Citibank 2009 Annual Report Download - page 162

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shares of Citigroup common stock. The number of shares to be delivered
will equal the CSE award value divided by the then fair market value of the
common stock. For CSEs awarded to certain employees whose compensation
structure was approved by the Special Master, 50% of the shares to be
delivered in April 2010 will be subject to restrictions on sale and transfer until
January 20, 2011. In lieu of 2010 CAP awards, certain retirement-eligible
employees were instead awarded CSEs payable in April 2010, but any shares
that are to be delivered in April 2010 (subject to stockholder approval) will be
subject to restrictions on sale or transfer that will lapse in four equal annual
installments beginning January 20, 2011. CSE awards have generally been
accrued as compensation expenses in the year 2009 and will be recorded as
a liability from the January 2010 grant date until the settlement date in April
2010. If stockholders approve delivery of Citigroup stock for the CSE awards,
CSE awards will likely be paid as new issues of common stock as an exception
to the Company’s practice of delivering shares from treasury stock, and the
recorded liability will be reclassified as equity at that time.
In January 2009, members of the Management Executive Committee
(except the CEO and CFO) received 30% of their incentive awards for 2008
as performance vesting-equity awards. These awards vest 50% if the price
of Citigroup common stock meets a price target of $10.61, and 50% for a
price target of $17.85, in each case on or prior to January 14, 2013. The
price target will be met only if the NYSE closing price equals or exceeds
the applicable price target for at least 20 NYSE trading days within any
period of 30 consecutive NYSE trading days ending on or before January 14,
2013. Any shares that have not vested by such date will vest according to
a fraction, the numerator of which is the share price on the delivery date
and the denominator of which is the price target of the unvested shares. No
dividend equivalents are paid on unvested awards. Fair value of the awards is
recognized as compensation expense ratably over the vesting period.
On July 17, 2007, the Committee approved the Management Committee
Long-Term Incentive Plan (MC LTIP) (pursuant to the terms of the
shareholder-approved 1999 Stock Incentive Plan) under which participants
received an equity award that could be earned based on Citigroup’s
performance against various metrics relative to peer companies and publicly-
stated return on equity (ROE) targets measured at the end of each calendar
year beginning with 2007. The final expense for each of the three consecutive
calendar years was adjusted based on the results of the ROE tests. No awards
were earned for 2009, 2008 or 2007 and no shares were issued because
performance targets were not met. No new awards were made under the MC
LTIP since the initial award in July 2007.
CAP participants in 2008, 2007, 2006 and 2005, and FA CAP participants
in those years and in 2009, could elect to receive all or part of their award in
stock options. The figures presented in the stock option program tables (see
“Stock Option Programs” below) include options granted in lieu of CAP and
FA CAP stock awards in those years.
A summary of the status of Citigroup’s unvested stock awards at
December 31, 2009 and changes during the 12 months ended December 31,
2009 are presented below:
Unvested stock awards Shares
Weighted-average
grant date
fair value
Unvested at January 1, 2009 226,210,859 $36.23
New awards 162,193,923 $ 4.35
Cancelled awards (51,873,773) $26.59
Deleted awards (568,377) $13.91
Vested awards (1) (148,011,884) $25.96
Unvested at December 31, 2009 187,950,748 $19.53
(1) The weighted-average market value of the vestings during 2009 was approximately $3.64 per share.
At December 31, 2009, there was $1.6 billion of total unrecognized
compensation cost related to unvested stock awards net of the forfeiture
provision. That cost is expected to be recognized over a weighted-average
period of 1.3 years.