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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☒
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
Or 
☐
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number: 001-32877
mc_logononamea02.jpg
Mastercard Incorporated
(Exact name of registrant as specified in its charter)
Delaware 13-4172551
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
2000 Purchase Street 10577
Purchase, NY (Zip Code)
(Address of principal executive offices)
(914) 249-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange of which registered
Class A Common Stock, par value $0.0001 per share
MA
New York Stock Exchange
2.1% Notes due 2027
MA27
New York Stock Exchange
1.0% Notes due 2029
MA29A
New York Stock Exchange
2.5% Notes due 2030
MA30
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)
Yes
☒
No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.
 ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)
 Yes ☐ No ☒
As of April 24, 2023, there were 940,404,217 shares outstanding of the registrant’s Class A common stock, par value $0.0001 per share; and 7,448,384 shares outstanding of the registrant’s Class B common stock, par value $0.0001 per share.


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MASTERCARD INCORPORATED FORM 10-Q
TABLE OF CONTENTS
PART I
PART II
-

2 MASTERCARD MARCH 31, 2023 FORM 10-Q

In this Report on Form 10-Q (“Report”), references to the “Company,” “Mastercard,” “we,” “us” or “our” refer to the business conducted by Mastercard Incorporated and its consolidated subsidiaries, including our operating subsidiary, Mastercard International Incorporated, and to the Mastercard brand.
Forward-Looking Statements
This Report contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. When used in this Report, the words “believe”, “expect”, “could”, “may”, “would”, “will”, “trend” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to the Company’s future prospects, developments and business strategies.
Many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors could cause our actual results to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf, including, but not limited to, the following factors:
•regulation directly related to the payments industry (including regulatory, legislative and litigation activity with respect to interchange rates and surcharging)
•the impact of preferential or protective government actions
•regulation of privacy, data, security and the digital economy
•regulation that directly or indirectly applies to us based on our participation in the global payments industry (including anti-money laundering, counter financing of terrorism, economic sanctions and anti-corruption, account-based payments systems, and issuer and acquirer practice regulation)
•the impact of changes in tax laws, as well as regulations and interpretations of such laws or challenges to our tax positions
•potential or incurred liability and limitations on business related to any litigation or litigation settlements
•the impact of competition in the global payments industry (including disintermediation and pricing pressure)
•the challenges relating to rapid technological developments and changes
•the challenges relating to operating a real-time account-based payments system and to working with new customers and end users
•the impact of information security incidents, account data breaches or service disruptions
•issues related to our relationships with our stakeholders (including loss of substantial business from significant customers, competitor relationships with our customers, consolidation amongst our customers, merchants’ continued focus on acceptance costs and unique risks from our work with governments)
•the impact of global economic, political, financial and societal events and conditions, including adverse currency fluctuations and foreign exchange controls as well as events and resulting actions related to the Russian invasion of Ukraine
•the impact of the global COVID-19 pandemic and measures taken in response
•reputational impact, including impact related to brand perception and lack of visibility of our brands in products and services
•the impact of environmental, social and governance matters and related stakeholder reaction
•the inability to attract and retain a highly qualified and diverse workforce, or maintain our corporate culture
•issues related to acquisition integration, strategic investments and entry into new businesses
•exposure to loss or illiquidity due to our role as guarantor and other contractual obligations
•issues related to our Class A common stock and corporate governance structure
Please see a complete discussion of these risk factors in Part I, Item 1A - Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. We caution you that the important factors referenced above may not contain all of the factors that are important to you. Our forward-looking statements speak only as of the date of this Report or as of the date they are made, and we undertake no obligation to update our forward-looking statements.

MASTERCARD MARCH 31, 2023 FORM 10-Q 3

PART I


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Item 1. Consolidated financial statements (unaudited)
Mastercard Incorporated
Index to consolidated financial statements (unaudited)
Page
Consolidated Statement of Operations — Three Months Ended March 31, 2023 and 2022
Consolidated Statement of Comprehensive Income — Three Months Ended March 31, 2023 and 2022
Consolidated Balance Sheet — March 31, 2023 and December 31, 2022
Consolidated Statement of Changes in Equity — Three Months Ended March 31, 2023 and 2022
Consolidated Statement of Cash Flows — Three Months Ended March 31, 2023 and 2022

MASTERCARD MARCH 31, 2023 FORM 10-Q 5

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Operations (Unaudited)
  Three Months Ended March 31,
  2023 2022
  (in millions, except per share data)
Net Revenue $ 5,748  $ 5,167 
Operating Expenses:
General and administrative 2,043  1,844 
Advertising and marketing 167  181 
Depreciation and amortization 191  192 
Provision for litigation 211  — 
Total operating expenses 2,612  2,217 
Operating income 3,136  2,950 
Other Income (Expense):
Investment income 55  5 
Gains (losses) on equity investments, net (212) (76)
Interest expense (132) (110)
Other income (expense), net 6  4 
Total other income (expense) (283) (177)
Income before income taxes 2,853  2,773 
Income tax expense 492  142 
Net Income $ 2,361  $ 2,631 
Basic Earnings per Share $ 2.48  $ 2.69 
Basic weighted-average shares outstanding 953  977 
Diluted Earnings per Share $ 2.47  $ 2.68 
Diluted weighted-average shares outstanding 956  981 

The accompanying notes are an integral part of these consolidated financial statements.

6 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Comprehensive Income (Unaudited)
  Three Months Ended March 31,
  2023 2022
  (in millions)
Net Income $ 2,361  $ 2,631 
Other comprehensive income (loss):
Foreign currency translation adjustments 94  (64)
Income tax effect (14) 12 
Foreign currency translation adjustments, net of income tax effect 80  (52)
Translation adjustments on net investment hedges (74) 86 
Income tax effect 17  (19)
Translation adjustments on net investment hedges, net of income tax effect (57) 67 
Cash flow hedges (10) 1 
Income tax effect —  — 
Reclassification adjustments for cash flow hedges 8  (5)
Income tax effect 1  1 
Cash flow hedges, net of income tax effect (1) (3)
Investment securities available-for-sale
 2  (2)
Income tax effect —  1 
Investment securities available-for-sale, net of income tax effect 2  (1)
Other comprehensive income (loss), net of income tax effect 24  11 
Comprehensive Income $ 2,385  $ 2,642 

The accompanying notes are an integral part of these consolidated financial statements.


MASTERCARD MARCH 31, 2023 FORM 10-Q 7

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheet (Unaudited)
March 31, 2023 December 31, 2022
  (in millions, except per share data)
Assets
Current assets:
Cash and cash equivalents $ 6,566  $ 7,008 
Restricted cash for litigation settlement 596  589 
Investments 402  400 
Accounts receivable 3,511  3,425 
Settlement assets 1,236  1,270 
Restricted security deposits held for customers 1,608  1,568 
Prepaid expenses and other current assets 2,501  2,346 
Total current assets 16,420  16,606 
Property, equipment and right-of-use assets, net of accumulated depreciation and amortization
of $2,002 and $1,904, respectively
 2,006  2,006 
Deferred income taxes 1,267  1,151 
Goodwill 7,575  7,522 
Other intangible assets, net of accumulated amortization of $2,018 and $1,960, respectively
 4,027  3,859 
Other assets 7,641  7,580 
Total Assets $ 38,936  $ 38,724 
Liabilities, Redeemable Non-controlling Interests and Equity
Current liabilities:
Accounts payable $ 735  $ 926 
Settlement obligations 870  1,111 
Restricted security deposits held for customers 1,608  1,568 
Accrued litigation 1,107  1,094 
Accrued expenses 7,310  7,801 
Short-term debt 276  274 
Other current liabilities 1,745  1,397 
Total current liabilities 13,651  14,171 
Long-term debt 15,292  13,749 
Deferred income taxes 389  393 
Other liabilities 4,197  4,034 
Total Liabilities 33,529  32,347 
Commitments and Contingencies
Redeemable Non-controlling Interests 21  21 
Stockholders’ Equity
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,400 and 1,399 shares issued and 941 and 948 shares outstanding, respectively
 —  — 
Class B common stock, $0.0001 par value; authorized 1,200 shares, 7 and 8 shares issued and outstanding, respectively
 —  — 
Additional paid-in-capital 5,376  5,298 
Class A treasury stock, at cost, 459 and 451 shares, respectively
 (54,241) (51,354)
Retained earnings 55,424  53,607 
Accumulated other comprehensive income (loss) (1,229) (1,253)
Mastercard Incorporated Stockholders' Equity 5,330  6,298 
Non-controlling interests 56  58 
Total Equity 5,386  6,356 
Total Liabilities, Redeemable Non-controlling Interests and Equity $ 38,936  $ 38,724 

The accompanying notes are an integral part of these consolidated financial statements.

