Executive Option Grant Agreement – Citigroup
Citigroup Inc.
Executive Option Grant Agreement
1. Award Agreement. Citigroup Inc. (“Citigroup“)
hereby grants to Vikram Pandit (“Participant“), the award summarized
below, pursuant to the Citigroup 2009 Stock Incentive Plan, as amended and
restated effective April 21, 2011, and as it may be further amended from time to
time (the “Plan“). The terms, conditions and restrictions of your award
are contained in this Executive Option Grant Agreement, including the attached
Appendix (together, the “Agreement“), and are summarized, along with
additional information, in the Executive Option Grant prospectus dated
May 17, 2011, and any applicable prospectus supplements (together, the
“Prospectus“). For the award to be effective, you must accept below,
acknowledging that you have received and read the Prospectus and this Agreement,
including the Appendix.
2. Executive Option Grant Summary*
|
Grant Date: |
May 17, 2011 |
|
|
Number of Shares: |
500,000 |
|
|
Grant Price: |
$41.54 per share, as to 300,000 shares |
|
|
$52.50 per share, as to 100,000 shares |
||
|
$60.00 per share, as to 100,000 shares |
||
|
Vesting Dates (1/3 of the number of shares subject to each grant |
May 17, 2012 |
|
|
May 17, 2013 |
||
|
May 17, 2014 |
||
|
Option Expiration Date: |
May 17, 2021 |
3. Acceptance and Agreement by Participant. I hereby accept
the award described above, and agree to be bound by the terms, conditions, and
restrictions of such award as set forth in this Agreement, including the
Appendix, and in the Prospectus (acknowledging hereby that I have read and that
I understand such documents), the Plan and Citigroup’s policies, as in effect
from time to time, relating to the administration of the Plan. I understand that
vesting is conditioned upon continuous employment with the Company, and that an
Award may be cancelled if there is a break in or termination of my employment
with the Company.
|
CITIGROUP INC. |
PARTICIPANT’S SIGNATURE: |
|||
|
By: |
/s/ PAUL MCKINNON |
/s/ VIKRAM S. PANDIT |
||
|
Paul McKinnon |
Name: Vikram S. Pandit |
|||
* The terms, conditions and restrictions applicable to your award, including
what happens in the event of a termination or suspension of your employment, are
contained in this Agreement, which includes the Appendix hereto, and are also
summarized in the Prospectus. The Award is also subject to any modifications,
limitations, adjustments or clawback provisions required under Company policy or
legal, regulatory or governmental requirements, stock exchange listing
requirements, or that are required to enable the Company to qualify for any
government loan, subsidy, investment or other program.
CITIGROUP INC.
EXECUTIVE OPTION GRANT AGREEMENT
APPENDIX
This Appendix constitutes part of the Executive Option Grant Agreement (the
“Agreement“) and is applicable to the stock option
award summarized on the first page of this Agreement. This Appendix is
part of the Agreement and sets forth the terms and conditions and other
information applicable to the non-qualified stock option (the
“Option“), granted to Participant, as described in the Award Summary on
page 1. All Options are denominated in shares of Citigroup common stock, par
value $.01 per share (referred to herein as “shares” or “Citigroup
stock“). The “Company“, for purposes of this Agreement, shall mean
Citigroup and its subsidiaries.
1. Terms and Conditions. The terms, conditions, and
restrictions of the Option are set forth below. Certain of these provisions,
along with other important information, are summarized in the Executive
Option Grant prospectus dated May 17, 2011 and any applicable
prospectus supplement (together, the “Prospectus“). The terms,
conditions, and restrictions of the Option include, but are not limited to,
provisions relating to amendment, vesting, and cancellation of the Option,
restrictions on the transfer of the Option, and additional restrictions as
further described below.
By accepting the Option, Participant acknowledges that he has read
and understands the Prospectus and the terms and conditions set forth in this
Appendix. Participant understands that this Option and all other incentive
awards granted by the Company are entirely discretionary and that no right to
receive the Option, or any incentive award, exists absent a prior written
agreement to the contrary.
