Each incumbent Director attended at least 75% of the meetings of the Board and of the standing committees of which he or she was a member during 2017.2018.
Citi’s non-management Directors meet in executive session without any management Directors in attendance each timewhenever the full Board convenes for a regularly scheduled meeting, which is usually six times each year, and, if the Board convenes a special meeting, the non-management Directors ordinarily meet in executive session.meeting. During 2017,2018, Mr. O’Neill presided at each executive session of the non-management Directors. In addition, the independent Directors met in executive session during 2017.2018.
Diversity is among the critical factors that the Nomination, Governance and Public Affairs Committee considers when evaluating the composition of the Board. For a company like Citi, which operates in more than 100 countries around the globe, diversity includes race, ethnicity, and gender as well as the diversity of the communities and geographies in which Citi operates. Included in the qualifications for Directors listed in the Company’s Corporate Governance Guidelines is “whether the candidate has special skills, expertise and background that would complement the attributes of the existing Directors, taking into consideration the diverse communities and geographies in which the Company operates.” Citi’s Board is committed to ensuring that it is composed of individuals whose backgrounds reflect the diversity represented by our employees, customers, and stakeholders. The candidates nominated for election at Citi’s 20182019 Annual Meeting exemplify that diversity: fivesix nominees are women and three nominees are African-American or Hispanic. In addition, each Director candidate contributes to the Board’s overall diversity by providing a variety of perspectives, personal and professional experiences, and backgrounds, as well as othercharacteristics,other characteristics, such as global and international business experience. The Board believes that the current nominees reflect an appropriate diversity of gender, age, race, geographical background, and experience and is committed to continuing to consider diversity issues in evaluating the composition of the Board.
The Board oversees Citi’s global risk management framework.
At each regularly scheduled Board meeting, the Board receives a risk report from the Chief Risk Officer with respect to the Company’s approach to management of major risks, including management’s risk mitigation efforts, where appropriate. Global Risk Management, led by the Chief Risk Officer, is a company-wide function that is responsible for an integrated effort to identify, assess, and manage risks that may affect Citi’s ability to execute on its corporate strategy and fulfill its business objectives. The Board’s role is to oversee this effort.
The Risk Management Committee enhances the Board’s oversight of risk management. The Committee’s role is one of oversight, recognizing that management is responsible for executing Citi’s risk management policies.
The Board of Directors provides oversight of management’s efforts to address cybersecurity risk throughrisk. The Board and various Committees receive periodic reports and engage in discussions throughout the periodic receiptyear on the effectiveness of reportsCiti’s overall cybersecurity program, exploring Citi’s inherent risks, the road map for addressing these risks, and Citi’s progress in doing so. Board members receive contemporaneous reporting on any significant cyber events that may occur—which includes efforts at meetingsresponse, discussions of the Risk Management Committee, the Audit Committee,legal obligations, and the Operations status of outreach to regulators—and Technology Committee,provides guidance to management as well as presentations at the Board level. The reports the Board and its Committees receive focus on the threat environment and vulnerability assessments, as well as specific cyber incidents and management’s efforts to monitor, detect and prevent cyber threats to Citi.appropriate.
The Board has adopted a policy setting forth procedures for the review, approval, and monitoring of transactions involving Citi and related persons (Directors, Senior Managers, 5% stockholders, Immediate Family Member or Primary Business Affiliations). A copy of Citi’s Policy on Related Party Transactions is available on our website at www.citigroup.com. Click on “About Us,” then “Corporate Governance,” and then “Citi Policies.” Under the policy, the Nomination, Governance and Public Affairs Committee is responsible for reviewing and approving all related party transactions involving related persons. Directors may not participate in any discussion or approval of a related party transaction in which he or she or any member of his or her immediate family is a related person, except that the Director must provide all material information concerning the related party transaction to the Nomination, Governance and Public Affairs Committee. The Nomination, Governance and Public Affairs Committee is also responsible for reviewing and approving all related party transactions valued at more than $50 million involving an executive officer or an Immediate Family Member of an executive officer. The Transaction Review Committee, composed of Citi’s President, General Counsel, Chief Financial Officer, Chief Compliance Officer, Chief Risk Officer, and Head of Human Resources, is responsible for reviewing and approving all related party transactions valued at less than $50 million involving an executive officer or an Immediate Family Member of an executive officer. The policy also contains a list of categories of transactions involving related persons that are pre-approved under the policy, and therefore need not be brought to the Nomination, Governance and Public Affairs Committee or the Transaction Review Committee for approval.
The Nomination, Governance and Public Affairs Committee and the Transaction Review Committee will review the following information when assessing a related party transaction:
basis and contain customary terms and conditions and were on substantially the same terms as comparable transactions with unrelated third parties. Acciones y Valores Banamex, S.A. de C.V., Servicios Corporativos de Finanzas, S.A. de C.V., and Grupo Financiero Citibanamex, S.A. de C.V. (“Citibanamex”) entered into a transactionan agreement with BlackRock, Inc. and certain of its affiliates (“BlackRock”) pursuant to which BlackrockBlackRock would acquire the asset management business of Citibanamex in Mexico. The transaction includes the sale of Impulsora de Fondos Banamex, S.A. de C.V., (“Impulsora”) legal vehicle, and its advisory role for 5352 mutual funds and certain managed account relationships,
and certain intellectual property and vendor contracts required to operate the business. The signing of the purchase and sale agreementclosing for this transaction occurred on November 27, 2017 and the closing of the sale is expected in the second half of 2018, subject to regulatory approvals and customary closing conditions.September 2018. Consideration for the sale consistsconsisted of $350 million to be paid upon closing and certain future payments if defined targets are met. In connection with the closing, Citibanamex and Blackrock willBlackRock also enterentered into a long termlong-term distribution agreement upon the closing of the transaction to offer BlackRock asset management products to Citibanamex clients in Mexico. The agreement provides a framework under which Citibanamex would distribute BlackRock products in Mexico and includes terms relating to pricing, preferential access, and product support. Based on information contained in a Schedule 13G filed with the SEC, Blackrock reported that it beneficially owns 7.1% of Citi’s common stock as of December 31, 2017. The Nomination, Governance and Public Affairs Committee reviewed the terms of the sale and approved the transaction in accordance with the Related Party Transaction Policy. Based on information contained in a Schedule 13G filed with the SEC, BlackRock reported that it beneficially owns more than 5% of Citi’s common stock.
Citi has established funds in which employees have invested. In addition, certain of our executive officers have from time to time invested their personal funds directly, or directed that funds for which they act in a fiduciary capacity be invested, in funds arranged by Citi’s subsidiaries on the same terms and conditions as the other outside investors in these funds, who are not our executive officers, or employees. Other than certain “grandfathered” investments, in accordance with Sarbanes-Oxley and the Citi Corporate Governance Guidelines, executive officers may invest in certain Citi-sponsored investment opportunities only under certain circumstances and with the approval of the appropriate committee.
Mr. Corbat has entered into an Aircraft Time Sharing Agreement with Citigroup Inc. that allows him to reimburse Citi for the cost of his personal use of corporate aircraft based on the aggregate incremental cost of the flight to Citi. Aggregate incremental cost is calculated based on a cost-per-flight-hour charge developed by a nationally recognized and independent service or, if higher, the charge allowed under Federal Aviation Regulation 91.501(d). Mr. Corbat reimbursed Citi $239,978$223,132 related to his personal use of corporate aircraft during 2017.
An adult child of Mr. Humer, a Director, has been employed by Citi since 2010 and is currently employed by Citi’s Institutional Clients Group. He received 2018 compensation of $951,239. A sibling of Sara Wechter, the Head of Human Resources, has been employed by Citi since 2008, first as an intern and then, beginning in 2010, as a full-time employee. She is employed by the Consumer Banking Group and received 20172018 compensation of $906,062.$479,139. An adult child of John Gerspach, Citi’s former CFO, has been employed by Citi since 2009 and is currently employed in Citi’s Compliance function andGroup. He received 20172018 compensation of $144,000.$154,765. The compensation for these employees was established by Citi in accordance with its employment and compensation practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions. Mr. Humer and Mr. GerspachThese individuals do not have an interest in the employment relationship of, nor do they share a household with, their respective family members who are employees of Citi.
Other than certain “grandfathered” margin loans, in accordance with Sarbanes-Oxley and the Citi Corporate Governance Guidelines, no margin loans may be made to any executive officer unless such person is an employee of a broker-dealer subsidiary of Citi and such loan is made in the ordinary course of business.
Certain transactions in excess of $120,000 involving loans, deposits, credit cards, and sales of commercial paper, certificates of deposit, and other money market instruments and certain other banking transactions occurred during 20172018 between Citibank, N.A. and other Citi banking subsidiaries on the one hand, and certain Directors or executive officers of Citi, members of their immediate families, corporations or organizations of which any of them is an executive officer or partner or of which any of them is the beneficial owner of 10% or more of any class of securities, or associates of the Directors, the executive officers or their family members, on the other. The transactions were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, that prevailed at the time for comparable transactions with other persons not related to the lender and did not involve more than the normal risk of collectability or present other unfavorable features. Personal loans made to any Director or an executive officer must comply with Sarbanes-Oxley, Regulation O, and the Corporate Governance Guidelines, and must be made in the ordinary course of business.
The business practices committees, which are composed of our most senior executives, provide the guidance necessary for Citi’sCiti's business practices to meet the highest standards of professionalism, integrity, and ethical behavior consistent with Citi’s Mission and Value Proposition. OurThe business leaders, in additionpractices committees for the corporate level and each of Citi’s businesses and regions review business activities, transactions, sales practices, product design, potential conflicts of interest, and other franchise or reputational risk issues escalated to confirming our commitment to the principles of responsible finance and protecting Citi’s franchise, are responsible for establishing a framework for compliance with applicable laws and regulations, Citi policies, and ethical standards.these committees.
Business practices concerns may be raised through a variety of sources, including business practices working groups, other in-business committees, or the control functions. Relevant issues from the business practices committees are reported on a regular basis to the Nomination, Governance and Public Affairs Committee of the Board.
At Citi, our mission is to serve as a trusted partner to our clients by responsibly providing financial services that enable growth and economic progress.
We foster a culture of ethics through our governance framework, programs and efforts that embed our culture and expectations for behavior throughout the organization, and collaboration with key stakeholders outside Citi to improve Citi’s and the banking industry’s culture.
To promote ethical conduct and enhance Citi’s culture, Citi focuses on empowering individuals by establishing global policies, programs, and processes that embed our values throughout the organization and guide and support our employees in making ethical decisions and adhering to Citi’s standards of conduct. Under the oversight of and with input and feedback from the Ethics and Culture Committee, senior management has prioritized a number of efforts to further embed our values and conduct expectations into the organization. The following are a few examples of our programs and associated efforts to set, reinforce, and embed our culture at Citi:
The Citi Code of Ethics for Financial Professionals applies to Citi’s Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer), Controller (Principal Accounting Officer), and all finance professionals and administrative staff in a finance role, including Controllers, CSS Finance & Risk Operations,Shared Services, Finance and Risk Infrastructure, Financial Planning & Analysis and Strategy, Treasury, Tax, Strategy and M&A, Investor Relations, and the Regional/Business teams. Citi expects all of its employees to act in accordance with the highest standards of personal and professional integrity in all aspects of their activities, to comply with all applicable laws, rules, and regulations, to deter wrongdoing, and abide by the Citi Code of Conduct and other policies and procedures adopted by Citi that govern the conduct of its employees. The Code of Ethics for Financial Professionals is intended to supplement the Citi Code of Conduct. A copy of the Code of Ethics for Financial Professionals is available on our website at www.citigroup.com. Click on “About Us,” then “Corporate Governance,” and then “Code of Ethics for Financial Professionals.” We will disclose amendments to, or waivers from, the Code of Ethics for Financial Professionals, if any, on our website.
Citi expects employees to raise concerns or questions regarding ethics, discrimination or harassment matters, and to promptly report suspected violations of these and other applicable laws, regulations, rules,law, regulation, rule, or breaches of Citi policies, procedures, standards,policy, procedure, standard, or the Citi Code of Conduct. Citi offers several channels by which employees and others may report ethical concerns, including concerns about accounting, internal controls, or auditing matters. We provide a global Ethics Hotline, a toll-free number that is available 24 hours a day, seven days a week, 365 days a year, and is staffed by live operators who can connect to translators to accommodate multiple languages.
Calls to the Ethics Hotline are received by a third-party vendor, located in the United States, which reports the calls to the Citi Ethics Office for handling. Ethical concerns may also be reported through a dedicated e-mail address, multilingual website submission, fax line, and conventional mailing address. Any individual may also raise a concern by accessing Citi’s public-facing corporate website. Individuals may choose to remain anonymous to the extent permitted by applicable laws and regulations. We prohibit retaliatory actions against anyone who raises concerns or questions in good faith, or who participates in a subsequent investigation of such concerns. The Ethics Office reports on concerns it receives via the Citi Ethics Hotline to the Audit Committees of the Board of Directors of Citigroup Inc. and Citibank, N.A. on a quarterly basis.
The Board has adopted a Code of Conduct, which provides an overview of the laws, regulations, and Citi policies and procedures applicable to the activities of Citi, and sets forth Citi’s Mission and Value Proposition, as well as the standards of ethics and professional behavior expected of employees and representatives of Citi. The Code of Conduct applies to every Director,director, officer, and employee of Citi and its consolidated subsidiaries. All Citi employees, directors, and officers are required to read and comply with the Code of Conduct. In addition, other persons performing services for Citi may be subject to the Code of Conduct by contract or other agreement. The Code of Conduct is publicly available in multiple languages at www.citigroup.com. Click on “About Us,” then “Corporate Governance,” and then “Code of Conduct.”
Stockholders or other interested parties who wish to communicate with a member or members of the Board, including the ChairmanChair or the non-management Directors as a group, may do so by addressing their correspondence to the Board member or members, c/o the Corporate Secretary, Rohan Weerasinghe, Citigroup Inc., 388 Greenwich Street, New York, NY 10013. The Board of Directors has approved a process pursuant to which the office of the Corporate Secretary will review and forward correspondence to the appropriate person or persons for response.
Citi has long encouraged stock ownership by its Directors, officers, and employees to align their interests with the long-term interests of stockholders. The Board and executive officers are subject to a stock ownership commitment, which requires these individuals to maintain a minimum ownership level of Citigroup stock. Executive officers are required to retain at least 75% of the equity awarded to them as incentive compensation (net of amounts required to pay taxes and option exercise prices) as long as they are executive officers. In addition, a stock holding period applies after the executive officer leaves Citi, or is no longer an executive officer. He or she must retain, for one year after ending executive officer status, 50% of the shares previously subject to the stock ownership commitment. Directors are similarly required to retain at least 75% of the net equity awarded to them, further aligning their interests with stockholders. The Board may revise the terms of the stock ownership commitment from time to time to reflect legal and business developments warranting a change. In addition, Directors and executive officers may not enter into hedging transactions in respect of Citi’s common stock or other securities issued by Citi, including securities granted by the Company to the Director or executive officer as part of his or her compensation and securities purchased or acquired by the Director or executive officer in a non-compensatory transaction.
The following table shows the beneficial ownership of Citi common stock by our Directors, and certainnominee, named executive officers, current CFO, and Directors and executive officers as a group at February 26, 2018.23, 2019. For purposes of this table, “beneficial ownership” is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which a person, or group of persons, is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of the date of determination.
Mr. Reiner also owns 485 Depositary Sharesdepositary shares of Citi’s 5.9% Fixed Rate/Floating Rate Noncumulative Preferred Stock, Series B, which represents 0.065% of such series of preferred stock.
The Nomination, Governance and Public Affairs Committee considers all qualified candidates identified by members of the Nomination, Governance and Public Affairs Committee, by other members of the Board, by senior management, and by security holders. During 2017,2018, the Committee engaged Egon Zehnder to assist in identifying and evaluating potential nominees. Stockholders who would like to propose a Director candidate for consideration by the Nomination, Governance and Public Affairs Committee may do so by submitting the candidate’s name, résumé, and biographical information to the attention of the Corporate Secretary, Rohan Weerasinghe, Citigroup Inc., 388 Greenwich Street, New York, New York 10013. All proposals for nominations received by the Corporate Secretary will be presented to the Committee for its consideration.
In considering the composition of the Board of Directors, the Nomination, Governance and Public Affairs Committee inventories the categories of risks faced by Citi, given its size, business mix, and geographical presence, and seeks to identify candidates with the skills and experience necessary to enable the Board of Directors to provide proper oversight of those risks. The Nomination, Governance and Public Affairs Committee also takes directorDirector tenure into consideration when making directorDirector nomination decisions and believes that it is desirable to maintain a mix of longer-tenured, experienced directorsDirectors and newer directorsDirectors with fresh perspectives. The Nomination, Governance and Public Affairs Committee and the Board also believe that longer-tenured, experienced directorsDirectors are a significant strength of the Board, given the large size of our company,Company, the breadth of our product offerings, and the international scope of our organization. The Board’s composition, and the individuals nominated for consideration by stockholders, are the result of careful consideration by the Committee of the correspondence between the risk inventory and skills and experience of the Board members and candidates. In addition to the ability
to assist the Board in its oversight of a particular risk or risks, as more fully described in each nominee’s biography, the members of the Board are assessed based on a variety of factors, including the following criteria, which have been developed by the Nomination, Governance and Public Affairs Committee and approved by the Board:
Application of these factors involves the exercise of judgment by the Nomination, Governance and Public Affairs Committee and the Board.
Based on its assessment of each candidate’s independence, skills and qualifications and the criteria described above, the Nomination, Governance and Public Affairs Committee will make recommendations regarding potential Director candidates to the Board.
The Nomination, Governance and Public Affairs Committee follows the same process and uses the same criteria for evaluating candidates proposed by stockholders, members of the Board of Directors, and members of senior management. For the 20182019 Annual Meeting, Citi did not receive notice from any stockholders regarding a nomination to the Board of Directors.
The nominees for the Board of Directors each have the qualifications and experience to approve and guide Citi’s strategy and to oversee management’s execution of that strategic vision. Citi’s Board of Directors consists of individuals with the skills, experience, and backgrounds necessary to oversee Citi’s efforts toward becoming a simpler, smaller, safer, and stronger financial institution, while mitigating risk and operating within a complex financial and regulatory environment.
The nominees listed below are leaders in business, the financial community, and academia because of their intellectual acumen and analytic skills, strategic vision, ability to lead and inspire others to work with them, and records of outstanding accomplishments over a period of decades. Each has been chosen to stand for election in part because of his or her ability and willingness to ask difficult questions, understand Citi’s unique challenges, and evaluate the strategies proposed by management, as well as their implementation.
Each of the nominees has a long record of professional integrity, a dedication to his or her profession and community, a strong work ethic that includes a commitment to coming fully prepared to meetings and being willing to spend the time and effort needed to fulfill professional obligations and the ability to maintain a collegial environment.
In evaluating the composition of the Board, the Nomination, Governance and Public Affairs Committee seeks to find and retain individuals who, in addition to having the qualifications set forth in Citi’s Corporate Governance Guidelines, have the skills, experience and abilities necessary to meet Citi’s unique needs as a highly regulated financial services company with operations in the corporate and consumer businessbusinesses within the United States and more than 100 countries around the globe. The Committee has determined it is critically important to Citi’s proper operation and success that its Board has, in addition to the qualities described above, expertise and experience in the following areas:
The following tables give information – provided by the nominees – about their principal occupation, business experience, and other matters.
Each nominee’s biography highlights his or her particular skills, qualifications, and experience that support the conclusion of the Nomination, Governance and Public Affairs Committee that the nominee is extremely qualified to serve on Citi’s Board.
LINKING 2018 CEO PAY ELEMENTS TO PERFORMANCE
● | Relative total shareholder return.As shown on page 77, Citi’s one-year relative total shareholder return ranking improved from 10th to 3rd within our compensation peer group from 2016 to 2017, and Citi’s three-year relative total shareholder return ranking improved from 12th to 5th within our compensation peer group over the same period. Our percentile rankings improved significantly as well, as shown on page 77. Citi’s 2017 total shareholder return was 27%, which represents a 70% improvement over 2016 total shareholder return, and Citi’s three-year total shareholder return for the period ending December 31, 2017, was 41.2%, which represents a 166% improvement compared to the three-year period ending December 31, 2016. |
Citi 2018 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2017 EXECUTIVE COMPENSATION | 81 |
● | Strategic accomplishments and leadership.Mr. Corbat developed the strategy that enabled Citi to improve the factors that influence total shareholder returns, and he has led its successful implementation. Under Mr. Corbat’s leadership, Citi completed a decade-long restructuring that has resulted in a firm that is safer, simpler, and stronger. Capital and liquidity levels have been substantially increased. A key element underlying the improved total shareholder returns has been Citi’s increased return of capital to stockholders through share buybacks and dividends, which would not have been possible if the Federal Reserve Board had objected to our capital plan during the 2017 CCAR process. During the last several years, Citi has improved risk management and controls, enhanced its culture of ethical business conduct, and dramatically simplified its business model, all efforts Mr. Corbat has championed. There is always room to improve in these critically important areas, but the steady progress achieved under Mr. Corbat’s leadership thus far has been exemplary. |
| |
● | Consistently applied compensation philosophy.The massive multi-year restructuring and simplification process led by Mr. Corbat was initially met with skepticism by many investors due to the complexity of the undertaking and its uncertain outcome. While management’s vision, commitment, and acumen were recognized by the Board, the Compensation Committee took the position that it would have been premature to fully reflect Citi’s progress in executive compensation awards until Citi’s share price reflected stockholder recognition of management’s achievements. Thus, in past years — primarily due to lagging total shareholder returns — the Compensation Committee applied negative discretion to the compensation outcome of the CEO scorecard and performance evaluation Framework. As a consequence, since Mr. Corbat became CEO in 2012, his annual compensation has been at the lower end of our U.S.-based peers. In 2017, investors responded positively to Citi’s improved operating results and embraced management’s vision of Citi’s prospects that was comprehensively laid out at a well-received Investor Day in July. In reflection of the greatly improved performance of the stock, the Compensation Committee did not apply negative discretion to the results of our executive compensation Framework for 2017, but rather approved the amount without adjustment, thus making the year-over-year increase appear larger due to the absence of negative discretion that had been applied in prior years. While Mr. Corbat’s 2017 pay is above the median of our compensation peer group in reflection of 2017 achievements, it aligns with the low end of CEO pay among the large U.S.-based banks that are most comparable to Citi based on the nature and scale of their operations. |
LINKING 2017 CEO PAY ELEMENTS TO PERFORMANCE |
 | ●Over 90% variable pay in 2017.for 2018. ●70% of variable pay is deferred long-term incentives subject to multi-year vesting and clawbacks. ●70% of variable pay is equity-based to align stockholder and executive interests. ●Total incentive award and annual bonus are based on the overall achievements of Citi and individual performance against goals set at the beginning of the year. ●PSUs are earned only to the extent Citi performs against two forward-looking metrics: RoTCE in 20202021 and cumulative EPS over the 2018-20202019-2021 performance period. ●PSU metrics require substantial operational improvements for target payout and exceptional performance for maximum payout. |
www.citigroup.com
Table of Contents
8278 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION |
2017
2018 Pay Elements
Citi’s incentive awards delivered to the CEO and the other named executive officers (NEOs) are a mix of cash bonus, Performance Share Units, and Deferred Stock Awards. This incentive structure establishes a balance between annual and long-term compensation, with the majority of incentive compensation delivered in Performance Share Units and Deferred Stock Awards that vest over multiple years. In determining the percentages to award as cash bonuses, Performance Share Units, and Deferred Stock Awards, the Compensation Committee considered applicable regulatory requirements and guidelines for deferral as well as market practices.
| | % of Variable Pay | | | | | | Compensation
Type | | % OF
VARIABLE PAY | | | | COMPENSATION |
| Element | | CEO | | NEOs | | Award Type | | Performance Link and Vesting | | |
| ELEMENT | | | CEO | | NEOs | | AWARD TYPE | | PERFORMANCE LINK AND VESTING | | TYPE |
| Fixed | | | | | | | | | | | | | | | |
| Salary | | N/A | | N/A | | Base Pay | | ●Fixed portion of total pay at a competitive level that enables Citi to attract and retain talent | | Cash | | N/A | | N/A | | Base Pay | | ●Fixed portion of total pay at a competitive level that enables Citi to attract and retain talent | | Cash |
| Variable | | | | | | | | | | | | | | | | |
Annual
Incentive | | 30% | | 40% | | Annual Bonus | | ●Scorecard assessment determines value ●Plan limits on executive officer cash bonuses | | Cash | | 30% | | 40% | | Annual Bonus | | ●Scorecard assessment determines value ●Plan limits on executive officer cash bonuses | | Cash |
Deferred/
Long-Term
Incentives
(LTI) |
| 70% |
| 60% |
| Performance
Share Units
(50% of LTI) | | ●Scorecard assessment determines target number of units ●Earned units based 50% on return on tangible common equity in 2020 and 50% on cumulative earnings per share over 2018-2020 ●Ultimate value of earned units linked to Citi total shareholder returns ●Award capped at 100% of target if Citi’s total shareholder return is negative over 2018-2020 ●Subject to clawbacks | | Equity-based but settled in cash to limit dilution to stockholders | | 70% | | 60% | | Performance
Share Units
(50% of LTI) |
| ●Scorecard assessment determines target number of units ●Earned units based 50% on return on tangible common equity in 2021 and 50% on cumulative earnings per share over 2019-2021 ●Ultimate value of earned units linked to Citi total shareholder returns ●Award capped at 100% of target if Citi’s total shareholder return is negative over 2019-2021 ●Subject to clawbacks ●Other than increases in targets, no change in award terms as compared to last year | | Equity-based,
but settled in
cash to limit
dilution to
stockholders |
Deferred Stock
Awards
(50% of LTI) | | ●Scorecard assessment determines number of shares granted ●Ultimate value based on Citi total shareholder returns ●Vests ratably over a four-year period ●Subject to reduction in the event of pretax losses in any year of the deferral period ●Subject to clawbacks ●No change in award terms since 2013 | | Equity | | | Deferred Stock
Awards
(50% of LTI) |
| ●Scorecard assessment determines number of shares granted ●Ultimate value based on Citi total shareholder returns ●Vest ratably over a four-year period ●Subject to reduction in the event of pretax losses in any year of the deferral period ●Subject to clawbacks ●No change in award terms as compared to prior years | | Equity |
Performance Share Unit Targets
We have consistently set challenging targets for our Performance Share Units. For the Performance Share Units awarded for 20172018 performance:
● | We have set a target return on tangible common equity achievement of 13% by 2020, which is meaningfully higher than the 8.1% we achieved in 2017 and is aligned with the goals announced at our 2017 Investor Day while reflecting the positive impact of Tax Reform to our returns. Although this metric is stated as a 2020 target, it also incentivizes consistent improvement in returns throughout the performance period. |
| |
●We have set a target return on tangible common equity achievement of 14% by 2021, which is meaningfully higher than the 10.9% we achieved in 2018 (excluding the impact of Tax Reform). Although this metric is stated as a 2021 target, it also incentivizes consistent improvement in returns throughout the performance period.
●We have set a cumulative earnings per share target for the three-year performance period 2019 through 2021 of $26.25, which is reflective of significant earnings per share growth over the period. Cumulative earnings per share mitigates potential risk associated with a single year-end target and drives balanced improvement in operational performance over the performance period.
Citi 20182019 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 8379 |
● | We have set a cumulative earnings per share target for the three-year performance period 2018 through 2020 of $22.50, which is reflective of double-digit earnings per share growth over the period. Cumulative earnings per share mitigates potential risk associated with a single year-end target and drives balanced improvement in operational performance over the performance period. |
➢ | As a matter of policy, our preference is to redeploy earned capital within our businesses, provided that such investments are expected to produce returns above our cost of capital. To the extent that the capital we generate exceeds our ability to productively redeploy it in our businesses, we intend to return it to stockholders. |
➢ | We have several mechanisms in place to ensure that our earnings per share measure drives appropriate long-term decision making. Buyback levels are subject to oversight by both the Citigroup Board and the Federal Reserve Board (through the CCAR process), and they are calibrated against a range of considerations, including current capital levels, alternative uses for excess capital, and safety and soundness. |
➢As a matter of policy, our preference is to redeploy earned capital within our businesses, provided that such investments are expected to produce returns above our cost of capital. To the extent that the capital we generate exceeds our ability to productively redeploy it in our businesses, we intend to return it to stockholders.
➢We have several mechanisms in place to ensure that our earnings per share measure drives appropriate long-term decision-making. Buyback levels are subject to oversight by both the Citigroup Board and the Federal Reserve Board (through the CCAR process), and they are calibrated against a range of considerations, including current capital levels, alternative uses for excess capital, and safety and soundness.
●To reflect and focus on our improving performance, we set the targets at levels that are more challenging than the targets for last year’s awards, which were a return on tangible common equity of 13% by 2020 and cumulative earnings per share of $22.50 for the three-year performance period 2018 through 2020.
Full details on our Performance Share Units for performance in 2017 and equitable adjustments to our outstanding Performance Share Units are2018 appear on pages 98-99.page 94.
Performance Share Unit Payouts
The variability of the value of our Performance Share Unit awards demonstrates the strong link between Citi’s executive pay and Citi’s performance. As an example, the following chart compares the grant date value of Mr. Corbat’s recent Performance Share Units to the value ultimately earned, which demonstrates that executives are paid substantially less than target when the targets are not attained.earned.
CEO PERFORMANCE SHARE UNIT PAYOUTS
| CEO PERFORMANCE SHARE UNIT PAYOUTS |
|
 |
www.citigroup.com
Table of Contents
8480 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION |
Compensation Governance Practices
In addition to our performance-sensitive direct compensation structure, Citi has strong compensation governance practices. Over the past several years, we have refined many of our governance practices as a result of feedback obtained through our ongoing engagement with stockholders.
| PRACTICES WE EMPLOY | | PRACTICES WE AVOID |
  InvestorOngoing investor outreach.Regular stockholder engagement to solicit feedback on compensation and governance.2017,2018, variable performance-based incentive compensation was at least 90%94% of named executive officer annual compensation. The deferred variable award is further at risk based on the value of Citi common stock over multi-year vesting periods.SubjectingSubjected Performance Share Units and Deferred Stock Awards to clawbacks, as described on page 101.97.officers, as described on page 44.officers.100-102.95-97.102.97. | |   No excessive perks.We do not provide personal perquisites such as free personal use of private aircraft or special executive medical benefits.are paid on earned awards commence payment at the time of vesting, and the dividend rate is the same for the executive officers as for other stockholders. |
Citi 20182019 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 8581 |
Citi’s 20172018 Executive Compensation Awards
|
20172018 Named Executive Officer Compensation
The Compensation Committee approved the following compensation for performance in 2017:2018:
| |
1 | | 2 | | 3 | | 4 | | Annual
Compensation
for 2017
(Sum of
Columns 1-4) | | 1 | | 2 | | 3 | |
4 | | Annual
Compensation
for 2018
(Sum of
Columns 1-4) |
| Name | | Base Salary(1) | | Cash Bonus(1) | | Performance
Share Units(2) | | Deferred Stock
Awards(2) | | | Base Salary(1) | | Cash Bonus(1) | | Performance
Share Units(2) | | Deferred Stock
Awards(2) | |
| Michael Corbat | | $1,500,000 | | $6,450,000 | | $7,525,000 | | $7,525,000 | | $23,000,000 | | $1,500,000 | | $6,750,000 | | $7,875,000 | | $7,875,000 | | | $24,000,000 |
| John Gerspach | | $500,000 | | $4,200,000 | | $3,150,000 | | $3,150,000 | | $11,000,000 | | $500,000 | | $4,600,000 | | $3,450,000 | | $3,450,000 | | | $12,000,000 |
| James Forese | | $500,000 | | $7,800,000 | | $5,850,000 | | $5,850,000 | | $20,000,000 | | $500,000 | | $7,800,000 | | $5,850,000 | | $5,850,000 | | $20,000,000 |
| Stephen Bird | | $500,000 | | $4,000,000 | | $3,000,000 | | $3,000,000 | | $10,500,000 | | $500,000 | | $4,400,000 | | $3,300,000 | | $3,300,000 | | $11,500,000 |
| Jane Fraser | | $500,000 | | $3,200,000 | | $2,400,000 | | $2,400,000 | | $8,500,000 | | $500,000 | | $3,500,000 | | $2,625,000 | | $2,625,000 | | $9,250,000 |
| (1) | Reported in the 20172018 Summary Compensation Table. |
| (2) | In accordance with SEC rules, these awards are not reportable in the 20172018 Summary Compensation Table because they were not awarded during 2017.2018. They will be reportable next year in the 20182019 Summary Compensation Table. |
The above table is not intended to be a substitute for the reporting of compensation in accordance with SEC rules as shown in the 20172018 Summary Compensation Table.
Roadmap for the Scorecards on Pages 88-9784-93
The scorecards on pages 88-9784-93 illustrate how our executive compensation Framework is used in practice by the Compensation Committee to make compensation decisions.
The scorecards:
| ● | Show how the Compensation Committee assessed each named executive officer’s performance against financialquantitative and non-financialqualitative goals established early in the year. |
| ● | Explain the size and scope of each named executive officer role to provide context for the Compensation Committee’s decision and level of pay. |
| ● | Explain how the Compensation Committee arrived at its decision on each named executive officer’s compensation. |
The colors in the FinancialQuantitative Goal section of the scorecards are intended to visually signify relative performance against operational and risk-related financialquantitative goals, as follows:
Signifies that an operational goal result achieved the 20172018 goal or exceeded the 20172018 goal by up to 10%.(1)Signifies that a risk goal result was achieved. | Signifies that an operational goal result was below the 20172018 goal by 10% or less. Signifies that a risk goal had a positive but below-target result. | Signifies that an operational goal result was below the 20172018 goal by more than 10%. Signifies that a risk goal had a negative result. |
| (1) | Additional colors or definitions would be provided if any achievements are greater than 10% of a goal. |
The Compensation Committee assesses performance against each financialquantitative and non-financialqualitative goal on a qualitative scale, as follows:according to the following scale:
| Score | | 1 | | 2 | | 3 | | 4 | | 5 |
| Rating | | Significant
Outperform | | Outperform | | Meets
Expectations | | Underperform | | Significant
Underperform |
www.citigroup.com
Table of Contents
8682 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION |
Citi’s Executive Compensation Framework
Our Compensation Committee uses a five-step process to determine named executive officer incentive compensation.
Step 1 – Goal Setting and Goal Weightings for Scorecards
| ● | The Compensation Committee sets scorecard goals for each named executive officer early in each year. Performance goals fall into two categories, financialquantitative and non-financial,qualitative, and vary by named executive officer: |
| ➢ | FinancialQuantitative goalsinclude:
|
| ✓ | Company-wide goals for all named executive officers that reflect our annual business plan, and |
| ✓ | Business-unit specificBusiness unit-specific goals for named executive officers who are business unit leaders that reflect annual plans for our individual business units.
|
| ➢ | Non-financialQualitative goals include:focus on:
|
| ✓ | Strategic goals tailoredEnhancing Citi’s reputation,
|
| ✓ | Delivering value to each named executive officer based on his or her role and the goals of Citi or the applicable business unit,clients, and |
| ✓ | Uniform expectations of all named executive officers to deliver leadership effectiveness and strong risk management and control practices.Continued progress toward Citi’s longer-term targets.
|
| ● | When we set the goals, we also assign weightings to the goals. For 20172018 and consistent with prior years, financial performancequantitative goals were weighted 70% and non-financialqualitative goals were weighted 30% in the calculation of the year-end overall scorecard rating for each named executive officer. |
Step 2 – Scorecard Assessment
| ● | After the end of each year, a named executive officer’s performance against each financialquantitative and non-financial scorecardqualitative goal is assessed on a qualitative basis.assessed. |
| ● | A performance rating is assigned for each goal on a scale of 1 to 5, with 1 being “significant outperform” and 5 being “significant underperform,” reflecting a subjective assessment of the executive’s performance against the goal. |
| ● | In accordance with the relative weightings established early in 2017, financial2018, quantitative goal ratings were averaged and weighted 70% and non-financialqualitative goals were averaged and weighted 30% in arriving at an overall scorecard rating for each named executive officer. |
| ● | The Compensation Committee rates the CEO’s performance, and the Compensation Committee and the CEO rate the performance of the other named executive officers. |
Step 3 – Evaluation of Market Pay
| ● | The Compensation Committee reviews an estimated market pay range for each named executive officer role. Ranges are developed based on public information and third-party market surveys of compensation for the same or comparable roles at peer firms. |
| ● | This practice ensures that our named executive officer pay appropriately reflects market pay, based on varying levels of performance. |
Step 4 – Linking Performance to Compensation
| ● | The Compensation Committee then evaluates each named executive officer’s overall scorecard rating relative to the estimated market-based pay range for each named executive officer role. |
| ● | The overall scorecard rating determines whether compensation should be preliminarily targeted at, above, or below the estimated market median pay for the role. An overall scorecard rating of 3 would generally correspond to market median pay levels, with an overall 2 rating generally corresponding to above market median and an overall 4 rating generally corresponding to below market median. |
| ● | The Compensation Committee believes that the simultaneous evaluation of scorecard performance and market pay is the most effective approach to aligning pay and performance in an industry where market levels of pay can change dynamically. |
Step 5 – Committee Determination
| ● | Based on the evaluation of the scorecard ratings and market pay described in Step 4, the Compensation Committee, exercising its discretion, determines the final award amount for each named executive officer. The objective, non-formulaic factors (such as risk behaviors) that inform the decision are explained in detail within each named executive officer’s scorecard. |
Citi 20182019 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 8783 |
Our Compensation Peer Group
The Compensation Committee believes that market compensation levels must frame compensation decisions in order to retain the executive talent necessary to execute the Company’s business strategy. Accordingly, a critical step in our executive compensation Framework is the Compensation Committee’s understanding of market pay, which it develops through consideration of surveys of historic peer firm compensation for each named executive officer role.
In 2016, the Compensation Committee, with input from its independent compensation consultant, established the compensation peer group Citi currently uses to determine market pay ranges. The Compensation Committee evaluates the compensation peer group on an annual basis to ensure that the group continues to be appropriate. In connection with the awards for performance in 2016, theThe Compensation Committee with input from its independent compensation consultant, modified and expanded thecontinues to believe that a U.S.-based peer group used to determinereflects the relevant market pay ranges to include more U.S. firmsfor executive talent and exclude non-U.S. firms. The modifications reflected the increasing challenges associated with comparingrelevant regulatory environment for Citi’s executive compensation at U.S. financial services firms to pay at firms headquartered outside the U.S. that are subject to different regulatory environments. This change was the first modification of Citi’s peer group since 2012. No changes to this peer group were made for awards for 2017 performance.compensation.
Our peers were chosen because they operate in one or more lines of business that are similar to Citi’s and compete in similar labor markets, although many do not have global scale that is comparable to Citi. The Compensation Committee believes that this peer group can provide improved comparability of data across Citi’s key competitors for executive talent.
20172018 COMPENSATION PEER GROUP
|
AIG (AIG)
American Express (AXP)
Bank of America (BAC)
BNY Mellon (BK)
Capital One (COF) | Goldman Sachs (GS)
JPMorgan Chase (JPM)
MetLife (MET)
Morgan Stanley (MS)
PNC (PNC) | Prudential (PRU)
U.S. Bancorp (USB)
Wells Fargo (WFC) |
All compensation peer group firms were included in preparing the market data for the CEO and CFO roles. Not all compensation peer group firms have roles comparable to Citi’s named executive officer roles other than the CEO and CFO roles (e.g., the Institutional Clients Group role), so not all of the compensation peer group firms were represented in the market data for each of the other named executive officer roles. Information from comparable non-U.S. firms was included if insufficient comparableIn evaluating the market data was available for the other named executive officer roles.compensation, the Compensation Committee additionally focused on compensation for comparable roles at the U.S.-based global banks with lines of business similar to Citi’s. That group includes Bank of America, Goldman Sachs, JP Morgan Chase, Morgan Stanley, and Wells Fargo.
In selecting the compensation peer group, the Compensation Committee used size-based metrics as primary screening criteria among financial services firms. TheDue to the absence of a sufficient number of comparably sized direct peers, the result wasis a peer group where Citi is above the 75th percentile in size. In 2017, Citi compensated its named executive officers either abovesize, meaning that the market for target compensation prior to consideration of performance could be the upper quartile. Where Citi pays executives above median, (50th percentile) or within the rangesize and scope of market median as comparedtheir responsibilities and their performance tend to peers.be critical factors in determining pay ranges.
