Document:

Exhibit 10.01

 

Citigroup Inc.

399 Park Avenue

3rd Floor

New York. NY 10022

 

September 11, 2009

 

Mr. Eugene M. McQuade

 

Dear Gene:

 

We are delighted to extend to you an offer to join Citibank, N.A. (the “Company”) as Chief Executive Officer of the Company. Your employment will commence on the first business day occurring not later than one week after this letter becomes an effective binding agreement in accordance with paragraph 17 below (the “Commencement Date”) and will continue until terminated by you, by the Company, or by reason of your death or Disability (as defined in paragraph 6 below).

 

If you accept, you will be joining a family of companies, Citigroup Inc. and its subsidiaries and affiliates (“Citi”), that serves over 200 million customers in more than 100 countries and is bound together by a steady focus on growth, a workforce committed to excellence, and a workplace based on mutual respect, where every employee can make a difference.

 

In your capacity as Chief Executive Officer of the Company, you will report directly to the Chief Executive Officer of Citi; you will be a member of Citi’s senior-most management bodies which, at this time, are the Executive Committee and the Senior Leadership Committee; and you shall perform such duties as are consistent with your position as Chief Executive Officer of the Company. You agree that during your employment with the Company you will devote substantially all of your business time and services to the business and affairs of the Company; provided that you may continue to serve on the board of directors of XL Capital Ltd., and the Company will not unreasonably withhold its consent to your serving on a second corporate board of directors, in each case so long as such service does not present a conflict or otherwise interfere with the performance of your duties to the Company.

 

1.     BASE SALARY. Your salary will be paid in accordance with the Company’s standard policies in effect from time to time (currently, semi-monthly) at an annual rate of $500,000, subject to increase in the discretion of the Personnel and Compensation Committee of the Board of

 

 

Directors of Citi, which increase for the period through the end of 2010 shall be consistent with any increases in the annual base salaries of other members of the Executive Committee who are Structured Employees.

 

2.              INCENTIVE AWARDS.

 

(a) With respect to 2009, you will receive an incentive award with a pre-tax nominal value of $5,000,000 (the “2009 Award”), subject to paragraphs 2(c) and 8(b) below, when incentive awards are made to similarly situated senior executives of Citi (in early 2010, but in all events by March 15, 2010). Thereafter, you will be eligible to be considered for discretionary incentive awards (each, a “Discretionary Award”), which are generally expected to be made on an annual basis and may recognize Citi’s and/or the Company’s performance as well as your performance of your job functions in accordance with the Company’s standards and policies in effect from time to time. Any Discretionary Awards will be determined on the same basis, and delivered to you at the same time, as such awards provided to other similarly situated executives of Citi. In order to be eligible to receive any Discretionary Award, you must be actively employed on the date the award is granted.

 

(b) The 2009 Award, as well as any Discretionary Award, may be granted as a combination of a cash bonus and one or more equity awards in accordance with Citi’s incentive programs covering other similarly situated executives of Citi, as in effect from time to time; provided that the current cash component of each such annual Award shall be not less than 80%, subject in each case to paragraphs 2(c) and 8(b) below.

 

(c) The 2009 Award shall be structured in a manner consistent with the compensation structure approved by the Special Master for TARP Executive Compensation (the “Special Master”) for such of the executive officers and the other most highly compensated employees of Citi who are not subject to the bonus payment limitations under the Emergency Economic Stabilization Act of 2008, as amended by the American Recovery and Reinvestment Act of 2009 or otherwise from time to time (together with applicable implementing guidance, rules and regulations as the same shall be in effect from time to time, “EESA”) (such executive officers and employees, the “Structured Employees” and the executive officers and employees who are subject to such bonus payment limitations, the “Restricted Employees”), in each case subject to the proviso in paragraph 2(b) above if approved by the Special Master. Any Discretionary Award shall be structured in a manner consistent with the compensation structure approved by the Special Master for (i) the Structured Employees, if on the date of grant of such Discretionary Award you are a Structured Employee, or (ii) the Restricted Employees, if on the date of grant of such Discretionary Award you are a Restricted Employee,

 

 

in each case subject to the proviso in paragraph 2(b) above if approved by the Special Master.

 

3.     VOLUNTARY TERMINATION OR TERMINATION FOR CAUSE. If you voluntarily terminate your employment without Good Cause (as defined below) or are terminated by the Company for Cause (as defined below), you will not be eligible to receive the 2009 Award or any Discretionary Award, in each case, if such award has not been granted to you as of the date of such termination, and any such award that is outstanding as of such date shall be cancelled if such termination occurs before the date of the scheduled vesting or settlement of such award.

 

The Company or Citi shall have “Cause” to void the guarantee of your 2009 Award or terminate your employment if: (i) you engage in excessive risk taking in contravention of standards established or revised by Citi Risk Management and/or Citi senior management (“Management”) or you knowingly fail to comply with any balance sheet or working or regulatory capital guidance provided by Management; (ii) you are subject to an action taken by a regulatory body or a self regulatory organization (“SRO”) as a result of your act or omission which substantially impairs you from performing your duties; (iii) you engage in material misconduct in connection with your employment including a material breach of Citi’s compliance and control policies; (iv) you materially breach non-compliance related policies or rules including with respect to expense management and human resources; (v) you are willfully dishonest in connection with your employment; (vi) you breach your fiduciary duty of loyalty to Citi; (vii) you knowingly violate a federal or state securities or banking law, rule or regulation or you knowingly violate the constitution, by-laws, rules or regulations of a regulatory authority or SRO; (viii) you fail to become and remain licensed to perform your duties if and only if any licensing requirements become applicable to you (in which case you will have a reasonable period of time to become licensed and the Company will assist you in that process); (ix) you fail to devote substantially all of your professional time to your assigned duties and to the business of Citi (except as may be expressly permitted or authorized under this letter and Citi’s Outside Directorships and Business Interests policy); (x) you are convicted of a felony or a crime of breach of trust, money laundering or dishonesty or you participate in a pre-trial diversion program after being charged or indicted for a felony or such crime in connection with which program you formally admit to criminal misconduct; (xi) you fail to perform your lawfully assigned duties promptly after written demand therefore or you are grossly negligent in the performance of such duties; or (xii) you made a material misrepresentation or omission in the furtherance of your hiring or retention. For this purpose, any failure of compliance with guidance or violation of law, rule, regulation, constitution or by-law, whether by action or failure to act, will be deemed to have occurred

 

 

“knowingly” if you knew or should have known of such guidance, law, rule, regulation, constitution or by-law and any action or failure to act by you will be deemed “willful” unless it was effected or refrained from by you in good faith and with a reasonable belief that such action or failure to act was lawful, in compliance with Company policy and in the best interests of the Company.

 

4.     BENEFITS. You will be eligible to participate in the Company’s comprehensive benefit programs, plans and arrangements (including perquisites, if any) on the same basis as other members of the Executive Committee as in effect from time to time, subject to paragraph 8(b) below. The Company wiII pay you $150,000 in reimbursement of expenses incurred by you in connection with accepting our offer of employment.

 

5.     TERMINATION OF EMPLOYMENT WITHOUT CAUSE OR FOR GOOD CAUSE.

 

(a) In the event that the Company terminates your employment without Cause or you terminate your employment for Good Cause (as defined below), the Company will pay you any earned but unpaid base salary through the effective date of such termination. In addition, subject to your execution and non-revocation of a release of claims, substantially in the form attached as Exhibit A, if such termination occurs:

 

(i)    before your receipt of the 2009 Award, the Company will provide you with a cash payment of $5,000,000, subject to paragraph 8(b) below; and

 

(ii)   after your receipt of the 2009 Award, the 2009 Award will fully vest and become payable, subject to paragraph 8(b) below.