Participant understands that the value that may be realized from the
Option, if any, is contingent and depends on the future market price of
Citigroup stock, among other factors, and that because equity awards are
discretionary, and intended to promote employee retention and stock ownership
and to align employees’ interests with those of stockholders, equity awards are
subject to vesting conditions and will be canceled if such conditions are not
satisfied.
Any monetary value assigned to the Option in any communication
regarding the Option is contingent, hypothetical, and for illustrative purposes
only and does not express or imply any promise or intent by the Company to
deliver, directly or indirectly, any certain or determinable cash value to
Participant. Receipt of an Option covered by this Agreement, or any other
incentive award, is neither an indication nor a guarantee that an incentive
award of any type or amount will be made in the future, and absent a written
agreement to the contrary, the Company is free to change its practices and
policies regarding incentive awards at any time in its sole discretion.
Any actual, anticipated, or estimated financial benefit to
Participant from the Option is not and shall not be deemed to be a normal or an
integral part of Participant’s regular or expected salary or compensation from
employment for any purposes, including, but not limited to, calculating any
statutory, common law or other employment-related payment to Participant,
including any severance, resignation, termination, redundancy, end-of-service,
bonus, long-service awards, pension, superannuation or retirement or welfare or
similar payments, benefits or entitlements, and in no event should be considered
as compensation for, or relating in any way to, past services for the
Company.
2. Vesting. If conditions to vesting are satisfied, the
Option will vest in the installment amounts and on the vesting dates set forth
in the Executive Option Grant Summary, or at such earlier times as provided for
upon the occurrence of events described in Section 4. Any fractional shares
resulting from the application of the vesting schedule set forth in the
Executive Option Grant Summary will be sold upon option exercise and used to
satisfy tax withholding obligations. Vesting in each case is subject to receipt
of the information necessary to make any required tax payments and confirmation
by Citigroup that all conditions to vesting have been satisfied.
2
Vesting is conditioned on Participant’s continuous employment with the
Company up to and including the scheduled vesting date, unless otherwise
provided below.
3. Exercise of Option. Vested Option shares may be
exercised in whole or in part by Participant upon notice to the Company,
together with provision for payment of the grant price (as set forth in the
Executive Option Grant Summary). Such notice shall be given in the manner
prescribed by Citigroup and shall specify the date and method of exercise and
the number of Option shares that are being exercised. The currently available
option exercise methods, which are subject to change at any time, are described
in the Prospectus. All stock option exercises will be processed in accordance
with the Citigroup Equity Compensation administrative procedures and deadlines
then in effect. If Participant uses a broker-assisted exercise method that may
be available from time to time, Participant acknowledges and agrees that option
proceeds from any broker-assisted exercises will be net of applicable
commissions and fees associated with these transactions. The applicable
commissions and fees will be disclosed to Participant at or prior to the time of
exercise or will be available to Participant upon request. The laws of the
country in which Participant is working at the time of grant, vesting, and/or
exercise of the Option (including any rules or regulations governing securities,
foreign exchange, tax or labor matters), and Citigroup accounting or other
policies, whether dictated by such country’s political or regulatory climate or
otherwise, may restrict or prohibit any one or more of the stock option exercise
methods described in the Prospectus; such restrictions may apply differently if
Participant is a resident or expatriate employee, and are subject to change at
any time. If the last day on which an Option may be exercised pursuant to any
provision of this Agreement is not a trading day on the New York Stock Exchange,
then the immediately preceding New York Stock Exchange trading day shall be the
last day on which an Option may be exercised. Under no circumstances may an
Option be exercised after the Option Expiration Date set forth in the Executive
Option Grant Summary (the “Option expiration date“). The
Company is not obligated to notify a Participant (or his estate or personal
representatives) that an Option is nearing expiration.
4. Termination of Employment and Exercise Rights. The
vesting of the Option shares is conditioned upon Participant’s continuous
employment with the Company and/or subject to other conditions, as provided
below.
