Travelers 2003 Annual Report Download - page 81

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79
Prior to the IPO, Travelers participated in Citigroup’s Capital Accumulation Plan (CAP) that provided for the issuance
of shares of Citigroup common stock in the form of restricted stock awards to eligible officers and other key
employees. On August 20, 2002, in connection with the Citigroup Distribution, the unvested outstanding awards of
restricted stock and deferred shares held by Travelers employees on that date under Citigroup CAP awards, were
cancelled and replaced by awards comprised primarily of 3.1 million newly issued shares of class A common stock at a
total market value of $53.3 million based on the closing price of the class A common stock on August 20, 2002. These
replacement awards were granted on substantially the same terms, including vesting, as the former Citigroup awards.
The value of these newly issued shares along with class A and class B common stock received in the Citigroup
Distribution on the Citigroup restricted shares, were equal to the value of the cancelled Citigroup restricted share
awards. In addition the Board of Directors plan allows deferred receipt of shares of class A common stock (deferred
stock) to a future distribution date or upon termination of their service.
Prior to the Citigroup Distribution on August 20, 2002, unearned compensation expense associated with the Citigroup
restricted common stock grants is included in other assets in the consolidated balance sheet. Following the Citigroup
Distribution and the issuance of replacement stock awards in Travelers class A and class B shares on August 20, 2002,
the unamortized unearned compensation expense associated with these awards is included as unearned compensation
in the consolidated balance sheet. Unearned compensation expense is recognized as a charge to income ratably over
the vesting period. The after-tax compensation cost charged to earnings for these restricted stock and deferred stock
awards was $17.1 million, $17.0 million and $19.4 million for the years ended December 31, 2003, 2002 and 2001,
respectively. See note 10 of notes to Travelers consolidated financial statements for a discussion of restricted common
stock awards.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See note 1 of notes to Travelers consolidated financial statements for a discussion of recently issued accounting
pronouncements.