<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TRAVELERS PROPERTY CASUALTY CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE> 2
[TRAVELERS LOGO]
Travelers Property Casualty Corp.
One Tower Square
Hartford, CT 06183
March 17, 2000
Dear Stockholder:
We cordially invite you to attend Travelers Property Casualty
Corp.'s annual stockholders' meeting. The meeting will be held
on Tuesday, April 18, 2000 at 2:30 PM in the Citigroup
auditorium at 399 Park Avenue in New York City.
At the meeting, stockholders will vote on a number of
important matters. Please take the time to carefully read each
of the proposals described in the attached proxy statement.
Thank you for your support of our company.
Sincerely,
<TABLE>
<S> <C>
/s/ Robert I. Lipp /s/ Jay S. Fishman
Robert I. Lipp Jay S. Fishman
Chairman of the Board President and Chief Executive
Officer
</TABLE>
- --------------------------------------------------------------------------------
This proxy statement and the accompanying proxy card are being
mailed to
Travelers Property Casualty Corp. stockholders beginning about
March 17, 2000.
<PAGE> 3
[TRAVELERS LOGO]
Travelers Property Casualty Corp.
One Tower Square
Hartford, CT 06183
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
Travelers Property Casualty Corp.'s (TAP's) annual
stockholders' meeting will be held on Tuesday, April 18, 2000
at 2:30 PM in the Citigroup auditorium at 399 Park Avenue in
New York City.
At the meeting, stockholders will be asked to
- elect TAP's entire board of directors,
- ratify the selection of TAP's independent auditors for 2000
and
- consider any other business properly brought before the
meeting.
The close of business on March 2, 2000 is the record date for
determining stockholders entitled to vote at the annual
meeting. A list of these stockholders will be available at
Citigroup's headquarters, 153 East 53rd Street, New York City,
before the annual meeting.
PLEASE SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
IN THE ENCLOSED ENVELOPE, OR VOTE BY TELEPHONE OR INTERNET
(INSTRUCTIONS ARE ON YOUR PROXY CARD), SO THAT YOUR SHARES
WILL BE REPRESENTED WHETHER OR NOT YOU ATTEND THE ANNUAL
MEETING.
By order of the board of directors
/s/ James M. Michener
James M. Michener
Secretary
March 17, 2000
<PAGE> 4
CONTENTS
<TABLE>
<S> <C>
ABOUT THE ANNUAL MEETING 1
HOW WE HAVE DONE 2
Annual report 2
Cumulative total return 2
STOCK OWNERSHIP 4
ELECTION OF DIRECTORS 5
The nominees 5
Meetings of the board of directors 8
Committees of the board of directors 9
Nominations, compensation and corporate
governance committee interlocks and
Insider participation 10
Directors' compensation 10
EXECUTIVE COMPENSATION 11
Report on executive compensation by the
nominations, compensation and corporate
governance committee 11
Compensation tables 13
Retirement plans 18
Other transactions 20
RELATIONSHIPS WITH CITIGROUP AND
AFFILIATES 21
Intercompany agreement 21
Tax sharing agreement 21
Other relationships 21
RATIFICATION OF SELECTION OF AUDITORS 22
SUBMISSION OF FUTURE STOCKHOLDER PROPOSALS 22
COST OF ANNUAL MEETING AND PROXY
SOLICITATION 22
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING 23
</TABLE>
<PAGE> 5
ABOUT THE ANNUAL MEETING
WHO IS SOLICITING MY VOTE?
The board of directors of TAP is soliciting your vote at the 2000 annual meeting
of TAP's stockholders.
WHAT WILL I BE VOTING ON?
- - Election of TAP's board of directors (see page 5).
- - Ratification of KPMG LLP as TAP's auditors for 2000 (see page 22).
HOW MANY VOTES DO I HAVE?
You will have one vote for every share of TAP Class A common stock you owned on
March 2, 2000 (the record date).
HOW MANY VOTES CAN BE CAST BY ALL STOCKHOLDERS?
3,337,543,152, consisting of
- - one vote for each of TAP's 57,341,452 shares of Class A common stock that were
outstanding on the record date, and
- - 10 votes for each of TAP's 328,020,170 shares of Class B common stock that
were outstanding on the record date.
The Class A and Class B common stock will vote as a single class on all matters
scheduled to be voted on at the annual meeting. There is no cumulative voting.
We understand that all of the Class B common stock will be voted in favor of
each of the proposals, which will ensure their adoption.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE MEETING?
A majority of the votes that can be cast, or 1,668,771,577 votes.
DOES ANY SINGLE STOCKHOLDER CONTROL AS MUCH AS 5% OF ANY CLASS OF TAP'S STOCK?
Based on Schedules 13G filed with the Securities and Exchange Commission (SEC)
and/or information available to TAP, the only stockholders known to us to
control as much as 5% of the Class A or Class B common stock are:
---------------------
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF CLASS PERCENTAGE VOTING
BENEFICIALLY OWNED BENEFICIALLY OWNED (2) PERCENTAGE OF POWER OF
----------------------- ----------------------- OUTSTANDING OUTSTANDING
BENEFICIAL OWNER CLASS A CLASS B CLASS A CLASS B COMMON STOCK COMMON STOCK
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Citigroup Inc. 328,020,170 100% 85.1% 98.3%
153 East 53rd Street
New York, New York 10043(1)
Iridian Asset Management 3,774,700 6.6% .98% *
LLC
276 Post Road West
Westport, Connecticut 06880
Neuberger Berman, Inc. 3,671,300 6.4% .95% *
605 Third Avenue
New York, New York 10158
</TABLE>
(1) Each share of Class B common stock is convertible into a share of Class A
common stock.
(2) Based on the number of shares of common stock entitled to vote as of the
record date.
* Less than 1%
1
<PAGE> 6
HOW DO I VOTE?
You can vote either in person at the annual meeting or by proxy without
attending the annual meeting.
To vote by proxy, you must either
- - fill out the enclosed proxy card, date and sign it, and return it in the
enclosed postage-paid envelope,
- - vote by telephone (instructions are on the proxy card), or
- - vote by internet (instructions are on the proxy card).
TAP employees who participate in TAP benefit plans may receive their proxy cards
separately.
If you want to vote in person at the annual meeting, and you hold your TAP stock
through a securities broker (that is, in street name), you must obtain a proxy
from your broker and bring that proxy to the meeting.
CAN I CHANGE MY VOTE?
Yes. Just send in a new proxy card with a later date, or cast a new vote by
telephone or internet, or send a written notice of revocation to TAP's Secretary
at the address on the cover of this proxy statement. If you attend the annual
meeting and want to vote in person, you can request that your previously
submitted proxy not be used.
WHAT IF I DON'T VOTE FOR SOME OF THE MATTERS LISTED ON MY PROXY CARD?
If you return a signed proxy card without indicating your vote, your shares will
be voted for the nominees listed on the card and for KPMG LLP as auditors for
2000.
WHAT IF I VOTE "ABSTAIN"?
A vote to "abstain" on any matter will have the effect of a vote against.
CAN MY SHARES BE VOTED IF I DON'T RETURN MY PROXY CARD AND DON'T ATTEND THE
ANNUAL MEETING?
If you don't vote your shares held in street name, your broker can vote your
shares on any of the matters scheduled to come before the meeting.
If you don't vote your shares held in street name, and your broker doesn't vote
them, the votes will be broker nonvotes, which will have no effect on the vote
for any matter scheduled to be considered at the annual meeting.
If you don't vote your shares held in your name, your shares will not be voted.
COULD OTHER MATTERS BE DECIDED AT THE ANNUAL MEETING?
We don't know of any other matters that will be considered at the annual
meeting. If any other matters arise at the annual meeting, the proxies will be
voted at the discretion of the proxy holders.
WHAT HAPPENS IF THE MEETING IS POSTPONED OR ADJOURNED?
Your proxy will still be good and may be voted at the postponed or adjourned
meeting. You will still be able to change or revoke your proxy until it is
voted.
---------------------
HOW WE HAVE DONE
ANNUAL REPORT
By now you should have received TAP's annual report to stockholders for 1999. We
urge you to read it carefully.
