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Citigroup DEF 14A 2009 Documents found in this filing: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:
CITIGROUP INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
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Citigroup Inc.
399 Park Avenue New York, NY 10043
March 20, 2009
Dear Stockholder:
We cordially invite you to attend Citi’s annual
stockholders’ meeting. The meeting will be held on Tuesday,
April 21, 2009, at
9am at the Hilton
New York, 1335 Avenue of the Americas in New York City. The
entrance to the Hilton is on Avenue of the Americas
(6th Ave.) between West 53rd and West
54th Streets.
At the meeting, stockholders will vote on a number of important
matters. Please take the time to carefully read each of the
proposals described in the attached proxy statement.
The Board would also like to recognize our retiring directors,
Sir Win Bischoff, Kenneth Derr, Roberto Hernandez, Robert Rubin,
and Franklin Thomas for their many contributions to Citi. The
collective wisdom and insight of these directors have been an
invaluable source of strength for Citi.
Please join me in thanking them. And thank you for your support
of Citi.
Sincerely,
Richard D. Parsons
Chairman of the Board
This proxy
statement and the accompanying proxy card are being mailed to
Citi’s stockholders beginning about March 20, 2009.
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Citigroup Inc.
399 Park Avenue
New York, NY 10043
Dear Stockholder:
Citi’s annual stockholders’ meeting will be held on
Tuesday, April 21, 2009, at
9am at the Hilton
New York, 1335 Avenue of the Americas in New York City. The
entrance to the Hilton is on Avenue of the Americas
(6th Ave.) between West 53rd and West
54th Streets. You will need an admission ticket or proof of
ownership of Citi stock to enter the meeting.
At the meeting, stockholders will be asked to
The close of business on February 27, 2009 is the record
date for determining stockholders entitled to vote at the annual
meeting. A list of these stockholders will be available at
Citi’s headquarters, 399 Park Avenue, New York City, before
the annual meeting.
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
Michael S. Helfer
Corporate Secretary
March 20,
2009
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The board of directors of Citi is soliciting your vote at the
2009 annual meeting of Citi’s stockholders.
The meeting is scheduled to begin at
9am on
April 21, 2009 at the Hilton New York at 1335 Avenue of the
Americas in New York City. The entrance to the Hilton is on
Avenue of the Americas (6th Ave.) between West
53rd and West 54th Streets.
An agenda will be distributed at the meeting.
You will have one vote for every share of Citi common stock you
owned on February 27, 2009 (the record date).
5,512,970,301, consisting of one vote for each of Citi’s
shares of common stock that were outstanding on the record date.
There is no cumulative voting.
A majority of the votes that can be cast, or 2,756,485,152. 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.
Yes, according to a Schedule 13 G Information Statement
filed by State Street Bank and Trust Company on
February 17, 2009, State Street may be deemed to
beneficially own 6.2% of Citi’s common stock. State Street,
the custodian for Citi’s 401(k) Plan, disclaimed beneficial
ownership of all such shares in the Information Statement.
In 2008 and 2009, Citi issued to the U.S. Treasury warrants
to purchase 465,117,176 shares of common stock, of which
warrants to purchase 360,075,159 shares of common stock are
exercisable within 60 days. The exercise prices for the
warrants are $10.61 and $17.85. The warrants exercisable within
60 days represent approximately 6.2% of Citi’s voting
stock. However, none of the warrants have been exercised and the
exercise prices are above Citi’s closing price on March 6
of $1.03. See Citi’s Annual Report on
Form 10-K
filed on February 27, 2009 for additional information.
For further information, see “Stock Ownership—Owners
of More than 5% of Our Common Stock” in this proxy
statement.
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
To ensure that your vote is counted, please remember to submit
your vote by April 20, 2009.
Citi employees who participate in equity programs may receive
their proxy cards separately.
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If you want to vote in person at the annual meeting, and you
hold your Citi stock through a securities broker (that is, in
street name), you must obtain a proxy from your broker and bring
that proxy to the meeting.
Yes. Just send in a new proxy card with a later date, or cast a
new vote by telephone or Internet, or send a written notice of
revocation to Citi’s Corporate Secretary at the address on
the cover of this proxy statement. If you attend the annual
meeting and want to vote in person, you can request that your
previously submitted proxy not be used.
If you return a signed proxy card without indicating your vote,
your shares will be voted, in accordance with the board’s
recommendation, for the nominees listed on the card,
for kpmg as
independent registered public accounting firm for 2009, for
the Citigroup 2009 Stock Incentive Plan, for
Citi’s 2008 Executive Compensation and against
the other proposals.
You may vote for or against each director nominee,
or abstain from voting on a director nominee. 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 the ratification of
kpmg, or
abstain from voting on this proposal. If you abstain
from voting on the ratification of
kpmg, 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 this proposal.
You may vote for or against Citi’s 2008
Executive Compensation, or abstain from voting on this
proposal. If you abstain from voting on Citi’s 2008
Executive Compensation, 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 this proposal.
You may vote for or against or you may abstain
from voting on the other proposals. If you abstain
from voting on the Citigroup 2009 Stock Incentive Plan or
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.
Citi has adopted a by-law providing a majority vote standard for
director elections. The by-law amendment provides that if a
nominee receives, in an uncontested election, a number of votes
cast 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, the Citigroup 2009 Stock Incentive Plan,
Citi’s 2008 Executive Compensation 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.
In 2006, the board adopted a confidential voting policy as a
part of its Corporate Governance Guidelines. Under the policy,
all proxies, ballots, and vote tabulations are kept confidential
for registered stockholders who request confidential treatment.
If you are a registered stockholder and would like your vote
kept confidential, please check the appropriate box on the proxy
card or follow the instructions when submitting your vote by
telephone or by the Internet. If you hold your shares in
“street name” or through an employee benefit plan,
your vote already receives confidential treatment and you do not
need to request confidential treatment in order to maintain the
confidentiality of your vote.
The confidential voting policy will not apply in the event of a
proxy contest or other solicitation based on an opposition proxy
statement. For
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further details regarding this policy, please see the Corporate
Governance Guidelines attached as Annex A to this proxy
statement.
