MasterCard 2009 Annual Report Download - page 119

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except percent and per share data)
basis into shares of Class A common stock for subsequent sale or transfer to public investors, beginning after
May 31, 2010. The conversion programs follow the expiration on May 31, 2010 of a 4-year post-IPO restriction
period with respect to the conversion of shares of Class B common stock. The Company currently expects that
the first 2010 conversion program will consist of four one-week periods in June 2010. Holders of shares of Class
B common stock will be able to make conversion elections in a program to be modeled on the Company’s 2008
and 2009 programs, except that there will not be a limit on the number of shares of Class B common stock that
are eligible for conversion by any one holder. Starting in early July 2010, the Company expects to run a
subsequent, continuous conversion program for remaining shares of Class B common stock, featuring an “open
window” for elections of any size.
Additionally, if at any time while shares of Class M common stock are outstanding, the number of shares of
Class B common stock outstanding is less than 41% of the aggregate number of shares of Class A common stock
and Class B common stock outstanding, Class B stockholders will in certain circumstances be permitted to
acquire an aggregate number of shares of Class A common stock in the open market or otherwise, with acquired
shares thereupon converting into an equal number of shares of Class B common stock so that holders of Class B
common stock could own up to 41% of the aggregate number of shares of Class A common stock and Class B
common stock outstanding at such time. Shares of Class B common stock are non-registered securities that may
be bought and sold among eligible holders of Class B common stock subject to certain limitations.
Stock Repurchase Program
In April 2007, the Company’s Board of Directors authorized a plan for the Company to repurchase up to
$500,000 of its Class A common stock in open market transactions during 2007. On October 29, 2007, the
Company’s Board of Directors amended the share repurchase plan to authorize the Company to repurchase an
incremental $750,000 (aggregate for the entire repurchase program of $1,250,000) of its Class A common stock
in open market transactions through June 30, 2008. As of December 31, 2007, approximately 3,922 shares of
Class A common stock had been repurchased at a cost of $600,532. During 2008, the Company repurchased
approximately 2,819 shares of Class A common stock at a cost of $649,468, completing its aggregate authorized
share repurchase program of $1,250,000. The Company records the repurchase of shares of common stock at cost
based on the settlement date of the transaction. These shares are classified as treasury stock, which is a reduction
to stockholders’ equity. Treasury stock is included in authorized and issued shares but excluded from outstanding
shares.
Note 17. Share Based Payment and Other Benefits
In May 2006, the Company implemented the MasterCard Incorporated 2006 Long-Term Incentive Plan (the
“LTIP”). The LTIP is a shareholder-approved omnibus plan that permits the grant of various types of equity
awards to employees.
The Company has granted restricted stock units (“RSUs”), non-qualified stock options (“options”) and
Performance Stock Units (“PSUs”) under the LTIP. The RSUs generally vest after three to four years. The
options, which expire ten years from the date of grant, generally vest ratably over four years from the date of
grant. The PSUs generally vest after three years. Additionally, the Company made a one-time grant to all
non-executive management employees upon the IPO for a total of approximately 440 RSUs (the “Founders’
Grant”). The Founders’ Grant RSUs vested three years from the date of grant. The Company uses the straight-
line method of attribution for expensing equity awards. Compensation expense is recorded net of estimated
forfeitures. Estimates are adjusted as appropriate.
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