Citibank 2008 Annual Report Download - page 148

Stock Option Programs
The Company has a number of stock option programs for its non-employee
directors, officers and employees. Generally, in 2008, 2007, 2006 and 2005,
stock options were granted only to CAP participants who elected to receive
stock options in lieu of restricted or deferred stock awards, and to
non-employee directors who elected to receive their compensation in the
form of a stock option grant. Occasionally, stock options also may be granted
as sign-on awards. All stock options are granted on Citigroup common stock
with exercise prices that are no less than the fair market value at the time of
grant. Generally, options granted from 2003 through 2008 have six-year
terms, but there have been grants with terms of up to 10 years. Options
granted from January 2003 through 2008 typically vest ratably over three- or
four-year periods; however, directors’ options cliff vest after two years, and
vesting schedules for sign-on grants may vary. Options granted in 2004 and
2003 typically vest in thirds each year over three years (with the first vesting
date occurring 17 months after the grant date), and had 10-year terms. The
sale of shares acquired through the exercise of employee stock options
granted since January 2003 is restricted for a two-year period (and may be
subject to the stock ownership commitment of senior executives thereafter).
Prior to 2003, Citigroup options, including options granted since the date of
the merger of Citicorp and Travelers Group, Inc., generally vested at a rate of
20% per year over five years (with the first vesting date occurring 12 to 18
months following the grant date) and had 10-year terms. Certain options,
mostly granted prior to January 1, 2003, permit an employee exercising an
option under certain conditions to be granted new options (reload options)
in an amount equal to the number of common shares used to satisfy the
exercise price and the withholding taxes due upon exercise. The reload
options are granted for the remaining term of the related original option and
vest after six months. Reload options may in turn be exercised using the
reload method, given certain conditions. An option may not be exercised
using the reload method unless the market price on the date of exercise is at
least 20% greater than the option exercise price.
To further encourage employee stock ownership, the Company’s eligible
employees participated in WealthBuilder, CitiBuilder, or the Citigroup
Ownership Program. Options granted under the WealthBuilder and the
Citigroup Ownership programs vest over a five-year period, and options
granted under the CitiBuilder program vest after five years. These options did
not have a reload feature. Options have not been granted under these
programs since 2002.
On January 22, 2008, Vikram Pandit, CEO, was awarded stock options to
purchase three million shares of common stock. The options vest 25% per
year beginning on the first anniversary of the grant date and expire on the
tenth anniversary of the grant date. One-third of the options have an exercise
price equal to the NYSE closing price of Citigroup stock on the grant date
($24.40), one-third have an exercise price equal to a 25% premium over the
grant date closing price ($30.50), and one-third have an exercise price equal
to a 50% premium over the grant date closing price ($36.60). The first
installment of these options vested on January 22, 2009. These options do not
have a reload feature.
Information with respect to stock option activity under Citigroup stock option plans for the years ended December 31, 2008, 2007 and 2006 is as follows:
2008 2007 2006
Options
Weighted
average
exercise
price
Intrinsic
value
per share Options
Weighted
average
exercise
price
Intrinsic
value
per share Options
Weighted
average
exercise
price
Intrinsic
value
per share
Outstanding, beginning of period 172,767,122 $43.08 $ — 212,067,917 $41.87 $13.83 277,255,935 $40.27 $ 8.26
Granted—original 18,140,448 $24.70 — 2,178,136 $54.21 — 3,259,547 $48.87 —
Granted—reload 15,984 $28.05 — 3,093,370 $52.66 — 12,530,318 $52.30 —
Forfeited or exchanged (24,080,659) $42.19 — (8,796,402) $46.26 1.52 (14,123,110) $45.57 3.36
Expired (20,441,584) $38.88 — (843,256) $43.40 4.38 (2,021,955) $44.87 4.06
Exercised (2,540,654) $22.36 — (34,932,643) $36.62 11.16 (64,832,818) $36.37 12.56
Outstanding, end of period 143,860,657 $41.84 $ — 172,767,122 $43.08 $ — 212,067,917 $41.87 $13.83
Exercisable at end of period 123,654,795 165,024,814 179,424,900
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