Prudential 2003 Annual Report Download - page 141

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
12. STOCKHOLDERS’ EQUITY (continued)
Financial chooses not to pay dividends on the Class B Stock in an aggregate amount at least equal to the lesser of the
CB Distributable Cash Flow or the Target Dividend Amount for that period, then cash dividends cannot be paid on the
Common Stock with respect to such period.
Stock Conversion Rights of the Class B Stock
Prudential Financial may, at its option, at any time, exchange all outstanding shares of Class B Stock into such
number of shares of Common Stock as have an aggregate average market value equal to 120% of the appraised fair
market value of the outstanding shares of Class B Stock.
Holders of Class B Stock will be permitted to convert their shares of Class B Stock into such number of shares of
Common Stock as have an aggregate average market value equal to 100% of the appraised fair market value of the
outstanding shares of Class B Stock (1) in the holder’s sole discretion, in the year 2016 or at any time thereafter, and
(2) at any time in the event that (a) the Class B Stock will no longer be treated as equity of Prudential Financial for
federal income tax purposes or (b) the New Jersey Department of Banking and Insurance amends, alters, changes or
modifies the regulation of the Closed Block, the Closed Block Business, the Class B Stock or the IHC debt in a manner
that materially adversely affects the CB Distributable Cash Flow; provided, however, that in no event may a holder of
Class B Stock convert shares of Class B Stock to the extent such holder immediately upon such conversion, together
with its affiliates, would be the beneficial owner (as defined under the Securities Exchange Act of 1934) of in excess of
9.9% of the total outstanding voting power of Prudential Financial’s voting securities. In the event a holder of shares of
Class B Stock requests to convert shares pursuant to clause (2)(a) in the preceding sentence, Prudential Financial may
elect, instead of effecting such conversion, to increase the Target Dividend Amount to $12.6875 per share per annum
retroactively from the time of issuance of the Class B Stock.
Treasury Stock
In January 2002, Prudential Financial’s Board of Directors authorized a program to repurchase up to $1 billion of
Prudential Financial’s outstanding Common Stock. During 2002, the Company acquired 26,027,069 shares of Common
Stock at a total cost of $800 million, including 1,696,929 shares at a cost of $56 million that were immediately reissued
to the Prudential Securities Incorporated (“Prudential Securities”) deferred compensation program referred to in
Note 14.
In March 2003, Prudential Financial’s Board of Directors authorized a new stock repurchase program that
authorized Prudential Financial to purchase up to an additional $1 billion of its outstanding Common Stock. During
2003, the Company acquired 29,076,809 shares of Common Stock at a total cost of $1.0 billion.
In March 2004, Prudential Financial’s Board of Directors authorized a new stock repurchase program under which
the Company is authorized to purchase up to $1.5 billion of its outstanding Common Stock in 2004. This stock
repurchase program supersedes all previous repurchase programs. The timing and amount of repurchases are
determined by management based on market conditions and other considerations, and such repurchases may be
effected in the open market or throughout negotiated transactions.
Treasury stock is accounted for at cost. When treasury stock is reissued, the treasury stock balance is reduced by
the average cost per share.
Prudential Financial 2003 Annual Report 139