Shareholder Ratification of Executive Compensation – Citigroup

Resolved: That stockholders of Citigroup Inc. urge the board of directors to adopt a policy that Citigroup stockholders be given the opportunity at each annual meeting of stockholders to vote on an advisory resolution, to be proposed by Company’s management, to ratify the compensation of the named executive officers (“NEOs”) set forth in the proxy statement’s Summary Compensation Table (the “SCT”) and the accompanying narrative disclosure of material factors provided to understand the SCT (but not the Compensation Discussion and Analysis). The proposal submitted to stockholders should make clear that the vote is non-binding and would not affect any compensation paid or awarded to any NEO.

Shareholder Supporting Statement

In our view, senior executive compensation at Citigroup has not always been structured in ways that best serve stockholders’ interests. For example, in 2005 Chairman and CEO Charles Prince received $87,710 for tax gross-ups, while former Chairman Sanford Weill received tax gross-ups of $900,981. Mr. Prince’s 2005 pay package included a $12 million bonus and a restricted stock award valued at nearly $10 million.

We believe that existing U.S. corporate governance arrangements, including SEC rules and stock exchange listing standards, do not provide stockholders with enough mechanisms for providing input to boards on senior executive compensation. In contrast to U.S. practices, in the United Kingdom, public companies allow stockholders to cast an advisory vote on the “directors’ remuneration report,” which discloses executive compensation. Such a vote isn’t binding, but gives stockholders a clear voice that could help shape senior executive compensation.

Currently U.S. stock exchange listing standards require stockholder approval of equity-based compensation plans; those plans, however, set general parameters and accord the compensation committee substantial discretion in making awards and establishing performance thresholds for a particular year. Stockholders do not have any mechanism for providing ongoing feedback on the application of those general standards to individual pay packages. (See Lucian Bebchuk & Jesse Fried, Pay Without Performance 49 (2004))

Similarly, performance criteria submitted for stockholder approval to allow a company to deduct compensation in excess of $1 million are broad and do not constrain compensation committees in setting performance targets for particular senior executives. Withholding votes from compensation committee members who are standing for reelection is a blunt and insufficient instrument for registering dissatisfaction with the way in which the committee has administered compensation plans and policies in the previous year.

Accordingly, we urge Citigroup’s board to allow stockholders to express their opinion about senior executive compensation at Citigroup by establishing an annual referendum process. The results of such a vote would, we think, provide Citigroup with useful information about whether stockholders view the company’s senior executive compensation, as reported each year, to be in stockholders’ best interests.

We urge stockholders to vote for this proposal.

Link executive pay to progress on predatory lending – Citigroup

Executive Pay and Predatory Lending

WHEREAS, Citigroup is the second largest subprime lender in the United States, controlling 9 percent of the market. Citigroup’s consistently profitable and expanding consumer finance business, which includes subprime lending, is vital to our company’s future.

Though Citigroup is a leader in subprime lending, it has not been the leader in responding to predatory lending abuses that plague the subprime industry. In September 2002, Citigroup settled a Federal Trade Commision complaint for a record $215 million. This settlement pertained only to the activities of Associates First Capital, which Citigroup acquired in 2000. Citigroup continues to face lawsuits alleging predatory lending within the company’s home-grown Citifinancial business.

The subprime lending industry continues to engage in controversial business practices. According to Freddie Mac and Fannie Mae, between 30% and 50% of all subprime customers either currently qualify for lower-cost prime rate loans or would qualify within two years. Citigroup acknowledges this problem and has instituted its Referral-Up program in response. Through Referral-Up, sub-prime borrowers who qualify for prime loans are referred to CitiMortgage offices. In our opinion, this program is not working since fewer than 2% of those sub-prime customers qualifying for a prime loan, using Citigroup’s own criteria, end up with a lower-cost CitiMortgage.

