity for instructions on how to elect not to receive paper copies of future proxy statements and annual reports.

 

If you choose not to receive paper copies of future proxy statements and annual reports, you will receive an e-mail message next year containing the Internet address to use to access Citigroup’s proxy statement and annual report. Your choice will remain in effect until you tell us otherwise. You do not have to elect Internet access each year. To view, cancel or change your enrollment profile, please go to www.InvestorDelivery.com.


 

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How We Have Done

 

Annual Report

If you received these materials by mail, you should have also received Citigroup’s annual report to stockholders for 2006 with them. The 2006 annual report is also available on Citigroup’s website at

www.citigroup.com. We urge you to read these documents carefully. In accordance with the Securities and Exchange Commission’s (SEC) rules, the Five-Year Performance Graph appears in the 2006 Annual Report on Form 10-K.


 

LOGO

 

Corporate Governance

 

Citigroup 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 Citigroup’s businesses. Citigroup continues to set the standard in corporate governance among our peers.

 

Citigroup is proactive in ensuring its governance practices are at the leading edge of best practices. Among the initiatives that Citigroup has recently adopted are:

 

  Ø  

eliminated super-majority vote provisions contained in its charter;

 

  Ø  

adopted Senior Executive Compensation Guidelines—describing for shareholders Citigroup’s approach to determining the compensation of our most senior executives;

 

  Ø  

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

 

  Ø  

adopted a policy to recoup unearned compensation; and

 

  Ø  

adopted a Political Contributions Policy under which Citigroup will annually compile and publish a list of its political contributions. The policy and a list of our 2006 political contributions are available in the “Corporate Governance” section of Citigroup’s website: www.citigroup.com.

 

The current charters of the audit and risk management, nomination and governance, and personnel and compensation committees, as well as Citigroup’s Corporate Governance Guidelines,

Code of Conduct and Code of Ethics, are available in the “Corporate Governance” section of Citigroup’s website: www.citigroup.com. Citigroup stockholders may obtain printed copies of these documents by writing to Citigroup Inc., Corporate Governance, 425 Park Avenue, 2nd floor, New York, NY 10022.

 

Nomination and Governance Committee

The nomination and governance committee’s mandate is to review and shape corporate governance policies and identify qualified individuals for nomination to the board of directors. All of the members of the committee meet the independence standards contained in the NYSE corporate governance rules and Citigroup’s Corporate Governance Guidelines, which are attached to this proxy statement as Annex A. A copy of the committee’s charter is attached to this proxy statement as Annex C.

 

In April 2004, Citigroup designated the chair of the board’s nomination and governance committee, currently Alain J.P. Belda, as lead director. The lead director: (i) presides at all meetings of the board at which the chairman is not present, including executive sessions of the independent directors; (ii) serves as liaison between the chairman and the independent directors; (iii) approves information sent to the board; (iv) approves meeting agendas for the board; (v) approves meeting schedules to ensure that there is sufficient time for discussion of all agenda items; (vi) has the authority to call meetings of the independent directors; and (vii) if requested, will be available for consultation and direct communication with major shareholders.


 

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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. For 2006, the committee engaged Heidrick & Struggles 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 and our Shared Responsibilities contained in Citigroup’s annual report.

 

 

Whether the candidate has had business, governmental, non-profit or professional experience at the Chairman, Chief Executive Officer or Chief Operating Officer or equivalent policy-making and operational level of a large organization with significant international activities that indicates that the candidate will be able to make a meaningful and immediate contribution to the board’s discussion of and decision-making on the array of complex issues facing a large and diversified financial services business that operates on a global scale.

 

 

Whether the candidate has special skills, expertise and background that would complement the attributes of the existing directors, taking into consideration the diverse communities and geographies in which Citigroup operates.

 

 

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

 

and diversified financial services business that operates on a global scale.

 

 

Whether the candidate has achieved prominence in his or her business, governmental or professional activities, and has built a reputation that demonstrates the ability to make the kind of important and sensitive judgments that the board is called upon to make.

 

 

Whether the candidate will effectively, consistently and appropriately take into account and balance the legitimate interests and concerns of all of Citigroup’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 board.

 

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

 

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

 

For the 2007 annual meeting, we received timely notice of director nominations from two stockholders, each of whom nominated one person to stand for election at the annual meeting. The qualifications of these individuals were discussed at a meeting of the nomination and governance committee in connection with the annual evaluation of all director candidates. After deliberation, the committee decided not to include


 

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these individuals on the slate of candidates it proposed to the full board for consideration. The committee used the above-mentioned criteria to evaluate the candidates.

 

Corporate Governance Guidelines

Citigroup’s Corporate Governance Guidelines embody many of our long-standing practices, policies and procedures, which are the foundation of our commitment to best practices. The Guidelines are reviewed at least annually, and revised as necessary to continue to reflect best practices. The full text of the Guidelines, as approved by the board, is set forth in Annex A to this proxy statement. The Guidelines outline the responsibilities, operations, qualifications and composition of the board.

 

Our goal is that at least two-thirds of the members of the board be independent. A description of our independence criteria and the results of the board’s independence determinations are set forth below.

 

The number of other public company boards on which a director may serve is subject to a case-by-case review by the nomination and governance committee, in order to ensure that each director is able to devote sufficient time to performing his or her duties as a director. Interlocking directorates are prohibited (inside directors and executive officers of Citigroup may not sit on boards of companies where a Citigroup outside director is an executive officer).

 

The Guidelines require that all members of the committees of the board, other than the public affairs committee and the executive committee, be independent. Committee members are appointed by the board upon recommendation of the nomination and governance committee. Committee membership and chairs are rotated periodically. The board and each committee have the power to hire and fire independent legal, financial or other advisors, as they may deem necessary, without consulting or obtaining the approval of senior management.

 

Meetings of the non-management directors are held as part of every regularly scheduled board meeting and are presided over by the lead director.

 

If a director has a substantial change in professional responsibilities, occupation or business association, he or she is required to notify the nomination and governance committee and to offer his or her resignation from the board. The nomination and governance committee will evaluate the facts and circumstances and make a recommendation to the board whether to accept the resignation or request that the director continue to serve on the board. If a director assumes a significant role in a not-for-profit entity he or she is asked to notify the nomination and governance committee.

 

Directors are expected to attend board meetings, meetings of the committees and subcommittees on which they serve and the annual meeting of stockholders. All of the directors then in office attended Citigroup’s 2006 annual meeting.

 

The nomination and governance committee nominates one of the members of the board to serve as chairman of the board on an annual basis. The nomination and governance committee also conducts an annual review of board performance, and each committee conducts its own self-evaluation. The board and committees may engage an outside consultant to assist in conducting the self-evaluations. The results of these evaluations are reported to the board.

 

Directors have full and free access to senior management and other employees of Citigroup. New directors are provided with an orientation program to familiarize them with Citigroup’s businesses, and its legal, compliance, regulatory and risk profile. Citigroup 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 to learn about a complex financial product.

 

The board reviews the personnel and compensation committee’s report on the performance of Mr. Prince in order to ensure that he is providing the best leadership for Citigroup. The board also works with the personnel and compensation committee to evaluate potential successors to the Chief Executive Officer.


 

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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 non-profit organization and such entity receives contributions from Citigroup and/or the Citigroup Foundation, such contributions will be reported to the nomination and governance committee at least annually.

 

The Guidelines affirm Citigroup’s stock ownership commitment, which is described in greater detail in this proxy statement. In 2005, Citigroup introduced an expanded version of the stock ownership commitment, with a 25% holding requirement that generally covers those employees who report directly to a member of the management committee and those employees one level below them. After the expansion of the stock ownership commitment, which became effective prospectively in January 2006, approximately 2,600 employees are subject to a stock ownership commitment. Citigroup also prohibits the repricing of stock options and requires that new equity compensation plans and material revisions to such plans be submitted to stockholders for approval.

 

The Guidelines restrict certain financial transactions between Citigroup 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 Citigroup and its public issuer subsidiaries and members of the operating committee, or immediate family members who share any such person’s household, are prohibited, except for mortgage loans, home equity loans, consumer loans, credit cards, charge cards, overdraft checking privileges and margin loans to employees of a broker-dealer subsidiary of Citigroup made on market terms in the ordinary course of business. See Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation on page 10 of this proxy statement.

 

The Guidelines prohibit investments or transactions by Citigroup 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 Citigroup-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 Citigroup-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 Citigroup.