20172018 CITI POSITIONING RELATIVE TO PEER COMPANIES
| (1) | MetLifeAIG employees as of 12/31/2016.2017; MET employees as of 10/1/2017; PRU employees as of 12/31/2017.
|
www.citigroup.com
Table of Contents
8884 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION |
CEO Scorecard and Pay Explanation
Mr. Corbat has been CEO of Citi since October 2012. He joined Citi in 1983 and has held various management positions throughout Citi in multiple businesses and geographies.
| FINANCIAL SCORECARD |
| Category | | Financial Goal (Glossary on Page 139) | | 2017 Result(1)(2) | | Rating(2) |
| Profitability | | Citigroup Income from Continuing Operations Before Taxes | | $22.8 billion | | 2 |
| Expense Management | | Citigroup Efficiency Ratio | | 57.7% | | 2 |
| Use of Capital | | Citigroup Return on Tangible Common Equity | | 8.1% | | 2 |
| | Citigroup Return on Assets | | 0.84% | | 2 |
| Risk | | Citigroup Risk Appetite Ratio | | 118% | | 2 |
| | Citigroup Risk Appetite Surplus | | $2.93 billion | |
| QUANTITATIVE SCORECARD |
| Category | | Quantitative Goal (Glossary on Page 127) | | 2018 Result(1)(2) | | Rating(2) |
| Profitability | | Citigroup Income from Continuing Operations Before Taxes | | $23.4 billion | | 3 |
| Expense Management | | Citigroup Efficiency Ratio | | 57.4% | | 3 |
| Use of Capital | | Citigroup Return on Tangible Common Equity | | 10.9% | | 2 |
| | | Citigroup Return on Assets | | 0.93% | | 3 |
| Risk | | Citigroup Risk Appetite Ratio | | 151% | | 1 |
| | | Citigroup Risk Appetite Surplus | | $7.61 billion | |
NON-FINANCIALQUALITATIVE SCORECARD
|
Non-FinancialQualitative Goal
| | Result Highlights (Glossary on Page 139)127) | | Rating(2) |
Set strategic directionProtect and enhance our reputation
| | ●Mr. Corbat continues to provide prominent and clear messaging across the company around the firm’s culture of ethics and conduct. ●Under Mr. Corbat’s sponsorship, Citi received no objection from regulators to its capital plan submitted as part of the 20172018 CCAR process, enabling the return of $17.1$18.4 billion of capital to common stockholders during 2017, a 61% increase2018. Citi repurchased over 2016.200 million shares during 2018, resulting in an 8% reduction in outstanding common shares. ●Mr. Corbat has sponsored investmentNotwithstanding the continued progress in building digital channel engagement and transaction flow with institutional clients as well as a broad rolloutreturning capital to shareholders, each of electronic and digital consumer banking products and initiatives. The usage of our mobile products in Global Consumer Banking continues to grow. | | 2
|
Strong risk and controls management
| | ●Citi received feedback from the Federal Reserve Board and the Federal Deposit Insurance Corporation that neither agency had found deficiencies or shortcomings in Citi’s 2017 resolution plan. Ensuring that Citi can be resolved without the use of taxpayer funds and without adverse systemic impact is critical to being recognized as an indisputably strong and stable institution.key regulatory capital metrics remained strong.
●AsControl metrics generally improved year-over-year across Citi, and as measured by objective risk metrics, Citi’s risk profile was stable in 2017. | | 2
|
Strong personnel management
| | ●Mr. Corbat continued to strengthen our multi-year2018. Many outstanding regulatory issues were resolved, while others remain as focus on Ethics and Culture, which is our innovative effort to further emphasize ethical conduct across Citi.areas.
●Mr. Corbat has sponsored a data-driven approachchampioned Citi’s leadership in disclosing gender and U.S. minority pay gaps and making related adjustments to compensation globally. We have published our goals to improve representation of women and U.S. minorities. In 2017, 80% of our openminorities in senior roles at the Director and Managing Director levels had a diverse slate of candidates and at the Managing Director level and above, the percentage of roles with diverse interviewing panels was 77%.throughout Citi. ●Mr. Corbat continues to set the tone from the top about Citi’s commitment to diversity and inclusion through a range of communications. We are also advancing diverse and inclusive values through our Affinities groups, which are led by executives who report directly to Mr. Corbat. | | 2
|
Enhance relations with external stakeholders, including stockholders
| | ●Mr. Corbat delivered a successful Investor Day, our first in nine years.
●He continued his outreach to external stakeholders globally, including clients,investors, regulators, and government officials.
➢He maintained regular client contact by holding, on average, 40 client meetings per month in cities around the world. ➢He also led investor outreach by conducting numerous36 investor meetings and presenting at an investor conference.in 2018.
➢In 2017, in addition to regular bank supervisory meetings, he participated in 4756 meetings in 2018 with regulators, central bankers, and government officials from the U.S. and other countries. | | 13
|
Develop client-relevant value propositions | | ●Mr. Corbat maintained regular client contact by holding, on average, approximately 40 client meetings per month in cities around the world. ●Mr. Corbat drove continued focus on key investments in Global Consumer Banking and Institutional Clients Group that are already showing results, such as digital and mobile innovations in consumer banking and investments in our equities business. | | 2 |
Produce extraordinary client experiences | | ●Innovations sponsored by Mr. Corbat have led to improved client satisfaction scores on objective surveys in Global Consumer Banking and Institutional Clients Group. ●Key digital user metrics improved substantially year-over-year, and in Institutional Clients Group, we have significantly improved the client onboarding experience. | | 2 |
Deliver our financial commitments | | ●Key financial metrics, including Citi’s 2018 return on tangible common equity, exceeded 2017 results (excluding the impact of Tax Reform in both periods) and our 2018 business plan. | | 3 |
| (1) | Return on Tangible Common Equity and Return on Assets exclude the impact of Tax Reform.Reform in 2018. For a reconciliation of all adjusted results to reported results, please see Annex A to this Proxy Statement. |
| (2) | Explanations of the colors and ratings used in the scorecards appear on page XX.81. |
Citi 20182019 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 8985 |
| ● | As CEO, Mr. Corbat is responsible for Citi’s global business operations. Citi operatesCiti’s Global Consumer Banking (which consists of consumer banking businesses operate in North America, Mexico, and Asia)Asia and provide traditional banking services to retail customers through retail banking, including commercial banking, and Citi-branded cards and retail services. Citi’s Institutional Clients Group which provides corporate, institutional, public sector, and high-net-worth clients around the world with a full range of wholesale banking products and services, including fixed income and equity sales and trading, foreign exchange, prime brokerage, derivative services, equity and fixed income research, corporate lending, investment banking and advisory services, private banking, cash management, trade finance, and securities services. |
| ● | Citi has approximately 200 million customer accounts and does business in over 160 countries and jurisdictions. Citi believes this global network provides a strong foundation for servicing the broad financial services needs of its large multinational clients and for meeting the needs of retail, private banking, commercial, public sector, and institutional clients around the world. |
| ● | AtAs of December 31, 2017,2018, Citi reported:had:
|
| ➢ | revenues of $71.4$72.9 billion for the full year of 2017,2018, |
| ➢ | total assets of $1,842 billion,approximately $1.92 trillion,
|
| ➢ | market capitalization of $191$123 billion, |
| ➢ | approximately 209,000204,000 employees, and |
| ➢ | $960 billiondeposits of deposits.approximately $1.01 trillion.
|
SUMMARY OF FRAMEWORK CONCLUSIONS AND FINALCOMMITTEE’S PAY DECISIONRATIONALE
|
Scorecard Assessment Summary |
| ● | Company-wide financial results reflected balanced operating resultssolid progress toward improving Citi’s profitability and continued momentum across businesses and geographies,returns, including return on tangible common equity, in a more challenging revenue growth, positive operating leverage, and operating margin expansion in Institutional Clients Group as well as in every region in Global Consumer Banking.environment. Citi attained the challenging targets set at the beginning of 2017, including its announced operating efficiency target,2018 and demonstrated improved operating performance over 2016.2017. |
| ● | The Compensation Committee considered Mr. Corbat’s notable 2017 non-financial2018 qualitative goal achievements, such as the 2017leadership demonstrated in the 2018 favorable CCAR result, which enabled the return of $17.1$18.4 billion in capital to stockholders during 2017, and the finding of no deficiencies or shortcomings with our 2017 resolution plan.2018. |
Linking Performance to Compensation |
| ● | Company business performance at or above targets combined with Mr. Corbat’s strong performance against non-financialqualitative goals resulted in an overall scorecard rating of 1.925,2.43, which points toward compensation above market median pay for the CEO role within our 13-firm compensation peer group. The overall scorecard rating was determined by averaging the financialquantitative goal ratings and weighting the result 70%, averaging the non-financialqualitative goal ratings and weighting the result 30%, then adding the two amounts ([2.02.4 x 0.7] + [1.75[2.5 x 0.3] = 1.925)2.43). |
Final Award |
| ● | The Compensation Committee awarded Mr. Corbat $23$24 million in total annual compensation for 2017,2018, consisting of a base salary of $1.5 million and a total annual incentive award of $21.5$22.5 million, a 48%an increase of 4% over his total annual compensation for 20162017 of $15.5$23 million. Mr. Corbat’s compensation iswas above market median for the CEO role based on a comparison to CEO pay in our 13-firm compensation peer group, consistent with the results produced by our executive compensation Framework, while at the same time iswas below the median of CEO pay at other large U.S.-based global banks. In determining the final award amount in the exercise of its discretion, the Compensation Committee relied on the results of the executive compensation Framework and made no upward or downward adjustments to those results for the reasons set forth on pages 80-81.considered Citi’s solid progress toward its financial goals, market levels of pay at other U.S.-based global banks, and Mr. Corbat’s qualitative results. |
www.citigroup.com
Table of Contents
9086 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION |
CFO Scorecard and Pay Explanation
John Gerspach has been CFO of Citi since July 2009 and has served in various executive financial management roles globally since joining Citi in 1990. He retired from the CFO role on February 22, 2019.
FINANCIALQUANTITATIVE SCORECARD |
| Category | | Financial Goal (Glossary on Page 139) | | 2017 Result(1)(2) | | Rating(2) | | Quantitative Goal (Glossary on Page 127) | | 2018 Result(1)(2) | | Rating(2) |
| Profitability | | Citigroup Income from Continuing Operations Before Taxes | | $22.8 billion | | 2 | | Citigroup Income from Continuing Operations Before Taxes | | $23.4 billion | | 3 |
| Expense Management | | Citigroup Efficiency Ratio | | 57.7% | | 2 | | Citigroup Efficiency Ratio | | 57.4% | | 3 |
| Use of Capital | | Citigroup Return on Tangible Common Equity | | 8.1% | | 2 | | Citigroup Return on Tangible Common Equity | | 10.9% | | 2 |
| | Citigroup Return on Assets | | 0.84% | | 2 | | Citigroup Return on Assets | | 0.93% | | 3 |
| Risk | | Citigroup Risk Appetite Ratio | | 118% | | 2 | | Citigroup Risk Appetite Ratio | | 151% | | 1 |
| | Citigroup Risk Appetite Surplus | | td.93 billion | | | Citigroup Risk Appetite Surplus | | $7.61 billion | |
NON-FINANCIALQUALITATIVE SCORECARD |
Non-FinancialQualitative Goal | | Result Highlights (Glossary on Page 139)127) | | Rating(2) |
Strong riskProtect and controls managementenhance
our reputation | | ●Under Mr. Gerspach led Citi’s comprehensive and successful resolution plan submission and our ongoing integrated approach to resolution planning.Gerspach’s leadership, Citi received feedbackno objection from regulators to its capital plan submitted as part of the Federal Reserve Board and2018 CCAR process, enabling the Federal Deposit Insurance Corporation that neither agency had found deficiencies or shortcomingsreturn of $18.4 billion of capital to common stockholders during 2018. Citi repurchased over 200 million shares during 2018, resulting in an 8% reduction in outstanding common shares. ●Notwithstanding the continued progress in returning capital to shareholders, each of Citi’s 2017 resolution plan.key regulatory capital metrics remained strong. ●Control metrics generally improved year-over-year across the Finance function.function, while areas of focus remain. ●Succession planning efforts in Finance resulted in the orderly succession process pursuant to which Mark Mason was promoted to Citi CFO. | | 23 |
Achieve satisfactory CCAR resultDevelop client-
relevant value
propositions | | ●Citi received no objection to its capital plan submitted as part of the 2017 CCAR process, enabling the return of $17.1 billion of capital to common stockholders during 2017, a 61% increase over 2016. This critical result was achieved underUnder Mr. Gerspach’s leadership.leadership, Citi Ventures continued to build a successful investment portfolio, resulting in substantial cost savings and incremental revenue to Citi. ●The Finance function has continued to make productivity and process improvements that have lowered cost, improved the quality of financial reporting and analysis, and improved the effectiveness of our control environment. | | 13 |
Manage deferred tax assets and foreign tax creditsProduce extraordinary
client experiences | | ●Mr. Gerspach leads Citi’s strategic use ofhas sponsored multiple initiatives to deliver better insights to clients and faster execution. | | 3 |
Deliver our deferred tax assets and related foreign tax credit carry forwards.financial
commitments | | ●InKey financial metrics, including Citi’s 2018 return on tangible common equity, exceeded 2017 and prior toresults (excluding the impact of Tax Reform Citi effectively utilized its deferred tax assetsin both periods) and time-sensitive foreign tax credit carryforwards. Reductions in deferred tax assets are important because they have the effect of making additional capital available for use either in Citi’s businesses or for return to Citi’s stockholders. | | 1 |
Leadership effectiveness | | ●Along with Mr. Corbat, Mr. Gerspach led Citi’s successful 2017 Investor Day.our 2018 business plan.
●Mr. Gerspach continues to sponsor comprehensive career development and advanced learning initiatives across the Finance function.function efforts resulted in a reduction of Citi’s effective tax rate. | | 2 |
Enhance operational efficiency | | ●In partnership with Citi’s Chief Risk Officer, Mr. Gerspach continues to lead advances in our standardized financial reporting systems through better integration with Citi’s Risk Management function and systems that monitor risk.
●Mr. Gerspach continues to lead efforts in Finance to advance Citi’s process engineering efforts, which reduce costs and improve controls.
| | 2 |
| (1) | Return on Tangible Common Equity and Return on Assets exclude the impact of Tax Reform.Reform in 2018. For a reconciliation of all adjusted results to reported results, please see Annex A to this Proxy Statement. |
| (2) | Explanations of the ratings used in the scorecards appear on page 85.81. |
Citi 20182019 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 9187 |
| ● | AsMr. Gerspach was Citi CFO Mr. Gerspachthroughout 2018 and until February 22, 2019. The Citi CFO is responsible for managing Citi’s balance sheet and Citi’s financial reporting processes. At December 31, 2017,2018, Citi had approximately $1.84$1.92 trillion of assets and $960 billion$1.01 trillion of deposits. |
| ● | Among the disciplines reporting to Mr. Gerspachthe Citi CFO is Citi’s treasury function, which manages our capital, funding, and liquidity. In addition, the treasury function manages corporate oversight of risks related to liquidity, interest rates, and currency translation. |
| ● | Mr. GerspachThe Citi CFO leads the teams coordinating Citi’s responses to global financial regulatory reform, including Dodd-Frank, and Citi’s comprehensive approach to resolution planning.reform. The Finance function also plays a central role in our CCAR capital planning process. |
| ● | Mr. GerspachThe Citi CFO leads many of Citi’s expense management initiatives and Finance also leads or participates in a range of financial control activities throughout the businesses. |
SUMMARY OF FRAMEWORK CONCLUSIONS AND FINALCOMMITTEE’S PAY DECISIONRATIONALE |
Scorecard Assessment Summary
Scorecard Assessment Summary |
| ● | Company-wide financial results reflected balanced operating resultssolid progress toward improving Citi’s profitability and continued momentum across businesses and geographies,returns, including return on tangible common equity, in a more challenging revenue growth, positive operating leverage, and operating margin expansion in Institutional Clients Group as well as in every region in Global Consumer Banking.environment. Citi attained the challenging targets set at the beginning of 2017, including its announced operating efficiency target,2018 and demonstrated improved operating performance over 2016.2017. |
| ● | The Compensation Committee considered Mr. Gerspach’s notable 2017 non-financial2018 qualitative goal achievements, such as the 2017leadership demonstrated in the 2018 favorable CCAR result and feedback received on Citi’s 2017 resolution plan, along with his leadership in developing successful expense management initiatives.company-wide productivity improvements. |
Linking Performance to Compensation
Linking Performance to Compensation |
| ● | Company business performance at or above targets combined with Mr. Gerspach’s strong performance against non-financialqualitative goals resulted in an overall scorecard rating of 1.88,2.505, which points toward compensation above market median for the CFO role.role within our 13-firm compensation peer group. The overall scorecard rating was determined by averaging the financialquantitative goal ratings and weighting the result 70%, averaging the non-financialqualitative goal ratings and weighting the result 30%, then adding the two amounts ([2.02.4 x 0.7] + [1.6[2.75 x 0.3] = 1.88)2.505). |
Final Award
Final Award |
| ● | The Compensation Committee awarded Mr. Gerspach $11$12 million in annual compensation for 2017,2018, a 22%9% increase over his 20162017 annual compensation of $9 million.$11 million, in recognition of a gap to market levels of compensation for similar roles at U.S.-based global banks as well as Mr. Gerspach’s performance. Mr. Gerspach’s compensation was above market median for the CFO role based on a comparison to CFO pay in our 13-firm compensation peer group, consistent with the results produced by our executive compensation Framework, while at the same time iswas below the median of CFO pay at other large U.S.-based global banks. In determining the final award amount in the exercise of its discretion, the Compensation Committee relied on the results of the executive compensation Framework notingand considered Citi’s overallsolid progress againsttoward its financial goals, market levels of pay at other U.S.-based global banks, and Mr. Gerspach’s strong individual performance against individual non-financial goals.qualitative results. |
www.citigroup.com
Table of Contents
9288 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION |
Citi President and Institutional Clients Group CEO Scorecard and Pay Explanation
James Forese is President of Citi and CEO of Institutional Clients Group (ICG). He assumed expanded duties as President of Citi in June 2015 after serving as Co-President of Citi and CEO of ICG since January 2013. Mr. Forese joined Citi in 1985 and has held various executive positions in multiple geographies throughout the businesses comprising ICG.
FINANCIALQUANTITATIVE SCORECARD |
Mr. Forese’s performance on most financialquantitative metrics was evaluated on the basis of both company-wide and ICG results, consistent with his roles as President of Citi and as CEO of ICG.
| Category | | Financial Goal (Glossary on Page 139) | | 2017 Result(1)(2) | | Rating(2) | | Quantitative Goal (Glossary on Page 127) | | 2018 Result(1)(2) | | Rating(2) |
| Profitability | | Citigroup Income from Continuing Operations Before Taxes | | td2.8billion | | 1 | | Citigroup Income from Continuing Operations Before Taxes | | td3.4 billion | | 3 |
| | ICG Income from Continuing Operations Before Taxes | | td6.1billion | | | ICG Income from Continuing Operations Before Taxes | | td5.8 billion | |
| Expense Management | | Citigroup Efficiency Ratio | | 57.7% | | 2 | | Citigroup Efficiency Ratio | | 57.4% | | 3 |
| | ICG Efficiency Ratio | | 55.0% | | | ICG Efficiency Ratio | | 56.7% | |
| Use of Capital | | Citigroup Return on Tangible Common Equity | | 8.1% | | 1 | | Citigroup Return on Tangible Common Equity | | 10.9% | | 3 |
| | ICG Return on Tangible Common Equity | | 13.4% | | | ICG Return on Tangible Common Equity | | 14.3% | |
| | Citigroup Return on Assets | | 0.84% | | 1 | | Citigroup Return on Assets | | 0.93% | | 3 |
| | ICG Return on Assets | | 0.81% | | | ICG Return on Assets | | 0.87% | |
| Risk | | ICG Risk Appetite Ratio | | 206% | | 2 | | ICG Risk Appetite Ratio | | 219% | | 2 |
| | ICG Risk Appetite Surplus | | $7.70billion | | | ICG Risk Appetite Surplus | | $8.15 billion | |
NON-FINANCIALQUALITATIVE SCORECARD |
Non-FinancialQualitative Goal | | Result Highlights | | Rating(2) |
Strong riskProtect and controls management | | ●Mr. Forese continues to lead efforts to enhance the controls environment in ICG, which in 2017 demonstrated year-over-year improvements across a range of control metrics and continued reductions in operational losses.
●ICG’s risk metrics demonstrate that risk discipline was maintained in 2017 as ICG broadly capitalized on improved market opportunities.
| | 2 |
Leadership and strategy effectiveness
our reputation | | ●As Citi President, Mr. Forese has actively supported ongoing effortscontinues to enhance ourprovide prominent and clear messaging across the company around the firm’s culture of ethical business conductethics and advance our “Leadership Matters” initiative and other global franchise initiatives.conduct. ●Mr. Forese contributed to the success of Citi’s 2017 Investor Day.Control metrics generally improved year-over-year across ICG. Many outstanding regulatory issues were resolved, while others remain as focus areas. ●Led by Mr. Forese, continuesICG demonstrated improvement in key diversity metrics and ethical culture scores and implemented new approaches to champion our global commitmententry-level hiring that have already increased diversity. | | 3 |
Develop client-
relevant value
propositions | | ●Earnings in three priority areas – equities, investor services, and treasury and trade solutions – exceeded 2017 results and the 2018 business plan. Private bank revenues continued to diversity and inclusion through a range of initiatives, including his co-leadership of an Affinities group and increases in diverse slates and candidates ingrow. ●Led by Mr. Forese, ICG critical roles as well as at Managing Director and Director levels.continued to enhance controls while simplifying client-facing processes. | | 2 |
Improve ICG business optimization | | ●ICG’s efforts to streamline operations showed strong results in 2017, with substantial ICG revenue and earnings growth (excluding the impact of Tax Reform) as compared to 2016. Markets performance in 2017 compared favorably to Citi’s peers, with market share gains in both fixed income and equities.
●Overall, ICG businesses continued to gain “wallet share.” In investment banking, revenues increased significantly while “wallet share” increased in every product and region.
| | 2 |
Enhance ICG operational efficiencyProduce extraordinary
client experiences | | ●ICG maintained expense disciplinegreatly simplified and streamlined the client onboarding experience through use of technology in 2017, resultingmultiple areas, including trading platforms. ●ICG continued to improve client satisfaction significantly, as measured in an improved year-over-year ICG operating efficiency ratio as well as an operating efficiency ratio better than plan.objective surveys. | | 1 |
Deliver our financial
commitments | | ●Although ICG 2018 financial results fell short of its business plan, ICG’s underlying results in 2018 showed solid growth over 2017 levels. Led by Mr. Forese, ICG productivity improvements exceeded targets. | | 2 |
| (1) | Citigroup Return on Tangible Common Equity and Citigroup Return on Assets exclude the impact of Tax Reform.Reform in 2018. For a reconciliation of all adjusted results to reported results, please see Annex A to this Proxy Statement. |
| (2) | Explanations of the colors and ratings used in the scorecards appear on page 85.81. |
Citi 20182019 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 9389 |
| ● | As President of Citi, Mr. Forese leads enterprise-wide initiatives, including those designed to improve Citi’s execution of its business strategy and efforts to shape Citi’s culture through our common mission and value proposition statements. |
| ● | Mr. Forese is also CEO of ICG, which provides corporate, institutional, public sector, and high-net-worth clients around the world with a full range of wholesale banking products and services, including fixed income and equity sales and trading, foreign exchange, prime brokerage, derivative services, equity and fixed income research, corporate lending, investment banking and advisory services, private banking, cash management, trade finance, and securities services. |
| ● | ICG’s international presence is supported by trading floors in approximately 80 countries and a proprietary network in 98 countries and jurisdictions. At December 31, 2017,2018, ICG had approximately $1.3$1.4 trillion of assets and $640$690 billion of deposits, while two of its businesses, securities services and issuer services, managed approximately $17.4$17.5 trillion of assets under custody compared to $15.2 trillion at the end of the prior-year period.custody. |
SUMMARY OF FRAMEWORK CONCLUSIONS AND FINALCOMMITTEE’S PAY DECISIONRATIONALE |
Scorecard Assessment Summary
Scorecard Assessment Summary |
| ● | Company-wide financial results reflected balanced operating resultssolid progress toward improving Citi’s profitability and continued momentum across businesses and geographies,returns, including return on tangible common equity, in a more challenging revenue growth, positive operating leverage, and operating margin expansion in ICG.environment. Citi attained the challenging targets set at the beginning of 2017, including its announced operating efficiency target,2018 and demonstrated improved operating performance over 2016.2017. ICG generated year-over-yearhad solid revenue and net income growth (excluding the impact of Tax Reform), with particularly strong performance in the accrual businesses —across treasury and trade solutions, private bank, securities services, equity markets, and corporate lending, and securities services —partially offset by weakness in fixed income as well as softness in investment banking. ICG also exceeded the challenging targets set for 2017.equity and debt underwriting. |
| ● | The Compensation Committee considered Mr. Forese’s notable 2017 non-financial2018 qualitative goal achievements, including Mr. Forese’s active support for continuous enhancementthe success of Citi’s ethics and conduct initiatives.investments in targeted ICG businesses. |
Linking Performance to Compensation
Linking Performance to Compensation |
| ● | Company business performance at or above targets and ICG business performance above or near targets combined with Mr. Forese’s strong performance against non-financialqualitative goals resulted in an overall scorecard rating of 1.58, pointing2.635, which points toward compensation abovewithin the range of market median for Mr. Forese’s role as CEO of ICG. The overall scorecard rating was determined by averaging the financialquantitative goal ratings and weighting the result 70%, averaging the non-financialqualitative goal ratings and weighting the result 30%, then adding the two amounts ([1.42.8 x 0.7] + [2.0[2.25 x 0.3] = 1.58)2.635). |
Final Award
Final Award |
| ● | The Compensation Committee awarded Mr. Forese $20 million in annual compensation for 2017, a 31% increase over2018, the same as his 20162017 annual compensation of $15.3$20 million. Mr. Forese’s 20172018 compensation was somewhat abovewithin the range of market median for his ICG role considering compensation at U.S.-based global banks, consistent with the results produced by our executive compensation Framework. In determining the final award amount in the exercise of its discretion, the Compensation Committee relied on the results of the executive compensation Framework, which reflect market levels of compensation, ICG’s 20172018 business performance, above targets and the prior year, as well as Mr. Forese’s contributions to franchise-wide goals as Citi President.qualitative results. |
www.citigroup.com
Table of Contents
9490 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION |
Global Consumer Banking CEO Scorecard and Pay Explanation
Stephen Bird became CEO of Global Consumer Banking (GCB) in June 2015. Previously, Mr. Bird was CEO of Citi’s Asia Pacific region, responsible for Citi’s business lines across the region. He joined Citi in 1998 and has held regional executive roles in Operations & Technology as well as business executive roles in GCB.
FINANCIALQUANTITATIVE SCORECARD |
Mr. Bird’s performance on most financialquantitative metrics was evaluated on the basis of both company-wide and GCB results, consistent with his roles as an executive officer of Citi and as CEO of GCB.
| Category | | Financial Goal (Glossary on Page 139) | | 2017 Result(1)(2) | | Rating(2) | | Quantitative Goal (Glossary on Page 127) | | 2018 Result(1)(2) | | Rating(2) |
| Profitability | | Citigroup Income from Continuing Operations Before Taxes | | td2.8billion | | 3 | | Citigroup Income from Continuing Operations Before Taxes | | td3.4billion | | 4 |
| | GCB Income from Continuing Operations Before Taxes | | $7.2billion | | | GCB Income from Continuing Operations Before Taxes | | $7.6billion | |
| Expense Management | | Citigroup Efficiency Ratio | | 57.7% | | 2 | | Citigroup Efficiency Ratio | | 57.4% | | 4 |
| | GCB Efficiency Ratio | | 54.6% | | | GCB Efficiency Ratio | | 55.0% | |
| Use of Capital | | Citigroup Return on Tangible Common Equity | | 8.1% | | 3 | | Citigroup Return on Tangible Common Equity | | 10.9% | | 4 |
| | GCB Return on Tangible Common Equity | | 12.9% | | | GCB Return on Tangible Common Equity | | 16.4% | |
| | Citigroup Return on Assets | | 0.84% | | 3 | | Citigroup Return on Assets | | 0.93% | | 4 |
| | GCB Return on Assets | | 1.11% | | | GCB Return on Assets | | 1.36% | |
| Risk | | GCB Risk Appetite Ratio | | 159% | | 2 | | GCB Risk Appetite Ratio | | 173% | | 2 |
| | GCB Risk Appetite Surplus | | td.81billion | | | GCB Risk Appetite Surplus | | $3.46billion | |
NON-FINANCIALQUALITATIVE SCORECARD |
Non-FinancialQualitative Goal | | Result Highlights | | Rating(2) |
Strong riskProtect and controls managementenhance
our reputation | | ●Control metrics generally improved year-over-year across GCB, and many outstanding regulatory issues were resolved. ●Led by Mr. Bird, GCB demonstrated improvement in key diversity metrics and ethical culture scores. ●Mr. Bird demonstrated leadership in revising his organizational structure, and the changes are already resulting in improved business performance. | | 3 |
Develop client-
relevant value
propositions | | ●GCB delivered solid performance on its strategic mobile initiatives, with digital and mobile usage above 2018 targets. ●In 2018, investments in Citibanamex resulted in significant progress toward 2020 targets. | | 2 |
Produce extraordinary
client experiences | | ●Key digital user metrics improved substantially year-over-year, and we are winning industry awards for exceptional digital and mobile experiences. ●The GCB client experience is rapidly improving, as indicated by client survey results. | | 2 |
Deliver our financial
commitments | | ●Led by Mr. Bird, GCB advanced multiple key control initiatives, including upgraded fraud detection systemsfinancial performance for 2018 generally showed improvement over 2017 and an enhanced governance framework for sales practices. ●After thorough reviews, no systemic sales practices issues have been identified.was near its business plan.
| | 2 |
Leadership effectiveness | | ●Mr. Bird led successful initiatives to develop and enhance existing talent as well as recruit new talent in the digital and related spaces. He is leading our culture change efforts to be “forward compatible” to accelerate GCB’s strategy.
●Mr. Bird continues to advance our global commitment to diversity and inclusion through a range of initiatives, including his co-leadership of an Affinities group.
●Mr. Bird contributed to the success of Citi’s 2017 Investor Day.
| | 2 |
Digitize and simplify customer platforms | | ●Under Mr. Bird’s leadership, GCB executed successfully on its strategy to accelerate digital acquisition and servicing capabilities, including digitized lending and onboarding processes.
●The online customer experience is improving globally, as demonstrated by improved digital net promoter scores.
●In the U.S., our successful launch of the enhanced Citigold wealth management platform is showing early results.
| | 2 |
Improve profitable market share in core markets | | ●Our cards business continues to build a balanced portfolio and grow revenues with a continued focus on our U.S. branded cards franchise.
●E-commerce growth in commercial banking has strengthened in 2017.
| | 3 |
Enhance growth in GCB | | ●Under Mr. Bird’s leadership, revenue growth accelerated in 2017 in both Mexico and Asia, and Mexico cards returned to revenue growth in the second half of the year, which was earlier than planned.
●GCB has developed a robust pipeline of potential new investments to contribute to Citi’s future growth.
| | 2 |
| (1) | Citigroup Return on Tangible Common Equity and Citigroup Return on Assets exclude the impact of Tax Reform.Reform in 2018. For a reconciliation of all adjusted results to reported results, please see Annex A to this Proxy Statement. |
| (2) | Explanations of the colors and ratings used in the scorecards appear on page 85.81. |
Citi 20182019 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 9591 |
| ● | As CEO of GCB, Mr. Bird’s global responsibilities include all consumer and commercial banking businesses in 19 countries and jurisdictions, including retail banking and wealth management, credit cards, mortgages, and operations and technology supporting GCB.jurisdictions. |
| ● | GCB provides traditional banking services to retail customers through retail banking, including commercial banking, and Citi-branded cards and Citi retail services. GCB is focused on its priority markets in the U.S., Mexico, and Asia with 2,4512,410 branches as of December 31, 2017.2018. At December 31, 2017,2018, GCB had approximately $429$432 billion of assets and $307$308 billion of deposits. |
| ➢ | ➢At December 31, 2017,2018, North America GCB had 694689 retail bank branches, approximately 9.29.1 million retail banking customer accounts, $56$56.8 billion in retail banking loans, and $182.5$181.2 billion in deposits. In addition, North America GCB had approximately 121 million Citi-branded and Citi retail services card accounts with $139.7$144.5 billion in outstanding loan balances. |
| ➢ | At December 31, 2017,2018, Latin America GCB had 1,4791,463 retail branches in Mexico, with approximately 27.729.4 million retail banking customer accounts, $19.9$19.7 billion in retail banking loans, and $27.1$27.7 billion in deposits. In addition, Latin America GCB had approximately 5.6 million Citi-branded card accounts with $5.4$5.7 billion in outstanding loan balances. |
| ➢ | At December 31, 2017,2018, Asia GCB businesses had 278258 retail branches, approximately 1616.0 million retail banking customer accounts, $70$69.2 billion in retail banking loans, and $97.7$99.2 billion in deposits. In addition, the businessesAsia GCB had approximately 16.415.3 million Citi-branded card accounts with $19.8$19.3 billion in outstanding loan balances. |
SUMMARY OF FRAMEWORK CONCLUSIONS AND FINALCOMMITTEE’S PAY DECISIONRATIONALE |
Scorecard Assessment Summary
Scorecard Assessment Summary |
| ● | Company-wide financial results reflected balanced operating resultssolid progress toward improving Citi’s profitability and continued momentum across businesses and geographies,returns, including return on tangible common equity, in a more challenging revenue growth, positive operating leverage, and operating margin expansion in every region in GCB.environment. Citi attained the challenging targets set at the beginning of 2017, including its announced operating efficiency target,2018 and demonstrated improved operating performance over 2016.2017. GCB reported revenue growth in all regions, reflecting continued loan and overall deposit growth, partially offset by the near-term impact of weak market sentiment on Asia wealth management revenues, as well as the impact from partnership renewal terms that went into effect in 2018 in Citi-branded cards in North America GCB. |
| ● | The Compensation Committee considered Mr. Bird’s notable 2017 non-financial2018 qualitative goal achievements, such as the gains in the digital space, along with key achievements in important markets. |
Linking Performance to Compensation
Linking Performance to Compensation |
| ● | Company performance at or above targets and GCB business performance generally above or near targets plus Mr. Bird’s strong performance against non-financialqualitative goals resulted in an overall scorecard rating of 2.48,3.27, which points toward compensation within the range of market median for Mr. Bird’s role. The overall scorecard rating was determined by averaging the financialquantitative goal ratings and weighting the result 70%, averaging the non-financialqualitative goal ratings and weighting the result 30%, then adding the two amounts ([2.63.6 x 0.7] + [2.2[2.5 x 0.3] = 2.48)3.27). |
Final Award
Final Award |
| ● | The Compensation Committee awarded Mr. Bird $11.5 million in 2018 annual compensation, a 9.5% increase over his 2017 pay of $10.5 million, in 2017 annualrecognition of a gap to market levels of compensation a 17% increase over his 2016 pay of $9 million.for similar roles at U.S.-based global banks as well as Mr. Bird’s 2017performance. Mr. Bird’s 2018 compensation was within the range of market median for his role considering compensation at U.S.-based global banks, consistent with the results produced by our executive compensation Framework. In determining the final award amount in the exercise of its discretion, the Compensation Committee relied on the results of the executive compensation Framework, which reflect market levels of compensation, GCB’s 20172018 business performance, and progress against a range of objectives designed to drive future growth and Mr. Bird’s strong performance against individual non-financial goals.qualitative results. |
www.citigroup.com
Table of Contents
9692 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION |
Latin America CEO Scorecard and Pay Explanation
In June 2015, Jane Fraser became CEO of Citi’s Latin America (LatAm) region. Previously, she was CEO of Citi’s U.S. Consumer and Commercial Banking and CitiMortgage. From 2009 to 2013, Ms. Fraser served as CEO of Citi’s Private Bank, and before then, she held key strategy roles. She joined Citi in 2004.
FINANCIALQUANTITATIVE SCORECARD |
Ms. Fraser’s performance on most financialquantitative metrics was evaluated on the basis of both company-wide and LatAm results, consistent with her roles as an executive officer of Citi and as CEO of LatAm.
| Category | | Financial Goal (Glossary on Page 139) | | 2017 Result(1)(2) | | Rating(2) | | Quantitative Goal (Glossary on Page 127) | | 2018 Result(1)(2) | | Rating(2) |
| Profitability | | Citigroup Income from Continuing Operations Before Taxes | | td2.8billion | | 2 | | Citigroup Income from Continuing Operations Before Taxes | | td3.4billion | | 2 |
| | LatAm Income from Continuing Operations Before Taxes | | $3.2billion | | | LatAm Income from Continuing Operations Before Taxes | | $3.8billion | |
| Expense Management | | Citigroup Efficiency Ratio | | 57.7% | | 3 | | Citigroup Efficiency Ratio | | 57.4% | | 2 |
| | LatAm Efficiency Ratio | | 50.8% | | | LatAm Efficiency Ratio | | 49.4% | |
| Use of Capital | | Citigroup Return on Tangible Common Equity | | 8.1% | | 2 | | Citigroup Return on Tangible Common Equity | | 10.9% | | 1 |
| | LatAm Return on Tangible Common Equity | | 16.3% | | | LatAm Return on Tangible Common Equity | | 23.3% | |
| | Citigroup Return on Assets | | 0.84% | | 2 | | Citigroup Return on Assets | | 0.93% | | 1 |
| | LatAm Return on Assets | | 1.63% | | | LatAm Return on Assets | | 2.23% | |
| Risk | | LatAm Risk Appetite Ratio | | 225% | | 2 | | LatAm Risk Appetite Ratio | | 305% | | 2 |
| | LatAm Risk Appetite Surplus | | td.94billion | | | LatAm Risk Appetite Surplus | | td.78billion | |
NON-FINANCIALQUALITATIVE SCORECARD |
Non-FinancialQualitative Goal | | Result Highlights | | Rating(2) |
Strong risk
Protect and controlsenhance
managementour reputation
| | ●Ms. Fraser ledControl metrics generally improved year-over-year across the ongoing upgrade of our governanceLatAm region, and control framework in Mexico. In addition, Citi’s regional operational control metrics continued to improve or remained stable in 2017.many outstanding regulatory issues were resolved. ●Year-over-year employee engagement scores improved, demonstrating support for an enhancedThe control environment. | | 2 |
Leadership
effectiveness
| | ●Ms. Fraser continues to streamline the organizational structure in the region while identifying optimal levels of controls and governance in target markets.environment has strengthened considerably under Ms. Fraser’s stewardship, as we continue to focus on further improvements.
