Summary
Mastercard Inc. (MA) filed an 8-K on June 2, 2010, detailing a significant step in its ongoing conversion program for Class B common stock. In the first week of the program, approximately 7.5 million shares of Class B stock were converted into Class A common stock on a one-for-one basis. This conversion marks a crucial milestone, as it reduced the aggregate ownership of Class B shares to below 15% of the combined Class A and Class B outstanding shares. As a direct consequence of this reduction, all outstanding shares of Class M common stock have been automatically retired and are no longer available for issuance. This event has important implications for corporate governance, as Class M shareholders previously held rights to elect directors and approve significant corporate actions. Mastercard plans to propose changes to its governance arrangements, which will be detailed in its September 2010 proxy statement.
Key Highlights
- 1Approximately 7.5 million shares of Class B common stock were converted to Class A common stock in the first week of the conversion program.
- 2The conversion occurred on a one-for-one basis.
- 3Following the conversion, Class B shares now represent 9.6% of the aggregate outstanding Class A and Class B shares, falling below the 15% threshold.
- 4All outstanding Class M common stock has been automatically transferred to the company and retired due to the Class B ownership threshold being met.
- 5The company will no longer have the authority to issue additional shares of Class M common stock.
- 6Class M shareholders previously had rights to elect up to three directors and approve specified corporate actions.
- 7Mastercard intends to propose changes to its corporate governance arrangements, to be detailed in the September 2010 proxy statement.