Citigroup (C)

South Asia Fund Donation

At the request of the President of the United States, Sanford Weill and senior executives from 4 other companies (the Five Executives) (including Anne Mulcahy, Xerox, Jeff Immelt, GE, Hank McKinnell, Pfizer, and Jim Kelly, UPS) have led a private sector effort to aid those harmed by the South Asia earthquake. Working with representatives from the State Department and US AID as well as various staff members from the companies of each of the Five Executives with particular expertise (charitable giving, legal, public affairs, tax, government relations, etc.), a fund for South Asia relief was conceived (the Fund).

Due to the short timeframe, the Committee to Encourage Corporate Philanthropy (CECP), a not-for-profit organization of which Sandy Weill is Chairman and Paul Newman and Ken Derr are Founding Co-Chairs, was chosen, based on its 501(c)(3) status and its mission to encourage corporate philanthropy, to house the Fund. With the approval of the CECP Board, comprised of executives from many corporations, including 2 of Citigroup’s outside directors (Ken Derr and Dick Parsons), a committee was formed to advise the Fund (comprised of the Five Executives and representatives chosen by the Government) and make recommendations to a committee of the CECP Board on how best to disseminate the donations contributed to the Fund. The CECP Board committee will ultimately cause the donations to be made.

The members of the Board of CECP did not derive any benefit from the choice of CECP to house the Fund, nor do any of them stand to benefit from the relief effort. Neither Mr. Derr nor Mr. Parsons are members of the advisory committee of the CECP Board, nor did they actively participate in the process of creating or advising the Fund.

Each of the Five Executives have reached out to their own companies, business colleagues and their respective company’s employees to encourage donations to the Fund. The Citigroup Foundation has donated $3m to the Fund, which, based on revenues received thus far, is greater than 10% of the Fund’s revenues. The Fund is expected to collect $35m for the relief effort.

Citigroup’s independence criteria for its outside directors deem annual contributions to a charitable organization of which a director or an immediate family member of a director serves as a director, trustee or executive officer in excess of the greater of $250,000 or 10% of the charitable organization’s annual consolidated gross revenue to be a bar to independence. Based on the fact that the Fund was created at the request of the President of the United States, that none of Citigroup’s directors who are also directors of CECP (other than Weill) were involved in the creation of the Fund, participate in decision-making regarding the Fund or stand to benefit in any way from the creation of the Fund, the nomination and governance committee determined that the payment by Citigroup to the Fund did not impact the independence of Messrs. Derr and Parsons.