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, the
ratification of
kpmg’s
appointment, and Citi’s 2008 Executive Compensation
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
Citi affiliated member is permitted to vote your shares in the
same proportion as all other shares are voted with respect to
each such proposal; and (2) all other
nyse member
brokers are permitted to vote your shares in their discretion.
The brokers will not be able to vote your shares for the
Citigroup 2009 Stock Incentive Plan and the stockholder
proposals if you fail to provide instructions.
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.
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 that are
properly presented at the meeting, the proxies will be voted at
the discretion of the proxy holders.
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.
Yes, you will need an admission ticket or proof of ownership of
Citi stock to enter the meeting. When you arrive at the annual
meeting, you may be asked to present photo identification, such
as a driver’s license. If you 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 Citi
stockholder. Due to seating limitations, Citi will not be able
to accommodate guests at the annual meeting. Any persons needing
special assistance should contact Shareholder Relations at the
following email address: shareholderrelations@citi.com.
This proxy statement and the 2008 annual report are available on
Citi’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.
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If you are a stockholder of record, you can choose this option
and save Citi the cost of producing and mailing these documents
by following the instructions provided when you vote over the
Internet. If you hold your Citi stock through a bank, broker or
other holder of record, please refer to the information provided
by that entity for instructions on how to elect not to receive
paper copies of future proxy statements and annual reports.
If you choose not to receive paper copies of future proxy
statements and annual reports, you will receive an
e-mail
message next year containing the Internet address to use to
access Citi’s proxy statement and annual report. Your
choice will remain in effect until you tell us otherwise. 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
If you received these materials by mail, you should have also
received Citi’s annual report to stockholders for 2008 with
them. The 2008 annual report is also available on Citi’s
website at www.citigroup.com. We urge you to read
these documents carefully. In accordance with the Securities and
Exchange Commission’s
(sec) rules, the
Five-Year Performance Graph appears in the 2008 Annual Report on
Form 10-K.
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Citi continually strives to maintain the highest standards of
ethical conduct: reporting results with accuracy and
transparency; and maintaining full compliance with the laws,
rules and regulations that govern Citi’s businesses. Citi
is active in ensuring its governance practices are at the
leading edge of best practices. Among other initiatives, Citi in
recent years has:
The current charters of the audit and risk management,
nomination and governance, and personnel and compensation
committees, as well as Citi’s Corporate Governance
Guidelines, Code of Conduct and Code of Ethics, are available in
the “Corporate Governance” section of Citi’s
website: www.citigroup.com. Citi stockholders may obtain printed
copies of these documents by writing to Citigroup Inc.,
Corporate Governance, 425 Park Avenue, 2nd floor, New York,
NY 10022.
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 Citi’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.
On January 21, 2009, Citi announced that Richard D.
Parsons, the lead director and chair of the board’s
nomination and governance committee, would succeed Sir Win
Bischoff as chairman of the board of directors, effective
February 23, 2009. During the period that Citi has an
independent chair, there will not be a lead director. In 2004,
Citi designated the chair of the nomination and governance
committee as lead director. Since 2004 and until
February 23, 2009, Citi has had an independent lead
director. Details regarding the selection, duties, term, and
tenure of the independent lead director are specified in
Citi’s Corporate Governance Guidelines, attached as
Annex A to this proxy statement.
The committee considers all qualified candidates identified by
members of the committee, by other members of the board of
directors, by senior management and by security holders. In
2008, the committee engaged Heidrick & Struggles for a
portion of the year and Spencer Stuart thereafter 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
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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:
account and balance the legitimate interests and concerns of all
of Citi’s stockholders and our other stakeholders in
reaching decisions, rather than advancing the interests of a
particular constituency.
Application of these factors involves the exercise of judgment
by the committee and the board.
Based on its assessment of each candidate’s independence,
skills and qualifications and the criteria described above, the
committee will make recommendations regarding potential director
candidates to the board.
The committee follows the same process and uses the same
criteria for evaluating candidates proposed by stockholders,
members of the board of directors and members of senior
management.
For the 2009 annual meeting, we received timely notice of
director nominations from thirteen stockholders who nominated
themselves or another person to stand for election at the annual
meeting. The qualifications of these individuals were discussed
at meetings of the nomination and governance committee and the
views of Spencer Stuart on the candidates were considered. After
deliberation, the committee decided not to include these
individuals on the slate of candidates it proposed to the full
board for consideration. The committee used the above-mentioned
criteria to evaluate the candidates.
Citi’s Corporate Governance Guidelines embody many of our
long-standing practices, policies and procedures, which are the
foundation of our commitment to best practices. The Guidelines
are reviewed at least annually, and revised as necessary, to
continue to reflect best practices. The full text of the
Guidelines, as approved by the board, is set forth in
Annex A to this proxy statement. The Guidelines outline the
responsibilities, operations, qualifications and composition of
the board.
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Our goal is that at least two-thirds of the members of the board
be independent. The board has recently announced that it
unanimously decided to have a majority of new directors as soon
as feasible. Certain nominees are included in this proxy
statement for election by stockholders. When additional
candidates are identified, approved and subsequently appointed
as directors by the board, the Company will file a
Form 8-K
to announce the appointments. A description of our independence
criteria and the results of the board’s independence
determinations are set forth below.
The number of other public company boards on which a director
may serve is subject to a
case-by-case
review by the nomination and governance committee, in order to
ensure that each director is able to devote sufficient time to
performing his or her duties as a director. Interlocking
directorates are prohibited (inside directors and executive
officers of Citi may not sit on boards of companies where a Citi
outside director is an executive officer).
The Guidelines require that all members of the 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 management.
Meetings of the non-management directors are held as part of
every regularly scheduled board meeting and are presided over by
the independent chairman.
If a director has a substantial change in professional
responsibilities, occupation or business association, he or she
is required to notify the nomination and governance committee
and to offer his or her resignation from the board. The
nomination and governance committee will evaluate the facts and
circumstances and make a recommendation to the board whether to
accept the resignation or request that the director continue to
serve on the board. If a director assumes a significant role in
a not-for-profit entity, he or she is asked to notify the
nomination and governance committee.
