MasterCard 2012 Annual Report Download - page 115

MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On July 18, 2006, the Company’s stockholders approved the MasterCard Incorporated 2006 Non-Employee
Director Equity Compensation Plan, which was amended and restated as of October 13, 2008 (the “Director
Plan”). The Director Plan provides for awards of Deferred Stock Units (“DSUs”) to each director of the
Company who is not a current employee of the Company. There are 100 thousand shares of Class A common
stock reserved for DSU awards under the Director Plan. During the years ended December 31, 2012, 2011 and
2010, the Company granted 4 thousand, 4 thousand and 5 thousand DSUs, respectively. The fair value of the
DSUs was based on the closing stock price on the New York Stock Exchange of the Company’s Class A
common stock on the date of grant. The weighted-average grant-date fair value of DSUs granted during the years
ended December 31, 2012, 2011 and 2010 was $408, $274 and $217, respectively. The DSUs vested immediately
upon grant and will be settled in shares of the Company’s Class A common stock on the fourth anniversary of the
date of grant. Accordingly, the Company recorded general and administrative expense of $1 million for the DSUs
for each of the years ended December 31, 2012, 2011 and 2010. During the years ended December 31, 2012,
2011 and 2010, there were approximately 4 thousand, 7 thousand and 25 thousand DSUs converted into shares of
Class A common stock, respectively. The total intrinsic value of these DSUs converted into shares of Class A
common stock was $2 million, $2 million and $5 million, respectively.
Note 16. Commitments
At December 31, 2012, the Company had the following future minimum payments due under non-
cancelable agreements:
Total
Capital
Leases
Operating
Leases
Sponsorship,
Licensing &
Other
(in millions)
2013 .......................................... $295 $ 45 $ 19 $231
2014 .......................................... 176 5 19 152
2015 .......................................... 135 1 17 117
2016 .......................................... 66 — 15 51
2017 .......................................... 27 — 12 15
Thereafter ..................................... 40 — 21 19
Total .......................................... $739 $ 51 $103 $585
Included in the table above are capital leases with imputed interest expense of $2 million and a net present value
of minimum lease payments of $48 million. In addition, at December 31, 2012, $66 million of the future minimum
payments in the table above for operating leases, sponsorship, licensing and other agreements was accrued.
Consolidated rental expense for the Company’s leased office space, which is recognized on a straight-line basis over
the life of the lease, was $36 million, $30 million and $27 million for the years ended December 31, 2012, 2011 and
2010, respectively. Consolidated lease expense for automobiles, computer equipment and office equipment was $11
million, $9 million and $8 million for the years ended December 31, 2012, 2011 and 2010, respectively.
In January 2003, MasterCard purchased a building in Kansas City, Missouri for approximately $24 million.
During 2003, MasterCard entered into agreements with the City of Kansas City for (i) the sale-leaseback of the
building and related equipment which totaled $36 million and (ii) the purchase of municipal bonds for the same
amount which have been classified as investment securities held-to-maturity. The leaseback has been accounted
for as a capital lease as the agreement contains a bargain purchase option at the end of the ten-year lease term.
The building and related equipment are being depreciated over their estimated economic life in accordance with
the Company’s policy. Rent of $2 million is due annually and is equal to the interest due on the municipal bonds.
The future minimum lease payments are $38 million and are included in the table above.
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