Citibank 2012 Annual Report Download - page 190

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Director Compensation
Non-employee directors receive part of their compensation in the form of
deferred stock awards that vest in two years, and may elect to receive part of
their retainer in the form of a stock payment, which they may elect to defer.
A summary of the status of Citigroup’s unvested stock awards that are not
subject to variable accounting at December 31, 2012 and changes during the
12 months ended December 31, 2012 are presented below:
Unvested stock awards Shares
Weighted-average
grant date
fair value
Unvested at January 1, 2012 50,213,124 $50.90
New awards 33,452,028 30.51
Cancelled awards (2,342,822) 39.15
Vested awards (1) (17,345,405) 62.12
Unvested at December 31, 2012 63,976,925 $37.62
(1) The weighted-average fair value of the vestings during 2012 was approximately $32.78 per share.
A summary of the status of Citigroup’s unvested stock awards that are
subject to variable accounting at December 31, 2012, and changes during the
12 months ended December 31, 2012, are presented below:
Unvested stock awards Shares
Weighted-average
award issuance
fair value
Unvested at January 1, 2012 5,290,798 $49.30
New awards 2,219,213 30.55
Cancelled awards (377,358) 43.92
Vested awards (1) (1,168,429) 50.16
Unvested at December 31, 2012 5,964,224 $42.50
(1) The weighted-average fair value of the vestings during 2012 was approximately $29.18 per share.
At December 31, 2012, there was $886 million 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 2.1 years. However, the cost of awards subject to variable accounting
will fluctuate with changes in Citigroup’s common stock price.
Stock Option Programs
While the Company no longer grants options as part of its annual incentive
award programs, Citigroup may grant stock options to employees or directors
on a one-time basis, as sign-on awards or as retention awards, as referenced
above. 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 (which
is defined under the 2009 Stock Incentive Plan to be the NYSE closing price
on the trading day immediately preceding the grant date or on the grant
date for grants to executive officers). Vesting periods and other terms and
conditions of sign-on and retention option grants tend to vary by grant.
Beginning in 2009, Citigroup 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). This stock option
election allowed participants to trade a certain percentage of their annual
incentive that would otherwise be granted in CAP shares and elect to have the
award delivered instead as a stock option.
On February 14, 2011, Citigroup granted options exercisable for
approximately 2.9 million shares of Citigroup 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 Citigroup
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 of a share of Citigroup common stock 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 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 Citigroup’s 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 the NYSE closing price of a share of
Citigroup common stock was $45.30. The options have a 10-year term and
vest ratably over a four-year period.
Generally, all other 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. All outstanding options granted
prior to 2009 are significantly out of the money.
Prior to 2003, Citigroup options had 10-year terms and 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). All outstanding options that were
granted prior to 2003 expired in 2012.
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
remained outstanding expired in 2012.
All unvested options granted to former CEO Vikram Pandit, including
premium-priced stock options granted on May 17, 2011, were cancelled upon
his resignation in October 2012.