8 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Changes in Equity (Unaudited)
Three Months Ended March 31, 2023
Stockholders’ Equity
   
Common Stock		 Additional
Paid-In
Capital		 Class A
Treasury
Stock		 Retained
Earnings 		Accumulated
Other
Comprehensive
Income (Loss)		 Mastercard Incorporated Stockholders' Equity Non-
Controlling
Interests		 Total
Equity
  Class A Class B
  (in millions)
Balance at December 31, 2022 $ —  $ —  $ 5,298  $ (51,354) $ 53,607  $ (1,253) $ 6,298  $ 58  $ 6,356 
Net income —  —  —  —  2,361  —  2,361  —  2,361 
Activity related to non-controlling interests —  —  —  —  —  —  —  (2) (2)
Redeemable non-controlling interest adjustments —  —  —  —  (3) —  (3) —  (3)
Other comprehensive income (loss) —  —  —  —  —  24  24  —  24 
Dividends —  —  —  —  (541) —  (541) —  (541)
Purchases of treasury stock —  —  —  (2,894) —  —  (2,894) —  (2,894)
Share-based payments —  —  78  7  —  —  85  —  85 
Balance at March 31, 2023 $ —  $ —  $ 5,376  $ (54,241) $ 55,424  $ (1,229) $ 5,330  $ 56  $ 5,386 

Three Months Ended March 31, 2022
Stockholders’ Equity
   
Common Stock		 Additional
Paid-In
Capital		 Class A
Treasury
Stock		 Retained
Earnings 		Accumulated
Other
Comprehensive
Income (Loss)		 Mastercard Incorporated Stockholders' Equity Non-
Controlling
Interests		 Total
Equity
  Class A Class B
  (in millions)
Balance at December 31, 2021 $ —  $ —  $ 5,061  $ (42,588) $ 45,648  $ (809) $ 7,312  $ 71  $ 7,383 
Net income —  —  —  —  2,631  —  2,631  —  2,631 
Activity related to non-controlling interests —  —  —  —  —  —  —  (3) (3)
Redeemable non-controlling interest adjustments —  —  —  —  (2) —  (2) —  (2)
Other comprehensive income (loss) —  —  —  —  —  11  11  —  11 
Dividends —  —  —  —  (477) —  (477) —  (477)
Purchases of treasury stock —  —  —  (2,411) —  —  (2,411) —  (2,411)
Share-based payments —  —  (35) 5  —  —  (30) —  (30)
Balance at March 31, 2022 $ —  $ —  $ 5,026  $ (44,994) $ 47,800  $ (798) $ 7,034  $ 68  $ 7,102 

The accompanying notes are an integral part of these consolidated financial statements.

MASTERCARD MARCH 31, 2023 FORM 10-Q 9

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Cash Flows (Unaudited)
  Three Months Ended March 31,
  2023 2022
  (in millions)
Operating Activities
Net income $ 2,361  $ 2,631 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of customer and merchant incentives 378  430 
Depreciation and amortization 191  192 
(Gains) losses on equity investments, net 212  76 
Share-based compensation 108  74 
Deferred income taxes (129) (320)
Other 2  5 
Changes in operating assets and liabilities:
Accounts receivable (38) 134 
Settlement assets 35  218 
Prepaid expenses (761) (441)
Accrued litigation and legal settlements 9  (43)
Restricted security deposits held for customers 40  (144)
Accounts payable (184) (56)
Settlement obligations (241) (366)
Accrued expenses (506) (746)
Net change in other assets and liabilities 442  138 
Net cash provided by operating activities 1,919  1,782 
Investing Activities
Purchases of investment securities available-for-sale (50) (58)
Purchases of investments held-to-maturity (26) (37)
Proceeds from sales of investment securities available-for-sale 4  8 
Proceeds from maturities of investment securities available-for-sale 51  70 
Proceeds from maturities of investments held-to-maturity 24  43 
Purchases of property and equipment (110) (146)
Capitalized software (242) (148)
Purchases of equity investments (22) (24)
Proceeds from sales of equity investments 44  — 
Other investing activities (70) 5 
Net cash used in investing activities (397) (287)
Financing Activities
Purchases of treasury stock (2,878) (2,408)
Dividends paid (545) (479)
Proceeds from debt, net 1,489  843 
Tax withholdings related to share-based payments (76) (132)
Cash proceeds from exercise of stock options 53  28 
Other financing activities 2  (6)
Net cash used in financing activities (1,955) (2,154)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents 37  (28)
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents (396) (687)
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period 9,196  9,902 
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period $ 8,800  $ 9,215 
The accompanying notes are an integral part of these consolidated financial statements.

10 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes to consolidated financial statements (unaudited)
Note 1. Summary of Significant Accounting Policies
Organization
Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (“Mastercard International” and together with Mastercard Incorporated, “Mastercard” or the “Company”), is a technology company in the global payments industry. Mastercard connects consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide by enabling electronic forms of payment instead of cash and checks and making those payment transactions safe, simple, smart and accessible.
Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Mastercard and its majority-owned and controlled entities, including any variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Investments in VIEs for which the Company is not considered the primary beneficiary are not consolidated and are accounted for as marketable, equity method or measurement alternative method investments and recorded in other assets on the consolidated balance sheet. At March 31, 2023 and December 31, 2022, there were no significant VIEs which required consolidation and the investments were not considered material to the consolidated financial statements. The Company consolidates acquisitions as of the date on which the Company has obtained a controlling financial interest. Intercompany transactions and balances have been eliminated in consolidation. During the fourth quarter of 2022, the Company updated its disaggregated net revenue presentation by category and geography to reflect the nature of its payment services and to align such information with the way in which management views its categories of net revenue. Prior period amounts have been reclassified to conform to the 2022 presentation. The reclassification had no impact on previously reported total net revenue, operating income or net income. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).
The balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements as of December 31, 2022. The consolidated financial statements for the three months ended March 31, 2023 and 2022 and as of March 31, 2023 are unaudited, and in the opinion of management, include all normal recurring adjustments that are necessary to present fairly the results for interim periods. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year.
The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q. Reference should be made to Mastercard’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional disclosures, including a summary of the Company’s significant accounting policies.
Note 2. Acquisitions
In April 2022, Mastercard acquired 100% equity interest in Dynamic Yield LTD. As of March 31, 2023, the Company finalized the purchase price accounting of $325 million for this acquisition. For the preliminary estimated fair value of the purchase price allocation as of the acquisition date, refer to Note 2 (Acquisitions) to the consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

MASTERCARD MARCH 31, 2023 FORM 10-Q 11

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Revenue
The Company’s disaggregated net revenue by category and geographic region were as follows:
Three Months Ended March 31,
2023 2022
(in millions)
Net revenue by category:
Payment network $ 3,650  $ 3,399 
Value-added services and solutions 2,098  1,768 
Net revenue $ 5,748  $ 5,167 
Net revenue by geographic region:
North American Markets $ 1,896  $ 1,730 
International Markets 3,852  3,437 
Net revenue $ 5,748  $ 5,167 
The Company’s customers are generally billed weekly, however, the frequency is dependent upon the nature of the performance obligation and the underlying contractual terms. The Company does not typically offer extended payment terms to customers. The following table sets forth the location of the amounts recognized on the consolidated balance sheet from contracts with customers:
March 31,
2023		 December 31,
2022
(in millions)
Receivables from contracts with customers
Accounts receivable
 $ 3,271  $ 3,213 
Contract assets
Prepaid expenses and other current assets 142  118 
Other assets 511  442 
Deferred revenue 1
Other current liabilities 634  434 
Other liabilities 266  248 
1    Revenue recognized from performance obligations satisfied during the three months ended March 31, 2023 was $371 million.
Note 4. Earnings Per Share
The components of basic and diluted earnings per share (“EPS”) for common shares were as follows:
Three Months Ended March 31,
2023 2022
(in millions, except per share data)
Numerator
Net income $ 2,361  $ 2,631 
Denominator
Basic weighted-average shares outstanding 953  977 
Dilutive stock options and stock units 3  4 
Diluted weighted-average shares outstanding 1
 956  981 
Earnings per Share
Basic $ 2.48  $ 2.69 
Diluted $ 2.47  $ 2.68 
Note: Table may not sum due to rounding.
1    For the periods presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards.