 

(b) In no event shall you be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to you under any of the provisions of this letter and such amounts shall not be reduced whether or not you obtain other employment.

 

(c) “Good Cause” shall mean, without your written consent, (i) a material reduction in your responsibilities, duties or authority; (ii) your removal without your consent from the Executive Committee or the Senior Leadership Committee of Citi (or either of their respective successors); (iii) a significant reduction in compensation that is either not related to your performance or not applicable to senior executives at your level; provided, however, that any such significant reduction pursuant to paragraph 8(b) below shall not constitute Good Cause; (iv) a change in your reporting relationship that results in your reporting to someone other than the Chief 

 

 

Executive Officer of Citi; and (v) the material interference by the Company or Citi with your authority to perform your duties in a manner consistent with applicable regulatory requirements and sound business practices.

 

(d) Any termination by the Company for Cause, or by you for Good Cause, shall be communicated by a Notice of Termination to the other party hereto given in accordance with paragraph 18 below. “Notice of  Termination” shall mean a written notice which: (i) indicates the specific termination provision in this letter relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice). The failure by you or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Cause or Cause shall not constitute a waiver of any right of you or the Company, respectively, hereunder or preclude you or the Company, respectively, from asserting such fact or circumstance in enforcing your or the Company’s rights hereunder. For this purpose, “Date of Termination” shall mean the date of receipt of the Notice of Termination or any later date specified therein within 30 days of such notice, as the case may be. Any Notice of Termination delivered by you shall be invalid unless you provide such Notice within 90 days after the initial existence of the condition on which the Notice of Termination is based, and Citi shall have 40 days after its receipt of your Notice of Termination to remedy the condition and not be obligated to pay any amount described in paragraph 5(a) above.

 

6.     DEATH OR DISABILITY. In the event of a termination of your employment due to death or Disability (as defined in the Company’s long-term disability plan) at any time:

 

(a) after the Commencement Date but before your receipt of the 2009 Award, the Company will provide you with a cash payment in an amount equal to the sum of:

 

(i)    any earned but unpaid base salary through the effective date of such termination (which, in the case of a Disability, will be net of any payments received under the Company’s long term disability plan); and

 

(ii)   an amount equal to $5,000,000, multiplied by a fraction, the numerator of which shall be the number of days from the Commencement Date through the effective date of such termination, and the denominator of which shall be the number of

 

 

days from the Commencement Date through December 31, 2009; and

 

(b) after your receipt of the 2009 Award, a pro rata portion of the 2009 Award will vest and become payable, based on the number of days that you were employed during the service period applicable to the 2009 Award, subject to paragraph 8(b) below.

 

7.     STOCK OWNERSHIP COMMITMENT. Citi is a leader among companies that maintain a stock ownership commitment. For so long as you remain a member of senior management, you will be required to hold 75% of the net (after tax) shares you acquire under Citi’s equity programs.

 

8.     REGULATORY MATIERS. (a) Effective with the commencement of your employment, you will become a Section 16 Officer of Citi and you will be subject to Regulation O of the Board of Governors of the Federal Reserve Bank, Citi’s Loan Prohibition Policy and the Corporate Personal Trading Policy. You will receive more information about these policies prior to your commencement of employment.

 

(b) Payment or accrual of any portion of the 2009 Award, any Discretionary Award or any other compensation or benefits will be subject to (i) the approval of the Special Master to the extent required under EESA (including the regulations thereunder), (ii) any compensation payment or accrual limitations or clawback requirements applicable to you under EESA (including the regulations thereunder), (iii) any limitations or clawback requirements applicable to you under any agreement entered into between Citi and the United States Treasury Department in connection with Citi’s participation in TARP, the Master Agreement among Citi, certain affiliates of Citi, the Department of the Treasury, the Federal Deposit Insurance Corporation and the Federal Reserve Bank of New York dated as of January 15, 2009, and the Exchange Agreement dated June 9, 2009 between Citi and the United States Treasury Department and/or (iv) any other limitations or clawback provisions required in order to comply with or satisfy any other legal, regulatory or governmental requirements or to qualify for any government loan, subsidy, investment or other program. You agree that at Citi’s request you will sign a waiver of any claims against the United States, Citi and the Company, and the respective directors, officers, employees and agents of Citi and the Company, for any changes to your compensation or benefits that are required to comply with the foregoing.

 

9.     INDEMNIFICATION. You shall be indemnified to the fullest extent provided by the corporate documents of the Company then in effect or pursuant to applicable law and subject to your execution of applicable

 

 

undertakings, as provided by such corporate documents or applicable law, including but not limited to recoupment if you do not meet the relevant standard of conduct. The Company shall also provide you with Director and Officer Liability Insurance coverage on the same basis as other similarly situated executives. Subject to paragraph 8(b) above and the foregoing, your right to have legal fees and expenses advanced shall vest on the Commencement Date.

 

10.  PRIOR AGREEMENTS. We understand that you will abide by any pre-existing terms and conditions that are contained in any contractual restrictive covenants you may have entered into with your current employer or any other prior employer, including any covenants relating to the hiring or solicitation of employees or maintaining the confidentiality of proprietary information. You represent that you have provided the Company with copies of any and all agreements between you and your current or prior employers relating to your conduct in connection with or following termination of your employment with such employer. You and we both agree that the commencement of your employment with the Company will not be in violation of any such preexisting agreement.

 

11.  NON-SOLICITATION. In consideration of your employment, you agree that while you are employed with the Company and for one year following the resignation or termination of your employment for any reason, you will not directly or indirectly solicit, induce, or otherwise encourage any person to leave the employment of or terminate any client/customer relationship with the Company or any of its subsidiaries or affiliates.

 

12.  CONFIDENTIAL AND PROPRIETARY INFORMATION. You also agree that during your employment, you will have access to or acquire confidential, client/customer, employee, competitive and/or other business information that is unique and cannot be lawfully duplicated or easily acquired. You understand and agree that you will have a continuing obligation not to use, publish or otherwise disclose such information either during or after your employment with the Company.

 

13.  COMPLIANCE REQUIREMENTS. You will be subject to Citi’s Personal Trading Policy. In addition, you are required to obtain Citi’s approval should you want to continue with any outside business activity in which you are currently involved except as otherwise disclosed and approved in this letter. If you have received material and nonpublic information about an issuer of publicly traded securities through your prior employment or otherwise, you may not use such information in the course of your employment for so long as the information remains material, nonpublic and is not otherwise disclosed to Citi through its own business

 

 

with a potential client or issuer or other permissible means. Further, in accordance with the federal securities laws and Citi policy, you may not use such information to trade any securities for your own account or any related accounts, and you may not use such information to direct or influence trading. If you have any questions as to whether the information you have is material and nonpublic, you should consult your HR Generalist.

 

14.  GOVERNING LAW AND ARBITRATION. The terms and conditions set forth in this letter will be governed by and interpreted in accordance with the laws of the State of New York. Any controversy or dispute relating to your employment with or separation from the Company or Citi, including with respect to the terms and conditions set forth in this letter, will be resolved in accordance with the Employment Arbitration Policy described in the enclosed Principles of Employment, which are incorporated herein by reference.

