Citibank 2011 Annual Report Download - page 184

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On May 17, 2011, the Committee approved a retention award to the CEO
that included an option grant with exercise prices at or above the market
price of Citi common stock on the grant date. The price of Citi common
stock on the grant date was $41.54 and the committee awarded options with
exercise prices of $41.54, $52.50 and $60.00. These options vest in three equal
installments on the first three anniversaries of the grant date, and vested
options remain exercisable for their entire 10-year term. Unvested options
will be forfeited if the CEO terminates employment with the Company for
any reason before the applicable vesting date, except in the event of his death
or disability. The options have risk-adjustment features such as a one-year
holding period for incremental shares if the options are exercised before the
fifth anniversary of the grant date, and unvested and vested but unexercised
option shares may be cancelled or forfeited pursuant to a clawback provision.
On February 14, 2011, Citigroup granted options exercisable for
approximately 2.9 million shares of Citi common stock to certain of its
executive officers. The options have six-year terms and vest in three equal
annual installments beginning on February 14, 2012. The exercise price of
the options is $49.10, which was the closing price of a share of Citi common
stock on the grant date. On any exercise of the options before the fifth
anniversary of the grant date, the shares received on exercise (net of the
amount required to pay taxes and the exercise price) are subject to a one-
year transfer restriction.
On April 20, 2010, Citigroup made an option grant to a group of
employees who were not eligible for the October 29, 2009, broad-based grant
described below. The options were awarded with an exercise price equal to
the NYSE closing price on the trading day immediately preceding the date of
grant ($48.80). The options vest in three annual installments beginning on
October 29, 2010. The options have a six-year term.
On October 29, 2009, Citigroup made a one-time broad-based option
grant to employees worldwide. The options have a six-year term, and
generally vest in three equal installments over three years, beginning on
the first anniversary of the grant date. The options were awarded with an
exercise price equal to the NYSE closing price on the trading day immediately
preceding the date of grant ($40.80). The CEO and other employees whose
2009 compensation was subject to structures approved by the Special Master
did not participate in this grant.
In January 2009, members of the Management Executive Committee
received 10% of their awards as performance-priced stock options, with an
exercise price that placed the awards significantly “out of the money” on
the date of grant. Half of each executive’s options have an exercise price of
$178.50 and half have an exercise price of $106.10. The options were granted
on a day on which Citi’s closing price was $45.30. The options have a 10-year
term and vest ratably over a four-year period.
Prior to 2009, stock options were granted 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. Beginning in 2009, Citi eliminated the
stock option election for all directors and employees (except certain CAP
participants who were permitted to make a stock option election for awards
made in 2009).
Generally, options granted from 2003 through 2009 have six-year terms
and vest ratably over three- or four-year periods; however options granted
to directors provided for cliff vesting. Vesting schedules for sign-on or
retention grants may vary. The sale of shares acquired through the exercise
of employee stock options granted from 2003 through January 2009 is
restricted for a two-year period (and may be subject to the stock ownership
commitment of senior executives thereafter).
On January 22, 2008, the CEO was awarded stock options to purchase
three hundred thousand 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
($244.00), one-third have an exercise price equal to a 25% premium over
the grant-date closing price ($305.00), and one-third have an exercise price
equal to a 50% premium over the grant date closing price ($366.00). These
options do not have a reload feature.
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 and with 10-year terms, 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 to purchase.
From 1997 to 2002, a broad base of employees participated in annual
option grant programs. The options vested over five-year periods, or cliff
vested after five years, and had 10-year terms but no reload features. No
grants have been made under these programs since 2002 and all options that
remain outstanding will expire in 2012.