 

Director Independence

The board has adopted categorical standards to assist the board in evaluating the independence of each of its directors. The categorical standards describe various types of relationships that could potentially exist between a director or an immediate family member of a director and Citigroup and sets 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 January 2007, the board and nomination and governance committee reviewed directors’ responses to a questionnaire asking about their relationships with Citigroup, and those of their immediate family members and primary business or charitable affiliations and other potential conflicts of interest, as well as data collected by


 

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Citigroup’s businesses related to transactions, relationships or arrangements between Citigroup on the one hand and a director, immediate family member of a director, or a primary business or charitable affiliation of a director, on the other. The board reviewed the relationships or transactions between the directors or immediate family members of the directors or their primary business or charitable affiliations on the one hand and Citigroup on the other and determined that the relationships or transactions complied with the Corporate Governance Guidelines and the related categorical standards. The board also determined that, applying the guidelines and standards, which are intended to comply with the NYSE corporate governance rules, and all other applicable laws, rules and regulations, each of the following directors standing for re-election is independent: C. Michael Armstrong, Alain J.P. Belda, George David, Kenneth T. Derr, John M. Deutch, Klaus C. Kleinfeld, Andrew N. Liveris, Anne M. Mulcahy, Richard D. Parsons, Judith Rodin and Franklin A. Thomas.

 

Categorical Standards

 

Advisory, Consulting and Employment Arrangements

  Ø  

During any twelve month period within the last three years, neither a director nor any immediate family member of a director have received, directly or indirectly, from Citigroup any compensation, fees or benefits in an amount greater than $100,000, other than amounts paid (a) pursuant to the Company’s Amended and Restated Compensation Plan for Non-Employee Directors; or (b) as compensation to an immediate family member of a director who is a non-executive employee of Citigroup or another entity.

 

In addition, no member of the audit and risk management committee, nor any immediate family member who shares such individual’s household, nor any entity in which an audit and risk management committee member is a partner, member or executive officer shall, within the last three years, have received any payment for

accounting, consulting, legal, investment

 

banking or financial advisory services provided to Citigroup.

 

 

Business Relationships

  Ø  

All business relationships, lending relationships, deposits and other banking relationships between Citigroup and a director’s primary business affiliation or the primary business affiliation of an immediate family member of a director must be made in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated persons.

 

  Ø  

In addition, the aggregate amount of payments in any of the last three fiscal years by Citigroup to, and to Citigroup 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 Citigroup to a director’s primary business affiliation or the primary business affiliation of an immediate family member of a director, only if: (a) the loan is made in the ordinary course of business of Citigroup 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) the loan complies with applicable law, including SARBANES-OXLEY, Regulation O of the Board of Governors of the Federal Reserve, and the Federal Deposit Insurance Corporation Guidelines; (c) the loan when made does not involve more than the normal risk of collectibility or present other unfavorable features; and (d) the lending relationship is not classified by Citigroup as Substandard (II) or worse, as defined by the Office of the Comptroller of the Currency in its “Rating Credit Risk” Comptroller’s Handbook.


 

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Charitable Contributions

Annual contributions in any of the last three calendar years from Citigroup and/or the Citigroup Foundation to a foundation, university, or other non-profit organization of which a director, or an immediate family member who shares the director’s household, serves as a director, trustee or executive officer may not exceed the greater of $250,000 or 10% of the annual consolidated gross revenue of the entity.

 

 

Employment/Affiliations

  Ø  

An outside director shall not:

 

  (i)   be or have been an employee of Citigroup within the last three years;

 

  (ii)   be part of, or within the past three years have been part of, an interlocking directorate in which an executive officer of Citigroup 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 Citigroup within the five-year period following the auditing relationship.

 

  Ø  

An outside director may not have an immediate family member who:

 

  (i)   is an executive officer of Citigroup or has been within the last three years;

 

  (ii)   is, or within the past three years has been, part of an interlocking directorate in which an executive officer of Citigroup 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 Citigroup’s outside auditor, or a current employee of Citigroup’s outside auditor who participates in the auditor’s audit,
 

assurance or tax compliance practice, or (B) was within the last three years (but is no longer) a partner of or employed by Citigroup’s outside auditor and personally worked on Citigroup’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 director or an immediate family member of the director as well as their primary business or charitable affiliations and Citigroup, provided Citigroup’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 a director or an immediate family member of the director as well as their primary business or charitable affiliations and Citigroup that comply with the Corporate Governance Guidelines, including but not limited to 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 independence standards, (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


 

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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) Citigroup is a participant, and (c) any related person (any director, any executive officer of Citigroup, any nominee for director, any shareholder owning in excess of 5% of the total equity of Citigroup, 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 Citigroup and related persons (directors and executive officers or their immediate family members). A copy of Citigroup’s Policy on Related Party Transactions is available in the “Corporate Governance” section of Citigroup’s website: www.citigroup.com. Under the policy, the nomination and governance committee is responsible for reviewing and approving all related party transactions involving directors or an immediate family member of a director. Directors may not participate in any discussion or approval of a related party transaction in which he or she or any member of his or her immediate family is a related person, except that the director shall provide all material information concerning the related party transaction to the nomination and committee. The nomination and governance committee is also responsible for reviewing and approving all related party transactions valued at more than $50 million involving an executive officer or an immediate family member of an executive officer. The transaction review committee, comprised of the Chief Financial Officer, Senior Risk Officer, General Counsel, Head of Global Compliance, and Head of Corporate Affairs, is responsible for reviewing and approving all related party transactions valued at less than $50 million involving an executive officer or an immediate family member of an executive

officer. The policy also contains a list of categories of transactions involving directors or executive officers, or their immediate family members, that are pre-approved under the policy, and therefore need not be brought to the nomination and governance committee or transaction review committee for approval.

 

The nomination and governance committee and the transaction review committee will review the following information when assessing a related party transaction:

 

 

the terms of such transaction;

 

 

the related person’s interest in the transaction;

 

 

the purpose and timing of the transaction;

 

 

whether Citigroup is a party to the transaction, and if not, the nature of Citigroup’s participation in the transaction;

 

 

if the transaction involves the sale of an asset, a description of the asset, including date acquired and cost basis;

 

 

information concerning potential counterparties in the transaction;

 

 

the approximate dollar value of the transaction and the approximate dollar value of the related person’s interest in the transaction;

 

 

a description of any provisions or limitations imposed as a result of entering into the proposed transaction;

 

 

whether the proposed transaction includes any potential reputational risk issues that may arise as a result of or in connection with the proposed transaction; and

 

 

any other relevant information regarding the transaction.

 

Robert Rubin reimbursed Citigroup $316,305 related to his personal use of corporate aircraft during the period commencing August 10, 2006 to December 31, 2006. See page 46 for additional information about this arrangement.

 

Prior to November 9, 2006, Roberto Hernández Ramirez, a Citigroup director, held his interest in


 

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Citigroup common stock indirectly through a

family trust. Since that date, Mr. Hernández has held his interest through a Mexican open-end mutual fund called Citiacciones Flexible, S.A. de C.V., Sociedad de Inversion de Renta Variable (Citifle). The investment manager of Citifle is an affiliate of Citigroup. The transactions effectuating this change were undertaken for estate tax planning purposes and did not change the number of shares of Citigroup common stock beneficially owned by Mr. Hernández. See “Stock Ownership” on page 16.

 

The transactions involved a sale of 14,596,144 Citigroup shares, at a price of $50.5436 per share, or $737,741,663 in the aggregate, and a simultaneous acquisition of interests in Citifle for the same aggregate amount. This price represented the volume weighted average price of Citigroup shares reported on the Mexican Stock Exchange on November 9, 2006. The transactions were effected in Mexican pesos and converted into U.S. dollars based on the currency conversion rate of 10.9074 pesos per dollar in effect on the transaction date.

 

Officers and employees of Citigroup and members of their immediate families who share their household or are financially dependent upon them who wish to purchase or sell securities in brokerage transactions are generally required by Citigroup’s policies to do so through a Citigroup broker-dealer affiliate. Citigroup’s affiliates also may, from time to time, enter into transactions on a principal basis involving the purchase or sale of securities, derivative products and other similar transactions in which our directors, officers and employees, or members of their immediate families have an interest. All of these transactions are entered into in the ordinary course of business on substantially the same terms, including interest rates and collateral provisions, as those prevailing at the time for comparable transactions with our other similarly situated customers. For certain transactions with officers and employees, these affiliates may offer discounts on their services.