CUMULATIVE TOTAL RETURN
The following graph and table compare the annual changes in TAP's cumulative
total return for the period beginning on April 22, 1996, the date of
2
<PAGE> 7
TAP's initial public offering, and ending on December 31, 1999 with the
cumulative total return for the same period of
- - the S&P 500 Index, and
- - a Peer Index.
The Peer Index tracks the price (weighted by market capitalization) of the
common stock of American International Group, Inc. and the companies that
comprise the S&P Property and Casualty Insurance Index: The Allstate
Corporation, The Chubb Corporation, Cincinnati Financial Corpora-
tion, MBIA Inc., MGIC Investment Corporation, The Progressive Corporation,
SAFECO Corporation, and The St. Paul Companies, Inc.
The following graph and table show the value at year-end of $100 invested at the
closing price on April 22, 1996 (the date of the initial public offering of the
Class A common stock) in TAP common stock, the S&P 500, and the Peer Index. The
comparisons in this table are set forth in response to SEC disclosure
requirements, and therefore are not intended to forecast or be indicative of
future performance of TAP's common stock.
---------------------
COMPARISON OF CUMULATIVE TOTAL RETURN FOR THE PERIOD COMMENCING
APRIL 22, 1996 THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
Travelers Property
Casualty Corp. S&P 500 Peer Index
------------------ ------- ----------
<S> <C> <C> <C>
April 22,
1996 100.00 100.00 100.00
Dec. 31, 1996 142.24 115.45 123.50
Dec. 31, 1997 178.31 153.93 190.65
Dec. 31, 1998 126.94 197.92 208.48
Dec. 31, 1999 142.30 239.56 233.18
</TABLE>
[Line Graph]
<TABLE>
<CAPTION>
TRAVELERS PROPERTY
CASUALTY CORP. S&P 500 PEER INDEX
------------------ ------- ----------
<S> <C> <C> <C>
April 22, 1996 100.00 100.00 100.00
Dec. 31, 1996 142.24 115.45 123.50
Dec. 31, 1997 178.31 153.93 190.65
Dec. 31, 1998 126.94 197.92 208.48
Dec. 31, 1999 142.30 239.56 233.18
</TABLE>
3
<PAGE> 8
STOCK OWNERSHIP
The following table shows the beneficial ownership of TAP Class A common stock
by our directors and certain executive officers. At the record date, no
director or executive officer owned any Class B common stock or had been granted
any option to acquire any Class A or Class B common stock.
---------------------
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
CLASS A
COMMON
NAME POSITION STOCK
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Kenneth J. Bialkin Director 10,445
Charles J. Clarke Executive Officer 22,816
Leslie B. Disharoon Director 2,820
Douglas G. Elliot Executive Officer 6,774
Jay S. Fishman Director and Chief Executive Officer 46,340
William P. Hannon Executive Officer 15,216
Anil Khanna Executive Officer 2,712
Robert I. Lipp Director and Chairman of the Board 134,859
Dudley C. Mecum Director 7,820
Frank J. Tasco Director 8,695
Sanford I. Weill Director 4,100
Arthur Zankel Director 7,405
All directors and executive officers 315,482
as a group (17 persons)
</TABLE>
At January 31, 2000, no director or executive officer owned as much as 1% of
TAP'S common stock.
Some of the TAP shares shown in the preceding table are considered as
beneficially owned under SEC rules, but are shares
- - for which receipt has been deferred under the director's deferred compensation
plan,
- - held as a tenant-in-common with family members or trusts,
- - owned by a family member,
- - for which the director or executive officer has direct or indirect voting
power but not dispositive power, or
- - for which the director or executive officer has direct or indirect voting
power but that are subject to forfeiture and restrictions on disposition,
as shown in the following table.
4
<PAGE> 9
<TABLE>
<CAPTION>
VOTING VOTING POWER,
POWER, BUT SUBJECT TO
TENANT-IN- OWNED BY BUT NOT FORFEITURE AND
RECEIPT COMMON WITH FAMILY DISPOSITIVE RESTRICTIONS ON
DIRECTOR/OFFICER DEFERRED TRUST MEMBER POWER DISPOSITION
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mr. Bialkin 6,070
Mr. Clarke 4,307 12,716
Mr. Disharoon 2,820
Mr. Elliot 376 4,888
Mr. Fishman 3,484 33,433
Mr. Hannon 300 7,876
Mr. Khanna 1,712
Mr. Lipp 22,431 34,010
Mr. Mecum 6,070
Mr. Tasco 6,070
Mr. Weill
Mr. Zankel
All directors and executive 21,030 22,431 300 13,116 120,458
officers as a group (17
persons)
</TABLE>
ELECTION OF DIRECTORS
TAP has 8 directors, all of whom serve for one-year terms that expire at the
annual meeting. The board of directors has nominated all of the current
directors for re-election at the 2000 annual meeting.
Directors will be elected by a plurality of the votes cast.
Directors are not eligible to stand for re-election after reaching the age of
75.
THE NOMINEES
The following tables give information -- provided by the nominees -- about their
principal occupation, business experience and other matters.
THE BOARD RECOMMENDS THAT YOU VOTE
FOR EACH OF THE FOLLOWING NOMINEES.
5
<PAGE> 10
<TABLE>
<CAPTION>
NAME AND AGE AT POSITION, PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
RECORD DATE AND DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------
<S> <C>
KENNETH J. BIALKIN PARTNER
70 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
[PHOTO OF KENNETH J. BIALKIN] - Joined Skadden, Arps, Slate, Meagher & Flom LLP in 1988
- TAP director since 1996
- Citigroup (or predecessor) director since 1986
- Other Directorships: The Municipal Assistance Corporation
for the City of New York, Tecnomatix Technologies Ltd. and
Sapiens International Corporation N.V.
- Other Activities: Carnegie Hall (Trustee), New School
University (Visiting Committee, Graduate Faculty), American
Jewish Historical Society (President), America-Israel
Friendship League (Chairman) and Council on Foreign
Relations (member)
LESLIE B. DISHAROON FORMER CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
67 OFFICER
[PHOTO OF LESLIE B. DISHAROON] MONUMENTAL CORPORATION
- Chairman of the Board, President and Chief Executive
Officer of Monumental Corporation -- 1978 to 1988
- TAP director since 1998
- Citigroup (or predecessor) director -- 1986 to 1998
- Other Directorships: Aegon USA, Inc., GRC International
Inc. M.S.D. & T. Funds, Inc. and Caves Valley Club Inc.
(Chairman)
JAY S. FISHMAN CHIEF EXECUTIVE OFFICER PRESIDENT
47 TRAVELERS PROPERTY CASUALTY CORP.
[PHOTO OF JAY S. FISHMAN] - Chief Executive Officer and President, TAP -- 1998 to
present
- TAP director -- 1998 to present
- Chief Executive Officer and President, Commercial
Lines -- 1998
- Chief Operating Officer, Commercial Lines -- 1996 to 1998
- Vice Chairman and Chief Administrative Officer,
TAP -- 1996 to 1998
- Chief Administrative Officer, The Travelers Insurance
Group Inc. (TIGI) -- 1996
- Vice Chairman, TIGI -- 1995
- Chief Financial Officer, TIGI -- 1993
- Treasurer, Travelers Group -- 1991 to 1993
- Chief Financial Officer, Travelers Group's Consumer
Financial Services Group -- 1989 to 1991
- Joined Travelers Group -- 1989
- Other Activities: Connecticut Public Broadcasting, Inc.
