MasterCard 2010 Annual Report Download - page 52

• holders of our Class A common stock are not entitled to act by written consent;
• our stockholders must provide timely notice for any stockholder proposals and director nominations;
• a vote of 80% or more of all of the outstanding shares of our stock then entitled to vote is required for
stockholders to amend any provision of our bylaws;
• our board of directors is divided into three classes, with approximately one-third of our directors elected
each year (although pursuant to our amended certificate of incorporation, classes will be phased out
through 2013, when each director will be elected each year);
• any representative of a competitor of MasterCard or of the Foundation is disqualified from service on
our board of directors;
• prior to our 2013 annual meeting of stockholders, our directors may be removed only upon the
affirmative vote of at least 80% in voting power of all the shares of stock then entitled to vote at an
election of directors, voting together as a single class.
A substantial portion of our voting power is held by the Foundation, which is restricted from selling
shares for an extended period of time and therefore may not have the same incentive to approve a corporate
action that may be favorable to the other public stockholders. In addition, the ownership of Class A common
stock by the Foundation and the restrictions on transfer could discourage or make more difficult acquisition
proposals favored by the other holders of the Class A common stock.
As of February 16, 2011 the Foundation owns 13,108,364 shares of Class A common stock, representing
approximately 10.6% of our general voting power. The Foundation may not sell or otherwise transfer its shares
of Class A common stock prior to the date which is twenty years and eleven months following the IPO, except to
the extent necessary to satisfy its charitable disbursement requirements. The directors of the Foundation are
required to be independent of us and our members. The ownership of Class A common stock by the Foundation,
together with the restrictions on transfer, could discourage or make more difficult acquisition proposals favored
by the other holders of the Class A common stock. In addition, because the Foundation is restricted from selling
its shares for an extended period of time, it may not have the same interest in short or medium-term movements
in our stock price as, or incentive to approve a corporate action that may be favorable to, our other stockholders.
Our ability to pay regular dividends to our holders of Class A common stock and Class B common stock
is subject to the discretion of our board of directors and will be limited by our ability to generate sufficient
earnings and cash flows.
MasterCard intends to pay cash dividends on a quarterly basis on our shares of Class A common stock and
Class B common stock. Our board of directors may, in its discretion, decrease the level of dividends or
discontinue the payment of dividends entirely. The payment of dividends is dependent upon our ability to
generate earnings and cash flows so that we may pay our obligations and expenses and pay dividends to our
stockholders. However, sufficient cash may not be available to pay such dividends. Payment of future dividends,
if any, will be at the discretion of our board of directors after taking into account various factors, including our
financial condition, settlement guarantees, operating results, available cash and current and anticipated cash
needs. If, as a consequence of these various factors, we are unable to generate sufficient earnings and cash flows
from our business, we may not be able to make or may have to reduce or eliminate the payment of dividends on
our shares of Class A common stock and Class B common stock.
Item 1B. Unresolved Staff Comments
Not applicable.
42