Travelers 2010 Annual Report Download - page 223

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 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. 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 Savings Plan.
Treasury Stock
The Company’s board of directors has approved common share repurchase authorizations under
which repurchases may be made from time to time in the open market, pursuant to pre-set 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 financial position, earnings, catastrophe losses, capital requirements of the Company’s
operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities
(including mergers and acquisitions), market conditions and other factors. The following table
summarizes repurchase activity in 2010 and remaining repurchase capacity at December 31, 2010.
Number of Remaining capacity
shares Cost of shares Average price paid under share repurchase
Quarterly Period Ending purchased repurchased per share authorization
March 31, 2010 .............. 26,985,323 $1,400,047,070 $51.88 $5,109,655,637
June 30, 2010 ............... 27,961,897 1,400,173,784 50.07 3,709,481,853
September 30, 2010 ........... 11,828,725 600,056,933 50.73 3,109,424,920
December 31, 2010 ........... 28,948,317 1,600,031,383 55.27 1,509,393,537
Total .................... 95,724,262 $5,000,309,170 $52.24 $1,509,393,537
211