Citigroup (C)

Net Reduction in “Overhang”

“Overhang” refers to a ratio used to measure the potential stockholder dilution represented by outstanding employee equity awards and shares available for future grants. We monitor simple overhang and fully diluted overhang, which are calculated as follows:

Using the number of shares of common stock outstanding on the record date (approximately 5.22 billion), our simple overhang and fully diluted overhang are stated below, based on the estimate of total shares available for grant under existing plans and the total shares that would be available for grant if the proposal to amend the 1999 plan were approved (as reported in Table III, above, and including shares available under the stock purchase plan). For purposes of the overhang calculations, outstanding awards cover 401.01 million shares of common stock underlying outstanding stock options, deferred stock awards and stock purchase plan agreements. These figures include awards outstanding under the existing plans, the stock purchase plan, and other plans that

55

Table of Contents

have been terminated with respect to new awards. Shares underlying outstanding (unvested) restricted stock awards are not included in outstanding awards because they are already reflected in the number of common shares outstanding. At December 31, 2004, there were 79.46 million shares underlying outstanding restricted stock awards, and 33.33 million shares underlying outstanding deferred stock awards.