MasterCard 2009 Annual Report Download - page 117

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except percent and per share data)
Immediately prior to the closing of the IPO, MasterCard Incorporated filed an amended and restated
certificate of incorporation (the “certificate of incorporation”). The certificate of incorporation authorized
4,501,000 shares, consisting of the following new classes of capital stock:
Class Par Value
Authorized
Shares
(in millions) Dividend and Voting Rights
A $.0001 per share 3,000 • One vote per share
• Dividend rights
B $.0001 per share 1,200 • Non-voting
• Dividend rights
M $.0001 per share 1 • Generally non-voting, but can elect up to three, but not more than
one-quarter, of the members of the Company’s Board of Directors
and approve specified significant corporate actions (e.g., the sale
of all of the assets of the Company)
• No dividend rights
Preferred $.0001 per share 300 • No shares issued or outstanding. Dividend and voting rights are to
be determined by the Board of Directors of the Company upon
issuance.
The certificate of incorporation also provided for the immediate reclassification of all of the Company’s 99,978
outstanding shares of existing Class A redeemable common stock, causing each of its existing stockholders to
receive 1.35 shares of the Company’s newly issued Class B common stock for each share of common stock that
they held prior to the reclassification as well as a single share of Class M common stock. The Company paid
stockholders an aggregate of $27 in lieu of issuing fractional shares that resulted from the reclassification. This
resulted in the issuance of 134,969 shares of Class B common stock and 2 shares of Class M common stock.
The Company issued 66,135 newly authorized shares of Class A common stock in the IPO, including 4,614
shares sold to the underwriters pursuant to an option to purchase additional shares, at a price of $39 per share.
The Company received net proceeds from the IPO of approximately $2,449,910. The Company issues and retires
one share of Class M common stock at the inception or termination, respectively, of each principal membership
of MasterCard International. All outstanding Class M common stock will be transferred to the Company and
retired and unavailable for issue or reissue on the day on which the outstanding shares of Class B common stock
represent less than 15% of the total outstanding shares of Class A common stock and Class B common stock.
The MasterCard Foundation
In connection and simultaneously with the IPO, the Company issued and donated 13,497 newly authorized
shares of Class A common stock to The MasterCard Foundation (the “Foundation”). The Foundation is a private
charitable foundation incorporated in Canada that is controlled by directors who are independent of the Company
and its principal members. Under the terms of the donation, the Foundation can only resell the donated shares
beginning on the fourth anniversary of the IPO to the extent necessary to meet charitable disbursement requirements
dictated by Canadian tax law. Under Canadian tax law, the Foundation is generally required to disburse at least
3.5% of its assets not used in administration each year for qualified charitable disbursements. However, the
Foundation obtained permission from the Canadian tax authorities to defer the giving requirements for up to ten
years. The Foundation, at its discretion, may decide to meet its disbursement obligations on an annual basis or to
settle previously accumulated obligations during any given year. The Foundation will be permitted to sell all of its
remaining shares beginning twenty years and eleven months after the consummation of the IPO. During 2007, the
Company donated $20,000 in cash to the Foundation, which is included in general and administrative expense.
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