Citigroup Inc.

7. PRINCIPAL TRANSACTIONSPrincipal transactions revenue consists of realized and unrealized gainsand losses from trading activities. Trading activities include revenues fromfixed income, equities, credit and commodities products, as well as foreignexchange transactions. Not included in the table below is the impact ofnet interest revenue related to trading activities, which is an integral partof trading activities’ profitability. The following table presents principaltransactions revenue for the years ended December 31:In millions of dollars 2010 2009 2008Regional Consumer Banking $ 533 $ 1,569 $ (146)Institutional Clients Group 5,567 5,626 6,102Subtotal Citicorp $6,100 $ 7,195 $ 5,956Local Consumer Lending (217) 896 504Brokerage and Asset Management (37) 30 (4,958)Special Asset Pool 2,078 (2,606) (26,270)Subtotal Citi Holdings $1,824 $(1,680) $(30,724)Corporate/Other (407) 553 879Total Citigroup $7,517 $ 6,068 $(23,889)In millions of dollars 2010 2009 2008Interest rate contracts (1) $3,231 $ 6,211 $(10,369)Foreign exchange contracts (2) 1,852 2,762 3,921Equity contracts (3) 995 (334) (958)Commodity and other contracts (4) 126 924 970Credit derivatives (5) 1,313 (3,495) (17,453)Total Citigroup $7,517 $ 6,068 $(23,889)(1) Includes revenues from government securities and corporate debt, municipal securities, preferredstock, mortgage securities, and other debt instruments. Also includes spot and forward trading ofcurrencies and exchange-traded and over-the-counter (OTC) currency options, options on fixedincome securities, interest rate swaps, currency swaps, swap options, caps and floors, financialfutures, OTC options, and forward contracts on fixed income securities.(2) Includes revenues from foreign exchange spot, forward, option and swap contracts, as well astranslation gains and losses.(3) Includes revenues from common, preferred and convertible preferred stock, convertible corporatedebt, equity-linked notes, and exchange-traded and OTC equity options and warrants.(4) Primarily includes revenues from crude oil, refined oil products, natural gas, and other commoditiestrades.(5) Includes revenues from structured credit products.8. INCENTIVE PLANSThe Company has adopted a number of equity compensation plans underwhich it currently administers award programs involving grants of stockoptions, restricted or deferred stock awards, and stock payments. The awardprograms are used to attract, retain and motivate officers, employees andnon-employee directors, to provide incentives for their contributions to thelong-term performance and growth of the Company, and to align theirinterests with those of stockholders. Certain of these equity issuances alsoincrease the Company’s stockholders’ equity. The plans and award programsare administered by the Personnel and Compensation Committee of theCitigroup Board of Directors (the Committee), which is composed entirely ofindependent non-employee directors. Since April 19, 2005, all equity awardshave been pursuant to stockholder-approved plans.At December 31, 2010, approximately 806.22 million shares wereauthorized and available for grant under Citigroup’s 2009 Stock IncentivePlan. Citigroup’s general practice has been to deliver shares from treasurystock upon the exercise or vesting of equity awards. However, newly issuedshares were issued as stock payments in April 2010 to settle common stockequivalent awards granted in January 2010. Newly issued shares were alsoissued as stock payments in January 2011. Citigroup will be reviewing itsgeneral practice in 2011 and might begin using newly issued shares moreregularly in 2011 or 2012 as an alternative to treasury shares. There is noincome statement difference between treasury stock issuances and newlyissued share issuances.The following table shows components of compensation expense relatingto the Company’s stock-based compensation programs as recorded during2010, 2009 and 2008:In millions of dollars 2010 2009 2008Charges for estimated awards toretirement -eligible employees $ 366 $ 207 $ 110Option expense 197 55 29Amortization of deferred cash awards anddeferred cash stock units 280 113 —Amortization of MC LTIP awards (1) — 19 18Amortization of salary stock awards 173 162 —Amortization of restricted and deferredstock awards (2) 747 1,543 3,133Total $1,763 $2,099 $3,290(1) Management Committee Long-Term Incentive Plan (MC LTIP) awards were granted in 2007. Theawards expired in December 2009 without the issuance of shares.(2) The 2008 period includes amortization of expense over the remaining life of all unvested, restrictedand deferred stock awards granted to all employees prior to 2006. All periods include amortizationexpense for all unvested awards to non-retirement-eligible employees on or after January 1, 2006.Amortization is recognized net of estimated forfeitures of awards.184