 

15.  TAXES. All payments to you, incentive awards, perquisites and benefits set forth in this letter are subject to, and the Company will withhold, such federal, state and local taxes as the Company reasonably determines are required by applicable law or regulation. You remain obligated to pay all required taxes on all payments to you, incentive awards, perquisites and benefits regardless of whether withholding is required or made by the Company. For the avoidance of doubt, you shall not be obligated to pay any amount with respect to any such required taxes to the extent that the Company has withheld such amount.

 

16.  SECTION 409A. We and you agree that if the payments and benefits under this letter may be subject to Section 409A of the Internal Revenue Code (“Section 409A”), the Company may amend this letter to the extent necessary to comply with Section 409A in order to preserve the payments and benefits provided herein to the extent possible without additional cost to the Company. In addition, you hereby agree that if you are determined by the Company to be a “specified employee” at the time  of your “separation from service,” as such terms are defined in Section 409A, then any payment that is due as a result of your separation from service shall not be made until the date that is six months after your separation from service (or, if earlier, your death).

 

17.  EFFECTIVENESS. This letter shall not become an effective binding agreement unless and until, this letter is approved by the Personnel and Compensation Committee of the Board of Citi.

 

18.  NOTICES. Any notice, request or demand given pursuant to this letter shall be in writing and shall be delivered to the designees below via hand delivery; first-class mail, certified and registered; or overnight

 

 

delivery by a nationally recognized courier service:

 

	
TO YOU:  

c/o Katten Muchin Rosenman, LLP 

575 Madison Avenue 

New York, New York 10022 

Attn: Steven Eckhaus, Esq.
    	
TO THE COMPANY:  

Citigroup Inc. 

399 Park Avenue 

New York, NY 10043 

Attn : Michael Helfer, General Counsel
    

 

Your employment is contingent upon successful completion of any and all procedures and verifications to meet employment eligibility, recognizing that the drug testing and fingerprinting have already been successfully completed.

 

This letter, along with the enclosed Principles of Employment which you have already signed and the Executive Employment Termination Notice and Non-Solicitation Policy (the “Executive Policy”), which are incorporated herein by reference, describe the Company’s offer of employment. Any discussions that you may have had with us are not part of this offer unless they are described in this letter, the applicable Employee Handbook, the Citi Code of Conduct, the Principles of Employment or the Executive Policy (which you must read carefully, sign and return as part of accepting our offer). This letter should not be construed as a promise or guarantee of employment for any defined period of time. Your employment with the Company is “at will”, which affords either party the right to terminate the relationship at any time for any reason or for no reason at all not otherwise prohibited by law.

 

We are confident that Citi will provide you with a rewarding and challenging career, and I look forward to working with you in your new role.

 

 

Please let me know that you have accepted this offer by signing below and returning your signed letter, Principles of Employment and Executive Policy to me.

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Lewis B. Kaden
    
	
 
    	
Lewis B. Kaden
    
	
 
    	
Vice Chairman
    
	
 
    	
Citigroup, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ACCEPTED AND AGREED:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Eugene M. McQuade
    
	
 
    	
Eugene M. McQuade
    
	
 
    	
Date: 10/15/2009
    
	
 
    	
 
    
	
 
    	
 
    
	
Enclosures:
    	
 
    
	
Principles of   Employment
    
	
Executive   Employment Termination Notice and Non-Solicitation Policy
    

 

 

PRINCIPLES OF EMPLOYMENT

 

As you consider our offer of employment or continued employment with Citigroup lnc., its subsidiaries, and its and their affiliates (collectively “Citi”), there are certain matters that we want to clarify.  First, you must observe the policies that we publish from time to time for employees.  These include a requirement that you maintain the highest standards of conduct and act within the highest ethical principles.  You must not do anything that may be a conflict of interest with your responsibilities as an employee.. These expectations are included in the U.S. Employee Handbook, the Citi Code of Conduct, and any other policies that apply to your business sector or to Citi employees generally.  These documents are available for your review prior to your acceptance of employment if you choose to review them.  You will be asked to acknowledge receiving a copy of the Employee Handbook and the Citi Code of Conduct on or before your start date. Remember—it is your responsibility to read and understand these policies and expectations.  If you have any questions, now or in the future, please ask Human Resources.

 

Second, you must never use (except when necessary in your employment with us), nor disclose to any unauthorized person within Citi or anyone not affiliated with Citi, any personal, proprietary or confidential information you obtain as a result of your employment with us (“Confidential Information”).  This applies both while you are employed with us and after that employment ends.  If you leave our employ, you may not disclose, use retain or take with you any Confidential Information, or any writing or other record that relates to Confidential Information.

 

Third, your employment with us requires your full attention. You waive any rights to and further agree to assign, and hereby do assign, any work of authorship, invention, discovery, development or improvement made or conceived by you, either alone or jointly with others, during the time you are employed by us which pertains to our business; arises out of your employment; is aided by the use of time, materials, property or facilities of Citi; or is at Citi’s request and expense (“Intellectual Property”).  Works of authorship created within the scope of your employment are owned by Citi as “works for hire”.  In addition, in the event that you currently own rights in any inventions or technologies (such as financial models, trading strategies or software programs) that pertain to Citi’s business (“Other Technologies”), you are required to notify your manager of the existence and nature of such things prior to your employment with us.  Unless you obtain a signed written agreement from an authorized representative of Citi providing otherwise prior to your employment with us, you agree to assign, and hereby do assign, to us any interest that you have in such Other Technologies.  Additionally you agree to assist Citi in connection with any effort to perfect the assignment of Intellectual Property including Other Technologies; any .controversy or legal proceeding relating to Intellectual Property; and in obtaining domestic and foreign patent(s), copyright or other protection covering Intellectual Property.  You also must irrevocably waive author’s moral rights relating to Intellectual Property and not exercise such right in any manner.

 

 

Fourth, you agree to follow our dispute resolution/arbitration procedure for resolving all disputes(1) arising out of or relating to your employment with and separation from Citi.  This applies while you are employed by us as well as after your employment ends. While we hope that disputes with our employees will never arise, we want them resolved promptly if they do arise.  These procedures do not preclude us from taking disciplinary actions (including terminations) at any time, but if you dispute those actions, we both agree that the disagreement will be resolved through these procedures.  Our procedures are divided into two parts:

 

1.                                      An internal dispute resolution procedure that allows you to seek review of any action taken regarding your employment or termination of your employment which you think is unfair.

 

2.                                      In the unusual situation when this procedure does not fully resolve a dispute, and such dispute is based upon a legally protected right (i.e., statutory, contractual, or common law), we both agree to submit the dispute, within the time provided by the applicable statute(s) of limitations, to binding arbitration as follows:

 

·                  Before the arbitration facilities of the Financial Industry Regulatory Authority, Inc. (“FINRA”) if: (1) you’re a registered person or hold a securities Iicense(s) with a self-regulatory organization and are employed by Citigroup Global Markets Inc. (“CGMI”); or, (2) you’re a registered person or hold a securities license(s) with a self-regulatory organization, you’re employed by CGMI (the “Secondary Employer”) and another Citi affiliate (the “Primary Employer”) (which together make you a “Dual Employee”), and your dispute involves the Secondary Employer or activities related to your securities Iicense(s).  In such Dual Employee instances, any other related disputes you may have against your Primary Employer must be heard before the FINRA as well.