12 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5. Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents reported on the consolidated balance sheet that total to the amounts shown on the consolidated statement of cash flows.
March 31,
2023		 December 31,
2022
(in millions)
Cash and cash equivalents $ 6,566  $ 7,008 
Restricted cash and restricted cash equivalents
Restricted cash for litigation settlement 596  589 
Restricted security deposits held for customers 1,608  1,568 
Prepaid expenses and other current assets 30  31 
Cash, cash equivalents, restricted cash and restricted cash equivalents $ 8,800  $ 9,196 
Note 6. Investments
The Company’s investments on the consolidated balance sheet include both available-for-sale and held-to-maturity debt securities (see Investments section below). The Company classifies its investments in equity securities of publicly traded and privately held companies within other assets on the consolidated balance sheet (see Equity Investments section below).
Investments
Investments on the consolidated balance sheet consisted of the following:
March 31,
2023		 December 31,
2022
(in millions)
Available-for-sale securities 1
 $ 271  $ 272 
Held-to-maturity securities 2
 131  128 
Total investments $ 402  $ 400 
1See Available-for-Sale Securities section below for further detail.
2The cost of these securities approximates fair value.
Available-for-Sale Securities
The major classes of the Company’s available-for-sale investment securities and their respective amortized cost basis and fair values were as follows:
  March 31, 2023 December 31, 2022
  Amortized
Cost		 Gross
Unrealized
Gain		 Gross
Unrealized
Loss		 Fair
Value		 Amortized
Cost		 Gross
Unrealized
Gain		 Gross
Unrealized
Loss		 Fair
Value
(in millions)
Government and agency securities $ 96  $ —  $ (1) $ 95  $ 91  $ —  $ (2) $ 89 
Corporate securities 179  —  (3) 176  187  —  (4) 183 
Total $ 275  $ —  $ (4) $ 271  $ 278  $ —  $ (6) $ 272 
The Company’s government and agency securities include U.S. government bonds, U.S. government sponsored agency bonds and foreign government bonds which are denominated in the national currency of the issuing country. Corporate available-for-sale investment securities held at March 31, 2023 and December 31, 2022 primarily carried a credit rating of A- or better. Corporate securities are comprised of commercial paper and corporate bonds. Unrealized gains and losses are recorded as a separate component of other comprehensive income (loss) on the consolidated statement of comprehensive income.

MASTERCARD MARCH 31, 2023 FORM 10-Q 13

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The maturity distribution based on the contractual terms of the Company’s available-for-sale investment securities at March 31, 2023 was as follows:
 
  Amortized Cost Fair Value
  (in millions)
Due within 1 year $ 156  $ 155 
Due after 1 year through 5 years 119  116 
Total $ 275  $ 271 
Investment income on the consolidated statement of operations primarily consists of interest income generated from cash, cash equivalents, time deposits and available-for-sale investment securities, as well as realized gains and losses on the Company’s investment securities. The realized gains and losses from the sales of available-for-sale securities for the three months ended March 31, 2023 and 2022 were not material.
Equity Investments
Included in other assets on the consolidated balance sheet are equity investments with readily determinable fair values (“Marketable securities”) and equity investments without readily determinable fair values (“Nonmarketable securities”). Marketable securities are equity interests in publicly traded companies and are measured using unadjusted quoted prices in their respective active markets. Nonmarketable securities that do not qualify for equity method accounting are measured at cost, less any impairment and adjusted for changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer (“Measurement alternative”).
The following table is a summary of the activity related to the Company’s equity investments:
  Balance at December 31, 2022 Purchases Sales
Changes in Fair Value 1
Other 2
 Balance at March 31, 2023
(in millions)
Marketable securities $ 399  $ —  $ —  $ (66) $ 3  $ 336 
Nonmarketable securities 1,331  22  (44) (146) 4  1,167 
Total equity investments $ 1,730  $ 22  $ (44) $ (212) $ 7  $ 1,503 
1Recorded in gains (losses) on equity investments, net on the consolidated statement of operations.
2Includes translational impact of currency.
The following table sets forth the components of the Company’s Nonmarketable securities:
March 31,
2023		 December 31,
2022
(in millions)
Measurement alternative
 $ 958  $ 1,087 
Equity method
 209  244 
Total Nonmarketable securities $ 1,167  $ 1,331 
The following table summarizes the total carrying value of the Company’s Measurement alternative investments, including cumulative unrealized gains and losses through March 31, 2023:
(in millions)
Initial cost basis
 $ 504 
Cumulative adjustments 1:
Upward adjustments 620 
Downward adjustments (including impairment) (166)
Carrying amount, end of period $ 958 
1 Includes immaterial translational impact of currency.

14 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the unrealized gains and losses included in the carrying value of the Company’s Measurement alternative investments and Marketable securities for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31,
2023 2022
(in millions)
Measurement alternative investments:
Upward adjustments $ —  $ 86 
Downward adjustments (including impairment) (133) — 
Marketable securities:
Unrealized gains (losses), net (66) (162)
Note 7. Fair Value Measurements
The Company classifies its fair value measurements of financial instruments into a three-level hierarchy (the “Valuation Hierarchy”). Financial instruments are categorized for fair value measurement purposes as recurring or non-recurring in nature.

MASTERCARD MARCH 31, 2023 FORM 10-Q 15

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Instruments - Recurring Measurements
The distribution of the Company’s financial instruments measured at fair value on a recurring basis within the Valuation Hierarchy were as follows:
  March 31, 2023 December 31, 2022
  Quoted Prices
in Active
Markets
(Level 1)		 Significant
Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Total Quoted Prices
in Active
Markets
(Level 1)		 Significant
Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Total
(in millions)
Assets
Investment securities available-for-sale 1:
Government and agency securities $ 31  $ 64  $ —  $ 95  $ 35  $ 54  $ —  $ 89 
Corporate securities —  176  —  176  —  183  —  183 
Derivative instruments 2:
Foreign exchange contracts —  47  —  47  —  108  —  108 
Marketable securities 3:
Equity securities 336  —  —  336  399  —  —  399 
Deferred compensation plan 4:
Deferred compensation assets 81  —  —  81  74  —  —  74 
Liabilities
Derivative instruments 2:
Foreign exchange contracts $ —  $ 43  $ —  $ 43  $ —  $ 21  $ —  $ 21 
Interest rate contracts —  89  —  89  —  105  —  105 
Deferred compensation plan 5:
Deferred compensation liabilities 80  —  —  80  73  —  —  73 
1The Company’s U.S. government securities are classified within Level 1 of the Valuation Hierarchy as the fair values are based on unadjusted quoted prices for identical assets in active markets. The fair value of the Company’s available-for-sale non-U.S. government and agency securities and corporate securities are based on observable inputs such as quoted prices, benchmark yields and issuer spreads for similar assets in active markets and are therefore included in Level 2 of the Valuation Hierarchy.
2The Company’s foreign exchange and interest rate derivative asset and liability contracts have been classified within Level 2 of the Valuation Hierarchy as the fair value is based on observable inputs such as broker quotes for similar derivative instruments. See Note 17 (Derivative and Hedging Instruments) for further details.
3The Company’s Marketable securities are publicly held and classified within Level 1 of the Valuation Hierarchy as the fair values are based on unadjusted quoted prices in their respective active markets.
4The Company has a nonqualified deferred compensation plan where assets are invested primarily in mutual funds held in a rabbi trust, which is restricted for payments to participants of the plan. The Company has elected to use the fair value option for these mutual funds, which are measured using quoted prices of identical instruments in active markets and are included in prepaid expenses and other current assets on the consolidated balance sheet.
5The deferred compensation liabilities are measured at fair value based on the quoted prices of identical instruments to the investment vehicles selected by the participants. These are included in other liabilities on the consolidated balance sheet.
Financial Instruments - Nonrecurring Measurements
Nonmarketable Securities
The Company’s Nonmarketable securities are recorded at fair value on a nonrecurring basis in periods after initial recognition under the equity method or measurement alternative method. Nonmarketable securities are classified within Level 3 of the Valuation Hierarchy due to the absence of quoted market prices, the inherent lack of liquidity and unobservable inputs used to measure fair value that require management’s judgment. The Company uses discounted cash flows and market assumptions to estimate the fair value of its Nonmarketable securities when certain events or circumstances indicate that impairment may exist. See Note 6 (Investments) for further details.