●Led by Ms. Fraser, contributed to the success of Citi’s 2017 Investor Day. ●She continues to advance our global commitment toLatAm region demonstrated improvement in key diversity metrics and inclusion through a range of initiatives.ethical culture scores.
| | 23 |
Initiatives in MexicoDevelop client-
relevant value
propositions
| | ●Citi continuescontinued to execute on its investment plan for Citibanamex (totaling more than $1 billion through 2020). Ms. Fraser is leading the transformation of Citi’s consumer banking platform in Mexico, which demonstrated significant progress in 2017 passed key pre-set milestones on the path related to growth in digital banking, improved client service, branch upgrades,2018. ●In 2018, Citibanamex made progress toward a market leadership position through development of new strategic business combinations and enhanced regulatory safety and soundness.partnerships. | | 2 |
Productivity andProduce extraordinary
growth in LatAmclient experiences
| | ●Under Ms. Fraser’s leadership, Citi completed the divestitures of consumer businessesdigital and mobile users in significant markets, including Argentina and Brazil.Mexico have increased significantly. ●She has delivered a framework for a simplified client engagement model acrossTargeted businesses in LatAm ICG inimproved wallet share and revenues compared to 2017, while the region with rollout in two countries. ●Mexico cards returned to revenue growth in the second half of the year, which was earlier than planned.region’s operating efficiency improved year-over-year.
| | 2 |
Transformation of ICGDeliver our financial
in LatAmcommitments
| | ●Under Ms. Fraser’s leadership, ICG wallet share and “trusted advisor” scores improved over 2016Overall the region delivered results that exceeded the business plan in addition to demonstrating year-over-year improvement in financial results. | | 21 |
| (1) | Citigroup Return on Tangible Common Equity and Citigroup Return on Assets exclude the impact of Tax Reform.Reform in 2018. For a reconciliation of all adjusted results to reported results, please see Annex A to this Proxy Statement. |
| (2) | Explanations of the colors and ratings used in the scorecards appear on page 85.81. |
Citi 20182019 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 9793 |
| ● | The CEO of LatAm is responsible for LatAm GCB in Mexico and ICG’s businesses in the 23 countries and jurisdictions where Citi is present in this region. |
| ● | LatAm GCB provides traditional retail banking, including commercial banking, and its Citi-branded cards products to retail customers and small to mid-sized businesses in Mexico through Citibanamex, one of Mexico’s largest banks. At December 31, 2017,2018, LatAm GCB had 1,4791,463 retail branches in Mexico, with approximately 27.729.4 million retail banking customer accounts, $19.9$19.7 billion in retail banking loans, (up from $18.0 billion at the end of 2016) and $27.1$27.7 billion in deposits. |
| ● | In addition, LatAm GCB had approximately 5.6 million Citi-branded card accounts with $5.4$5.7 billion in outstanding loan balances.balances at December 31, 2018. |
| ● | LatAm ICG has a long-standing institutional presence in the region and leverages Citi’s global network, digital capabilities, and deep local market expertise. In 2017,2018, LatAm ICG had $4.2$4.5 billion in revenue and $1.5 billion in income from continuing operations before taxes, and at December 31, 2017, LatAm ICG had $25.4 billion in deposits.revenue. |
SUMMARY OF FRAMEWORK CONCLUSIONS AND FINALCOMMITTEE’S PAY DECISIONRATIONALE |
Scorecard Assessment Summary
| ● | Company-wide financial results reflected balanced operating resultssolid progress toward improving Citi’s profitability and continued momentum across businesses and geographies,returns, including return on tangible common equity, in a more challenging revenue growth, positive operating leverage, and operating margin expansion in ICG as well as in every region in GCB.environment. Citi attained the challenging targets set at the beginning of 2017, including its announced operating efficiency target,2018 and demonstrated improved operating performance over 2016.2017. The LatAm region performed well, with financial performance above or in line with targets. |
| ● | The Compensation Committee considered Ms. Fraser’s notable 2017 non-financial2018 qualitative goal achievements, including the accelerating transformationsuccess of our consumer businessesnew client initiatives in Mexico.the region. |
Linking Performance to Compensation
| ● | Company performance at or above targets and LatAm business performance above or near targets combined with Ms. Fraser’s strong performance against non-financialqualitative goals resulted in an overall scorecard rating of 2.14,1.72, which points toward compensation within the range ofabove market median for Ms. Fraser’s role. The overall scorecard rating was determined by averaging the financialquantitative goal ratings and weighting the result 70%, averaging the non-financialqualitative goal ratings and weighting the result 30%, then adding the two amounts ([2.21.6 x 0.7] + [2.0 x 0.3] = 2.14)1.72). |
Final Award
| ● | The Compensation Committee awarded Ms. Fraser $8.5$9.25 million in 2018 annual compensation, a 9% increase over her 2017 annual compensation an 8% increase over her 2016 annual compensation of $7.9$8.5 million. Ms. Fraser’s 20172018 compensation was within the range of market median for theher role, consistent with the results produced by our executiveconsidering compensation Framework.at U.S.-based global banks. In determining the final award amount in the exercise of its discretion, the Compensation Committee relied on the results of the executive compensation Framework, notingfocusing on the overall performance of Citi while recognizing the strong overall performance of the LatAm region the importance of the region to Citi’s financial goals, and Ms. Fraser’s strong performance against individual non-financial goals.qualitative results. |
www.citigroup.com
Table of Contents
9894 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION |
Performance Share Units
Thirty-five percent of CEO variable pay and 30% of other named executive officer variable pay are awarded as Performance Share Units, which represent half of Citi’s long-term incentive awards for these executives. The performance target levels for this year’s awards were updated, but there were no other changes to the terms of the Performance Share Units as compared to last year.
| AWARD FEATURE | | PERFORMANCE YEAR 2017 PSU DESCRIPTION | | PERFORMANCE YEAR 2018 PSU DESCRIPTION |
| Performance Period | | January 1, 2018 through December 31, 2020 | | | January 1, 2019 through December 31, 2021 |
Target Number
of PSUs | | Portion of total incentive award allocated to PSU program divided by the average of the closing price of Citi common stock for the five trading days immediately preceding the February 15, 2018 grant date ($74.44) | | Portion of total incentive award allocated to PSU program divided by the average of the closing prices of Citi common stock for the five trading days immediately preceding the February 14, 2019 grant date ($62.428) |
Performance Metrics
and Targets | | RoTCE for 2020 | Cumulative EPS over 2018-2020 | | RoTCE for 2021 | | Cumulative EPS over 2019-2021 |
RoTCE is net income (less preferred dividends) divided by average tangible common equity for the year. Half of units earned on RoTCE performance based on the following performance grid: | Cumulative EPS is determined by adding the diluted earnings per share based on net income allocated to common stockholders from our quarterly earnings reports for the 12 quarters ending in 2018 through 2020. Half of units earned on cumulative EPS based on the following performance grid: | | RoTCE is net income (less preferred dividends) divided by average tangible common equity for the year. Half of units earned on RoTCE performance based on the following performance grid: | | Cumulative EPS is determined by adding the diluted earnings per share based on net income allocated to common stockholders from our quarterly earnings reports for the 12 quarters ending in 2019 through 2021. Half of units earned on cumulative EPS based on the following performance grid: |
Percent of Target
PSUs Earned | RoTCE for 2020 | Percent of Target
PSUs Earned | Cumulative EPS,
2018-2020 | |
| 0% | Less than 9% | 0% | Less than td9.00 | |
| 50% | 9% | 50% | $19.00 | |
| 100% | 13% | 100% | $22.50 | |
| 150% | 15% or more | 150% | $25.00 or more | |
Performance between the thresholds in the table will be determined by straight-line interpolation to avoid encouraging imprudent risk-taking through artificial cliffs in the design of the PSUs. Example: If Citi has RoTCE for 2020 of 13% and cumulative EPS of td9.00 over the performance period, the executives will receive 75% of the target PSUs, which assigns equal weight to performance against the RoTCE metric (100% performance) and the cumulative EPS metric (50% performance). | |
| | | RoTCE for 2021 | | Percent of Target
PSUs Earned | | Cumulative EPS,
2019-2021 | | Percent of Target
PSUs Earned |
| | | Less than 10% | | 0% | | Less than $22.50 | | 0% |
| | | 10% | | 50% | | $22.50 | | 50% |
| | | 14% | | 100% | | $26.25 | | 100% |
| | | 16% or more | | 150% | | $29.00 or more | | 150% |
| | | Performance between the thresholds in the table will be determined by straight-line interpolation to avoid encouraging imprudent risk-taking through artificial cliffs in the design of the PSUs. Example: If Citi has RoTCE for 2021 of 14% and cumulative EPS of $22.50 over the performance period, the executives will receive 75% of the target PSUs, which assigns equal weight to performance against the RoTCE metric (100% performance) and the cumulative EPS metric (50% performance). |
Rationale for
Performance Metrics
and Target Levels | | The rationale for our performance metrics and target levels appears on pages 82-83. | | The rationale for our performance metrics and target levels appears on pages 78-79. |
| Award Delivery | | After the end of the performance period, the number of earned PSUs will be multiplied by the average Citi common stock price over the 20 trading days preceding the final vesting date, and the resulting value will be paid in cash. This practice links the payout to changes in the price of Citi common stock while limiting stockholder dilution. | | After the end of the performance period, the number of earned PSUs will be multiplied by the average Citi common stock price over the 20 trading days preceding the final vesting date, and the resulting value will be paid in cash. This practice links the payout to changes in the price of Citi common stock while limiting stockholder dilution. |
| TSR Factor | | The number of PSUs that may be earned is capped at 100% of target if Citi’s total shareholder return is negative over the three-year performance period, regardless of the outcome of the performance metrics. | | The number of PSUs that may be earned is capped at 100% of target if Citi’s total shareholder return is negative over the three-year performance period, regardless of the outcome of the performance metrics. |
| Dividend Equivalents | | Dividend equivalents will be accrued and paid on the number of earned PSUs after the end of the performance period; dividend equivalents on PSUs that are not earned will be forfeited. | | Dividend equivalents will be accrued and paid on the number of earned PSUs after the end of the performance period; dividend equivalents on PSUs that are not earned will be forfeited. |
| Clawbacks | | Subject to clawbacks in a range of circumstances, including misconduct and failure to supervise others | | Subject to clawbacks in a range of circumstances, including misconduct and failure to supervise others. |
Citi 20182019 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 9995 |
Impact of Tax Reform on Outstanding Performance Share Units
The terms of our Performance Share Unit program are established on the grant date. Those terms require the Compensation Committee to equitably adjust outstanding awards in the event of major nonrecurring events affecting the performance metrics or in the event of changes in tax laws. Accordingly, the Compensation Committee has equitably adjusted outstanding awards with the intent of reproducing the expected value of the awards immediately prior to the enactment of Tax Reform. In substance, the adjustments disregard the one-time charge to earnings in the fourth quarter of 2017 andincreasethe existing targets for 2018 and 2019 to reflect the lower corporate tax rate. The expected value of the awards remains unchanged after the adjustment so that the executives and Citi neither benefit nor are financially disadvantaged by Tax Reform. The targets as adjusted are aligned with the goals and strategy announced at our 2017 Investor Day, as adjusted for Tax Reform. The following chart summarizes the impact of the adjustments:
| GRANT DATE | | ADJUSTMENT |
| February 18, 2015 | | Average return on assets over the three-year performance period (2015-2017) was adjusted to disregard the charge to earnings in the fourth quarter of 2017. |
| February 16, 2016 | | No adjustments. Relative total shareholder return, the sole performance metric for this award, was not impacted. |
| February 16, 2017 | | Return on tangible common equity was adjusted to disregard the charge to earnings in the fourth quarter of 2017. In addition, performance targets were raised to reflect lower corporate income tax rates, as follows: |
| | | | | | |
| | Percent of Target PSUs Earned
(applies separately to each metric) | 0% | 50% | 100% | 150% |
| | Prior 2019 RoTCE | Less than 5% | 5% | 10% | 14% or more |
| | Adjusted 2019 RoTCE | Less than 6.75% | 6.75% | 11.75% | 15.75% or more |
| | Prior Cumulative EPS,
2017-2019 | Less than $16.00 | $16.00 | $17.70 | $19.00 or more |
| | | Adjusted Cumulative EPS,
2017-2019 | Less than $17.00 | $17.00 | $18.75 | $20.35 or more |
| | | | | | | |
Deferred Stock Awards
Thirty-five percent of CEO variable pay and 30% of other named executive officer variable pay are awarded as Deferred Stock Awards, which represent half of Citi’s long-term incentive awards for these executives. There have been no changes to the terms of our Deferred Stock Awards since 2013.
AWARD FEATURE | | DEFERRED STOCK AWARD (DSA) DESCRIPTION |
Vesting Period | | Vests 25% each year over a four-year period |
Number of Shares | | Portion of total incentive award allocated to DSAs divided by the average of the closing price of Citi common stock for the five trading days immediately preceding the February 15, 2018 grant date ($74.44) |
Performance-
Based Vesting
Condition | | If Citigroup has pretax losses in any year of the deferral period, the portion of the DSA that is scheduled to vest in the year following the loss year will be reduced by a fraction: |
| | |
| | the amount of the pretax loss
|
| | the highest level of annual pretax profit for Citigroup in the three years
immediately preceding the loss year |
| | If that fraction would result in a cancellation of 20% or less of the shares, the shares scheduled to vest will be reduced by 20% (i.e., there is a minimum cancellation level in the event of pretax losses).●This provision cannot result in an increase in award value; the feature can only result in the cancellation of unvested shares.
|
(continued on next page)
www.citigroup.com
Table of Contents
100 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2017 EXECUTIVE COMPENSATION |
| AWARD FEATURE | | DEFERRED STOCK AWARD (DSA) DESCRIPTION | | DEFERRED STOCK AWARD (DSA) DESCRIPTION |
Vesting Period | | | Vests 25% each year over a four-year period |
Number of Shares | | | Portion of total incentive award allocated to DSAs divided by the average of the closing prices of Citi common stock for the five trading days immediately preceding the February 14, 2019 grant date ($62.428) |
Performance-Based Vesting Condition | | | If Citigroup has pretax losses in any year of the deferral period, the portion of the DSA that is scheduled to vest in the year following the loss year will be reduced by a fraction: the amount of the pretax loss the highest level of annual pretax profit for Citigroup in the three years
immediately preceding the loss year
If that fraction would result in a cancellation of 20% or less of the shares, the shares scheduled to vest will be reduced by 20% (i.e., there is a minimum cancellation level in the event of pretax losses). ●This provision cannot result in an increase in award value; the feature can only result in the cancellation of unvested shares. |
| Example | | This example shows how the portion of a DSA granted in February 2018 of 20,000 shares that is scheduled to vest in January 2019 — 5,000 shares — would be affected, assuming the following pretax profit (loss) history for Citigroup. | | This example shows how the portion of a DSA granted in February 2019 of 20,000 shares that is scheduled to vest in January 2020 — 5,000 shares — would be affected, assuming the following pretax profit (loss) history for Citigroup. |
| | Pretax profit (loss) for Citigroup (in millions) | |
| | Scheduled vesting date | 2018 | 2017 | 2016 | 2015 | | | Pretax profit (loss) for Citigroup (in millions) |
| | January 2019 | ($500) | $22,761 | $21,477 | $24,826 | | Scheduled vesting date | 2019 | 2018 | 2017 | 2016 |
| | | | | January 2020 | ($500) | $23,445 | $22,761 | $21,477 |
| | The profit amounts for 2015, 2016, and 2017 in the example are derived from current publicly reported financial information. The pretax loss amount for 2018 in the example is a hypothetical assumption for illustrative purposes only. The reduction produced by the formula (500 divided by 24,826) is 2.01%. Due to the minimum cancellation level, 20% of shares scheduled to vest in January 2019 would be cancelled. Therefore, 1,000 shares of the 5,000 that were scheduled to vest would be cancelled (1,000 = 20% of 5,000). | | The profit amounts for 2016, 2017, and 2018 in the example are derived from current publicly reported financial information. The pretax loss amount for 2019 in the example is a hypothetical assumption for illustrative purposes only. The reduction produced by the formula (500 divided by 23,445) is 2.13%. Due to the minimum cancellation level, 20% of shares scheduled to vest in January 2020 would be cancelled. Therefore, 1,000 shares of the 5,000 that were scheduled to vest would be cancelled (1,000 = 20% of 5,000). |
Dividend
Equivalents | | Dividend equivalents will be accrued and paid on vested shares after the end of the vesting period; dividend equivalents on DSAs that are not earned will be forfeited. | | Dividend equivalents will be accrued and paid on vested shares after the end of the vesting period; dividend equivalents on DSAs that are not earned will be forfeited. |
| Clawbacks | | Subject to clawbacks | | Subject to clawbacks. |
Citi’s Additional Compensation Practices |
Risk and Citi’s Incentive Compensation Programs
Our compensation programs are designed in accordance with our responsibility to assume only risks that are prudent and well-understood and to effectively manage those risks to protect the franchise. Our programs have the following important elements:
| ● | Our Compensation Philosophyrequires us to consider risk management when making discretionary incentive compensation awards. Our Compensation Philosophy is available on our public website. |
(continued on next page)
www.citigroup.com
Table of Contents
| 96 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2018 EXECUTIVE COMPENSATION |
| ● | The Chief Risk Officer reports at least twice annually to the Compensation Committeeon risk levels and trends across Citi, as well as incentive compensation frameworks at the senior executive level and throughout Citi. The Chief Risk Officer reviewshas reviewed our executive compensation Framework to help ensure that compensation is aligned with long-term performance in a manner that does not encourage imprudent or excessive risk-taking. |
| ● | Citi’s executive compensation Framework explicitly and implicitly adjusts incentive awards for risk.risk. Citi’s executive compensation Framework takes risk into account in a number of ways, including: |
| ➢ | Using financial metrics intended to assess risk levels as an element of each executive’s financial goals,quantitative goals; |
| ➢ | Evaluating risk management performance, including effectiveness of the control environment, as part of the non-financial goals,qualitative goals; and |
| ➢ | Taking adverse risk outcomes into account when determining incentive compensation. |
| ● | An assessment of risk management behaviors is taken into account in determining individual incentive awards.For individual covered employees (several hundred of the most senior employees at Citi), Citi has established an annual control function review process in which reviewers from the control functions provide an evaluation of each covered employee’s risk behaviors. The control functions are Finance, Independent Compliance Finance,Risk Management, InternalAudit, Legal, and Risk Management. The process is designed to evaluate current behavior and attitudes toward risk. The rating from the control function review process informs and influences the covered employee’s performance review conducted by the employee’s manager, and the results of the process are reported to the Compensation Committee. We believe this process has |
Citi’s control functions provide direct feedback on a senior manager’s risk behaviors as part of the annual performance assessment process. |
Citi 2018 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2017 EXECUTIVE COMPENSATION | 101 |
| improved awareness of the importance of risk management behaviors and has resulted in the strengthening of Citi’s risk culture. The named executive officers other than Mr. Corbat were evaluated on risk behaviors by Citi’s control functions through this annual control function review process, and Mr. Corbat was assessed on risk behaviors by the Compensation Committee with input from the control functions. These reviews resulted in positive ratings or assessments on risk behaviors for the named executive officers. The positive ratings were not determinative of the size of the annual incentive awards for 2017,2018, as a positive rating on risk behaviors is an expected element of job performance in all covered employee roles. A negative risk rating on risk behaviors would have resulted in the reduction or elimination of incentive compensation awarded for 2017.2018. |
| |
| Citi’s control functions provide direct feedback on a senior manager’s risk behaviors as part of the annual performance assessment process. |
| |
| ● | Annual incentive awards to covered employees, including the named executive officers, have design features intended to discourage imprudent or excessive risk-taking.Through a systematic annual process, Citi identifies the inherent material risks to the firm and its material business units, and then identifies employees with influence over those risks as covered employees, as defined in applicable bank regulatory guidance.employees. The compensation structure for covered employees, including the named executive officers, includes substantial deferrals and clawbacks intended to cover a range of behaviors. Furthermore, performance-based vesting criteria are a part of all deferred incentive compensation awarded to covered employees. |
| ● | Citi has a strong global governance process covering Citi’s incentive compensation plans.Citi’s formulaic incentive compensation plans, including its sales incentive plans, provide variable compensation to a broad-based population of employees predominantly in Global Consumer Banking. The plans are administered through a global governance process that is designed to eliminate incentives to engage in illegal or imprudent conduct or take imprudent or excessive risks. As part of this governance process, all of Citi’s incentive compensation plans throughout the world are analyzed through a central risk management model developed and administered by a third-party consultant with input from Citi. Six potential sources of risk are assessed: incentive program design, misalignment with Citi’s strategy and goals, pay opportunity offered by the plan, payout approval process, extent of monitoring as part of plan governance, and risks associated with plan administration. Plans are remediated based on the results of the risk assessment, if appropriate. This global governance model ensures that best practices are communicated and shared throughout Citi. |
Citi 2019 Proxy Statement
Table of Contents
| PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2018 EXECUTIVE COMPENSATION | 97 |
| ● | Clawbacks applicable to Performance Share Units and Deferred Stock Awards.Citi’s robust clawback policies are applicable to incentive awards to the named executive officers and all other eligible employees. The clawback provisions provide Citi with the right to cancel unvested deferred incentive compensation under a range of adverse outcomes and are summarized in the table below: |
(continued on next page)
www.citigroup.com
Table of Contents
102 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2017 EXECUTIVE COMPENSATION | |
At a minimum, Citi will consider whether a Material Adverse Outcome has occurred and potential impact on Performance Share Units if there is an annual pretax loss at any of the following three reportable financial segments: Citigroup (the entire company), Global Consumer Banking, and Institutional Clients Group. Citi will also consider making public disclosures whenever a decision has been made to cancel deferred compensation payable to an executive officer because he or she had significant responsibility for a Material Adverse Outcome or otherwise.
Our Independent Compensation Consultant
| The Board’s compensation consultant does no work for Citi other than advising the Board. |
FW Cook has been the Compensation Committee’s independent advisor since 2012. FW Cook provides no services to Citi other than its services to the Board, has no other ties to management that could jeopardize its fully independent status, and has strong internal governance policies that help ensure that it maintains its independence. Representatives of FW Cook attended all Compensation Committee meetings during 2017,2018, including executive sessions as requested, and consultedengaged with Compensation Committee members between meetings. FW Cook advised the Compensation Committee regarding the compensation awarded to the CEO and other executive officers. FW Cook also provided extensive guidance and analysis regarding the Compensation Committee’s and the Board’s responses to Citi’s advisory say-on-pay votes, offered market insights, and provided advice to the Compensation Committee on Citi’s executive compensation plan design and the presentation of its programs to stockholders. FW Cook also provided advice to the Board on non-executive director compensation. In 2018, FW Cook was paid fees of $293,940 in 2017.$282,428 for advice regarding executive compensation. Pursuant to SEC and NYSE rules, the Compensation Committee assessed the independence of FW Cook most recently in January 20182019 and determined that FW Cook is independent from Citi management and that its work for the Compensation Committee has not raised any conflicts of interest.
www.citigroup.com
Table of Contents
| 98 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2018 EXECUTIVE COMPENSATION |
Tax Deductibility of and Limits on Incentive Compensation
Annual incentive awards for 20172018 were awarded to named executive officers under the 2011 Executive Performance Plan (the EPP), a performance plan intended. The EPP was originally adopted to preserve the deductibility of incentive compensation paid to the named executive officers that might otherwise not be deductible under Section 162(m) of the Internal Revenue Code. However, Tax Reform amended Section 162(m) of the Internal Revenue Code by removing the exception for qualified performance-based compensation and expanding it to cover the CFO, thereby reducing the potential for deductible executive compensation for 2018 and later years. While Citi has sought to preserve deductibility of compensation paid to the named executive officers to the extent permitted by law, Citi has retained the flexibility to provide nondeductible compensation arrangements it believes are necessary to recruit, incentivize, and retain its executives.
Citi does not intend to change its pay-for-performance approach to awarding executive pay even though Tax Reform eliminated the tax benefits of awarding qualified performance-based compensation. Accordingly, the Committee awarded named executive officer incentive compensation for 2018 performance under rules in effect before Tax Reform.the EPP and subject to its limits on executive compensation. The EPP specifies a maximum amount that can be awarded to a participant for any year based on Citigroup’s income from continuing operations before income taxes. The amount of annual incentive actually awarded for the year, however, is determined by the Compensation Committee, applying the executive compensation Framework described in this Compensation Discussion and Analysis and subject to the condition that Citi may pay less (but not more) than the maximum. For 2017,2018, the Compensation Committee certified the maximum amount payable under the EPP as $45.4$46.8 million per executive (0.2% of Citigroup pretax earnings) and exercised its negative discretion to award lesser amounts under the plan. In addition to this limit on total incentive pay, the EPP also limits the annual cash bonus portion of individual executive officer incentive pay to $20 million. While Citi has sought to preserve deductibility of compensation paid to the named executive officers to the extent permitted by law, Citi has retained the flexibility to provide nondeductible compensation arrangements it believes are necessary to recruit, incentivize, and retain its executives. Tax Reform amended Section 162(m) of the Internal Revenue Code by removing the exception for qualified performance based compensation and expanding it to cover the CFO, thereby reducing the potential for deductible executive compensation in the future. Citi does not intend to change its pay-for-performance approach to awarding executive pay due to Tax Reform.
Citi 2018 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2017 EXECUTIVE COMPENSATION | 103 |
The Personnel and Compensation Committee Report
The Personnel and Compensation Committee has evaluated the performance of and determined the compensation for the CEO, approved the compensation of executive officers, and approved the compensation structure for other members of senior management and other highly compensated employees. The Personnel and Compensation Committee reviewed and discussed the foregoing Compensation Discussion and Analysis with members of senior management and, based on this review, the Personnel and Compensation Committee recommended to the Board of Directors of Citigroup Inc. that the Compensation Discussion and Analysis be included in Citi’s Annual Report on Form 10-K and Proxy Statement on Schedule 14A filed with the SEC.
The Personnel and Compensation Committee:
Duncan P. Hennes (Chair)
Michael E. O’NeillJohn C. Dugan
Lew W. (Jay) Jacobs, IV
Gary M. Reiner
Diana L. Taylor
Dated: March 7, 20185, 2019
www.citigroup.comCiti 2019 Proxy Statement
Table of Contents
104 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 99 |
20172018 Summary Compensation Table and
Compensation Information
20172018 Summary Compensation Table
The following table shows the compensation for 2018, 2017, 2016, and as applicable, 2015,2016 for any person serving as Citi’s CEO or CFO during 20172018 and Citi’s three other most highly compensated executive officers. These individuals are referred to as Citi’s named executive officers.
Name and
Principal
Position(1) | | Year(2) | | Salary
($) | | Bonus(3)
($) | | Stock
Awards(4)
($) | | Non-Equity
Incentive Plan
Compensation(5)
($) | | Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings(6)
($) | | All Other
Compensation(7)
($) | | Total
($) | |
Michael Corbat
CEO | | 2017 | | $1,500,000 | | $6,450,000 | | $9,831,752 | | $0 | | $3,731 | | $16,200 | | $17,801,683 | |
| 2016 | | $1,500,000 | | $4,200,000 | | $7,645,356 | | $1,848 | | $4,271 | | $30,283 | | $13,381,758 | |
| 2015 | | $1,500,000 | | $6,000,000 | | $6,493,169 | | $586,393 | | $2,961 | | $15,900 | | $14,598,423 | |
John Gerspach
CFO | | 2017 | | $500,000 | | $4,200,000 | | $5,116,524 | | $0 | | $79,241 | | $16,200 | | $9,911,965 | |
| 2016 | | $500,000 | | $3,400,000 | | $4,332,368 | | $1,355 | | $48,949 | | $15,900 | | $8,298,572 | |
| 2015 | | $500,000 | | $3,400,000 | | $3,952,364 | | $430,021 | | $18,937 | | $15,900 | | $8,317,222 | |
James Forese
President,
Citi; CEO,
Institutional
Clients Group | | 2017 | | $500,000 | | $7,800,000 | | $8,908,771 | | $2,611 | | $1,524 | | $16,200 | | $17,229,106 | (8) |
| 2016 | | $500,000 | | $5,920,000 | | $7,901,877 | | $1,056,412 | | $4,342 | | $15,900 | | $15,398,531 | |
| 2015 | | $496,712 | | $6,201,315 | | $7,354,220 | | $2,082,700 | | $4,074 | | $15,900 | | $16,154,921 | |
Stephen Bird
CEO, Global
Consumer
Banking
| | 2017 | | $500,000 | | $4,000,000 | | $5,116,751 | | $1,250 | | $0 | | $3,143,844 | | $12,761,845 | |
| 2016 | | $499,623 | | $3,400,151 | | $3,766,294 | | $509,673 | | $0 | | $5,122,985 | | $13,298,726 | |
| 2015 | | $500,273 | | $3,199,891 | | $3,880,827 | | $974,873 | | $0 | | $742,590 | | $9,298,454 | |
Jane Fraser
CEO, Latin
America
Region | | 2017 | | $500,000 | | $3,200,000 | | $4,454,386 | | $452,764 | | $0 | | $20,265 | | $8,627,415 | |
| 2016 | | $500,000 | | $2,960,000 | | $3,302,904 | | $895,061 | | $0 | | $18,730 | | $7,676,695 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Name and
Principal
Position(1) | | Year | | Salary
($) | | Bonus(3)
($) | | Stock
Awards(4)
($) | | Non-Equity
Incentive Plan
Compensation(5)
($) | | Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings(6)
($) | | All Other
Compensation(7)
($) | | Total
($) | |
| Michael Corbat | | 2018 | | $1,500,000 | | $6,750,000 | | $15,912,666 | | $0 | | $4,548 | | $16,500 | | $24,183,714 | |
| CEO | | 2017 | | $1,500,000 | | $6,450,000 | | $9,831,752 | | $0 | | $3,731 | | $16,200 | | $17,801,683 | |
| | 2016 | | $1,500,000 | | $4,200,000 | | $7,645,356 | | $1,848 | | $4,271 | | $30,283 | | $13,381,758 | |
| John Gerspach | | 2018 | | $500,000 | | $4,600,000 | | $6,661,116 | | $0 | | $0 | | $16,500 | | $11,777,616 | |
| CFO(2) | | 2017 | | $500,000 | | $4,200,000 | | $5,116,524 | | $0 | | $79,241 | | $16,200 | | $9,911,965 | |
| | 2016 | | $500,000 | | $3,400,000 | | $4,332,368 | | $1,355 | | $48,949 | | $15,900 | | $8,298,572 | |
| James Forese | | 2018 | | $500,000 | | $7,800,000 | | $12,370,644 | | $0 | | $4,151 | | $16,500 | | $20,691,295 | (8) |
| President, | | 2017 | | $500,000 | | $7,800,000 | | $8,908,771 | | $2,611 | | $1,524 | | $16,200 | | $17,229,106 | |
| Citi; CEO, | | 2016 | | $500,000 | | $5,920,000 | | $7,901,877 | | $1,056,412 | | $4,342 | | $15,900 | | $15,398,531 | |
| Institutional | | | | | | | | | | | | | | | | | |
| Clients Group | | | | | | | | | | | | | | | | | |
| Stephen Bird | | 2018 | | $500,000 | | $4,400,000 | | $6,343,920 | | $0 | | $0 | | $16,500 | | $11,260,420 | |
| CEO, Global | | 2017 | | $500,000 | | $4,000,000 | | $5,116,751 | | $1,250 | | $0 | | $3,143,844 | | $12,761,845 | |
| Consumer | | 2016 | | $499,623 | | $3,400,151 | | $3,766,294 | | $509,673 | | $0 | | $5,122,985 | | $13,298,726 | |
| Banking | | | | | | | | | | | | | | | | | |
| Jane Fraser | | 2018 | | $500,000 | | $3,500,000 | | $5,075,136 | | $398,854 | | $0 | | $16,500 | | $9,490,490 | |
| CEO, Latin | | 2017 | | $500,000 | | $3,200,000 | | $4,454,386 | | $452,764 | | $0 | | $20,265 | | $8,627,415 | |
| America | | 2016 | | $500,000 | | $2,960,000 | | $3,302,904 | | $895,061 | | $0 | | $18,730 | | $7,676,695 | |
| Region | | | | | | | | | | | | | | | | | |
| (1) | The principal position for each named executive officer is the position he or she held on December 31, 2017.2018. |
| (2) | In accordance with SEC rules,Mr. Gerspach retired as Citi CFO effective February 22, 2019, and from Citi employment on March 1, 2019. Mr. Gerspach did not receive any special compensation for Ms. Fraser is not presented for 2015 because she was notas a named executive officer for that year.result of his retirement.
|
| (3) | Amounts in this column show cash bonuses for service in the listed year. |
| (4) | In accordance with SEC rules, the amounts in this column for 20172018 are the aggregate grant date fair values of Performance Share Units and Deferred Stock Awards awarded under the Capital Accumulation Program,2014 Stock Incentive Plan, in each case granted in February 20172018 for performance in 2016.2017. SEC rules require the presentation of awards granted during calendar year 2017,2018, not awards made in respect of performance in 2017.2018. The separate grant date value of each award is disclosed in the 20172018 Grants of Plan-Based Awards Table. The aggregate grant date fair values of the awards are computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The assumptions made, if any, when calculating the amounts in this column are found in Note 7 to the Consolidated Financial Statements of Citigroup Inc. and its subsidiaries, as filed with the SEC on Form 10-K for 2017.2018. The amounts reported in the Summary Compensation Table for the Performance Share Units are the values at the grant date under applicable accounting principles, which take into account the probable outcome of the performance conditions. Consequently, these values differ from the nominal amount of the awards made by the Compensation Committee, which is divided by the Citi common stock price as determined on the grant date to yield a target number of Performance Share Units. The values of the Performance Share Units at the 20172018 grant date shown in the 20172018 Summary Compensation Table, assuming that the highest levels of performance conditions are achieved, are: Mr. Corbat, $7,350,000;$11,287,500; Mr. Gerspach, $3,825,000;$4,725,000; Mr. Forese, $6,660,000;$8,775,000; Mr. Bird, $3,825,170;$4,500,000; and Ms. Fraser, $3,330,000.$3,600,000. |
(continued on next page)
www.citigroup.com
Table of Contents
| 100 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2018 EXECUTIVE COMPENSATION |
| (5) | Set forth below is a breakdown ofThe amounts shown in the amount reported as Non-Equity Incentive Plan Compensation for each named executive officer for 2017. For each executive, the total amount shown in the 2017 Summary Compensation Table representscolumn represent the amount of each Deferred Cash Award considered earned in 2017the applicable year even though the awards were granted in prior years in respect of
|
Citi 2018 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2017 EXECUTIVE COMPENSATION | 105 |
| prior year service. Deferred Cash Awards were granted to senior executives before the creation of our Performance Share Unit program and are also granted to executives who are not eligible for Performance Share Units, which are awarded only to the CEO and executives who report directly to him. Like our Performance Share Units, Deferred Cash Awards represent 50% of each executive’s deferred incentive award for the applicable performance year with Deferred Stock Awards representing the other 50%. Deferred Cash Awards earn notional interest at a fixed market rate and vest over a period of four years, and the portion of the award (including notional interest) that vests for a year is included in the Summary Compensation Table for the year of vesting. The amount shown in the 20172018 Summary Compensation Table for Ms. Fraser for 2018 therefore includes the portions of outstanding awards that vested and were deemed earned in 2017 and notional interest earned in 2017 on all outstanding awards. |
| | Name | | Reportable
Portion of
February 2015
Deferred Cash
Award
($) | | Aggregate
2017 Earnings on
Outstanding
Deferred Cash Awards
($) | | Total
Non-Equity
Incentive Plan
Amount Shown
in 2017
Summary
Compensation
Table
($) |
| Michael Corbat | | — | | — | | — |
| John Gerspach | | — | | — | | — |
| James Forese | | — | | $2,611 | | $2,611 |
| Stephen Bird | | — | | $1,250 | | $1,250 |
| Jane Fraser | | $406,834 | | $45,930 | | $452,764 |
| The table includes$382,988 for a portion of the Deferred Cash Award granted in February 20152016 for performance in 20142015 and $15,866 in notional interest earned in 2017 on all outstanding awards. Mr. Forese and Mr. Bird received small amounts2018, for a total of notional interest in connection with the January 20, 2017, vesting of the last tranche of their Deferred Cash Awards granted in January 2013 for performance in 2012.
|
| Mr. Bird’s Deferred Cash Awards were denominated in Hong Kong dollars as they were awarded for years in which Mr. Bird was employed in Hong Kong. The amounts presented above for Mr. Bird are shown as converted from Hong Kong dollars to U.S. dollars at the December 31, 2017, conversion rate used to prepare Citi’s financial statements (0.12798198 U.S. dollars = 1 Hong Kong dollar).$398,854. Ms. Fraser’s Deferred Cash Awards are denominated in British pounds as they were awarded for years in which Ms. Fraser was employed in London. The amounts presented above for Ms. Fraser are shown as converted from British pounds to U.S. dollars at the December 31, 2017,2018, conversion rate used to prepare Citi’s financial statements (1.3529(1.2736 U.S. dollars = 1 British pound).
|
| (6) | These amounts represent the increases in the present value of pension benefits for Mr. Corbat, Mr. Gerspach, and Mr. Forese, as more fully described in the 20172018 Pension Benefits Table. (TheThe value of Mr. Gerspach’s benefit under The Citigroup Pension Plan increaseddecreased by $48,224,($15,058), and the value of his benefit under the Supplemental ERISA Compensation Plan of Citibank, N.A. and Affiliates increaseddecreased by $31,017.)($11,824). The decreases in value of Mr. Gerspach’s pension benefits were primarily attributable to increases in the discount rate assumptions applicable to the plans. The amount of each named executive officer’s above-market or preferential earnings on compensation that was deferred on a basis that was not tax-qualified was $0. Mr. Bird and Ms. Fraser have never been eligible to participate in a defined benefit pension plan under the terms of Citi’s broad-based retirement programs in effect in their employment countries; they have participated only in defined contribution retirement plans since the commencement of their employment. |
| (7) | Set forth below is a breakdown of All Other Compensation for 20172018 (including personal benefits): |
| | Name | | Employer
Retirement Plan
Contribution
($) | | Tax
Reimbursement
Costs
($) | | Temporary
Living and
Home Leave
Costs
($) | | Housing
and Cost
of Living
Differential
($) | | Relocation
Expenses
($) | | Total
($) |
| Michael Corbat | | $16,200 | | $0 | | $0 | | $0 | | $0 | | $16,200 |
| John Gerspach | | $16,200 | | $0 | | $0 | | $0 | | $0 | | $16,200 |
| James Forese | | $16,200 | | $0 | | $0 | | $0 | | $0 | | $16,200 |
| Stephen Bird | | $15,304 | | $3,125,172 | | $0 | | $0 | | $3,368 | | $3,143,844 |
| Jane Fraser | | $16,200 | | $4,065 | | $0 | | $0 | | $0 | | $20,265 |
| | Name | | Employer
Retirement Plan
Contribution
($) | | Tax
Reimbursement
Costs
($) | | Temporary
Living and
Home Leave
Costs
($) | | Housing
and Cost
of Living
Differential
($) | | Relocation
Expenses
($) | | Total
($) |
| Michael Corbat | | $16,500 | | $0 | | $0 | | $0 | | $0 | | $16,500 |
| John Gerspach | | $16,500 | | $0 | | $0 | | $0 | | $0 | | $16,500 |
| James Forese | | $16,500 | | $0 | | $0 | | $0 | | $0 | | $16,500 |
| Stephen Bird | | $16,500 | | $0 | | $0 | | $0 | | $0 | | $16,500 |
| Jane Fraser | | $16,500 | | $0 | | $0 | | $0 | | $0 | | $16,500 |
| Mr. Bird moved from Hong Kong to New York on an expatriate assignment effective July 1, 2015, with benefits provided under the general terms of Citi’s Expatriate Program. Mr. Bird’s expatriate assignment ended on December 31, 2016, at which time he became a U.S. local employee. Mr. Bird is not eligible for expatriate benefits for service after 2016; amounts in the above table are attributable to compensation paid in 2017 for service in prior years. The benefits made available to Mr. Bird are fully in accordance with Citi’s Expatriate Program and are generally available to similarly situated employees who accept assignments
|
All named executive officers received 401(k) plan matching contributions pursuant to the formula applicable to all eligible U.S. employees.
Mr. Bird had no expatriate benefits for 2018 but had significant tax equalization benefits for 2016 and 2017. He moved from Hong Kong to New York on an expatriate assignment effective July 1, 2015, with benefits provided under the general terms of Citi’s Expatriate Program. Mr. Bird’s expatriate assignment ended on December 31, 2016, at which time he became a U.S. local employee. Mr. Bird is not eligible for expatriate benefits for service after 2016. The benefits made available to Mr. Bird were fully in accordance with Citi’s Expatriate Program and are generally available to similarly situated employees who accept assignments outside their home countries. The Expatriate Program enables Citi to quickly fill specific business needs through relocating employees for a transitional period and neutralizing the tax and other personal financial consequences of the move. The tax equalization benefits were intended to limit Mr. Bird’s tax liabilities and related expenses to what they would have been had he remained employed in Hong Kong in 2016 and, as such, are not additional incentive compensation.