 

·                  Before the American Arbitration Association (“AAA”) where you don’t meet the criteria above for FINRA arbitration, FINRA declines the use of its facilities, or you are a Dual Employee and your dispute does not involve CGMI or activities related to” your securities Iicense(s).

 

Arbitrations shall be conducted in accordance with the respective arbitration rules of the FINRA or AAA, as applicable, then in effect and as supplemented by Citi’s Arbitration 

 

(1)  These include, but aren’t limited to, all claims, demands, or actions alleging unlawful employment discrimination or other conduct under Title VII of the Civil Rights Act of 1964, the Civil Rights ‘Act of 1866, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act of 1938, the Equal Pay Act of 1963, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act of 1989, the Sarbanes-Oxley Act of 2002, and all amendments thereto, and any other federal, state, or local statute or regulation or common law doctrine regarding employment, employment discrimination, the terms and conditions of employment, termination of employment, compensation, breach of contract, defamation, retaliation or whistleblower claims, and any claims arising under the Citigroup Separation Pay Plan.

 

 

Policy then in effect (“Arbitration Policy”).  A detailed description of the Arbitration Policy is included in the Employee Handbook, and is available for review prior to your acceptance of employment if you choose to review it.  Again, it is your responsibility to read and understand the dispute resolution/arbitration procedure.  If you have any questions, now or in the future, please ask Human Resources.

 

Fifth, nothing herein constitutes a contract of employment for a definite period of time.  The employment relationship is “at-will” which affords either party the right “to terminate the relationship at any time for no reason or any reason not otherwise prohibited by applicable law.  Citi retains the right to decrease an employee’s compensation and/or benefits, transfer or demote an employee, or otherwise change the terms and conditions of any employee’s employment with Citi at any time with or without notice at its sole discretion.

 

We believe these matters are important to you as an employee and to us as an employer.  Your acceptance of our offer of employment with Citi constitutes your acceptance of the aforementioned provisions.

 

Understood and agreed.

 

 

	
_/s/ Eugene McQuade
    	
 
    	
7/21/09
    
	
Signature
    	
 
    	
Date
    

 

 

Paul D. McKinnon

Head of Human Resources

399 Park Avenue

New York, NY 10022

 

 

August 4, 2011

 

 

Mr. Eugene M. McQuade

CEO

Citibank, N.A.

399 Park Avenue

New York, New York  10044

 

Dear Gene:

 

This letter is to advise you that Section 2(b) of our letter agreement dated September 11, 2009, shall read as follows, applicable to awards made after February 1, 2011: 

 

(b) Effective February 1, 2011, any Discretionary Award may be granted as a combination of a cash bonus and/or one or more equity or deferred awards in accordance with Citi’s Capital Accumulation Program (CAP) or other incentive programs covering similarly situated executives of Citi, as in effect from time to time, subject to paragraphs 2(c) and 8(b) below. In addition, effective February 1, 2011, for any future Discretionary Award you may receive, you shall be granted sufficient service credit as of the award date to attain the Rule of 60 as in effect at the time of the award date. This grant of additional service credit shall not apply to the 2009 Award or Discretionary Awards made before February 1, 2011.

 

These changes to your employment arrangement are subject to approval by the Personnel and Compensation Committee of the Board of Directors of Citigroup Inc. If you agree with the foregoing, please sign two copies of this letter and return one to me.

 

 

Sincerely,

 

 

Paul McKinnon

Global Head, Human Resources

 

Agreed and accepted:

 

	
/s/   Eugene M. McQuade
    	
 
    
	
Eugene   M. McQuadeExhibit 10.02

 

FORM OF CITIGROUP AWARD AGREEMENT

 

Citigroup Inc.

Performance Share Unit Award Agreement

Summary

 

Citigroup Inc. (“Citigroup”) hereby grants to {NAME} (the “Participant”) the performance share unit award summarized below pursuant to the terms of the Discretionary Incentive and Retention Award Plan, as amended and restated effective January 1, 2013 (“DIRAP”).  The terms, conditions and restrictions of your award are contained in this Award Agreement, including the attached Terms and Conditions (together, the “Agreement”).

 

For the award to be effective, you must sign below and return this page of the Agreement.

 

Summary of Participant’s Performance Share Unit Award (the “Award”)

 

	
Award Date
    	
 
    	
February 19, 2013
    
	
Target Award (the “Target Award”)
    	
 
    	
[Number] Performance Share Units (“PSUs”)
    
	
Vesting Dates (and percentage vesting), (each, a “Vesting   Date”)
    	
 
    	
January 20, 2014 (33 1/3%)(1)  
    January 20, 2015 (33 1/3%)  
    January 20, 2016 (33 1/3%)
    

 

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 (which includes the attached Terms and Conditions), acknowledging hereby that I have read and that I understand such document, and that I am subject to Citigroup’s policies, as in effect from time to time, relating to the administration of Citigroup’s incentive compensation programs.

 

	
CITIGROUP INC.
    	
 
    	
PARTICIPANT’S SIGNATURE:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
[Name]
    	
 
    	
Name:
    
	
 
    	
[Title]
    	
 
    	
 
    

 

(1)  Vesting dates of February 20, 2014, February 20, 2015 and February 20, 2016 for Code Staff (as defined herein).

 

 

CITIGROUP INC.

PERFORMANCE SHARE UNIT AWARD AGREEMENT

TERMS AND CONDITIONS

 

The Terms and Conditions below constitute part of this Agreement and relate to the Award described on the Award Summary.  Except as otherwise provided herein, the “Company” shall mean Citigroup and its consolidated subsidiaries.  The “Committee” shall mean the Personnel and Compensation Committee of the Citigroup Board of Directors or any person acting with authority delegated from such Committee.

 

1.             Participant Acknowledgements.  By accepting the Award, Participant acknowledges that:

 

(a)           He has read and understands these Terms and Conditions.

 

(b)           He understands that the Award and all other incentive awards are entirely discretionary.  Participant acknowledges that, absent a prior written agreement to the contrary, he has no right to receive the Award, or any incentive award, that receipt of the Award 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 that the Company is free to change its practices and policies regarding incentive awards at any time in its sole discretion.

 

(c)           The Award will be cancelled if performance and vesting conditions set forth herein are not satisfied.  The Award is a forward-looking award that delivers value only to the extent that performance goals and conditions are attained and specified service conditions are satisfied.

 

(d)           Any actual, anticipated, or estimated financial benefit to Participant from the Award (or any other incentive award) 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 purpose.  Participant hereby agrees that neither the Award nor any amounts payable in respect of the Award shall be considered when 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.

 

(e)           The value that may be realized from the Award, if any, is contingent and depends on the future market price of Citigroup stock, among other factors.  Any monetary value assigned to the Award in any communication 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.

 

(f)            The Award is an unsecured general obligation of Citigroup and, until paid in accordance with its terms, is subject to the claims of Citigroup’s creditors.  The currency in which Participant’s Award is denominated and/or paid and any required tax withholding and reporting will be in accordance with Citigroup’s policies, as in effect from time to time, relating to the administration of Citigroup’s incentive compensation programs.

 

(g)           The Award does not confer any shareholder rights of any kind.  The Award is not an equity security of Citigroup, and as such, Participant has no shareholder rights derived from the Award.  The Award does not confer any voting rights or rights to dividends at any time, and all value attributable to the Award including the amount equal to cash dividends referenced in Section 2(e) is compensation.

 

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2.             Performance Share Units.