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Debt
The Company estimates the fair value of its debt based on either market quotes or observable market data. Debt is classified as Level 2 of the Valuation Hierarchy as it is generally not traded in active markets. At March 31, 2023, the carrying value and fair value of debt was $15.6 billion and $14.6 billion, respectively. At December 31, 2022, the carrying value and fair value of debt was $14.0 billion and $12.7 billion, respectively. See Note 10 (Debt) for further details.
Other Financial Instruments
Certain other financial instruments are carried on the consolidated balance sheet at cost or amortized cost basis, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, restricted cash, time deposits, accounts receivable, settlement assets, restricted security deposits held for customers, accounts payable, settlement obligations and other accrued liabilities.
Note 8. Prepaid Expenses and Other Assets
Prepaid expenses and other current assets consisted of the following:
March 31,
2023		 December 31,
2022
(in millions)
Customer and merchant incentives $ 1,448  $ 1,392 
Prepaid income taxes 25  34 
Other 1,028  920 
Total prepaid expenses and other current assets $ 2,501  $ 2,346 
Other assets consisted of the following:
March 31,
2023		 December 31,
2022
(in millions)
Customer and merchant incentives $ 4,715  $ 4,578 
Equity investments 1,503  1,730 
Income taxes receivable 691  633 
Other 732  639 
Total other assets $ 7,641  $ 7,580 
Customer and merchant incentives represent payments made to customers and merchants under business agreements. Payments made directly related to entering into such an agreement are generally capitalized and amortized over the life of the agreement.
Note 9. Accrued Expenses and Accrued Litigation
Accrued expenses consisted of the following:
March 31,
2023		 December 31,
2022
  (in millions)
Customer and merchant incentives $ 5,619  $ 5,600 
Personnel costs 589  1,322 
Income and other taxes 588  279 
Other 514  600 
Total accrued expenses $ 7,310  $ 7,801 
Customer and merchant incentives represent amounts to be paid to customers under business agreements. As of March 31, 2023 and December 31, 2022, long-term customer and merchant incentives included in other liabilities were $2,433 million and $2,293 million, respectively.
As of March 31, 2023 and December 31, 2022, the Company’s provision for litigation was $1,107 million and $1,094 million, respectively. These amounts are not included in the accrued expenses table above and are separately reported as accrued litigation on the consolidated balance sheet. See Note 15 (Legal and Regulatory Proceedings) for additional information regarding the Company’s accrued litigation.

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Debt
Debt consisted of the following:
March 31,
2023		 December 31,
2022		 Effective
Interest Rate
(in millions)
Senior Notes
2023 USD Notes 4.875  % Senior Notes due March 2028 $ 750  $ —  5.003  %
4.850  % Senior Notes due March 2033 750  —  4.923  %
2022 EUR Notes 1
 1.000  % Senior Notes due February 2029 815  800  1.138  %
2021 USD Notes 2.000  % Senior Notes due November 2031 750  750  2.112  %
1.900  % Senior Notes due March 2031 600  600  1.981  %
2.950  % Senior Notes due March 2051 700  700  3.013  %
2020 USD Notes 3.300  % Senior Notes due March 2027 1,000  1,000  3.420  %
3.350  % Senior Notes due March 2030 1,500  1,500  3.430  %
3.850  % Senior Notes due March 2050 1,500  1,500  3.896  %
2019 USD Notes 2.950  % Senior Notes due June 2029 1,000  1,000  3.030  %
3.650  % Senior Notes due June 2049 1,000  1,000  3.689  %
2.000  % Senior Notes due March 2025 750  750  2.147  %
2018 USD Notes 3.500  % Senior Notes due February 2028 500  500  3.598  %
3.950  % Senior Notes due February 2048 500  500  3.990  %
2016 USD Notes 2.950  % Senior Notes due November 2026 750  750  3.044  %
3.800  % Senior Notes due November 2046 600  600  3.893  %
2015 EUR Notes 2
 2.100  % Senior Notes due December 2027 870  854  2.189  %
2.500  % Senior Notes due December 2030 163  160  2.562  %
2014 USD Notes 3.375  % Senior Notes due April 2024 1,000  1,000  3.484  %
Other Debt
2022 INR Term Loan 3
 8.640  % Term Loan due July 2023 277  275  9.090  %
15,775  14,239 
Less: Unamortized discount and debt issuance costs (118) (111)
Less: Cumulative hedge accounting fair value adjustments 4
 (89) (105)
Total debt outstanding 15,568  14,023 
Less: Short-term debt 5
 (276) (274)
Long-term debt $ 15,292  $ 13,749 
1 €750 million euro-denominated debt issued in February 2022.
2 €950 million euro-denominated debt remaining of the €1.650 billion issued in December 2015.
3 INR22.7 billion Indian rupee-denominated loan issued in July 2022.
4 The Company has an interest rate swap which is accounted for as a fair value hedge. See Note 17 (Derivative and Hedging Instruments) for additional information.
5 The INR Term Loan due July 2023 is classified as short-term debt on the consolidated balance sheet as of March 31, 2023 and December 31, 2022.
Senior Notes
In March 2023, the Company issued $750 million principal amount of notes due March 2028 and $750 million principal amount of notes due March 2033 (collectively the “2023 USD Notes”). The net proceeds from the issuance of the 2023 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $1.489 billion.

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Senior Notes described above are not subject to any financial covenants and may be redeemed in whole, or in part, at the Company’s option at any time for a specified make-whole amount. These notes are senior unsecured obligations and would rank equally with any future unsecured and unsubordinated indebtedness.
Indian Rupee (“INR”) Term Loan
In July 2022, the Company entered into an unsecured INR22.7 billion ($277 million as of March 31, 2023) term loan due July 2023 (the “2022 INR Term Loan”). The net proceeds of the 2022 INR Term Loan, after deducting issuance costs, were INR22.6 billion ($284 million as of the date of settlement).
In April 2023, the Company entered into an additional unsecured INR4.97 billion ($61 million as of the date of settlement) term loan, also due July 2023 (the “2023 INR Term Loan”). The net proceeds of the 2023 INR Term Loan, after deducting issuance costs, were INR4.96 billion ($61 million as of the date of settlement).
The Company obtained the INR Term Loans to serve as economic hedges to offset possible changes in the value of INR-denominated monetary assets due to foreign exchange fluctuations. The INR Term Loans are not subject to any financial covenants and they may be repaid in whole at the Company’s option at any time for a specified make-whole amount.
Note 11. Stockholders' Equity
Dividends
The Company declared quarterly cash dividends on its Class A and Class B common stock as summarized below: 
Three Months Ended March 31,
2023 2022
(in millions, except per share data)
Dividends declared per share $ 0.57  $ 0.49 
Total dividends declared $ 541  $ 477 
Common Stock Activity
The following table presents the changes in the Company’s outstanding Class A and Class B common stock:
Three Months Ended March 31,
2023 2022
  Outstanding Shares Outstanding Shares
  Class A Class B Class A Class B
(in millions)
Balance at beginning of period 948.4  7.6  972.1  7.8 
Purchases of treasury stock (8.0) —  (6.8) — 
Share-based payments 0.9  —  1.1  — 
Conversion of Class B to Class A common stock 0.1  (0.1) 0.1  (0.1)
Balance at end of period 941.4  7.5  966.5  7.7 

