MasterCard 2011 Annual Report Download - page 116

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Ownership and Governance Structure
Equity ownership and voting power of the Company’s shares were allocated as follows as of December 31:
2011 2010
Equity
Ownership
General
Voting
Power
Equity
Ownership
General
Voting
Power
Public Investors (Class A stockholders) ............ 85.7% 89.3% 83.5% 89.1%
Principal or Affiliate Customers (Class B
stockholders) ............................... 4.1% — 6.3% —
The MasterCard Foundation (Class A stockholders) . . 10.2% 10.7% 10.2% 10.9%
Class B Common Stock Conversions
Shares of Class B common stock are convertible on a one-for-one basis into shares of Class A common
stock. Entities eligible to hold our Class B common stock are defined in our amended and restated certificate of
incorporation (generally our principal or affiliate customers), and they are restricted from retaining ownership of
shares of Class A common stock. Class B stockholders are required to subsequently sell or otherwise transfer any
shares of Class A common stock received pursuant to such a conversion.
The Company’s certificate of incorporation in effect at the time of its initial public offering in May 2006
(the “IPO”) provided that shares of the Class B common stock could not be converted into shares of Class A
common stock for subsequent sale until May 31, 2010, the fourth anniversary of the IPO. At the annual meeting
of stockholders of the Company on June 7, 2007, the Company’s stockholders approved amendments to the
Company’s certificate of incorporation which were designed to facilitate an accelerated, orderly conversion of
Class B common stock into Class A common stock for subsequent sale prior to May 2010. Through “conversion
transactions,” in amounts and at times designated by the Company, current holders of shares of Class B common
stock who elected to participate were eligible to convert their shares, on a one-for-one basis, into shares of
Class A common stock for subsequent sale or transfer to public investors, within a 30 day “transitory” ownership
period. Holders of Class B common stock were not allowed to participate in any vote of holders of Class A
common stock during this “transitory” ownership period. The number of shares of Class B common stock
eligible for conversion transactions was limited to an annual aggregate number of up to 10% of the total
combined outstanding shares of Class A common stock and Class B common stock, based upon the total number
of shares outstanding as of December 31 of the prior calendar year. In addition, prior to May 31, 2010, a
conversion transaction was not permitted that would have caused the number of shares of Class B common stock
to represent less than 15% of the total number of outstanding shares of Class A common stock and Class B
common stock outstanding. A series of conversion programs were implemented and completed from 2007
through 2009, decreasing the total number of shares of Class B common stock to be just above the 15%
threshold.
Commencing on May 31, 2010, the fourth anniversary of the IPO, each share of Class B common stock
became eligible for conversion, at the holder’s option, into a share of Class A common stock on a one for one
basis. In February 2010, the Company’s Board of Directors authorized programs to facilitate conversions of
shares of Class B common stock (without limits as to the number of shares) on a one-for-one basis into shares of
Class A common stock for subsequent sale or transfer to public investors, beginning after the May 31, 2010
anniversary date. In June 2010, the Company implemented and completed the first 2010 conversion program
which consisted of four one-week periods, during which approximately 8 million shares of Class B common
stock were converted on a one-for-one basis into shares of Class A common stock for subsequent sale or transfer
112