Mr. Corbat has reimbursed Citi for his personal use of corporate aircraft pursuant to an Aircraft Time Sharing Agreement with Citigroup Inc. For additional disclosure regarding the use of corporate aircraft, see page 39 of this Proxy Statement.
www.citigroup.comCiti 2019 Proxy Statement
Table of Contents
106 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 101 |
| outside their home countries. The Expatriate Program enables Citi to quickly fill specific business needs through relocating employees for a transitional period and neutralizing the tax and other personal financial consequences of the move. The tax equalization benefits shown above in the Tax Reimbursement Costs column are intended to limit Mr. Bird’s tax liabilities and related expenses to what they would have been had he remained employed in Hong Kong in 2016 and, as such, are not additional incentive compensation. The disclosed amounts are based on the estimated tax equalization benefits accrued in respect of compensation paid in 2017 in respect of prior year service, although the tax equalization payments may be made in later years and will not again appear in the Summary Compensation Table.
|
| The tax reimbursement costs for Ms. Fraser relate to an assignment under Citi’s Expatriate Program that ended before 2017. All named executive officers received 401(k) plan matching contributions pursuant to the formula applicable to all eligible U. S. employees.
|
| Mr. Corbat has entered into an Aircraft Time Sharing Agreement with Citiflight, Inc. (a subsidiary of Citigroup Inc.) that permits him to reimburse Citi for the cost of his personal use of corporate aircraft in accordance with limits set forth in Federal Aviation Regulation 91.501(d). Mr. Corbat has reimbursed Citi for the flights in an amount equal to or exceeding the aggregate incremental cost of such flights during 2017.
|
| (8) | Mr. Forese’s reported compensation exceeded Mr. Corbat’s reported compensation in prior years2016 in part because Mr. Forese was awarded Deferred Cash Awards in prior years when Mr. Corbat was awarded Performance Share Units;Units. Deferred Cash Awards are reported as Non-Equity Incentive Plan Compensation over time as they vest while Performance Share Units are reported in full as Stock Awards for the year of grant. Therefore, Mr. Forese has had significant amounts of prior year compensation reported in the Summary Compensation Table while parallel compensation for Mr. Corbat appeared in the Summary Compensation Table for earlier years. In addition, the Bonus column shows a significantly lower amount for Mr. Corbat than for Mr. Forese for 2016 in part because the Compensation Committee increased the percentage of Mr. Corbat’s compensation deferred in the form of Deferred Stock Awards and Performance Share Units, both of which are reported in the Summary Compensation Table for 2017 rather than 2016, but did not increase the deferral percentage for any other named executive officer. Notwithstanding the foregoing, Mr. Forese’s annual compensation has been comparable to Mr. Corbat’s. The Compensation Committee has recognized Mr. Forese’s performance in his franchise-wide role as Citi President as well as his role as CEO of Institutional Clients Group, with its broad range of complex products and services and its exceptional global scale. The Compensation Committee has also considered market levels of pay for the roles. |
20172018 Grants of Plan-Based Awards
The table below provides information regarding awards granted by the Compensation Committee to the named executive officers in 2017.2018. The values shown are each equity award’s grant date fair value as determined under applicable accounting standards.
| | | | | | Estimated Future Payouts Under
Equity Incentive Plan Awards | | Grant Date
Fair Value of
Stock and
Option Awards
($)(1) |
| Name | | Grant Date | | Threshold
(#) | | Target
(#) | | | Maximum
(#) | |
| Michael Corbat | | 2/16/2017 | | 0 | | 83,285 | (2) | | 83,285 | | $4,900,000 |
| | | 2/16/2017 | | 0 | | 83,285 | (3) | | 124,927 | | $4,931,752 |
| John Gerspach | | 2/16/2017 | | 0 | | 43,342 | (2) | | 43,342 | | $2,550,000 |
| | | 2/16/2017 | | 0 | | 43,342 | (3) | | 65,013 | | $2,566,524 |
| James Forese | | 2/16/2017 | | 0 | | 75,466 | (2) | | 75,466 | | $4,440,000 |
| | | 2/16/2017 | | 0 | | 75,466 | (3) | | 113,199 | | $4,468,771 |
| Stephen Bird | | 2/16/2017 | | 0 | | 43,344 | (2) | | 43,344 | | $2,550,113 |
| | | 2/16/2017 | | 0 | | 43,344 | (3) | | 65,016 | | $2,566,638 |
| Jane Fraser | | 2/16/2017 | | 0 | | 37,733 | (2) | | 37,733 | | $2,220,000 |
| | | 2/16/2017 | | 0 | | 37,733 | (3) | | 56,599 | | $2,234,386 |
| | | |
Estimated Future Payouts Under
Equity Incentive Plan Awards
| | Grant Date
Fair Value of
Stock and
Option Awards
($)(1) |
| Name | | Grant Date | | Threshold
(#) | | Target
(#) | | | Maximum
(#) | |
| Michael Corbat | | 2/15/2018 | | 0 | | 101,088 | (2) | | 101,088 | | $7,525,000 |
| | 2/15/2018 | | 0 | | 101,088 | (3) | | 151,632 | | $8,387,666 |
| John Gerspach | | 2/15/2018 | | 0 | | 42,315 | (2) | | 42,315 | | $3,150,000 |
| | 2/15/2018 | | 0 | | 42,315 | (3) | | 63,472 | | $3,511,116 |
| James Forese | | 2/15/2018 | | 0 | | 78,586 | (2) | | 78,586 | | $5,850,000 |
| | 2/15/2018 | | 0 | | 78,586 | (3) | | 117,879 | | $6,520,644 |
| Stephen Bird | | 2/15/2018 | | 0 | | 40,300 | (2) | | 40,300 | | $3,000,000 |
| | 2/15/2018 | | 0 | | 40,300 | (3) | | 60,450 | | $3,343,920 |
| Jane Fraser | | 2/15/2018 | | 0 | | 32,240 | (2) | | 32,240 | | $2,400,000 |
| | 2/15/2018 | | 0 | | 32,240 | (3) | | 48,360 | | $2,675,136 |
| (1) | The assumptions used in determining grant date fair value are the same as those set forth in footnote 4 to the 20172018 Summary Compensation Table. These amounts do not necessarily represent the actual value that may be realized by the named executive officer. The amounts reported in the 20172018 Grants of Plan-Based Awards Table for the Performance Share Units are the values at the grant date under applicable accounting principles, which take into account the probable outcome of the performance conditions. Consequently, these values differ from the nominal amount of the awards made by the Compensation Committee, which is divided by the Citi common stock price as determined on the grant date to yield a target number of Performance Share Units. |
| (2) | These Deferred Stock Awards were granted under the 2014 Stock Incentive Plan for performance in 2016.2017. More detailed information about the terms of these awards appears on pages 99-100.page 95. |
| (3) | These awards are Performance Share Units for performance in 2016.2017. More detailed information about the terms of these awards appears on pages 98-99. Thepage 94, except that the performance targets were equitably adjusted after the grant date to reflect Tax Reform,metrics for these awards are as disclosed on page 99.follows: |
Citi 2018 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2017 EXECUTIVE COMPENSATION | 107 |
Outstanding Equity Awards at 2017 Fiscal Year End
The market values in this table were computed using the closing price of a share of Citi common stock on December 29, 2017, which was $74.41.
| | | | Option Awards | | Stock Awards |
| Name | | Grant
Date | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number
of Shares
or Units of
Stock That
Have Not
Vested
(#) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#) | | Equity
Incentive
Plan Awards:
Market
or Payout
Value of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($) |
| Michael Corbat | | 2/18/2014 | | — | | — | | — | | 19,631 | (1) | $1,460,743 | | — | | — |
| | 2/18/2015 | | — | | — | | — | | — | | — | | 34,111 | (2) | $2,538,200 |
| | 2/18/2015 | | — | | — | | — | | 64,880 | (3) | $4,827,721 | | — | | — |
| | 2/16/2016 | | — | | — | | — | | — | | — | | 91,093 | (4) | $6,778,230 |
| | 2/16/2016 | | — | | — | | — | | — | | — | | 104,211 | (5) | $7,754,341 |
| | 2/16/2017 | | — | | — | | — | | — | | — | | 83,285 | (6) | $6,197,237 |
| | 2/16/2017 | | — | | — | | — | | — | | — | | 83,285 | (7) | $6,197,237 |
| John Gerspach | | 2/18/2014 | | — | | — | | — | | 10,571 | (1) | $786,588 | | — | | — |
| | 2/18/2015 | | — | | — | | — | | — | | — | | 20,763 | (2) | $1,544,975 |
| | 2/18/2015 | | — | | — | | — | | 39,492 | (3) | $2,938,600 | | — | | — |
| | 2/16/2016 | | — | | — | | — | | — | | — | | 51,619 | (4) | $3,840,970 |
| | 2/16/2016 | | — | | — | | — | | — | | — | | 59,053 | (5) | $4,394,134 |
| | 2/16/2017 | | — | | — | | — | | — | | — | | 43,342 | (6) | $3,225,078 |
| | 2/16/2017 | | — | | — | | — | | — | | — | | 43,342 | (7) | $3,225,078 |
| James Forese | | 1/14/2009 | | 29,745 | (8) | $106.10 | | 1/14/2019 | | — | | — | | — | | — |
| | 1/14/2009 | | 29,745 | (8) | $178.50 | | 1/14/2019 | | — | | — | | — | | — |
| | 2/18/2014 | | — | | — | | — | | 20,424 | (1) | $1,519,750 | | — | | — |
| | 2/18/2015 | | — | | — | | — | | — | | — | | 38,634 | (2) | $2,874,756 |
| | 2/18/2015 | | — | | — | | — | | 73,483 | (3) | $5,467,870 | | — | | — |
| | 2/16/2016 | | — | | — | | — | | — | | — | | 94,149 | (4) | $7,005,627 |
| | 2/16/2016 | | — | | — | | — | | — | | — | | 107,707 | (5) | $8,014,478 |
| | 2/16/2017 | | — | | — | | — | | — | | — | | 75,466 | (6) | $5,615,425 |
| | 2/16/2017 | | — | | — | | — | | — | | — | | 75,466 | (7) | $5,615,425 |
| Stephen Bird | | 2/18/2014 | | — | | — | | — | | 10,238 | (1) | $761,810 | | — | | — |
| | 2/18/2015 | | — | | — | | — | | — | | — | | 22,321 | (2) | $1,660,906 |
| | 2/18/2015 | | — | | — | | — | | 42,455 | (3) | $3,159,077 | | — | | — |
| | 2/16/2016 | | — | | — | | — | | — | | — | | 48,581 | (4) | $3,614,912 |
| | 2/16/2016 | | — | | — | | — | | — | | — | | 55,577 | (5) | $4,135,485 |
| | 2/16/2017 | | — | | — | | — | | — | | — | | 43,344 | (6) | $3,225,227 |
| | 2/16/2017 | | — | | — | | — | | — | | — | | 43,344 | (7) | $3,225,227 |
| Jane Fraser | | 2/16/2015 | | — | | — | | — | | — | | — | | 18,199 | (2) | $1,354,188 |
| | 2/16/2016 | | — | | — | | — | | — | | — | | 42,604 | (4) | $3,170,164 |
| | 2/16/2016 | | — | | — | | — | | — | | — | | 48,739 | (5) | $3,626,669 |
| | 2/16/2017 | | — | | — | | — | | — | | — | | 37,733 | (6) | $2,807,713 |
| | 2/16/2017 | | — | | — | | — | | — | | — | | 37,733 | (7) | $2,807,713 |
(1) | This Deferred Stock Award granted on February 18, 2014, vested in four equal annual installments beginning on January 20, 2015, subject to a performance-based vesting condition.
|
(continued on next page)
| | RoTCE for 2020 | Percent of Target
PSUs Earned | Cumulative EPS,
2018-2020 | Percent of Target
PSUs Earned |
| Less than 9% | 0% | Less than $19.00 | 0% |
| 9% | 50% | $19.00 | 50% |
| 13% | 100% | $22.50 | 100% |
| 15% or more | 150% | $25.00 or more | 150% |
www.citigroup.com
Table of Contents
108102 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION |
Outstanding Equity Awards at 2018 Fiscal Year End
The market values below were computed using the closing price of Citi common stock on December 31, 2018, which was $52.06.
| | Option Awards | | Stock Awards |
| Name | | Grant
Date | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number
of Shares
or Units of
Stock That
Have Not
Vested
(#) | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#) | | | Equity
Incentive
Plan Awards:
Market
or Payout
Value of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($) |
| Michael Corbat | | 2/18/2015 | | — | | | — | | — | | 17,055 | (1) | | $887,883 | | — | | | — |
| | 2/16/2016 | | — | | | — | | — | | — | | | — | | 60,728 | (2) | | $3,161,500 |
| | 2/16/2016 | | — | | | — | | — | | 100,858 | (3) | | $5,250,667 | | — | | | — |
| | 2/16/2017 | | — | | | — | | — | | — | | | — | | 62,463 | (4) | | $3,251,824 |
| | 2/16/2017 | | — | | | — | | — | | — | | | — | | 83,285 | (5) | | $4,335,817 |
| | 2/15/2018 | | — | | | — | | — | | — | | | — | | 101,088 | (6) | | $5,262,641 |
| | | 2/15/2018 | | — | | | — | | — | | — | | | — | | 101,088 | (7) | | $5,262,641 |
| John Gerspach | | 2/18/2015 | | — | | | — | | — | | 10,381 | (1) | | $540,435 | | — | | | — |
| | 2/16/2016 | | — | | | — | | — | | — | | | — | | 34,412 | (2) | | $1,791,489 |
| | 2/16/2016 | | — | | | — | | — | | 57,153 | (3) | | $2,975,385 | | — | | | — |
| | 2/16/2017 | | — | | | — | | — | | — | | | — | | 32,506 | (4) | | $1,692,262 |
| | 2/16/2017 | | — | | | — | | — | | — | | | — | | 43,342 | (5) | | $2,256,385 |
| | 2/15/2018 | | — | | | — | | — | | — | | | — | | 42,315 | (6) | | $2,202,919 |
| | 2/15/2018 | | — | | | — | | — | | — | | | — | | 42,315 | (7) | | $2,202,919 |
| James Forese | | 1/14/2009 | | 29,745 | (8) | | $106.10 | | 1/14/2019 | | — | | | — | | — | | | — |
| | 1/14/2009 | | 29,745 | (8) | | $178.50 | | 1/14/2019 | | — | | | — | | — | | | — |
| | 2/18/2015 | | — | | | — | | — | | 19,317 | (1) | | $1,005,643 | | — | | | — |
| | 2/16/2016 | | — | | | — | | — | | — | | | — | | 62,766 | (2) | | $3,267,598 |
| | 2/16/2016 | | — | | | — | | — | | 104,242 | (3) | | $5,426,839 | | — | | | — |
| | 2/16/2017 | | — | | | — | | — | | — | | | — | | 56,599 | (4) | | $2,946,544 |
| | 2/16/2017 | | — | | | — | | — | | — | | | — | | 75,466 | (5) | | $3,928,760 |
| | 2/15/2018 | | — | | | — | | — | | — | | | — | | 78,586 | (6) | | $4,091,187 |
| | 2/15/2018 | | — | | | — | | — | | — | | | — | | 78,586 | (7) | | $4,091,187 |
| Stephen Bird | | 2/18/2015 | | — | | | — | | — | | 11,160 | (1) | | $580,990 | | — | | | — |
| | 2/16/2016 | | — | | | — | | — | | — | | | — | | 32,387 | (2) | | $1,686,067 |
| | 2/16/2016 | | — | | | — | | — | | 53,789 | (3) | | $2,800,255 | | — | | | — |
| | 2/16/2017 | | — | | | — | | — | | — | | | — | | 32,508 | (4) | | $1,692,366 |
| | 2/16/2017 | | — | | | — | | — | | — | | | — | | 43,344 | (5) | | $2,256,489 |
| | 2/15/2018 | | — | | | — | | — | | — | | | — | | 40,300 | (6) | | $2,098,018 |
| | 2/15/2018 | | — | | | — | | — | | — | | | — | | 40,300 | (7) | | $2,098,018 |
| Jane Fraser | | 2/18/2015 | | — | | | — | | — | | 9,099 | (1) | | $473,694 | | — | | | — |
| | 2/16/2016 | | — | | | — | | — | | — | | | — | | 28,402 | (2) | | $1,478,608 |
| | 2/16/2016 | | — | | | — | | — | | 47,171 | (3) | | $2,455,722 | | — | | | — |
| | 2/16/2017 | | — | | | — | | — | | — | | | — | | 28,299 | (4) | | $1,473,246 |
| | 2/16/2017 | | — | | | — | | — | | — | | | — | | 37,733 | (5) | | $1,964,380 |
| | 2/15/2018 | | — | | | — | | — | | — | | | — | | 32,240 | (6) | | $1,678,414 |
| | 2/15/2018 | | — | | | — | | — | | — | | | — | | 32,240 | (7) | | $1,678,414 |
(2)(1) | This Deferred Stock Award granted on February 16, 2015, or February 18, 2015, vestsvested in four equal annual installments beginning on January 20, 2016, subject to a performance-based vesting condition.condition described on page 95. |
Citi 2019 Proxy Statement
Table of Contents
| PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2018 EXECUTIVE COMPENSATION | 103 |
(3) | This Performance Share Unit award granted on February 16, 2015, vested in three equal annual installments beginning on January 20, 2016, subject to performance conditions based on relative total shareholder return and average return on assets. Based on attainment of the performance metrics of the award, 95.1% of the target number of units was delivered to each executive. The performance period for the award ended on December 31, 2017. Average return on assets over the three-year performance period (2015-2017) was equitably adjusted to disregard the charge to earnings in the fourth quarter of 2017, and the equitable adjustment is reflected in the values in the table and in the final payouts. The table presents the award values at December 31, 2017; the values of the awards on the 2017 delivery date are different and were determined using a five-day average Citi common stock price as of the final vesting date (January 20, 2018), such that the realized values of the awards were as follows: Mr. Corbat, $5,143,767; Mr. Gerspach, $3,130,988; Mr. Forese, $5,825,875; and Mr. Bird, $3,365,900. |
(4)(2) | This Deferred Stock Award granted on February 16, 2016, vests in four equal annual installments beginning on January 20, 2017, subject to a performance-based vesting condition.condition described on page 95. |
(5)(3) | This Performance Share Unit award granted on February 16, 2016, vestsvested in three equal annual installments beginning on January 20, 2017, subject to performance conditions based on relative total shareholder return. The table includes the entire value of earned Performance Share Units assuming that relative total shareholder returnis delivered in full after the end of the three-year performance period. Based on attainment of the performance metric of the award, 83.0% of the target number of units was delivered to each executive. The performance period for the award ended on December 31, 2018. The table presents the award values at December 31, 2018; the values of the awards on the 2019 delivery date are different and thewere determined using an average Citi common stock price at December 31, 2017, remain unchanged through the endas of the performance period in 2018.final vesting date (January 20, 2019), such that the realized values of the awards were as follows: Mr. Corbat, $5,931,274; Mr. Gerspach, $3,361,056; Mr. Forese, $6,130,284; Mr. Bird, $3,163,239; and Ms. Fraser, $2,774,046. |
(6)(4) | This Deferred Stock Award granted on February 16, 2017, vests in four equal annual installments beginning on January 20, 2018, subject to a performance-based vesting condition.condition described on page 95. |
(7)(5) | This Performance Share Unit award granted on February 16, 2017, vests in three equal annual installments beginning on January 20, 2018, subject to performance conditions based on return on tangible common equity and cumulative earnings per share. The value of earned Performance Share Units is delivered in full after the end of the three-year performance period. The table includes the entire value of Performance Share Units assuming that 100% of target for both performance metrics is achieved and the Citi common stock price at December 31, 2017,2018, remains unchanged through the end of the performance period in 2019. |
(8(6) | )This Deferred Stock Award granted on February 15, 2018, vests in four equal annual installments beginning on January 20, 2019, subject to a performance-based vesting condition described on page 95. |
| (7) | This Performance Share Unit award granted on February 15, 2018, vests in three equal annual installments beginning on January 20, 2019, subject to performance conditions based on return on tangible common equity and cumulative earnings per share. The value of earned Performance Share Units is delivered in full after the end of the three-year performance period. The table includes the entire value of Performance Share Units assuming that 100% of target for both performance metrics is achieved and the Citi common stock price at December 31, 2018, remains unchanged through the end of the performance period in 2020. |
| (8) | This stock option granted on January 14, 2009, vested in four equal annual installments beginning on January 14, 2010. The numbers of options and exercise prices have been adjusted for the 10-for-1 reverse stock split effective May 6, 2011. |
Option Exercises and Stock Vested in 20172018
| | Option Awards | | Stock Awards |
| Name | | Number of
Shares Acquired
on Exercise
(#) | | Value Realized
on Exercise
($) | | Number of
Shares Acquired
on Vesting
(#) | | Value
Realized
on Vesting(1)
($) |
| Michael Corbat | | — | | — | | 124,392 | | $7,103,997 |
| John Gerspach | | — | | — | | 70,523 | | $4,025,734 |
| James Forese | | — | | — | | 135,308 | | $7,724,295 |
| Stephen Bird | | — | | — | | 69,336 | | $3,957,429 |
| Jane Fraser | | — | | — | | 35,029 | | $2,023,403 |
| | Option Awards | | Stock Awards |
| Name | | Number of
Shares Acquired
on Exercise
(#) | | Value Realized
on Exercise
($) | | Number of
Shares Acquired
on Vesting
(#) | | Value
Realized
on Vesting(1)
($) |
| Michael Corbat | | — | | — | | 152,752 | | $11,893,893 |
| John Gerspach | | — | | — | | 88,485 | | $6,888,431 |
| James Forese | | — | | — | | 163,473 | | $12,725,657 |
| Stephen Bird | | — | | — | | 90,882 | | $7,073,569 |
| Jane Fraser | | — | | — | | 32,734 | | $2,559,510 |
(1)(1) | The values in the Stock Awards column reflect Deferred Stock Awards and Performance Share Units that were delivered to the named executive officers in 2017.2018. |
Citi 2018 Proxy Statementwww.citigroup.com
Table of Contents
| 104 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 109 |
20172018 Pension Benefits
| Name | | Plan Name | | Number of Years
Credited Service
(#) | | Present Value
of Accumulated
Benefit(1)
($) |
| Michael Corbat | | The Citigroup Pension Plan | | 24.4 | | $118,329 |
| John Gerspach(2) | | The Citigroup Pension Plan | | 17.7 | | $539,574 |
| | Supplemental ERISA Compensation Plan of Citibank, N.A. and | | | | |
| | Affiliates (Pay Cap Plan) | | 11.7 | | $357,017 |
| James Forese | | The Citigroup Pension Plan | | 24.5 | | $107,560 |
| Stephen Bird | | – | | — | | — |
| Jane Fraser | | – | | — | | — |
| Name | Plan Name | Number of Years
Credited Service
(#) | | Present Value
of Accumulated
Benefit(1)
($) |
| Michael Corbat | The Citigroup Pension Plan | 24.4 | | $122,877 |
| John Gerspach(2) | The Citigroup Pension Plan | 17.7 | | $524,489 |
| Supplemental ERISA Compensation Plan of Citibank, N.A. and
Affiliates (Pay Cap Plan) | 11.7 | | $345,193 |
| James Forese | The Citigroup Pension Plan | 24.5 | | $111,711 |
| Stephen Bird | — | — | | — |
| Jane Fraser | — | — | | — |
(1)(1) | The mortality table, plan discount rate, and payment form assumptions used in determining the present value of The Citigroup Pension Plan and Pay Cap Plan benefits are the same as the year-end 20172018 assumptions used to prepare Note 8 to the Consolidated Financial Statements of Citigroup Inc. and its subsidiaries, as filed with the SEC on Form 10-K for 2017.2018. An interest crediting rate on cash balance plan benefits of 2.60%3.25% is also an assumption used in determining these present values. The interest crediting rate assumption is not required to be stated in that Note 8. Benefits in the 20172018 Pension Benefits Table have been calculated using a normal retirement age of 65, as defined in the plans. |
(2)(2) | Mr. Gerspach has more years of credited service under The Citigroup Pension Plan than under the Pay Cap Plan because benefit accruals under the Pay Cap Plan ceased before benefit accruals under The Citigroup Pension Plan ceased. |
Citi’s policy is that executives should accrue retirement benefits on the same basis generally available to Citi employees under Citi’s broad-based, tax-qualified retirement plans. Citi has not granted extra years of credited service under any retirement plan to any of the named executive officers. Mr. Bird and Ms. Fraser have never been eligible to participate in a defined benefit pension plan under the terms of Citi’s broad-based retirement programs in effect in their employment countries; they have participated only in defined contribution retirement plans since the commencement of their employment at Citi.
The following describes the pension plans listed in the 20172018 Pension Benefits Table.
The Citigroup Pension Plan.The purpose of this broad-based, tax-qualified retirement plan is to provide retirement income on a tax-deferred basis to all eligible U.S. employees. Effective December 31, 2006, The Citigroup Pension Plan was closed to new members and generally ceased benefit accruals effective December 31, 2007. Mr. Corbat, Mr. Gerspach, and Mr. Forese are eligible for benefits under this plan. Mr. Corbat’s and Mr. Forese’s entire benefits are cash balance benefits, and Mr. Gerspach accrued a cash balance benefit from 2000 through 2007.
The Citigroup Pension Plan cash balance benefit is expressed as a hypothetical account balance. Prior to January 1, 2008, the plan generally provided for the annual accrual of benefit credits for most of the covered population, including the covered named executive officers, at a rate between 1.5% and 6% of eligible compensation; the benefit credit rate increased with age and service. Eligible compensation generally included base salary and incentive awards, but excluded compensation payable after termination of employment, certain non-recurring payments, and other benefits. Annual eligible compensation was limited by the Internal Revenue Code to $225,000 for 2007 (the final year of cash balance benefit accrual). Interest credits continue to be applied annually to each participant’s account balance; these credits are based on the yield on 30-year Treasury bonds (as published by the Internal Revenue Service).
Prior to 2000, Mr. Gerspach accrued a benefit under the Citibank Retirement Plan formula, which is a component of The Citigroup Pension Plan. That formula generally provided for an annual benefit of 2% of annual average compensation per year of service for up to 30 years of credited service plus 0.75% of average annual compensation for up to an additional five years of credited service, reduced by an offset based on an estimated Social Security benefit. Annual compensation included base salary and excluded bonus and incentive pay, and average annual compensation was the average of the five highest years of annual compensation out of the final 10 annual computation periods. Annual compensation was also subject to limits imposed by the Internal Revenue Code.
www.citigroup.comCiti 2019 Proxy Statement
Table of Contents
110 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 105 |
Benefits under The Citigroup Pension Plan are payable in annuity form or in other optional forms, including a lump sum, upon termination of employment. The Citigroup Pension Plan’s normal retirement age is 65. The portion of an eligible participant’s benefit determined under the Citibank Retirement Plan formula may be paid upon early retirement, which is defined for this purpose as the first day of the month after the later of the participant’s 55th birthday or the date on which the participant completes a year of service (as defined in the plan). Mr. Gerspach has attained eligibility for early retirement, and there would be no reduction in his benefits attributable to early retirement under the terms of the plan because he attained age 60 while employed.
Supplemental ERISA Compensation Plan of Citibank, N.A. and Affiliates (Pay Cap Plan).The Pay Cap Plan is an unfunded, nonqualified deferred compensation plan. The Pay Cap Plan provided benefits not otherwise provided under The Citigroup Pension Plan because of limits imposed by the Internal Revenue Code on eligible pay and benefits. To the extent that a participant’s benefit was determined under the cash balance formula in The Citigroup Pension Plan, eligible compensation under the Pay Cap Plan was limited to $500,000 beginning January 1, 2000. Future benefit accruals under the Pay Cap Plan ceased effective January 1, 2002, for most participants in the plan, including Mr. Gerspach. Benefits under the Pay Cap Plan are payable at the same time as benefits are payable under The Citigroup Pension Plan; accordingly, Mr. Gerspach is eligible for early retirement and immediate commencement under the Pay Cap Plan.
20172018 Nonqualified Deferred Compensation
| Name and Plan | | Executive
Contributions
in Last Fiscal
Year
($) | | Registrant
Contributions
in Last Fiscal
Year
($) | | Aggregate
Earnings in
Last Fiscal
Year(1)
($) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate
Balance at
Last Fiscal
Year End(2)
($) |
| Michael Corbat | | — | | — | | — | | — | | — |
| John Gerspach | | | | | | | | | | |
| Citicorp Deferred Compensation Plan | | $0 | | $0 | | $314,997 | | $0 | | $1,948,519 |
| James Forese | | — | | — | | — | | — | | — |
| Stephen Bird | | — | | — | | — | | — | | — |
| Jane Fraser | | — | | — | | — | | — | | — |
| Name and Plan | | Executive
Contributions
in Last Fiscal
Year
($) | | Registrant
Contributions
in Last Fiscal
Year
($) | | Aggregate
Earnings in
Last Fiscal
Year(1)
($) | | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate
Balance at
Last Fiscal
Year End(2)
($) |
| Michael Corbat | | — | | — | | — | | | — | | — |
John Gerspach
Citicorp Deferred Compensation Plan | | $0 | | $0 | | ($129,480 | ) | | $0 | | $1,819,039 |
| James Forese | | — | | — | | — | | | — | | — |
| Stephen Bird | | — | | — | | — | | | — | | — |
| Jane Fraser | | — | | — | | — | | | — | | — |
(1)(1) | The amount reported as “Aggregate Earnings in Last Fiscal Year” was not required to be reported in the 20172018 Summary Compensation Table. |
(2)(2) | The amount in the “Aggregate Balance at Last Fiscal Year End” column was not required to be reported in any prior year Summary Compensation Table. |
The following is additional information on the plan shown in the 20172018 Nonqualified Deferred Compensation Table.
Citicorp Deferred Compensation Plan.Mr. Gerspach participates in the Citicorp Deferred Compensation Plan, which was closed in 2001 and provided for mandatory and voluntary deferrals of compensation from 1996 through 2000 for employees of Citicorp. All mandatory deferrals under the Citicorp Deferred Compensation Plan have been distributed to participants, but voluntary deferrals are notionally invested at the participant’s election in one of six pre-determined investment alternatives. Participants may change investment elections up to four times per year. All amounts deferred under the Citicorp Deferred Compensation Plan are fully vested and are distributed in a lump sum or installments at the participant’s election upon termination at or after the attainment of age 55.
Potential Payments upon Termination or Change of Control
Mr. Gerspach’s Retirement.Mr. Gerspach retired as Citi CFO effective February 22, 2019, immediately following the filing of Citi’s Annual Report on Form 10-K for the fiscal year ending December 31, 2018. He retired from Citi employment effective March 1, 2019. Mr. Gerspach did not receive any special compensation as a result of his retirement.
www.citigroup.com
Table of Contents
| 106 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2018 EXECUTIVE COMPENSATION |
General Policies.Citi does not provide guaranteed executive severance or change of control agreements, and none of the named executive officers has an individually negotiated employment or separation agreement.
Citi 2018 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 2017 EXECUTIVE COMPENSATION | 111 |
Potential Payments Table.Set forth below is a table showing the estimated value of outstanding awards that would have been delivered over time to each named executive officer, had the applicable employment termination or other event occurred on December 31, 20172018 and assuming that all award vesting and performance conditions are satisfied. Unless the awards are forfeited, the awards shown in the Potential Payments Table vest on schedule following termination of employment and do not accelerate by their terms except in the case of death. The closing price of Citi’s common stock on December 29, 201731, 2018 ($74.41)52.06) was used in developing the estimates shown in the Potential Payments Table.
| Name | | Change of
Control of
Citigroup
($) | | Termination for
Gross Misconduct
($) | | Involuntary
Termination
not for Gross
Misconduct
($) | | Voluntary
Resignation or
Retirement
($) | | Death or
Disability
($) |
| Michael Corbat | | | | | | | | | | |
| Deferred Stock Awards | | $0 | | $0 | | $16,974,410 | | $16,974,410 | | $16,974,410 |
| Performance Share Units(1) | | $0 | | $0 | | $18,779,299 | | $18,779,299 | | $18,779,299 |
| Deferred Cash Awards | | $0 | | $0 | | $0 | | $0 | | $0 |
| John Gerspach | | | | | | | | | | |
| Deferred Stock Awards | | $0 | | $0 | | $9,397,611 | | $9,397,611 | | $9,397,611 |
| Performance Share Units(1) | | $0 | | $0 | | $10,557,812 | | $10,557,812 | | $10,557,812 |
| Deferred Cash Awards | | $0 | | $0 | | $0 | | $0 | | $0 |
| James Forese | | | | | | | | | | |
| Deferred Stock Awards | | $0 | | $0 | | $17,015,558 | | $17,015,558 | | $17,015,558 |
| Performance Share Units(1) | | $0 | | $0 | | $19,097,773 | | $19,097,773 | | $19,097,773 |
| Deferred Cash Awards | | $0 | | $0 | | $0 | | $0 | | $0 |
| Stephen Bird | | | | | | | | | | |
| Deferred Stock Awards | | $0 | | $0 | | $9,262,855 | | $9,262,855 | | $9,262,855 |
| Performance Share Units(1) | | $0 | | $0 | | $10,519,789 | | $10,519,789 | | $10,519,789 |
| Deferred Cash Awards | | $0 | | $0 | | $0 | | $0 | | $0 |
| Jane Fraser | | | | | | | | | | |
| Deferred Stock Awards | | $0 | | $0 | | $7,332,065 | | $7,332,065 | | $7,332,065 |
| Performance Share Units(1) | | $0 | | $0 | | $6,434,382 | | $6,434,382 | | $6,434,382 |
| Deferred Cash Awards(2) | | $0 | | $0 | | $941,405 | | $941,405 | | $941,405 |
| Name | | Change of
Control of
Citigroup
($) | | Termination for
Gross Misconduct
($) | | Involuntary
Termination
not for Gross
Misconduct
($) | | Voluntary
Resignation or
Retirement
($) | | Death or
Disability
($) |
| Michael Corbat | | | | | | | | | | |
| Deferred Stock Awards | | $0 | | $0 | | $12,563,848 | | $12,563,848 | | $12,563,848 |
| Performance Share Units(1) | | $0 | | $0 | | $14,849,125 | | $14,849,125 | | $14,849,125 |
| Deferred Cash Awards | | $0 | | $0 | | $0 | | $0 | | $0 |
| John Gerspach | | | | | | | | | | |
| Deferred Stock Awards | | $0 | | $0 | | $6,227,105 | | $6,227,105 | | $6,227,105 |
| Performance Share Units(1) | | $0 | | $0 | | $7,434,741 | | $7,434,741 | | $7,434,741 |
| Deferred Cash Awards | | $0 | | $0 | | $0 | | $0 | | $0 |
| James Forese | | | | | | | | | | |
| Deferred Stock Awards | | $0 | | $0 | | $11,310,972 | | $11,310,972 | | $11,310,972 |
| Performance Share Units(1) | | $0 | | $0 | | $13,446,838 | | $13,446,838 | | $13,446,838 |
| Deferred Cash Awards | | $0 | | $0 | | $0 | | $0 | | $0 |
| Stephen Bird | | | | | | | | | | |
| Deferred Stock Awards | | $0 | | $0 | | $6,057,441 | | $6,057,441 | | $6,057,441 |
| Performance Share Units(1) | | $0 | | $0 | | $7,154,814 | | $7,154,814 | | $7,154,814 |
| Deferred Cash Awards | | $0 | | $0 | | $0 | | $0 | | $0 |
| Jane Fraser | | | | | | | | | | |
| Deferred Stock Awards | | $0 | | $0 | | $5,103,962 | | $5,103,962 | | $5,103,962 |
| Performance Share Units(1) | | $0 | | $0 | | $6,098,568 | | $6,098,568 | | $6,098,568 |
| Deferred Cash Awards(2) | | $0 | | $0 | | $437,751 | | $437,751 | | $437,751 |
(1)(1) | The Potential Payments Table includes (a) the value of the Performance Share Units granted in February 2015 assuming that relative total shareholder return, average return on assets as equitably adjusted for Tax Reform, and the Citi common stock price at December 31, 2017, remained unchanged through the final vesting date; (b) the value of the Performance Share Units granted in February 2016 assuming that relative total shareholder return and the Citi common stock price at December 31, 2017, remain2018, remained unchanged through the final vesting date; and (c)(b) the value of the Performance Share Units granted in February 2017 and February 2018 assuming that Performance Share Units are earned at 100% of target levels and that the Citi common stock price at December 31, 2017,2018, remains unchanged through the final vesting date. |
(2)(2) | Ms. Fraser’s Deferred Cash Awards are denominated in British pounds as they were awarded for years in which she was employed in London. The amounts presented above for Ms. Fraser are shown as converted from British pounds to U.S. dollars at the December 31, 2017,2018, conversion rate used to prepare Citi’s financial statements (1.3529(1.2736 U.S. dollars = 1 British pound). |
Deferred Stock Awards; Rule of 60.Deferred Stock Awards granted to the named executive officers under the Capital Accumulation Program2014 Stock Incentive Plan vest over a period of four years subject to performance conditions. Deferred Stock Awards provide for accelerated vesting if a participant dies but provide for vesting on schedule in all other circumstances in which vesting occurs after termination of employment. If a participant’s combined years of age and service meet the Rule of 60 at the time he or she voluntarily resigns, the participant’s Deferred Stock Awards will continue to vest on schedule over the four-year period, provided he or she does not work for a “significant competitor” during the vesting period. A participant meets the Rule of 60 if his or her age plus full years of service equals at least 60 and he or she either: (i) is at least age 50 with at least five full years of service; or (ii) is under age 50 with at least 20 full years of service. Partial years of age and service are each rounded down to the nearest whole number. In contrast, if a participant does not meet the Rule of 60 and voluntarily resigns, any unvested Deferred Stock Awards shares are forfeited, unless the participant becomes employed in an “alternative career.”
www.citigroup.comCiti 2019 Proxy Statement
Table of Contents
112 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 107 |
Under the “alternative career” provisions of Citi’s Deferred Stock Awards, employees may continue to vest in their deferred awards if they resign from Citi to work full-time in government or at a charitable organization or to teach full-time at an educational institution. As of December 31, 2017, allAll of the named executive officers had attained the Rule of 60 prior to 2018, so none of them wereare eligible for the “alternative career” provisions, and each of them would be eligible for continued vesting following resignation without regard to whether they pursued an “alternative career.”
Performance Share Units.Performance Share Units have the same vesting provisions covering termination of employment as those applicable to Citi’s Deferred Stock Awards, including the Rule of 60. Any named executive officer who meets the Rule of 60 will receive his or her earned Performance Share Units unless: (i) he or she voluntarily resigns during the performance period and performs services for a competitor, or (ii) he or she is terminated for gross misconduct (in which case the undelivered award is cancelled). If a named executive officer who meets the Rule of 60 resigns and competes, at the end of the performance period, he or she will forfeit a prorated Performance Share Unit award, based on his or her service during the performance period. For example, if such a named executive officer resigns after the first year of the performance period to work for a competitor, he or she will receive one-third of the earned Performance Share Units after the end of the three-year performance period and the other two-thirds will be forfeited.
Deferred Cash Awards.Deferred Cash Awards were granted to senior executives before the creation of our Performance Share Unit program and are also granted to executives who are not eligible for Performance Share Units, which are awarded only to the CEO and executives who report directly to him. Like our Performance Share Units, Deferred Cash Awards represent 50% of each executive’s deferred incentive award for the applicable performance year with Deferred Stock Awards representing the other 50%. Deferred Cash Awards are a fixed amount that earns notional interest at a fixed market rate and vests over a period of four years. The treatment of Deferred Cash Award Plan awardsAwards upon termination of employment is the same as the treatment of Deferred Stock Awards.
“Double Trigger” Change of Control Requirement.Citi’s 2014 Stock Incentive Plan has a “double trigger” requirement, which provides that an involuntary termination of employment not for gross misconduct must occur as a result of a “change of control” of Citi before any vesting of equity awards may occur in connection with the change of control. The 2019 Stock Incentive Plan, which is subject to stockholder approval at the 2019 Annual Meeting pursuant to Proposal 4 of this Proxy Statement, has the same provision. In addition, the Compensation Committee has a policy that equity awards granted to executive officers will not be accelerated solely by reason of a change of control of Citigroup Inc. The intent of the policy is for such a change of control to have no impact on the applicable awards. The same change of control provisions apply to Citi’s Performance Share Units and Deferred Cash Awards.
Under the 2014 Stock Incentive Plan, a “change of control” means: (i) a person acquiring direct or indirect beneficial ownership of Citigroup Inc. securities representing 30% or more of the combined voting power of then outstanding securities of Citigroup Inc.; (ii) specified changes in the majority of the Board (not including the election of Directors whose election or nomination was approved by a majority of the then incumbent Board); (iii) a sale, transfer, or distribution of all or substantially all of the assets of Citigroup Inc. or a dissolution or liquidation of Citigroup Inc.; or (iv) consummation of a reorganization, merger, consolidation, or other corporate transaction that results in stockholders of Citigroup Inc. not owning more than 50% of the combined voting power of Citigroup Inc. or other corporation resulting from the transaction. The 2019 Stock Incentive Plan has the same provision.