Industry-wide, 80% of sub-prime borrowers face prepayment penalties making it prohibitively expensive to refinance their loans to take advantage of falling interest rates. In contrast, only 2% of prime borrowers face prepayment penalties. Citigroup charges its sub-prime borrowers prepayment penalties of up to 5%, a level that fair housing activists such as the Coalition for Responsible Lending, ACORN and the Greenlining Institute label excessive and predatory.

We believe Citigroup should be a leader in eliminating predatory lending. Failing to adequately address predatory lending imperils Citigroup’s reputation and threatens shareholder value.

We believe Citigroup’s CEO should assume personal responsibility for eradicating predatory lending. We believe this is best done by linking a portion of executive pay to Citigroup’s progress in ending predatory lending. Citigroup insists that meeting corporate social responsibility standards is already one of the criteria used in determining executive compensation. However, the Board’s Compensation Committee report to shareholders provides no assessment of how well executives have met corporate social responsibility goals. Given that our CEO, Mr. Weill, has received more than $1 billion in compensation since 1990 and is among America’s most highly compensated CEOs, our company should similarly lead the nation in corporate responsibility.

RESOLVED: Shareholders request the Board to conduct a special executive compensation review to study ways to link a portion of executive compensation to ending predatory lending practices. Among the factors to be considered in this review shall be: implementation of best practices to prevent predatory lending; constructive meetings with concerned community groups; evaluation of subprime loans by outside auditors for compliance with laws and Citigroup’s internal policies; and reductions in predatory lending complaints filed with federal and state government agencies. A summary of this review will be published in the Compensation Committee’s report to shareholders.

Review and Report on Executive Compensation – General Electric

GENERAL ELECTRICWHEREAS,

“Beginning with the strongest companies, CEOs and their boards should simply reach the conclusion that executive pay is excessive and adjust it to more reasonable and justifiable levels.” – William McDonough, President of the New York Federal Reserve Bank speaking at a 9/11 memorial event. Mr. McDonough went on to say that excessive CEO pay was “terribly bad social policy and perhaps even bad morals.”

During the four years ending 2001, General Electric paid its Chief Executive Officers more than $315 million, ranking eighth among US corporations. In 2001, General Electric’s shareholders lost men that served as CEO that year collectively received more than $40 million in total compensation. In 2001 GE’s stock lost more than 15% of its value, underperforming the S&P 500 by more than 2%. General Electric also announced layoffs of 8,304 hard-working employees in 2001, according to Forbes.com.

Last year’s revelations about the retirement perks of GE’s retired CEO Jack Welch embroiled the company in controversy. Mr.Welch wrote in a September 16, 2002 Wall Street Journal op-ed: “The world has changed during the past year. Reports of corporate malfeasance fill the media, as several companies and executives stand accused of betraying their shareowners. In today’s reality, my 1996 employment contract could be misportrayed as an excessive retirement package, rather than what it is — part of a fair employment and post-employment contract made six years ago.” Mr. Welch responded to a changing world and made an important decision by asking that the terms of his retirement package be dramatically altered.

RESOLVED:

Shareholders request that the Board conduct a comprehensive executive compensation review and publish a report of this review, omitting proprietary information and prepared at a reasonable cost. This report shall be available to all shareholders upon request by August 15, 2003. At a minimum, this review should consider the following:

Would shareholder value be enhanced if General Electric altered its executive compensation policies to:

1) Freeze executive pay during periods of large layoffs?

2) Establish a maximum ratio between the highest-paid executive officer and the lowest-paid employee?

3) Seek shareholder approval for any executive severance payments or executive retirement plans exceeding two times annual salary?

Supporting Statement

Jack Welch had it right: executive pay packages that seemed appropriate six years ago are today subject to great public scrutiny and question. General Electric has not become a successful company by clinging to convention and refusing to change.

Does it take the promise of a financial payoff of tens of millions of dollars to get a CEO out of bed in the morning and off to work? Of course not. The passion of most successful CEOs is to create a company they and others can be proud of. We believe that a company with a commitment to fairness and equity, and in which all employees are regarded as co-creators of corporate success, would be a company worthy of pride.

Please vote FOR this resolution!