MasterCard 2011 Annual Report Download - page 117

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
to public investors in accordance with the terms of both the program and the Company’s certificate of incorporation
in effect at that time. In July 2010, the Company commenced a subsequent, continuous conversion program for the
remaining shares of Class B common stock, featuring an “open window” for elections of any size.
Class M Common Stock
Prior to June 1, 2010, MasterCard’s amended and restated certificate of incorporation that was in effect as of
that time had authorized 1 million shares of Class M common stock, $0.0001 par value. Class M Common Stock
was generally non-voting, but could elect up to three, but no 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). Class M common stock had no dividend rights.
Effective June 1, 2010, the outstanding shares of the Company’s Class B common stock represented for the
first time less than 15% of the aggregate outstanding shares of the Class A common stock and Class B common
stock. Accordingly, pursuant to the Company’s amended and restated certificate of incorporation in effect at that
time, all outstanding shares of the Company’s Class M common stock were automatically transferred to the
Company and retired, and are no longer available for issue or reissue. Additionally, the Company no longer has
authority to issue additional shares of Class M common stock. The retirement of the Class M common stock had
no effect on the Company’s financial position or basic or diluted EPS.
The MasterCard Foundation
In connection and simultaneously with the IPO, the Company issued and donated 13.5 million 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 customers. Under the terms of the donation, the Foundation became able to resell
the donated shares in May 2010 and 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, which was extended in 2011 to 15 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.
Stock Repurchase Programs
In September 2010, the Company’s Board of Directors authorized a plan for the Company to repurchase up to
$1 billion of its Class A common stock in open market transactions. The Company did not repurchase any shares
under this plan during the year ended December 31, 2010. In April 2011, the Company’s Board of Directors
amended the existing share repurchase program, authorizing the Company to repurchase an incremental $1 billion
of its Class A common stock in open market transactions. The incremental $1 billion share repurchase authorization
increases the Class A share repurchase program to an aggregate of $2 billion. As of December 31, 2011, the
Company repurchased a total of approximately 4.4 million shares of its Class A common stock for approximately
$1.1 billion. These shares were considered treasury stock, which is a reduction to stockholders’ equity.
As of January 27, 2012, the cumulative repurchases by the Company under the share repurchase program
totaled approximately 4.7 million shares of its Class A common stock for an aggregate cost of approximately
$1.3 billion at an average price of $264.65 per share of Class A common stock.
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