Management Analysis of Potential Adverse Effects of Compensation Plans
Citi has adopted multiple coordinated strategies to manage the risk of material adverse effects to the franchise through the design and administration of its incentive compensation programs, including those applicable to the named executive officers. During 2017,2018, Citi continued its efforts to align its processes with the U.S. Interagency Guidance on Sound Incentive Compensation Policies and the Financial Stability Board’s Principles for Sound Compensation Practices. Citi’s approach to risk and incentive compensation plans is detailed on pages 100-10295-97 of this Proxy Statement. On the basis of the foregoing analysis, management has concluded that Citi’s compensation plans are not reasonably likely to have a material adverse effect on Citi.
Citi 2018 Proxy Statementwww.citigroup.com
Table of Contents
| 108 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 113 |
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following information about the relationship of the annual total compensation of our employees andto the annual total compensation of our CEO. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
| ● | For 2017,2018, the median annual total compensation of all employees of our company (other than the CEO) was $48,249,$49,766, and the annual total compensation of our CEO was $17,814,131.$24,195,749.(1) |
| ● | Based on this information, for 2017,2018, the ratio of the annual total compensation of our CEO to the median annual total compensation of all employees was estimated to be 369486 to 1. |
CEO Pay Ratio Supplemental Information
Citi aims to provide competitive pay and benefits for each employee’s role in every business and geography. Market levels of pay are therefore important factors in determining pay for every role at Citi, including senior executive roles. In addition, Citi’s business mix and global footprint drive the median pay level at Citi. Over 65% of our workforce is employed outside the U.S., and 52% of our workforce is employed in Global Consumer Banking.
HEADCOUNT AT DECEMBER 31, 20172018 |
| By Business or Function | | By Region |
  | |   |
(2)(2) | Includes Compliance, Finance, Human Resources, Independent Compliance Risk Management, Legal, Risk Management, and headcount attributable to legacy assets and operations. Additional Compliance and Risk Management staff are included in business headcounts. |
How We Calculated the Ratio
| ● | The “median annual total compensation of all employees” is the annual total compensation of a single employee who is at the midpoint of employees ranked in order of compensation amounts. When determining our midpoint, we considered compensation of 209,203204,147 Citi employees (other than the CEO) who were employed by Citi on December 31, 2017,2018, in about 100 countries. We did not exclude any countries and we did not make any adjustments for the cost of living. |
(continued on next page)
(1)(1) | This number is the sum of the 20172018 total compensation reported in the 20172018 Summary Compensation Table and the value of employer contributions to broad-based employee benefit plans not already included in the Summary Compensation Table. |
www.citigroup.comCiti 2019 Proxy Statement
Table of Contents
114 | PROPOSAL 3: ADVISORY VOTE TO APPROVE CITI’S 20172018 EXECUTIVE COMPENSATION | 109 |
| ● | SEC regulations allow employers to identify the midpoint based on a “consistently applied compensation measure” (CACM). We used 20172018 base pay and cash payments under our incentive compensation plans as our CACM to determine the midpoint of our employee population. We chose this CACM because these two pay elements were consistently available across all countries in which we have employees. |
| ➢ | Where full year information from our formulaic incentive compensation plans was not available, we estimated such amounts using third quarter payments as a proxy for fourth quarter payments, consistent with the design of the plans and our experience with the data. The incentive compensation plans for Citi employees with compensation in the range of our midpoint generally have quarterly payment schedules. |
| ➢ | Compensation paid in foreign currency was converted to U.S. dollars using a monthly average. |
| ➢ | We did not consider discretionary cash incentives, equity awards, or deferred cash awards as part of the analysis because all employees eligible for discretionary incentives, equity awards, or deferred cash awards are paid well above our midpoint, and therefore, including or excluding such compensation would not affect our midpoint. |
| ● | As permitted by SEC regulations, we then calculated the “annual total compensation” for a group of representative employees with compensation at or very near our midpoint (our “midpoint group”). We used the annual total compensation of the employee with annual total compensation at approximately the median of our midpoint group to determine our CEO pay ratio. |
| ➢ | In determining the “annual total compensation” for each employee in our midpoint group, we followed the methodology required under SEC regulations for calculating the total compensation of our named executive officers as reported in the Summary Compensation Table, and, as permitted under the SEC regulations, added the value of employer contributions to broad-based employee benefit plans not already included in the Summary Compensation Table. |
| ● | The SEC rules for identifying the median-paid employee and calculating the CEO pay ratio allow companies to apply various methodologies and assumptions and, as a result, the CEO pay ratio reported by Citi may not be comparable to the CEO pay ratio reported by other companies. |
Citi 2018 Proxy Statementwww.citigroup.com
Table of Contents
Proposal 4: Approval of Additional Authorized Shares under the Citigroup 20142019 Stock Incentive Plan
On the recommendation of the Compensation Committee, the Board has unanimously approved an amendment to the Citigroup 2019 Stock Incentive Plan (the 2019 Plan), which will become effective on April 16, 2019, if approved by stockholders at our Annual Meeting. Upon approval, the 2019 Plan will become the only equity compensation plan under which we will grant shares. Currently, we grant equity awards exclusively under the 2014 Stock Incentive Plan (the 2014 Plan)., and the 2014 Plan will expire by its terms on April 16, 2019. The amendment would increase2019 Plan is proposed to replace the authorized number2014 Plan. The discussion and description of shares available for grantthe 2019 Plan that follows is qualified in its entirety by 15 million.the text of the 2019 Plan that is included as Annex B.
Board Recommendation
The Board recommends that you voteFORapproval of the amendment to the Citigroup 20142019 Stock Incentive Plan, increasing the number of authorized shares, as described in Proposal 4. Our equity award practices and the terms of our 2014 Stock Incentive Plan are aligned with stockholder interests.
|  |  |
Executive Summary
| ● | 1530 million shares requested.
|
| ● | As of December 31, 2017,
Key facts: |
| ➢ | 39.1842.40 million shares reserved for issuance and available for grant under the 2014 Plan
as of December 31, 2018, |
| ➢ | 38.3933.00 million shares subject to outstanding awards under the 2014 Plan and its predecessor plan as of December 31, 2018, and
|
| ➢ | 2,569.92,340.5 million total shares of Citi common stock outstanding.
outstanding as of the record date. |
| ● | We have strong equity award practices, including limiting the percentage of deferred incentive pay awarded in stock, stock ownership requirements for executive officers, and clawbacks. |
| ● | KeyImportant terms of the 20142019 Plan are aligned with stockholder interests, including a minimum three-yearone-year vesting requirement applicable to at least 90%95% of the shares granted under the plan, stringent change of control provisions, an annual limit on the number of shares and stock options and SARs that may be granted to employees, and prohibitions on option repricings, reload options, and discounted stock options. The 20142019 Plan has a fixed number of shares available for grant and limits on dividends and dividend equivalent payments.
|
| ● | Significant changes from the terms of the 2014 Plan: |
| ➢ | We changed our limit on Director pay. The 2014 Plan limited Director equity awards to $900,000 annually; the 2019 Plan limits each Director’s compensation (whether in the form of cash or equity) to $1 million annually, except where the Board of Directors approves a higher limit for a non-executive Board chair. |
| ➢ | We changed our minimum vesting provision from three years applicable to 90% of plan shares to one year applicable to 95% of plan shares. |
| ➢ | Although we eliminated language relating to qualified performance-based compensation under Section 162(m) of the Internal Revenue Code, we retained annual limits on stock and option/SAR grants to any individual. |
| ➢ | We added explicit authority to adopt sub-plans, and we intend to adopt a sub-plan to offer tax-qualified awards in France. |
Our Recent Share Requests
We request shares frequently to obtain regular stockholder feedback on our practices. Our current share request is consistent with our approach on share authorizations, which is to request increases as often as annually but only as needed to support grant activity for at least one year.
www.citigroup.comCiti 2019 Proxy Statement
Table of Contents
116 | PROPOSAL 4: APPROVAL OF ADDITIONAL AUTHORIZED SHARES UNDER THE CITIGROUP 20142019 STOCK INCENTIVE PLAN | 111 |
Shares Requested
The initial share authorization of the 2019 Plan will be 30 million shares, which is estimated to be approximately equal to the shares that would no longer be available for grant upon the expiration of the 2014 Plan. This initial share authorization is intended to support grant activity for at least one to two years, and we expect to continue our practice of asking stockholders to approve additional share authorizations under the 2019 Plan, as frequently as annually, thereafter. The 2019 Plan will expire by its terms on the date of the annual general meeting of stockholders in 2024.
Our Equity Award Practices Are Aligned with Stockholder Interests
| ● | Equity compensation aligns employee and stockholder interests.Citi’s equity awards are a key component of annual incentive awards for thousands of employees worldwide, thereby aligning the interests of stockholders and a broader group of Citi employees (not just senior executives). In 2017,2018, approximately 7,2007,350 employees in 6563 countries were awarded shares of Citi common stockreceived equity awards under the 2014 Plan as part of their annual incentive awards. |
| ● | Citi has prudent equity award practices. |
| ➢ | Our equity pay mix minimizes dilution from our executive compensation programs.Under our current executive compensation practices, 50% of the deferred portion of named executive officer incentive compensation is payable in Deferred Stock Awardsdeferred stock awards with performance-based vesting features, and 50% is payable in Performance Share Unitsperformance share units that are paid in cash with a value linked to the value of Citi common stock. Thisstock.This practice links all named executive officer deferred compensation to the value of Citi common stock, yet limitswill limit the use of shares under the 20142019 Plan. |
| ➢ | All deferred equity awards have clawbacks.Citi’s equity awards are subject to one or more clawbacks that provide for cancellation in a range of circumstances, as set forth on page 101.97. |
| ➢ | Stock ownership requirements.Executive officers are generally required to hold at least 75% of the net after-tax shares acquired through Citi’s incentive compensation programs as long as they are executive officers. In addition to that stock ownership commitment, effective January 1, 2013, executive officers are required to retain at least 50% of the shares subject to the stock ownership commitment for one year after ceasing to be an executive officer, as a result of leaving Citi employment or otherwise. |
| ➢ | Our “overhang” and “run rate” percentages demonstrate our prudent use of shares.As illustrated in the accompanying tables, we have a three-year average run rate of 0.64% and our overhang percentages are no higher than 3.60%.
|
➢ | Share buybacks have the incidental effect of offsetting dilution from equity compensation programs.In 2017,2018, Citi continued the meaningful return of capital to stockholders through common stock repurchases and dividends, following common stock repurchase programs in each of the prior threefour years. |
| ● | Equity compensation helps Citi to comply with its regulatory obligations.Regulatory guidance in the U.S. and in other countries in which Citi does business provides that a substantial portion of variable compensation awarded to senior executives and other employees whose actions have a material impact on the risk exposure of Citi should be awarded in shares or share-linked instruments.shares. |
Run Rate Table
Our run rate is the number of shares subject to equity awards granted during a year stated as a percentage of common shares outstanding for such year, based on annual grant data and the basic weighted average number of common shares outstanding as reported in Citigroup’s Annual Report on Form 10-K for such year.
| 2016 | | 2017 | | 2018 | | Three-year
average |
| Run rates for 12-month periods ending December 31 | 0.81% | | 0.52% | | 0.52% | | 0.62% |
www.citigroup.com
Table of Contents
| 112 | PROPOSAL 4: APPROVAL OF THE CITIGROUP 2019 STOCK INCENTIVE PLAN |
Overhang Table
“Overhang” refers to the potential stockholder dilution represented by outstanding employee equity awards and shares available for future grants.
| | December 31, 2017(1) | | April 24, 2018
(estimated)(2) | | December 31, 2018(1) | | April 16, 2019
(estimated)(2) |
| Simple overhang(3) | | 3.02% | | 3.60% | | 3.18% | | 2.69% |
| Fully diluted overhang(4) | | 2.93% | | 3.48% | | 3.09% | | 2.62% |
| (1) | The following data as of December 31, 2017,2018, was used in the calculation of overhang percentages: outstanding equity awards under the 2014 Plan and its predecessor (unvested stock awards of 37.2532.24 million and unexercised stock options of 1.140.76 million, totaling 38.3933.00 million shares); shares available for grant under the 2014 Plan (39.18(42.40 million); and common shares outstanding (2,569.9(2,368.5 million). |
| (2) | Our overhang estimates at April 24, 2018,16, 2019, are based on the assumptions that the number of shares subject to outstanding awards on that date is the same as the number outstanding on December 31, 2017,2018, and Proposal 4 is approved by stockholders such that an additional 1530 million shares will be available for future grants under the 20142019 Plan. For purpose of this estimate, we have used the common shares outstanding as of the record date, which was 2,340.5 million. |
| (3) | Simple overhang is the sum of outstanding equity awards and shares available for grant under the 2014 Planapplicable plan stated as a percentage of common shares outstanding. |
| (4) | Fully diluted overhang is the sum of outstanding equity awards and shares available for grant under the 2014 Planplan or plans stated as a percentage of fully diluted common shares (i.e., common shares outstanding plus outstanding equity awards and shares available for grant under the 2014 Plan)applicable plan). |
Citi 2018 Proxy Statement
Table of Contents
PROPOSAL 4: APPROVAL OF ADDITIONAL AUTHORIZED SHARES UNDER THE CITIGROUP 2014 STOCK INCENTIVE PLAN | 117 |
The preceding Run Rate Table and the Overhang Table demonstrate our prudent use of shares.
| | 2015 | | 2016 | | 2017 | | Three-year
average |
| Run rates(1)for 12-month periods ending December 31 | | 0.59% | | 0.81% | | 0.52% | | 0.64% |
(1) | Our run rate is the number of shares subject to equity awards granted during a year stated as a percentage of common shares outstanding for such year, based on annual grant data and the basic weighted average number of common shares outstanding as reported in Citigroup’s Annual Report on Form 10-K for such year.
|
Our Plan Terms Are Aligned with Stockholder Interests
The following features of the 20142019 Plan protect the interests of our stockholders:
| ● | No “evergreen” feature.The 20142019 Plan has a fixed number of shares available for grant that will not automatically increase because of an “evergreen” feature. |
| ● | Minimum three-yearone-year vesting requirement.Our three-yearone-year minimum vesting requirementsrequirement will generally apply to at least 90%95% of the shares that may be granted subjectpursuant to any type of award, including options and stock appreciation rights (SARs), except in certain limited circumstances.award. |
| ● | A limit on total annual compensation for Directors.The maximum number of shares subject to awards to an individual Director in a calendar year, taken together with any cash fees paid during the calendar year to the Director for services as a member of the Board, may not exceed $1 million in value, except where the Board of Directors approves a higher limit for a non-executive Board chair. |
| ● | Retention of annual limits on shares and options or SARs that can be granted to employees.Although no longer required to meet the performance-based compensation exception to the $1 million deduction limitation under Section 162(m) of the Internal Revenue Code, the one million share limit on shares subject to stock options and SARs that may be granted in a calendar year, and the one million share limit on stock awards that may be granted in a calendar year, that had been included in the 2014 Plan, are retained in the 2019 Plan. |
| ● | No discounted options or SARs.Option or SAR exercise prices must be at least 100% of fair market value on the date an option or SAR is granted or at least 125% of fair market value if the option or SAR is to be considered an award subject to a performance condition based on premium pricing.granted. |
| ● | No repricings or cash buyouts.The 20142019 Plan prohibits any “repricing” of any outstanding option or SAR, except with the approval of the stockholders of the Company. The 20142019 Plan defines “repricing” to mean (i) any action that constitutes a “repricing” under GAAP or the rules of the NYSE (including any modification or amendment to an outstanding option or SAR that has the effect of reducing its exercise price); (ii) any cancellation of an outstanding option or SAR when its exercise price exceeds its fair market value in exchange for cash; (iii) any cancellation of an option or SAR in exchange for a new option or SAR with a lower exercise price; or (iv) a substitution of a stock award for an option or SAR when its exercise price exceeds fair market value; in each case other than a permitted equitable adjustment. |
Citi 2019 Proxy Statement
Table of Contents
| PROPOSAL 4: APPROVAL OF THE CITIGROUP 2019 STOCK INCENTIVE PLAN | 113 |
| ● | No reload option grants.Reload options are additional options that are granted automatically upon the exercise of previously granted options; options granted under the 20142019 Plan may not include a reload feature. |
| ● | No liberal share “recycling.”TheIf an award under the 2019 Plan, or, after April 16, 2019, the 2014 Plan and the 2009 Plan, is forfeited, cancelled, or expires or is settled without the issuance of shares, the shares subject to such award will be available for future grants under the 2019 Plan. However, the 2019 Plan prohibits re-granting shares withheld or tendered to pay option exercise prices, repurchased by the Company with option exercise proceeds, or withheld or tendered to satisfy tax withholding obligations on any award. Also, shares of stock subject to SARs that are not issued on settlement may not be re-granted. |
| ● | No dividend or dividend equivalent payments on unvested shares subject to a performance vesting condition.The 20142019 Plan permits payment of dividends or dividend equivalents on shares of restricted or deferred stock subject to a performance vesting condition only if and when the underlying shares vest. The 20142019 Plan also prohibits the payment of dividends and dividend equivalents on shares subject to outstanding options and SARs. |
| ● | A “double trigger” change of control provision.The 20142019 Plan requires that participants must experience an involuntary termination of employment for an award to vest as a result of a change of control of Citigroup Inc. (a “double trigger”). The Compensation Committee has also adopted a policy affirming that no deferred incentive awards to executive officers will vest solely by reason of a change of control of Citigroup Inc. |
| ● | No excise tax gross-ups.The 20142019 Plan does not provide for excise tax gross-ups in the event of a change of control of Citigroup Inc., nor do any executive agreements. |
| ● | No liberal definition of change of control.Our definition of “change of control” of Citigroup Inc. requires the consummation, and not merely the approval, of a reorganization, merger, consolidation, or other corporate transaction that results in stockholders of Citigroup Inc. not owning more than 50% of the combined voting power of Citigroup Inc. or other corporation resulting from such transaction. Additionally, the 20142019 Plan defines a “change of control” of Citigroup Inc. to mean (i) a person acquiring direct or indirect beneficial ownership of Citigroup Inc. securities representing 30% or more of the combined voting power of then outstanding securities of Citigroup Inc.; (ii) specified changes in the majority of the Board (not including the election of Directors whose election or nomination was approved by a majority of the then incumbent Board); or (iii) a sale, transfer, or distribution of all or substantially all of the assets of Citigroup Inc., or a dissolution or liquidation of Citigroup Inc. |
www.citigroup.com
Table of Contents
118● | PROPOSAL 4: APPROVAL OF ADDITIONAL AUTHORIZED SHARES UNDER THE CITIGROUP 2014 STOCK INCENTIVE PLANAbility to adopt sub-plans that facilitate participation by employees located outside the United States.Any special terms or conditions that the Compensation Committee considers necessary or appropriate to accommodate differences in non-U.S. law, tax policy, or custom may be included in a sub-plan that forms a part of the 2019 Plan. We intend to adopt a sub-plan that will permit awards that qualify for special tax benefits in France. |
Equity Compensation Plan Information
All of Citi’s outstanding equity awards have been granted under two stockholder-approved plans – plans—the 2014 Plan and its predecessor, the 2009 Stock Incentive Plan.Plan (the 2009 Plan). There are no equity awards outstanding under plans for which stockholder approval was not required or sought. The information below is as of December 31, 2017.2018.
| Plan Category | | (a)
Number of securities to
be issued upon exercise
of outstanding options,
warrants, and rights
(in millions) | | | (b)
Weighted-average
exercise price
of outstanding
options, warrants,
and rights
($) | | (c)
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))
(in millions) | | (a)
Number of securities to
be issued upon exercise
of outstanding options,
warrants, and rights
(in millions) | | (b)
Weighted-average
exercise price
of outstanding
options, warrants,
and rights
($) | | (c)
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))
(in millions) |
| Equity compensation plans approved | | | | | | | | |
| by security holders | | 38.39 | (1) | | $161.96 | | 39.18 | | 33.00 | (1) | $101.84 | | 42.40 |
| Equity compensation plans not | | | | | | | | |
| approved by security holders | | 0 | | N/A | | 0 | | 0 | | N/A | | 0 |
| Total | | 38.39 | | $161.96 | | 39.18 | | 33.00 | | $101.84 | | 42.40 |
| (1) | Includes 37.2532.24 million shares issuable upon the vesting of deferred stock awards. As such, these awards do not have an exercise price; only the 1.140.76 million outstanding options are considered when determining the weighted-average exercise price in column (b). |
New Plan Benefits Table
The following table reflects the number of shares and options awarded under the 2014 Plan during calendar year 2017. The table does not include any information on future awards under the 2014 Plan or benefits to any person from the proposed amendment to increase the number of shares authorized for grant under the 2014 Plan. Future awards are not determinable.
| Name and Position | | Number of
Shares | | Number of
Options |
| Michael Corbat, CEO, Director, and Director Nominee | | 83,285 | | 0 |
| John Gerspach, CFO | | 43,342 | | 0 |
| James Forese, President, Citi; CEO, Institutional Clients Group | | 75,466 | | 0 |
| Stephen Bird, CEO, Global Consumer Banking | | 43,344 | | 0 |
| Jane Fraser, CEO, Latin America Region | | 37,733 | | 0 |
| Executive Group(1) | | 508,888 | | 0 |
| Non-Executive Director Group | | 50,759 | | 0 |
| Non-Executive Officer Employee Group | | 13,603,577 | | 0 |
(1) | Includes the named executives above.
|
Through February 28, 2018, no individual has been granted any options under the 2014 Plan, including the named executive officers, other executive officers, other employees, current Directors and/or nominees who are not executive officers, and any associate of a Director, Director nominee, or an executive officer. As of February 28, 2018, no single person has received or is to receive as much as 5% of the options, warrants, or rights granted or that may be granted under the 2014 Plan.
Citi 2018 Proxy Statementwww.citigroup.com
Table of Contents
| 114 | PROPOSAL 4: APPROVAL OF ADDITIONAL AUTHORIZED SHARES UNDER THE CITIGROUP 20142019 STOCK INCENTIVE PLAN | 119 |
New Plan Benefits
Awards under the 2019 Plan will be granted by the Compensation Committee in its sole discretion. Therefore, the benefits or amounts that will be received by any particular employee or group of employees in the future is not determinable at this time.
Description of the Citigroup 20142019 Stock Incentive Plan
This summary description of the 20142019 Plan is qualified in its entirety by reference to the 20142019 Plan document, which is included inas Annex B to this Proxy Statement. If Proposal 4 is approved by stockholders at our Annual Meeting, we intend to file a registration statement on Form S-8, pursuant to the Securities Act of 1933, as amended, to register the additional shares authorized for grant under the 20142019 Plan.
General.The 2014If Proposal 4 is approved by stockholders, the 2019 Plan becamewill become effective on April 22, 201416, 2019 and will expire on the date of the annual general meeting of stockholders to be held in 2019.2024. The 20142019 Plan provides for various types of awards denominated in shares of Citi common stock to Citi employees, officers, and non-employee Directors. The NYSE closing price of a share of Citi common stock on March 5, 2018February 26, 2019 was $74.42.$64.12.
Administration.The 20142019 Plan is administered by the Compensation Committee. All members of such Committee or a sub-committee thereof must satisfy the requirements for independence of SEC Rule 16b-3 and remain qualified as “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code.16b-3. With respect to participants who are outside Directors, the 20142019 Plan is administered by the Board. The Compensation Committee may delegate some or all of its authority over administration of the 20142019 Plan to one or more officers, directors, employees, or another plan administrator except with respect to persons who are Section 16(a) officersofficers. In addition, any special terms or covered employees (as definedconditions that the Compensation Committee considers necessary or appropriate to accommodate differences in Section 162(m)non-U.S. law, tax policy or custom may be included a sub-plan that forms a part of the Internal Revenue Code).2019 Plan.
Eligibility.All “employees” of Citi – Citi—within the broad definition set forth in the instructions to the SEC Form S-8 registration statement, as in effect on April 16, 2019, but expressly excluding consultants and advisors who are not members of the Board – Board—generally are eligible to receive awards under the 20142019 Plan. Based on worldwide employment at December 31, 2017,2018, approximately 209,000204,000 persons could be eligible to participate in the 20142019 Plan. However, participation is discretionary – discretionary—awards are subject to approval by the Compensation Committee. In general, employees with discretionary annual incentive awards of at least $100,000 are eligible to receive at least 25% of that annual award in deferred stock. In 2017,2019 through February 26, 2019, awards were made under the 2014 Plan to 16 non-employee Directors, 1417 executive officers, and approximately 7,2007,350 employees worldwide. Former “employees” are eligible to participate in the 20142019 Plan, but only with respect to their last year of service or substitute awards to replace awards granted by a prior employer acquired by the Company.
Shares subject to the 20142019 Plan.Shares of Citi common stock issued in connection with awards under the 20142019 Plan may be shares that are authorized but unissued, or previously issued shares that have been reacquired, or both. The initial share authorization under the 20142019 Plan wasis 30 million shares. (The shares authorized under the 2019 Plan is estimated to be approximately equal to number of shares remainingthat would no longer be available for grant under the 2009 Plan at the timeupon expiration of its expiration, not to exceed 52 million shares. The actual number of remaining approved shares when the 2009 Plan expired on April 21, 2014 was approximately 52.1 million, thereby providing the 2014 Plan with an initial authorization of 52 million shares. On April 28, 2015, stockholders approved an amendment to the 2014 Plan authorizing an additional 20 million shares, and on April 26, 2016, stockholders approved another amendment authorizing an additional 20 million shares. Pursuant to the amendment described in Proposal 4, the number of authorized shares would increase by another 15 million.Plan.)
“Recycling” provisions.If an award under the 2019 Plan, or, after April 16, 2019, the 2014 Plan and the 2009 Plan, is forfeited, cancelled, or expires or is settled without the issuance of shares, the shares subject to such award will be available for future grants under the 20142019 Plan. However, shares tendered by a participant or withheld by Citi to pay an option exercise price, withheld or tendered to satisfy tax withholding obligations relating to any award, repurchased by Citi with option exercise proceeds, covered by a stock-settled SAR (without regard to the number of shares actually issued upon exercise) or withheld to satisfy any debt or other obligation owed to Citi, and cancelled fractional shares will be considered issued and shall not be added to the maximum number of shares that may be issued under the 20142019 Plan.
www.citigroup.comCiti 2019 Proxy Statement
Table of Contents
120 | PROPOSAL 4: APPROVAL OF ADDITIONAL AUTHORIZED SHARES UNDER THE CITIGROUP 20142019 STOCK INCENTIVE PLAN | 115 |
Limits on awards.AwardsThe maximum number of shares subject to awards to an individual Director in a calendar year (including awards made at the election of a Director in lieu of his or her cash retainer), taken together with any cash fees paid during the calendar year to the Director, in respect of the Director’s service as a member of the Board during such year (including service as a member or chair of any committees of the Board), may not exceed $900,000$1,000,000 in value, as determined as of the date of each award. However, the independent members of the Board may make exceptions to this limit for a non-executive chair of the Board, provided that the Director receiving any additional compensation may not participate in the decision to award such compensation. For all other eligible “employees,” the number of shares subject to stock options or SARs granted during a calendar year may not exceed one million shares, and the number of shares that may be subject to stock awards granted in a calendar year may not exceed one million shares, unless granted subject to substitute awards that replace awards of a former employer acquired by the Company.
Types of awards.The following types of awards may be made under the 20142019 Plan:
| ● | Stock options.An award of a stock option under the 20142019 Plan grants a participant the right to purchase a specified number of shares of Citi common stock during a specified term in the future at an exercise price equal to at least 100% of the “fair market value” (see below) of Citi common stock on the grant date. The term of a stock option may not exceed 10 years from the date of grant. |
| ● | Stock appreciation rights (SARs).A SAR, upon exercise, entitles the participant to receive an amount equal to the difference between the fair market value of Citi common stock on the exercise date and the exercise price of the SAR (which may not be less than 100% of fair market value of a share of Citi common stock on the grant date) times the number of shares subject to the SAR. Payment to a participant upon the exercise of a SAR may be in cash and/or shares of Citi common stock. |
| ➢ | Definition of “fair market value.”For purposes of setting the exercise price of any option or SAR granted under the 20142019 Plan, “fair market value” means the closing price on the NYSE (or on the principal national securities exchange on which the common stock is traded or quoted, if not the NYSE) on the date on which the stock option or SAR is granted. For all other purposes under the 20142019 Plan, “fair market value” will be as determined by the Compensation Committee. |
| ● | Stock payment.The Compensation Committee may grant vested shares of Citi common stock as a stock payment. |
| ● | Restricted stock.A restricted stock award is an award of outstanding shares of Citi common stock that does not vest until vesting conditions are satisfied and which will be forfeited if conditions to vesting are not met. Unless the Compensation Committee determines otherwise, participants who receive awards of restricted stock are also generally entitled to direct the voting of the unvested shares underlying their awards on matters submitted to a vote of stockholders. All shares underlying outstanding (unvested) restricted stock awards as to which no voting instructions are received are voted proportionately, based on the voting instructions received with respect to all other restricted shares. Participants may receive dividends or dividend equivalent payments on the shares subject to their awards during the vesting period, unless the awards are subject to one or more performance conditions, in which case the dividends, or dividend equivalents, if any, shall be paid only if and when, and only to the extent that, the underlying shares vest. |
| ● | Deferred stock.A deferred stock award is an unfunded, unsecured promise to deliver shares of Citi common stock to the participant in the future, if the participant satisfies the conditions to vesting. Participants do not have voting rights (their rights are no greater than a general unsecured creditor of the Company), but may receive dividend equivalent payments during the vesting period, unless the awards are subject to one or more performance conditions, in which case the dividend equivalents, if any, shall be paid to participants only if and when, and only to the extent that, the underlying shares vest. |
| ● | Other stock-based awards.The Compensation Committee may grant any other award that is denominated in shares of Citi common stock and that may be settled by the delivery of shares and/or cash. For the avoidance of doubt, awards that by their terms shall be settled only in cash shall not be considered to have been granted under the 20142019 Plan. |
| ● | Performance-based awards.Subject to the terms of the 20142019 Plan, the Compensation Committee may grant awards that are subject to or that may vest on an accelerated basis upon achievement of, one or more performance conditions related to a performance period of not less than one year. |
www.citigroup.com
Table of Contents
| 116 | PROPOSAL 4: APPROVAL OF THE CITIGROUP 2019 STOCK INCENTIVE PLAN |
Minimum vesting requirement.Awards granted under the 2019 Plan may not vest in full prior toearlier than the thirdfirst anniversary of the date on which the award date,is granted, except that the Compensation Committee may grant awards that vest in full in less than three yearsa year (i) on accountas a “substitute award” to replace awards of a participant’sformer employer acquired by the Company, (ii) awards to Directors that vest on the earlier of the one-year anniversary of the date of grant and the next annual meeting of stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting, and (iii) any additional awards the Compensation Committee may grant, up to a maximum of five percent (5%) of the available share reserve authorized for issuance under the 2019 Plan. This restriction does not apply to the Compensation Committee’s discretion to provide for accelerated exercisability or vesting of any award, including in cases of retirement, death, disability, leave of absence, or termination of employment, change of control, or upon the sale or other disposition of the subsidiary employing a participant or other similar event; (ii) upon satisfaction of a performance condition subject to a performance period of at least one year; or (iii) as a “substitute award” to replace an awardevent.
Citi 2018 Proxy Statement
Table of Contents
PROPOSAL 4: APPROVAL OF ADDITIONAL AUTHORIZED SHARES UNDER THE CITIGROUP 2014 STOCK INCENTIVE PLAN | 121 |
scheduled to vest in less than three years from the date the substitute award is granted. Additionally, up to 10% of the shares authorized for grant under the 2014 Plan may be granted as stock payments or subject to other awards that provide for vesting in full in less than three years.
Performance conditions.An option or SAR granted with a premium exercise price (i.e., higher than fair market value) and no other performance conditions shall not be considered to beIn the case of an award subject to a performance condition, for purposes of the minimum vesting provision unless the exercise price is at least 125% of fair market value at the date granted and vesting is not scheduled to occur prior to the first anniversary of the grant date. In the case of a performance-based award qualified under section 162(m) of the Internal Revenue Code, the applicable performance conditions mustcondition may include one or more of the following objective performance conditions and be expressed in either, or a combination of, absolute or relative values or a percentage of: revenue, revenue or product growth, net income (pre- or(pre-or after-tax), earnings, earnings per share, stockholders’ equity or return on stockholders’ equity, assets or return on assets, return on risk-adjusted assets, capital or return on capital, return on risk capital, book value or book value per share, economic value addedvalue-added models or equivalent metrics, operating income, pre- or after-tax income, expenses or reengineering savings, margins, cash flow or cash flow per share, stock price, total shareholder return, market share, debt reduction, net promoter scores, operating efficiency ratios, expense ratios, liquidity ratios, regulatory achievements, or regulatory achievements. As a result of Tax Reform, Citi does not expect to be able to grant awards that qualify as performance-based compensation under Section 162(m) ofany objective or subjective performance conditions selected by the Internal Revenue Code in the future.Compensation Committee.
Prohibition against repricing.The 20142019 Plan prohibits any action under the 20142019 Plan that would constitute a ”repricing” of any outstanding option or SAR granted under the 2019 Plan, the 2014 Plan, the 2009 Plan or any other plan of the Company or of any acquired company, except with the approval of the stockholders of the Company. The 20142019 Plan defines “repricing” to mean (i) any action that constitutes a “repricing” under GAAP or the rules of the NYSE (including any modification or amendment to an outstanding option or SAR that has the effect of reducing its exercise price); (ii) any cancellation of an outstanding option or SAR when its exercise price exceeds its fair market value in exchange for cash; (iii) any cancellation of an option or SAR in exchange for a new option or SAR with a lower exercise price; or (iv) a substitution of a stock award for an option or SAR when its exercise price exceeds fair market value; in each case other than a permitted equitable adjustment.
Prohibition of reload options.The 20142019 Plan does not permit the grant of “reload” options.
Repayment obligation; right of set-off.If the Compensation Committee subsequently determines that all conditions to vesting and payment of an award, or the vesting and exercisability of an option or SAR, were not satisfied in full, the Compensation Committee may cancel such vesting or exercise and refuse to issue shares and immediately terminate the participant’s rights with respect to such award (or improperly vested portion thereof). If the vesting or exercise of any such award (or portion thereof) has already been settled by delivery of shares or cash, the participant shall be obligated, upon demand, to return the shares or cash (or higher value received at vesting or exercise), to Citi, without reduction for any shares or cash withheld to satisfy withholding tax or other obligations. The 2014Consistent with the requirements of Section 409A of the Internal Revenue Code, the 2019 Plan also provides for the set-off of vested awards against obligations a participant may owe to Citi, including but not limited to the obligation to repay improperly vested or exercised awards. Any failure to timely pay tax-related obligations owing to Citi in connection with an award may result in its cancellation.
Non-transferability.During the vesting period, awards and sale-restricted shares generally are not transferable other than by will or the laws of descent and distribution.
Adjustments.The 20142019 Plan provides that the Compensation Committee shall make appropriate equitable adjustments to the maximum number of shares available for grant under the 20142019 Plan and to the annual individual award limits expressed in numbers of shares in the event of any changes to the Company’s capital structure,
Citi 2019 Proxy Statement
Table of Contents
| PROPOSAL 4: APPROVAL OF THE CITIGROUP 2019 STOCK INCENTIVE PLAN | 117 |
including a change in the number of shares outstanding on account of any stock dividend, stock split, reverse stock split, spinoff or any similar equity restructuring, or any combination or exchange of equity securities, merger, consolidation, recapitalization, reorganization, or similar transaction. In the event of any such transaction, or any extraordinary dividend, divestiture, or other distribution (other than ordinary cash dividends) of assets to stockholders, the
www.citigroup.com
Table of Contents
122 | PROPOSAL 4: APPROVAL OF ADDITIONAL AUTHORIZED SHARES UNDER THE CITIGROUP 2014 STOCK INCENTIVE PLAN |
Compensation Committee shall make appropriate equitable adjustments to the number or kind of shares subject to outstanding awards, the exercise prices of outstanding options and SARs, and performance conditions, to the extent necessary to prevent the enlargement or diminution of participants’ rights.
Change of control.The Compensation Committee may, when an award is made, or at any time prior to, at, or after the time of a “change of control” (as defined below), provide for the adjustment of performance conditions to reflect the change of control, provide for the cancellation of outstanding awards if the surviving entity or acquiring entity (or the surviving or acquiring entity’s parent company) replaces the awards with new rights of substantially equivalent value, provide for the acceleration of any time periods or the waiver of any other conditions to vesting, exercise, payment, or distribution of an award upon an involuntary termination of a participant’s employment as a result of a change of control, or provide for the purchase of any award. The vesting, payment, purchase, or distribution of an award, however, may not be accelerated by reason of a change of control for any participant unless the participant’s employment is involuntarily terminated as a result of the change of control. For these purposes, a termination of employment as a result of a change of control means involuntary termination of employment other than for “gross misconduct” (as defined in the 20142019 Plan) upon, or on or prior to the first anniversary of, the change of control.
The 20142019 Plan defines a “change of control” to mean (i) a person acquiring direct or indirect beneficial ownership of Citigroup Inc. securities representing 30% or more of the combined voting power of then outstanding securities of Citigroup Inc.; (ii) specified changes in the majority of the Board (not including the election of Directors whose election or nomination was approved by a majority of the then incumbent Board); (iii) a sale, transfer, or distribution of all or substantially all of the assets of Citigroup Inc. or a dissolution or liquidation of Citigroup Inc.; or (iv) consummation of a reorganization, merger, consolidation, or other corporate transaction that results in stockholders of Citigroup Inc. not owning more than 50% of the combined voting power of Citigroup Inc. or other corporation resulting from the transaction.
Tax withholding.Citi retains the right to deduct or withhold, or require the participant to remit to his or her employer, an amount sufficient to satisfy federal, state, local, and foreign taxes (including hypothetical taxes owed to Citi by tax-equalized expatriates) required by law or regulation to be withheld with respect to any taxable event as a result of the 20142019 Plan.
Amendment and termination.The 20142019 Plan may be amended, suspended, or terminated by the Compensation Committee at any time, provided that no amendment shall be made without stockholder approval if it would materially increase the number of shares available under the 20142019 Plan (other than in connection with an equitable adjustment), materially expand the types of awards available under the 20142019 Plan or the class of persons eligible to participate in the 20142019 Plan, materially extend the term of the 20142019 Plan, materially change the method of determining the exercise price of an option or SAR granted under the 20142019 Plan, delete or limit the prohibition against “repricing,” or otherwise require approval by stockholders in order to comply with applicable law or the rules of the NYSE (or principal national securities exchange upon which Citi’s common stock is traded or quoted).
Award modification.The Compensation Committee retains the right to modify outstanding awards without a participant’s prior consent if it determines that the modification is required to comply with applicable law, regulation, or regulatory guidance (including applicable tax law). Subject to certain exceptions, any other modifications, if adverse to a participant, shall not be effective without the participant’s written consent.
www.citigroup.com
Table of Contents
| 118 | PROPOSAL 4: APPROVAL OF THE CITIGROUP 2019 STOCK INCENTIVE PLAN |
Certain U.S. Federal Income Tax Consequences
The following is a brief summary of the principal U.S. federal income tax consequences relating to stock options granted under the 20142019 Plan, based on current U.S. federal income tax laws. This summary does not constitute tax advice and, among other things, does not describe state, local, or foreign tax consequences, which may be substantially different.
Citi 2018 Proxy Statement
Table of Contents
PROPOSAL 4: APPROVAL OF ADDITIONAL AUTHORIZED SHARES UNDER THE CITIGROUP 2014 STOCK INCENTIVE PLAN | 123 |
Generally, a participant will not recognize taxable income on the grant of a stock option. Upon the exercise of a stock option, a participant will recognize ordinary income in an amount equal to the difference between the fair market value of the Citi common stock received on the date of exercise and the option cost (number of shares purchased multiplied by the exercise price per share). The participant will recognize ordinary income upon the exercise of the option even though the shares acquired may be subject to further restrictions on sale or transferability. Citi will ordinarily be entitled to a deduction on the exercise date in an amount equal to the amount of ordinary income recognized by the participant upon exercise, except as may be specified under Section 162(m) of the Internal Revenue Code. Generally, upon a subsequent sale of shares acquired in an option exercise, the difference between the sale proceeds and the cost basis of the shares sold will be taxable as a capital gain or loss, including any sale of shares freed from sale restrictions to fund the payment of taxes incurred at exercise. The 20142019 Plan does not provide for awards of “incentive stock options,” which have different tax consequences under the Internal Revenue Code.
www.citigroup.comCiti 2019 Proxy Statement
Table of Contents
Stockholder Proposals
Citi makes every effort to be responsive to concerns expressed by our stockholders by engaging in dialogues, participating in issuer/investor working groups, and adopting policies or initiatives we believe to be in the best interests of all stockholders. Over the years, Citi has met with several proponents and other interested parties regarding such issues as gender pay equity, proxy access, human rights, the Company’s response to regulation (Dodd-Frank, credit cards), derivatives, risk management, auditor rotation, and trade association payments, among others, and has, on certain occasions, as appropriate, taken action in response to these engagements and/or shareholder votes. We encourage our stockholders to communicate with management and the Board. Any stockholder wishing to communicate with management, the Board, or an individual Director, or obtain the addresses of any of the stockholder proponents or their Citi’sCiti stock ownership information, should send a request to the Corporate Secretary, Rohan Weerasinghe, at 388 Greenwich Street, New York, New York 10013.