 

Citigroup has established funds that employees have invested in. 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 Citigroup’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 Citigroup Corporate Governance Guidelines, executive officers may invest in certain Citigroup-sponsored investment opportunities only under certain circumstances and with the approval of the appropriate committee.

 

In 2006, Citigroup 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. Citigroup 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, Citigroup may use the products or services of organizations in which some of our directors are officers or directors.

 

The persons listed on page 35 were the only members of the personnel and compensation committee during 2006. No member of the personnel and compensation committee was a part of a “compensation committee interlock” during fiscal year 2006 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 Citigroup. Except for Messrs. Hernández, Prince and Rubin, no director is a current or former employee of Citigroup or any of its subsidiaries.

 

Certain directors and executive officers have immediate family members who are employed by Citigroup or a subsidiary. The compensation of each such family member was established by Citigroup in accordance with its employment and


 

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compensation practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions. None of the directors or executive officers has a material interest in the employment relationships nor do any of them share a household with these employees. These employees are four of the approximately 300,000 employees of Citigroup. With one exception, none of them is, or reports directly to, any executive officer of Citigroup. With respect to this one individual, and in any other instance where a relative may report to an executive officer, that individual’s compensation is reviewed by an independent compensation consultant.

 

An adult child of Robert Druskin, an executive officer, is employed in Citigroup’s Corporate and Investment Banking business and received 2006 compensation of $3,425,000. An adult spouse of another adult child of Mr. Druskin is employed in Citigroup’s Corporate and Investment Banking business and received 2006 compensation of $439,917. A sibling of Mr. Prince, the Chairman and Chief Executive Officer, is employed in Citigroup’s Corporate and Investment Banking business and received 2006 compensation of $194,583. A sibling of Manuel Medina-Mora, an executive officer, is employed by Banamex, a subsidiary of Citigroup, and received 2006 compensation of $1,303,989.

 

Indebtedness

Other than certain “grandfathered” margin loans, in accordance with SARBANES-OXLEY and the Citigroup 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 Citigroup and such loan is made in the ordinary course of business. Before and during 2006, certain executive officers have incurred indebtedness to Smith Barney, a division of Citigroup and a registered broker-dealer, and/or other broker-dealer subsidiaries of Citigroup, on margin loans against securities accounts. The margin loans were made in the ordinary course of business on substantially the same terms (including interest rates and collateral) as those prevailing for comparable transactions for other

persons, and did not involve more than the normal risk of collectibility or present other unfavorable features.

 

Certain transactions involving loans, deposits, credit cards, and sales of commercial paper, certificates of deposit, and other money market instruments and certain other banking transactions occurred during 2006 between Citibank and other Citigroup banking subsidiaries on the one hand and certain directors or executive officers of Citigroup, 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 and did not involve more than the normal risk of collectibility or present other unfavorable features. Personal loans made to any director, executive officer or member of the management committee must comply with SARBANES-OXLEY and the Corporate Governance Guidelines, and must be made in the ordinary course of business.

 

SSB Capital Partners I, LP and Citigroup Employee Fund of Funds I, LP are funds that were formed in 2000. Each invests either directly or via a master fund in private equity investments. Citigroup matches each dollar invested by an employee with an additional two dollar commitment to each fund in which an employee has invested, up to a maximum of $1 million in the aggregate for all funds in which the employee has invested. Citigroup’s match is made by a loan to the fund or funds in which the employee has invested. Each employee, subject to vesting, receives the benefit of any increase in the value of each fund in which he or she invested attributable to the loan made by Citigroup, less the interest paid by the fund on the loan, as well as any increase in the value of the fund attributable to the employee’s own investment. One-half of the loan is full recourse to


 

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the employee 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 to Citigroup to pay interest on and to repay the loan. Interest on the loans accrues quarterly at a rate determined from time to time by Citigroup 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 Citigroup), and (ii) the short-term applicable federal rate calculated in accordance with Section 1274(d) of the Internal Revenue Code (IRC) (as determined by Citigroup).

 

 

During 2006, Citigroup had loans outstanding to the following current and former executive officers in the amounts set forth below opposite each person’s name:

 

Executive Officer


  Citigroup
Employee
Fund of
Funds I, LP
Amount of
Loan


  SSB Capital
Partners I, LP
Amount of
Loan(A)


Winfried F.W. Bischoff

  $ 794,847   $ 109,562

David C. Bushnell

    552,077     364,577

Michael A. Carpenter(B)

    588,042     326,797

Robert Druskin

    726,511     181,344

Charles Prince

    289,525     73,671

Todd S. Thomson(C)

    199,611     130,341

(A)   During the fourth quarter of 2006, all of the outstanding loans under the SSB Capital Partners I, LP fund were paid in full and distributions were made to the following current or former executive officers: Mr. Bischoff: $36,197; Mr. Bushnell: $120,450; Mr. Carpenter: $107,968; Mr. Druskin: $59,913; Mr. Prince: $24,340; and Mr. Thomson: $43,062.
(B)   As of December 31, 2006, Mr. Carpenter was no longer an executive officer or employee of Citigroup.
(C)   As of January 17, 2007, Mr. Thomson was no longer an executive officer of Citigroup.

 

The Five Point Plan

In 2005, Citigroup embarked on an extensive Five Point Plan to change our culture and help us achieve our goal to be the most respected global

financial services company. The objective of the Plan was to bring about the changes Citigroup needed in order to live up to our Shared Responsibilities—to our clients, to each other, and to our franchise.

 

We believe that the development and successful implementation of the Five Point Plan has created a solid foundation for the growth of our company in 2007 and the years ahead.

 

Business Practices

Citigroup’s business practices committees, at the corporate level and in each of its business units, review our business activities, policies, products, potential conflicts of interest, complex transactions, suitability and other concerns providing guidance to reflect the best interests of our customers.

These committees, comprised of our most senior executives, focus on reputational and franchise risk while our businesses work to ensure that our policies are being adhered to and that our shared responsibilities are emphasized throughout the organization.

 

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 Citigroup business practices committee and the board.

 

Code of Ethics

The board has adopted a Code of Ethics for Financial Professionals governing the principal executive officers of Citigroup and its reporting subsidiaries and all Citigroup professionals worldwide serving in a finance, accounting, treasury, tax or investor relations role. A copy of the Code of Ethics is available on our website at www.citigroup.com. Click on “Corporate Governance” and then “Code of Ethics for Financial Professionals.” It has also been filed as an exhibit to our 2002 Annual Report on Form 10-K.


 

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We intend to disclose amendments to, or waivers from, the Code of Ethics, if any, on our website.

 

Ethics Hotline

Citigroup strongly encourages employees to raise possible ethical issues. Citigroup offers several channels by which employees and others may report ethical concerns or incidents, including, without limitation, concerns about accounting, internal controls or auditing matters. We provide an Ethics Hotline that is available 24 hours a day, seven days a week with live operators who can connect to translators in multiple languages, a dedicated e-mail address, fax line, web-link and a post office box. Individuals may choose to remain anonymous. We prohibit retaliatory action against any individual for raising legitimate concerns or questions regarding ethical matters, or for reporting suspected violations. Calls to the Ethics Hotline are received by a vendor, which reports the calls to Citigroup’s Ethics Office of Global Compliance for review and investigation.

 

Code of Conduct

The board has adopted a Code of Conduct, which outlines the principles, policies and laws that govern the activities of Citigroup and its

employees, directors, agents and representatives and establishes guidelines for professional conduct in the workplace. Every employee is required to read and follow the Code of Conduct. A copy of the Code of Conduct is available on our website at www.citigroup.com. Click on “Corporate Governance” and then “Code of Conduct.”

 

Communications with the Board

Stockholders or other interested parties who wish to communicate with a member or members of the board of directors, including the lead director or the non-management directors as a group, may do so by addressing their correspondence to the board member or members, c/o the Corporate Secretary, Citigroup Inc., 399 Park Avenue, New York, NY 10043. The board of directors has approved a process pursuant to which the office of the Corporate Secretary will review and forward correspondence to the appropriate person or persons for response.


 

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Stock Ownership

 

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

 

As part of our commitment to aligning employee and stockholder interests, our management committee and all members of the board of directors, approximately 124 persons, have agreed to hold 75% of the Citigroup stock they acquire from Citigroup while they remain directors or members of senior management. The full text of the stock ownership commitment appears in Citigroup’s Corporate Governance Guidelines, which are attached to this proxy statement as Annex A.