(a) Termination of Employment Generally. If Participant
voluntarily terminates his employment with the Company, of if the Company
terminates Participant’s employment other than in the circumstances described in
Section 4(f) below, vesting of Option shares will cease and all unvested Option
shares will be canceled on the date Participant’s employment is so terminated,
and Participant may exercise vested Option shares until the Option expiration
date.
(b) Disability. Option shares will continue to vest on
schedule and may be exercised, subject to all other provisions of this
Agreement, during Participant’s approved disability leave pursuant to a Company
disability policy (but not later than the Option expiration date). If
Participant’s disability ends with Participant’s termination of employment on
account of the disability, any unvested Option shares will vest immediately.
Vested Option shares may be exercised until the Option expiration date.
(c) Approved Personal Leave of Absence (Non-Statutory
Leave).
(i) Unvested Option shares will continue to vest on schedule, subject to all
other provisions of this Agreement, during the first six months of an approved
personal leave of absence, provided that Participant’s leave of absence was
approved by the Committee in accordance with the leave of absence policies
applicable to Participant (an “approved personal leave of absence“).
Unvested Option shares will be canceled as soon as the approved personal leave
of absence has exceeded six months, except as provided in paragraph (ii) below.
3
(ii) If Participant’s employment terminates for any reason specified
elsewhere in this Section 4 during the first six months of an approved personal
leave of absence, the Award will be treated as described in the applicable
provision of this Section 4.
(d) Statutory Leave of Absence. Unvested Option shares will
continue to vest on schedule, subject to all other provisions of this Agreement,
during a leave of absence that is approved by the Committee, provided by
applicable law and is taken in accordance with such law and applicable Company
policy (a “statutory leave of absence“).
(e) Death. If Participant’s employment terminates by reason
of Participant’s death, any unvested Option shares will vest and vested Option
shares may be exercised only by the lawful representative of Participant’s
estate until the Option expiration date.
(f) Involuntary Termination for Gross Misconduct.
Notwithstanding any provisions of this Agreement to the contrary, if the Company
terminates Participant’s employment because of Participant’s “Gross
Misconduct” (as defined below), vesting of the Option, and Participant’s
right to exercise vested Option shares will cease on the date Participant’s
employment is so terminated; all unvested and unexercised Option shares will be
canceled as of date Participant’s employment is terminated, and Participant
shall have no further rights of any kind with respect to the Option. For
purposes of this Agreement, “Gross Misconduct” means any conduct that
(i) is in competition with the Company’s business operations, (ii) breaches any
obligation that Participant owes to the Company or Participant’s duty of loyalty
to the Company, (iii) is materially injurious to the Company or (iv) is
otherwise determined by the Personnel and Compensation Committee of the
Citigroup Board of Directors (the “Committee“), in its sole discretion,
to constitute gross misconduct.
(g) Clawback. Any unvested shares subject to the Option,
any vested but unexercised Option shares, and any Incremental Shares (as defined
in Section 4(h) below) will be canceled, forfeited, or subject to recovery if
the Committee determines that (i) Participant received the Option based on
materially inaccurate financial statements (which includes, but is not limited
to, statements of earnings, revenues, or gains) or any other materially
inaccurate performance metric criteria, (ii) Participant knowingly engaged in
providing inaccurate information (including knowingly failing to timely correct
inaccurate information) relating to financial statements or performance metrics,
(iii) Participant materially violated any risk limits established or revised by
senior management, a business head and/or risk management, or any balance sheet
or working or regulatory capital guidance provided by a business head, or (iv)
the Participant’s employment is terminated for Gross Misconduct.
