Travelers 2007 Annual Report Download - page 212

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY (Continued)
Common Stock
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 authorized
and unissued 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 401(k) Savings Plan.
On February 5, 2008, the Company, under The Travelers Companies, Inc. 2004 Incentive Plan,
granted 1,969,496 common stock awards in the form of restricted stock units, deferred stock and
performance share awards to participating officers, non-employee directors and other key employees.
The restricted stock units and deferred stock awards totaled 1,228,281 shares. The restricted stock units
totaling 1,196,517 generally vest in full after a three-year performance period from date of grant. The
deferred stock awards totaling 31,764 shares vest in full as of the date of the annual meeting of
shareholders of the Company scheduled at least one year following the date of the award, subject to
continued service. The performance share awards, totaling 741,215 shares, represent shares which the
recipient may earn upon the Company’s attainment of certain performance goals. The performance
goals are based upon the Company’s adjusted return on equity over a three-year performance period.
Vesting of any performance shares is contingent upon the Company attaining the relevant performance
period minimum threshold return on equity. If the performance period return on equity is below the
minimum threshold, none of the shares will vest; if performance meets or exceeds the minimum
performance threshold, between 50% and 160% of the performance shares will vest, depending on the
actual return on equity attained. The fair value per share attributable to the common stock awards on
the date of grant was $47.23.
Refer to note 11 for information regarding share-based grants made in 2007, 2006 and prior years.
Treasury Stock
In May 2006, the Company’s board of directors authorized the repurchase of up to $2 billion of
shares of the Company’s common stock. In January 2007, the board of directors authorized an
additional $3 billion of share repurchase capacity. Under these authorizations, repurchases may be
made from time to time in the open market, pursuant to preset trading plans meeting the requirements
of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise. The
authorizations do not have a stated expiration date. The timing and actual number of shares to be
repurchased in the future will depend on a variety of factors, including corporate and regulatory
200