Citigroup Inc.

In January 2009, members of the Management Executive Committee(except the CEO and CFO) received 30% of their incentive awards for 2008as performance vesting-equity awards. These awards vest 50% if the priceof Citigroup common stock meets a price target of $10.61, and 50% for aprice target of $17.85, in each case on or prior to January 14, 2013. Theprice target will be met only if the NYSE closing price equals or exceeds theapplicable price target for at least 20 NYSE trading days within any periodof 30 consecutive NYSE trading days ending on or before January 14, 2013.Any shares that have not vested by such date will vest according to a fraction,the numerator of which is the share price on the delivery date and thedenominator of which is the price target of the unvested shares. No dividendequivalents are paid on unvested awards. The fair value of the awards isrecognized as compensation expense ratably over the vesting period. This fairvalue was determined using the following assumptions:Weighted-average per-share fair value $2.30Weighted-average expected life3.85 yearsValuation assumptionsExpected volatility 36.07%Risk-free interest rate 1.21%Expected dividend yield 0.88%CAP participants in 2008, 2007, 2006 and 2005, and Financial AdvisorCAP (FA CAP) participants in those years and in 2009, could elect to receiveall or part of their award in stock options. The figures presented in the stockoption program tables (see “Stock Option Programs” below) include optionsgranted in lieu of CAP and FA CAP stock awards in those years.On July 17, 2007, the Committee approved the Management CommitteeLong-Term Incentive Plan (MC LTIP) (pursuant to the terms of theshareholder-approved 1999 Stock Incentive Plan) under which participantsreceived an equity award that could be earned based on Citigroup’sperformance against various metrics relative to peer companies and publiclystated return on equity (ROE) targets measured at the end of each calendaryear beginning with 2007. The final expense for each of the three consecutivecalendar years was adjusted based on the results of the ROE tests. No awardswere earned for 2009, 2008 or 2007 and no shares were issued becauseperformance targets were not met. No new awards were made under the MCLTIP since the initial award in July 2007.A summary of the status of Citigroup’s unvested stock awards atDecember 31, 2010 and changes during the 12 months ended December 31,2010 are presented below:Unvested stock awardsSharesWeighted-averagegrant datefair valueUnvested at January 1, 2010 187,950,748 $19.53New awards 628,158,906 4.34Cancelled awards (27,569,242) 14.10Vested awards (1) (463,458,743) 7.86Unvested at December 31, 2010 325,081,669 $ 7.28(1) The weighted-average market value of the vestings during 2010 was approximately $4.64 per share.At December 31, 2010, there was $965 million of total unrecognizedcompensation cost related to unvested stock awards net of the forfeiture provision.That cost is expected to be recognized over a weighted-average period of 1.7 years.Stock Option ProgramsThe Company has a number of stock option programs for its non-employeedirectors, officers and employees. Generally, in January 2008, 2007 and2006, stock options were granted only to CAP and FA CAP participants whoelected to receive stock options in lieu of restricted or deferred stock awards,and to non-employee directors who elected to receive their compensationin the form of a stock option grant. Beginning in 2009, CAP participants,and directors may no longer elect to receive stock options (however, FACAP participants were permitted to make a stock option election for awardsmade in 2009). Occasionally, stock options also may be granted as sign-onawards. All stock options are granted on Citigroup common stock withexercise prices that are no less than the fair market value at the time ofgrant (which is defined under the plan to be the NYSE closing price on thetrading day immediately preceding the grant date or on the grant date forgrants to executive officers). Generally, options granted from 2003 through2009 have six-year terms and vest ratably over three- or four-year periods;however, directors’ options cliff vest after two years, and vesting schedules forsign-on grants may vary. The sale of shares acquired through the exerciseof employee stock options granted from 2003 through 2008 (and FA CAPoptions granted in 2009) is restricted for a two-year period (and may besubject to the stock ownership commitment of senior executives thereafter).187