Citigroup (C)

Under Citi’s senior executive compensation guidelines, total compensation of senior executives consists of, to a very large degree, incentive compensation. The current structure of compensation includes the following guidelines for the allocation of total compensation to salary and bonus:

Employment Agreements

To the extent that Citi has entered into employment agreements with senior executives, they have generally been limited in duration and scope. Accordingly, the compensation described in the Summary Compensation Table was not generally paid pursuant to employment agreements, except as noted below.

Mr. Crittenden’s compensation reflected in the Summary Compensation Table was awarded pursuant to the terms of his employment

agreement dated February 23, 2007, which has been publicly filed. As CFO of Citi, he is paid a base salary at an annual rate of $500,000 and is generally entitled to receive incentive awards with a pre-tax nominal value of $9,500,000 in respect of 2007 and 2008 (the 2007 Award and the 2008 Award, respectively). Thereafter, he will be eligible to be considered for discretionary incentive awards on the same basis as other similarly situated executives. The committee awarded Mr. Crittenden 30 percent of the 2007 Award in cash ($2,850,000) and 70 percent in Citi stock ($6,650,000) under the same allocation of cash and equity awarded to other members of senior management for 2007.

Also pursuant to the employment agreement, Mr. Crittenden (a) was paid in cash $11,180,000 on March 30, 2007 and (b) received 277,574 restricted shares of Citi stock effective July 17, 2007, as make-whole awards to offset forfeitures of compensation from his former employer. The cash award was determined with reference to the value of forfeited vested stock options and the restricted stock award was determined with reference to the value of other forfeited awards as well as interest on deferred compensation. The committee agreed to the make-whole awards as a necessary condition to

hiring Mr. Crittenden to fill a critical executive role. The make-whole awards made in the form of Citi restricted stock vest 50 percent on each of the first two anniversaries of his employment commencement date at Citi, subject to acceleration if his employment is terminated without cause or he resigns with good cause, as explained in more detail below under Potential Payments upon Termination of Employment or Change in Control. If Mr. Crittenden terminates his employment without good cause or is terminated for cause before the second anniversary of his employment commencement date, the cash and equity make-whole awards must be forfeited and/or repaid.

Pursuant to the agreement, Citi provides a car and driver for his business and personal use, and he is eligible to receive personal security protection to the extent that other senior executives receive such protection. Pursuant to the employment agreement, in the event that Mr. Crittenden’s employment with Citi terminates for any reason, he has agreed to not directly or indirectly solicit, induce or otherwise encourage any person to leave the employment of, or terminate any customer relationship with, Citi. Covenants protecting Citi’s confidential and proprietary information also apply during employment and thereafter.

The Capital Accumulation Plan

The restricted and deferred stock awards described in the Grants of Plan-Based Awards Table granted under CAP in January 2007 were awarded in respect of performance for 2006. For the January 2008 performance awards in respect of 2007, three of the named executive officers received awards of either restricted or deferred stock under CAP, depending on the named executive officer’s age and years of service. The January 2008 awards to Sir Winfried were made in the form of deferred stock because he met an age and years of service rule (the Rule of 75) and because he was a resident of the U.K. The January 2008 awards to Mr. Crittenden and Ms. Krawcheck are awards of restricted stock because they have not met an age and years of service rule. While CAP awards are generally intended to be made in the form of restricted stock, awards to participants who meet

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

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

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

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

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

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

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

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

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

The Long-Term Incentive Program

On July 17, 2007, the committee approved the LTIP, under the terms of the 1999 Stock Incentive Plan. The LTIP provides members of the Citi management committee, including the named executive officers, an opportunity to earn deferred stock awards based on Citi financial performance.

Each participant in the LTIP is eligible to receive an equity award that will be earned based on Citi’s financial performance for the period from July 1, 2007 to December 31, 2009. Three periods will be measured for financial performance (July 1, 2007 to December 31, 2007, full year 2008 and full year 2009). The ultimate value of the award will be based on Citi’s performance in each of these periods with respect to (a) TSR versus Citi’s current key competitors and (b) ROE targets measured at the end of each performance period. If, in any of the three performance periods, Citi’s total stockholder return does not exceed the median performance of the peer group, the participants, including the named executive officers, will not earn award shares for that period.

The maximum number of shares that a named executive officer may receive under the LTIP is based on the fair market value of Citi common stock on the July 17, 2007 award date ($52.19) and the executive’s “basis” in his or her award. A named executive officer’s “basis” in his or her award is equal to the lesser of (a) his or her base salary as of July 17, 2007 plus the nominal amount of his or her annual incentive award granted in January 2007 or (b) $8 million.

As stated above, the award of deferred stock under the LTIP is conditioned on Citi’s meeting certain performance criteria during three performance periods. In addition, a participant must remain continuously employed by Citi through January 5, 2010, the vesting date of the award, in order to receive any of the shares earned during the performance periods. A participant will be entitled to receive a pro-rata award if the participant’s employment is terminated on account of death, disability, or involuntary termination other than for gross misconduct, or there is a change in control, and Citi met the performance conditions during one or more of the performance periods in which the participant was employed. Dividend equivalents are not paid on nonvested LTIP shares.

The performance metrics for each of the three performance periods is (a) TSR Score, which ranges between 0 percent and 125 percent and is based on

Citi’s total stockholder return versus Citi’s current key competitors, and (b) ROE Score, which ranges between 150 percent and 50 percent and is based on publicly stated ROE targets measured at the end of each calendar year.

The key competitor companies that are used to determine Citi’s TSR Score for each performance period are the same companies used for compensation benchmarking purposes and are listed in the Benchmarking section of the Compensation Discussion and Analysis. As indicated above, if, in any of the three performance periods, Citi’s total stockholder return does not exceed the median performance of the key competitor companies, the TSR Score will be 0 percent, and the participants, including the named executive officers, will not earn award shares for that period. If Citi’s publicly stated ROE for the performance period is 20 percent or greater, the ROE Score will be 150 percent, if it is between 18 percent and 20 percent, the ROE Score will be 100 percent, and if it is below 18 percent, the ROE Score will be 50 percent.

If the maximum performance level is met for each performance period, a participant’s maximum award will be equal to 187.5 percent of the participant’s “basis” (e.g., 187.5 percent = participant’s “basis” x 125 percent (the maximum TSR Score) x 150 percent (the maximum ROE Score)). Thus, the maximum number of shares that a participant can receive is 187.5 percent of his or her basis divided by $52.19, the award date fair market value of Citi common stock.

For each performance period, the potential number of shares that may be earned is equal to the product of (a)  ¹/3 of a participant’s basis, (b) the TSR Score for the performance period, and (c) the ROE Score for the performance period. Assuming a participant is continuously employed through the January 5, 2010 vesting date, any shares earned during the three performance periods will be distributed to the participant in 2010.

For the performance period ending on December 31, 2007, the TSR Score was 0 percent and the ROE Score was 50 percent, meaning that the awards formula for each participant yielded zero (i.e., basis x 0 x 50 percent = 0). Thus, none of the participants in the LTIP, including the named

executive officers, earned any shares for the performance period ending on December 31, 2007. However, as discussed above, Citi is required to include amounts accrued for LTIP awards under SFAS 123(R) in the Summary Compensation Table.