MetLife 2005 Annual Report Download - page 117

METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Savings and Investment Plans
The Subsidiaries sponsor savings and investment plans for substantially all employees under which a portion of employee contributions are
matched. The Subsidiaries contributed $71 million, $64 million and $59 million for the years ended December 31, 2005, 2004 and 2003, respectively.
14. Equity
Preferred Stock
On September 29, 1999, the Holding Company adopted a stockholder rights plan (the ‘‘rights plan’’) under which each outstanding share of
common stock issued between April 4, 2000 and the distribution date (as defined in the rights plan) will be coupled with a stockholder right. Each right
will entitle the holder to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock. Each one one-hundredth of a share of
Series A Junior Participating Preferred Stock will have economic and voting terms equivalent to one share of common stock. Until it is exercised, the right
itself will not entitle the holder thereof to any rights as a stockholder, including the right to receive dividends or to vote at stockholder meetings.
Stockholder rights are not exercisable until the distribution date, and will expire at the close of business on April 4, 2010, unless earlier redeemed or
exchanged by the Holding Company. The rights plan is designed to protect stockholders in the event of unsolicited offers to acquire the Holding
Company and other coercive takeover tactics.
In connection with financing the acquisition of Travelers on July 1, 2005, which is more fully described in Note 2, the Company issued preferred
shares as follows:
On June 13, 2005, the Holding Company issued 24 million shares of Floating Rate Non-Cumulative Preferred Stock, Series A (the ‘‘Series A
preferred shares’’) with a $0.01 par value per share, and a liquidation preference of $25 per share for aggregate proceeds of $600 million.
On June 16, 2005, the Holding Company issued 60 million shares of 6.50% Non-Cumulative Preferred Stock, Series B (the ‘‘Series B preferred
shares’’), with a $0.01 par value per share, and a liquidation preference of $25 per share, for aggregate proceeds of $1.5 billion.
The Series A and Series B preferred shares (the ‘‘Preferred Shares’’) rank senior to the common stock with respect to dividends and liquidation
rights. Dividends on the Preferred Shares are not cumulative. Holders of the Preferred Shares will be entitled to receive dividend payments only when, as
and if declared by the Holding Company’s board of directors or a duly authorized committee of the board. If dividends are declared on the Series A
preferred shares, they will be payable quarterly, in arrears, at an annual rate of the greater of (i) 1.00% above three-month LIBOR on the related LIBOR
determination date; or (ii) 4.00%. Any dividends declared on the Series B preferred shares will be payable quarterly, in arrears, at an annual fixed rate of
6.50%. Accordingly, in the event that dividends are not declared on the Preferred Shares for payment on any dividend payment date, then those
dividends will cease to accrue and be payable. If a dividend is not declared before the dividend payment date, the Holding Company has no obligation to
pay dividends accrued for that dividend period whether or not dividends are declared and paid in future periods. No dividends may, however, be paid or
declared on the Holding Company’s common stock — or any other securities ranking junior to the Preferred Shares — unless the full dividends for the
latest completed dividend period on all Preferred Shares, and any parity stock, have been declared and paid or provided for.
The Holding Company is prohibited from declaring dividends on the Preferred Shares if it fails to meet specified capital adequacy, net income and
shareholders’ equity levels. In addition, under Federal Reserve Board policy, the Holding Company may not be able to pay dividends if it does not earn
sufficient operating income.
The Preferred Shares do not have voting rights except in certain circumstances where the dividends have not been paid for an equivalent of six or
more dividend payment periods whether or not those periods are consecutive. Under such circumstances, the holders of the Preferred Shares have
certain voting rights with respect to members of the board of directors of the Holding Company.
The Preferred Shares are not subject to any mandatory redemption, sinking fund, retirement fund, purchase fund or similar provisions. The Preferred
Shares are redeemable but not prior to September 15, 2010. On and after that date, subject to regulatory approval, the Preferred Shares will be
redeemable at the Holding Company’s option in whole or in part, at a redemption price of $25 per Preferred Share, plus declared and unpaid dividends.
In connection with the offering of the Preferred Shares, the Holding Company incurred approximately $56.8 million of issuance costs which have
been recorded as a reduction of additional paid-in capital.
On November 15, 2005, the Holding Company’s board of directors declared dividends of $0.3077569 per share, for a total of $8 million, on the
Series A preferred shares, and $0.4062500 per share, for a total of $24 million, on the Series B preferred shares. Both dividends were paid on
December 15, 2005 to shareholders of record as of November 30, 2005.
On August 22, 2005, the Holding Company’s board of directors declared dividends of $0.286569 per share, for a total of $7 million, on the Series A
preferred shares, and $0.4017361 per share, for a total of $24 million, on the Series B preferred shares. Both dividends were paid on September 15,
2005 to shareholders of record as of August 31, 2005.
See Note 21 for further information.
Common Stock
On October 26, 2004, the Holding Company’s board of directors authorized a $1 billion common stock repurchase program. Under this
authorization, the Holding Company may purchase its common stock from the MetLife Policyholder Trust, in the open market and in privately negotiated
transactions. As a result of the acquisition of Travelers (see Note 2), the Holding Company has suspended its common stock repurchase activity. Future
common stock repurchases will be dependent upon several factors, including the Company’s capital position, its financial strength and credit ratings,
general market conditions and the price of the Holding Company’s common stock.
On December 16, 2004, the Holding Company repurchased 7,281,553 shares of its outstanding common stock at an aggregate cost of
$300 million under an accelerated common stock repurchase agreement with a major bank. The bank borrowed the stock sold to the Holding Company
from third parties and purchased the common stock in the open market to return to such third parties. In April 2005, the Holding Company received a
cash adjustment of approximately $7 million based on the actual amount paid by the bank to purchase the common stock, for a final purchase price of
approximately $293 million. The Holding Company recorded the shares initially repurchased as treasury stock and recorded the amount received as an
adjustment to the cost of the treasury stock.
See Note 9 regarding stock purchase contracts issued by the Company on June 21, 2005 in connection with the issuance of the common equity
units.
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