Travelers 2009 Annual Report Download - page 231

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 related to a legacy 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, consisting of
1.745 billion shares of voting common stock and five million undesignated shares. The Company’s
articles of incorporation allow the board of directors to establish, from the undesignated shares, one or
more classes and series of shares, and to further designate the type of shares and terms thereof. In
1990, the board designated 1.45 million shares as Series B Convertible Preferred Stock in connection
with its 401(k) Savings Plan.
Treasury Stock
Since May 2006, the Company’s board of directors has approved four common share repurchase
authorizations, for a cumulative authorization of up to $16 billion of shares of the Company’s common
stock. Under these authorizations, the most recent of which totaled $6 billion and was approved by the
board of directors in October 2009, 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 the Company’s earnings, corporate and regulatory requirements, share
price, catastrophe losses, strategic initiatives and other market conditions. The following table
summarizes repurchase activity in 2009 under these authorizations and remaining repurchase capacity at
December 31, 2009.
Number of Remaining capacity
shares Cost of shares Average price paid under share repurchase
Quarterly Period Ending purchased repurchased per share authorization
March 31, 2009 . . . . . . . . . . . . . . — $ — $ — $3,809,857,539
June 30, 2009 . . . . . . . . . . . . . . . 18,450,066 750,030,914 40.65 3,059,826,625
September 30, 2009 . . . . . . . . . . . 20,826,981 1,000,035,439 48.02 2,059,791,186
December 31, 2009 . . . . . . . . . . . 30,095,982 1,550,088,479 51.50 6,509,702,707
Total . . . . . . . . . . . . . . . . . . . . 69,373,029 $3,300,154,832 $47.57 $6,509,702,707
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