Directors are expected to attend board meetings, meetings of the
committees and subcommittees on which they serve and the annual
meeting of stockholders. All of the directors then in office
attended Citi’s 2008 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 Citi. New directors are provided with an
orientation program to familiarize them with Citi’s
businesses and its legal, compliance, regulatory and risk
profile. Citi provides educational sessions on a variety of
topics, which all members of the board are invited to attend.
These sessions are designed to allow directors to, for example,
develop a deeper understanding of a business issue or a complex
financial product.
The board reviews the personnel and compensation
committee’s report on the performance of senior executives
in order to ensure that they are providing the best leadership
for Citi. The board also works with the nomination and
governance committee to evaluate potential successors to the
ceo.
If a director, or an immediate family member who shares the
director’s household, serves as a director, trustee or
executive officer of a foundation, university, or other
not-for-profit organization and such entity receives
contributions from Citi
and/or the
Citi Foundation, such contributions will be reported to the
nomination and governance committee at least annually.
The Guidelines affirm Citi’s stock ownership commitment,
which is described in greater detail in this proxy statement. In
2008, the stock ownership commitment was reviewed in
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connection with the reorganization of Citi’s senior
management structure and was simplified as part of Citi’s
continuing efforts to streamline the organization and become
more efficient. The members of the management executive
committee, consisting of the most senior executives of the
Company, and the members of the board of directors have agreed
to hold 75% of the shares of common stock they acquire through
Citi’s equity programs as long as they remain subject to
the stock ownership commitment. Those members of the senior
leadership committee, which consists of the management executive
committee and an additional 36 executives of the Company who are
not also members of the management executive committee, have
agreed to hold 50% of the shares of common stock they acquire
through Citi’s equity programs as long as they remain
subject to the stock ownership commitment.
The Guidelines restrict certain financial transactions between
Citi and its subsidiaries on the one hand and directors, senior
management and their immediate family members on the other.
Personal loans to executive officers and directors of Citi and
its public issuer subsidiaries and members of the management
executive 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 Citi 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 Citi or
its executive officers and those immediate family members who
share an executive officer’s household in a partnership or
other privately-held entity in which an outside director is a
principal or in a publicly-traded company in which an outside
director owns or controls more than a 10% interest. Directors
and those immediate family members who share the director’s
household are not permitted to receive initial public offering
allocations. Directors and their immediate family members may
participate in Citi-sponsored investment activities, provided
they are offered on the same terms as those offered to similarly
situated non-affiliated persons. Under certain circumstances, or
with the approval of the appropriate committee, members of
senior management may participate in certain Citi-sponsored
investment opportunities. Finally, there is a prohibition on
certain investments by directors and executive officers in
third-party entities when the opportunity comes solely as a
result of their position with Citi.
The board has adopted categorical standards to assist the board
in evaluating the independence of each of its directors. The
categorical standards, which are set forth below, describe
various types of relationships that could potentially exist
between a director or an immediate family member of a director
and Citi and set thresholds at which such relationships would be
deemed to be material. Provided that no relationship or
transaction exists that would disqualify a director under the
categorical standards and no other relationships or transactions
exist of a type not specifically mentioned in the categorical
standards that, in the board’s opinion, taking into account
all facts and circumstances, would impair a director’s
ability to exercise his or her independent judgment, the board
will deem such person to be independent.
In 2008, the board and the nomination and governance committee
reviewed directors’ responses to a questionnaire asking
about their relationships with Citi, and those of their
immediate family members and primary business or charitable
affiliations and other potential conflicts of interest, as well
as data collected by Citi’s businesses related to
transactions, relationships or arrangements between Citi on the
one hand and a director, immediate family member of a director,
or a primary business or charitable affiliation of a director,
on the other. The board reviewed 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 Citi on the other and
determined that the relationships or transactions complied with
the Corporate Governance Guidelines and the related
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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 and the nominees standing for election are
independent: C. Michael Armstrong, Alain J.P. Belda, John M.
Deutch, Jerry A. Grundhofer, Andrew N. Liveris, Anne M. Mulcahy,
Michael E. O’Neill, Richard D. Parsons, Judith
Rodin, Robert L. Ryan, Anthony M. Santomero and William S.
Thompson, Jr.
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
the Company.
by the Company to, and to the Company from, any company of which
a director is an executive officer or employee or where an
immediate family member of a director is an executive officer,
must not exceed the greater of $1 million or 2% of such
other company’s consolidated gross revenues in any single
fiscal year.
Annual contributions in any of the last three calendar years
from the Company
and/or the
Citigroup Foundation to a foundation, university, or other
non-profit organization (“Charitable Organization”) of
which a director, or an immediate family member who shares the
director’s household, serves as a director, trustee or
executive officer (other than the Citigroup Foundation and other
Charitable Organizations sponsored by the Company) may not
exceed the greater of $250,000 or 10% of the Charitable
Organization’s annual consolidated gross revenue.
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The board may determine that a director is independent
notwithstanding the existence of an immaterial relationship or
transaction between the Company and (i) the director,
(ii) an immediate family member of the director or
(iii) the director’s or immediate family member’s
business or charitable affiliations, provided Citi’s proxy
statement includes a specific description of such relationship
as well as the basis for the board’s determination that
such relationship does not preclude a determination that the
director is independent. Relationships or transactions between
the Company and (i) the director, (ii) an immediate
family member of the director or (iii) the director’s
or immediate
family member’s business or charitable affiliations that
comply with the Corporate Governance Guidelines, including but
not limited to the director independence standards that are part
of the Corporate Governance Guidelines and the sections titled
Financial Services, Personal Loans and Investments/Transactions,
are deemed to be categorically immaterial and do not require
disclosure in the proxy statement (unless such relationship or
transaction is required to be disclosed pursuant to
Item 404 of
sec
Regulation S-K).
For purposes of the Corporate Governance Guidelines,
(i) the term “immediate family member” means a
director’s or executive officer’s (designated as such
pursuant to Section 16 of the Securities Exchange Act of
1934) spouse, parents, step-parents, children,
step-children, siblings, mother- and father-in law, sons- and
daughters-in-law,
and brothers and
sisters-in-law
and any person (other than a tenant or domestic employee) who
shares the director’s household; (ii) the term
“primary business affiliation” means an entity of
which the director or executive officer, or an immediate family
member of such a person, is an officer, partner or employee or
in which the director, executive officer or immediate family
member owns directly or indirectly at least a 5% equity
interest; and (iii) the term “related party
transaction” means any financial transaction, arrangement
or relationship in which (a) the aggregate amount involved
will or may be expected to exceed $120,000 in any fiscal year,
(b) the Company is a participant, and (c) any related
person (any director, any executive officer of the Company, any
nominee for director, any shareholder owning in excess of 5% of
the total equity of the Company, and any immediate family member
of any such person) has or will have a direct or indirect
material interest.
