Citibank 2014 Annual Report Download - page 182

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Profit Sharing Plan
The 2010 Key Employee Profit Sharing Plan (KEPSP) entitled participants
to profit-sharing payments calculated with reference to the pretax income of
Citicorp (as defined in the KEPSP) over a performance measurement period
of January 1, 2010, through December 31, 2013. Generally, if a participant
remained employed and all other conditions to vesting and payment were
satisfied, the participant became entitled to payment. Payments were made in
cash, except for U.K. participants who, pursuant to regulatory requirements,
received 50% of their payment in Citigroup common stock that was subject to
a six-month sale restriction.
Independent risk function employees were not eligible to participate in the
KEPSP, as the independent risk function participates in the determination of
whether payouts will be made under the KEPSP. Instead, they were eligible to
receive deferred cash retention awards.
Other Variable Incentive Compensation
Citigroup has various incentive plans globally that are used to motivate and
reward performance primarily in the areas of sales, operational excellence
and customer satisfaction. Participation in these plans is generally limited to
employees who are not eligible for discretionary annual incentive awards.
Summary
Except for awards subject to variable accounting, the total expense
recognized for stock awards represents the grant date fair value of such
awards, which is generally recognized as a charge to income ratably over the
vesting period, other than for awards to retirement-eligible employees and
immediately vested awards. Whenever awards are made or are expected to be
made to retirement-eligible employees, the charge to income is accelerated
based on when the applicable conditions to retirement eligibility were or will
be met. If the employee is retirement eligible on the grant date, or the award
is vested at grant date, the entire expense is recognized in the year prior
to grant.
Recipients of Citigroup stock awards generally do not have any
stockholder rights until shares are delivered upon vesting or exercise, or
after the expiration of applicable required holding periods. Recipients of
restricted or deferred stock awards and stock unit awards, however, may be
entitled to receive dividends or dividend-equivalent payments during the
vesting period. Recipients of restricted stock awards generally are entitled to
vote the shares in their award during the vesting period. Once a stock award
vests, the shares are freely transferable, unless they are subject to a restriction
on sale or transfer for a specified period. Pursuant to a stock ownership
commitment, certain executives have committed to holding most of their
vested shares indefinitely.
All equity awards granted since April 19, 2005, have been made pursuant
to stockholder-approved stock incentive plans that are administered by the
Personnel and Compensation Committee of the Citigroup Board of Directors,
which is composed entirely of independent non-employee directors.
At December 31, 2014, approximately 51.6 million shares of Citigroup
common stock were authorized and available for grant under Citigroup’s
2014 Stock Incentive Plan, the only plan from which equity awards are
currently granted.
The 2014 Stock Incentive Plan and predecessor plans permit the use of
treasury stock or newly issued shares in connection with awards granted
under the plans. Newly issued shares were distributed to settle the vesting of
annual deferred stock awards in January 2012, 2013, 2014 and 2015. The use
of treasury stock or newly issued shares to settle stock awards does not affect
the compensation expense recorded in the Consolidated Statement of Income
for equity awards.
Incentive Compensation Cost
The following table shows components of compensation expense, relating
to the above incentive compensation programs, recorded during 2014, 2013
and 2012:
In millions of dollars 2014 2013 2012
Charges for estimated awards
to retirement-eligible employees $ 525 $ 468 $ 444
Amortization of deferred cash awards,
deferred cash stock units and performance
stock units 311 323 345
Immediately vested stock award expense (1) 51 54 60
Amortization of restricted and deferred
stock awards (2) 668 862 864
Option expense 110 99
Other variable incentive compensation 803 1,076 670
Profit sharing plan 178 246
Total $ 2,360 $ 2,871 $ 2,728
(1) Represents expense for immediately vested stock awards that generally were stock payments in lieu
of cash compensation. The expense is generally accrued as cash incentive compensation in the year
prior to grant.
(2) All periods include amortization expense for all unvested awards to non-retirement-eligible employees.
Amortization is recognized net of estimated forfeitures of awards.
Future Expenses Associated with Outstanding (Unvested) Awards
Citi expects to record compensation expense in future periods as a result of
awards granted for performance in 2014 and years prior. Because the awards
contain service or other conditions that will be satisfied in the future, the
expense of these already-granted awards is recognized over those future
period(s). Citi’s expected future expenses, excluding the impact of forfeitures,
cancellations, clawbacks and repositioning-related accelerations that have
not yet occurred, are summarized in the table below. The portion of these
awards that is subject to variable accounting will cause the expense amount
to fluctuate with changes in Citigroup’s common stock price.
In millions of dollars 2015 2016 2017
2018 and
beyond (1) Total (2)
Awards granted in 2014 and prior:
Deferred Stock Awards $ 357 $ 204 $ 92 $ 6 $ 659
Deferred Cash Awards 232 123 51 3 409
Future expense related to awards
already granted $ 589 $ 327 $ 143 $ 9 $1,068
Future expense related to awards
granted in 2015 (3) $ 400 $ 290 $ 188 $ 164 $1,042
Total $ 989 $ 617 $ 331 $ 173 $2,110
(1) Principally 2018.
(2) $1.8 billion of which is attributable to ICG.
(3) Refers to awards granted on or about February 16, 2015, as part Citi’s discretionary annual incentive
awards for services performed in 2014, and 2015 compensation allowances.