 

In addition to the stock ownership commitment for senior management, described above, in 2005, Citigroup introduced a significantly expanded version of the stock ownership commitment, which generally applies to those employees who report directly to a member of the Citigroup management committee and those employees one level below them. Expanding the stock ownership commitment to a broader group of employees underscores Citigroup’s belief that the stock ownership commitment has played, and will continue to play, a significant role in aligning the interests of management with the interests of stockholders and driving Citigroup’s success in creating long-term value. With the expansion of the stock ownership commitment, the senior managers of Citigroup, approximately 2,600 employees are prospectively

subject to the commitment. The precise number of senior managers fluctuates but generally covers the top 1% of Citigroup employees.

 

Exceptions to the stock ownership commitment include gifts to charity, certain estate planning transactions, and certain other limited circumstances. In addition, the commitment relates to the net number of shares received in connection with the exercise of employee stock options or paying withholding taxes under other equity compensation programs.

 

Citigroup also seeks to encourage stock ownership in the following ways:

 

 

each director receives a deferred stock award representing two-thirds of his or her total annual director compensation. Directors may also elect to receive up to 100% of their director fees in Citigroup stock or stock options,

 

 

approximately 36,700 employees around the world, including all members of senior management, are granted incentive and retention awards of restricted or deferred stock under our Capital Accumulation Program (CAP),

 

 

employees who receive CAP awards may elect to receive a portion of their award in stock options, and

 

 

approximately 100,000 employees whose total compensation is $100,000 or less receive restricted or deferred stock awards under the Citigroup Ownership Program.


 

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The following table shows the beneficial ownership of Citigroup common stock by our directors and certain executive officers at February 28, 2007.

 

             

Amount and Nature of Beneficial

Ownership

 
Name    Position       

Common

Stock

Beneficially

Owned

Excluding

Options

  

Stock

Options

Exercisable

Within

60 Days of

Record

Date (A)

  

Total

Common

Stock

Beneficially

Owned (A)

 

C. Michael Armstrong

   Director        124,026    28,139    152,165  

Alain J.P. Belda

   Director        35,461    39,876    75,337  

George David

   Director        15,658    54,649    70,307  

Kenneth T. Derr

   Director        69,174    35,655    104,829  

John M. Deutch

   Director        73,071    31,639    104,710  

Robert Druskin

   Chief Operating Officer        1,186,431    549,333    1,735,764  

Roberto Hernández(B)

   Director        14,596,144    0    14,596,144  

Ann Dibble Jordan

   Director        31,013    23,402    54,415  

Klaus C. Kleinfeld

   Director        7,485    0    7,485  

Sallie L. Krawcheck(C)

   Chief Financial Officer        263,941    777,773    1,041,714  

Andrew N. Liveris

   Director        3,379    0    3,379  

Dudley C. Mecum

   Director        338,700    23,402    362,102  

Anne M. Mulcahy

   Director        11,792    0    11,792  

Richard D. Parsons

   Director        44,831    37,349    82,180  

Charles Prince

   Chairman and Chief Executive
Officer
       1,609,959    1,038,330    2,648,289  

Judith Rodin

   Director        11,905    0    11,905  

Robert E. Rubin

   Director and Chairman of the
Executive Committee
       691,939    4,598,395    5,290,334  

Franklin A. Thomas

   Director        108,946    42,546    151,492  

Stephen R. Volk

   Vice Chairman        257,503    0    257,503  

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

       25,263,158    10,710,595    35,973,753  

 

    (A) The share numbers in these columns have been restated to reflect equitable adjustments made to all Citigroup options outstanding on August 20, 2002 in respect of the distribution to all stockholders of shares of Travelers Property Casualty Corp. For each option grant, the number of options was increased by a factor of 1.0721990 and the exercise price was decreased by a factor of .9326627. The expiration and vesting dates of each option did not change.

 

    (B) See Certain Transactions and Relationships, Compensation Committee Interlocks and Insider

Participation for a description of Mr. Hernández’s beneficial ownership.

 

    (C) Ms. Krawcheck, who has been appointed the Chairman and Chief Executive Officer of Global Wealth Management, will leave the role of CFO on March 12, 2007, following the expected commencement of Gary Crittenden’s appointment as CFO.

 

At February 28, 2007, no director, nominee or executive officer owned

 

 

any shares of Citigroup’s preferred stock, or

 

 

as much as 1% of Citigroup’s common stock;


 

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however, all of the directors and executive officers as a group beneficially owned approximately 1.1% of Citigroup’s common stock.

 

Of the shares shown on the preceding page, all of which are deemed to be beneficially owned under SEC rules, some portion may not be held directly by the director or executive officer. The following table details the various forms in which directors or executive officers indirectly hold shares. Such indirectly-held shares may be shares:

 

 

for which receipt has been deferred under certain deferred compensation plans,

 

 

held as a tenant-in-common with a family member or trust, owned by a family member,

 

held by a trust for which the director or executive officer is a trustee but not a beneficiary or held by a mutual fund which invests substantially all of its assets in Citigroup stock,

 

 

for which the director or executive officer has direct or indirect voting power but not dispositive power, or

 

 

for which the director or executive officer has direct or indirect voting power but that are subject to restrictions on disposition,

 

as shown in the following table:


Director/Officer  

Receipt

Deferred

  Owned by or
Tenant-in
Common with
Family Member,
Trust or Mutual
Fund
   

Voting
Power,

but not
Dispositive
Power

  Voting Power,
but Subject to
Restrictions on
Disposition

C. Michael Armstrong

  118,281   15,150 1   0   0

Alain J.P. Belda

  30,461   0     0   0

George David

  5,658   0     0   0

Kenneth T. Derr

  43,438   0     0   0

John M. Deutch

  14,575   0     0   0

Robert Druskin

  242,397   57,107 2   6,973   0

Roberto Hernández

  0   14,596,144     0   0

Ann Dibble Jordan

  19,319   0     0   0

Klaus C. Kleinfeld

  7,485   0     0   0

Sallie Krawcheck

  0   0     0   187,784

Andrew N. Liveris

  3,379   0     0   0

Dudley C. Mecum

  261,972   5,054 1   0   0

Anne M. Mulcahy

  11,685   106     0   0

Richard D. Parsons

  37,848   29,780 1   0   0

Charles Prince

  425,303   2,962 1   4,350   318,337

Judith Rodin

  9,849   2,056     0   0

Robert E. Rubin

  298,871   0     0   0

Franklin A. Thomas

  94,491   0     0   0

Stephen R. Volk

  171,581   900 1   0   0

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

  2,991,149   15,214,475 3   18,234   933,135

 

1   disclaims beneficial ownership
2   disclaims beneficial ownership of an aggregate of 8,000 shares
3   disclaims beneficial ownership of an aggregate of 79,373 shares

 

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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 2007 annual meeting except Ann Dibble Jordan and Dudley C. Mecum who, in accordance with Citigroup’s retirement policy, will be retiring from

the board, effective at the annual meeting. Directors are not eligible to stand for re-election after reaching the age of 72. The board waived this requirement for Franklin Thomas, who has been asked by the board to serve another term.


LOGO

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

C. Michael Armstrong

68

LOGO

  

Chairman, Board of Trustees

Johns Hopkins Medicine, Health Systems & Hospital

•   Chairman, Johns Hopkins Medicine, Health Systems and Hospital —July 2005 to present

•   Chairman, Comcast Corporation — 2002 to 2004

•   Chairman and Chief Executive Officer, AT&T Corp. — 1997 to 2002

•   Chairman and Chief Executive Officer, Hughes Electronic Corporation — 1992 to 1997

•   International Business Machines Corporation — 1961 to 1992

Member, IBM Management Committee

Chairman, IBM World Trade Corporation

•   Director of Citigroup (or predecessor) since 1989

•   Other Directorships: IHS Inc. (Lead Independent Director) and The Parsons Corporation

•   Other Activities: Johns Hopkins University (Vice Chairman), President’s Export Council (Chairman, Retired), Council on Foreign Relations (member), SV Investment Partners LLC (Non-Executive Chairman), MIT Sloan School of Management (Visiting Professor), Telluride Foundation (Director), and Telluride Medical Capital Fund (Chairman)

 

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Table of Contents
Name and Age at
Record Date
   Position, Principal Occupation, Business Experience
and Directorships

Alain J.P. Belda

63

LOGO

[PHOTO]

  

Chairman and Chief Executive Officer

Alcoa Inc.