The board has adopted a policy setting forth procedures for the
review, approval and monitoring of transactions involving Citi
and related persons (directors and executive officers or their
immediate family members). A copy of
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Citi’s Policy on Related Party Transactions is available in
the “Corporate Governance” section of Citi’s
website: www.citigroup.com. Under the policy, the nomination and
governance committee is responsible for reviewing and approving
all related party transactions involving directors or an
immediate family member of a director. Directors may not
participate in any discussion or approval of a related party
transaction in which he or she or any member of his or her
immediate family is a related person, except that the director
shall provide all material information concerning the related
party transaction to the nomination and governance committee.
The nomination and governance committee is also responsible for
reviewing and approving all related party transactions valued at
more than $50 million involving an executive officer or an
immediate family member of an executive officer. The transaction
review committee, comprised of the chief financial officer,
chief risk officer, general counsel, chief compliance officer,
and 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:
Robert Rubin entered into an Aircraft Time Sharing Agreement
with Citiflight, Inc. (a subsidiary of Citigroup Inc.) on
August 10, 2006 that allows him to reimburse Citi for the
cost of his personal use of corporate aircraft. Mr. Rubin
reimbursed Citi $633,918 related to his personal use of
corporate aircraft during 2008. Vikram Pandit entered into an
Aircraft Time Sharing Agreement with Citiflight on
December 12, 2007, that allows him to reimburse Citi for
any personal use of Citi’s aircraft. Mr. Pandit
reimbursed Citi $171,808 related to his personal use of
corporate aircraft during 2008.
During 2008, certain Citi and Banamex executives used, for
Citi-related travel, private aircraft owned by Aeropersonal, a
company in which Roberto Hernández has an ownership
interest. The nomination and governance committee reviewed and
ratified the executives’ business-related use of aircraft
owned by Aeropersonal during 2008 and approved the
business-related use of Aeropersonal’s services by Citi and
Banamex executives in 2009. Citi reimbursed Aeropersonal
$1,002,126 for business-related services provided to Citi and
Banamex executives.
In April 2007, Citi entered into an agreement to purchase 100%
of the outstanding partnership interests in Old Lane Partners
L.P. (Old Lane), a hedge fund firm co-founded by Vikram Pandit
and John Havens in which each of Vikram Pandit, John Havens and
Brian Leach had an interest. At the time of the Old Lane
acquisition in 2007, a substantial portion of the purchase price
paid to the former owners of Old Lane was required to be
invested in the Old Lane Fund until July 2011, the fourth
anniversary of the closing of the transaction. Accordingly, on
behalf
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of each of Vikram Pandit and John Havens $100,273,630 was
invested (a substantial portion of which was subject to
forfeiture until July 2011) and on behalf of Brian Leach
$10,862,222 was invested in the Old Lane Fund. In June 2008,
Citi purchased substantially all of the assets in the Old Lane
Fund and redeemed substantially all of the interests of
investors in the Old Lane Fund. In connection with the
redemptions of investors’ interests, distributions were
made in respect of a portion of the investments made by the
former owners of Old Lane in the Old Lane Fund, including
$79,706,630, each, in the case of Mr. Pandit and
Mr. Havens, and $8,634,283, in the case of Mr. Leach.
The amounts distributed are invested, and all future
distributions will be invested, in an account at the Citi
Private Bank for the remainder of the period ending July 2011.
The funds may be earlier withdrawn in the event the executive
dies or his employment with Citi terminates by reason of his
disability or without cause or for good reason or, in the case
of Mr. Leach, upon termination of his employment with Citi
for any reason. A substantial portion of Mr. Pandit’s
and Mr. Havens’ investment remains subject to
forfeiture if the executive’s employment with Citi
terminates for cause or without good reason before July 2011.
State Street may be deemed to be the beneficial owner of more
than 5% of the outstanding shares of our common stock as a
result of its role as custodian of our 401(k) plan and other
unaffiliated accounts and investment funds. For further
information, see “Stock Ownership — Owners of
More than 5% of Our Common Stock” in this proxy statement.
We and certain of our subsidiaries have engaged in transactions
in the ordinary course of business with State Street and certain
of its affiliates during 2008. These transactions were on
substantially the same terms as comparable transactions with
unrelated third parties.
Officers and employees of Citi 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 Citi’s policies to
do so through a Citi broker-dealer affiliate. Certain of our
directors and members of their immediate families have
brokerage accounts at our broker-dealer affiliates. Transactions
in such accounts are offered on substantially the same terms as
those offered to other similarly-situated customers. Citi’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.
Citi has established funds in which employees have invested. In
addition, certain of our directors and executive officers have
from time to time invested their personal funds directly or
directed that funds for which they act in a fiduciary capacity
be invested in funds arranged by Citi’s subsidiaries on the
same terms and conditions as the other outside investors in
these funds, who are not our directors, executive officers, or
employees. Other than certain “grandfathered”
investments, in accordance with
sarbanes-oxley and
the Citi Corporate Governance Guidelines, executive officers may
invest in certain Citi-sponsored investment opportunities only
under certain circumstances and with the approval of the
appropriate committee.
In 2008, Citi performed investment banking, financial advisory
and other services in the ordinary course of our business for
certain organizations in which some of our directors are
officers or directors. Citi may also, in the ordinary course of
business, have sponsored investment opportunities in which such
organizations participated. In addition, in the ordinary course
of business, Citi may use the products or services of
organizations in which some of our directors are officers or
directors.
The persons listed on page 36 were the only members of the
personnel and compensation committee during 2008. No member of
the personnel and compensation committee was a
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part of a “compensation committee interlock” during
fiscal year 2008 as described under
sec rules. In
addition, none of our executive officers served as a director or
member of the compensation committee of another entity that
would constitute a “compensation committee interlock.”