(Trustee)
</TABLE>
6
<PAGE> 11
<TABLE>
<CAPTION>
NAME AND AGE AT POSITION, PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
RECORD DATE AND DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------
<S> <C>
ROBERT I. LIPP CHAIRMAN AND CHIEF EXECUTIVE OFFICER -- GLOBAL CONSUMER
61 BUSINESS OF CITIGROUP
[PHOTO OF ROBERT I. LIPP] - Chairman of the Board, TAP -- 1996 to present
- Chairman and Chief Executive Officer -- Global Consumer
Business of Citigroup -- April 1999 to present
- Co-Chairman -- Global Consumer Business of
Citigroup -- 1998 to 1999
- Chief Executive Officer, TAP -- 1996 to 1998
- President, TAP-- 1996 to 1998
- Chairman of the Board and Chief Executive Officer,
TIGI -- 1993 to present
- Vice Chairman and director, Travelers Group -- 1991 to
1998
- Chairman and Chief Executive Officer, CitiFinancial Credit
Company (f/k/a Commercial Credit Company) -- 1991 to 1993
- Executive Vice President, Travelers Group and its
corporate predecessor -- 1986 to 1991
- Joined Travelers Group -- 1986
- Other Directorships: Citicorp, Citibank, N.A., The New
York City Ballet (President), the Wadsworth Atheneum, the
Massachusetts Museum of Contemporary Art, Dance-On Inc.
(Chairman) and Williams College (Trustee)
- Other Activities: Williams College (Finance Committee)
DUDLEY C. MECUM MANAGING DIRECTOR
65 CAPRICORN HOLDINGS, LLC
[PHOTO OF DUDLEY C. MECUM] - Managing Director, Capricorn Holdings, LLC -- 1997 to
present
- Partner, G.L. Ohrstrom & Co. -- 1989 to 1996
- Managing Partner, KPMG LLP (New York office) -- 1979 to
1985
- TAP director since 1996
- Director of Citigroup (or predecessor) since 1986
- Other Directorships: Dyncorp, Lyondell Companies, Inc.,
Suburban Propane Partners, MLP and CCC Information Services,
Inc.
FRANK J. TASCO RETIRED CHAIRMAN OF THE BOARD
72 AND CHIEF EXECUTIVE OFFICER
[PHOTO OF FRANK J. TASCO] DIRECTOR
MARSH & MCLENNAN COMPANIES, INC.
- Travelers Group director -- 1992 to 1998
- TAP director since 1996
- Other Directorships: Angram Inc. (Chairman of the Board)
- Other Activities: Phoenix House Foundation (director),
Catholic Health Council of the Archdiocese of Rockville
Centre (Chairman), Council on Foreign Relations (member),
the Lincoln Center Consolidated Corporate Fund Leadership
Committee (member), the Foreign Policy Association
(member), New York University (Trustee), the Inner-City
Scholarship Fund (Trustee), President Bush's Drug Advisory
Council (member) and New York Drugs Don't Work (Founder)
</TABLE>
7
<PAGE> 12
<TABLE>
<CAPTION>
NAME AND AGE AT POSITION, PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
RECORD DATE AND DIRECTORSHIPS
- ---------------------------------------------------------------------------------------------------
<S> <C>
SANFORD I. WEILL CHAIRMAN AND CO-CHIEF EXECUTIVE OFFICER
66 CITIGROUP INC.
[PHOTO OF SANFORD I. WEILL] - Chairman and Co-Chief Executive Officer, Citigroup
Inc. -- 1998 to present
- Chairman of the Board and Chief Executive Officer,
Travelers Group -- 1986 to 1998
- President -- 1986 to 1991
- President, American Express Company -- 1983 to 1985
- Chairman of the Board and Chief Executive Officer,
American Express Insurance Services, Inc. -- 1984 to 1985
- Chairman of the Board, Shearson Lehman Brothers Holdings
Inc. -- 1984 to 1985
- Chairman of the Board and Chief Executive Officer, or a
principal executive officer, Shearson Lehman Brothers
Inc. -- 1965 to 1984
- Founding Partner, Shearson Lehman Brothers Inc.'s
predecessor partnership -- 1960 to 1965
- TAP director since 1996
- Director of Citigroup (or predecessor) since 1986
- Other Directorships: AT&T Corp., E.I. du Pont de Nemours &
Company and United Technologies Corp.
- Other Activities: The Business Roundtable (member), The
Business Council (member), Board of Trustees, Carnegie Hall
(Chairman), Baltimore Symphony Orchestra (Director), Board
of Governors of New York Hospital (member), Board of
Overseers of the Joan and Sanford I. Weill Medical College
& Graduate School of Medical Sciences of Cornell
University (Chairman), The New York and Presbyterian
Hospitals (Trustee), Cornell University's Johnson Graduate
School of Management Advisory Board, Cornell University
(Trustee Emeritus), National Academy Foundation (Chairman)
and United States Treasury Department's Working Group on
Child Care (member)
ARTHUR ZANKEL GENERAL PARTNER
68 ZANKEL CAPITAL ADVISORS, LLC
- General Partner, Zankel Capital Advisors, LLC -- 2000 to
[PHOTO OF ARTHUR ZANKEL] present
- General Partner, First Manhattan Co. -- 1965 to 1999
- Co-Managing Partner, First Manhattan Co. -- 1980 to 1997
- TAP director since 1996
- Director of Citigroup (or predecessor) since 1986
- Other Directorships: Vicorp Restaurants, Inc. and White
Mountains Insurance Group, Ltd.
- Other Activities: Carnegie Hall (Trustee), Jerusalem
Foundation, Inc. (Trustee) and UJA-Federation (Trustee)
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS
The board of directors met 7 times in 1999. Each director attended at least 75
percent of the total number of meetings of the board of directors and board
committees of which he was a member in 1999.
8
<PAGE> 13
COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the board of directors are:
The executive committee, which acts on behalf of the board if a matter requires
board action before a meeting of the full board can be held.
The audit committee, which
- - reviews the audit plans and findings of the independent auditors and TAP's
internal audit and risk review staff, and the results of regulatory
examinations, and tracks management's corrective action plans where necessary,
- - reviews TAP's accounting policies and controls, compliance programs, and
significant tax and legal matters,
- - recommends to the board the annual appointment of independent auditors and
evaluates their independence and performance, and
- - reviews TAP's risk management processes.
The nominations, compensation and corporate governance committee, which
evaluates the efforts of TAP and the board of directors to maintain effective
corporate governance practices and identifies candidates for election to the
board of directors. The committee will consider candidates suggested by
directors or stockholders. Nominations from stockholders, properly submitted in
writing to TAP's Secretary, will be referred to the committee for consideration.
The committee reviews the compensation actions for senior management. The
committee also approves broad-based and special compensation plans across TAP.
The incentive compensation subcommittee of the nominations, compensation and
corporate governance committee establishes compensation for the chief executive
officer and certain other senior executives, and has the exclusive authority to
approve all compensation for those section 16(a) persons covered by
Section 16(a) of the Securities Exchange Act of 1934 and the covered executives
required to be named in the summary compensation table that appears later in
this proxy statement.
The subcommittee also administers TAP's executive option and executive
performance compensation plans (the TAP compensation plans). Under the executive
option plan, only the subcommittee can grant options to purchase Citigroup
common stock to TAP's section 16(a) persons and covered executives. Subcommittee
awards of options must be authorized by Citigroup's personnel, compensation and
directors committee or the incentive compensation subcommittee, as applicable,
and are subject to the Citigroup 1999 Stock Incentive Plan (SIP) and the
Travelers Group 1996 Stock Incentive Plan (1996 SIP) and other plans that
Citigroup may adopt. The subcommittee has the exclusive authority to grant
options to purchase shares of TAP common stock and, in accordance with the terms
of the TAP compensation plans, other stock or stock-based awards to section
16(a) persons and covered executives and to administer certain other elements of
the TAP 1999 stock incentive plan covered by Section 162(m) of the Internal
Revenue Code. However, to date, no such stock option awards have been granted.
References in this proxy statement to the nominations, compensation and
corporate governance committee should be understood to refer to the subcommittee
wherever Section 16(a) of the Securities and Exchange Act of 1934 and/or Section
162(m) of the Internal Revenue Code requires that action be taken by the
subcommittee rather than the full committee.
All of the committees except the executive committee are comprised entirely of
non-management directors. The following table shows the membership and the
number of meetings of each committee during 1999.