Proposal 5
Harrington Investments, Inc. has submitted the following proposal for consideration at the 2018 Annual Meeting:
Citigroup
Whereas, our Company has been identified as one of the banks financially supporting companies engaged in development or construction of the Dakota Access Pipeline (DAPL) (Bakken Pipeline), a controversial project which received extensive media coverage and public condemnation for its environmental destruction, pollution and encroachment upon sacred Sioux Nation land;
Whereas, in accordance with the United Nations Declaration on the Rights of Indigenous Peoples, Article Eleven, asserts “the right to maintain, protect and develop the past, present and future manifestations of their cultures, such as archaeological and historical sites…”
Whereas, Article Twenty-Nine of the Declaration states “Indigenous Peoples have the right to the conservation and protection of the environment and the productive capacity of their lands or territories and resources”;
Whereas, in 1948, the United Nations adopted the Universal Declaration of Human Rights and the United Nations Human Rights Council, and in 2011 adopted the United Nations Guiding Principles on Business and Human Rights;
Whereas, Citigroup’s financial support of the Dakota Access Pipeline and corporations involved in the pipeline’s construction has resulted in Human and Indigenous People’s Rights violations, threatened negative impacts on customer loyalty and shareholder value,1and harmed project companies with reputational damage2, delays, disruption and litigation;
Whereas, many financial institutions including Citigroup attempt to differentiate in their Human Rights oversight between project or transactional financing and direct corporate loans for general purposes, bringing much less Human Rights oversight to general corporate or commercial loans, even if Human Rights concerns are relevant;
Whereas, financial institutions face reputational damage or even liability for Human Rights abuses associated with general financing. For example, holocaust victims and other victims of Human Rights violations have successfully sought redress from banks that provided general financial services to Human Rights violators;
1 | https://www.thenation.com/article/these-cities-are-divesting-from-the-banks-that-support-the-dakota-access-pipeline/ |
2 | https://sandiegofreepress.org/2017/02/calpers-joins-investors-calling-on-banks-to-address-concerns-about-dakota-access-pipeline/ |
Citi 2018 Proxy Statement
Table of Contents
Whereas, we believeit is a fiduciary duty of the Board and Management to consider Human Rights when making all executive decisions (including loan agreements and related business affairs) where there is significant potential impact or consequence of our Company’s involvement, along with significant risk to our Company;
Whereas, reputational damage, negative publicity and loss of customer business can result in negative consequences for Citigroup regardless of whether the underlying financing was conducted as general or project-based financing;
Therefore, be it resolved,shareholders request the Citigroup Board of Directors to establish a Human and Indigenous Peoples’ Rights Policy to ensure that safe-guarding such rights is considered whenever relevant to general corporate and commercial financing.
Supporting statement
The proponent believes the Policy should at minimum adopt and include procedures to require Citigroup and its fiduciaries in all relevant instances of corporate-level financing (in addition to transactional, consortium and project financing), to ensure consideration of finance recipients’ policies and practices for potential impacts on Human and Indigenous Peoples’ Rights including respect for the Free, Prior and Informed Consent of Indigenous communities affected by their operations.
Management Comment
Summary
Citi is committed to supporting and maintaining the highest standards of ethical conduct and respect for human rights, including the rights of Indigenous Peoples. Citi launched a comprehensive Environmental and Social Risk Management (ESRM) Policy in 2003 for project-related lending, including an approach to managing risks related to Indigenous Peoples, and has continually updated its approach and helped facilitate a broader industry evolution in best practice through its co-founding and leadership of the Equator Principles. Citi adopted a Statement on Human Rights in 2007, which it updated in 2014. Citi further updated its approach to human rights and the rights of Indigenous Peoples in 2017, following extensive stakeholder engagement and the retention of a human rights consultant. In adopting its initial policies and as part of its commitment to continuous improvement, Citi considers evolving international human rights standards and industry practices of both clients and recognized leading companies. As the original policy focused on project-related lending, to address risks in client transactions outside of project-related lending, in 2017 Citi also began implementing a watchlist process to flag certain clients with known elevated environmental, social, or reputational risks (including Indigenous Peoples risks).
Important Points to Consider
➢ | Citi has long been engaged on human rights issues. It also recognizes and respects the unique historical treatment and collective rights of Indigenous Peoples and understands that these communities’ languages, beliefs, cultural values, and lands are often under threat, representing a higher degree of vulnerability than other project-affected communities. Citi’s 2017 policy update was a refinement of its existing ESRM Policy, which is part of Citi’s overall Risk Policy. The purpose of the update was to enhance our existing robust approach to the issue to help ensure that the rights of Indigenous Peoples are respected in line with international norms and emerging best practice among public and private financial institutions. |
www.citigroup.com
Table of Contents
➢ | Citi launched a comprehensive ESRM Policy that incorporates the International Finance Corporation (IFC) Performance Standards, including stakeholder engagement and Indigenous Peoples, in 2003. In 2007, Citi became the first major U.S. bank to publish a Statement on Human Rights, publicly affirming its commitment to respecting the fundamental human rights in the Universal Declaration on Human Rights and the International Labour Organization core conventions. The Statement was updated in 2014 to incorporate our support for the United Nations Guiding Principles on Business and Human Rights. To review our Statement on Human Rights and other ESRM Policy-related information, please visit the “Environmental and Social Information” section under Investor Relations–Corporate Governance http://www.citigroup.com/citi/investor/corporate_governance.html#Environmental-and-Social-Information. |
➢ | The ESRM Policy prior to the 2017 update already addressed risks to Indigenous Peoples consistent with the Equator Principles and good industry practice: it included the requirement of Free, Prior, and Informed Consent (FPIC) found in the IFC’s Performance Standards and other international instruments for projects in developing countries. For projects built in developed countries, Citi applied requirements of national law. We have determined, however, that there are circumstances even in developed countries where national law falls below international human rights norms and industry good practice. |
➢ | Following the 2017 update, in all covered transactions where there is a specified use of proceeds, when a client’s assets may pose adverse effects to Indigenous Peoples, the transaction is flagged for enhanced due diligence, which may include the use of a qualified social consultant. Transactions covered by the ESRM Policy include corporate loans, capital market transactions, letters of credit, project finance loans, and equity investments that meet certain financial thresholds particular to the type of transaction. For further detail, please review Citi’s Environmental and Social Policy Framework http://www.citigroup.com/citi/sustainability/policies.htm. |
➢ | Under the updated policy, when project-related loans involve more extensive impacts, including involuntary resettlement of indigenous communities; significant impacts on land and natural resources traditionally used by the community; or significant impacts on critical cultural heritage, Citi expects project sponsor clients to avoid infringing upon the rights and protections for Indigenous Peoples and to have engaged in meaningful consultation with directly affected Indigenous Peoples, with the goal of achieving Free, Prior, and Informed Consent (FPIC). |
➢ | To address risks beyond project-related finance, over 2017 Citi began implementing an “ESRM Watchlist” process to flag certain clients with known elevated environmental or social risks (including Indigenous Peoples risks). Transactions of any kind for clients on the Watchlist require review by our ESRM team, including transactions for general corporate purposes. |
➢ | The 2017 update involved extensive stakeholder engagement and the retention of a human rights consultant. In revising the policy, Citi considered international human rights norms, such as the Universal Declaration on the Rights of Indigenous Peoples and the UN Guiding Principles on Business and Human Rights, industry practices of a range of clients and recognized leading companies, and how to best implement the policy in its institutional client lending activities. To develop internal guidance and help refine an implementation approach capable of addressing different on-the-ground challenges, Citi’s ESRM and Sustainability teams met with over a dozen external stakeholder organizations and individuals, including leading human rights and Indigenous Peoples NGOs and academics, development finance social risk experts, human rights consultants, a leading global industry association, and socially responsible investors. |
➢ | The Proposal was originally co-filed by Harrington Investments, Inc. and Mercy Investment Services, Inc. Company representatives met with Mercy Investment Services and discussed the factors enumerated above. Satisfied that Citi had addressed the issues raised by the Proposal through its existing policies and practices, Mercy Investment Services withdrew the Proposal. Notwithstanding our offer of engagement, Harrington Investments declined to meet with the Company. |
Board Recommendation
The Proposal calls for the establishment of a Human and Indigenous Peoples’ Rights Policy to ensure that safe-guarding such rights is considered whenever relevant to general corporate and commercial financing. The Company has had such a policy in place for over a decade and has continually reviewed and enhanced its policy and approach to such issues – as recently as 2017 – to remain at the forefront of leading industry practices. As such, the Proposal would not meaningfully enhance the Company’s existing management of the risks to human and Indigenous Peoples’ rights; therefore, the Board recommends that you voteAGAINSTthis Proposal 5.
| |  |
Citi 2018 Proxy Statement
Table of Contents
Proposal 6
James McRitchie and Myra K. Young have submitted the following proposal for consideration at the 2018 Annual Meeting:
Proposal 6 – Cumulative Voting
Resolved: Cumulative Voting. Shareholders recommend that our Board take the steps necessary to adopt cumulative voting. Cumulative voting means that each shareholder may cast as many votes as equal to number of shares held, multiplied by the number of directors to be elected. A shareholder may cast all such cumulated votes for a single candidate or focus on a few candidates. Under cumulative voting shareholders can withhold votes from poor-performing directors in order to cast multiple votes for other director candidates. This is an important protection for shareholders.
Cumulative voting also allows a significant group of shareholders to elect a director of its choice – safeguarding minority shareholder interests and bringing independent perspectives to Board decisions. Cumulative voting won 54%-support at Aetna and 51%-support at Alaska Air. It also received 53%-support at General Motors in two annual elections. The Council of Institutional Investors and CalPERS recommended adoption of this proposal topic.
Cumulative voting is useful so that shareholders can elect one director with a certain type of risk management expertise that would benefit the company the most. This is of utmost importance because shareholders of big banks have paid $10s of billions in fines since big bank managers failed to prevent misconduct related to Bernie Madoff’s Ponzi scheme, mortgage securities sales, energy market manipulation, military lending, foreclosures, municipal securities, collateralized debt obligations, mortgage servicing and foreign exchange rigging.
Please vote for improved corporate governance and risk management:
Cumulative Voting – Proposal 6
Management Comment
Summary
Cumulative voting is not in the best interest of Citi’s stockholders. Cumulative voting is fundamentally inconsistent with the majority-vote standard adopted by Citi in that it could lead to a director being elected without the support of a majority of stockholders. The Board believes that Citi’s current system for electing directors, combined with its strong governance structure, including a majority vote for director elections, and proxy access rights, provides effective Board accountability, responsiveness to stockholders, and best ensures that director elections reflect the will of the majority of the votes cast in an election. Cumulative voting would distort that process and increase the risk that a relatively small minority of stockholders could elect one or more directors who would not represent the broader interests of stockholders. The Board of Directors believes that its current approach produces a Board that represents the interests of the Company’s stockholders as a whole rather than the interests of any particular group.
Important Points to Consider
➢ | First, the Company’s By-laws provide for the annual election of all directors. Thus, unlike companies with staggered boards, the Company’s stockholders can replace some or all of the directors in any given election year. |
➢ | Second, consistent with the practices of leading publicly traded corporations, the Company’s By-laws provide for a majority-vote standard in uncontested elections and a plurality standard only in a contested election of directors by stockholders. |
www.citigroup.com
Table of Contents
➢ | Third, Citi’s Board believes that it has adopted many governance practices that advance stockholders’ rights, including a provision for stockholders to exercise proxy access, which permits an eligible stockholder (or a group of up to 20 stockholders) who has owned 3% of our Company’s stock for 3 years, pursuant to our Company’s By-laws, to nominate up to the greater of 2 directors and 20 percent of our Board, subject to the terms and conditions in the By-laws. Also, Citi’s stockholders have the right to call special meetings and act by written consent. |
➢ | Fourth, cumulative voting could result in the election of directors who do not have the support of a significant percentage of stockholders. Under cumulative voting, in an election of directors, each stockholder would be able to cast a number of votes equal to the number of directors to be elected multiplied by the number of shares he or she owns. These votes may be directed to a single candidate or allocated among candidates in any proportion. Cumulative voting could therefore result in the election of one or more directors by stockholders who represent a relatively small minority of Citi’s shares, conflicting with the purpose of a majority vote. |
➢ | Finally, the election of directors who represent separate stockholder groups with divergent interests could lead to a fragmented Board and impair its members’ ability to work together effectively for all stockholders. |
Board Recommendation
Citi believes its current voting system is fair and most likely to produce an effective Board that represents the interests of all Citi’s stockholders; therefore, the Board recommends a voteAGAINSTthis Proposal 6.
| | |
Proposal 7
CtW Investment Group has submitted the following proposal for consideration at the 2018 Annual Meeting:
Whereas,we believe in full disclosure of Citigroup’s direct and indirect lobbying activities and expenditures to assess whether Citigroup’s lobbying is consistent with its expressed goals and in the best interests of stockholders.
Resolved,the stockholders Citigroup request the preparation of a report, updated annually, disclosing:
1. | Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
|
2. | Payments by Citigroup used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.
|
3. | Description of management’s and the Board’s decision making process and oversight for making payments described in section 2 above.
|
For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which Citigroup is a member.
Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels.
The report shall be presented to the Audit Committee or other relevant oversight committees and posted on Citigroup’s website.
Citi 2018 Proxy Statement
Table of Contents
Supporting Statement
As stockholders, we encourage transparency and accountability in our company’s use of corporate funds to influence legislation and regulation. Citigroup spent $36.67 million from 2010 - 2016 on federal lobbying (opensecrets.org). This figure does not include lobbying expenditures to influence legislation in states, where Citigroup also lobbies in 42 states (“Amid Federal Gridlock, Lobbying Rises in the States,”Center for Public Integrity, February 11, 2016), but disclosure is uneven or absent. Citigroup’s lobbying on arbitration clauses has attracted media scrutiny (“Who Benefits from the Arbitration Rule, and Who Wants It Repealed?”International Business Times, July 12, 2017).
Citigroup is a member of the Chamber of Commerce, which has spent over $1.3 billion on lobbying since 1998. Citigroup is also a member of the Business Roundtable and the Securities Industry and Financial Markets Association, which together spent $50 million on lobbying in 2015 and 2016. Citigroup does not disclose its trade association payments or the portions used for lobbying on its website. Citigroup prohibits its payments to trade associations from being used for political contributions, but this does not cover payments used for lobbying. This leaves a serious disclosure gap, as trade associations generally spend far more on lobbying than on political contributions.
We are concerned that Citigroup’s lack of trade association lobbying disclosure presents significant reputational risk. For example, combating climate change is a strategic priority for Citigroup, yet the Chamber has consistently opposed legislation and regulation to address climate change. Transparent reporting would reveal whether company assets are being used for objectives contrary to Citigroup’s long-term interests.
Management Comment
Summary
Citi has a comprehensive system of reporting on Citi’s lobbying activities and political contributions. Citi discloses its lobbying activities as required by law in the more than 30 states in which it is actively engaged in lobbying, and at the federal level. Citi provides access to this information on its website. Moreover, shareholders can access Citi’s filings under the Lobbying Disclosure Act to view the issues and campaigns that Citi supports through its lobbying efforts. Citi also publishes annually on its website its political contributions made by the Citi Political Action Committees. Finally, Citi lists the names of the significant trade and business associations in which it participates. The Proposal would be substantively duplicative and not an effective use of Citi’s resources.
Important Points to Consider
➢ | Citi already has in place measures to promote transparency in and oversight of its lobbying and political activity. |
| ✓ | First, as required by its Charter, the Nomination, Governance and Public Affairs Committee of Citi’s Board of Directors provides oversight over the Company’s political contributions, trade association activities, and lobbying strategy. |
| ✓ | Second, Citi has links on its website to state government websites where its lobbying activities are reported. In addition, Citi discloses U.S. federal lobbying activity quarterly, as required by the Lobbying Disclosure Act (LDA). LDA requires disclosure of the issues and costs of its lobbying efforts. |
| ✓ | Third, Citi posts on its website a list, updated annually, of all corporate political contributions made by Citi as well as contributions made by Citi’s Political Action Committees (PAC). (www.citigroup.com. Click on “About Us,” and then “Corporate Governance.”) |
| ✓ | Fourth, Citi posts the names of its significant trade and business associations on its website. |
www.citigroup.com
Table of Contents
| ✓ | Citi’s Political Activities Statement, which can be found at www.citigroup.com, provides, in addition to the information above, meaningful disclosure about: |
| | ■ | Citi’s lobbying policies and procedures including grassroots lobbying – we commit to disclose any grassroots lobbying efforts or any state ballot initiative in which we engage; |
| | ■ | membership in any tax-exempt group that writes and endorses model legislation; and |
| | ■ | the Board’s oversight of lobbying activities and political contributions. |
➢ | As Citi already provides the disclosures requested by the Proposal, the focus of the Proposal appears to be on Citi’s membership in and oversight of lobbying expenditures made by trade associations and a concern that such trade associations will engage in activities that will harm Citi’s reputation. As noted above, the Citi Board’s Nomination, Governance and Public Affairs Committee provides oversight of Citi’s membership in trade associations. In addition, the overall amount of funds provided to trade associations for membership is not material to Citi and the amount used by those trade associations for lobbying, a small percentage of Citi’s dues payments, is even less significant. |
➢ | Concerns in the Proposal about trade associations using Citi funds for independent expenditures are unfounded. Citi will not directly or indirectly make payments to independent expenditure campaigns and has procedures in place to prevent such payments from being made. |
| ✓ | First, Citi policy prohibits contributions for independent expenditures which means it cannot make such payments directly. “Independent expenditures” are expenditures by an entity other than the political candidate or his or her campaign that support the candidate (or criticize his/her opponent) and are generally made by SuperPACs. |
| ✓ | Second, to prevent any indirect funding of SuperPACs, Citi requires, before Citi pays its dues, that trade and business associations attest that they have a process that assures that no funds provided by any Citi entity (whether by way of dues or otherwise) will be used for independent expenditures. |
➢ | Citi engages in lobbying activities on its own behalf and determines on which issues to lobby based on careful consideration of political and legislative matters that may have an impact on Citi. Citi’s lobbying efforts are necessarily focused on issues and positions favored by Citi. While trade and business associations may lobby on behalf of the financial industry, this “indirect” lobbying does not necessarily represent Citi’s positions. Attributing these lobbying efforts to Citi’s decision-making would be misleading to stockholders. |
➢ | Citi is also a member of trade associations for a variety of reasons not related to lobbying, including for information gathering and professional development. |
➢ | The report requested by the Proposal would be duplicative and is not an effective use of Citi’s resources. |
| ✓ | Citi’s current public disclosures, including its political contributions disclosure, the links on its website to disclosures of its state lobbying activities, its disclosures of federal lobbying under the Lobbying Disclosure Act, and the disclosure of its Political Activities Statement provide stockholders with extensive information of the kind and substance requested in the Proposal. |
| ✓ | Citi has also successfully passed regular audits by regulatory authorities with lobbying and political contributions oversight, as well as those performed by Citi’s Internal Audit function. In addition, Citi participates in the European Union’s voluntary lobbying disclosure registry. |
Board Recommendation
Because it already has extensive disclosure practices pertaining to its political contributions and lobbying activities, disclosures of its political contributions and lobbying expenditures, disclosure of its trade association participation, and a Political Activities Statement outlining its policies and procedures surrounding political and lobbying activities, Citi does not believe the additional disclosure requested by the stockholder Proposal would be useful to stockholders. In addition, disclosure of indirect lobbying activities by outside trade associations in itself would not offer stockholders a useful nor clear window into Citi’s approach to lobbying and political activity. The disclosure requested by the Proposal would thus not be an effective use of Citi’s resources or management’s time, nor would it provide stockholders with additional meaningful disclosures; therefore the Board recommends that you voteAGAINSTthis Proposal 7.
| | |
Citi 2018 Proxy Statement
Table of Contents
Proposal 8
John Chevedden has submitted the following proposal for consideration at the 20182019 Annual Meeting:
Proposal 85 – Shareholder Proxy Access Enhancement
RESOLVED: Stockholders ask the board of directors to amend its proxy access bylaw provisions and any associated documents, to include the following change for the purpose of decreasing the average amount of Company common stock the average member of a nominating group would be required to hold for 3-years to satisfy the aggregate ownership requirements to form a nominating group:group and to increase the possible number of proxy access director candidates:
No limitation shall be placed on the number of stockholders that can aggregate their shares to achieve the 3% of common stock required to nominate directors under our Company’s proxy access provisions.
The number of shareholder-nominated candidates eligible to appear in proxy materials will not be less than 2 when our board has less than 12 members. The number of shareholder-nominated candidates eligible to appear in proxy materials will not be less than 3 when our board has more than 12 members.
Proxy access for shareholders enables shareholders to put competing director candidates on the company ballot to see if they can get more votes than some of management’s director candidates. A competitive election is good for everyone. This proposal can help ensueensure that our management will nominate directors with outstanding qualifications in order to avoid giving shareholders a reason to exercise their right to use proxy access.
Even if the 20 largest public pension funds were able to aggregate their shares, they would not meet the current 3% criteria for a continuous 3-years at most companies according to the Council of Institutional Investors. This proposal addresses the situation that our company now has with proxy access potentially for only the largest shareholders who are the least unlikely shareholders to make use of it.
Since no group of shareholders at any U.S. company has yet to make use of proxy access, it is important to make sure that the current limitation of 20 shareholders is not a deterrent to shareholders using proxy access.
UnfortunatelyA more practical proxy access right would put shareholders in a better position to ask for improvement in our board took extra measuresstock price performance of a decline from $71 to $63 in 2017 so that we would be excluded from voting on a similarthe year leading up to the submittal of this proposal. Our Board probably spent more money to prevent us from voting on a similar 2017 proposal than it would have spent if it allowed us to vote. Are those the kind of decisions to expect from a $200 billion company?
Please vote to enhance shareholder value:yes:
Shareholder Proxy Access Enhancement – Proposal 85
www.citigroup.com
Table of Contents
Management Comment
Summary
Citi implemented a progressive proxy access by-law provision for our stockholders in 2015 that is aligned with current best practices, providing stockholders with meaningful and appropriate proxy access rights while taking into account the need to balance enhancing stockholder rights with protecting the interests of all our stockholders. The Board adopted the proxy access by-law provision after careful consideration and engagement with a number of our stockholders. Since our adoption of proxy access, we have had further discussions regarding proxy access with stockholders. Based on their feedback as well as a benchmarking review of proxy access rights adopted by other companies, we continue to believe that our current proxy access structure is the most appropriate for the Company and its stockholders at this time.
www.citigroup.com
Table of Contents
132➢ | STOCKHOLDER PROPOSALS |
Important Points to Consider
➢Citi’s Proxy Access By-law is within the mainstream of other significant U.S. public companies with proxy access rights. Specifically, our By-laws permit a stockholder, or a group of up to twenty stockholders, owning at least three percent of Citi’s outstanding shares of common stock continuously for at least three years, to nominate and include in our annual meeting proxy materials director nominees constituting twenty percent of the Board (but no fewer than two nominees), subject to the other procedural requirements specified in our By-laws. In fact, two of the three provisions sought by the proponent are already included in Citi’s Proxy Access By-law.
➢The proponent acted as a proxy for the proponent (the “Original Proponent”) of a Proxy Access Stockholder Proposal (the “Original Proposal”) voted on by stockholders at the 2015 annual meeting. The Board supported the Original Proposal after negotiating and agreeing on the terms with the proponent and the Original Proponent and, after stockholders expressed support for the Original Proposal, subsequently amended the By-laws to grant stockholders the right to have stockholder nominees to the Board included in the Company’s proxy materials. The proponent now seeks to change the terms agreed to in 2015. The Proposal requests the following changes to Citi’s Proxy Access By-law: (i) no limitation on the number of stockholders that can aggregate their shares to achieve the 3% of common stock required to nominate directors and (ii) an increase in the number of shareholder-nominated candidates if there are more than 12 members on the Board. Management believes that the changes put forth in the Proposal are not in the best interests of Citi’s stockholders.
● | Consistent with the practices of many other public companies that have adopted proxy access, Citi limited the maximum number of directors who could be nominated through proxy access to the greater of two individuals or 20% of the Board (but no fewer than two nominees), subject to trythe other procedural requirements specified in our By-laws. In fact, all of the provisions sought by the Proponent, except for the provision permitting an unlimited number of stockholders to ensureaggregate their holdings to nominate candidates, are already included in Citi’s Proxy Access By-law. A recent study published by Sidley Austin LLP summarizes proxy access provisions adopted since January 1, 2015 and, after analyzing 565 provisions, concluded that there could be enough stockholder-selecteda nominating group size limit of 20 was by far the most common limit, averaging 93% of the companies surveyed.1 Citi’s Proxy Access provisions, including its group aggregation limit, are in line with best practices among U.S. corporations. |
| ➢ | The proponent acted as a proxy for the proponent (the “Original Proponent”) of a Proxy Access Stockholder Proposal (the “Original Proposal”) voted on by stockholders at the 2015 annual meeting. The Board supported the Original Proposal after negotiating and agreeing on the terms with the proponent and the Original Proponent and, after stockholders expressed support for the Original Proposal, subsequently amended the By-laws to grant stockholders the right to have stockholder nominees to have a meaningful effect on the Board without excessive disruption of a Board’s continuity and operations andincluded in the balance ofCompany’s proxy materials. The proponent now seeks to change the knowledge, experience, skills, and diversity ofterms agreed to in 2015. The Proposal requests the Board. The existingfollowing change to Citi’s Proxy Access By-law: no limitation on the maximum number of directors whostockholders that can be nominated through proxy access strikes an appropriate balance between enhancing stockholder rights and adequately protectingaggregate their shares to achieve the 3% of common stock required to nominate directors. Management believes that the change put forth in the Proposal is not in the best interests of Citi and itsCiti’s stockholders. |
●✓ | Allowing a limited number of holders, who own a meaningful interest in the Company for a reasonable period of time, to act as a group strengthens the principle that we believe is shared by most of our stockholders – stockholders–the right to nominate a director using the Company’s proxy statement should be available only for thosethose who have a sufficient financial stake in the Company to cause their interests to be aligned with the interests of our stockholders as a whole and help reduce the risk of abuse of proxy access rights by stockholders with a special interest, including interests unrelated to long-term stockholder value.stockholders. |
●✓ | The existing limit on the number of holders who can aggregate their shares creates a reasonable limitation that will control the administrative costs for Citi. In the absence of a reasonable limitation, – or as the Proposal requests, proposal requests–no limitation, – on the number of stockholders in a group, Citi could be required to make burdensome and time-consuming inquiries into the nature and duration of the share ownership of a large number of individuals.individuals |
Board Recommendation Because Citi has adopted a progressive proxy access by-law provisionprovisions that servesserve the best interests of the Company and our stockholders and is in line with best practices among Citi’s peers and the vast majority of large cap companies, adoption of the stockholder Proposalproposal is not necessary or appropriate; therefore the Board recommends a voteAGAINST this Proposal 8.5. | | |
| |  |
| 1 | Sidley Austin LLP,Proxy Access – The Latest on Proxy Access, January 11, 2019. https://www.sidley.com/-/media/update-pdfs/2019/01/20190111-corporate-governance-update.pdf |
Citi 20182019 Proxy Statement
Table of Contents
| STOCKHOLDER PROPOSALS | 133121 |
Proposal 96
AFL–CIO Reserve Fund has submitted the following proposal for consideration at the 20182019 Annual Meeting:
RESOLVED: Shareholders of Citigroup Inc. (the “Company”) request that the Board of Directors adopt a policy prohibiting the vesting of equity-based awards for senior executives due to a voluntary resignation to enter government service (a “Government Service Golden Parachute”).
For purposes of this resolution, “equity-based awards” include stock options, restricted stock and other stock awards granted under an equity incentive plan. “Government service” includes employment with any U.S. federal, state or local government, any supranational or international organization, any self-regulatory organization, or any agency or instrumentality of any such government or organization, or any electoral campaign for public office.
This policy shall be implemented so as not to violate existing contractual obligations or the terms of any compensation or benefit plan currently in existence or approved by shareholders on the date this proposal is adopted, and it shall apply only to equity plans or plan amendments that shareholders approve after the date of the 20182019 annual meeting.
Supporting Statement:
Our Company provides its senior executives with vesting of equity-based awards after their voluntary resignation of employment from the Company to pursue a career in government service. In other words, our Company gives a “golden parachute” for entering government service. For example, Stephen Bird, CEOAlthough the Company’s current named executive officers may have attained the “rule of Global Consumer Banking, was entitled60” under which deferred stock awards continue to $12 million in unvested equity awards if he entered government servicevest on December 31, 2016.schedule, future named executive officers and other senior executives may be able to take advantage of this golden parachute.
At most companies, equity-based awards vest over a period of time to compensate executives for their labor during the commensurate period. If an executive voluntarily resigns before the vesting criteria are satisfied, unvested awards are usually forfeited. While government service is commendable, we question the practice of our Company providing continued vesting of equity-based awards to executives who voluntarily resign to enter government service.
The vesting of equity-based awards over a period of time is a powerful tool for companies to attract and retain talented employees. But contrary to this goal, our Company’s award agreements contain a “Voluntary Resignation to Pursue Alternative Career” clause that provides for the continued vesting of restricted stock of executives who voluntarily resign to pursue a government service career.
In last year’s proxy statement, the Company responded to this proposal by stating its desire to facilitate “some degree of parity between private and public sector employment” because “unvested awards are typically ‘bought out’replaced with new awards by a new private sector employer.” In our view, it is simply not appropriate for our Company’s employees who choose to enter government service to be “bought out. ”out” in this way.
We believe that compensation plans should align the interests of senior executives with the long-term interests of the Company. We oppose compensation plans that provide windfalls to executives that are unrelated to their performance. For these reasons, we question how our Company benefits from providing Government Service Golden Parachutes. Surely our Company does not expect to receive favorable treatment from its former executives?
www.citigroup.com
Table of Contents
134122 | STOCKHOLDER PROPOSALS |
Management Comment
Summary
Citi’s deferred compensation programs, like those of many other companies, include provisions that alter an award’s regular forfeiture conditions and provide for vesting in a range of circumstances (e.g., termination of employment on account of death, disability, involuntary termination not for cause, and upon meeting certain retirement-type age and service provisions). The alternative career provision, which is available to all employees who are eligible for deferred compensation awards (not just senior executives), is one of these exceptions. Under the alternative career provision, an employee who is not eligible for retirement may resign to work full-time in a paid career in government service, for a charitable institution, or as a teacher at an educational institution, and have his/her awards continue to vest on schedule. (A retirement-eligible employee may work for such employers and continue to vest regardless of the alternative career provision.) We believe that the alternative career provision, like other exceptions to the vesting conditions of our programs, helps us attract talented employees, which is a goal that furthers both our long-term business objectives and benefits stockholders at minimal cost.
Important Points to Consider
➢Adopting a policy that erodes the features of an incentive program intended to attract and retain talented employees would be detrimental to Citi’s long-term business objectives. The alternative career provision is necessary to remain competitive for talent in the financial services industry, as it is an element of our peers’ programs. It is not an executive perk; it is a component of our broader-based incentive programs covering about 8,300 employees globally.
➢The alternative career provision operates at minimal cost to Citi and its stockholders, despite broad eligibility. As of December 5, 2017, only eight participants globally, none of which were executive officers, were vesting on schedule by reason of the provision, and only one of those individuals was vesting on schedule by reason of the government service component of the provision.
➢The proponent asserts in the supporting statement of its Proposal that “Our Company provides its senior executives with vesting of equity-based awards after their voluntary resignation of employment from the Company to pursue a career in government service.” The provision is not relevant to most of Citi’s current executive officers (including the five executive officers who were named executive officers in Citi’s 2018 Proxy Statement). Due to their service to Citi, these executive officers will continue to vest on schedule after resignation as long as they do not work for a “significant competitor.” Consequently, even if these executive officers were to leave Citi for government service, the provision would not apply to them. Moreover, no executive officer has resigned and continued to vest in his or her awards by reason of the provision in the last 10 years.
➢The provision does not result in a “windfall” to employees as they have earned the awards for services already performed. Furthermore, Citi’s deferred incentive awards are subject to business-based performance conditions during the vesting period and to meaningful clawback provisions in the event of misconduct or other specified negative circumstances. Accordingly, awards that vest on schedule by reason of alternative career or other reasons are still subject to important conditions for receipt. These clawback provisions and business-based performance vesting conditions provide for alignment of stockholder and employee interests after termination of employment during the vesting period.
➢The proponent alludes to the proposition that the goal of the alternative career provision is to enable Citi to influence government policymakers. The purpose of the government service component of the provision is not to allow Citi executives to influence government – it is to encourage public service at all employment levels at Citi.
Citi 2018 Proxy Statement
Table of Contents
STOCKHOLDER PROPOSALS➢ | 135Adopting a policy that erodes the features of an incentive program intended to attract and retain talented employees would be detrimental to Citi’s long-term business objectives. The alternative career provision is necessary to remain competitive for talent in the financial services industry, as it is an element of our peers’ programs. It is not an executive perk; it is a component of our broader-based incentive programs covering about 8,300 employees globally. |
| ➢ | The alternative career provision operates at minimal cost to Citi and its stockholders, despite broad eligibility. As of December 5, 2017, only eight participants globally, none of whom were executive officers, were vesting on schedule by reason of the provision. |
| ➢ | The proponent asserts in the supporting statement of its Proposal that “Our Company provides its senior executives with vesting of equity-based awards after their voluntary resignation of employment from the Company to pursue a career in government service.” The provision is not relevant to most of Citi’s current executive officers (including the five executive officers who were named executive officers in Citi’s 2018 Proxy Statement). Due to their service to Citi, these executive officers will continue to vest on schedule after resignation as long as they do not work for a “significant competitor.” Consequently, even if these executive officers were to leave Citi for government service, the provision would not apply to them. Moreover, no executive officer has resigned and continued to vest in his or her awards by reason of the provision in the last 10 years. |
| ➢ | The provision does not result in a “windfall” to employees as they have earned the awards for services already performed. Furthermore, Citi’s deferred incentive awards are subject to business-based performance conditions during the vesting period and to meaningful clawback provisions in the event of misconduct or other specified negative circumstances. Accordingly, awards that vest on schedule by reason of alternative career or other reasons are still subject to important conditions for receipt. These clawback provisions and business-based performance vesting conditions provide for alignment of stockholder and employee interests after termination of employment during the vesting period. |
| ➢ | The proponent alludes to the proposition that the goal of the alternative career provision is to enable Citi to influence government policymakers. The purpose of the government service component of the provision is not to allow Citi executives to influence government–it is to encourage public service at all employment levels at Citi. |
➢The alternative career provision helps maintain strong employee relations by facilitating some degree of parity between private and public sector employment following Citi service. Employees who are not eligible to retire and who leave to work in the private sector often do not face an economic penalty as a consequence of their decision to leave Citi as their unvested awards are typically replaced with new awards by a new private sector employer. Conversely, employees who are not eligible to retire are unlikely to have their unvested awards replaced by a new public, educational, or non-profit sector employer and therefore would typically lose deferred awards if they entered those sectors. In contrast, employees who are eligible to retire under our incentive programs may leave to work in public, educational, or non-profit service and continue to vest. The alternative career provision therefore promotes equitable treatment of employees seeking employment in public, educational, and non-profit sectors by allowing employees who are not eligible to retire to continue to vest in their equity awards while employed in such sectors.
Board Recommendation The alternative career provision advances stockholder interests by enabling Citi to attract and retain talented employees; adopting this Proposal would put Citi at a competitive disadvantage and could harm the Company and its employees; therefore the Board recommends a voteAGAINST this Proposal 9.6. | | |
| | |
Citi 2019 Proxy Statement
Table of Contents
Proposal 107
Kenneth Steiner has submitted the following proposal for consideration at the 20182019 Annual Meeting:
Proposal 107 – Special ShareownerShareholder Meetings
Resolved, Shareowners ask our board to take the steps necessary (unilaterally if possible) to amend our bylaws and each appropriate governing document to give holders in the aggregate of 15% of our outstanding common stock the power to call a special shareowner meeting. This proposal does not impact our board’s current power to call a special meeting.
Scores of Fortune 500 companies allow even 10% of shares to call a special meeting. Special shareholder meetings allow shareownersshareholders to vote on important matters, such as electing new directors that can arise between annual meetings. This proposal topic won more than 70%-support at Edwards Lifesciences and SunEdison. This proposal topic, sponsored by William Steiner, also won 78% support at a Sprint annual meeting with 1.7 Billion yes-votes. Nuance Communications (NUAN) shareholders gave 94%-support in February 2018 to a rule 14a-8 proposal calling for 10% of shareholders to call a special meeting.
This proposal topic won a majority votesupport at ourthe 2011 Citigroup annual meeting – and our top management casually ignored our majority vote. Also our bylaws do notalso 49.9% support at the 2018 Citigroup annual meeting. Both these votes would have been higher if all shareholders had access to independent proxy voting advice.
Our current higher 25%-threshold for shareholders to call for a shareholder rightspecial meeting may be unreachable due to acttime constraints and the detailed technical requirements that can easily trigger disqualifying errors by written consent.shareholders.
Any claim that a shareholder right to call a special meeting can be costly – may be largely moot. When shareholders have a good reason to call a special meeting – our board should be able to take positive responding action to make a special meeting unnecessary.
Shareholder proposals such as this have taken a leadership role to improve the corporate governance rules of our company. For instance Citigroup adopted shareholder proxy access after James McRitchie submitted a proxy access proposal in 2014 and 2015.
Please vote for improved corporate governance:yes:
Special ShareownerShareholder Meetings – Proposal 107
www.citigroup.com
Table of Contents
Management Comment
Summary
Citi supports stockholders having the right to call a special meeting, which is why Citi’s By-laws already provideprovided stockholders that own at least 25% of the outstanding shares of the Company’scompany’s common stock the power to call a special meeting of stockholders. OurIn response to the vote at the 2018 Annual Meeting on a proposal to lower the threshold to 15%, which did not pass but received significant shareholder support, the Board, continuestaking into account the vote result, input from institutional investors and peer thresholds, has carefully considered the appropriate ownership threshold to believe thatcall a 25%special meeting and amended Citi’s By-laws to lower the threshold to 20%. The 20% threshold aligns Citi with many of its peers and strikes an appropriate balance between facilitating extraordinary meetings when deemed necessary by a sufficient numberthe right of our stockholders and not providing undue power to a small minority of stockholders. In that regard, the rightshareholders to call a special meeting should be reserved for those matters that are time sensitive and significant enough to warrant supportthe interests of 25%Citi and our stockholders in promoting the appropriate use of Citi’s stockholders.Company resources. Given the number of outlets stockholders have to express their concerns, Citi believes nothat the adjustment to the 25%20% threshold is warranted.properly addresses shareholder concerns, without providing undue power to a small minority of stockholders.
www.citigroup.com
Table of Contents
Important Points to Consider
➢Special meetings of stockholders should only be called if a reasonably large proportion of Citi’s stockholders determine that a meeting is necessary, for extraordinary events that only occur when fiduciary obligations or strategic concerns require that matters be addressed on an accelerated basis rather than waiting until the next annual meeting. Citi believes it is reasonable to maintain a 25% threshold in order to prevent unnecessarily frequent special meetings. The existing 25% ownership requirement strikes the appropriate balance between the right of stockholders to call a special meeting in appropriate circumstances and the substantial administrative and financial burdens that special meetings can impose on our company. The existing 25% threshold requires large and small stockholders to work together to bring an important matter to the general stockholder population through a special meeting.