No member of the committee had any material interest in a
transaction with Citi or is a current or former employee of Citi
or any of its subsidiaries.
Certain directors and executive officers have immediate family
members who are employed by Citi or a subsidiary. The
compensation of each such family member was established by Citi
in accordance with its employment and compensation practices
applicable to employees with equivalent qualifications and
responsibilities and holding similar positions. None of the
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 two of the
approximately 326,000 employees of Citi. One of them reports to
an executive officer of Citi. 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. A sibling of Manuel Medina-Mora, an executive
officer, is employed by Banamex, a subsidiary of Citi, and
received 2008 compensation of $1,510,726. An adult spouse of an
adult child of Lewis Kaden, an executive officer, is employed by
Citi’s Global Consumer Group and received 2008 compensation
of $292,333.
Other than certain “grandfathered” margin loans, in
accordance with
sarbanes-oxley and
the Citi Corporate Governance Guidelines, no margin loans may be
made to any executive officer unless such person is an employee
of a broker-dealer subsidiary of Citi and such loan is made in
the ordinary course of business. Before and during 2008, certain
executive officers have incurred indebtedness to Smith Barney, a
division of Citi and a registered broker-dealer,
and/or other
broker-dealer subsidiaries of Citi, 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 2008 between Citibank and other
Citi banking subsidiaries on the one hand and certain directors
or executive officers of Citi, members of their immediate
families, corporations or organizations of which any of them is
an executive officer or partner or of which any of them is the
beneficial owner of 10% or more of any class of securities, or
associates of the directors, the executive officers or their
family members on the other. The transactions were made in the
ordinary course of business on substantially the same terms,
including interest rates and collateral, that prevailed at the
time for comparable transactions with other persons not related
to the lender and did not involve more than the normal risk of
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,
Regulation O and the Corporate Governance Guidelines, and
must be made in the ordinary course of business.
Citigroup Capital Partners I (Master Fund), LP (formerly SSB
Capital Partners (Master Fund) I, LP) and Citigroup
Employee Fund of Funds I, LP are funds that were formed in
2000. Citigroup Capital Partners II Employee Master Fund,
L.P. was formed in 2006. Each invests either directly or via a
master fund in private equity investments. Citi matches each
dollar invested by an employee with an additional two dollar
commitment to each fund, or feeder fund, in which an employee
has invested, up to a maximum of $1 million for each fund
in which the employee has invested. Citi’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 Citi, less the interest paid by
the fund on the loan, as well as any increase in the value of
the fund attributable to the employee’s own investment.
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One-half of the loan is full recourse to the employee via a
guaranty and the other half is non-recourse to the employee.
Before any distributions (other than tax distributions) are made
to an employee, distributions are paid by each fund to Citi to
pay interest on and to repay the loan.
Interest on the loans accrues quarterly at a rate determined
from time to time by Citi as of the first business day of each
quarter equal to the greater of (i) the three-month London
Inter-Bank Offered Rate plus 75 basis points (as determined
by Citi), and (ii) the short-term applicable federal rate
calculated in accordance with Section 1274(d) of the
Internal Revenue Code of 1986, as amended
(irc) (as
determined by Citi).
In 2008, two employees who participated in the Citigroup Capital
Partners II Employee Master Fund, L.P. became executive
officers and, pursuant to the fund’s offering memorandum
and in compliance with
Sarbanes-Oxley,
were required to repay their outstanding leverage. During 2008,
Shirish Apte reimbursed Citi $664,000 and James Forese
reimbursed Citi $1.66 million for leverage outstanding to
the Citigroup Capital Partners II Employee Master Fund, L.P.
During 2008, no loans were made under the Citigroup Employee
Fund of Funds I, LP to any current or former executive
officer. For the Citigroup Capital Partners I (Master Fund), LP,
no loans were made to any current or former executive officer
that exceeded $120,000. The
following distributions with respect to investments in these two
funds were made to current and former executive officers in 2008:
* Amount does not exceed $120,000.
Citi’s business practices committees, at the corporate
level and in each of its business units, review business
activities, sales practices, products, potential conflicts of
interest, complex transactions, suitability and other
reputational concerns providing guidance to ensure that
Citi’s business practices meet the highest standards of
ethics, integrity and professional behavior. These committees,
comprised of our most senior executives, focus on reputational
risk while our businesses ensure that our policies are adhered
to and emphasize our commitment to the franchise.
Business practices concerns may be surfaced by a variety of
sources, including business practices working groups, other
in-business committees or the control functions. The business
practices committees guide the development of business practices
and may change them when necessary or appropriate. These issues
are reported on a regular basis to the Citi business practices
committee and the board.
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The board has adopted a Code of Ethics for Financial
Professionals governing the principal executive officers of Citi
and its reporting subsidiaries and all Citi professionals
worldwide serving in a finance, accounting, treasury, tax or
investor relations role. A copy of the Code of Ethics is
available on our website at www.citigroup.com. Click on
“Corporate Governance” 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.
We intend to disclose amendments to, or waivers from, the Code
of Ethics, if any, on our website.
Citi strongly encourages employees to raise possible ethical
issues. Citi offers several channels by which employees and
others may report ethical concerns or incidents, including,
without limitation, concerns about accounting, internal controls
or auditing matters. We provide an Ethics Hotline that is
available 24 hours a day, seven days a week with live
operators who can connect to translators in multiple languages,
a dedicated
e-mail
address, fax line, a web-link and conventional mailing address.
Individuals may choose to remain anonymous. We prohibit
retaliatory actions against anyone who, in good faith, raises
concerns or questions regarding ethics, discrimination or
harassment matters, or reports suspected violations of other
applicable laws, regulations or policies. Calls to the Ethics
Hotline are received by a vendor, which reports
the calls to Citi’s Ethics Office of Global Compliance for
review and investigation.
The board has adopted a Code of Conduct, which outlines the
laws, rules, regulations and Citi policies that govern the
activities of Citi and sets the standards of business behavior
and ethics that apply across Citi. The Code of Conduct applies
to every director, officer and employee of Citi and each of its
subsidiaries. All employees, directors and officers are required
to read and follow the Code of Conduct. In addition, other
persons performing services for Citi may be subject to the Code
of Conduct by contract or agreement. A copy of the Code of
Conduct is available on our website at www.citigroup.com. Click
on “Corporate Governance” and then “Code of
Conduct.”