•   Chairman, Alcoa Inc. — 2001 to present

•   Chief Executive Officer — 1999 to present

•   Director — 1999 to present

•   President — 1997 to 2001

•   Chief Operating Officer — 1997 to 1999

•   Vice Chairman — 1995 to 1997

•   Executive Vice President — 1994 to 1995

•   President, Alcoa (Latin America) — 1991 to 1994

•   Vice President — 1982 to 1991

•   President, Alcoa Aluminio SA (Brazil) — 1979 to 1994

•   Joined Alcoa — 1969

•   Director of Citigroup (or predecessor) since 1997

•   Other Activities: The Conference Board (Trustee), Brown University (Trustee), and Brazil Project Advisory Board (Co-Chair) at The Woodrow Wilson International Center for Scholars

George David

64

LOGO

  

Chairman and Chief Executive Officer

United Technologies Corporation

•   Chairman, United Technologies Corporation — 1997 to present

•   Chief Executive Officer — 1994 to present

•   President — 1992 to 1999; 2002 to 2006

•   Director — 1992 to present

•   Director of Citigroup since 2002

•   Other Activities: Business Roundtable (member), The Business Council (member), Carnegie Hall (Trustee), and Institute for International Economics (Vice Chairman)

 

19


Table of Contents
Name and Age at
Record Date
   Position, Principal Occupation, Business Experience
and Directorships

Kenneth T. Derr

70

LOGO

  

Chairman, Retired

Chevron Corporation

•   Chairman and Chief Executive Officer, Chevron Corporation — 1989 to 1999

•   Vice Chairman — 1985 to 1988

•   Director — 1981 to 1999

•   President and Chief Executive Officer, Chevron USA Inc. — 1979 to 1984

•   Vice President — 1972 to 1979

•   Assistant to the President — 1969 to 1972

•   Joined Chevron Corporation — 1960

•   Director of Citigroup (or predecessor) since 1987

•   Other Directorships: Calpine Corporation (Chairman of the Board) and Halliburton Company

•   Other Activities: American Petroleum Institute (member), The Business Council (member), Council on Foreign Relations (member), Hoover Institution Board of Overseers (member), Cornell University (Trustee Emeritus), University of California at San Francisco Foundation (Director), The Basic Fund (Director), Committee to Encourage Corporate Philanthropy (Director), and National Petroleum Council (member)

John M. Deutch

68

LOGO

  

Institute Professor

Massachusetts Institute of Technology

•   Institute Professor, M.I.T. — 1990 to present

•   Director of Central Intelligence — 1995 to 1996

•   Deputy Secretary, U.S. Department of Defense — 1994

•   Under Secretary, U.S. Department of Defense — 1993

•   Provost and Karl T. Compton Professor of Chemistry, M.I.T. — 1985 to 1990

•   Dean of Science, M.I.T. — 1982 to 1985

•   Under Secretary, U.S. Department of Energy — 1979 to 1980

•   Director, Energy Research of the U.S. Department of Energy — 1978

•   Director of Citigroup (or predecessor) since 1996 (and 1987 to 1993)

•   Citibank, N.A. director — 1987 to 1993 and 1996 to 1998

•   Other Directorships: Cummins Inc., Cheniere Energy, Raytheon Company, and Schlumberger Limited*

•   Other Activities: Urban Institute (Life Trustee), Resources for the Future (Trustee), and Museum of Fine Arts, Boston (Trustee)

 

*Mr. Deutch will retire from Schlumberger Limited’s Board of Directors effective on April 11, 2007.

 

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Table of Contents
Name and Age at
Record Date
   Position, Principal Occupation, Business Experience
and Directorships

Roberto Hernández Ramirez

64

LOGO

[PHOTO]

  

 

Chairman of the Board

Banco Nacional de México

•   Chairman of the Board, Banco Nacional de México, S.A. — 1991 to present

•   Chief Executive Officer, Banco Nacional de México, S.A. — 1997 to 2001

•   Director, Grupo Financiero Banamex, S.A. de CV. — 1991 to present

•   Co-founder, Acciones y Valores Banamex, SA. de C.V., Chairman — 1971 to 2003

•   Chairman of the Board, Bolsa Mexicana de Valores, S.A. de C.V. (Mexican Stock Exchange) — 1974 to 1979, Director — 1972 to 2003

•   Member of the International Advisory Committee of the Federal Reserve Bank of New York — 2002 to present

•   Chairman, Asociación Mexicana de Bancos (Mexican Bankers Association) — 1993 to 1994

•   Member, Bolsa Mexicana de Valores, S.A. de C.V. — 1967 to 1986

•   Director of Citigroup since 2001

•   Other Directorships: GRUMA, S.A. de C.V., and Grupo Televisa, S.A.

•   Other Activities: Consejo Mexicano de Hombres de Negocios (Mexican Businessmen Council) (member), Museo Nacional de Arte (Vice-Chairman), Patronato Pro-Universidad Veracruzana (chairman), Club de Banqueros de México (Chairman), Patronato Museo de Arte del Estado de Veracruz (Vice-Chairman), Patronato Pro-Rescate y Preservación del Patrimonio Arquitectónico de San Luis Potosí (Chairman), Fomento Cultural Banamex and Fomento Ecológico y Social Banamex, A. C. (co-chairman), Patronato del Museo Dolores Olmedo Patiño (member), Universidad Iberoamericana, A. C. (Director), Universidad de Las Américas — Puebla (Director) , The Nature Conservancy Board (Director), World Monuments Fund (Director), David Rockefeller Center for Latin American Studies at Harvard (Director), and University of Cambridge — Advisory Board of the Judge Institute of Management (Director)

 

 

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Name and Age at
Record Date
   Position, Principal Occupation, Business Experience
and Directorships

Klaus Kleinfeld

49

LOGO

  

President and Chief Executive Officer

Siemens AG

•   President and Chief Executive Officer, Siemens AG — 2005 to present

•   Deputy Chairman of the Managing Board and Executive Vice President — 2004 to 2005

•   Member, Managing Board — 2002 to present

•   President and Chief Executive Officer, Siemens Corporation (USA) —2002 to 2003

•   Executive Vice President and COO, Siemens Corporation — 2001

•   Joined Siemens in 1987

•   Director of Citigroup since 2005

•   Other Directorships: Alcoa Inc., Bayer AG

•   Other Activities: The Assmann Foundation of Prevention (Trustee), The BDI — The Umbrella Organization of German Industry (member of Chairman Committee), The European Round Table of Industrialists (member), International Business Leaders Advisory Council for the Mayor of Shanghai (member), Metropolitan Opera (Director), The Conference Board (Trustee), The Trilateral Commission (member), Transatlantic Business Dialogue (member of the Executive Board), WEF International Business Council (member), and American Institute for Contemporary German Studies (AICGS) (member of the Board of Trustees)

Andrew N. Liveris

52

LOGO

  

Chairman and Chief Executive Officer

The Dow Chemical Company

•   Chairman, Chief Executive Officer and President — 2006 to present

•   President and Chief Executive Officer — 2004 to 2006

•   President and Chief Operating Officer — 2003 to 2004

•   Director — 2004 to present

•   Joined The Dow Chemical Company in 1976

•   Director of Citigroup since 2005

•   Other Activities: Herbert H. and Grace A. Dow Foundation (Trustee), Tufts University (Trustee), The American Australian Association (patron), American Chemistry Council (chairman), The Business Council (member), Business Roundtable (member), The International Council of Chemical Associations (chairman), The Detroit Economic Club (member), WEF International Business Council (member), The National Petroleum Council (member), The Société de Chimie Industrielle (member), and The U.S.-China Business Council (vice chairman)

 

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Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Anne M. Mulcahy

54

LOGO

  

Chairman and Chief Executive Officer

Xerox Corporation

•   Chairman, Xerox Corporation — 2002 to present

•   Chief Executive Officer — 2001 to present

•   President and Chief Operating Officer — 2000 to 2001

•   President, General Markets Operations — 1999 to 2000

•   Joined Xerox — 1976

•   Director of Citigroup since 2004

•   Other Directorships: Fuji Xerox Company, Ltd. and Target Corporation

•   Other Activities: Business Roundtable (member), Catalyst (Director), and John F. Kennedy Center for the Performing Arts (member)

Richard D. Parsons

58

LOGO

  

Chairman and Chief Executive Officer

Time Warner Inc.