 

(a)                General.  The value of each PSU corresponds to one share of Citigroup common stock; however, PSUs are deliverable only in cash.  The portion, if any, of Participant’s Target Award that will be earned is based on the Company’s performance against the performance measures set forth in this Section 2, the Award’s vesting conditions, and the other terms and conditions of this Agreement.

 

(b)                Citigroup’s Average Return on Assets.

 

(i)                 Performance Grids.  One-half of Participant’s Target Award will be earned based on Citigroup’s Average ROA, as defined herein.  For Participants who have not been designated by the Company prior to the Award Date as Code Staff for purposes of the Award pursuant to regulations and other guidance issued by the U.K. Financial Services Authority (hereinafter, “Code Staff”), the number of PSUs earned by Participant based on Average ROA (subject to vesting and the other terms and conditions of the Award) will be determined by multiplying the number of PSUs representing one-half of Participant’s Target Award by a percentage determined as follows:

 

	
Average ROA
    	
 
    	
Percentage Earned Based 
   on Average ROA
    
	
Less than 0.6%
    	
 
    	
Entire Award is cancelled under Section 2(d)
    
	
0.6%
    	
 
    	
0%
    
	
0.85%
    	
 
    	
100%
    
	
1.0% or greater
    	
 
    	
150%
    

 

For a Participant who is Code Staff, the number of PSUs earned by Participant based on Average ROA (subject to vesting and the other terms and conditions of the Award) will be determined by multiplying the number of PSUs representing one-half of Participant’s Target Award by a percentage determined as follows:

 

	
Average ROA
    	
 
    	
Percentage Earned Based 
   on Average ROA
    
	
Less than 0.6%
    	
 
    	
Entire Award is cancelled under Section 2(d)
    
	
0.6%
    	
 
    	
0%
    
	
0.85% or greater
    	
 
    	
100%
    

 

The percentage earned between each Average ROA performance level in the tables above shall be determined by straight line interpolation in each case.

 

(ii)                Defined Terms.  For purposes of this Agreement:

 

“Annualized Net Income” shall mean the Company’s reported GAAP net income for a given quarter excluding credit valuation adjustments/debt valuation adjustments (CVA/DVA) divided 

 

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by the number of calendar days in the given quarter multiplied by the number of calendar days in the given year.

 

“Average ROA” shall mean the average of the Company’s Quarterly ROAs for the twelve calendar quarters beginning with the first quarter of 2013, through and including the fourth quarter of 2015.

 

“Quarterly ROA” shall mean the Company’s Annualized Net Income for a given calendar quarter divided by the average daily GAAP assets of the Company during the same period.  Average daily GAAP assets of the Company shall be determined under procedures developed by the Company’s Finance function, and such procedures shall be final and binding on Participant.

 

(c)                Relative Total Shareholder Return.

 

(i)                 Performance Grids.  One-half of Participant’s Target Award will be earned based on the TSR, as defined herein, on shares of Citigroup common stock as compared to the TSRs of the Comparison Group during the Performance Period.  For Participants who are not Code Staff, the number of PSUs earned based on relative TSR (subject to vesting and the other terms and conditions of the Award) will be determined by multiplying the number of PSUs representing one-half of Participant’s Target Award by a percentage determined as follows:

 

	
Relative TSR (Percentile) of Citigroup
    	
 
    	
Percentage Earned Based 
   on Relative TSR
    
	
Lower than 25th
    	
 
    	
Entire Award is cancelled under Section 2(d)
    
	
25th
    	
 
    	
0%
    
	
50th
    	
 
    	
100%
    
	
75th or higher
    	
 
    	
150%
    

 

For Participants who are Code Staff, the number of PSUs earned based on relative TSR (subject to vesting and the other terms and conditions of the Award) will be determined by multiplying the number of PSUs representing one-half of Participant’s Target Award by a percentage determined as follows:

 

 

	
Relative TSR (Percentile) of Citigroup
    	
 
    	
Percentage Earned Based 
   on Relative TSR
    
	
Lower than 25th
    	
 
    	
Entire Award is cancelled under Section 2(d)
    
	
25th
    	
 
    	
0%
    
	
50th or higher
    	
 
    	
100%
    

 

The percentage earned between each relative TSR performance level in the tables above shall be determined by straight line interpolation in each case.

 

(ii)                Determination of Percentiles.  After the end of the Performance Period, the Committee shall rank each member of the Comparison Group according to TSR.  The 75th 

 

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Percentile TSR is the average TSR of the second and third highest TSRs in the Comparison Group; the 50th Percentile TSR is the average TSR of the fourth and fifth highest TSRs in the Comparison Group; and the 25th Percentile TSR is the average TSR of the sixth and seventh highest TSRs in the Comparison Group.  Citigroup’s TSR will then be compared to TSRs of the Comparison Group.  This approach to determining percentiles may be equitably adjusted by the Committee if there is a change in the number of companies in the Comparison Group.

 

(iii)               Example.  Appendix A hereto provides an example of the calculation of relative TSR for purposes of this Agreement.

 

(iv)               Defined Terms.  For purposes of this Agreement:

 

“Applicable Exchange” shall mean the Frankfurt Stock Exchange for Deutsche Bank AG, the London Stock Exchange for Barclays plc and HSBC Holdings plc, and the New York Stock Exchange for all other members of the Comparison Group and Citigroup.

 

“Comparison Group” shall mean the shares of common stock regularly traded on the Applicable Exchange (under the symbol listed below next to the company’s name) of each of the companies listed below:

 

Bank of America Corporation (NYSE: BAC)

Barclays plc (LSE: BARC)

Deutsche Bank AG (FWB: DBK)

The Goldman Sachs Group, Inc. (NYSE: GS)

HSBC Holdings plc (LSE: HSBA)

JPMorgan Chase & Co. (NYSE: JPM)

Morgan Stanley (NYSE: MS)

Wells Fargo & Company (NYSE: WFC)

 

In the event that any member of the Comparison Group is involved in any event that results in such member ceasing to be traded on the Applicable Exchange at any time during the Performance Period, then such entity may be removed by the Committee as a member of the Comparison Group and the determination of the relative TSR (percentile) of Citigroup shall be adjusted accordingly.

 

“Performance Period” shall mean January 1, 2013 through December 31, 2015.

 

“TSR” for Citigroup or any member of the Comparison Group shall be expressed as a percentage determined by dividing: (A) (1) the closing price on the Applicable Exchange on the last trading day in the Performance Period plus (2) the sum of all dividends paid on the applicable class of common stock during the Performance Period minus (3) the closing price on the Applicable Exchange on the trading day immediately preceding the first day of the Performance Period, by (B) the closing price on the Applicable Exchange on the trading day immediately preceding the first day of the Performance Period.  Percentages shall not be adjusted for changes in currency exchange rates during the Performance Period or any other period, and shall be equitably adjusted to account for changes in capital structure or other events as provided in Section 9.

 

(d)                Cancellation of Entire Award.  Notwithstanding anything herein to the contrary and after any adjustments made by the Committee pursuant to Section 2(c) or Section 9, if either (i) the Average ROA is less than 0.6%, or (ii) Citigroup’s relative TSR as determined in 

 

5

 

accordance with Section 2(c) is lower than the 25th percentile, then Participant’s entire Award shall be cancelled, without regard to the performance determined under the other metric.