➢Holding a special meeting of our stockholders would be a costly undertaking, involve substantial planning, and require us to commit significant resources and attention to the legal and logistical elements of such a meeting. Due to these costs, we believe that it is essential that this right be limited in the manner provided by the 25% threshold. The Company’s stockholders should only have to bear such expenses and our Board and management should divert attention away from overseeing and running the business only when at least a quarter of stockholders agree that it is worth doing so. If fewer than 25% of our stockholders think a special stockholder meeting is required, we believe there is insufficient reason to hold one, particularly when there are other avenues for stockholders to express concerns regarding Citi.
➢The proponent’s concern appears to be that the current minimum ownership threshold to call a special meeting of the Company’s stockholders unduly restricts or limits stockholders’ ability to call a special meeting of stockholders. Yet, the 25% ownership limit contained in the By-laws achieves the primary objective of the Proposal by ensuring that any stockholder may form a group by combining with any of a large number of other stockholders to achieve the 25% ownership threshold to call a special meeting of stockholders.
➢The concerns of stockholders who might want to call a special meeting but who cannot garner the support of a quarter of the Company’s stockholders have alternatives for expressing their concerns:
●➢ | Special meetings of stockholders should only be called if a reasonably large proportion of Citi’s stockholders determine that a meeting is necessary for extraordinary events that only occur when fiduciary obligations or strategic concerns require that matters be addressed on an accelerated basis rather than waiting until the next annual meeting. Citi amended the threshold to 20% and believes it is a reasonable threshold in order to prevent unnecessarily frequent special meetings. The 20% ownership threshold strikes the appropriate balance between the right of stockholders to call a special meeting in appropriate circumstances and the substantial administrative and financial burdens that special meetings can impose on our Company. The 20% threshold requires large and small stockholders to work together to bring an important matter to the general stockholder population through a special meeting. |
| ➢ | Holding a special meeting of our stockholders would be a costly undertaking, involve substantial planning, and require us to commit significant resources and attention to the legal and logistical elements of such a meeting. Due to these costs, we believe that it is essential that this right be limited in the manner provided by the 20% threshold. The company’s stockholders should only have to bear such expenses and our Board and management should divert attention away from overseeing and running the business only when a significant percentage of stockholders agree that it is worth doing so. If fewer than 20% of our stockholders think a special stockholder meeting is required, we believe there is insufficient reason to hold one, particularly when there are other avenues for stockholders to express concerns regarding Citi. |
| ➢ | The Proponent’s concern appears to be that the current minimum ownership threshold to call a special meeting of the Company’s stockholders unduly restricts or limits stockholders’ ability to call a special meeting of stockholders. The Board, taking into account peer thresholds, the 2018 vote of shareholders on this proposal, alternatives Citi’s shareholders have for expressing their concerns, and the input of institutional investors, lowered the ownership threshold to call a special meeting of stockholders to 20%. |
| ➢ | The concerns of stockholders who might want to call a special meeting but who cannot garner the support of 20% of the Company’s stockholders have alternatives for expressing their concerns: |
| ✓ | Stockholders of Citi have the ability to act by written consent; |
●✓ | Citi’s Board has adopted a proxy access by-law that enables stockholders to include up to two Directordirector candidates in Citi’s Proxy Statement; |
●✓ | Stockholders have ample opportunity to express their concerns at the Company’s Annual Meeting, or, alternatively, in writing, by following the instructions on page 4342 of this Proxy Statement; and |
●✓ | Stockholders can communicate directly with our Board and management. |
Board Recommendation Citi continuesIn response to believe that our currentthe vote at Citi’s 2018 Shareholder meeting, Citi’s Board of Directors lowered the threshold of 25%to 20% to call a special meetingmeeting; this provides stockholders with assurance that a reasonable number of stockholders consider a matter important enough to merit a special meeting; therefore the Board recommends that youa voteAGAINSTthis Proposal 10.7.
| | |
| | |
Citi 20182019 Proxy Statement
Table of Contents
| STOCKHOLDER PROPOSALS | 137125 |
Submission of Future Stockholder Proposals
Under SEC Rule 14a-8, a stockholder who intends to present a proposal at the next Annual Meeting of stockholders and who wishes the proposal to be included in the Proxy Statement for that meeting must submit the proposal in writing to the Corporate Secretary of Citi, Rohan Weerasinghe, at 388 Greenwich Street, New York, New York 10013. The proposal must be received no later than November 14, 2018.7, 2019. The proposal and its proponent must satisfy all applicable requirements of Rule 14a-8.
Citi’s By-laws permit a stockholder or group of stockholders (up to 20) who have owned at least 3% of Citi common stock for at least three years to submit Director nominees (up to the greater of two nominees or 20% of the Board, as determined in accordance with the By-laws) for inclusion in Citi’s Proxy Statement if the nominating stockholder(s) satisfies the requirements specified in the By-laws. With respect to stockholder nominees for Director election submitted for inclusion in Citi’s Proxy Statement for the 20192020 Annual Meeting, written notice of nominations must be provided by the stockholder proponent(s) to Citi in accordance with Citi’s By-laws. The notice must be delivered to, or mailed and received by, Citi’s Corporate Secretary between October 15, 20188, 2019 and November 14, 2018.7, 2019. These deadlines are based on the 150th day and 120th day, respectively, before the one-year anniversary of the date that the Proxy Statement for this Annual Meeting was first sent to stockholders (which date, for purposes of Citi’s By-laws, is March 14, 2018)6, 2019). The ability to include a nominee in Citi’s Proxy Statement is subject to the terms and conditions set forth in Citi’s By-laws.
With respect to stockholder nominees for Director election at the next Annual Meeting (other than nominees submitted for inclusion in Citi’s proxy materials) and stockholder proposals for consideration at the next Annual Meeting that are not submitted for inclusion in Citi’s proxy materials under Rule 14a-8, written notice of nominations and proposals must be provided by the stockholder proponent to Citi in accordance with Citi’s By-laws. The notice must be delivered to, or mailed and received by, Citi’s Corporate Secretary, Rohan Weerasinghe, between December 25, 201818, 2019 and January 24, 201917, 2020 and must comply with all applicable provisions of Citi’s By-laws. You may obtain a copy of Citi’s By-laws on Citi’s website or by writing to the Corporate Secretary, Rohan Weerasinghe, at 388 Greenwich Street, New York, New York 10013.
Cost of Annual Meeting and Proxy Solicitation
Citi pays the cost of the Annual Meeting and the cost of soliciting proxies. In addition to soliciting proxies by mail, Citi may solicit proxies by personal interview, telephone, and similar means. No Director, officer, or employee of Citi will be specially compensated for these activities. Citi also intends to request that brokers, banks, and other nominees solicit proxies from their principals and will pay the brokers, banks, and other nominees certain expenses they incur for such activities. Citi has retained Morrow Sodali LLC, 470 West Avenue, Stamford, CT 06902, a proxy soliciting firm, to assist in the solicitation of proxies, for an estimated fee of $30,000 plus reimbursement of certain out-of-pocket expenses.
Householding
Under SEC rules, a single set of Annual Reports and Proxy Statements may be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses. In accordance with a notice sent to certain stockholders who shared a single address, only one Annual Report and Proxy Statement will be sent to that address unless any stockholder at that address requested multiple sets of documents be sent. However, if any stockholder who agreed to householding wishes to receive a separate Annual Report or Proxy Statement, for 2017 or in the future, he or she may telephone toll-free 1-866-540-7095 or write to Broadridge Financial Services, Inc., Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Stockholders sharing an address who wish to receive a single set of reports may do so by contacting their banks or brokers, if they are beneficial holders, or by contacting Broadridge at the address set forth above, if they are record holders.
www.citigroup.com
Table of Contents
Directions to 20182019 Annual Meeting Location
  | Date and Time April 24, 2018,16, 2019, 9:00 a.m. |
| | |
  | Place | Citi’s Headquarters |
| The Great Hall of The Congress Plaza Hotel388 Greenwich Street (between North Moore and Beach Streets)
520 South Michigan Avenue
Chicago, Illinois 60605New York, New York 10013
|
The Congress Plaza Hotel is accessible by public transportation. If you plan to visit by car, please allow extra time to navigate Chicago traffic and secure parking. There are multiple parking garages near The Congress Plaza Hotel; however, it is recommended that you contact a parking garage ahead of time to ensure availability.Key Information for attending Citi’s 2019 Annual Meeting:
● | Please register for the Annual Meeting at www.proxyvote.com. |
| ● | Print your ticket at home or call Shareholder Meeting Registration Phone Support (toll free) at 1-844-318-0137 or (international toll call) at 1-925-331-6070 for assistance. |
| ● | From the South on the Dan Ryan Expressway — I-90/94Deadline date isApril 15, 2019. |
| ● | ExitCiti’s Headquarters at Congress Parkway downtown |
● | Follow Congress Parkway388 Greenwich Street is accessible by public transportation. If you plan to Michigan Avenue |
● | Turn right on Michigan Avenue — The Congress Plaza Hotelvisit by car, please allow extra time to navigate New York City traffic and to secure parking. There are multiple parking garages in Tribeca; however, it is on the corner |
From the North on the Kennedy Expressway — I-90/94
● | Followrecommended that you contact a parking garage ahead of time to Congress Parkway East |
● | Follow Congress Parkway to Michigan Avenue |
● | Turn right on Michigan Avenue — The Congress Plaza Hotel is on the corner |
From the West on the Eisenhower Expressway — I-290
● | Follow to Congress Parkway East |
● | Follow Congress Parkway to Michigan Avenue |
● | Turn right on Michigan Avenue — The Congress Plaza Hotel is on the corner |
Driving South on Lake Shore Drive — Route #41
● | Stay in right lane, exit at Randolph Street, and continue to Michigan Avenue |
● | Turn left on Michigan Avenue and continue 7 blocks to the corner of Congress Parkway and Michigan Avenue |
● | The Congress Plaza Hotel is on the southwest corner |
Driving North on Lake Shore Drive — Route #41
● | Stay in left lane, exit at Balbo Drive, and continue to State Street |
● | Turn right on State Street and continue to the corner of Congress Parkway and State Street |
● | Turn right onto Congress Parkway and drive 2 blocks to Michigan Avenue |
● | Turn right on Michigan Avenue — The Congress Plaza Hotel is on the corner |
| “L” System |
Blue Line from O’Hare Airport, exit at Jackson and walk 3 blocks east |
Orange Line from Midway Airport, exit at LaSalle and walk 3 blocks east |
Red Line, exit at Harrison and walk 3 blocks toward Lake Michigan |
| Metra Rail |
● | Take the Rock Island District line to LaSalle Street |
● | Walk east toward Lake Michigan (approximately 7 blocks) |
● | At Michigan Avenue – the hotel is on the right sideensure availability. |
 
| By Subway |
| Buses — the following buses stop in front of the hotel: train to Franklin Street, walk 2 blocks west to Greenwich Street and North Moore Street. |
|  trains to Canal Street, walk 3.5 blocks west to Greenwich Street and Beach Street. |
| ● | For more information, please visit: www.mta.info. |
| | |
 | By Car |
| ● | From the East Side, use the FDR Drive to South Street Viaduct/West Street. Continue to Hubert Street, making a right turn on Hubert Street, proceed 2 blocks to Greenwich Street, make a right turn onto Greenwich Street and proceed 1 block to 388 Greenwich Street on your right. |
| ● | From the Upper West Side, take the West Side Highway to Vestry Street (approximately 3 4, 6, 26, 28, 147, J14blocks after Canal Street). Turn left onto Vestry Street, turn right at the 2nd cross street onto Greenwich Street and proceed 3 blocks to 388 Greenwich Street on your right. |
| ● | Please Note: Citi’s Headquarters at 388 Greenwich Street does not have designated visitor parking. Limited street parking is available, and there are nearby parking garages. |
| | |
 | By Bus |
| ● | Buses arrive at the Port Authority Bus Terminal at 42nd Street. Please take either the subway or an MTA bus downtown. Please visit: www.mta.info for further information. |
| | |
 | By Railroad |
| ● | Long distance trains (i.e., Amtrak, LIRR and NJT) generally arrive in Penn Station (at 34th Street and 7th Avenue). From Penn Station, either take a taxi to 388 Greenwich Street, or a downtown train  or (follow subway directions above). For more information, please visit: www.mta.info. |
| ● | Metro North Commuter trains (servicing Hudson, Harlem, and New Haven lines) arrive in Grand Central Terminal. From Grand Central, take a taxi to 388 Greenwich Street, or subway using the shuttle to Times Square and transfer to the downtown to the Franklin Street stop. Exit the Franklin subway station and walk 2 blocks west and turn right onto Greenwich Street. Citi’s headquarters is on the northwest corner of Greenwich and North Moore Streets. |
Citi 20182019 Proxy Statement
Table of Contents
Annex A
Additional Information Regarding Proposal 3
Glossary
CCARrefers to the Federal Reserve Board’s annual Comprehensive Capital Analysis and Review. CCAR is an important regulatory supervisory mechanism for assessing the capital adequacy of banks including, among other things, ensuring that banks have sufficient capital to continue to provide key financial services under adverse economic and financial market scenarios. Banks may not return capital to stockholders or take other capital actions unless the Federal Reserve Board indicates that it has “no objection” to a bank’s capital plan, including its requested capital actions.
Cumulative Earnings Per Sharefor our Performance Share Units is determined by adding the diluted earnings per share based on net income allocated to common stockholders from our quarterly earnings reports for the 12 quarters of the applicable three-year performance period.
Deferred Tax Assets or DTAsrepresent the accumulated tax benefits on Citi’s Consolidated Balance Sheet resulting from losses in prior years that Citi expects to use to offset tax liabilities on future profits. These assets are excluded to some extent from the calculation of a bank’s regulatory capital. This has the effect of limiting the amount of capital that a bank can deploy in its banking business or can return to stockholders. Large DTAs mean that a bank must retain higher amounts of capital, thereby making higher returns harder to achieve. Reductions in DTAs are therefore important because the reductions have the effect of making more capital usable either in Citi’s businesses or for return to Citi’s stockholders.
Efficiency Ratiois total operating expenses divided by total revenues (net of interest expense). This ratio generally compares the cost of generating revenue to the amount of revenue generated. A lower cost is preferable to a higher cost in generating the same amount of revenue, and therefore, a lower efficiency ratio is generally better than a higher one. This metric encourages management to consider the costs of generating additional revenue instead of simply maximizing revenue, and can be used on a relative basis to identify which businesses are managed better than others.
Income from Continuing Operations Before Taxesis revenues minus expenses and cost of credit, before taxes and discontinued operations.
Net Incomerepresents a company’s after-tax profits. Net Income is an element of the metrics that measure return on assets or capital.
Return on Assets (ROA)is net income divided by average assets as determined under U.S. GAAP.
Return on Tangible Common Equityis net income for a business or Citigroup (minus preferred dividends in the case of Citigroup) divided by average tangible common equity for the year. Management views this metric as an appropriate indication of the long-term potential of Citi’s operating businesses to deliver long-term value to stockholders.
Risk Appetite Ratiois the ratio between the earnings of a business unit, including expected losses (defined as revenues, net of interest expense, minus operating expenses, minus expected losses) (the numerator) and the stress losses (i.e., unexpected losses) of Citi or the applicable business segment under a 1-in-10 year stress scenario (the denominator). The applicable business unit should produce sufficient earnings each year, so that it does not lose money under a moderate stress event (i.e., a 1-in-10 year stress scenario). As long as the relationship is higher than 1-to-1, then the business unit “passes” the Risk Appetite Ratio test. The Risk Appetite Ratio is currently viewed as a baseline standard or a minimum goal.
www.citigroup.com
Table of Contents
Risk Appetite Surplus, for a business unit, is earnings (defined as revenues, net of interest expense, minus operating expenses) minus both expected losses and unexpected losses (i.e., the stress losses of the business unit under a 1-in-10 year stress scenario). The Risk Appetite Surplus metric is intended to measure the ability of a business unit to withstand a moderate stress event without incurring an annual loss. Risk Appetite Surplus is used as a more nuanced qualitative tool to evaluate the capital generation power of businesses that may “pass” the Risk Appetite Ratio test.
www.citigroup.com
Table of Contents
Citigroup – FinancialQuantitative Scorecard Metric DetailDetails and Adjusted Results Reconciliations
(In millions of dollars, except ratios)ratios and earnings per share)
| | Citigroup | | GCB | | ICG | | Latin
America |
| As Reported Income from Continuing Operations before Income Taxes | | $22,761 | | $7,213 | | $16,074 | | $3,234 |
| |
| Less: Provision for Income Taxes | | 29,388 | | 3,320 | | 7,008 | | 1,132 |
| Add: Income from Discontinued Operations | | (111 | ) | — | | — | | — |
| Less: Noncontrolling Interests | | 60 | | 9 | | 57 | | 4 |
| As Reported Net Income (Loss) | | $(6,798 | ) | $3,884 | | $9,009 | | $2,098 |
| | | | | | | | | |
| Add Back: Provision for Income Taxes Related to Tax Reform | | 22,594 | | 750 | | 2,000 | | — |
| Adjusted Net Income for Adjusted Return on Assets and Return on | | | | | | | | |
| Tangible Common Equity | | $15,796 | | $4,634 | | $11,009 | | $2,098 |
| |
| Average Assets | | $1,875,400 | | $418,000 | | $1,358,000 | | $129,000 |
| As Reported ROA (As Reported Net Income/Average Assets) | | (0.36% | ) | 0.93% | | 0.66% | | 1.63% |
| Adjusted ROA (Adjusted Net Income/Average Assets) | | 0.84% | | 1.11% | | 0.81% | | 1.63% |
| |
| Revenues, Net of Interest Expense | | $71,449 | | $32,697 | | $35,667 | | $9,368 |
| |
| Total Operating Expenses | | $41,237 | | $17,843 | | $19,608 | | $4,763 |
| |
| Efficiency Ratio (Operating Expenses/Revenues, Net of Interest Expense) | | 57.7% | | 54.6% | | 55.0% | | 50.8% |
| | | | | | | | | |
| Adjusted Net Income (from above) | | $15,796 | | $4,634 | | $11,009 | | $2,098 |
| Preferred Stock Dividends | | 1,213 | | | | | | |
| Income Available to Common Shareholders | | $14,583 | | | | | | |
| |
| Total Common Equity at December 31, 2017 | | $181,487 | | | | | | |
| Less: | | | | | | | | |
| Goodwill at December 31, 2017 | | 22,256 | | | | | | |
| Intangible Assets (Other Than Mortgage Servicing Rights) | | | | | | | | |
| at December 31, 2017 | | 4,588 | | | | | | |
| Goodwill and Intangible Assets (Other Than MSRs) Related to | | | | | | | | |
| Assets Held-for-Sale at December 31, 2017 | | 32 | | | | | | |
| Tangible Common Equity at December 31, 2017 | | $154,611 | | | | | | |
| Average Tangible Common Equity during 2017 (Excluding the Impact of | | | | | | | | |
| Tax Reform) | | $180,458 | | $36,000 | | $82,000 | | $12,900 |
| Return on Tangible Common Equity | | 8.1% | | 12.9% | | 13.4% | | 16.3% |
| |
| Risk Appetite Ratio: | | | | | | | | |
| Unexpected Losses | | $16,246 | | $4,779 | | $7,234 | | $1,558 |
| Expected Losses | | $11,036 | | $7,267 | | $1,126 | | $1,104 |
| Risk Appetite Ratio (RAR) = [Revenues - Operating Expenses - | | | | | | | | |
| Expected Losses]/Unexpected Losses | | 118% | | 159% | | 206% | | 225% |
| Risk Appetite Surplus (RAS) = [Revenues - Operating Expenses - | | | | | | | | |
| Expected Losses - Unexpected Losses] | | $2,930 | | $2,808 | | $7,699 | | $1,943 |
| | | | 2018 | | | | 2017 | | 2018 vs. 2017 |
| | Citigroup | | GCB | | ICG | | Latin
America | | Citigroup | | %
Increase |
Reported Income from Continuing
Operations before Income Taxes | | $23,445 | | $7,601 | | $15,831 | | $3,810 | | $22,761 | | |
| Less: Provision for Income Taxes | | 5,357 | | 1,839 | | 3,631 | | 994 | | 29,388 | | |
| Add: Income from Discontinued Operations | | (8) | | — | | — | | — | | (111) | | |
| Less: Noncontrolling Interests | | 35 | | 7 | | 17 | | — | | 60 | | |
| Reported Net Income (Loss) | | $18,045 | | $5,755 | | $12,183 | | $2,816 | | $(6,798) | | |
| Less: Impact of Tax Reform(1) | | $(94) | | | | | | | | $22,594 | | |
| Adjusted Net Income | | $17,951 | | | | | | | | $15,796 | | 14% |
| Reported Diluted Earnings Per Share (EPS) | | $6.68 | | | | | | | | $(2.98) | | |
| Impact of Tax Reform(1) | | 0.03 | | | | | | | | (8.31) | | |
| Adjusted Diluted EPS | | $6.65 | | | | | | | | $5.33 | | 25% |
| Average Assets (in billions of dollars) | | $1,920,200 | | $423,000 | | $1,404,000 | | $126,000 | | $1,875,500 | | |
Reported ROA (Reported Net Income/
Average Assets) | | 0.94% | | 1.36% | | 0.87% | | 2.23% | | (0.36%) | | |
Adjusted ROA (Adjusted Net Income/
Average Assets) | | 0.93% | | | | | | | | 0.84% | | |
| Revenues, Net of Interest Expense | | $72,854 | | $33,777 | | $36,994 | | $10,264 | | $72,444 | | |
| Total Operating Expenses | | $41,841 | | $18,590 | | $20,979 | | $5,068 | | $42,232 | | |
Efficiency Ratio (Operating Expenses/Revenues,
Net of Interest Expense) | | 57.4% | | 55.0% | | 56.7% | | 49.4% | | 58.3% | | |
| Adjusted Net Income (from above) | | $17,951 | | | | | | | | $15,796 | | |
| Preferred Stock Dividends | | 1,173 | | | | | | | | 1,213 | | |
Adjusted Income Available to
Common Shareholders | | $16,778 | | | | | | | | $14,583 | | |
Total Common Equity at December 31, 2018
and 2017 | | $177,760 | | | | | | | | $181,487 | | |
| Less: | | | | | | | | | | | | |
| Goodwill at December 31, 2018 and 2017 | | 22,046 | | | | | | | | 22,256 | | |
Intangible Assets (Other Than Mortgage
Servicing Rights) at December 31, 2018
and 2017 | | 4,636 | | | | | | | | 4,588 | | |
Tangible Common Equity at December 31, 2018
and 2017 | | $151,078 | | | | | | | | $154,643 | | |
Average Tangible Common Equity during 2018
and 2017 | | $153,343 | | $35,000 | | $85,000 | | $12,100 | | $180,458 | | |
Adjusted Return on Tangible Common Equity
(Excluding the Impact of Tax Reform) | | 10.9% | | 16.4% | | 14.3% | | 23.3% | | 8.1% | | |
| Average Common Equity | | $179,497 | | | | | | | | $207,413 | | |
Return on Common Equity ((Reported Net
Income less Preferred Dividends)/
Average Common Equity) | | 9.4% | | | | | | | | (3.9%) | | |
| Common Dividends | | $3,865 | | | | | | | | $2,595 | | |
| Common Stock Repurchases | | 14,545 | | | | | | | | 14,533 | | |
Distributions to Common Shareholders
(Total Payout) | | $18,410 | | | | | | | | $17,128 | | |
Reported Total Payout Ratio (Total Payout/
(Net Income less Preferred Dividends)) | | 109% | | | | | | | | (214%) | | |
Adjusted Total Payout Ratio (Total
Payout/(Adjusted Net Income less
Preferred Dividends)) | | 110% | | | | | | | | 117% | | |
Citi 20182019 Proxy Statement
Table of Contents
| | December 31,
2017 | | December 31,
2016 | | % Increase
(Decrease) |
| Total Citi End-of-Period (EOP) Loans, Deposits and Retail Assets | | | | | | |
| Under Management: | | | | | | |
| |
| Total EOP Loans - As Reported | | $667,034 | | $624,369 | | 7% |
| Impact of FX Translation | | — | | 12,300 | | |
| Total EOP Loans - Ex-FX | | $667,034 | | $636,669 | | 5% |
| | | | | | | |
| Total EOP Deposits - As Reported | | $959,822 | | $929,406 | | 3% |
| Impact of FX Translation | | — | | 23,400 | | |
| Total EOP Deposits - Ex-FX | | $959,822 | | $952,806 | | 1% |
| | | | | | | |
| Total EOP Retail Assets Under Management (AUMs) - As Reported | | $160,900 | | $137,500 | | 17% |
| Impact of FX Translation | | — | | 3,826 | | |
| Total AUMs - Ex-FX | | $160,900 | | $141,326 | | 14% |
| | | | 2018 | | | | | | 2017 | | 2018 vs. 2017 |
| | Citigroup | | GCB | | ICG | | Latin
America | | Citigroup | | %
Increase |
| Risk Appetite Ratio: | | | | | | | | | | | | |
| Unexpected Losses | | $14,979 | | $4,716 | | $6,837 | | $1,359 | | | | |
| Expected Losses | | $8,420 | | $7,016 | | $1,024 | | $1,055 | | | | |
Risk Appetite Ratio (RAR) = (Revenues -
Operating Expenses - Expected Losses)/
Unexpected Losses | | 151% | | 173% | | 219% | | 305% | | | | |
Risk Appetite Surplus (RAS) = (Revenues -
Operating Expenses - Expected Losses -
Unexpected Losses) | | $7,614 | | $3,455 | | $8,154 | | $2,782 | | | | |
| Reported Global Consumer Banking (GCB) | | | | | | | | | | 2017 GCB | | |
| Revenues | | | | $33,777 | | | | | | $32,838 | | |
| Less: Impact of Foreign Exchange Translation | | | | — | | | | | | (132) | | |
Less: Gain on Sale of a Mexico Asset
Management Business | | | | 250 | | | | | | — | | |
| Adjusted GCB Revenues | | | | $33,527 | | | | | | $32,706 | | 3% |
| Reported Institutional Clients Group (ICG) | | | | | | | | | | 2017 ICG | | |
| Revenues | | | | | | $36,994 | | | | $36,474 | | |
Less: Gain on Sale of a Fixed Income
Analytics Business | | | | | | — | | | | 580 | | |
| Adjusted ICG Revenues | | | | | | $36,994 | | | | $35,894 | | 3% |
| (1) | Represents the 2017 one-time impact of the enactment of the Tax Cuts and Jobs Act (Tax Reform), which was signed into law on December 22, 2017, as well as the 2018 one-time impact of the finalization of the provisional component of the impact based on Citi’s analysis as well as additional guidance received from the U.S. Treasury Department related to Tax Reform. |
www.citigroup.com
Table of Contents
Annex B
Citigroup 20142019 Stock Incentive Plan
(as amended and restated as ofeffective April 24, 2018,16, 2019, subject to approval by stockholders)
(marked to show amendment described in Proposal 4)stockholder approval)
1. Purpose
The purposes of the Citigroup 20142019 Stock Incentive Plan (the(as amended from time to time, the “Plan”) are to (i) align incentive compensation programs with the Company’s long-term business objectives and the interests of stockholders; (ii) attract and retain Employees by providing compensation opportunities that are competitive within the global financial services industry; and (iii) provide compensation opportunities that do not create incentives to take imprudent risks.
2. | Effective Date and Term |
2. Effective Date and Term
The Plan becamewill become effective on April 22, 201416, 2019 (the “Effective Date”)., subject to approval by the stockholders of the Company. Unless terminated earlier by the Committee, the Plan will expire on the date of the annual general meeting of stockholders to be held in 2019.2024. The Plan replaces the Prior2014 Stock Incentive Plan (the “2014 SIP”) for Awards granted on or after the Effective Date. Awards may not be granted under the Prior Plan2014 SIP beginning on the Effective Date, but the adoption and effectiveness of the Plan will not affect the terms or conditions of any outstanding awards granted under the Prior PlanPlans or any other plan prior to the Effective Date.
3. Definitions
“Award”shall mean an Option, SAR, or Stock Award granted under the Plan.
“Award AgreementAgreement”” shall mean theone or more documents (in either paper or electronic documentform (including by posting on the Company’s intranet or other shared electronic medium controlled by the Company to which a Participant has access)) evidencing the terms and conditions of an Award granted under the Plan.Award.
“BoardBoard”” shall mean the Board of Directors of the Company.
“Change of ControlControl”” shall have the meaning set forth in Section 11.
“CodeCode”” shall mean the Internal Revenue Code of 1986, as amended, including any rules and regulations promulgated thereunder.
“CommitteeCommittee”” shall mean the Personnel and Compensation Committee of the Board, or a sub-committee thereof, the members of which shall satisfy the requirements ofqualify as “Non-Employee Directors” under Rule 16b-3 of the 1934 Act and who, or another sub-committee thereof, shall also qualify, and remain qualified, as “outside directors,” as defined in Section 162(m) of the Code;Act; provided, however, that with respect to the application of the Plan to Directors, unless specifically provided otherwise herein, “Committee” shall mean the Board. Unless expressly provided otherwise herein or not permitted by applicable law, “Committee” includes any authorized delegate of the Committee, including each Plan Administrator. For avoidance of doubt, a failure of one or more members of the Committee to satisfy the requirements ofqualify as “Non-Employee Directors” under Rule 16b-3 of the 1934 Act or Section 162(m) of the Code shall not impair the validity of actions taken by the Committee, including the granting of any Award.
“Common StockStock”” shall mean the common stock of the Company, par value $.01 per share.
“CompanyCompany”” shall mean Citigroup Inc., a Delaware corporation.
Citi 20182019 Proxy Statement
Table of Contents
“Covered Employee” shall mean “covered employee” as such term is defined in Section 162(m)(3) of the Code.
“Deferred Stock AwardAward”” shall mean an Award payable in shares of Common Stock at the end of a specified deferral period that is subject to the terms, conditions, limitations, and restrictions set forth in the Plan and an Award Agreement.
“DirectorDirector”” shall mean a member of the Board who is not also an active employee or officer of the Company or a Subsidiary.
“EmployeeEmployee”” shall have the meaning set forth in General Instruction A to the Registration Statement on Form S-8 promulgated under the Securities Act of 1933, as amended, or any successor form or statute, as determined byin effect on the Committee.Effective Date. Notwithstanding the foregoing, consultants and advisors (other than Directors) shall not be eligible to receive Awards under the Plan.
“Fair Market ValueValue”” shall mean, in the case of a grant of an Option or a SAR, the closing price of a share of Common Stock on the New York Stock Exchange (or, if the Common Stock is not traded on the New York Stock Exchange, the principal national securities exchange upon which the Common Stock is traded or quoted) on the date on which the Option or the SAR is granted. For all other purposes of administering an Award (including Options and SARs granted as Substitute Awards), “Fair Market Value” shall be as determined pursuant to the valuation methodology approved for such purpose by the Committee.
“GAAPGAAP”” shall mean U.S. generally accepted accounting principles.
“Gross MisconductMisconduct”” shall mean any conduct by a Participant (a) while employed by the Company or a Subsidiary that is competitive with the Company’s or any Subsidiary’s business operations, (b) that is in breach of any obligation that Participant owes to the Company or any Subsidiary or of that Participant’s duty of loyalty to the Company or any Subsidiary, (c) that is materially injurious to the Company or any Subsidiary, or (d) that otherwise constitutes “gross misconduct” as determined pursuant to guidelines adopted by the Committee or a duly authorized Plan Administrator.
“OptionOption”” shall mean the right to purchase a specified number of shares of Common Stock at a stated exercise price for a specified period of time subject to the terms, conditions, limitations, and restrictions set forth in the Plan and an Award Agreement.
“ParticipantParticipant”” shall mean an Employee or former Employee who holds an Award under the Plan (and the legal representative of the estate of a deceased Participant).
“Performance ConditionCondition”” shall mean any condition to the vesting of an Award based on the performance of the Company (including one or more of its Subsidiaries), the performance of any branch, business unit of the Company (or of any Subsidiary), or the performance of an individual Participant (other than remaining employed by the Company or a Subsidiary), whether based on absolute or relative performance measures, and whether or not the Award is intended to be a Qualified Performance-Based Award.measures.
“Plan AdministratorAdministrator”” shall mean any officer or employee of the Company or a Subsidiary performing a function related to administration of the Plan as part of his or her normal job duties, and any director, officer, or employee, whether acting alone or as part of a committee or other group, or non-employee agent, to whom any authority over any matter related to administration of the Plan or any Award has been directly or indirectly delegated by the Committee.
“Prior PlanPlans”” shall mean the 2014 SIP and the Citigroup 2009 Stock Incentive Plan.
www.citigroup.com
Table of Contents
“Qualified Performance-Based AwardRepricing”” shall mean any Award (other than an Option or SAR that otherwise qualifies as performance-based compensation under Section 162(m) of the Code) designated as such by the Committee at the time of grant, based upon a determination that (a) the Participant is or may be a Covered Employee in the year in which the Company would expect to be able to claim a tax deduction with respect to such Award, and (b) the Committee intends for the Award to satisfy the requirements of Section 162(m) of the Code.
“Repricing” shall mean (a) any action that constitutes a “repricing” under GAAP or the rules of the New York Stock Exchange (including any modification or amendment to an outstanding Option or SAR that has the effect of reducing its exercise price), (b) any cancellation of an Option or SAR when its exercise price exceeds Fair Market Value in exchange for cash, (c) any cancellation of an Option or SAR in exchange for a new Option or SAR with a lower exercise price, or (d) a substitution of a Stock Award for an Option or SAR when its exercise price exceeds Fair Market Value; in each case other than an adjustment to an outstanding Award that is consistent with the requirements of Section 6(d).
www.citigroup.com
Table of Contents
“Restricted Stock AwardAward”” shall mean an Award of Common Stock that is subject to the terms, conditions, limitations, and restrictions set forth in the Plan and an Award Agreement.
“SARSAR”” shall mean “stock appreciation right,” which is a right to receive a payment, during a specified term, in cash, Common Stock, or a combination thereof, in an amount equal to the excess of the Fair Market Value of a specified number of shares of Common Stock at the time the SAR is exercised over the exercise price of such SAR, which right is subject to the terms, conditions, limitations, and restrictions set forth in the Plan and an Award Agreement.
“Section 16(a) OfficerOfficer”” shall mean an Employee who is subject to the reporting requirements of Section 16(a) of the 1934 Act.
“Stock AwardAward”” shall mean a Deferred Stock Award, a Restricted Stock Award, a Stock Payment, or Other Stock-Based Award.
“Stock PaymentPayment”” shall mean an immediately vested payment in shares of Common Stock that may or may not be in lieu of cash.
“SubsidiarySubsidiary”” shall mean any of the consolidated subsidiaries of the Company.
“Substitute AwardAward”” shall mean an Award designated as such and granted in connection with a transaction between the Company or a Subsidiary and another entity or business in substitution or exchange for, or conversion, adjustment, assumption, or replacement of, awards previously granted by such other entity to any individuals who have become Employees of the Company or any Subsidiary as a result of such transaction or who were formerly employed by the acquired entity. An Award granted as an inducement to joining the Company or a Subsidiary in replacement of an award forfeited when leaving a previous employer to join the Company or a Subsidiary shall not be considered a Substitute Award.
“1934 ActAct”” shall mean the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder and any successor thereto.