•   Chairman, Time Warner Inc. — 2003 to present

•   Chief Executive Officer — 2002 to present

•   Co-Chief Operating Officer — 2001 to 2002

•   Director, Time Warner Inc. (or predecessor) — 1991 to present

•   President — 1995 to 2000

•   Chairman and Chief Executive Officer, Dime Savings Bank of New York — 1991 to 1995

•   President and Chief Operating Officer — 1988 to 1990

•   Associate, Partner and Managing Partner, Patterson, Belknap, Webb & Tyler — 1977 to 1988

•   General Counsel and Associate Director, Domestic Council, White House — 1975 to 1977

•   Deputy Counsel to the Vice President, Office of the Vice President of the United States — 1975

•   Assistant and First Assistant Counsel to the Governor, State of New York — 1971 to 1974

•   Director of Citigroup (or predecessor) since 1996

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

•   Other Directorships: The Estee Lauder Companies Inc.

•   Other Activities: Apollo Theatre Foundation (Chairman), Museum of Modern Art (Trustee), Howard University (Trustee), American Museum of Natural History (Trustee), New York City Partnership (member), and Smithsonian Institute of African American History and Culture (Co-Chairman of the Advisory Board)

 

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Table of Contents

Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Charles Prince

57

LOGO

  

Chairman and Chief Executive Officer

Citigroup Inc.

•   Chairman, Citigroup Inc. — 2006 to present

•   Chief Executive Officer, Citigroup Inc. — 2003 to present

•   Chairman and Chief Executive Officer, Global Corporate and Investment Bank — 2002 to 2003

•   Chief Operating Officer — 2001 to 2002

•   Chief Administrative Officer — 2000 to 2001

•   General Counsel and Corporate Secretary of Citigroup and its predecessors — 1983 to 2000

•   Director of Citigroup since 2003

•   Other Directorships: Johnson & Johnson

•   Other Activities: Council on Foreign Relations (member), Business Roundtable (member), BRT Institute for Corporate Ethics (Advisory Council), The Business Council (member), The Juilliard School (Trustee), Board of Overseers of The Joan and Sanford I. Weill Medical College & Graduate School of Medical Sciences of Cornell University (Director), The Partnership for New York City (Co-Chair), National Academy Foundation (Director), and Financial Services Forum (Chairman)

Dr. Judith Rodin

62

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

•   Other Activities: World Trade Memorial Foundation (Director), Carnegie Hall (Director), Brookings Institution (Honorary Director), Schuylkill River Development Corp. (Director), White House Project (member), Council on Foreign Relations (member), and Institute of Medicine (member)

 

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Table of Contents

Name and Age at

Record Date

  

Position, Principal Occupation, Business Experience

and Directorships

Robert E. Rubin

68

LOGO

  

Chairman of the Executive Committee

Citigroup Inc.

•   Chairman of the Executive Committee, Citigroup Inc. — 1999 to present

•   Secretary of the Treasury of the United States — 1995 to 1999

•   Assistant to the President for Economic Policy — 1993 to 1995

•   Co-Senior Partner and Co-Chairman, Goldman, Sachs & Co. — 1990 to 1992

•   Vice-Chairman and Co-Chief Operating Officer — 1987 to 1990

•   Management Committee — 1980

•   General Partner — 1971

•   Joined Goldman, Sachs & Co. — 1966

•   Director of Citigroup since 1999

•   Other Activities: Local Initiatives Support Corporation (Chairman), Mount Sinai — NYU Health (Trustee), The Harvard Corporation (member), The Council on Foreign Relations (Vice Chairman), Insight Capital Partners (Advisory Board), Tinicum Capital Partners, L.P. (Special Advisor), Taconic Capital Advisors LLC (member of Advisory Board), and General Atlantic LLC (member of Executive Advisory Board)

Franklin A. Thomas

72

LOGO

  

Consultant

The Study Group

•   Consultant, The Study Group — 2005 to present

•   Consultant, TFF Study Group — 1996 to 2005

•   President, The Ford Foundation — 1979 to 1996

•   Private practice of law — 1977 to 1979

• President, Bedford-Stuyvesant Restoration Corporation — 1967 to 1977

• Director of Citigroup (or predecessor) since 1970

• Citibank, N.A. director — 1970 to 1998

• Other Directorships: Alcoa Inc. (Lead Director) and PepsiCo., Inc.

•   Other Activities: September 11th Fund (Chairman 12/31/05), Friends of the Nelson Mandela Children’s Fund (USA) (Trustee), Friends of the Constitutional Court of South Africa (USA) (member), Greentree Foundation (Trustee), and United Nations Fund for International Partnerships (member)

 

The one-year terms of all of Citigroup’s directors expire at the annual meeting.

 

Meetings of the Board of Directors and Committees

The board of directors met 12 times in 2006. During 2006, the audit and risk management committee met 11 times, the personnel and compensation committee met 8 times and the nomination and governance committee met 6 times.

 

Each director attended at least 75 percent of the total number of meetings of the board of directors and board committees of which he or she was a member in 2006.

 

Meetings of Non-Management Directors

Citigroup’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


 

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is usually 7 times each year, and, if the board convenes a special meeting, the non-management directors may meet in executive session if the circumstances warrant. The lead director presides at each executive session of the non-management directors.

 

Committees of the Board of Directors

The standing committees of the board of directors are:

 

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 audit and risk management committee, which assists the board in fulfilling its oversight responsibility relating to (i) the integrity of Citigroup’s financial statements and financial reporting process and Citigroup’s systems of internal accounting and financial controls; (ii) the performance of the internal audit function — Audit and Risk Review; (iii) the annual independent integrated audit of Citigroup’s consolidated financial statements and internal control over financial reporting, the engagement of the independent registered public accounting firm and the evaluation of the independent registered public accounting firm’s qualifications, independence and performance; (iv) policy standards and guidelines for risk assessment and risk management; (v) the compliance by Citigroup with legal and regulatory requirements, including Citigroup’s disclosure controls and procedures; and (vi) the fulfillment of the other responsibilities set out in its charter, as adopted by the board. The report of the committee required by the rules of the SEC is included in this proxy statement. Subcommittees of the audit and risk management committee cover Citigroup’s corporate and consumer businesses.

 

The board has determined that each of Mrs. Mulcahy, Dr. Rodin, and Messrs. Armstrong, David, Deutch, and Liveris 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 Federal Deposit Insurance Corporation guidelines.

 

The audit and risk management committee charter, as adopted by the board, is attached to this proxy statement as Annex B. A copy of the charter is also available in the “Corporate Governance” section of Citigroup’s website: www.citigroup.com.

 

The nomination and governance committee, which is responsible for identifying individuals qualified to become board members and recommending to the board the director nominees for the next annual meeting of stockholders. It leads the board in its annual review of the board’s performance and recommends to the board director candidates for each committee for appointment by the board. The committee takes a leadership role in shaping corporate governance policies and practices, including recommending to the board the Corporate Governance Guidelines and monitoring Citigroup’s compliance with these policies and the Guidelines. The committee is responsible for reviewing and approving all related party transactions involving directors or an immediate family member of a director and any related party transaction involving an executive officer or immediate family member of an executive officer, if the transaction is valued at $50 million or more. See Certain Transactions and Relationships, Compensation Committee Interlocks and Insider Participation on page 10 of this proxy statement for a complete description of the Policy on Related Party Transactions. The committee also reviews director compensation and benefits, Citigroup’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 Citigroup’s culture and business practices.

 

The board has determined that in addition to being independent according to the board’s independence standards as set out in its Corporate Governance Guidelines, each of the members of the nomination and governance committee is independent according to the corporate governance rules of the NYSE.


 

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Table of Contents

The nomination and governance committee charter, as adopted by the board, is attached to this proxy statement as Annex C. A copy of the charter, is also available in the “Corporate Governance” section of Citigroup’s website: www.citigroup.com.

 

The personnel and compensation committee, which is responsible for determining the compensation for Mr. Prince, and approving the compensation structure for senior management, including the operating committee, members of the business planning groups, the most senior managers of corporate staff, and other highly paid professionals in accordance with guidelines established by the committee from time to time. The committee annually reviews and discusses the Compensation Discussion and Analysis with management, and, if appropriate, recommends to the Board that the Compensation Discussion and Analysis be included in Citigroup’s filings with the SEC. The committee has also produced an annual report on executive compensation that is included in this proxy statement (on page 35 below). Further, the committee approves equity, broad-based and special compensation plans for all of Citigroup’s businesses.

 

The committee regularly reviews Citigroup’s management resources, succession planning and talent development activities, as well as the performance of senior management. The committee is also charged, in conjunction with the public affairs committee, with monitoring Citigroup’s performance toward meeting its goals on employee diversity.