(h) One-Year Transfer Restriction on Incremental Shares from
Exercises before May 17, 2016. If Participant exercises any Option
shares before the fifth anniversary of the grant date (May 17, 2016), the shares
issued after covering the option cost (equal to the grant price, as set forth in
the Executive Option Grant Summary, times the number of option shares
exercised), applicable taxes, and any brokerage commission and fees
(“Incremental Shares“) will be subject to a restriction on sale or
transfer (the “Transfer Restriction“) beginning on the exercise date
and ending one year thereafter. In the event of Participant’s death, the
Transfer Restriction will cease to apply and will not be imposed on any Option
shares that may be acquired by Participant’s estate in a future exercise of the
Option. Incremental Shares subject to the Transfer Restriction will also be
subject to recovery by the Company through the application of the clawback set
forth in Section 4(g) of this Agreement.
5. Non-Transferability. The Option and any Incremental
Shares subject to the Transfer Restriction may not be sold, pledged,
hypothecated, assigned, margined or otherwise transferred, other than by will or
the laws of descent and distribution, and no Option or interest or right therein
shall be subject to the debts, contracts or engagements of Participant or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law, by
judgment, lien, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy or
4
divorce), and any attempted disposition thereof shall be null and void, of no
effect, and not binding on the Company in any way. Participant agrees that any
purported transfer shall be null and void, and shall constitute a breach of this
Agreement causing damage to the Company for which the remedy shall be a
cancellation of the Option. During Participant’s lifetime, all rights with
respect to the Option shall be exercisable only by Participant, and any and all
payments in respect of the Option shall be to Participant only.
6. Stockholder Rights. Participant shall have no rights as
a stockholder of Citigroup over any shares covered by an Option, unless and
until shares are distributed to Participant in connection with an Option
exercise. Participant will be eligible to receive dividends and will have voting
rights with respect to Incremental S that are subject to the Transfer
Restriction.
7. Right of Set Off. Participant agrees that the Company
may, to the extent determined by the Company to be permitted by applicable law,
retain for itself funds or securities otherwise payable to Participant pursuant
to this Option or any award under any equity award program administered by
Citigroup to offset any amounts paid by the Company to a third party pursuant to
any award, judgment, or settlement of a complaint, arbitration, or lawsuit of
which Participant was the subject; to satisfy any obligation or debt that
Participant owes the Company or its affiliates; or in the event any equity award
is canceled pursuant to its terms. The Company may not retain such funds or
securities and set off such obligations or liabilities, as described above,
until such time as they would otherwise be distributable to Participant in
accordance with the applicable award terms.
8. Consent to Electronic Delivery. In lieu of receiving
documents in paper format, Participant hereby agrees, to the fullest extent
permitted by law, to accept electronic delivery of any documents that Citigroup
may be required to deliver (including, but not limited to, prospectuses,
prospectus supplements, grant or award notifications and agreements, account
statements, annual and quarterly reports, and all other forms or communications)
in connection with the Option covered by this Agreement and any other prior or
future incentive award or program made or offered by Citigroup or its
predecessors or successors. Electronic delivery of a document to Participant may
be via a Company e-mail system or by reference to a location on a Company
intranet or secure internet site to which Participant has access.
9. Plan Administration. The Option described in this
Agreement has been granted subject to the terms of the Plan. The shares
deliverable to Participant upon the exercise of an Option will be from the
shares available for grant pursuant to the terms of the Plan.
10. Adjustments. In the event of any change in Citigroup’s
capital structure on account of (i) any extraordinary dividend, stock dividend,
stock split, reverse stock split or any similar equity restructuring; or (ii)
any combination or exchange of equity securities, merger, consolidation,
recapitalization, reorganization, divestiture or other distribution (other than
ordinary cash dividends) of assets to stockholders, or any other similar event
affecting Citigroup’s capital structure, to the extent necessary to prevent the
enlargement or diminution of the rights of Participants, the Committee shall
make such appropriate equitable adjustments as may be permitted by the terms of
the Plan and applicable law, to the number or kind of shares subject to an
Option and/or the grant price applicable to an Option. All such adjustments
shall conform to the requirements of Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code“), to the extent applicable, and with
respect to Options intended to qualify as “performance-based compensation” under
Section 162(m) of the Code, such adjustments or substitutions shall be made only
to the extent that the Committee determines that such adjustments or
substitutions may be made without causing the Company to be denied a tax
deduction on account of Section 162(m) of the Code. Citigroup shall give
Participant notice of an adjustment hereunder and, upon notice, such adjustment
shall be conclusive and binding for all purposes. Notwithstanding the foregoing,
the Committee may, in its discretion, decline to adjust any Option granted to
Participant, if it determines that such adjustment would violate applicable law
or result in
5
adverse tax consequences to Participant or the Company, and neither the
Committee nor Citigroup shall be bound to compensate Participant for any such
adjustment not made, nor shall they be liable to Participant for any additional
personal tax or other consequences of any adjustments that are made to an
Option.
