|
|
 | | | |
- close
- close
- close
- close
This excerpt taken from the C DEF 14A filed Mar 20, 2009. Plan
Highlights
The 2009 plan has a five-year term and an initial share
authorization of 250 million shares (subject to adjustment,
as described below). However, for purposes of counting the
number of shares available for grant, the 2009 plan provides
that each share of common stock subject to a restricted or
deferred stock award (or other “full-value” award)
will be counted as an award of 2.3 shares; each share
subject to a stock option or stock appreciation right
(sar) will be
counted as an award of one share. Accordingly, if all shares
authorized for issuance under the plan are awarded subject to
stock options or
sars,
the maximum number of shares that may be issued will be
250 million shares; if all available shares are awarded as
full-value awards, the maximum number of shares that may be
issued will be 108 million shares.
Shares of common stock issued pursuant to awards granted under
the 2009 plan may be shares that have been authorized but not
yet issued, or previously issued shares that we have reacquired.
We recently announced offers to exchange publicly traded
preferred securities and preferred securities owned by the
U.S. government and certain private parties for shares of
common stock. Because the number of common shares to be issued
in these exchange transactions exceeds the total number of
shares held in treasury or currently authorized under our
corporate charter but not yet issued, an amendment of our
charter increasing the number of authorized shares will be
necessary to consummate these exchanges. Stockholders will be
asked to approve a proposal to amend our charter separately from
this proxy statement and the 2009 annual meeting.
Many of the shares held in our treasury or authorized for
issuance under our charter are being reserved for issuance upon
the exercise of warrants that will be issued as interim
securities in the private exchange transactions (the warrants
will be become exercisable only if preferred securities are
tendered in the exchange and common stockholders fail to approve
an amendment to the charter authorizing the issuance of
additional common shares). In addition, our ability to
re-purchase our common stock in the market is currently
restricted pursuant to the terms of specific government relief
under tarp.
Because the maximum number of shares that we would be allowed to
grant subject to awards under the 2009 plan may exceed the
number of shares remaining available in our treasury or for
issuance under our charter, and none can be repurchased at this
time, our ability to make awards under the 2009 plan may be
constrained unless and until a charter amendment authorizing the
issuance of additional shares of common stock is approved by
stockholders, or Citi is again permitted to repurchase its
shares in the market. The share authorization to be included in
the charter amendment proposal in connection with the exchange
transactions will provide for sufficient shares to support the
maximum 250 million shares (subject to adjustment, as
described in the following paragraph) that may be subject to
awards granted under the 2009 plan.
Table of Contents
If the public exchange transactions are consummated, and if the
proposal to amend our charter is approved and the private
exchange transactions are consummated, the number of shares
available for grant under the 2009 plan is expected to be
proportionately increased to reflect the increase in the number
of shares of common stock outstanding that will result from
issuing new shares of common stock in exchange for outstanding
preferred securities. The adjustment will ensure that the
percentage of outstanding common equity to be authorized for
grant under the plan will not be reduced by the issuance of new
shares of common stock in the exchange transactions. (The
adjustment provision of the 2009 plan is described on
page 82).
As further described below, the 2009 plan prohibits liberal
share counting practices that would permit shares used to pay
option exercise prices or withheld to pay taxes on awards to be
subject to new awards.
Due to unprecedented dislocations in the markets, Citi’s
stock price has fallen to unprecedented lows. At current market
prices, it is anticipated that most of the shares authorized for
grant under the 2009 plan would be subject to awards granted in
the first plan year. At higher market prices, fewer shares would
be needed than at lower prices. If necessary, management will
propose that stockholders approve an increase in the number of
shares available for future grants under the 2009 plan, possibly
as soon as the annual meeting in April 2010.
The 2009 plan is substantially similar to the amended and
restated 1999 plan that stockholders approved on April 19,
2005; the 1999 plan was further amended on October 17,
2006, and amended and restated effective January 1, 2009
(the amendments to the 1999 plan subsequent to April 19,
2005, were technical in nature and did not require stockholder
approval).
The 2009 plan (as did the 1999 plan) includes the following
features that protect the interests of our stockholders:
In addition to the reduced term (five years) and reduced share
authorization (expected to be sufficient for only one year), the
2009 plan contains several other enhancements, including the
following:
Table of Contents
We discuss below our current grant practices and how dilution
will be affected if the 2009 plan is approved. This discussion
is followed by a summary of the terms and provisions of the 2009
plan.
|
| |||||||