 

(e)                Conversion of Vested Earned PSUs to Cash.  After the end of the Performance Period, the Committee shall determine the percentages of Target Award PSUs that have been earned after determining the Average ROA pursuant to Section 2(b) hereof and relative TSR pursuant to Section 2(c) hereof, making any adjustments as needed or required under Section 9 hereof.  The Committee will then multiply those percentages by the allocable number of Target Award PSUs (the “Earned Award”), to derive a number of PSUs constituting the Earned Award.  After Participant’s final Vesting Date as set forth in the Award Summary, the Committee shall then determine the extent to which Participant has vested in his Earned Award, determined after applying the provisions of Section 3 and Section 4 hereof.  As of March 15, 2016 (the “Award Payment Date”), Participant shall receive a cash payment equal to (i) the number of PSUs in Participant’s vested Earned Award multiplied by the average of the high and low prices of Citi common stock on the NYSE on Participant’s final Vesting Date, plus (ii) (A) the number of PSUs in Participant’s vested Earned Award multiplied by (B) an amount equal to the sum of all cash dividends (regular and special) paid on a share of Citigroup common stock after December 31, 2012 and on or before the Award Payment Date.

 

(f)            Hold-back Period for Code Staff. If Participant is Code Staff, the cash value of the Earned Award with a Vesting Date of February 20, 2016 shall be delivered as of August 20, 2016.

 

(g)           Committee Authority.  The Committee has exclusive and binding authority to make all determinations relating to the determination of Average ROA, relative TSR and other provisions of the Agreement, to interpret the Agreement, to make all legal and factual determinations relating to the Award, and to determine all questions arising in the administration of the Award and the Agreement, including, without limitation, the reconciliation of any inconsistent provisions, the resolution of ambiguities, the correction of any defects, and the supplying of omissions.  Each interpretation, determination or other action made or taken by the Committee shall be final and binding on all persons.  To the extent permitted by applicable law, the Committee may delegate to one or more employees of the Company some or all of its authority over the administration of the Award.  Such delegation need not be in writing.

 

3.             Termination of Employment and Other Changes in Status.  If Participant’s employment with the Company terminates or is interrupted before the final Vesting Date set forth in the Award Summary, or if Participant’s status changes under the circumstances described below, Participant’s rights with respect to the Award will be affected as provided in this Section 3.  Participant’s vested status determines the percentage of the Earned Award he is eligible to receive after the end of the Performance Period.  In all cases, a vested Award will be delivered only after the end of the Performance Period, after the Committee determines Participant’s Earned Award.  If Participant’s employment with the Company terminates for any reason not described below, the Award will be cancelled.

 

(a)           Voluntary Resignation.  If Participant voluntarily terminates his employment with the Company and at such time does not satisfy the conditions of Section 3(j) or (k) below, vesting of the Award will cease on the date Participant’s employment is so terminated; the unvested portion of the Award will be cancelled and Participant shall retain his rights in the portion of the Award that has vested as of Participant’s termination date subject to all other provisions of this Agreement.

 

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(b)           Disability.  The Award will continue to vest on schedule subject to all other provisions of this Agreement during Participant’s approved disability leave pursuant to a Company disability policy.  If Participant’s approved disability leave ends with a termination of Participant’s employment by the Company on account of Participant’s disability, the unvested portion of the Award will continue to vest on schedule subject to all other provisions of this Agreement.

 

(c)           Approved Personal Leave of Absence (Non-Statutory Leave).

 

(i)            The Award will continue to vest on schedule subject to all other provisions of this Agreement during the first six months of Participant’s personal leave of absence that was approved by the Company in accordance with the leave of absence policies applicable to Participant (an “approved personal leave of absence”). The unvested portion of the Award will be cancelled as soon as the approved personal leave of absence has exceeded six months, except as provided in paragraph (ii) below.

 

(ii)           If Participant’s employment terminates for any reason specified elsewhere in this Section 3 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 3. If Participant satisfies the conditions of Section 3(k) before the approved personal leave of absence exceeds six months, the unvested portion of the Award will continue to vest on schedule subject to Section 3(k), as applicable.

 

(d)           Statutory Leave of Absence.  The unvested portion of the Award will continue to vest on schedule subject to all other provisions of this Agreement during a leave of absence that is approved by the Company, is provided by applicable law and is taken in accordance with such law and applicable Company policy (a “statutory leave of absence”).  If Participant’s employment terminates for any reason specified elsewhere in this Section 3 during a statutory leave of absence, the Award will be treated as described in the applicable provision of this Section 3. If Participant satisfies the conditions of Section 3(k) during a statutory leave of absence, the unvested portion of the Award will continue to vest on schedule, subject to Section 3(k). If a statutory leave of absence is followed without interruption by an approved personal leave of absence, Participant will be deemed to have voluntarily terminated his employment pursuant to Section 3(a) (or Section 3(k), if applicable) on the date that the combined leaves exceed six months.

 

(e)           Death.  If Participant’s employment terminates by reason of Participant’s death or if Participant dies following a termination of his employment during the Performance Period while he is continuing to vest in his Award, the unvested portion of the Award will continue to vest on schedule subject to all other provisions of this Agreement, and the Award will be paid to Participant’s estate after the Earned Award has been determined.

 

(f)            Involuntary Termination for Gross Misconduct.  If the Company terminates Participant’s employment because of Participant’s “gross misconduct” (as defined below) before the Award becomes an Earned Award, the Award, including any vested portion of the Award, will be cancelled as of the date Participant’s employment is terminated and Participant shall have no further rights of any kind with respect to the Award.  For purposes of this Agreement, “gross misconduct” means any conduct that is determined by the Committee, in its sole discretion, (i) to be in competition with the Company’s business operations, (ii) to be in breach of any obligation that Participant owes to the Company or Participant’s duty of loyalty to the 

 

7

 

Company, (iii) to be materially injurious to the Company, or (iv) to otherwise constitute gross misconduct.

 

(g)           Involuntary Termination Other than for Gross Misconduct.  If Participant’s employment is terminated by the Company involuntarily other than for gross misconduct, including under a reduction in force or job discontinuance program, the unvested portion of the Award will continue to vest on schedule subject to all other provisions of this Agreement.

 

(h)           Transfer to Non-Participating Subsidiary.  If Participant transfers to a subsidiary that is a member of the “controlled group” of Citigroup (as defined below), any unvested portion of the Award will continue to vest on schedule subject to all other provisions of this Agreement.  If Participant transfers to a subsidiary that is not a member of the “controlled group” of Citigroup (as defined below), the provisions of Section 3(g) will apply to the Award. For purposes of this Agreement, “controlled group” has the meaning set forth in Treas. Reg. § 1.409A-1(h)(3).

 

(i)            Employing Company is Acquired by Another Entity (Change in Control).  If Participant is employed by a company or other legal entity other than Citigroup where Citigroup ceases to own, directly or indirectly, at least 50% of the voting power or value of the equity of the employing entity, the unvested portion of the Award will continue to vest on schedule subject to all other provisions of this Agreement.  A change in control of Citigroup Inc., as defined in the 2009 Stock Incentive Plan or otherwise, shall not cause the Award to vest or otherwise affect the vesting of the Award (although, for the avoidance of doubt, the Average ROA and relative TSR percentiles may be equitably adjusted pursuant to Section 9(b) hereof).