9
<PAGE> 14
<TABLE>
<CAPTION>
NOMINATIONS,
COMPENSATION
AND CORPORATE INCENTIVE
DIRECTOR EXECUTIVE AUDIT GOVERNANCE COMPENSATION
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Mr. Bialkin X X
Mr. Disharoon X X X
Mr. Fishman X
Mr. Lipp Chair
Mr. Mecum Chair
Mr. Tasco X
Mr. Weill X
Mr. Zankel X Chair Chair
- ---------------------------------------------------------------
1999 meetings 0 5 8 2
</TABLE>
NOMINATIONS, COMPENSATION AND
CORPORATE GOVERNANCE COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The persons shown above as the members of the nominations, compensation and
corporate governance committee were the only members of the committee during
1999, except for Roberto G. Mendoza, a former director who did not stand for
election in 1999.
Mr. Bialkin is a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom
LLP which performs legal services for TAP and Citigroup and its subsidiaries.
DIRECTORS' COMPENSATION
Directors' compensation is determined by the board. TAP pays outside directors
in common stock to assure that the directors have an ownership interest in
common with other stockholders. Outside directors currently receive an annual
retainer of $75,000, payable either 100% in Class A common stock, or up to 50%
in cash to cover taxes and the remainder in Class A common stock. A director may
defer receipt of his stock.
Directors receive no additional compensation for participation on board
committees. Additional compensation for special assignments is determined on a
case by case basis, but no such additional compensation was paid to any director
in 1999.
Directors who are employees of TAP or its affiliates do not receive any
compensation for their services as directors.
10
<PAGE> 15
EXECUTIVE COMPENSATION
REPORT ON EXECUTIVE COMPENSATION BY THE NOMINATIONS, COMPENSATION AND CORPORATE
GOVERNANCE COMMITTEE
COMMITTEE RESPONSIBILITIES. The Nominations, Compensation and Corporate
Governance Committee (the "Committee") is responsible for evaluating the efforts
of the Company and of the Board of Directors to maintain effective corporate
governance practices and identifying candidates for election to the Company's
Board of Directors. The Committee will consider candidates suggested by
directors or stockholders. Nominations from stockholders, properly submitted in
writing to the Secretary of the Company, will be referred to the Committee for
consideration. The Committee reviews the compensation actions for senior
management, which includes the most senior members of corporate staff. Further,
the Committee approves broad-based and special compensation plans across the
Company.
The Incentive Compensation Subcommittee (the "Subcommittee") of the Committee
establishes compensation for the Chief Executive Officer and certain other
senior executives and has the exclusive authority to approve all compensation
for any executives covered by Section 16(a) of the Securities Exchange Act of
1934 ("Section 16(a) Persons") or Section 162(m) of the Internal Revenue Code
("Section 162(m) Persons") including the executives required to be named in the
Summary Compensation Table (the "Covered Executives").
No member of the Committee or the Subcommittee is a former or current officer or
employee of the Company or any of its affiliates. One member, Mr. Bialkin, is a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, which
performs legal services for the Company and Citigroup and its subsidiaries from
time to time. Therefore, decisions regarding compensation actions for any of the
Section 16(a) Persons and Section 162(m) Persons are made by the Subcommittee of
which Mr. Bialkin is not a member.
STATEMENT OF PHILOSOPHY. The Company seeks to attract and retain highly
qualified employees at all levels, including particularly executives whose
performance is critical to the Company's success. In order to accomplish this,
the Company is willing to provide superior compensation for superior
performance. Such performance is generally measured on the performance of the
Company as a whole, or on the performance of a business unit, or using both
criteria, as the nature of an executive's responsibilities may dictate, and by
the extent to which such performance reflects the corporate values integral to
the Company's overall success. The Committee considers and gives weight to both
qualitative and quantitative factors, including such factors as earnings,
earnings per share, return on equity and return on assets and considers a full
range of performance criteria for all senior executives, including those senior
executives covered by the Travelers Property Casualty Corp. Executive
Performance Compensation Plan (the "Compensation Plan"), together with
contributions to financial results, productivity, initiative, risk containment,
adherence to corporate values and contributions to both operating unit or
divisional strategy and Company-wide strategy. In conducting such review, the
Committee has generally examined changes in the Company's financial results,
both overall and on a unit basis, as well as similar data for comparable
companies, to the extent publicly available.
STOCK OWNERSHIP COMMITMENT. It is the Company's policy to strongly encourage
stock ownership by the Company's directors and senior management. This policy
closely aligns the interests of management with those of the stockholders. This
policy takes a number of forms, including the following:
- - at least 50% of director fees are paid in Company stock
- - a broad group of employees, including all members of senior management, are
paid a portion of their annual bonus in the form of forfeitable, restricted
Company stock.
EXECUTIVE PERFORMANCE COMPENSATION PLAN. The Compensation Plan, approved by
stockholders in
11
<PAGE> 16
1997, establishes certain performance criteria for determining the maximum
amount of bonus compensation available for the Covered Executives named in the
Summary Compensation Table that follows this Report. The Compensation Plan is
administered by the Subcommittee which determines whether the performance goals
under the Compensation Plan have been met.
The creation of any bonus pool for Covered Executives is contingent upon the
Company achieving at least a 10% Return on Equity, as defined in the
Compensation Plan. The amount of the bonus pool is calculated based upon the
extent to which the Return on Equity exceeds the 10% minimum threshold.
The Compensation Plan establishes that up to 31% of any bonus pool established
will be available for bonus awards to the Chief Executive Officer and up to
17.25% will be available to each of the other four eligible participants. The
Committee nevertheless retains discretion to reduce or eliminate payments under
the Compensation Plan to take into account subjective factors, including an
individual's performance or other relevant criteria. Under the Compensation
Plan, the maximum bonus pool for 1999 for the Chief Executive Officer and the
four other most highly compensated executives of the Company was approximately
$24.9 million.
COMPONENTS OF COMPENSATION. Compensation of executive officers consists of base
salary, discretionary bonus awards, a significant portion of which is payable in
forfeitable restricted stock, and, in certain cases, stock option awards
exercisable for shares of Citigroup common stock. Examination of competitors'
pay practices in this area is conducted to ensure that the Company's
compensation policies will enable it to attract new talent and retain current
valuable employees.
Bonuses are discretionary subject to certain maximum amounts specified by the
Compensation Plan and are generally a substantial part of total compensation of
Company executives. Because a percentage of executive compensation is awarded in
the form of forfeitable restricted stock, bonus awards include not only a
short-term cash reward but also a long-term incentive related directly to the
enhancement of stockholder value. The restricted period applicable to awards to
executives is three years in furtherance of the long-term nature of such
compensation. As a member of the Citigroup Management Committee, Mr. Fishman
received 25% of his total 1999 compensation in the form of restricted stock. He
received 50% of his restricted stock award in Citigroup stock and 50% of his
restricted stock award in Company stock.
The Company also takes all reasonable steps to obtain the fullest possible
corporate tax deduction for compensation paid to its executives by qualifying
under Section 162(m) of the Internal Revenue Code.
No stock options were granted in 1999 that are exercisable for shares of Company
stock. However, certain executives have received grants of stock options
exercisable for Citigroup stock under the Executive Option Plan approved by
stockholders in 1997 which permits the Subcommittee, in its discretion and, with
respect to certain executives, with the authorization of the Citigroup Incentive
Compensation Subcommittee, to grant options to purchase Citigroup stock to
certain executives of the Company and its subsidiaries. All of such options have
been issued under and pursuant to the terms of the Citigroup 1999 Stock
Incentive Plan and the Travelers Group 1996 Stock Incentive Plan.
1999 COMPENSATION. The Committee believes that 1999 was another year of
accomplishment for the Company. Despite the difficult competitive conditions
prevailing in the industry, the Company achieved a 7% increase in operating
earnings to a record $1.337 billion with a return on equity that exceeded 15%
for the third consecutive year. Mr. Fishman provided the leadership for this
performance. The amounts awarded to each of the Covered Executives under the
Compensation Plan are set forth in the Summary Compensation Table below and
total approximately $4.3 million.
THE NOMINATIONS, COMPENSATION AND CORPORATE GOVERNANCE COMMITTEE:
Arthur Zankel (Chairman)
Kenneth J. Bialkin
Leslie B. Disharoon
12
<PAGE> 17
COMPENSATION TABLES
The tables on pages 13 to 18 profile TAP's compensation for its Chief Executive
Officer and four other most highly compensated executive officers (the covered
executives), including salaries and bonuses paid during the last three years and
1999 option grants and exercises. The form of the tables is set by SEC
regulations.