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In December 2022 and November 2021, the Company’s Board of Directors approved share repurchase programs of its Class A common stock authorizing the Company to repurchase up to $9.0 billion and $8.0 billion, respectively. The following table summarizes the Company’s share repurchases of its Class A common stock:
Three Months Ended March 31,
2023 2022
(in millions, except per share data)
Dollar-value of shares repurchased 1
 $ 2,878  $ 2,408 
Shares repurchased 8.0  6.8 
Average price paid per share $ 361.70  $ 355.13 
1The three months ended March 31, 2023 dollar-value of shares repurchased does not include a 1% excise tax on share repurchases that became effective January 1, 2023. The incremental tax is recorded in treasury stock on the consolidated balance sheet and is payable annually beginning in 2024.
As of March 31, 2023, the remaining authorization under the share repurchase programs approved by the Company’s Board of Directors was $9.3 billion.
Note 12. Accumulated Other Comprehensive Income (Loss)
The changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2023 and 2022 were as follows:
December 31, 2022 Increase / (Decrease) Reclassifications March 31, 2023
(in millions)
Foreign currency translation adjustments 1
 $ (1,414) $ 80  $ —  $ (1,334)
Translation adjustments on net investment hedges 2
 309  (57) —  252 
Cash flow hedges
Foreign exchange contracts 3
 (8) (10) 8  (10)
Interest rate contracts (123) —  1  (122)
Defined benefit pension and other postretirement plans (11) —  —  (11)
Investment securities available-for-sale (6) 2  —  (4)
Accumulated other comprehensive income (loss) $ (1,253) $ 15  $ 9  $ (1,229)
December 31, 2021 Increase / (Decrease) Reclassifications March 31, 2022
(in millions)
Foreign currency translation adjustments 1
 $ (739) $ (52) $ —  $ (791)
Translation adjustments on net investment hedges 2
 34  67  —  101 
Cash flow hedges
Foreign exchange contracts 3
 4  1  (5) — 
Interest rate contracts (128) —  1  (127)
Defined benefit pension and other postretirement plans 21  —  —  21 
Investment securities available-for-sale (1) (1) —  (2)
Accumulated other comprehensive income (loss) $ (809) $ 15  $ (4) $ (798)
1During the three months ended March 31, 2023, the decrease in the accumulated other comprehensive loss related to foreign currency translation adjustments was driven primarily by the appreciation of the euro and British pound against the U.S. dollar. During the three months ended March 31, 2022, the increase in the accumulated other comprehensive loss related to foreign currency translation adjustments was driven primarily by the depreciation of the euro and British pound against the U.S. dollar, partially offset by the appreciation of the Brazilian real against the U.S. dollar.
2During the three months ended March 31, 2023, the decrease in the accumulated other comprehensive gain related to the net investment hedges was driven by the appreciation of the euro against the U.S. dollar. During the three months ended March 31, 2022, the increase in the accumulated other comprehensive gain related to the net investment hedges was driven by the depreciation of the euro against the U.S. dollar. See Note 17 (Derivative and Hedging Instruments) for additional information.
3Certain foreign exchange derivative contracts are designated as cash flow hedging instruments. Gains and losses resulting from changes in the fair value of these contracts are deferred in accumulated other comprehensive income (loss) and subsequently reclassified to the consolidated statement of operations when the underlying hedged transactions impact earnings. See Note 17 (Derivative and Hedging Instruments) for additional information.

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Share-Based Payments
During the three months ended March 31, 2023, the Company granted the following awards under the Mastercard Incorporated 2006 Long Term Incentive Plan, amended and restated as of June 22, 2021 (the “LTIP”). The LTIP is a stockholder-approved plan that permits the grant of various types of equity awards to employees.
Grants in 2023 Weighted-Average
Grant-Date
Fair Value
(in millions) (per option/unit)
Non-qualified stock options 0.3 $ 123 
Restricted stock units 1.1 $ 349 
Performance stock units 0.2 $ 365 
The Company used the Black-Scholes option pricing model to determine the grant-date fair value of stock options and calculated the expected life and the expected volatility based on historical Mastercard information. The expected life of stock options granted in 2023 was estimated to be six years, while the expected volatility was determined to be 29.6%. These awards expire ten years from the date of grant and vest ratably over three years.
The fair value of restricted stock units (“RSUs”) is determined and fixed on the grant date based on the Company’s Class A common stock price, adjusted for the exclusion of dividend equivalents. For RSUs granted in 2023, the awards generally vest ratably over three years.
The Company used the Monte Carlo simulation valuation model to determine the grant-date fair value of performance stock units (“PSUs”) granted. PSUs vest after three years from the date of grant and are subject to a mandatory one-year deferral period, during which vested PSUs are eligible for dividend equivalents.
Compensation expense is recorded net of estimated forfeitures over the shorter of the vesting period or the date the individual becomes eligible to retire under the LTIP. The Company uses the straight-line method of attribution over the requisite service period for expensing equity awards.
Note 14. Income Taxes
The effective income tax rates were 17.2% and 5.1% for the three months ended March 31, 2023 and 2022, respectively. The higher effective income tax rate for the three months ended March 31, 2023, versus the comparable period in 2022, was primarily due to a prior year discrete tax benefit related to final U.S. tax regulations published in the first quarter of 2022, which resulted in a valuation allowance release of $333 million associated with the U.S. foreign tax credit carryforward deferred tax asset. Additionally, the U.K. statutory tax rate increase, effective in 2023, contributed to the higher effective income tax rate.
The Company is subject to tax in the United States, Belgium, Singapore, the United Kingdom and various other foreign jurisdictions, as well as state and local jurisdictions. Uncertain tax positions are reviewed on an ongoing basis and are adjusted after considering facts and circumstances, including progress of tax audits, developments in case law and closing of statutes of limitation. Within the next twelve months, the Company believes that the resolution of certain federal, foreign and state and local examinations is reasonably possible and that a change in estimate, reducing unrecognized tax benefits, may occur. While such a change may be significant, it is not possible to provide a range of the potential change until the examinations progress further or the related statutes of limitation expire. The Company has effectively settled its U.S. federal income tax obligations through 2014. With limited exception, the Company is no longer subject to state and local or foreign examinations by tax authorities for years before 2011.
Note 15. Legal and Regulatory Proceedings
Mastercard is a party to legal and regulatory proceedings with respect to a variety of matters in the ordinary course of business.  Some of these proceedings are based on complex claims involving substantial uncertainties and unascertainable damages.  Accordingly, except as discussed below, it is not possible to determine the probability of loss or estimate damages, and therefore, Mastercard has not established reserves for any of these proceedings. When the Company determines that a loss is both probable and reasonably estimable, Mastercard records a liability and discloses the amount of the liability if it is material. When a material loss contingency is only reasonably possible, Mastercard does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Unless otherwise stated below with respect to these matters, Mastercard cannot provide an estimate of the possible loss or range of loss based on one or more of the following reasons: (1) actual or potential plaintiffs have not claimed an amount of monetary damages or the amounts are unsupportable or exaggerated, (2) the matters are in early stages, (3) there is uncertainty as to the outcome of pending appeals or motions, (4) there are significant factual issues to be resolved, (5) the existence in many such proceedings of multiple defendants or potential defendants whose share of any potential financial responsibility has yet to be determined and/or (6) there are novel legal issues presented. Furthermore, except as identified with respect to the matters below, Mastercard does not believe that the outcome of any individual existing legal or regulatory proceeding to which it is a party will have a material adverse effect on its results of operations, financial condition and overall business. However, an adverse judgment or other outcome or settlement with