 

The role of management in determining executive compensation is described in the Compensation Discussion and Analysis section of this proxy statement. As discussed in the Compensation Discussion and Analysis, compensation for the named executive officers was determined pursuant to the following process. Mr. Prince presented to the committee an evaluation of the executive officers who report directly to him. The evaluation was based on performance by each of the executive officers against the applicable performance criteria described in the Compensation Discussion and

Analysis. The committee then evaluated the performance of Mr. Prince and Mr. Rubin, using the same criteria. The committee received an evaluation of CEO compensation from the compensation consultant in executive session, and then determined incentive and retention awards for the CEO and the other named executive officers based on this input, the performance results, and benchmarking data.

 

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 Citigroup to engage such advisors. The committee has retained Independent Compensation Committee Adviser, LLC to provide the committee with comparative data on executive compensation and advice on Citigroup’s compensation programs for senior management. Citigroup has retained Mercer Human Resource Consulting for benchmarking and analyses with respect to executive compensation and benefit practices, and other compensation matters for all employees, including the named executive officers. The committee relies on information and analysis received from both compensation consultants.

 

The board has determined that in addition to being independent according to the board’s independence standards as set out in its Corporate Governance Guidelines, each of the members of the personnel and compensation committee is independent according to the corporate governance rules of the NYSE. Each of such directors is a “non-employee director,” as defined in Section 16 of the Securities Exchange Act of 1934, and is an “outside director,” as defined by Section 162(m) of the IRC.

 

The personnel and compensation committee charter is attached to this proxy statement as Annex D. A copy of the charter, as adopted by the board, is also available in the “Corporate Governance” section of Citigroup’s website: www.citigroup.com.

 

The public affairs committee, which is responsible for reviewing Citigroup’s policies and programs that


 

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relate to public issues of significance to Citigroup and the public at large and reviewing relationships with external constituencies and issues that impact Citigroup’s reputation. The committee also has responsibility for reviewing political and charitable contributions made by Citigroup and the Citigroup Foundation, reviewing Citigroup’s policies and practices regarding employee and supplier diversity, reviewing Citigroup’s sustainability policies and programs, including environmental and human rights, and reviewing Citigroup’s policies regarding privacy.

 

The public affairs committee charter, as adopted by the board, is attached to this proxy statement as

Annex E. A copy of the charter is also available in the “Corporate Governance” section of Citigroup’s website: www.citigroup.com.

 

The special litigation committee, which was formed to determine whether or not Citigroup should undertake litigation against one or more persons identified in demands submitted by a stockholder regarding certain Citigroup activities, including Citigroup’s business relationships with Enron Corporation, Dynegy, Inc., Adelphia Communications Corporation, WorldCom, Inc., and Parmalat.


LOGO

 

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

 

Director    Executive   

Audit and

Risk

Management

  

Personnel

and

Compensation

  

Nomination

and
Governance

   Public
Affairs
  

Special

Litigation

C. Michael Armstrong

   X    Chair         X          

Alain J.P. Belda

   X         X    Chair          

George David

        X         X          

Kenneth T. Derr

   X         X    X          

John M. Deutch

        X         X    X     

Roberto Hernández Ramirez

                       X     

Ann Dibble Jordan

             X         Chair     

Andrew N. Liveris

        X                    

Dudley C. Mecum

   X                   X     

Anne M. Mulcahy

        X                   Co-Chair

Richard D. Parsons

             Chair    X          

Charles Prince

   X                         

Judith Rodin*

        X              X    Co-Chair

Robert E. Rubin

   Chair                         

Franklin A. Thomas

   X                   X     

*   Dr. Rodin was temporarily excused from service on the audit and risk management committee and on the audit and risk management consumer subcommittee while she served as co-chair of the special litigation committee with Mrs. Mulcahy. In September 2006, the board determined that Dr. Rodin could resume her duties on the audit and risk management committee and on the audit and risk management consumer subcommittee while serving as co-chair of the special litigation committee. The board also determined that Mrs. Mulcahy could simultaneously serve on both the audit and risk management committee and the audit risk management corporate subcommittee while acting as co-chair of the special litigation committee.

 

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Involvement in Certain Legal Proceedings

Calpine Corporation, in connection with the departure of its Chairman, President and Chief Executive Officer, named Mr. Derr Chairman of the Board and Acting Chief Executive Officer in November 2005. Mr. Derr, who had previously held the position of Lead Director of Calpine, was Acting Chief Executive Officer for approximately two weeks. Mr. Derr continues to serve as Calpine’s Chairman of the Board. On December 20, 2005, Calpine Corporation filed for federal bankruptcy protection under Chapter 11.

 

There are no legal proceedings to which any director, officer or principal shareholder, or any affiliate thereof, is a party adverse to Citigroup or has a material interest adverse to Citigroup.

 

Directors’ Compensation

Directors’ compensation is determined by the board. The nomination and governance committee makes recommendations to the board with respect to compensation of directors. The committee periodically reviews benchmarking assessments in order to determine the level of compensation to attract qualified candidates for board service and to reinforce our practice of encouraging stock ownership by our directors. In 2006, the committee reviewed the current compensation program and determined that no changes were required. Since its initial public offering in 1986, Citigroup 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. Effective January 1, 2005, non-employee directors, other than Mr. Hernández, who, except as described below, has waived receipt of compensation for his services as a director, receive an annual cash retainer of $75,000 and a deferred stock award valued at $150,000. The

deferred stock award is granted on the same date that annual incentives are granted to the senior executives. The deferred stock award vests on the second anniversary of the date of the grant, and directors may elect to defer receipt of the award beyond that date. Directors may elect to receive all or a portion of the cash retainer in the form of common stock, and directors may elect to defer receipt of this common stock. Directors also may elect to receive their cash retainer in the form of an option to purchase shares of Citigroup common stock. Stock options are also granted on the same date that stock options are granted to the senior executives. The options vest and become exercisable on the second anniversary of the grant date and expire six years after the grant date.

 

Directors who are employees of Citigroup or its subsidiaries do not receive any compensation for their services as directors.

 

Except as described below, directors receive no additional compensation for participation on board committees or subcommittees. Committee and subcommittee chairs receive additional compensation of $15,000 per year except for the chairs of the audit and risk management committee and each subcommittee thereof, who receive additional compensation of $35,000 per year.

 

This additional compensation is paid in the same manner as the annual cash retainer, but directors may not elect stock options for this portion of their fee. Additional compensation for special assignments may be determined on a case by case basis, but no such additional compensation was paid to any director in 2006.

 

Citigroup reimburses its board members for expenses incurred in attending board and committee meetings or performing other services for Citigroup in their capacities as directors. Such expenses include food, lodging and transportation.


 

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Table of Contents

The following table provides information on 2006 compensation for non-employee directors.

 

Non-Employee Director Compensation Table

 

Name  

Fees
Earned
or Paid
in Cash

($) (a)

 

Stock
Awards

($)(a)(b)

 

Option
Awards

($)(c)

 

Non-Equity
Incentive Plan
Compensation

($)

 

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings

($)

 

All Other
Compensation

($)

 

Total

($)

C. Michael Armstrong (d)

  0   199,063   25,843   0   0   2,388   227,294

Alain J.P. Belda

  0   161,875   24,587   0   0   0   186,462

George David

  0   35,000   102,775   0   0   0   137,775

Kenneth T. Derr

  0   218,750   335   0   0   0   219,085

John M. Deutch

  110,000   143,750   335   0   0   0   254,085

Roberto Hernández Ramirez (e)

  0   0   0   0   0   2,867,000   2,867,000

Ann Dibble Jordan

  90,000   208,333   335   0   0   0   298,668

Klaus Kleinfeld

  75,000   106,250   0   0   0   0   181,250

Andrew N. Liveris

  37,500   42,969   30,575   0   0   0   111,044

Dudley C. Mecum

  75,000   228,261   335   0   0   0   303,596

Anne M. Mulcahy

  75,000   158,750   0   0   0   0   233,750

Richard D. Parsons

  0   15,000   102,097   0   0   0   117,097

Judith Rodin

  0   161,875   24,252   0   0   0   186,127

Franklin A. Thomas

  75,000   208,333   335   0   0   0   283,668

 

(a) Directors may elect to receive all or a portion of the cash retainer in the form of common stock and may elect to defer receipt of common stock. Directors also may elect to receive their cash retainer in the form of an option to purchase shares of Citigroup common stock. Directors may elect to receive a portion of their deferred stock awards in the form of an option to purchase shares of Citigroup common stock.