Summary compensation table
The following table shows the compensation of the covered executives for 1997,
1998 and 1999. As shown in the table, certain covered executives received awards
of restricted Citigroup common stock and/or Citigroup stock options in addition
to awards of restricted TAP common stock during the period covered by the table.
The Citigroup stock option numbers have been restated to give effect to
Citigroup common stock dividends paid during 1997 and 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
SECURITIES
ANNUAL COMPENSATION RESTRICTED RESTRICTED UNDERLYING
OTHER STOCK STOCK CITIGROUP
NAME AND PRINCIPAL ANNUAL AWARDS AWARDS STOCK OPTIONS ALL OTHER
POSITION AT COMPENSATION (TAP) (CITIGROUP) (NUMBER OF COMPENSATION
DECEMBER 31, 1999 YEAR SALARY($) BONUS($) ($)(B) ($)(C) ($)(C) SHARES) ($)(D)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jay S. Fishman 1999 $400,000 $1,550,047 $121,824 $433,326 $433,294 266,267 $ 264
Chief Executive 1998 400,000 1,235,021 137,986 309,985 309,988 781,828 348
Officer 1997 391,667 1,012,095 129,092 517,206 -- 391,591 348
and President (A)
Charles J. Clarke 1999 500,000 310,028 5,653 126,648 126,649 106,597 1,098
Vice Chairman 1998 500,000 235,054 5,654 109,969 109,960 181,150 17,338
1997 500,000 310,014 -- 253,314 -- 334,671 18,255
Douglas G. Elliot 1999 215,833 381,096 -- 79,287 79,252 22,326 120
Chief Operating
Officer - Commercial
Lines (E)
William Hannon 1999 440,000 182,528 35,591 84,979 84,983 15,982 426
Chief Financial 1998 416,667 143,371 28,269 71,082 71,091 107,305 576
Officer 1997 400,000 166,254 30,787 144,968 -- -- 348
Anil Khanna 1999 350,000 281,277 -- 62,467 62,498 16,462 --
Chief Executive 1998 67,756 60,739 -- -- -- 112,500 --
Officer -
Personal Lines (F)
</TABLE>
Notes to summary compensation table
(A) For Mr. Fishman, we estimate that approximately 80% of the compensation
shown is for services to TAP and its subsidiaries and approximately 20% is for
services to Citigroup and its affiliates (other than TAP and its subsidiaries).
(B) For Mr. Fishman, includes $28,472 for housing expenses while away from
home and $29,083.69 for use of company transportation.
(C) Restricted stock awards of Citigroup common stock were made under
Citigroup's capital accumulation programs (CAP) and awards of TAP common stock
were made under TAP's capital accumulation plan (TAP CAP). TAP CAP is
substantially identical to CAP. Under TAP CAP and CAP, a recipient may not
transfer restricted stock for three years after the award. If the recipient is
still employed by TAP or a Citigroup affiliate at the end of three years,
(Footnotes continued on following page)
13
<PAGE> 18
(Footnotes continued from preceding page)
the restricted stock becomes fully vested and freely transferable (subject, in
the case of Mr. Elliot, Mr. Fishman and Mr. Khanna to the Citigroup stock
ownership commitment). From the date of award, the recipient can vote the
restricted stock and receives full dividends. Under the stock ownership
commitment, Citigroup's directors and senior management have agreed to hold at
least 75% of the Citigroup common stock owned by them on the date they agreed to
the commitment and awarded to them in the future, subject to certain minimum
ownership requirements, for as long as they remain directors or members of
senior management. The only exceptions to the stock ownership commitment are
gifts to charity, limited estate planning transactions and transactions with
Citigroup in connection with exercising options or paying withholding taxes
under stock option and restricted stock plans.
For officers subject to CAP and TAP CAP for the periods shown, a portion of
compensation was paid in restricted stock. The stock was discounted 25% from
market value to reflect restrictions on transfer and the possibility of
forfeiture. CAP and TAP CAP are generally mandatory for TAP senior executives
and certain other employees. For 1999, in accordance with the terms of the
Citibuilder CAP program, Mr. Fishman received 25% of his annual compensation
(salary and bonus) in restricted stock, Mr. Khanna received 25% of his bonus in
restricted stock, and Messrs. Clarke, Elliot and Hannon received the percentages
of annual compensation (salary and bonus) shown in the following table in
restricted stock:
<TABLE>
<CAPTION>
% IN
ANNUAL COMPENSATION RESTRICTED STOCK
- ---------------------------------------
<S> <C>
up to $200,000 10%
$200,001 to $400,000 15%
$400,001 to $600,000 20%
over $600,000 25%
</TABLE>
As of December 31, 1999 (including awards made in January 2000 for 1999, but
excluding awards that vested in January 2000), total holdings of restricted
stock of TAP (T) and Citigroup (C) and the market value of such shares for the
covered executives was:
<TABLE>
<CAPTION>
EXECUTIVE SHARES MARKET VALUE
- ----------------------------------------------------
<S> <C> <C> <C>
Mr. Clarke T: 12,716 $ 435,523.00
C: 5,374 299,264.63
Mr. Elliot T: 4,888 167,414.00
C: 2,444 136,100.25
Mr. Fishman T: 33,433 1,145,080.25
C: 16,535 920,792.81
Mr. Hannon T: 7,876 269,753.00
C: 3,531 196,632.56
Mr. Khanna T: 1,712 58,636.00
C: 1,134 63,149.63
</TABLE>
The market price at the end of 1999 was $34.25 per share of TAP common stock and
$55.6875 per share of Citigroup common stock.
(D) Includes supplemental life insurance paid by TAP.
(E) As Mr. Elliot became an executive officer of TAP in December 1999, the
compensation reported for him is for the full year 1999.
(F) As Mr. Khanna became an executive officer of TAP in October 1998, the
compensation reported for him is for the periods from October 20, 1998 to
December 1998 and the full year 1999.
Stock options granted table
The following table shows 1999 grants to the covered executives of options to
purchase Citigroup common stock. All 1999 stock option grants, including reload
options and options granted under Citigroup's WealthBuilder program, are subject
to the terms of SIP and 1996 SIP. The value of stock options depends upon a
long-term increase in the market price of the common stock: if the stock price
does not increase, the options will be worthless; if the stock price does
increase, the increase will benefit all stockholders.
14
<PAGE> 19
The table describes options as either "initial" or "reload." Unless a particular
option is given different terms
- - the per share exercise price of all options is the composite closing price on
the New York Stock Exchange (NYSE) on the trading day before the option grant,
and
- - initial options generally vest in cumulative installments of 20% on each
anniversary of the grant date, so that the options become fully exercisable
five years after the grant, and remain exercisable until the tenth anniversary
of the grant.
All initial grants were made under Citigroup's WealthBuilder program. The
WealthBuilder program is available to all TAP employees, other than those who
are members of Citigroup's management committee. At the time Mr. Fishman
received his WealthBuilder grant he was not a member of the committee.
Reload options
All 1999 option grants to covered executives, other than the WealthBuilder
grants to Messrs. Clarke, Elliot, Fishman and Hannon, were reload options. Under
the reload program, option holders can use Citigroup common stock they have
owned for at least six months to pay the exercise price of their options and
have shares withheld to pay part of their income tax on the exercise. They then
receive a new reload option to make up for the shares they used or had withheld.
Reload options maintain the option holder's commitment to TAP by maintaining the
holder's net equity position -- the sum of shares owned and shares subject to
option.
Citigroup's personnel, compensation and directors committee determines at the
time of grant whether an option may be exercised under the reload program, and
may amend the program guidelines at any time. For optionees who are eligible to
participate in the reload program, the issuance of a reload option is not a new
discretionary grant. Rather, the issuance results from rights that were granted
to the option holder as part of the initial option grant.
Reload options are subject to several restrictions.
- - The option holder cannot receive a reload option unless the market price of
Citigroup common stock on exercise is at least 20% greater than the exercise
price. (An option holder can exercise an option at a lower price, but he or
she will not receive a reload option.)
