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C » Topics » Proposal 3: Approval of Amended and Restated Citigroup 1999 Stock Incentive Plan

This excerpt taken from the C DEF 14A filed Mar 15, 2005.

Proposal 3: Approval of Amended and Restated Citigroup 1999 Stock Incentive Plan

 

On January 18, 2005, the personnel and compensation committee recommended, and on January 19, 2005, the board of directors unanimously approved, amendments to the Citigroup 1999 stock incentive plan (1999 plan), which will become effective on April 19, 2005, if approved by stockholders at our annual meeting. A copy of the 1999 plan, as amended and restated, is attached as Annex F.

 

Approval of the proposed amendments to the 1999 plan will result in 250 million shares being added to the shares available for awards under the 1999 plan, but, as a result of the termination of our other existing plans, the total number of shares available for grant under all of our equity plans will be reduced by approximately 100 million shares. As part of this proposal, existing equity plans with approximately 354.11 million shares available for grant as of January 31, 2005, will be terminated with respect to new awards. One of the plans that will be terminated contains an “evergreen” feature and is not scheduled to expire until December 31, 2006. This feature will cause the number of shares available for grant to automatically increase on January 1, 2006, by 1.5% of outstanding common stock and common share equivalents on December 31, 2005, if the proposal to amend the 1999 plan

 

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and terminate the other existing plans is not approved. This proposal will also allow us to administer all of our equity award programs under one stockholder-approved plan, rather than the several plans under which they are administered now.

 

The 1999 plan, as amended, includes the following features that protect the interests of our stockholders:

 

•   Administration by a committee composed entirely of independent directors.

 

•   A fixed number of shares available for grant that will not automatically increase because of an “evergreen” feature.

 

•   Minimum vesting periods that preclude new awards from vesting more rapidly than ratably over a three-year period (except in certain limited circumstances) will apply to at least 80% of shares that may be awarded; the personnel and compensation committee will have discretion to award up to 20% of the shares on different terms for recruitment and retention purposes.

 

•   Exercise prices must be at least 100% of fair market value on the date of the award.

 

•   Awards may not be re-priced.

 

•   No new reload options will be granted (unless required by the terms of currently outstanding options).

 

•   No material amendments will be made without the approval of stockholders.

 

•   No awards after April 30, 2009; any awards after that date will be made under a new stockholder-approved plan.

 

We discuss below how the proposal to amend the 1999 plan will reduce the total number of shares available for grant, and the benefits of doing so. This is followed by a summary of the terms and provisions of the 1999 plan, as amended.

 

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