Stockholders or other interested parties who wish to communicate
with a member or members of the board of directors, including
the Chairman or the non-management directors as a group, may do
so by addressing their correspondence to the board member or
members,
c/o the
Corporate Secretary, Citigroup Inc., 399 Park Avenue, New York,
NY 10043. The board of directors has approved a process pursuant
to which the office of the Corporate Secretary will review and
forward correspondence to the appropriate person or persons for
response.
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Stock
Ownership
Citi has long encouraged stock ownership by its directors,
officers and employees to align their interests with the
long-term interests of stockholders.
As part of our commitment to aligning employee and stockholder
interests, members of the management executive committee and
members of the board of directors have agreed to hold 75% of the
shares of common stock they acquire through Citi’s equity
programs as long as they remain subject to the stock ownership
commitment. Senior leadership committee members have agreed to
hold 50% of the shares of common stock they acquire through
Citi’s
equity programs as long as they remain subject to the stock
ownership commitment. A summary of the stock ownership
commitment appears in Citi’s Corporate Governance
Guidelines, which are attached to this proxy statement as
Annex A.
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.
The following table shows the beneficial ownership of Citi
common stock by our directors, nominees and certain executive
officers at February 27, 2009.
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(A) The share numbers in
these columns have been restated to reflect equitable
adjustments made to all Citi 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.
At February 27, 2009, no director, nominee or executive
officer owned as much as 1% of Citi’s common stock.
The following table shows the beneficial ownership of Citi
preferred stock by our directors and certain executive officers
at February 27, 2009.
All of the directors, nominees and executive officers as a group
beneficially owned approximately .63% of Citi’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:
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The board of directors has nominated all of the current
directors for re-election at the 2008 annual meeting except for
Sir Win Bischoff and Messrs. Derr, Hernandez, Rubin and
Thomas, who are 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 has recently announced
that it
unanimously decided to have a majority of new directors as soon
as feasible. Certain nominees are included in this proxy
statement for election by stockholders. When additional
candidates are identified, approved and subsequently appointed
as directors by the board, the Company will file
Forms 8-K
to announce the appointments.
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.
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The one-year terms of all of Citi’s directors expire at the
annual meeting.
The board of directors met 25 times in 2008. During 2008, the
audit and risk management committee met 12 times, the personnel
and compensation committee met 15 times and the nomination and
governance committee met 8 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 2008.
Citi’s non-management directors meet in executive session
without any management directors in attendance each time the
full board convenes for a regularly scheduled meeting, which is
usually 7 times each year, and, if the board convenes a special
meeting, the non-management directors may meet in executive
session. Until the appointment of Richard Parsons as Chairman,
the lead director presided at each executive session of the
non-management directors. The independent chairman now presides
at such sessions.
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The standing committees of the board of directors are:
The audit and risk management committee, which assists
the board in fulfilling its oversight responsibility relating to
(i) the integrity of Citi’s financial statements and
financial reporting process and Citi’s systems of internal
accounting and financial controls; (ii) the performance of
the internal audit function — Audit and Risk Review;
(iii) the annual independent integrated audit of
Citi’s consolidated financial statements and 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 Citi with legal and
regulatory requirements, including Citi’s disclosure
controls and procedures; and (vi) the fulfillment of the
other responsibilities set out in its charter, as adopted by the
board. The report of the committee required by the rules of the
sec is included in
this proxy statement. Subcommittees of the audit and risk
management committee cover Citi’s corporate and consumer
businesses.
The board has determined that each of Mrs. Mulcahy,
Dr. Rodin, and Messrs. Deutch, Liveris, Ricciardi and
Ryan qualifies as an “audit committee financial
expert” as defined by the
sec and, in
addition to being independent according to the board’s
independence standards as set out in its Corporate Governance
Guidelines, is independent within the meaning of applicable
sec rules, the
corporate governance rules of the
nyse, and the
fdic guidelines.
The audit 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 Citi’s website:
www.citigroup.com.
The nomination and governance committee, which is
responsible for identifying individuals qualified to become
board members and recommending to the board the director
nominees for the next annual meeting of stockholders. It leads
the board in its annual review of the board’s
performance and 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 Citi’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, as part of its
executive succession planning process, evaluates and nominates
potential successors to the
ceo and provides
an annual report to the board on
ceo succession.
The committee also reviews director compensation and benefits,
Citi’s Code of Conduct, the Code of Ethics for Financial
Professionals and other internal policies to monitor that the
principles contained in the Codes are being incorporated into
Citi’s culture and business practices. The nomination and
governance committee may also exercise all powers of the board
of directors between meetings of the board.
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. 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 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 Citi’s website:
www.citigroup.com.
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The personnel and compensation committee, which is
responsible for determining the compensation for the
ceo, and approving
the compensation structure for senior management, including the
management executive committee, members of the senior leadership
committee, 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
(cd&a) with
management. The committee has also produced an annual report on
executive compensation that is included in this proxy statement
(on page 36 below). Further, the committee approves
broad-based and special compensation plans for all of
Citi’s businesses.
The committee regularly reviews Citi’s management
resources, succession planning and development activities, as
well as the performance of senior management. The committee is
also charged with monitoring Citi’s performance toward
meeting its goals on employee diversity.
The committee is responsible for evaluating the performance of
and determining the compensation for the
ceo and approving
the compensation for the management executive committee. The
committee also approves the compensation structure for senior
management, including members of the senior leadership
committee, 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
regularly reviews the design and structure of Citi’s
compensation programs to ensure that management’s interests
are aligned with stockholders and that the compensation programs
are aligned with Citi’s strategic priorities. See the
cd&a on
page 37 of this proxy statement.
In order to ensure uninterrupted operation of Citi in the event
of the unplanned departure or unavailability of Citi’s
ceo, Citi’s
personnel and compensation committee evaluates a number of
individuals who could be asked to assume the
ceo’s duties
in the event of an unexpected vacancy. The committee then
discusses the list with the board which then formalizes its
choices
of one or more of such individuals. This process is conducted at
a regularly scheduled board meeting on an annual basis.