- - If the option holder receives a reload option, the shares acquired must be
held for two years, other than a small portion to account for the difference
between the statutory minimum withholding rate and the highest marginal tax
rate. Employees who are subject to the stock ownership commitment are not
subject to this holding period.
- - The reload option does not vest (i.e., become exercisable) for six months.
- - The expiration date of the reload option is the same as that of the initial
grant.
15
<PAGE> 20
1999 OPTION GRANTS
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
% OF TOTAL
OPTIONS GRANTED
NUMBER OF TO ALL CITIGROUP
SHARES UNDERLYING EMPLOYEES EXERCISE OR GRANT DATE
OPTIONS GRANTED(A) IN 1999 BASE PRICE EXPIRATION PRESENT VALUE
NAME INITIAL RELOAD INITIAL RELOAD ($ PER SHARE) DATE ($)(B)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jay S. Fishman 10,785 .04% $35.5000 2/26/04 $ 54,309
13,449 .05 40.8333 1/28/08 79,247
87 * 46.0625 6/30/09 837
17,165 .06 47.5625 2/26/04 119,296
18,680 .06 47.5625 12/14/05 129,825
66,474 .23 53.3750 11/02/08 528,672
24,243 .08 54.3750 4/27/01 195,287
18,172 .06 54.3750 4/25/02 146,383
11,719 .04 54.3750 5/22/02 94,401
22,433 .08 54.3750 2/26/04 180,707
33,535 .12 54.3750 12/14/05 270,138
11,329 .04 54.3750 1/28/08 91,260
18,196 .06 54.8750 12/14/05 147,163
-- ------- -- ---- ----------
Sub-total 87 266,180 * .92
-- ------- -- ----
Total 266,267 .92 2,037,525
Charles J. Clarke 10,119 .03 43.0000 2/26/04 73,473
87 * 46.0625 6/30/09 837
6,513 .02 54.1250 2/13/02 61,571
6,464 .02 54.1250 1/07/03 61,108
31,638 .11 54.1250 2/26/04 299,091
5,230 .02 56.3750 1/10/01 52,147
24,739 .08 56.3750 2/13/02 246,666
16,898 .06 56.3750 1/07/03 168,486
4,909 .02 56.3750 11/02/08 48,946
-- ------- -- ---- ----------
Sub-total 87 106,510 * .36
-- ------- -- ----
Total 106,597 .36 1,012,325
Douglas G. Elliot 87 * 46.0625 6/30/09 837
767 .003 48.7500 02/13/02 5,613
16,017 .05 48.7500 1/07/03 117,205
5,455 .02 53.3750 11/02/08 44,387
-- ------- -- ---- ----------
Sub-total 87 22,239 * .07
-- ------- -- ----
Total 22,326 .07 186,031
William Hannon 87 * 46.0625 6/30/09 837
15,895 .05 54.1250 2/24/06 144,156
-- ------- -- ---- ----------
Sub-total 87 15,895 * .05
-- ------- -- ----
Total 15,982 .05 144,993
Anil Khanna 0 16,462 .06 54.7500 11/02/08 133,774
== ======= ==== ==========
</TABLE>
- ---------------
* Less than .0001%
16
<PAGE> 21
Notes to option grant table
(A) The total options outstanding at the end of 1999 for each covered
executive is shown as "number of shares underlying unexercised options at 1999
year-end" in the table "1999 aggregated option exercises and year-end option
values" below.
(B) The "grant date present value" numbers in the table were derived by
application of a variation of the Black-Scholes option pricing model. The
following assumptions were used in employing the model:
- - Stock price volatility was calculated using the weekly closing price of
Citigroup common stock on the NYSE for the year before the option grant date.
- - The risk-free interest rate for each option grant was the interpolated market
yield on the date of grant on a Treasury bill with a term identical to the
subject estimated option life, as reported by the Federal Reserve.
- - The dividend yield (based upon the actual annual dividend rate during 1999)
was assumed to be constant over the life of the option.
- - For reload options, which vest six months after the date of grant, exercise
was assumed to occur approximately the number of years after the grant date
shown in the following table, based on an estimate of the average period
between the grant date and exercise date.
<TABLE>
<CAPTION>
PERIOD BETWEEN GRANT
EXECUTIVE DATE AND EXERCISE DATE
- -----------------------------------------------------
<S> <C>
Clarke 1 1/2 years
Elliot 1 1/3 years
Fishman 1 1/4 years
Hannon 1 1/3 years
Khanna 1 1/4 years
</TABLE>
- - For initial options granted under the WealthBuilder program that vest at a
rate of 20% per year, exercise was assumed to occur approximately three years
after the grant date, based on an estimate of the average period between the
grant date and exercise date.
- - For Messrs. Clarke and Hannon, with respect to their reload options, the
values arrived at through the Black-Scholes model were discounted by 10% to
reflect the nontransferability of the shares of restricted Citigroup stock
issued upon exercise during the one or two-year period, as applicable,
following exercise.
- - For Messrs. Clarke, Elliot, Fishman and Hannon, with respect to their
WealthBuilder options, the values arrived at through the Black-Scholes model
were discounted by 18.75% to reflect the nontransferability of the shares of
Citigroup stock issued upon exercise for up to five years following exercise.
- - For Messrs. Elliot, Fishman and Khanna, with respect to their reload options,
the values arrived at through the Black-Scholes model were discounted by
18.75% to reflect the reduction in value (as measured by the estimated cost of
protection) of the options due to the holding requirements of the stock
ownership commitment by Citigroup senior management. The discount has been
reduced from 25%, which was used in prior years, to 18.75%, to reflect the
change in the percentage ownership requirements under the stock ownership
commitment. For purposes of calculating the discount, a five year holding
period was assumed even though a particular executive may be a member of
senior management for more or less than five years.
Option exercises table
The following table shows the aggregate number of shares underlying options for
Citigroup common stock exercised in 1999 and the value at year-end of
outstanding options for Citigroup common stock, whether or not exercisable.
17
<PAGE> 22
1999 AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED IN
UNDERLYING UNEXERCISED THE MONEY OPTIONS AT 1999
SHARES ACQUIRED VALUE REALIZED OPTIONS AT 1999 YEAR-END YEAR-END($)(C)
NAME ON EXERCISE(A) ($)(B) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jay S. Fishman 355,918 $6,531,420 0 698,033 $0 $12,259,998
Charles J. Clarke 144,455 2,222,371 16,814 144,478 270,325 1,239,550
Douglas G. Elliot 26,431 323,864 76 58,901 1,833 1,109,062
William Hannon 53,959 964,505 16,938 142,145 368,787 4,365,754
Anil Khanna 86,283 3,345,496 138,750 346,462 3,263,525 7,817,812
</TABLE>
Notes to options exercised table
(A) This column shows the number of shares underlying options exercised in
1999 by the covered executives. The actual number of shares of Citigroup common
stock received by these individuals from options exercised in 1999 (net of
shares used to cover the exercise price and withheld to pay income tax) was:
<TABLE>
<CAPTION>
EXECUTIVE SHARES
- -----------------------------------------------
<S> <C>
Mr. Fishman 79,228
Mr. Clarke 26,923
Mr. Elliot 4,192
Mr. Hannon 13,906
Mr. Khanna 41,036
</TABLE>
(B) "Value realized" is the difference between the exercise price and the
market price on the exercise date, multiplied by the number of options
exercised. "Value realized" numbers do not necessarily reflect what the
executive might receive if he sells the shares acquired by the option exercise,
since the market price of the shares at the time of sale may be higher or lower
than the price on the exercise date of the option. Each of Mr. Elliot, Mr.
Fishman and Mr. Khanna have made the stock ownership commitment (described
above) to hold at least 75% of his Citigroup stock while he is a member of TAP
senior management or the planning groups of certain Citigroup business units.
(C) "Value of unexercised in the money options" is the aggregate, calculated
on a grant by grant basis, of the product of the number of unexercised options
at the end of 1999 multiplied by the difference between the exercise price for
the grant and the year-end market price, excluding grants for which the
difference is equal to or less than zero.
