Travelers 2008 Annual Report Download - page 227

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. SHAREHOLDERS’ EQUITY AND DIVIDEND AVAILABILITY
Preferred Stock
The Company’s preferred shareholders’ equity represents the par value of preferred shares
outstanding that the Company assumed in the merger related to The St. Paul Companies, Inc. Stock
Ownership Plan (SOP) Trust which was subsequently merged into The Travelers 401(k) Savings Plan
(the 401(k) Savings Plan). The SOP Trust may at any time convert any or all of the preferred shares
into shares of the Company’s common stock at a rate of eight shares of common stock for each
preferred share. The board of directors has reserved a sufficient number of authorized common shares
to satisfy the conversion of all preferred shares issued to the SOP Trust and the redemption of
preferred shares to meet employee distribution requirements. Upon the redemption of preferred
shares, the Company will issue shares of common stock to the trust to fulfill the redemption
obligations. See note 13. Holders of the preferred stock have a preference upon liquidation, dissolution
or winding up of the Company of $100 per share.
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.
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. In January 2008, the Company’s board of directors
approved a $5 billion increase to the share repurchase authorization. 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 requirements, price, catastrophe losses and other market conditions. The
following table summarizes repurchase activity in 2008 and remaining repurchase capacity at
December 31, 2008.
Number of Remaining capacity
shares Cost of shares Average price paid under share repurchase
Quarterly Period Ending purchased repurchased per share authorization
March 31, 2008 .............. 20,831,251 $1,000,332,704 $48.02 $4,931,853,967
June 30, 2008 ............... 15,287,182 750,014,344 49.06 4,181,839,623
September 30, 2008 ........... 6,197,529 271,984,984 43.89 3,909,854,639
December 31, 2008 ........... 2,712,550 99,997,100 36.86 3,809,857,539
Total .................... 45,028,512 $2,122,329,132 $47.13 $3,809,857,539
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