 

(j)            Voluntary Resignation to Pursue Alternative Career.  If Participant has not met the conditions of Section 3(k), and Participant voluntarily resigns from his employment with the Company to work in a full-time paid career in government service, for a bona fide charitable institution, or as a teacher at a bona fide educational institution, and/or otherwise satisfies the alternative or additional requirements (including written management approvals) that may be imposed by then applicable guidelines adopted for the purposes of administering this provision (an “alternative career”), the unvested portion of the Award will continue to vest on schedule subject to all other provisions of this Agreement, provided that Participant remains continuously employed in the alternative career (or a new alternative career) until each scheduled Vesting Date, or until such earlier date on which Section 3(e) applies. Vesting under this Section 3(j) will be conditioned upon Participant providing by each subsequent Vesting Date, if requested by the Company, a written certification of compliance with the Company’s alternative career guidelines, in a form satisfactory to the Company. If an acceptable certification is not provided by the relevant Vesting Date, the unvested portion of the Award will be cancelled.

 

                (k)           Satisfying the “Rule of 60.”  If Participant (i) is at least age 50 and has completed at least five full years of service with the Company and Participant’s age plus the number of full years of service with the Company equals at least 60, or (ii) Participant is under age 50, but has completed at least 20 full years of service with the Company and Participant’s age plus the number of full years of service with the Company equals at least 60 (the “Rule of 60”), the unvested portion of the Award will continue to vest on schedule subject to all other provisions of this Agreement, provided that if Participant has voluntarily terminated his employment, Participant is not, at any time up to and including each scheduled Vesting Date (or until such earlier date on which Section 3(e) applies), employed by a Significant Competitor of the Company (as defined in Section 3(l) below).

 

8

 

(l)            Definition of “Significant Competitor;” Certification of Compliance.

 

(i) For purposes of this Agreement, a “Significant Competitor” of the Company shall mean any company or other entity designated by the Committee as such and included on a list of Significant Competitors that will be made available to Participant and which may be updated by the Company from time to time in its discretion.

 

(ii) Whenever the Award continues to vest pursuant to Section 3(k) following a termination of employment, the vesting of the Award will be conditioned upon Participant’s providing by each subsequent Vesting Date, if requested by the Company, a written certification that Participant has not been employed by a Significant Competitor in a form satisfactory to the Company. The list of Significant Competitors in effect at the time Participant terminates employment with the Company will apply to such certification. If an acceptable certification is not provided by the relevant Vesting Date, vesting of the Award will cease and Participant shall have no further rights of any kind with respect to the Award.

 

                (m)          Additional Condition Applicable to Post-Employment Vesting.  The Committee may cancel the unvested portion of the Award if it determines, in its sole discretion, that Participant has, during or after Participant’s employment with the Company, engaged in conduct that breaches any obligation or duty of loyalty to the Company, or that is materially injurious to the Company.

 

4.             Other Vesting Conditions and Clawbacks.  In addition to the time-based vesting schedule set forth in the Award Summary, the Award is subject to the additional vesting and clawback conditions set forth below, which may result in the reduction or cancellation of the  Award prior to the time the Award becomes an Earned Award.  The performance vesting and clawback conditions described in this Section 4 do not change during the performance period of the Award, regardless of Participant’s status as an active or terminated employee or other change in employment status.

 

(a)           Performance Vesting Condition.  The Committee may cancel all or a portion of the Award (including a Vested Award) prior to the time it becomes an Earned Award if it determines, in its sole discretion, that Participant has had significant responsibility for a material adverse outcome for Citigroup or any of its businesses or functions.  The Committee shall have the exclusive discretionary authority to determine and define “significant responsibility” and “material adverse outcome.”

 

(b)           Clawback.  The Committee may cancel all or a portion of the Award prior to the time the Award becomes an Earned Award if it determines, in its sole discretion, that: (i) Participant received the Award based on materially inaccurate publicly reported financial statements; (ii) Participant knowingly engaged in providing materially inaccurate information relating to publicly reported financial statements; (iii) Participant materially violated any risk limits established or revised by senior management and/or risk management; or (iv) Participant engaged in gross misconduct.

 

(c)           EU Clawback.  In addition, if Participant is Code Staff, the Committee may cancel all or a portion of the Award prior to the time the Award becomes an Earned Award if it determines, in its sole discretion, that: (i) there is reasonable evidence that Participant engaged in misconduct or committed material error, in either case in connection with his employment, or (ii) Citigroup or Participant’s business unit has suffered a material downturn in its financial performance or a material failure of risk management.

 

9

 

(d)           Additional Conditions.  Vesting and payment of the Award are subject to receipt of the information necessary to make required tax payments and confirmation by Citigroup that all applicable conditions to vesting and payment have been satisfied.  All payments pursuant to the Award will be net of any amounts withheld for taxes.

 

5.             Transferability.

 

(a)           Transfers by Participant.  The Award may not be sold, pledged, hypothecated, assigned, margined or otherwise transferred, other than by will or the laws of descent and distribution, and neither the Award nor any 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 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 cancellation of the Award. During Participant’s lifetime, all rights with respect to the Award shall be exercisable only by Participant, and any and all payments in respect of the Award shall be to Participant only. The Company shall be under no obligation to entertain, investigate, respect, preserve, protect or enforce any actual or purported rights or interests asserted by any creditor of Participant or any other third party in the Award, and Participant agrees to take all reasonable measures to protect the Company against any such claims being asserted in respect of Participant’s Award and to reimburse the Company for any and all reasonable expenses it incurs defending against or complying with any such third-party claims if Participant could have reasonably acted to prevent such claims from being asserted against the Company.

 

(b)           Transfers by the Company.  Citigroup may assign the legal obligation to pay Participant’s vested Earned Award to Participant’s employer without the consent of Participant.

 

6.             Right of Set Off.  Participant agrees that the Company may, to the extent determined by the Company to be permitted by applicable law and consistent with the requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), retain for itself funds otherwise payable to Participant pursuant to the Award or any award under any 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 award is cancelled pursuant to its terms. The Company may not retain such funds 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.

 

7.             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, brochures, grant or award notifications and agreements, account statements, and all other forms or communications) in connection with the Award and any other prior or future incentive award or program made or offered by Citigroup or its predecessors or successors.  Electronic 

 

10

 

delivery of a document to Participant may be via a secure internet site to which Participant has access.

 

8.             Plan Administration.  The Award described in this Agreement has been granted subject to the terms of the DIRAP.  The Committee and its delegates have the exclusive discretionary authority to make determinations regarding the administration of the Award, and have the exclusive authority to establish administrative procedures to implement the terms of the Award, including but not limited to procedures applicable to currency exchange rates, the delivery of the Award in the currency of Participant’s work country or countries, and the administration of the timing of Award delivery.  Any such procedure so established shall be conclusive and binding on Participant.

 

9.             Adjustments to Awards.

 

(a)           Capital Structure.  In the event of any change in the capital structure of Citigroup or of a member of the Comparison Group 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 the capital structure of Citigroup or a member of the Comparison Group, to the extent necessary to prevent the enlargement or diminution of the rights of Participant, the Committee shall make such appropriate equitable adjustments to the Award (including the determination of TSR), which adjustments shall not require the consent of Participant.

 

(b)           Equitable Adjustments.    If an event occurs with respect to the Company or any member of the Comparison Group that renders, in the sole determination of the Committee, any of the performance measures set forth in Section 2(b) or Section 2(c) to no longer be appropriate, then the Committee shall equitably adjust such measures to the extent necessary to carry out the intent of the original terms of the Award (i.e., without excessively enlarging Participant’s rights).  In the event of any material unusual or non-recurring events affecting Average ROA or any change in applicable tax laws or accounting principles, the Committee shall make appropriate equitable adjustments to Average ROA and any other provision of the Award, which adjustments shall not require the consent of Participant.