RETIREMENT PLANS
Domestic employees of Citigroup and its subsidiaries, including TAP, are
currently covered by a single qualified pension plan, The Citigroup Pension Plan
(the Qualified Plan). This plan provides different benefit formulas for
different portions of the covered population. Employees become eligible to
participate in the Qualified Plan after one year of service, and benefits under
the Qualified Plan generally vest after 5 years of service. The normal form of
benefit under the Qualified Plan is a joint and survivor annuity (payable over
the life of the participant and spouse) for married participants, and a single
life annuity (payable for the participant's life only) for single participants.
Other forms of payment are also available.
In addition, there are nonqualified programs to provide for retirement benefits
in respect of covered compensation in excess of the Internal Revenue Code
compensation limit ($160,000 for 1999), or in respect of benefits accrued in
excess of the Internal Revenue Code benefit limit ($130,000 for 1999).
The specific provisions governing retirement benefits for covered executives are
detailed below.
18
<PAGE> 23
Pension Changes Effective January 1, 2000 for Mr. Fishman and Mr. Khanna
Effective January 1, 2000, the Qualified Plan was amended to provide a cash
balance benefit formula (the Citibuilder cash balance formula) to the majority
of Qualified Plan participants who were Citicorp employees prior to the merger
of Citicorp and Travelers Group Inc. (the Citigroup merger), including Mr.
Khanna. Benefits accrued for Mr. Khanna for service prior to January 1, 2000
were determined under the prior Citicorp formula.
The Citibuilder cash balance benefit is expressed in the form of a hypothetical
account balance. Benefit credits accrue annually at a rate between 2% and 7%;
the rate increases with age and service. Interest credits are applied annually
to the prior year's balance; these credits are based on the yield on 30-year
Treasury bonds. Although the normal form of the benefit is an annuity, the
hypothetical account balance is also payable as a single lump sum.
In addition to pre-merger Citicorp employees, Qualified Plan participants who
were pre-merger Travelers Group employees, and who are now Citigroup employees,
including Mr. Fishman, are covered under the Citibuilder cash balance formula
beginning January 1, 2000. Benefits accrued for Mr. Fishman for service prior to
January 1, 2000 were determined under the Travelers Group cash balance formula
described below.
Benefits for Former Travelers Group Employees
Other pre-merger employees of Travelers Group or its subsidiaries, including
TAP, including Messrs. Elliot and Hannon, are covered by a different cash
balance formula (the Travelers Group cash balance formula). The Travelers Group
cash balance benefit is also expressed in the form of a hypothetical account
balance. Benefit credits accrue annually at a rate between 0.75% and 7.0%; the
rate increases with age and service. An additional amount of 1% to 2.5% accrues
in respect of covered compensation in excess of the Social Security Wage Base
($72,600 for 1999, increasing to $76,200 for 2000). Interest credits are applied
annually to the prior year's balance; these credits are based on the yield on
30-year Treasury bonds. Although the normal form of the benefit is an annuity,
the hypothetical account balance is also generally payable as a single lump sum
upon retirement.
Mr. Clarke accrues benefits in accordance with the formula under the retirement
plan in effect through 1989 (the old Travelers Retirement Plan). Retirement
benefits were computed on an actuarial basis providing fixed benefits after a
specified number of years of service. Generally, the plan provided vested
benefits after five years of service equal to 2% of final average salary
(including an incentive amount) over a five-year period for each year of service
up to 25 years plus two-thirds of 1% for each year of service over 25 years (up
to a maximum of 15 additional years), less a portion of the primary Social
Security amount, plus adjustments for cost-of-living increases of up to 3% each
year.
Employees who were vested participants in the old Travelers Retirement Plan on
December 31, 1989 are entitled to a minimum benefit as calculated under that
plan, without adjustment for cost-of-living increases. It is anticipated that
Mr. Clarke will receive a minimum benefit computed under the prior plan. In
addition, for employees the sum of whose age and years of service on such date
exceeded 55 will have such minimum benefit increased by an amount equal to the
excess of their age and years of service on such date over 55, up to a maximum
of 25, times 0.3% of their three-year final average salary. The excess of the
age and years of service over 55 utilized in calculating such increased benefit
for Mr. Clarke is 25 years.
Nonqualified pension plans
Citigroup sponsors nonqualified programs which provide benefit accruals in
respect of compensation or benefits exceeding Internal Revenue Service
limitations (described above). The formula governing these nonqualified accruals
mirrors the applicable formula in the Qualified Plan. The benefits payable under
the nonqualified plans are unfunded, and will come from the general assets of
each plan's sponsor.
19
<PAGE> 24
For participants covered by the Citibuilder cash balance formula, there is a
limit of $500,000 on compensation covered by the nonqualified plan. This limit
applies to future nonqualified accruals for Messrs. Khanna and Fishman.
Non-qualified benefits accrued for Mr. Khanna for service prior to January 1,
2000, were determined under the Citicorp supplemental nonqualified plan. There
were no nonqualified benefits accrued for Mr. Fishman for 1999.
For participants in the Travelers Group cash balance plan and the old Travelers
Retirement Plan (for service after 1/31/96), the compensation covered by such
plans is limited to $300,000 less amounts covered by the Citigroup Retirement
Plan. This limit applies to nonqualified accruals for Messrs. Elliot, Clarke and
Hannon.
In addition to these programs, there is a Supplemental Retirement Plan (SERP)
which, for certain pre-merger employees of Travelers Group provided additional
pension benefits for service through the end of 1993. Accruals under the SERP
were frozen as of December 31, 1993. Mr. Fishman participates in this frozen
SERP.
Estimated annual benefits under all plans
The estimated annual benefit provided in total by all plans described above,
expressed in the form of a single life annuity, is as follows:
<TABLE>
<CAPTION>
YEARS OF
SERVICE THROUGH ESTIMATED ANNUAL
EXECUTIVE 1999 BENEFIT
- ----------------------------------------------------------
<S> <C> <C>
Mr. Clarke 42 $485,496
Mr. Elliot 12 101,626
Mr. Fishman 10 134,129
Mr. Hannon 3 44,210
Mr. Khanna 12 242,537
</TABLE>
These estimates are based on the following assumptions:
- - The benefit is determined as of age 65.
- - Covered compensation for each covered executive remains constant at 1999
levels.
- - Regulatory limits on compensation and benefits, and the Social Security Wage
Base remain constant at 1999 levels.
- - The interest crediting rate for cash balance benefits for 1999 (5.5%) remains
constant.
- - The interest rate used to convert hypothetical account balances to annual
annuities for 1999 (5.5%) remains constant.
In addition to retirement benefits under the old Travelers Retirement Plan, TAP
pays a retirement allowance of up to 13 weeks of base salary, based upon age at
retirement, to employees who attained age 50 on or before December 31, 1989.
This additional benefit is available to Mr. Clarke.
OTHER TRANSACTIONS
The Travelers Insurance Company and The Travelers Life & Annuity Company,
affiliates of TAP, and Travelers Casualty and Surety Company and The Standard
Fire Insurance Company, each a subsidiary of TAP, purchased during 1999 limited
partnership interests in Capricorn Investors III, L.P. (the Fund). The Fund is a
limited partnership whose business is to acquire equity and equity-like
securities in public or private companies. Dudley Mecum, a TAP director, is a
managing director of Capricorn Holdings, LLC, the general partner of the Fund.
The aggregate investment in the Fund of the TAP subsidiaries and affiliates
listed above, $7.5 million, represents less than 10% of the capital of the Fund.
20
<PAGE> 25
RELATIONSHIPS WITH CITIGROUP AND AFFILIATES
INTERCOMPANY AGREEMENT
TAP and Citigroup entered into an intercompany agreement dated April 2, 1996,
parts of which are summarized below. In this section, Citigroup means Citigroup
collectively with its subsidiaries, other than TAP and its subsidiaries.
License to use the Travelers name and trademarks. Citigroup has granted TAP and
some of its subsidiaries a non-exclusive, revocable license to use the
"Travelers" name and certain trademarks in TAP's property and casualty insurance
business and related activities.
Indemnification. TAP will indemnify Citigroup and its officers, directors,
employees and agents against losses from certain actions by TAP and its
subsidiaries, and Citigroup will indemnify TAP and its subsidiaries and their
officers, directors, employees and agents against losses from certain actions by
Citigroup.