With respect to regular succession of the
ceo and senior
management, Citi’s board evaluates internal, and, when
appropriate, external, candidates. To find external candidates,
Citi seeks input from the members of the board and senior
management
and/or from
recruiting firms. To develop internal candidates, Citi engages
in a number of practices, formal and informal, designed to
familiarize the board with Citi’s talent pool. The formal
process involves an annual talent review conducted by senior
management at which the board studies the most promising members
of senior management. The board learns about each person’s
experience, skills, areas of expertise, accomplishments and
goals. This review is conducted at a regularly scheduled board
meeting on an annual basis. On an informal basis, members of
senior management are periodically asked to make presentations
to the board at board meetings and at the board strategy
sessions. These presentations are made by senior managers at the
various business units as well as those who serve in corporate
functions. The purpose of the formal review and informal
interaction is to ensure that board members are familiar with
the talent pool inside Citi from which the board would be able
to choose successors to the
ceo and evaluate
succession for other senior managers as necessary from time to
time.
The committee also has the authority to retain
and/or
engage special consultants or experts to advise the committee,
as the committee may deem appropriate or necessary in its sole
discretion, and receives funding from Citi to engage such
advisors. The committee has retained Independent Compensation
Committee Adviser, LLC
(icca) to provide
the committee with comparative data on executive compensation
and advice on Citi’s compensation programs for senior
management. icca
does no other work for Citi. The amount the personnel and
compensation committee approved for payment to
icca in 2008 is
disclosed in the
cd&a on
page 50 of this proxy statement. Citi has retained Mercer
Human Resource Consulting for benchmarking and analyses with
respect to executive compensation and benefit practices, and
other compensation matters for all
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employees, including the named executive officers. The committee
instructed the consultants to meet with senior management to
review Citi’s process, financial performance, and market
data. The consultants were asked to evaluate the compensation
recommendations for senior management in light of these factors
and management’s description of the performance assessment.
Towers Perrin also provided market data regarding compensation
trends in the financial services industry.
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 Citi’s website: www.citigroup.com.
The public affairs committee, which is responsible for
reviewing Citi’s policies and programs that relate to
public issues of significance to Citi and the public at large
and reviewing relationships with external constituencies and
issues that impact Citi’s reputation. The committee also
has responsibility for reviewing public policy and reputation
issues facing Citi, reviewing political and charitable
contributions made by Citi and the Citi Foundation, reviewing
Citi’s policies and practices regarding supplier diversity,
and reviewing Citi’s sustainability policies and programs,
including environmental and human rights.
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 Citi’s website:
www.citigroup.com.
The following table shows the current membership of each of the
foregoing committees.
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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 on Calpine’s 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,
nominee or principal shareholder, or any affiliate thereof, is a
party adverse to Citi or has a material interest adverse to Citi.
Directors’ compensation is determined by the board. Since
its initial public offering in 1986, Citi has paid outside
directors all or a portion of their compensation in common
stock, to ensure that the directors have an ownership interest
in common with other stockholders. The nomination and governance
committee makes recommendations to the board with respect to
compensation of directors. The committee periodically reviews
benchmarking assessments in order to determine the level of
compensation to attract qualified candidates for board service
and to reinforce our practice of encouraging stock ownership by
our directors. In 2008, the committee reviewed the current
compensation program and determined that no changes were
required. Effective January 1, 2005, the last time director
compensation was adjusted, 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
their deferred stock award and cash retainer in the form of
common stock, and directors may elect to defer receipt of this
common stock. Directors also may elect to receive their cash
retainer in the form of an option to purchase shares of Citi
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.
Beginning in 2009, directors may no longer elect to receive
stock options.
Directors who are employees of Citi or its subsidiaries do not
receive any compensation for their services as directors.
Except as described below, directors receive no additional
compensation for participation on board committees 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. On January 1, 2009, Messrs. Deutch,
Ricciardi and Ryan were elected to the Citibank, N.A. Board of
Directors and each will receive $50,000 as an annual retainer
for his service. Citibank, N.A. is a wholly-owned subsidiary of
Citi.
Citi reimburses its board members for expenses incurred in
attending board and committee meetings or performing other
services for Citi in their capacities as directors. Such
expenses include food, lodging and transportation.
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The following table provides information on 2008 compensation
for non-employee directors.
Non-Employee
Director Compensation Table
* As Citi’s stock price has declined significantly
since the granting of these awards, the value of the awards
shown in the table does not reflect their current value.
(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 Citi common stock. Directors may elect to receive a portion
of their deferred stock awards in the form of an option to
purchase shares of Citi common stock. Beginning in 2009,
directors may no longer elect to receive any of their
compensation in the form of options to purchase shares of common
stock.
The following directors elected to receive all or a portion of
their 2008 retainer and deferred stock award in stock options:
(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 2006
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 2008 and the grant
date fair
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value of those awards, determined in accordance with
sfas 123(r),
are set forth below:
* Mr. Ricciardi, who joined the Board on July 21,
2008, received an award of deferred stock with a grant price of
$19.356.
The Stock Awards 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 deferred stock awards outstanding at the
end of 2008 was:
(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 footnote 8 to the
Consolidated Financial Statements of Citigroup Inc. and its
Subsidiaries, as filed with the
sec on
Form 10-K
for 2008. 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 2008 was:
For the awards granted to all directors who elected to receive
options as part of their compensation for 2008, the exercise
price was $24.45. The number of shares in the option grant is
calculated by dividing the dollar amount elected by the fair
market value of Citi common stock on the grant date and
multiplying that amount by four.
(d) Travelers Property Casualty Corp., formerly a
subsidiary of Citi, sponsored a Director’s Charitable Award
Program originally adopted by the Travelers Corporation, a Citi
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 Citi’s distribution of
shares of Travelers to its stockholders, at which time Travelers
became a separate public company, Citi 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 Citi’s board, was a director of Travelers and a
participant in the Director’s Charitable Award Program. The
annual costs Citi incurs in connection with the administration
of this program which are attributable to Mr. Armstrong
amount to $2,877.
(e) George David retired from the board on April 22,
2008.