 

(c)           Modifications.  The Committee retains the right to modify the Award if required to comply with applicable law, regulation, or regulatory guidance (including applicable tax law) without the consent of Participant.  Citigroup shall furnish or make available to Participant a written notice of any modification through a brochure supplement or otherwise, which notice shall specify the effective date of such modification.  Any other adverse modification not elsewhere described in this Agreement shall not be effective without Participant’s written consent.

 

(d)           Adverse Consequences.  Neither the Committee nor Citigroup shall be liable to Participant for any additional personal tax or other adverse consequences of any adjustments that are made to the Award.

 

10.          Taxes and Tax Residency Status.

 

(a)           Compliance.  By accepting the Award, Participant agrees to pay all applicable taxes and to file all required tax returns in all jurisdictions where Participant is subject to tax and/or an income tax filing requirement. To assist Citigroup in achieving full compliance with its 

 

11

 

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 the Award until the vesting of the Award.  Participant also agrees to provide, upon request, complete and accurate information about his or her tax residency status to Citigroup during such periods, and confirmation of his or her status as a (i) U.S. citizen, (ii) holder of a U.S. green card, or (iii) citizen or legal resident of a country other than the U.S.  Participant will be responsible for any tax due, including penalties and interest, arising from any misstatement by Participant regarding such information.  The Award will be subject to cancellation if Participant fails to make any such required tax payment.

 

(b)           Withholding.  To the extent the Company is required to withhold tax in any jurisdiction or withholds hypothetical tax under a Citigroup Expatriate Policy, the Company will withhold from the vested portion of the Award to the extent permitted by applicable law and Participant will be paid the net after-tax amount.

 

(c)           Executive Performance Plan.  Any Award to a participant in the 2011 Executive Performance Plan (the “EPP”) shall be granted subject to the terms of the EPP.

 

11.          Entire Agreement; No Right to Employment.  The DIRAP plan document and this Agreement constitute the entire understanding between the Company and Participant regarding the Award 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 or in any incentive plan or program documents 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.

 

12.          Compliance with Regulatory Requirements.  The Award is subject to the applicable law (including tax laws) and regulatory guidance in multiple jurisdictions, and shall be administered and interpreted consistently with such law and regulatory guidance, including but not limited to Section 409A and Section 457A of the Code.

 

13.          Section 409A and Section 457A Compliance.

 

(a)           Tax Liability. Participant understands that as a result of Section 409A and/or Section 457A of the Code, if Participant is a U.S. taxpayer he could be subject to adverse tax consequences if the Award and program documents are not administered in accordance with the requirements of Section 409A or Section 457A. Participant further understands that if Participant is a U.S. taxpayer, and the Award is considered to be a “nonqualified deferred compensation plan” and Participant’s employer is considered to be a “nonqualified entity” (as such terms are defined in Section 409A and/or Section 457A of the Code), Participant could be subject to accelerated income recognition or other adverse tax consequences with respect to all or a portion of the Award if Citigroup fails to modify the Award. However, Participant acknowledges that there is no guarantee that the Award, or any amendment or modification thereto, will successfully avoid unintended tax consequences to Participant and that the Company does not accept any liability therefor.

 

(b)           Specified Employees.  This Agreement may not be amended, nor may the Award be administered, to provide for any payment of the Award to occur upon any event that would constitute a “separation from service” (within the meaning of Section 409A of the Code) if 

 

12

 

Participant is a “specified employee” (within the meaning of Treas. Reg. § 1.409A-1(i)(1)) at the time of such Participant’s “separation from service,” unless it is provided that the distribution or payment shall not be made until the date which is six months from such “separation from service,” or, if earlier, the date of Participant’s death and that during such six-month deferral period, Participant shall not be entitled to interest, or any compensation for any loss in market value or otherwise which occurs with respect to the Award during such deferral period.

 

14.          Arbitration; Conflict; Governing Law.  Any disputes related to the Award 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 Award shall be 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 DIRAP plan document and this Agreement, the DIRAP plan document 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 Company’s incentive award programs.

 

15.          Disclosure Regarding Use of Personal Information and Participant’s Consent.

 

(a)           Definition and Use of “Personal Information.” In connection with the grant of the Award, and any other award under other incentive award program, 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 country of employment.

 

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 incentive 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 incentive award programs, or in connection with tax or other governmental and regulatory compliance activities directly or indirectly related to an incentive 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 incentive award programs, and may be transferred by the company that employs (or any company that has employed) Participant from Participant’s country of employment to other Citigroup entities and third parties located in the U.S. 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 award programs, including local and regional equity award coordinators, and global coordinators located in the U.S.; (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, including Participant’s supervisor 

 

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and his superiors; (iv) the Committee or its designee, which is responsible for administering the DIRAP and the Award; (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 incentive 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 incentive 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 THE AWARD, PARTICIPANT EXPLICITLY CONSENTS (I) TO THE USE OF PARTICIPANT’S PERSONAL INFORMATION FOR THE PURPOSE OF BEING CONSIDERED FOR PARTICIPATION IN FUTURE EQUITY, DEFERRED CASH OR OTHER AWARD PROGRAMS (TO THE EXTENT HE IS ELIGIBLE UNDER THE TERMS OF SUCH PLAN OR PROGRAM, AND WITHOUT ANY GUARANTEE THAT ANY AWARD WILL BE MADE); AND (II) TO THE USE, 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 OR OTHER AWARD, AS DESCRIBED ABOVE.

 

***

 

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Appendix A

 

Example of Determination of Relative TSR

 

	
Company
    	
 
    	
TSR
    
	
Citigroup
    	
 
    	
1.32
    
	
Peer 1
    	
 
    	
1.50
    
	
Peer 2
    	
 
    	
1.40
    
	
Peer 3
    	
 
    	
1.30
    
	
Peer 4
    	
 
    	
1.20
    
	
Peer 5
    	
 
    	
1.10
    
	
Peer 6
    	
 
    	
0.95
    
	
Peer 7
    	
 
    	
0.85
    
	
Peer 8
    	
 
    	
0.75
    

 

75th percentile TSR is defined as the average TSR of Peer 2 and Peer 3 = 1.35.

50th percentile TSR is defined as the average TSR of Peer 4 and Peer 5 = 1.15.

25th percentile TSR is defined as the average TSR of Peer 6 and Peer 7 = 0.90.

 

Accordingly, the TSR of Citigroup is between the 50th percentile and the 75th percentile.

At the 50th percentile, the result of the relative TSR metric is 100% of Target PSUs.

At the 75th percentile, the result of the relative TSR metric is 150% of Target PSUs.

 

The relative TSR metric in this example is the linearly interpolated result, as follows:

 

	
 
    	
1.35   – 1.32
    	
x   100% + 
    	
1.32   – 1.15  x  150%    = 142.5%
    
	
 
    	
1.35   – 1.15
    	
 
    	
1.35   – 1.15
    

 

A Participant who is not Code Staff would receive 142.5% of half of his Target Award PSUs, assuming that all other conditions to delivery and vesting of the Earned Award had been satisfied.  A Participant who is Code Staff would receive 100% of half of his Target Award PSUs, assuming that all other conditions to delivery and vesting of the Earned Award had been satisfied.

 

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