MasterCard 2009 Annual Report Download - page 68

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General and Administrative
The major components of general and administrative expenses are as follows:
For the Years Ended
December 31,
Dollar
Increase (Decrease)
Percent
Increase (Decrease)
2009 2008 2007 2009 2008 2009 2008
(In millions, except percentages)
Personnel ........................ $1,365 $1,290 $1,156 $ 75 $134 5.8% 11.6%
Professional fees .................. 158 217 220 (59) (3) (27.2)% (1.4)%
Telecommunications ............... 69 78 71 (9) 7 (11.5)% 9.9%
Data processing ................... 86 78 63 8 15 10.3% 23.8%
Travel and entertainment ............ 44 87 106 (43) (19) (49.4)% (17.9)%
Other ........................... 213 247 241 (34) 6 (13.8)% 2.5%
General and administrative expenses . . $1,935 $1,997 $1,857 $(62) $140 (3.1)% 7.5%
* Note that figures in the above table may not sum due to rounding.
• Personnel expense increased 5.8% and 11.6% in 2009 and 2008, respectively. Personnel expense
increased in 2009 primarily due to higher costs for severance and pension. Personnel expense includes
$139 million, $33 million and $21 million for severance-related charges in 2009, 2008 and 2007,
respectively. The increased severance costs in 2009 were the result of realignment of our resources and
were partially offset by lower contractor costs and reduced payroll costs due to reduced staffing levels.
The increased pension costs were primarily due to lower investment returns in 2008. Personnel expense
increased in 2008 primarily due to higher costs for new personnel, salary increases and higher contractor
costs.
• Professional fees consist primarily of legal costs to defend our outstanding litigation and third-party
consulting services related to strategic initiatives. Professional fees decreased 27.2% in 2009 versus
2008 due to lower legal fees associated with the settlement of two significant legal cases during 2008
and decreased usage of third-party consulting services. Professional fees decreased slightly in 2008
versus 2007 primarily due to lower legal fees.
• Telecommunications expense consists of expenses to support our global payments system infrastructure
as well as our other telecommunication needs. These expenses vary with business volume growth,
system upgrades and usage.
• Data processing consists of expenses to operate and maintain MasterCard’s computer systems. These
expenses vary with business volume growth, system upgrades and usage.
• Travel and entertainment expenses are incurred primarily for travel to customer and regional meetings.
In 2009 and 2008, these expenses decreased as a result of cost containment initiatives.
• Other includes rental expense for our facilities, foreign exchange gains and losses, charges for
impairment of assets and other miscellaneous administrative expenses. The decrease in 2009 was
primarily driven by favorable fluctuations in foreign exchange rates partially offset by charges for
impairment of assets. The increase in 2008 was primarily driven by unfavorable fluctuations in foreign
exchange rates and higher rent for office facilities. During 2007, the Company made a $20 million cash
donation to The MasterCard Foundation.
Advertising and Marketing
Our brands, principally MasterCard, are valuable strategic assets that drive card acceptance and usage and
facilitate our ability to successfully introduce new service offerings and access new markets globally. Our
advertising and marketing strategy is to increase global MasterCard brand awareness, preference and usage
through integrated advertising, sponsorship, promotional, interactive media and public relations programs on a
global scale. We will also continue to invest in marketing programs at the regional and local levels and sponsor
diverse events aimed at multiple target audiences.
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