Prudential 2012 Annual Report Download - page 164

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
15. EQUITY
The Company has outstanding two classes of common stock: the Common Stock and the Class B Stock. The changes in the number of
shares issued, held in treasury and outstanding are as follows for the periods indicated:
Common Stock Class B Stock
Issued
Held In
Treasury Outstanding
Issued and
Outstanding
(in millions)
Balance, December 31, 2009 ........................................................ 641.8 179.7 462.1 2.0
Common Stock issued(2) ............................................................ 18.3 0.0 18.3 0.0
Common Stock acquired ............................................................ 0.0 0.0 0.0 0.0
Stock-based compensation programs(1) ................................................ 0.0 (3.4) 3.4 0.0
Balance, December 31, 2010 ........................................................ 660.1 176.3 483.8 2.0
Common Stock issued .............................................................. 0.0 0.0 0.0 0.0
Common Stock acquired ............................................................ 0.0 19.8 (19.8) 0.0
Stock-based compensation programs(1) ................................................ 0.0 (4.0) 4.0 0.0
Balance, December 31, 2011 ........................................................ 660.1 192.1 468.0 2.0
Common Stock issued .............................................................. 0.0 0.0 0.0 0.0
Common Stock acquired ............................................................ 0.0 11.5 (11.5) 0.0
Stock-based compensation programs(1) ................................................ 0.0 (6.5) 6.5 0.0
Balance, December 31, 2012 ........................................................ 660.1 197.1 463.0 2.0
(1) Represents net shares issued from treasury pursuant to the Company’s stock-based compensation program as discussed in Note 17.
(2) In November 2010, the Company issued 18,348,624 shares of Common Stock in a public offering at a price of $54.50 per share for net proceeds of
$970 million.
Common Stock and Class B Stock
On the date of demutualization, Prudential Financial completed an initial public offering of its Common Stock at an initial public
offering price of $27.50 per share. The shares of Common Stock issued were in addition to shares of Common Stock the Company
distributed to policyholders as part of the demutualization. The Common Stock is traded on the New York Stock Exchange under the
symbol “PRU.” Also on the date of demutualization, Prudential Financial completed the sale, through a private placement, of 2.0 million
shares of Class B Stock at a price of $87.50 per share. The Class B Stock is a separate class of common stock which is not publicly traded.
The Common Stock reflects the performance of the Financial Services Businesses and the Class B Stock reflects the performance of the
Closed Block Business.
Holders of Common Stock have no interest in a separate legal entity representing the Financial Services Businesses and holders of the
Class B Stock have no interest in a separate legal entity representing the Closed Block Business and holders of each class of common stock
are subject to all of the risks associated with an investment in the Company.
In the event of a liquidation, dissolution or winding-up of the Company, holders of Common Stock and holders of Class B Stock
would be entitled to receive a proportionate share of the net assets of the Company that remain after paying all liabilities and the liquidation
preferences of any preferred stock.
Common Stock Held in Treasury
Common Stock held in treasury is accounted for at average cost. Gains resulting from the reissuance of “Common Stock held in
treasury” are credited to “Additional paid-in capital.” Losses resulting from the reissuance of “Common Stock held in treasury” are charged
first to “Additional paid-in capital” to the extent the Company has previously recorded gains on treasury share transactions, then to
“Retained earnings.”
In June 2011, Prudential Financial’s Board of Directors authorized the Company to repurchase at management’s discretion up to $1.5
billion of its outstanding Common Stock through June 2012. Under this authorization, 28.6 million shares of the Company’s Common
Stock were repurchased at a total cost of $1.5 billion, of which 8.8 million shares were repurchased in the first six months of 2012 at a total
cost of $500 million.
In June 2012, Prudential Financial’s Board of Directors authorized the Company to repurchase at management’s discretion up to $1.0
billion of its outstanding Common Stock through June 2013. As of December 31, 2012, 2.7 million shares of the Company’s Common
Stock were repurchased under this authorization at a total cost of $150 million.
The timing and amount of share repurchases are determined by management based upon market conditions and other considerations,
and repurchases may be effected in the open market, through derivative, accelerated repurchase and other negotiated transactions and
through prearranged trading plans complying with Rule 10b5-1(c) of the Exchange Act. Numerous factors could affect the timing and
amount of any future repurchases under the share repurchase authorization, including increased capital needs of the Company due to
opportunities for growth and acquisitions, as well as the effect of adverse market conditions on the segments.
Stock Conversion Rights of the Class B Stock
Prudential Financial may, at its option, at any time, exchange all outstanding shares of Class B Stock into such number of shares of
Common Stock as have an aggregate average market value equal to 120% of the appraised fair market value of the outstanding shares of
Class B Stock.
162 Prudential Financial, Inc. 2012 Annual Report