11. Taxes and Tax Residency Status. By accepting the
Option, Participant agrees to pay all applicable income taxes and file all
required tax returns in all jurisdictions where Participant is subject to tax
and/or an income tax filing requirement. To the extent the Company is required
to withhold tax in any jurisdiction upon the vesting or exercise of an Option,
Participant acknowledges that Citigroup may (but is not required to) provide
Participant alternative methods of paying the Company the minimum amount due to
the appropriate tax authorities, as determined by the Company. If no choice is
offered or if Participant does not make a timely election from among the choices
offered, the Company will withhold a sufficient number of shares from the vested
shares that are distributable to Participant to fund only the minimum amount of
tax that is required to be withheld. The number of shares to be withheld will be
based on the fair market value of the shares on the applicable date, as
determined by the Company. To assist Citigroup in achieving full compliance with
its obligations under the laws of all relevant taxing jurisdictions, Participant
agrees to keep complete and accurate records of his income tax residency status
and the number and location of workdays outside his country of income tax
residency from the date of an Option grant until the later of the date of its
last exercise or the subsequent sale of any shares upon any exercise of the
Option. By accepting the Option, Participant also agrees to provide, upon
request, information about his tax residency status to Citigroup during such
period. Participant will be responsible for any income tax due, including
penalties and interest, arising from any misstatement by Participant regarding
such information.
12. Entire Agreement; No Right to Employment. The
Prospectus and the Agreement constitute the entire understanding between the
Company and Participant regarding the Option and supersede all previous written,
oral, or implied understandings between the parties hereto about the subject
matter hereof, including any written or electronic agreement, election form or
other communication to, from or between Participant and the Company. Nothing
contained herein, in the Plan, the Prospectus, or in any prospectus supplement
or any other communication about the Option shall confer upon Participant any
rights to continued employment or employment in any particular position, at any
specific rate of compensation, or for any particular period of time.
13. Amendment. The Committee may, in its sole discretion,
modify, amend, terminate or suspend the Option at any time, except that no
termination, suspension, modification or amendment of the Option shall (i) cause
the Option to become subject to, or violate, Section 409A of the Code, or (ii)
except as provided in Section 14 of this Agreement or Section 21 of the Plan,
adversely affect Participant’s rights with respect to the Option, as determined
by the Committee, without Participant’s written consent.
14. Compliance with Regulatory Requirements.
Notwithstanding any provision of this Agreement to the contrary, the Option will
be subject to any modification, limitations, adjustments or clawback provisions
applicable to Participant to the extent required under any policy implemented at
any time by the Company in its discretion to (i) comply with any legal,
regulatory or governmental requirements, directions, supervisory comments,
guidance or promulgations specifically including but not limited to guidance on
remuneration practices or sound incentive compensation practices promulgated by
any U.S. or non-U.S. governmental agency or authority, (ii) comply with the
listing requirements of any stock exchange on which the Company’s common stock
is traded or (iii) comply with or enable the Company to qualify for any
government loan, subsidy, investment or other program.