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
respect to any proceedings discussed below could result in fines or payments by Mastercard and/or could require Mastercard to change its business practices. In addition, an adverse outcome in a regulatory proceeding could lead to the filing of civil damage claims and possibly result in significant damage awards. Any of these events could have a material adverse effect on Mastercard’s results of operations, financial condition and overall business.
Interchange Litigation and Regulatory Proceedings
Mastercard’s interchange fees and other practices are subject to regulatory, legal review and/or challenges in a number of jurisdictions, including the proceedings described below. When taken as a whole, the resulting decisions, regulations and legislation with respect to interchange fees and acceptance practices may have a material adverse effect on the Company’s prospects for future growth and its overall results of operations, financial position and cash flows.
United States. In June 2005, the first of a series of complaints were filed on behalf of merchants (the majority of the complaints were styled as class actions, although a few complaints were filed on behalf of individual merchant plaintiffs) against Mastercard International, Visa U.S.A., Inc., Visa International Service Association and a number of financial institutions. Taken together, the claims in the complaints were generally brought under both Sections 1 and 2 of the Sherman Act, which prohibit monopolization and attempts or conspiracies to monopolize a particular industry, and some of these complaints contain unfair competition law claims under state law. The complaints allege, among other things, that Mastercard, Visa, and certain financial institutions conspired to set the price of interchange fees, enacted point of sale acceptance rules (including the “no surcharge” rule) in violation of antitrust laws and engaged in unlawful tying and bundling of certain products and services, resulting in merchants paying excessive costs for the acceptance of Mastercard and Visa credit and debit cards. The cases were consolidated for pre-trial proceedings in the U.S. District Court for the Eastern District of New York in MDL No. 1720. The plaintiffs filed a consolidated class action complaint seeking treble damages.
In July 2006, the group of purported merchant class plaintiffs filed a supplemental complaint alleging that Mastercard’s initial public offering of its Class A Common Stock in May 2006 (the “IPO”) and certain purported agreements entered into between Mastercard and financial institutions in connection with the IPO: (1) violate U.S. antitrust laws and (2) constituted a fraudulent conveyance because the financial institutions allegedly attempted to release, without adequate consideration, Mastercard’s right to assess them for Mastercard’s litigation liabilities. The class plaintiffs sought treble damages and injunctive relief including, but not limited to, an order reversing and unwinding the IPO.
In February 2011, Mastercard and Mastercard International entered into each of: (1) an omnibus judgment sharing and settlement sharing agreement with Visa Inc., Visa U.S.A. Inc. and Visa International Service Association and a number of financial institutions; and (2) a Mastercard settlement and judgment sharing agreement with a number of financial institutions.  The agreements provide for the apportionment of certain costs and liabilities which Mastercard, the Visa parties and the financial institutions may incur, jointly and/or severally, in the event of an adverse judgment or settlement of one or all of the merchant litigation cases. Among a number of scenarios addressed by the agreements, in the event of a global settlement involving the Visa parties, the financial institutions and Mastercard, Mastercard would pay 12% of the monetary portion of the settlement. In the event of a settlement involving only Mastercard and the financial institutions with respect to their issuance of Mastercard cards, Mastercard would pay 36% of the monetary portion of such settlement. 
In October 2012, the parties entered into a definitive settlement agreement with respect to the merchant class litigation (including with respect to the claims related to the IPO) and the defendants separately entered into a settlement agreement with the individual merchant plaintiffs. The settlements included cash payments that were apportioned among the defendants pursuant to the omnibus judgment sharing and settlement sharing agreement described above. Mastercard also agreed to provide class members with a short-term reduction in default credit interchange rates and to modify certain of its business practices, including its no surcharge rule. The court granted final approval of the settlement in December 2013, and objectors to the settlement appealed that decision to the U.S. Court of Appeals for the Second Circuit. In June 2016, the court of appeals vacated the class action certification, reversed the settlement approval and sent the case back to the district court for further proceedings. The court of appeals’ ruling was based primarily on whether the merchants were adequately represented by counsel in the settlement. As a result of the appellate court ruling, the district court divided the merchants’ claims into two separate classes - monetary damages claims (the “Damages Class”) and claims seeking changes to business practices (the “Rules Relief Class”). The court appointed separate counsel for each class.
In September 2018, the parties to the Damages Class litigation entered into a class settlement agreement to resolve the Damages Class claims. The time period during which Damages Class members were permitted to opt out of the class settlement agreement ended in July 2019 with merchants representing slightly more than 25% of the Damages Class interchange volume choosing to opt out of the settlement. The district court granted final approval of the settlement in December 2019, which was upheld by the appellate court in March 2023. The objectors to the settlement currently have the opportunity to petition the U.S. Supreme Court to hear an appeal of this order. Mastercard has commenced settlement negotiations with a number of the opt-out merchants and has reached settlements and/or agreements in principle to settle a number of these claims.
Separately, settlement negotiations with the Rules Relief Class are ongoing. Briefing on summary judgment motions in the Rules Relief Class and opt-out merchant cases was completed in December 2020. In September 2021, the district court granted the Rules Relief Class’s motion for class certification.

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2023 and December 31, 2022, Mastercard had accrued a liability of $1,094 million and $894 million, respectively, as a reserve for both the Damages Class litigation and the opt-out merchant cases. During the first quarter of 2023, Mastercard recorded an additional accrual of $211 million as a result of a change in estimate with respect to the claims of merchants who opted out of the Damages Class litigation. As of March 31, 2023 and December 31, 2022, Mastercard had $596 million and $589 million, respectively, in a qualified cash settlement fund related to the Damages Class litigation and classified as restricted cash on its consolidated balance sheet. The reserve as of March 31, 2023 for both the Damages Class litigation and the opt-out merchants represents Mastercard’s best estimate of its probable liabilities in these matters. The portion of the accrued liability relating to both the opt-out merchants and the Damages Class litigation settlement does not represent an estimate of a loss, if any, if the matters were litigated to a final outcome. Mastercard cannot estimate the potential liability if that were to occur.
Europe. Since May 2012, a number of United Kingdom (“U.K.”) merchants filed claims or threatened litigation against Mastercard seeking damages for excessive costs paid for acceptance of Mastercard credit and debit cards arising out of alleged anti-competitive conduct with respect to, among other things, Mastercard’s cross-border interchange fees and its U.K. and Ireland domestic interchange fees (the “U.K. Merchant claimants”). In addition, Mastercard, has faced similar filed or threatened litigation by merchants with respect to interchange rates in other countries in Europe (the “Pan-European Merchant claimants”). Mastercard has resolved a substantial amount of these damages claims through settlement or judgment. Following these settlements, approximately £0.6 billion (approximately $0.7 billion as of March 31, 2023) of unresolved damages claims remain.
Mastercard continues to litigate with the remaining U.K. and Pan-European Merchant claimants and it has submitted statements of defense disputing liability and damages claims. A number of those matters are now progressing with motion practice and discovery. In one of the actions involving multiple merchant plaintiff claims, the U.K. trial court in November 2021 denied the plaintiffs’ motion for summary judgment on certain liability issues. In October 2022, the appellate court rejected the plaintiffs’ appeal. In a separate matter filed in Belgium involving multiple merchants from the Czech Republic and Slovakia, the trial court held a hearing in June 2022 on liability issues, and the decision is pending.
During the third quarter of 2022, Mastercard and Visa were served with a proposed collective action complaint in the U.K. on behalf of merchants seeking damages for commercial card transactions and inter-regional consumer card transactions in both the U.K. and the European Union. The plaintiffs have claimed damages against Mastercard of approximately £0.5 billion (approximately $0.6 billion as of March 31, 2023). The court held a hearing on the plaintiffs’ collective action application in April 2023.
In September 2016, a proposed collective action was filed in the United Kingdom on behalf of U.K. consumers seeking damages for intra-EEA and domestic U.K. interchange fees that were allegedly passed on to consumers by merchants between 1992 and 2008. The complaint, which seeks to leverage the European Commission’s 2007 decision on intra-EEA interchange fees, claims damages in an amount that exceeds £14 billion (approximately $17 billion as of March 31, 2023). Following various hearings since July 2017 regarding collective action and scope, in August 2021, the trial court issued a decision in which it granted class certification to the plaintiffs but narrowed the scope of the class. In January 2023, the trial court held a hearing on Mastercard’s request to narrow the number of years of damages sought by the plaintiffs on statute of limitations grounds. The trial court has scheduled an additional hearing for July 2023 regarding Mastercard’s request to preclude the plaintiffs from seeking damages with respect to U.K. domestic interchange fees.
Mastercard has been named as a defendant in a proposed consumer collective action filed in Portugal on behalf of Portuguese consumers. The complaint, which seeks to leverage the 2019 resolution of the European Commission’s investigation of Mastercard’s central acquiring rules and interregional interchange fees, claims damages of approximately €0.4 billion (approximately $0.4 billion as of March 31, 2023) for interchange fees that were allegedly passed on to consumers by Portuguese merchants for a period of approximately 20 years. Mastercard has submitted a statement of defense that disputes both liability and damages.
In April 2023, the Serbian Competition Commission issued a Statement of Objections (“SO”) against Mastercard. The SO covers historic domestic interchange fees from 2013 to 2018. The SO seeks monetary fines and costs but no business practices changes.
Australia. In May 2022, the Australian Competition & Consumer Commission (“ACCC”) filed a complaint targeting certain agreements entered into by Mastercard and certain Australian merchants related to Mastercard’s debit program. The ACCC alleges that by entering into such agreements, Mastercard engaged in conduct with the purpose of substantially lessening competition in the supply of debit card acceptance services. The ACCC seeks both declaratory relief and monetary fines and costs. A hearing on liability issues has been scheduled for July 2024.
ATM Non-Discrimination Rule Surcharge Complaints
United States. In October 2011, a trade association of independent Automated Teller Machine (“ATM”) operators and 13 independent ATM operators filed a complaint styled as a class action lawsuit in the U.S. District Court for the District of Columbia against both Mastercard and Visa (the “ATM Operators Complaint”).  Plaintiffs seek to represent a class of non-bank operators of ATM terminals that operate in the United States with the discretion to determine the price of the ATM access fee for the terminals they operate. Plaintiffs allege that Mastercard and Visa have violated Section 1 of the Sherman Act by imposing rules that require ATM operators to charge non-discriminatory ATM surcharges for transactions processed over Mastercard’s and Visa’s respective networks that are not greater than the surcharge for

