Travelers 2004 Annual Report Download - page 179

THE ST. PAUL TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
12. SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY, Continued
The Company is governed by the Minnesota Business Corporation Act. All authorized shares of voting
common stock have no par value. Shares of common stock reacquired are considered treasury shares. The
number of authorized shares of the company is 1.75 billion.
The articles of incorporation allow the Company to issue five million undesignated shares. The Board of
Directors may designate the type of shares and set the terms thereof. The Board designated 1,450,000 shares as
Series B Convertible Preferred Stock in connection with the formation of the Stock Ownership Plan.
On January 25, 2005, the Company, through its Capital Accumulation Program (CAP) and on January 25,
2005 and February 4, 2005, through its Equity Awards program, issued 2,048,729 common stock awards in the
form of restricted stock and deferred stock to participating officers and other key employees. The fair value per
share of the common stock was $36.97 and $38.16 on January 25, 2005 and February 4, 2005, respectively.
These awards generally vest after a two-year period for the 2005 CAP awards and three years for the 2005
awards issued under the Equity Awards program. On January 22, 2004 and January 23, 2003, the Company
issued under the CAP program 847,593 and 842,368 shares, respectively, of common stock in the form of
restricted stock to participating officers and other key employees. The fair value per share of the common stock
was $41.35 and $37.33, respectively. The restricted stock awards in 2004 and 2003 generally vest after a three-
year period.
On March 21, 2002, TPC sold approximately 231 million shares of its class A common stock in a public
offering for net proceeds of $4.09 billion.
Treasury Stock
All shares of TPC common stock that were held by the Company as treasury stock at the merger date of
April 1, 2004, were cancelled and retired as of that date.
The Company’s 2004 Incentive Plan, the SPC 1994 Stock Incentives Plan and the TPC 2002 Incentive Plan
provide settlement alternatives to employees in which the Company repurchases shares to cover tax withholding
costs and exercise costs. At December 31, 2004 and 2003, the Company had purchased $14 million and $18
million, respectively, of its common stock under this plan.
Prior to the merger, TPC’s Board of Directors approved a $500 million share repurchase program. During
2003, TPC repurchased approximately 1.1 million shares (as adjusted for the merger) of its common stock at a
total cost of $40 million. That repurchase program was terminated upon completion of the merger.
The Company entered into a commitment, in conjunction with the August 2002 Citigroup Distribution, to
acquire the Company common stock held by the Citigroup Capital Accumulation Program (Citigroup CAP) upon
forfeiture of plan participants for which it prepaid $15 million. This commitment expires over three years upon
vesting of the Citigroup CAP participants. In March 2004, Citigroup accelerated the vesting of their CAP
participant awards, and accordingly, the Company has no further obligation to acquire the company stock held by
Citigroup CAP. The Company has 63,321 shares due from Citigroup for unvested shares and a prepaid balance
due from Citigroup of $7 million. At December 31, 2003 and 2002, TPC had acquired $4 million and $1 million,
respectively, of its common stock pursuant to this arrangement.
Common shares acquired under these plans are reported as treasury stock in the consolidated balance sheet.
Dividends
The Company’s insurance subsidiaries are subject to various regulatory restrictions that limit the maximum
amount of dividends available to be paid to their parent without prior approval of insurance regulatory
authorities. A maximum of $2.61 billion is available in 2005 for such dividends without prior approval of the
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