15. Arbitration; Conflict; Governing Law. Any disputes
related to the Option shall be resolved by arbitration in accordance with the
Company’s arbitration policies. In the absence of an effective arbitration
policy, Participant understands and agrees that any dispute related to the
Option shall be
6
submitted to arbitration in accordance with the rules of the American
Arbitration Association, if so elected by the Company in its sole discretion. In
the event of a conflict between the Prospectus and this Agreement, this
Agreement shall control. In the event of a conflict between this Agreement and
the Plan, the Plan shall control. This Agreement shall be governed by the laws
of the State of New York (regardless of conflict of laws principles) as to all
matters, including, but not limited to, the construction, application, validity
and administration of the Option.
16. Disclosure Regarding Use of Personal Information and
Participant’s Consent.
(a) Definition and Use of “Personal Information.” In
connection with the grant of the Option, and any other award under any equity
award program of the Company, and the implementation and administration of any
such program, including, without limitation, Participant’s actual participation,
or consideration by the Company for potential future participation, in any
program at any time, it is or may become necessary for the Company to
collect, transfer, use, and hold certain personal information regarding
Participant in and/or outside of Participant’s home country.
The “personal information” that Citigroup may collect, process,
store and transfer for the purposes outlined above may include Participant’s
name, nationality, citizenship, tax or other residency status, work
authorization, date of birth, age, government/tax identification number,
passport number, brokerage account information, GEID or other internal
identifying information, home address, work address, job and location history,
compensation and equity award information and history, business unit, employing
entity, and Participant’s beneficiaries and contact information. Participant may
obtain more details regarding the access and use of his personal information,
and may correct or update such information, by contacting his human resources
representative or local equity coordinator.
Use, transfer, storage and processing of personal information, electronically
or otherwise, may be in connection with the Company’s internal administration of
its equity award programs, or in connection with tax or other governmental and
regulatory compliance activities directly or indirectly related to an equity
award program. For such purposes only, personal information may be used by third
parties retained by the Company to assist with the administration and compliance
activities of its equity award programs, and may be transferred by the company
that employs (or any company that has employed) Participant from Participant’s
home country to other Citigroup entities and third parties located in the United
States and in other countries. Specifically, those parties that may have access
to Participant’s information for the purposes described herein include, but are
not limited to, (i) human resources personnel responsible for administering the
equity award programs, including local and regional equity award coordinators,
and global coordinators located in the United States; (ii) Participant’s U.S.
broker and equity account administrator and trade facilitator; (iii)
Participant’s U.S., regional and local employing entity and business unit
management; (iv) the Committee or its designee, which is responsible for
administering the Plan; (v) Citigroup’s technology systems support team (but
only to the extent necessary to maintain the proper operation of electronic
information systems that support the equity award programs); and (vi) internal
and external legal, tax and accounting advisors (but only to the extent
necessary for them to advise the Company on compliance and other issues
affecting the equity award programs in their respective fields of expertise). At
all times, Company personnel and third parties will be obligated to maintain the
confidentiality of Participant’s personal information except to the extent the
Company is required to provide such information to governmental agencies or
other parties. Such action will always be undertaken only in accordance with
applicable law.
(b) Participant’s Consent. BY ACCEPTING THIS AWARD,
PARTICIPANT EXPLICITLY CONSENTS (I) TO THE USE OF PARTICIPANT’S PERSONAL
INFORMATION FOR THE PURPOSE OF BEING CONSIDERED FOR PARTICIPATION IN FUTURE
EQUITY AWARDS (TO THE EXTENT HE IS ELIGIBLE UNDER APPLICABLE PROGRAM GUIDELINES,
AND WITHOUT ANY GUARANTEE THAT ANY AWARD WILL BE MADE); AND (II) TO THE USE,
7
TRANSFER, PROCESSING AND STORAGE, ELECTRONICALLY OR OTHERWISE, OF HIS
PERSONAL INFORMATION, AS SUCH USE HAS OCCURRED TO DATE, AND AS SUCH USE MAY
OCCUR IN THE FUTURE, IN CONNECTION WITH THIS OR ANY OTHER EQUITY AWARD, AS
DESCRIBED ABOVE.
***
8
Stay Up-to-Date With How the Law Affects Your Life