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(f) In consideration of his service as non-executive
chairman of Banco Nacional de México, an indirect wholly
owned subsidiary of Citi, and other duties and services
performed for such entity and its affiliates during 2008,
including governmental and client relations and strategic
development, Citi, 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 aircraft
usage for Citi business-related purposes. The aggregate amount
of such expenses for Mr. Hernández for 2008 is
estimated to be approximately $2,218,000.
The following chart shows the amount of dividend equivalents and
interest paid to the non-employee directors in 2008 with respect
to shares of Citi common stock held in their deferred stock
accounts.
(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.
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Director
Stock Option Grant Table
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The Audit and Risk Management Committee (“Committee”)
operates under a charter that specifies the scope of the
Committee’s responsibilities and how it carries out those
responsibilities. A copy of the Committee charter is attached to
Citigroup’s proxy statement as Annex B.
The Board of Directors has determined that all six members of
the Committee are independent based upon the standards adopted
by the Board, which incorporate the independence requirements
under applicable laws, rules and regulations.
Management is responsible for the financial reporting process,
the system of internal controls, including internal control over
financial reporting, risk management and procedures designed to
ensure compliance with accounting standards and applicable laws
and regulations. kpmg
llp, Citigroup’s independent registered public
accounting firm (“independent auditors”) is
responsible for the integrated audit of the consolidated
financial statements and internal control over financial
reporting. The Committee’s responsibility is to monitor and
oversee these processes and procedures. The members of the
Committee are not professionally engaged in the practice of
accounting or auditing and are not professionals in these
fields. The Committee relies, without independent verification,
on the information provided to us and on the representations
made by management regarding the effectiveness of internal
control over financial reporting, that the financial statements
have been prepared with integrity and objectivity and that such
financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of
America. The Committee also relies on the opinions of the
independent auditors on the consolidated financial statements
and the effectiveness of internal control over financial
reporting.
The Committee’s meetings facilitate communication among the
members of the Committee, management, independent risk managers,
the internal auditors, and Citigroup’s independent
auditors. The Committee separately met with each of the internal
and independent auditors with and without management, to discuss
the results of their examinations and their observations and
recommendations regarding Citigroup’s internal controls.
The Committee also discussed with Citigroup’s independent
auditors all communications required by generally accepted
auditing standards.
The Committee reviewed and discussed the audited consolidated
financial statements of Citigroup as of and for the year ended
December 31, 2008 with management, the internal auditors,
and Citigroup’s independent auditors.
The Committee has received the written disclosures required by
pcaob
Rule 3526 — “Communication with
Audit Committees Concerning Independence.” The Committee
discussed with the independent auditors any relationships that
may have an impact on their objectivity and independence and
satisfied itself as to the auditors’ independence.
The Committee has reviewed and approved the amount of fees paid
to the independent auditors for audit, audit related and tax
compliance services. The Committee concluded that the provision
of services by the independent auditors is compatible with the
maintenance of their independence.
Based on the above-mentioned review and discussions, and subject
to the limitations on our role and responsibilities described
above and in the Committee charter, the Committee recommended to
the Board that Citigroup’s audited consolidated financial
statements be included in Citigroup’s Annual Report on
Form 10-K
for the year ended December 31, 2008 for filing with the
sec.
John M. Deutch (Chair)
Andrew N. Liveris
Anne M. Mulcahy
Lawrence R. Ricciardi
Judith Rodin
Robert L. Ryan
Dated: February 26, 2009
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Executive
Compensation
In accordance with its written charter, the Personnel and
Compensation Committee (the committee) evaluated the performance
of and determined the compensation for the Chief Executive
Officer and approved the compensation structure for senior
management, including the senior leadership committee, the most
senior managers of corporate staff, and other highly paid
professionals.
The committee reviewed and discussed the Compensation Discussion
and Analysis with members of senior management and, based on
this review, the committee recommended to the Board of Directors
of Citigroup Inc. that the Compensation Discussion and Analysis
be included in Citi’s annual report on
Form 10-K
and proxy statement on Schedule 14A filed with the
Securities and Exchange Commission.
The committee certifies that it has reviewed with Citi’s
senior risk officer the senior executive officer incentive
compensation arrangements and has made reasonable efforts to
ensure that such arrangements do not encourage senior executive
officers to take unnecessary and excessive risks that threaten
the value of the financial institution.
Alain J.P. Belda (Chair)
C. Michael Armstrong
Kenneth T. Derr
Richard D. Parsons
February 17, 2009
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Compensation
Discussion and Analysis
Citi and the entire financial services industry are facing
unprecedented challenges and profound change and 2008 was a
particularly challenging year. Citi’s overarching priority
has been to reposition the Company to capitalize on the best
opportunities for global growth in a rapidly changing financial
environment. This repositioning includes reducing the assets on
the balance sheet, reducing expenses, and streamlining
businesses for future profitable growth. It also includes a
redesign of the compensation structure and a substantial
turnover of top management.
The objectives of Citi’s executive compensation programs
have been to attract and retain the best talent, motivate and
reward executives to perform by linking incentive compensation
to demonstrable performance-based criteria, align the long term
interests of management with those of stockholders, and deliver
compensation at levels that are competitive to the financial
services market. These objectives still hold true and remain as
part of Citi’s compensation philosophy; reflecting 2008
financial results and the evolving financial services landscape,
Citi has made changes to the structure of compensation that will
better result in meeting these objectives.
The extraordinary events of 2008 have significantly decreased
total compensation for 2008. The final awards made by the
committee are shown on page 45.
Citi’s compensation programs are designed to support:
The compensation structure has been redesigned to better meet
the objectives summarized above. In particular, awards are now
more closely tied to future performance and risk management is
now a more integrated part of the compensation. Set forth below
is a discussion of each element of compensation, the reason Citi
pays each element, how each amount is determined, and how that
element fits into Citi’s compensation philosophy. Note that
the American Recovery and Reinvestment Act of 2009, which is
described in this report, and other subsequent legislation and
regulations will modify or could modify the executive
compensation policies set forth herein prospectively
and/or
retroactively.
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Executives have a range of base salaries, and as a matter of
company policy, annual base salary is capped at $1,000,000 for
the members of the management executive
committee. Base pay was frozen for 2009 across Citi, and none of
the members of the management executive committee received a
base pay increase from 2008 to 2009.
Incentive
Compensation Structure
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