 

The following directors elected to receive all or a portion of their 2006 retainer and deferred stock award in stock options:

 

     Percentage

   Dollar
Value ($)


Mr. Armstrong

   25%    $ 56,250

Mr. Belda

   50%      112,500

Mr. David

   100%      225,000

Mr. Liveris

   50%      112,500

Mr. Parsons

   100%      225,000

Dr. Rodin

   50%      112,500

 

(b) The fair value of the stock awards and stock options appearing in the Non-Employee Director Compensation Table were calculated in accordance

with the December 2006 SEC regulations. In determining the compensation expense for all equity awards required to be disclosed in the table under the December SEC regulations, it was assumed that SFAS 123(R) was in effect on the grant date of each such equity award. The number of shares of deferred stock granted in 2006 and the grant date fair value of those awards, determined in accordance with SFAS 123(R), are set forth below:

 

     Deferred Stock
Granted in 2006 (#)


   Grant Date
Fair Value ($)


Mr. Armstrong

   2,306    112,500

Mr. Belda

   1,537    75,000

Mr. David

   0    0

Mr. Derr

   3,075    150,000

Mr. Deutch

   3,075    150,000

Ms. Jordan

   3,075    150,000

Dr. Kleinfeld

   3,075    150,000

Mr. Liveris

   1,537    75,000

Mr. Mecum

   3,075    150,000

Mrs. Mulcahy

   3,075    150,000

Mr. Parsons

   0    0

Dr. Rodin

   1,537    75,000

Mr. Thomas

   3,075    150,000

 

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The Stock Award column in the Non-Employee Director Compensation Table also includes shares of common stock that directors elected to receive in exchange for all or a portion of their cash retainer and chair fees, as applicable. These directors also elected to defer receipt of the shares.

 

The aggregate number of stock awards outstanding at the end of 2006 was: Mr. Armstrong 116,215; Mr. Belda 25,007; Mr. David 5,658; Mr. Derr 29,352; Mr. Deutch 14,725; Ms. Jordan 18,631; Dr. Kleinfeld 4,731; Mr. Liveris 2,002; Mr. Mecum 264,412; Mrs. Mulcahy 8,931; Mr. Parsons 24,747; Dr. Rodin 8,472; and Mr. Thomas 16,327.

 

(c) The amount reported in this column was calculated in accordance with the December 2006 SEC regulations which are based on income statement expense under SFAS 123(R), and which, depending on the circumstances of each director, may differ from the grant-date fair value formula applied uniformly for compensation purposes. The assumptions made when calculating the amounts in this column are found in footnotes 8 and 23 to the Consolidated Financial Statements of Citigroup Inc. and its Subsidiaries, as filed with the SEC on Form 10-K for 2006. Aggregate total numbers of stock option awards outstanding are shown in the Director Stock Option Grant Table below. The grant date fair value of the options they received in 2006 was:

 

     Grant
Date Fair
Value ($)


Mr. Armstrong

   $ 27,594

Mr. Belda

     55,194

Mr. David

     110,382

Mr. Liveris

     69,009

Mr. Parsons

     110,382

Dr. Rodin

     55,194

 

For the awards granted to all directors who elected to receive options as part of their compensation for 2006, the exercise price was $48.92. In addition, Mr. Liveris, who joined the board in September 2005, received an option grant in January 2006 representing the pro-rated portion of his 2005 director compensation. Based on the closing price on the NYSE on the trading date immediately preceding the grant date of his award, the exercise price was $48.53. The number of shares in the option grant is calculated by dividing the dollar amount elected

by the fair market value of Citigroup common stock on the grant date and multiplying that amount by four.

 

(d) Travelers Property Casualty Corp., formerly a subsidiary of Citigroup, sponsored a Director’s Charitable Award Program originally adopted by the Travelers Corporation, a Citigroup predecessor, under which all members of its board of directors were eligible, subject to certain vesting requirements, to have the program make charitable contributions to eligible tax-exempt organizations recommended by the directors up to an aggregate of $1,000,000. In connection with Citigroup’s distribution of shares of Travelers to its stockholders, at which time Travelers became a separate public company, Citigroup assumed responsibility under the program with respect to the vested interests of all participants in the program. Travelers initially funded the program through the purchase of life insurance policies on the lives of the directors. Generally, eligible directors were paired for purposes of buying second-to-die life insurance policies. The proceeds of these policies are used to fund the contributions to the organizations selected by the directors immediately upon the death of both vested directors in five equal, annual installments. Mr. Armstrong, a current member of Citigroup’s board, was a director of Travelers and a participant in the Director’s Charitable Award Program. The annual costs Citigroup incurs in connection with the administration of this program and attributable to Mr. Armstrong amount to $2,388.

 

(e) In consideration of his service as non-executive chairman of Banco Nacional de México, an indirect wholly owned subsidiary of Citigroup, and other duties and services performed for such entity and its affiliates during 2006, including governmental and client relations and strategic development, Citigroup, or certain of its Mexican affiliates, provided certain security services to Roberto Hernández and members of his immediate family as well as office, secretarial and related services, and airplane and helicopter usage. The aggregate amount of such expenses for Mr. Hernández for 2006 is estimated to be approximately $2,867,000.


 

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The following chart shows the amount of dividend equivalents and interest paid to the non-employee directors in 2006 with respect to their shares of Citigroup common stock held in their deferred stock accounts.

 

Director     

Dividend Equivalents and

Interest Paid on

Deferred Stock

Account (A)

C. Michael Armstrong

     $ 221,016

Alain J.P. Belda

       46,762

George David

       10,022

Kenneth T. Derr

       54,563

John M. Deutch

       28,284

Roberto Hernández Ramirez

       0

Ann Dibble Jordan

       35,787

Klaus Kleinfeld

       9,313

Andrew N. Liveris

       3,846

Dudley C. Mecum

       520,499

Anne M. Mulcahy

       16,792

Richard D. Parsons

       47,171

Judith Rodin

       15,002

Franklin A. Thomas

       32,140

 

(A) Dividend equivalents are paid quarterly, in the same amount per share and at the same time as dividends are paid to stockholders. Interest accrues on the amount of the dividend equivalent from the payment date until the end of the quarter, at which time the dividend equivalent is either distributed to the director in cash or reinvested in additional shares of deferred stock. Differences in the amounts paid to directors can be attributed to a variety of factors including length of service and

elections made by individual board members with respect to the form in which they receive their cash retainers or deferred stock awards. Generally, directors who have served on the board for longer periods of time have accumulated more shares in their deferred stock accounts than directors with a shorter tenure and as a result receive higher dividend equivalent payments. The number of shares owned by each director is reported on page 16.

 


 

32


Table of Contents

Director Stock Option Grant Table

 

Director   

Date of

Grant

  

Number

of Shares

  

Expiration
Date

  

Shares
Exercisable

as of

12/31/06

C. Michael Armstrong

   7/18/2000    2,680    7/18/2010    2,680
     1/16/2001    5,361    1/16/2011    5,361
     2/13/2002    5,361    2/13/2012    5,361
     2/12/2003    5,000    2/12/2009    5,000
     1/20/2004    5,000    1/20/2010    5,000
     1/18/2005    4,736    1/18/2011    4,736
     1/17/2006    4,599    1/17/2012    0

Alain J.P. Belda

   7/18/2000    2,680    7/18/2010    2,680
     1/16/2001    12,929    1/16/2011    12,929
     2/13/2002    14,266    2/13/2012    14,266
     2/12/2003    5,000    2/12/2009    5,000
     1/20/2004    5,000    1/20/2010    5,000
     1/17/2006    9,198    1/17/2012    0

George David

   2/12/2003    20,600    2/12/2009    20,600
     1/20/2004    15,101    1/20/2010    15,101
     1/18/2005    18,947    1/18/2011    18,947
     1/17/2006    18,397    1/17/2012    0

Kenneth T. Derr

   7/18/2000    2,680    7/18/2010    2,680
     1/16/2001    5,361    1/16/2011    5,361
     2/13/2002    9,813    2/13/2012    9,813
     2/12/2003    12,800    2/12/2009    12,800
     1/20/2004    5,000    1/20/2010    5,000

John M. Deutch

   7/18/2000    2,680    7/18/2010    2,680
     1/16/2001    9,144    1/16/2011    9,144
     2/13/2002    9,813    2/13/2012    9,813
     2/12/2003    5,000    2/12/2009    5,000
     1/20/2004    5,000    1/20/2010    5,000

Ann Dibble Jordan

   7/18/2000    2,680    7/18/2010</