4. The Committee
| |
|
| (a) | Committee Authority.The Committee shall have full and exclusive power to administer and interpret the Plan, to grant Awards and to adopt such administrative rules, regulations, procedures, and guidelines governing the Plan and Awards as it deems appropriate from time to time. The Committee’s authority shall include, but not be limited to, the authority to (i) determine the type of Awards to be granted under the Plan; (ii) select Award recipients and determine the extent of their participation; and (iii) establish all other terms, conditions, limitations, and restrictions applicable to Awards, Award programs and the shares of Common |
Citi 2018 Proxy Statement
Table of Contents
| | Stock issued pursuant thereto. Subject to the limitations set forth in the Plan, the Committee may suspend, accelerate, or defer the vesting or payment of Awards, cancel or modify outstanding Awards, waive any conditions or restrictions imposed with respect to Awards or the Common Stock issued pursuant to Awards, and make any and all other determinations that it deems appropriate with respect to the administration of the Plan.
|
| |
|
| (b) | Administration of the Plan.The administration of the Plan shall be managed by the Committee. The Committee shall have the power to prescribe and modify, as necessary, the form of Award Agreement, to correct any defect, supply any omission, or clarify any inconsistency in the Plan and/or in any Award Agreement and to take such actions and make such administrative determinations that the Committee deems appropriate. Any decision of the Committee in the administration of the Plan shall be final, binding, and conclusive on all parties concerned, including the Company, its stockholders and Subsidiaries, and all Participants. |
Citi 2019 Proxy Statement
Table of Contents
| (c) | Delegation of Authority.To the extent not inconsistent with applicable law, the rules of the New York Stock Exchange, or other provisions of the Plan, the Committee may at any time delegate to a Plan Administrator some or all of its authority over the administration of the Plan, with respect to persons who are not Section 16(a) Officers or Covered Employees.Officers. Actions taken or determinations made by or ratified by a duly authorized Plan Administrator shall have the same force and effect as if undertaken or made by the Committee, and all references in the Plan to the Committee (except with respect to actions or determinations related exclusively to Section 16(a) Officers or Covered Employees)Officers) shall be deemed to include a reference to a duly authorized Plan Administrator.
|
| | |
| (d) | Prohibition Against Repricing.Notwithstanding any provision of the Plan to the contrary, in no event shall any action be taken under the Plan that constitutes a Repricing of any Option or SAR granted under the Plan, or of any option or stock appreciation right granted under the Prior Plan or any other plan of the CompanyPlans or of an acquired company, except with approval of the stockholders of the Company.
|
| | |
| (e) | Indemnification.No member of the Committee or any Plan Administrator shall be personally liable for any action or determination made with respect to the Plan, except for his or her own willful misconduct or as expressly provided by statute. The members of the Committee and every Plan Administrator shall be entitled to indemnification and reimbursement from the Company, to the extent permitted by applicable law and the By-laws and policies of the Company. In the performance of its functions under the Plan, the Committee (and each member of the Committee and every Plan Administrator) shall be entitled to rely in good faith upon information and advice furnished by the Company’s officers, employees, accountants, counsel, and any other party they deem appropriate, and neither the Committee nor any Plan Administrator shall be liable for any action taken or not taken in reliance upon any such advice. |
5. Participation
| (a) | (a) | Eligible Employees.The Committee shall determine which Employees shall be eligible to receive Awards under the Plan, provided that consultants and advisors (other than members of the Board in their roles as such) shall not be eligible to receive Awards under the Plan. Former Employees may be eligible to receive Awards under the Plan, but only if a Substitute Award or with respect to their last year of service. With respect to Employees subject to U.S. income tax, Options and SARs (unless Substitute Awards) shall only be granted to such Employees who provide direct services to the Company or a Subsidiary of the Company as of the date of grant of the Option or SAR.
|
| (b) | |
|
| (b) | Participation by Employees of Subsidiaries.Employees of Subsidiaries may participate in the Plan upon approval of Awards to such Employees by the Committee. Awards to Employees of Subsidiaries may be conditioned upon the Subsidiary’s agreement to reimburse the Company for costs and expenses of such participation, as determined by the Committee.
|
www.citigroup.com
Table of Contents
| (c) | Participation Outside of the United States.In order to facilitate the granting of Awards to Employees who are foreign nationals or who are employed outside of the U.S., the Committee may provide for such special terms and conditions, including, without limitation, substitutes for Awards, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom. Any special terms or conditions adopted by the Committee in accordance with this Section 5(c) may be set forth in a sub-plan, which shall constitute a part of this Plan; provided that the terms and conditions of any such sub-plan shall not be inconsistent with the terms and conditions of this Plan, as then in effect.
|
| |
|
| (d) | Maximum Individual Awards
|
| |
|
| (i) | Limits on Awards to Directors.The maximum number of shares of Common Stock subject to Awards under the Plan in anygranted during a single calendar year to aany Director, taken together with any cash fees paid during the calendar year to the Director, in respect of the Director’s service as a Directormember of the Board during such year (including Awards made atservice as a member or chair of any committees of the election of a Director in lieu of all or any portion of his or her cash retainers) mayBoard), shall not exceed $900,000$1,000,000 in total value (calculating the value of any such Awards based on the combined grant-dategrant date fair value of each Stock Award and the grant-date fair value (in each case as determined |
www.citigroup.com
Table of Contents
| | such Awards in accordance with GAAP). The independent members of each Option or SARthe Board may make exceptions to this limit for a non-executive chair of the Board, provided that is granted during a calendar year. |
| | the Director receiving such additional compensation may not participate in the decision to award such compensation.
|
| (ii) | Limits on Options and SARs.The aggregate number of shares of Common Stock that may be subject to all Options and SARs granted to an individual Employee (other than as a Director) in a calendar year may not exceed 1,000,000 shares (subject to adjustment pursuant to Section 6(d)).
|
| | |
| (iii) | Limits on Stock Awards.The aggregate number of shares of Common Stock that may be subject to all Stock Awards granted to an individual Employee (other than as a Director) in a calendar year may not exceed 1,000,000 shares (subject to adjustment pursuant to Section 6(d)).
|
| | |
| (iv) | Substitute Awards.Notwithstanding the foregoing, shares subject to an Award that is a Substitute Award shall not count against any individual Award limit in this Section 5(d).
|
6. Available Shares of Common Stock
| | |
6. Available Shares of Common Stock
|
(a) | Shares Subject to the Plan.Common Stock issued pursuant to Awards granted under the Plan may be shares that have been authorized but unissued, or have been previously issued and reacquired by the Company, or both. Reacquired shares may consist of shares purchased in open market transactions or otherwise. Pursuant to and subject to the other provisions of this Section 6, the aggregate number of shares of Common Stock that may be issued pursuant to Awards granted under the Plan shall not exceed the sum of (i) fifty-twothirty million (52,000,000)(30,000,000) shares; and (ii) any additional number of shares that may be authorized for issuance pursuant to any amendments to the Plan approved by stockholders of the Company after the Effective Date. Effective April 28, 2015, pursuant to an amendment to the Plan approved by the stockholders of the Company, an additional twenty million (20,000,000) shares of Common Stock were authorized for issuance to Participants pursuant to Awards granted under the Plan. Effective April 26, 2016, pursuant to an amendment to the Plan approved by the stockholders of the Company, an additional twenty million (20,000,000) shares of Common Stock were authorized for issuance to Participants pursuant to Awards granted under the Plan.Effective April 24, 2018, pursuant to an amendment to the Plan approved by the stockholders of the Company, an additional fifteen million (15,000,000) shares of Common Stock were authorized for issuance to Participants pursuant to Awards granted under the Plan.
|
| |
|
| (b) | Forfeited and Expired Awards.Awards granted under the Plan or the Prior Plans that, after the Effective Date, are forfeited, expire, or are cancelled or settled without issuance of shares shall not count against the maximum number of shares that may be issued under the Plan as set forth in Section 6(a) and shall be available for future Awards under the Plan. Notwithstanding the foregoing, all shares of Common Stock that are (i) withheld or tendered in payment of an Option exercise price or repurchased by the Company with Option exercise proceeds; (ii) withheld or tendered to satisfy any tax withholding obligation (in connection with any Option, SAR, Stock Award, or otherwise); (iii) covered by a SAR (to the extent that it is settled in shares of Common Stock, without regard to the number of shares of Common Stock that are actually issued to the Participant upon exercise); (iv) withheld by the Company to satisfy any debt or other obligation owed to the Company or any Subsidiary; and (v) fractional shares of Common Stock that are cancelled pursuant to Section 7(f), shall be considered issued pursuant to the Plan and shall not be added to the maximum number of shares that may be issued under the Plan as set forth in Section 6(a).
|
Citi 2018 Proxy Statement
Table of Contents
| (c) | Other Items not Included in Allocation.The maximum number of shares that may be issued under the Plan as set forth in Section 6(a) shall not be affected by (i) the payment in cash of dividends or dividend equivalents in connection with outstanding Awards; or (ii) the grant of Substitute Awards. Any shares purchased by or on behalf of Participants in a dividend reinvestment program established under the Plan shall not count against the maximum number of shares that may be issued under the Plan as set forth in Section 6(a), provided that such shares are purchased in open-market transactions or are treasury shares purchased directly from the Company at Fair Market Value at the time of purchase. Unless the Committee determines otherwise, Section 16(a) Officers may not participate in dividend reinvestment programs established under the Plan.
|
| |
|
| (d) | Adjustments.In the event of any change in the Company’s capital structure, including but not limited to a change in the number of shares of Common Stock outstanding, on account of (i) any stock dividend, stock split, reverse stock split, spinoff or any similar equity restructuring;restructuring, or (ii) any combination or exchange of equity securities, merger, consolidation, recapitalization, reorganization, or divesture or any other similar event affecting the Company’s capital structure, to reflect such change in the Company’s capital structure, the Committee shall make appropriate equitable adjustments to (i) the maximum number of shares of |
Citi 2019 Proxy Statement
Table of Contents
| Common Stock that may be issued under the Plan as set forth in Section 6(a);, and (ii) to the extent permitted under Section 162(m) of the Code, the maximum number of shares that may be granted to any single individual pursuant to the limits set forth in Section 5(d). In the event of any extraordinary dividend, divestiture, or other distribution (other than ordinary cash dividends) of assets to stockholders, or any transaction or event described above, to the extent necessary to prevent the enlargement or diminution of the rights of Participants, the Committee shall make appropriate equitable adjustments to the number or kind of shares subject to an outstanding Award, the exercise price applicable to an outstanding Award, and/or a Performance Condition. Any adjustments under this Section 6(d) shall be made in a manner that does not adversely affect the exemption provided pursuant to Rule 16b-3 under the 1934 Act, or qualification under Section 162(m) of the Code, to the extent each may be applicable. The Company shall give each Participant notice of an adjustment to an Award hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes. Notwithstanding the foregoing, the Committee shall decline to adjust any Award made to a Participant if such adjustment would violate applicable law. |
| | |
7. Awards Under the Plan
|
7. Awards Under the Plan
Awards under the Plan may be granted as Options, SARs, or Stock Awards, as described below. Awards may be granted singly, in combination, or in tandem as determined by the Committee. Subject to the terms of the Plan (including but not limited to the minimum vesting requirement of Section 7(d)), Awards shall have such terms, conditions, limitations, and restrictions as may be determined by the Committee from time to time, and may include vesting, forfeiture, and clawback provisions.
Awards under the Plan may be granted as Options, SARs, or Stock Awards, as described below. Awards may be granted singly, in combination, or in tandem as determined by the Committee. Subject to the terms of the Plan (including but not limited to the minimum vesting requirement of Section 7(d)), Awards shall have such terms, conditions, limitations, and restrictions as may be determined by the Committee from time to time, and may include vesting, forfeiture, cancellation and clawback provisions.
|
| (a) | Options.Options shall expire after such period, not to exceed 10 years, as may be determined by the Committee. If an Option is exercisable in installments, such installments or portions thereof that become exercisable shall remain exercisable until the Option expires or is otherwise cancelled pursuant to its terms or the terms of the Plan. In no event shall any Option issued under the Plan be a “reload” Option or carry any similar rights.
|
| |
|
| (i) | Exercise Price.The Committee shall determine the exercise price per share for each Option, which shall not be less than 100% of the Fair Market Value on the grant date, unless the Option is a Substitute Award.
|
| |
|
| (ii) | Exercise of Options.Upon satisfaction of the applicable conditions relating to vesting and exercisability, as determined by the Committee, and upon provision for the payment in full of the exercise price and applicable taxes due, the Participant shall be entitled to exercise the Option and receive the number of shares of Common Stock issuable in connection with the Option exercise. The shares issued in connection with the Option exercise may be subject to such conditions and restrictions as the Committee may determine, from time to time. An Option may be exercised by any method as may be permitted by the Committee from time to time, including but not limited to any “net exercise” or other “cashless” exercise method.
|
www.citigroup.com
Table of Contents
| (b) | Stock Appreciation Rights.SARs granted under the Plan shall expire after such term, not to exceed 10 years, as may be determined by the Committee. The exercise price per share of Common Stock subject to a SAR shall not be less than 100% of Fair Market Value on the grant date, unless the SAR is a Substitute Award.
|
| |
|
| (c) | Stock Awards
|
| | |
| (i) | Stock Payment.Subject to the terms of the Plan, the Committee may grant vested shares of Common Stock as a Stock Payment. A Stock Payment may be in lieu of cash compensation, but may be subject to restrictions on sale or transfer, or cancellation and recoupment, as determined by the Committee. A Stock Payment under the Plan may be granted as, or in payment of, a bonus including without limitation any compensation that is intended to qualify as performance-based compensation for purposes of Section 162(m) of the Code, determined pursuant to any other plan. Any shares of Common Stock granted as a Stock Payment in lieu of cash compensation shall be valued at their Fair Market Value. |
www.citigroup.com
Table of Contents
| | | |
| (ii) | Restricted Stock.Unvested shares of Common Stock issued pursuant to a Restricted Stock Award shall be entitled to voting rights as provided in Section 9, unless determined otherwise by the Committee. Upon satisfaction of all conditions to vesting and any tax withholding obligations, and upon the lapse of any post-vesting restrictions on sale or transfer, shares of Common Stock subject to a Restricted Stock Award shall be delivered to a Participant free of restriction. A Restricted Stock Award may, but need not, be a Qualified Performance-Based Award.
|
| | |
| (iii) | Deferred Stock.A Deferred Stock Award represents only an unfunded, unsecured promise to deliver shares of Common Stock in the future and does not give a Participant any greater rights than those of an unsecured general creditor of the Company. Upon satisfaction of all conditions to vesting and any tax withholding obligations, shares of Common Stock subject to a vested Deferred Stock Award will be issued, and upon the lapse of any post-vesting restrictions on sale or transfer, such shares of Common Stock will be delivered to a Participant free of restriction. A Deferred Stock Award may, but need not, be a Qualified Performance-Based Award.
|
| | |
| (iv) | Other Stock-Based Awards.To the extent not prohibited by applicable law, the Committee may grant any other Award that is denominated in shares of Common Stock and that may be settled in cash and/ or by the delivery of shares of Common Stock (for the avoidance of doubt, an award that by its terms may be settled only in cash shall not be an Award under this Plan). An Other Stock-Based Award may, but need not, be a Qualified Performance-Based Award.
|
| |
|
| (d) | Minimum Vesting.Vesting Requirement.Notwithstanding any other provision of the Plan to the contrary, Awards granted under the Plan shall vest no earlier than the first anniversary of the date on which the Award is granted; provided, that the following Awards shall not vest in full priorbe subject to the thirdforegoing minimum vesting requirement: any (i) Substitute Awards, (ii) Awards to Directors that vest on the earlier of the one-year anniversary of theirthe date of grant date; provided, however, thatand the next annual meeting of stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting, and (iii) any additional Awards the Committee may grant, Awardsup to a maximum of five percent (5%) of the available share reserve authorized for issuance under the Plan pursuant to Section 6(a) (subject to adjustment under Section 6(d)); and, provided, further, that vestthe foregoing restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award, including in full in less than three years (i) on accountcases of a Participant’s retirement, death, disability, leave of absence, termination of employment, orChange in Control, upon the sale or other disposition of a Participant’s employer, or any other similar event, as specified in the Award Agreement; (ii) upon satisfaction of a Performance Condition subject to a performance period of at least one year; or (iii) as a Substitute Award in replacement of an award scheduled to vest in full in less than three years from the date of grant of such Substitute Award. Notwithstanding the foregoing, up to 10% of the shares of Common Stock authorized for issuance under the Plan pursuant to Section 6(a) (as it may be adjusted pursuant to Section 6(d)) may be granted as Stock Payments or subject to other Awards that provide for vesting in full in less than three years.Agreement.
|
| | |
| (e) | Performance-Based Awards
|
| | |
| (i) | The Committee may grant Awards that are subject to or may vest on an accelerated basis upon, the achievement of one or more Performance Conditions related to a period of performance of not less than one year. A premium-priced Option or SAR that is subject to no other Performance Condition shall be considered to have a Performance Condition (for purposes of Section 7(d)) only if its exercise price is at least 125% of Fair Market Value on the grant date. If an Award is designated as a Qualified Performance- Based Award, it shall be administered as set forth in Section 7(e)(ii).
|
Citi 2018 Proxy Statement
Table of Contents
| (ii) | The Committee may at the time of grant of any Award (other than an Option or SAR that otherwise qualifies under Section 162(m) of the Code) designate such Award as a Qualified Performance- Based Award. Qualified Performance-Based Awards shall be administered in accordance with the following procedures:
|
| | |
| A. | Vesting of the Award or the maximum amount of the Award eligible to vest shall be determined based on the attainment of written objective Performance Conditions selected by the Committee in accordance with Section 7(e)(ii)(B) for a performance period established by the Committee while the attainment of the Performance Conditions for that performance period is substantially uncertain and not more than 90 days after the commencement of the performance period, which may not be less than one year.
|
| | |
| B. | The vesting of a Qualified Performance-Based Award or the maximum amount of a Qualified Performance-Based Award eligible to vest must be based on one or more of the following objective Performance Conditions and expressed in either, or a combination of, absolute or relative values or a percentage of: revenue, revenue or product growth, net income (pre- or after-tax), earnings, earnings per share, stockholders’ equity or return on stockholders’ equity, assets or return on assets, return on risk-adjusted assets, capital or return on capital, return on risk capital, book value or book value per share, economic value-added models or equivalent metrics, operating income, pre- or after-tax income, expenses or reengineering savings, margins, cash flow or cash flow per share, stock price, total shareholder return, market share, debt reduction, net promoter scores, operating efficiency ratios, expense ratios, liquidity ratios, regulatory achievements or regulatory achievements. Suchany objective or subjective Performance Conditions selected by the Committee. In addition, such Performance Conditions may be used on an absolute or relative basis to measure the performance of the Company as a whole, any business unit(s) of the Company and its Subsidiaries and/or one or more of its branches or affiliates, or the performance of an individual Covered Employee,Participant, and may be used in any combination as the Committee may deem appropriate. Such Performance Conditions may also be based on performance determined on a per share basis (either basic or fully diluted) and/or as compared to the performance of a group of peer or comparator companies, prior performance periods, a published or special index or indices that the Committee deems appropriate, or such other measures selected or defined by the Committee at the time such Performance Conditions are established.
|
Citi 2019 Proxy Statement
Table of Contents
| ANNEX B | | |
| C. | Upon the conclusion of each performance period, the Committee shall determine whether the applicable Performance Conditions established in accordance with Section 7(e)(ii)(A) and (B) have been met with respect to each Participant, and if so, shall certify in writing that such Performance Conditions have been met and the amount payable pursuant to each Participant’s Qualified Performance-Based Award. No Qualified Performance-Based Award will be paid for a performance period until such certification is made by the Committee.
137 |
| | | |
| (iii) | Except as otherwise expressly provided, all financial terms used in defining a Performance Condition shall be as defined under GAAP or such other objective principles (including but not limited to International Financial Reporting Standards) asThe Committee may be designated by the Committee, and may provide for suchmake objectively determinable adjustments, modifications, or amendments to any Performance Condition as the Committee deems appropriate, including (but not limited to) with respect to items determined to be extraordinary or unusual in nature or infrequent in occurrence, or that are related to discontinued operations, the disposal of a business or assets, or a change in accounting principle under GAAP, or that are attributable to the business operations of any entity acquired by the Company or a Subsidiary during a relevant performance period.
|
| �� |
|
| (f) | Fractional Shares.The Company shall not be obligated to issue any fractional shares of Common Stock in settlement of Awards granted under the Plan. If an Award includes or results in an entitlement to a fractional share for any reason, the Award shall be settled in full by issuance of the maximum whole number of shares of Common Stock the Participant is entitled to receive pursuant to the terms of the Award (upon satisfaction of all applicable conditions to the issuance of shares) and the Company may cancel the fractional share without any compensation to the Participant.
|
www.citigroup.com
Table of Contents
8. Dividends and Dividend Equivalents
The Committee may provide that Stock Awards shall earn dividends or dividend equivalents. Such dividends or dividend equivalents may be paid currently or may be credited to an account maintained on the books of the Company. Any payment or crediting of dividends or dividend equivalents will be subject to such terms, conditions, limitations, and restrictions as the Committee may establish, from time to time, including, without limitation, reinvestment in additional shares of Common Stock or common share equivalents. Notwithstanding the foregoing, the Committee may not provide for the current payment of dividends or dividend equivalents with respect to any shares of Common Stock subject to an Award with a Performance Condition; for such Awards, the Committee may only provide for the accrual of dividends or dividend equivalents that will not be payable to a Participant unless and until, and only to the extent that, the shares of Common Stock subject to the Award vest upon satisfaction of the relevant Performance Condition and all other applicable conditions to vesting. Dividend or dividend equivalent rights shall be as specified in the Award Agreement, or pursuant to a resolution adopted by the Committee with respect to outstanding Awards. No dividends or dividend equivalents shall be paid on Options or SARs.
9. Voting
Unless the Committee has determined otherwise, a Participant shall have the right to direct the vote of shares of Common Stock subject to an unvested Restricted Stock Award. Unvested shares of Common Stock that are eligible to vote shall be voted by a Plan Administrator in accordance with instructions received from Participants (unless to do so would constitute a violation of any applicable exchange rules). Shares subject to unvested Restricted Stock Awards as to which no instructions are received shall be voted by the Plan Administrator proportionately in accordance with instructions received with respect to all other unvested Restricted Stock Awards (including, for these purposes, outstanding awards granted under the Prior PlanPlans and any other “non-qualified” stock incentive plan of the Company) that are eligible to vote (unless to do so would constitute a violation of any applicable exchange rules).
10. Nontransferability
Awards granted under the Plan, and during any period of restriction on transferability, shares of Common Stock issued in connection with the exercise of an Option or a SAR, or vesting of a Stock Award, may not be sold, pledged, hypothecated, assigned, margined, or otherwise transferred by a Participant in any manner other than by will or the laws of descent and distribution, unless and until the shares underlying such Award have been issued, and all restrictions applicable to such shares have lapsed or have been waived by the Committee. No Award or interest or right therein shall be subject to the debts, contracts, or engagements of a Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment, or any other means whether such disposition be voluntary or involuntary or by operation of law, by judgment, lien, levy, attachment, garnishment, or any other legal or equitable proceedings (including bankruptcy and divorce), and any attempted disposition thereof shall be null and void, of no effect, and not binding on the Company in any way.
www.citigroup.com
Table of Contents
Notwithstanding the foregoing, the Committee may permit Options and/or shares issued in connection with an Option or a SAR exercise that are subject to restrictions on transferability to be transferred one time and without payment or consideration to a member of a Participant’s immediate family or to a trust or similar vehicle for the benefit of a Participant’s immediate family members. During the lifetime of a Participant, all rights with respect to Awards shall be exercisable only by such Participant or, if applicable pursuant to the preceding sentence, a permitted transferee.
11. Change of Control of the Company
| | |
| (a) | The Committee may, at the time an Award is made or at any time prior to, coincident with, or after the time of a Change of Control: |
| |
|
| (i) | provide for the adjustment of any Performance Conditions as the Committee deems necessary or appropriate to reflect the Change of Control;
|
Citi 2018 Proxy Statement
Table of Contents
| (ii) | provide for the cancellation of any Awards then outstanding if the surviving entity or acquiring entity (or the surviving or acquiring entity’s parent company) in the Change of Control replaces the Awards with new rights of substantially equivalent value, as determined by the Committee; |
| |
|
| (iii) | provide that upon an involuntary termination of a Participant’s employment as a result of a Change of Control, any time periods shall accelerate, and any other conditions relating to the vesting, exercise, payment, or distribution of an Award shall be waived; or |
| |
|
| (iv) | provide that Awards shall be purchased for an amount of cash equal to the amount that could have been obtained for the shares covered by a Stock Award if it had been vested and or by an Option or SAR if it had been exercised at the time of the Change of Control. |
| | | |
| (b) | Notwithstanding any other provisions of the Plan or an Award Agreement to the contrary, the vesting, payment, purchase, or distribution of an Award may not be accelerated by reason of a Change of Control for any Participant unless the Participant’s employment is involuntarily terminated as a result of the Change of Control. For purposes of this Section 11, a Participant’s employment will be deemed to have been involuntarily terminated as a result of a Change of Control if it is involuntarily terminated other than for Gross Misconduct at any time beginning on the date of the Change of Control up to and including the first anniversary of the Change of Control.
|
| | |
| (c) | A “Change of Control” shall be deemed to occur if and when: |
| |
|
| (i) | any person, including a “person” as such term is used in Section 14(d)(2) of the 1934 Act (a “Person”), is or becomes a beneficial owner (as such term is defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities;
|
| | |
| (ii) | individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; |
Citi 2019 Proxy Statement
Table of Contents
| (iii) | all or substantially all of the assets of the Company are sold, transferred, or distributed, or the Company is dissolved or liquidated; or
|
| | |
| (iv) | a reorganization, merger, consolidation, or other corporate transaction involving the Company (a “Transaction”) is consummated, in each case, with respect to which the stockholders of the Company immediately prior to such Transaction do not, immediately after the Transaction, own more than 50% of the combined voting power of the Company or other corporation resulting from such Transaction in substantially the same respective proportions as such stockholders’ ownership of the voting power of the Company immediately before such Transaction. |
12. Award Agreements
Each Award under the Plan shall be evidenced by an Award Agreement (as such may be amended from time to time) that sets forth the terms, conditions, restrictions, and limitations applicable to the Award, including, but not limited to, the provisions governing vesting, exercisability, payment, forfeiture, cancellation, and termination of employment, all or some of which may be incorporated by reference into one or more other documents delivered or otherwise made available
www.citigroup.com
Table of Contents
to a Participant in connection with an Award. The Committee need not require the formal execution or acceptance of such document by the Participant, in which case acceptance of any benefit of the Award by the Participant shall constitute agreement by the Participant to the terms, conditions, restrictions, and limitations set forth in the Plan and the Award Agreement as well as the administrative guidelines and practices of the Company in effect from time to time. Any assertion by an Employee that any term, condition, limitation, or restriction of the Award as specified in the Award Agreement is invalid or not binding on such Employee because of his or her non-acceptance of the Award Agreement (or any portion thereof) shall be deemed a refusal of the Award and the Employee shall cease to be a Participant with respect to the Award, which shall be immediately cancelled. Each Award Agreement shall provide for forfeiture or cancellation of unvested Awards if it is determined that a Participant engaged in Gross Misconduct on or prior to a vesting date. Award Agreements and any other document required to be delivered to a Participant in connection with an Award may be delivered in electronic form (including by posting on the Company’s intranet or other shared electronic medium controlled by the Company to which a Participant has access).
13. Tax Withholding
Participants shall be solely responsible for any applicable taxes (including without limitation income, payroll, and excise taxes) and penalties, and any interest that accrues thereon, which they incur under applicable law in connection with the receipt, vesting, or exercise of any Award. The Company and its Subsidiaries shall have the right to require payment of, or may deduct from any payment made under the Plan or otherwise to a Participant, or may permit or require shares to be tendered or sold including(including shares of Common Stock delivered or vested in connection with an Award,Award) in an amount sufficient to cover withholding of, any federal, state, local, foreign, or other governmental taxes or charges required by law, or hypothetical taxes required to be paid by a Participant pursuant to a tax-equalization policy for expatriate employees, and to take such other action as may be necessary to satisfy any such withholding or payment obligations. The value of any shares allowed to be withheld or tendered for tax withholding may not exceed the amount allowed consistent with fixed plan accounting in accordance with GAAP, to the extent applicable. To the extent that a number of shares of Common Stock sufficient to satisfy a tax withholding obligation of the Company may not be withheld (whether because the Award has not vested in full pursuant to its terms, administrative procedures in effect at such time, applicable accounting principles, or any other reason), it shall be a condition to the obligation of the Company to issue shares of Common Stock upon the exercise of an Option or a SAR, or in settlement of any vested Award, that a Participant pay to the Company, on demand, such amount as may be requested by the Company for the purpose of satisfying any actual tax withholding (or hypothetical tax) liability. If the amount is not timely paid to the Company in cash by such Participant, the Company may cancel the Award and refuse to issue such shares.
14. Repayment Obligations and Right of Set-Off
| | |
| (a) | If the Committee determines that all conditions to vesting and payment or distribution of an Award (or any portion thereof), or the vesting and exercisability of an Option or SAR (or any portion thereof), were not satisfied in full on the scheduled vesting date (including but not limited to, any Performance Condition), the Committee shall cancel such vesting and refuse to issue or distribute shares or cash and immediately |
www.citigroup.com
Table of Contents
| terminate the Participant’s rights with respect to such Award (or improperly vested portion thereof). If any such Award (or portion thereof) has already been paid, distributed, or exercised, the Participant shall be obligated, upon demand, to: (i) in the case of an improperly vested Stock Award, return the amount of any cash payment received in settlement of the Stock Award (or improperly vested portion thereof), or if settled in shares, the number of shares of Common Stock issued in settlement of the Stock Award (or improperly vested portion thereof), or make a cash payment in an amount equal to the Fair Market Value of such shares on their vesting date, if greater than their Fair Market Value on the date they are due to be returned to the Company; or (ii) in the case of an improperly exercised Option or SAR, make a cash payment in an amount equal to the gain realized upon exercise of such Option or SAR (or improperly vested or exercised portion thereof), in each case, without reduction for any shares of Common Stock or cash withheld or paid to satisfy withholding tax or hypothetical tax obligations in connection with such Awards or any other obligation of the Participant.
|
Citi 2018 Proxy Statement
Table of Contents
| (b) | To the extent not prohibited by applicable law, and consistent with the requirements of Section 409A of the Code, if applicable, the Company will have the right to offset against its obligation to deliver vested shares of Common Stock or make any vested cash payment pursuant to any Award granted under the Plan: (i) any amounts paid by the Company or a Subsidiary to a third party pursuant to any award, judgment, or settlement of a complaint, arbitration, or lawsuit of which a Participant was the subject; and (ii) any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards granted under the Plan, or awards granted under any other plan, or any obligations pursuant to a tax-equalization or housing allowance policy or other expatriate benefit) that a Participant then owes to the Company or a Subsidiary. |
| | |
15. Other Benefit and Compensation Programs
Awards granted under the Plan and amounts received upon vesting or exercise of an Award shall not be deemed a part of a Participant’s regular, recurring compensation for purposes of calculating payments or benefits under any Company benefit plan or severance program unless specifically provided for under the plan or program. Unless specifically set forth in an Award Agreement, Awards under the Plan are not intended as payment for compensation that otherwise would have been delivered in cash, and even if so intended, such Awards shall be subject to such vesting requirements and other terms, conditions, restrictions, and limitations as may be provided in the Award Agreement.
16. Unfunded Plan
Unless otherwise determined by the Committee, the Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company and any Participant or other person. To the extent that any Participant holds any rights by virtue of an Award granted under the Plan, such rights shall constitute general unsecured liabilities of the Company and shall not confer upon any Participant or any other person or entity any right, title, or interest in any assets of the Company.
17. Expenses of the Plan
The expenses of the administration of the Plan shall be borne by the Company and its Subsidiaries. The Company may require Subsidiaries to pay for the Common Stock issued under the Plan to Participants employed (or formerly employed) by such Subsidiaries.
18. Rights as a Stockholder
Unless the Committee determines otherwise, a Participant shall not have any rights as a stockholder with respect to shares of Common Stock covered by an Award until the date the Participant becomes the holder of record with respect to such shares. No adjustment will be made for dividends or other rights for which the record date is prior to such date, except as provided in Section 6(d) or Section 8.
Citi 2019 Proxy Statement
Table of Contents
19. Future Rights
No Employee shall have any claim or right to be granted an Award under the Plan. There shall be no obligation of uniformity of treatment of Employees under the Plan. Further, the Company and its Subsidiaries may adopt other compensation programs, plans, or arrangements as it deemsthey deem appropriate or necessary. The adoption of the Plan or the granting of any Award shall not confer upon any Employee any right to continued employment in any particular position or at any particular rate of compensation, nor shall it interfere in any way with the right of the Company or a Subsidiary to terminate the employment of its Employees at any time, free from any claim or liability under the Plan. Unless expressly provided otherwise elsewhere in the Plan or in an Award Agreement, Awards under the Plan shall be made in anticipation of future service and/or subject to other vesting conditions and will not be earned until all conditions to vesting have been satisfied.
www.citigroup.com
Table of Contents
20. Amendment and Termination
The Plan may be amended, suspended, or terminated at any time by the Committee, provided that no amendment shall be made without stockholder approval, if it would (a) materially increase the number of shares available under the Plan (other than pursuant to Section 6(d)), (b) materially expand the types of awards available under the Plan, (c) materially expand the class of persons eligible to participate in the Plan, (d) materially extend the term of the Plan, (e) materially change the method of determining the exercise price of an Award, (f) delete or limit the Plan’s prohibition against Repricing, or (g) otherwise require approval by the stockholders of the Company in order to comply with applicable law or the rules of the New York Stock Exchange (or, if the Common Stock is not traded on the New York Stock Exchange, the principal national securities exchange upon which the Common Stock is then traded or quoted). No such amendment referred to above shall be effective unless and until it has been approved by the stockholders of the Company. The Committee retains the right to modify an Award without a Participant’s prior consent if it determines that the modification is required to comply with applicable law, regulation, or regulatory guidance (including applicable tax law). Except as may be provided by Section 7(e), Section 11, and this Section 20, any other adverse modification shall not be effective without the Participant’s written consent. The Company shall furnish or make available to Participants a written notice of any modification through a brochure, prospectus supplement, or otherwise, which notice shall specify the effective date of such modification.
21. Successors and Assigns
The Plan and any applicable Award Agreement entered into under the Plan shall be binding upon and inure to the benefit of the respective successors and permitted assigns of Participants, including, without limitation, the executors, administrators, or trustees of a Participant’s estate, or any receiver or trustee in bankruptcy or representative of a Participant’s creditors.
22. Governing Law
The Plan and all Award Agreements entered into under the Plan shall be construed in accordance with and governed by the laws of the State of New York, except that any principles or provisions of New York law that would apply the law of another jurisdiction (other than applicable provisions of U.S. federal law) shall be disregarded. Notwithstanding the foregoing, matters with respect to indemnification, delegation of authority under the Plan, and the legality of shares of Common Stock issued under the Plan, shall be governed by the Delaware General Corporation Law.
23. Tax Compliance
Awards granted hereunder shall comply with or be exempt from Section 409A of the Code, unless otherwise determined by the Committee. If, pursuant to any Award that is subject to Section 409A of the Code, a Participant is entitled to receive a payment on a specified date, such payment shall be deemed made as of such specified date if it is made (a) not earlier than 30 days before such specified date, and (b) not later than December 31 of the year in which such specified date occurs or, if later, the fifteenth day of the third month following such specified date,
www.citigroup.com
Table of Contents
date; provided that the Participant shall not be permitted, directly or indirectly, to designate the taxable year in which such payment is made. If, pursuant to any Award that is subject to Section 409A of the Code, a Participant is entitled to a series of installment payments, such Participant’s right to the series of installment payments shall be treated as a right to a series of separate payments and not as a right to a single payment. For purposes of the preceding sentence, the term “series of installment payments” has the same meaning as provided in Section 1.409A-2(b)(2)(iii) of the regulations promulgated under the Code. Notwithstanding any provision of this Plan to the contrary, in no event shall the Company or any Subsidiary be liable to a Participant on account of an Award’s failure to (a) qualify for favorable U.S. or foreign tax treatment, or (b) avoid adverse tax treatment under U.S. or foreign law, including, without limitation, Sections 409A and 457A of the Code.
24. Severability
If any provision of this Plan is finally held to be invalid, illegal, or unenforceable (whether in whole or in part), such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality, or unenforceability, and the remaining provisions shall not be affected thereby; provided that, if any such provision is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision shall be deemed modified to the minimum extent necessary in order to make such provision enforceable.
Citi 20182019 Proxy Statement
Table of Contents
Citigroup Inc.
388 Greenwich Street
New York, New York 10013
Table of Contents
CITIGROUP INC.
3800 CITIGROUP CENTER DRIVE
BLDG G, MAIL ZONE G3-23
TAMPA, FL 33610-9122  | SCAN TO
VIEW MATERIALS & VOTE |   |  |
VOTE BY INTERNET -www.proxyvote.com or from a mobile phone scan the QR code above.above
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on April 23, 2018.15, 2019. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY TELEPHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on April 23, 2018.15, 2019. Have this proxy card in hand when you call and then follow the recorded instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope so that it is received prior to the Annual Meeting on April 24, 2018.16, 2019.
ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by Citigroup Inc. in mailing proxy materials, you can consent to receive all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
To view or print a copy of the Proxy Statement or Annual Report on Form 10-K, go to www.citigroup.com/citi/investor/corporate_governance.html.
SHAREHOLDER MEETING REGISTRATION:
Shareholder Meeting Registration permits shareholders to register for the Annual Meeting and print their admission tickets at their leisure. If you plan to attend the meeting, please obtain an admission ticket by registering no later than April 15, 2019. Click the "Register for Meeting"
link at www.proxyvote.com.
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | |
E38380-P02545-Z71883-Z71781E59445-P17380-Z73893-Z73892 | KEEP THISPORTION FOR YOURRECORDS |
| DETACH AND RETURN THIS PORTION ONLY |
| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
| The Board of Directors recommends a voteFOR Proposals 1 through 4. | | | | | | |
| | | | | | | |
1. Proposal to elect 1615 Directors: | | | | | | |
| | | | For | | Against | | Abstain |
| | 1a. | Michael L. Corbat | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
| 1b. | Ellen M. Costello | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
| 1c. | Barbara J. Desoer | | ☐ | | ☐ | | ☐ |
| | | | | | | | |
| 1d. | John C. Dugan | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
| 1d.1e. | Duncan P. Hennes | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
| 1e.1f. | Peter B. Henry | | ☐ | | ☐ | | ☐ |
| | | | | | | | |
| 1f. | Franz B. Humer | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
| 1g. | S. Leslie Ireland | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
| 1h. | Lew W. (Jay) Jacobs, IV | | ☐ | | ☐ | | ☐ |
| | | | | | | | |
| 1i. | Renée J. James | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
| 1i.1j. | Eugene M. McQuade | | ☐ | | ☐ | | ☐ |
| | | | | | | | |
| 1j. | Michael E. O'Neill | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
| 1k. | Gary M. Reiner | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
| 1l. | Anthony M. Santomero | | ☐ | | ☐ | | ☐ |
| | | | | | | | |
| 1m. | Diana L. Taylor | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
| 1n.1m. | James S. Turley | | ☐ | | ☐ | | ☐ |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | For | | Against | | Abstain |
| |
| | 1o.1n. Deborah C. Wright | | ☐ | | ☐ | | ☐ |
| |
| | 1p.1o. Ernesto Zedillo Ponce de Leon | | ☐ | | ☐ | | ☐ |
| |
| 2. | | Proposal to ratify the selection of KPMG LLP as Citi’sCiti's independent registered public accounting firm for 2018.2019. | | ☐ | | ☐ | | ☐ |
| |
| 3. | | Advisory vote to approve Citi’s 2017Citi's 2018 executive compensation. | | ☐ | | ☐ | | ☐ |
| |
| 4. | | Approval of an amendment to the Citigroup 20142019 Stock Incentive Plan authorizing additional shares.Plan. | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
The Board of Directors recommends a voteAGAINST Proposals 5 through 10.7. | | For | | Against | | Abstain |
| |
| 5. | | StockholderShareholder proposal requesting a Human and Indigenous Peoples’ Rights Policy.Shareholder Proxy Access Enhancement to Citi's proxy access bylaw provisions. | | ☐ | | ☐ | | ☐ |
| |
| 6. | | Stockholder proposal requesting that our Board take the steps necessary to adopt cumulative voting. | | ☐ | | ☐ | | ☐ |
|
7. | | Stockholder proposal requesting a report on lobbying and grassroots lobbying contributions. | | ☐ | | ☐ | | ☐ |
|
8. | | Stockholder proposal requesting an amendment to Citi’s proxy access bylaw provisions pertaining to the aggregation limit and the number of candidates. | | ☐ | | ☐ | | ☐ |
|
9. | | StockholderShareholder proposal requesting that the Board adopt a policy prohibiting the vesting of equity-based awards for senior executives due to a voluntary resignation to enter government service. | | ☐ | | ☐ | | ☐ |
| |
10.7. | | StockholderShareholder proposal requesting that the Board amend Citi’sCiti's bylaws to give holders in the aggregate of 15% of Citi’sCiti's outstanding common stock the power to call a special meeting. | | ☐ | | ☐ | | ☐ |
| | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Please indicate if you would like to keep your vote confidential under the current policy. | | ☐ | | ☐ | | |
| | | | Yes | | No | | |
| | | | | |
| Signature [PLEASE SIGN WITHIN BOX] | Date | | Signature (Joint Owners) | Date | |
Table of Contents
ADMISSION TICKETMeeting Information
20182019 Annual Meeting of Stockholders
April 24, 201816, 2019 at 9:00 a.m. at Citi's
The Great Hall of The Congress Plaza HotelHeadquarters
520 South Michigan Avenue388 Greenwich Street
Chicago, IL 60605New York, New York 10013
You should present thisShareholder Meeting Registration permits shareholders to register for the Annual Meeting and print their admission ticket in ordertickets at their leisure.
If you plan to gain admittance toattend the meeting. This ticket admits onlyAnnual Meeting, please click the stockholder(s) listed on the reverse side and is not transferable. Each stockholder may be asked to present valid picture identification, such as a driver's license. Cameras, recording devices and other electronic devices will not be permitted"Register for Meeting" link at the meeting.www.proxyvote.com. |
If you submit your proxy by telephone or Internet, do not return your proxy card.
Thank you for your proxy submission.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice
and Proxy Statement and Annual Report are available at
www.citigroup.com/citi/investor/corporate_governance.html.
E38381-P02545-Z71883-Z71781E59446-P17380-Z73893-Z73892 |
CITIGROUP INC.
Proxy Solicited on Behalf of the Board of Directors
of Citigroup Inc. for the Annual Meeting, April 24, 201816, 2019
The undersigned hereby constitutes and appoints Michael E. O'Neill,John C. Dugan, Michael L. Corbat and Rohan Weerasinghe, and each of them his or her true and lawful agents and proxies with full power of substitution in each, to represent the undersigned at the Annual Meeting of Stockholders of Citigroup Inc. ("Citigroup") to be held at The Great Hall of The Congress Plaza Hotel, 520 South Michigan Avenue, Chicago, IL 60605,Citi's Headquarters, 388 Greenwich Street, New York, NY 10013, on Tuesday, April 24, 2018,16, 2019, at 9:00 a.m. local time and at any adjournments or postponements thereof, on all matters properly coming before the Annual Meeting, including but not limited to the matters set forth on the reverse side.
You are encouraged to specify your choices by marking the appropriate boxes (SEE REVERSE SIDE) but you need not mark any boxes if you wish to vote in accordance with the Board of Directors' recommendations. Your proxy cannot be voted unless you sign, date and return this card or follow the instructions for telephone or Internet voting set forth on the reverse side.
This proxy, when properly executed, will be voted in the manner directed herein. If no direction is made, this proxy will be votedFOR Proposals 1-4, andAGAINST Proposals 5-105-7 and will be voted in the discretion of the proxies (or, in the case of a Voting Plan, will be voted in the discretion of the plan trustee or administrator) upon such other matters as may properly come before the Annual Meeting.Meeting.
The signer(s) hereby acknowledge(s) receipt of the Notice of Annual Meeting of Stockholders and accompanying Proxy Statement. The signer(s) hereby revoke(s) all proxies heretofore given by the signer(s) to vote at said Annual Meeting and any adjournments or postponements thereof. NOTE: Please sign exactly as name appears herein. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
Attention employee benefit plan participants:If you hold shares of Citigroup common stock through an employee benefit plan, you should complete, sign and return this proxy card to instruct the trustee of the plan how to vote these shares. Your proxy must be received no later than 8:00 a.m., Eastern Time, on April 20, 201811, 2019 so that the trustee of the plan (who votes the shares on behalf of plan participants) has adequate time to tabulate the voting instructions. Your voting instructions will be kept confidential.
If shares of Citigroup common stock are issued to or held for the account of the undersigned under employee plans and voting rights attached to such shares (any of such plans, a "Voting Plan"), then the undersigned hereby directs the respective fiduciary of each applicable Voting Plan to vote all shares of Citigroup common stock in the undersigned's name and/or account under such Plan in accordance with the instructions given herein and the terms of the applicable Voting Plan, at the Annual Meeting and at any adjournments or postponements thereof, on all matters properly coming before the Annual Meeting, including but not limited to, the matters set forth on the reverse side.
IF NO BOXES ARE MARKED, THIS PROXY WILL BE VOTED IN THE MANNER DESCRIBED ABOVE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