Citigroup consent to fundamental actions. Until Citigroup ceases to control at
least 20% of the combined voting power or own at least 20% of TAP's common
stock, Citigroup must give its prior written consent for certain fundamental
corporate actions.
Registration rights. Citigroup can demand up to two registrations of its TAP
common stock in each calendar year, and has unlimited "piggyback" registration
rights. TAP will pay all registration costs and expenses, except underwriting
discounts and commissions.
Distribution arrangements. Distribution arrangements in effect as of April 2,
1996 under which Citigroup distributes TAP's and its subsidiaries' property and
casualty insurance products will continue until Citigroup ceases to control at
least 50% of the combined voting power of TAP's common stock. TAP will make its
products available for distribution through Citigroup and its affiliates and
will refrain from using like distribution channels, and Citigroup will refrain
from selling property and casualty insurance products of any nonaffiliate, in
each case, until two years after Citigroup ceases to control at least 50% of the
combined voting power of the TAP's common stock.
Real property. Citigroup will continue to lease or sublease to TAP certain
premises currently occupied by it for varying periods on terms consistent with
prior cost allocation practices on a fair market value basis.
Other provisions. The intercompany agreement also provides for
- - provision of insurance and allocation and/or reimbursement of the costs and
premiums,
- - provision of data processing services and allocation and/or reimbursement of
the costs,
- - cross-licensing of computer software,
- - provision of benefits and participation in benefit and retirement plans and
reimbursement for the costs, and
- - other relationships with Citigroup.
TAX SHARING AGREEMENT
TAP's items of income, loss, deductions and credits are included in the
consolidated and combined tax returns of Citigroup for federal income and
certain state tax purposes. Citigroup, TIGI, TAP's immediate corporate parent,
and TAP have agreed, effective January 1, 1996 to file consolidated and combined
federal and certain state income tax and franchise tax returns and allocate
income tax liabilities related to such returns. In general, TAP will pay TIGI
the federal income or state income or franchise taxes that TAP would have paid
if it filed separate consolidated or combined returns with its own subsidiaries.
OTHER RELATIONSHIPS
TAP participates with Citigroup and TIGI in limited group purchasing
arrangements, including telecommunications services.
Citigroup provides certain corporate staff services, including legal, internal
audit and other services, to
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<PAGE> 26
TAP at cost pursuant to a service reimbursement agreement.
TIGI and some of its subsidiaries, including subsidiaries of TAP, are parties to
an expense allocation agreement that allocates among the parties the costs for
services provided to or by the parties. The services include financial
management, operational management, legal, investment management, government
relations, record-keeping and data processing services and the acquisition of
equipment, software and office space. Charges are allocated at cost, and no
party is expected to realize a profit or incur a loss as a result of providing
or obtaining services under the agreement. A party may terminate the agreement
as to itself upon 90 days notice to the other parties.
From time to time TAP engages in transactions with Citigroup and its
subsidiaries, including reinsurance of long-standing business, the promotion of
affiliates' products and custody and general banking services. To the extent
they are material to TAP, the transactions are more fully described in TAP's
periodic reports filed with the SEC under the Securities Exchange Act.
During 1999, TAP paid Citigroup and its subsidiaries approximately $36 million,
and Citigroup and its subsidiaries paid TAP approximately $28 million, for
services provided pursuant to the various intercompany agreements and
arrangements described above.
TAP and Citigroup have each made a $200 million line of credit available to the
other. Neither party has any obligation to make a loan under this line of credit
and no loans are outstanding.
RATIFICATION OF SELECTION OF AUDITORS
The board of directors has selected KPMG LLP as the independent auditors of TAP
for 2000. KPMG has served as the independent auditors of TAP and its
predecessors since December 1993. Arrangements have been made for a
representative of KPMG to attend the annual meeting. The representative will
have an opportunity to make a statement if he or she desires to do so, and will
be available to respond to appropriate stockholder questions.
The selection of KPMG as TAP's auditors must be ratified by a majority of the
votes cast at the annual meeting.
THE BOARD RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF KPMG AS TAP'S
INDEPENDENT AUDITORS FOR 2000.
SUBMISSION OF FUTURE STOCKHOLDER PROPOSALS
Under SEC rules, a stockholder who intends to present a proposal at the next
annual meeting of stockholders and who wishes the proposal to be included in the
proxy statement for that meeting must submit the proposal in writing to TAP's
Secretary at the address on the cover of this proxy statement. The proposal must
be received no later than November 17, 2000.
COST OF ANNUAL MEETING AND PROXY SOLICITATION
TAP pays the cost of the annual meeting and the cost of soliciting proxies. In
addition to soliciting proxies by mail, TAP may solicit proxies by personal
interview, telephone and similar means. No director, officer or employee of TAP
will be specially compensated for these activities. TAP also intends to request
that brokers, banks and other nominees solicit proxies from their principals and
will pay the brokers, banks and other nominees certain expenses they incur for
such activities. TAP
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<PAGE> 27
has retained Morrow & Co. Inc., a proxy soliciting firm, to assist in the
solicitation of proxies. Morrow's fee will consist of reimbursement of certain
out-of-pocket expenses.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange Act requires TAP's officers and
directors, and persons who own more than 10% of a registered class of TAP's
equity securities, to file reports of ownership and changes in ownership with
the SEC and the NYSE, and to furnish TAP with copies of the forms. Based on its
review of the forms it received, or written representations from reporting
persons, TAP believes that, during 1999, each of its officers, directors and
greater than 10% stockholders complied with these requirements.
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<PAGE> 28
[RECYCLE LOGO PRINTED ON RECYCLED PAPER LOGO]
<PAGE> 29
[TRAVELERS PROPERTY CASUALTY LOGO]
A member of citigroup
C/O PROXY SERVICES
P.O. BOX 9079
EDGEWOOD, NY 11717
THREE WAYS TO VOTE
VOTE BY PHONE 1-800-690-6903
1. Read the accompanying Proxy Statement and this proxy card.
2. Call toll free 1-800-690-6903.
3. Enter your 12 digit Control Number, shown below.
4. Follow the simple recorded instructions.
VOTE BY INTERNET: WWW.PROXYVOTE.COM
1. Read the accompanying Proxy Statement and this proxy card.
2. Go to website WWW.PROXYVOTE.COM.
3. Enter your 12 digit Control Number, shown below.
4. Follow the simple instructions.
VOTE BY MAIL
1. Mark, sign and date your proxy card.
2. Return it in the enclosed postage paid envelope.
YOUR VOTE IS IMPORTANT
Do not return this proxy card if you vote by telephone or internet.
<TABLE>
<CAPTION>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
TRAVPC KEEP THIS PORTION FOR YOUR RECORDS
- -----------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
TRAVELERS PROPERTY CASUALTY CORP. ________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS. |
VOTE ON DIRECTORS |
1. Proposal to elect eight directors to a one-year term. |
Nominees:
FOR WITHHOLD FOR ALL TO WITHHOLD AUTHORITY TO VOTE MARK "FOR ALL EXCEPT"
01) Kenneth J. Bialkin ALL ALL EXCEPT AND WRITE THE NOMINEE'S NUMBER ON THE LINE BELOW.
02) Leslie B. Disharoon
03) Jay S. Fishman [ ] [ ] [ ]
04) Robert I. Lipp --------------------------------------------------
05) Dudley C. Mecum
06) Frank J. Tasco
07) Sanford I. Wiell
08) Arthur Zankel
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
2. Proposal to ratify the selection of KPMG LLP as
the Company's independent auditors for 2000. [ ] [ ] [ ]
The signer(s) hereby acknowledge(s) receipt of the Notice of Annual Meeting of Stockholders and accompanying Proxy Statement.
The signer(s) hereby revoke(s) all proxies heretofore given by the signer(s) to vote at said Annual Meeting and any adjournments or
postponements thereof.
IF NO BOXES ARE MARKED, THIS PROXY WILL BE VOTED IN THE MANNER DESCRIBED ON THE REVERSE SIDE.
NOTE: Please sign exactly as name appears herein. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
- ----------------------------------------------------- -----------------------------------------------------
| | | | | |
- ----------------------------------------------------- -----------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