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
transactions over other networks accepted at the same ATM.  Plaintiffs seek both injunctive and monetary relief equal to treble the damages they claim to have sustained as a result of the alleged violations and their costs of suit, including attorneys’ fees. 
Subsequently, multiple related complaints were filed in the U.S. District Court for the District of Columbia alleging both federal antitrust and multiple state unfair competition, consumer protection and common law claims against Mastercard and Visa on behalf of putative classes of users of ATM services (the “ATM Consumer Complaints”). The claims in these actions largely mirror the allegations made in the ATM Operators Complaint, although these complaints seek damages on behalf of consumers of ATM services who pay allegedly inflated ATM fees at both bank and non-bank ATM operators as a result of the defendants’ ATM rules. Plaintiffs seek both injunctive and monetary relief equal to treble the damages they claim to have sustained as a result of the alleged violations and their costs of suit, including attorneys’ fees. 
In January 2012, the plaintiffs in the ATM Operators Complaint and the ATM Consumer Complaints filed amended class action complaints that largely mirror their prior complaints. In September 2019, the plaintiffs filed with the district court their motions for class certification in which the plaintiffs, in aggregate, allege over $1 billion in damages against all of the defendants. In August 2021, the trial court issued an order granting the plaintiffs’ request for class certification. Visa and Mastercard subsequently appealed the certification decision to the appellate court and oral argument on the appeal was heard in September 2022.
Europe. Mastercard has been named as a defendant in an action brought by Euronet 360 Finance Limited, Euronet Polska Spolka z.o.o. and Euronet Services spol. s.r.o. (“Euronet”) alleging that certain rules affecting ATM access fees in Poland, the Czech Republic and Greece by Visa and Mastercard, and certain of their subsidiaries, breach various competition laws. Euronet seeks damages, costs and injunctive relief to prevent the defendants from enforcing these rules. A trial has been scheduled for October 2023.
U.S. Liability Shift Litigation
In March 2016, a proposed U.S. merchant class action complaint was filed in federal court in California alleging that Mastercard, Visa, American Express and Discover (the “Network Defendants”), EMVCo, and a number of issuing banks (the “Bank Defendants”) engaged in a conspiracy to shift fraud liability for card present transactions from issuing banks to merchants not yet in compliance with the standards for EMV chip cards in the United States (the “EMV Liability Shift”), in violation of the Sherman Act and California law. Plaintiffs allege damages equal to the value of all chargebacks for which class members became liable as a result of the EMV Liability Shift on October 1, 2015. The plaintiffs seek treble damages, attorney’s fees and costs and an injunction against future violations of governing law, and the defendants filed a motion to dismiss. In September 2016, the district court denied the Network Defendants’ motion to dismiss the complaint, but granted such a motion for EMVCo and the Bank Defendants. In May 2017, the district court transferred the case to New York so that discovery could be coordinated with the U.S. merchant class interchange litigation described above. In August 2020, the district court issued an order granting the plaintiffs’ request for class certification and in January 2021, the Network Defendants’ request for permission to appeal that decision was denied. The plaintiffs have submitted expert reports that allege aggregate damages in excess of $1 billion against the four Network Defendants. The Network Defendants have submitted expert reports rebutting both liability and damages. Briefing on summary judgment is scheduled to conclude in July 2023.
Telephone Consumer Protection Class Action
Mastercard is a defendant in a Telephone Consumer Protection Act (“TCPA”) class action pending in Florida. The plaintiffs are individuals and businesses who allege that approximately 381,000 unsolicited faxes were sent to them advertising a Mastercard co-brand card issued by First Arkansas Bank (“FAB”). The TCPA provides for uncapped statutory damages of $500 per fax. Mastercard has asserted various defenses to the claims, and has notified FAB of an indemnity claim that it has (which FAB has disputed). In December 2019, the Federal Communications Commission (“FCC”) issued a declaratory ruling clarifying that the TCPA does not apply to faxes sent to online fax services that are received online via email. In December 2021, the trial court granted plaintiffs’ request for class certification, but narrowed the scope of the class to stand alone fax recipients only. Mastercard’s request to appeal that decision was denied.
U.S. Federal Trade Commission Investigation
In June 2020, the U.S. Federal Trade Commission’s Bureau of Competition (“FTC”) informed Mastercard that it has initiated a formal investigation into compliance with the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act. In particular, the investigation focused on Mastercard’s compliance with the debit routing provisions of the Durbin Amendment.  In December 2022, the FTC voted to issue an administrative complaint and accept a consent agreement with Mastercard. Pursuant to this agreement, Mastercard agreed to provide primary account numbers (PANs) so that merchants can route tokenized online debit transactions to alternative networks. The consent agreement does not include any monetary penalty. The comment period has concluded and the Company is awaiting the FTC’s decision on finalizing the proposed consent agreement.

24 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. Department of Justice Investigation
In March 2023, Mastercard received a Civil Investigative Demand (“CID”) from the U.S. Department of Justice Antitrust Division (“DOJ”) seeking documents and information regarding a potential violation of Sections 1 or 2 of the Sherman Act. The CID focuses on Mastercard’s U.S. debit program and competition with other payment networks and technologies. Mastercard is cooperating with the DOJ in connection with the CID.
Note 16. Settlement and Other Risk Management
Mastercard’s rules guarantee the settlement of many of the transactions between its customers (“settlement risk”). Settlement exposure is the settlement risk to customers under Mastercard’s rules due to the difference in timing between the payment transaction date and subsequent settlement. For those transactions the Company guarantees, the guarantee will cover the full amount of the settlement obligation to the extent the settlement obligation is not otherwise satisfied. Settlement is generally completed on a same-day basis, however, in some circumstances, funds may not settle until subsequent business days creating a short-term settlement exposure.
Gross settlement exposure is estimated using the average daily payment volume during the three months prior to period end multiplied by the estimated number of days of exposure. The Company has global risk management policies and procedures, which include risk standards, to provide a framework for managing the Company’s settlement risk and exposure. In the event of failed settlement by a customer, Mastercard may pursue one or more remedies available under the Company’s rules to recover potential losses. Historically, the Company has experienced a low level of losses from customer settlement failures.
As part of its policies, Mastercard requires certain customers that are not in compliance with the Company’s risk standards to enter into risk mitigation arrangements, including cash collateral and/or other forms of credit enhancement such as letters of credit and guarantees. This requirement is based on a review of the individual risk circumstances for each customer. Mastercard monitors its credit risk portfolio and the adequacy of its risk mitigation arrangements on a regular basis. Additionally, from time to time, the Company reviews its risk management methodology and standards. As such, the amounts of estimated settlement exposure are revised as necessary.
The Company’s estimated settlement exposure was as follows:
March 31,
2023		 December 31,
2022
(in millions)
Gross settlement exposure
 $ 64,833  $ 64,885 
Risk mitigation arrangements applied to settlement exposure
 (9,587) (10,697)
Net settlement exposure
 $ 55,246  $ 54,188 
Mastercard also provides guarantees to customers and certain other counterparties indemnifying them from losses stemming from failures of third parties to perform duties. This includes guarantees of Mastercard-branded travelers cheques issued, but not yet cashed of $342 million at March 31, 2023 and December 31, 2022, of which the Company has risk mitigation arrangements for $273 million at March 31, 2023 and December 31, 2022. In addition, the Company enters into agreements in the ordinary course of business under which the Company agrees to indemnify third parties against damages, losses and expenses incurred in connection with legal and other proceedings arising from relationships or transactions with the Company. Certain indemnifications do not provide a stated maximum exposure. As the extent of the Company’s obligations under these agreements depends entirely upon the occurrence of future events, the Company’s potential future liability under these agreements is not determinable. Historically, payments made by the Company under these types of contractual arrangements have not been material.
Note 17. Derivative and Hedging Instruments
The Company monitors and manages its foreign currency and interest rate exposures as part of its overall risk management program which focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. A primary objective of the Company’s risk management strategies is to reduce the financial impact that may arise from volatility in foreign currency exchange rates principally through the use of both foreign exchange derivative contracts and foreign currency denominated debt. In addition, the Company may enter into interest rate derivative contracts to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances.
Cash Flow Hedges
The Company may enter into foreign exchange derivative contracts, including forwards and options, to manage the impact of foreign currency variability on anticipated revenues and expenses, which fluctuate based on currencies other than the functional currency of the entity. The objective of these hedging activities is to reduce the effect of movement in foreign exchange rates for a portion of revenues and expenses forecasted to occur. As these contracts are designated as cash flow hedging instruments, gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and subsequently reclassified to the consolidated statement of operations when the underlying hedged transactions impact earnings.

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PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In addition, the Company may enter into interest rate derivative contracts to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances, and designate such derivatives as hedging instruments in a cash flow hedging relationship. Gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and are subsequently reclassified as an adjustment to interest expense over the respective terms of the hedged debt issuances.
Fair Value Hedges
The Company may enter into interest rate derivative contracts, including interest rate swaps, to manage the effects of interest rate movements on the fair value of the Company's fixed-rate debt and designate such derivatives as hedging instruments in a fair value hedging relationship. Changes in fair value of these contracts and changes in fair value of fixed-rate debt attributable to changes in the hedged benchmark interest rate generally offset each other and are recorded in interest expense on the consolidated statement of operations. Gains or losses related to the net settlements of interest rate swaps are also recorded in interest expense on the consolidated statement of operations. The periodic cash settlements are included in operating activities on the consolidated statement of cash flows.
In 2021, the Company entered into an interest rate swap designated as a fair value hedge related to $1.0 billion of the 3.850% Senior Notes due March 2050. In effect, the interest rate swap synthetically converts the fixed interest rate on this debt to a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap Rate. The net impact to interest expense for the three months ended March 31, 2023 and 2022 was not material.
Net Investment Hedges
The Company may use foreign currency denominated debt and/or foreign exchange derivative contracts to hedge a portion of its net investment in foreign subsidiaries against adverse movements in exchange rates. The effective portion of the net investment hedge is recorded as a currency translation adjustment in accumulated other comprehensive income (loss). Forward points are excluded from the effectiveness assessment and are recognized in general and administrative expenses on the consolidated statement of operations over the hedge period. The amounts recognized in earnings related to forward points for the three months ended March 31, 2023 and 2022 were not material.
As of March 31, 2023 and December 31, 2022, the Company had €1.7 billion euro-denominated debt outstanding designated as hedges of a portion of its net investment in its European operations. For the three months ended March 31, 2023 and 2022, the Company recorded pre-tax net foreign currency gains (losses) of $(35) million and $51 million, respectively, in other comprehensive income (loss).
As of March 31, 2023 and December 31, 2022, the Company had net foreign currency gains of $252 million and $309 million, respectively, after tax, in accumulated other comprehensive income (loss) associated with this hedging activity.
Non-designated Derivatives
The Company may also enter into foreign exchange derivative contracts to serve as economic hedges, such as to offset possible changes in the value of monetary assets and liabilities due to foreign exchange fluctuations, without designating these derivative contracts as hedging instruments. In addition, the Company is subject to foreign exchange risk as part of its daily settlement activities. This risk is typically limited to a few days between when a payment transaction takes place and the subsequent settlement with customers. To manage this risk, the Company may enter into short duration foreign exchange derivative contracts based upon anticipated receipts and disbursements for the respective currency position. The objective of these activities is to reduce the Company’s exposure to volatility arising from gains and losses resulting from fluctuations of foreign currencies against its functional currencies. Gains and losses resulting from changes in fair value of these contracts are recorded in general and administrative expenses on the consolidated statement of operations, net, along with the foreign currency gains and losses on monetary assets and liabilities.

26 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the fair value of the Company’s derivative financial instruments and the related notional amounts:
March 31, 2023 December 31, 2022
  Notional Derivative assets Derivative liabilities Notional Derivative assets Derivative liabilities
(in millions)
Derivatives designated as hedging instruments
Foreign exchange contracts in a cash flow hedge 1
 $ 709  $ 5  $ 19  $ 642  $ 4  $ 15 
Interest rate contracts in a fair value hedge 2
 1,000  —  89  1,000  —  105 
Foreign exchange contracts in a net investment hedge 1
 2,229  16  16  1,814  103  4 
Derivatives not designated as hedging instruments
Foreign exchange contracts 1
 1,988  26  8  521  1  2 
Total derivative assets/liabilities $ 5,926  $ 47  $ 132  $ 3,977  $ 108  $ 126 
1Foreign exchange derivative assets and liabilities are included within prepaid expenses and other current assets and other current liabilities, respectively, on the consolidated balance sheet.
2Interest rate derivative liabilities are included within other current liabilities and other liabilities on the consolidated balance sheet.
The pre-tax gain (loss) related to the Company's derivative financial instruments designated as hedging instruments are as follows:
Gain (Loss)
Recognized in OCI		 Gain (Loss)
Reclassified from AOCI
Three Months Ended March 31, Location of Gain (Loss) Reclassified from AOCI into Earnings Three Months Ended March 31,
2023 2022 2023 2022
(in millions) (in millions)
Derivative financial instruments in a cash flow hedge relationship:
Foreign exchange contracts $ (10) $ 1  Net revenue $ (6) $ 7 
Interest rate contracts $ —  $ —  Interest expense $ (2) $ (2)
Derivative financial instruments in a net investment hedge relationship:
Foreign exchange contracts $ (39) $ 35 
The Company estimates that $21 million, pre-tax, of the net deferred loss on cash flow hedges recorded in accumulated other comprehensive income (loss) at March 31, 2023 will be reclassified into the consolidated statement of operations within the next 12 months. The term of the foreign exchange derivative contracts designated in hedging relationships are generally less than 18 months.
The amount of gain (loss) recognized on the consolidated statement of operations for non-designated derivative contracts is summarized below: 
  Three Months Ended March 31,
Derivatives not designated as hedging instruments: 2023 2022
(in millions)
Foreign exchange derivative contracts
General and administrative $ 15  $ 1 
The Company’s derivative financial instruments are subject to both market and counterparty credit risk. Market risk is the potential for economic losses to be incurred on market risk sensitive instruments arising from adverse changes in market factors such as foreign currency exchange rates, interest rates and other related variables. Counterparty credit risk is the risk of loss due to failure of the counterparty to perform its obligations in accordance with contractual terms. The Company’s derivative contracts are subject to enforceable master netting arrangements, which contain various netting and setoff provisions. To mitigate counterparty credit risk, the Company enters into derivative contracts with a diversified group of selected financial institutions based upon their credit ratings and other factors. Generally, the Company does not obtain collateral related to derivatives because of the high credit ratings of the counterparties.

MASTERCARD MARCH 31, 2023 FORM 10-Q 27

PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2. Management’s discussion and analysis of financial condition and results of operations
The following supplements management's discussion and analysis of Mastercard Incorporated for the year ended December 31, 2022 as contained in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 14, 2023. It also should be read in conjunction with the consolidated financial statements and notes of Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (together, “Mastercard” or the “Company”), included elsewhere in this Report. Percentage changes provided throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” were calculated on amounts rounded to the nearest thousand. During the fourth quarter of 2022, the Company updated its disaggregated net revenue presentation by category and geography to reflect the nature of its payment services and to align such information with the way in which management views its categories of net revenue. Prior period amounts have been reclassified to conform to the updated presentation. The reclassification had no impact on previously reported total net revenue, operating income or net income.

Financial Results Overview
The following table provides a summary of our key GAAP operating results, as reported:
Three Months Ended March 31, Increase/(Decrease)
2023 2022
($ in millions, except per share data)
Net revenue $ 5,748  $ 5,167  11%
Operating expenses $ 2,612  $ 2,217  18%
Operating income $ 3,136  $ 2,950  6%
Operating margin 54.6  % 57.1  % (2.5) ppt
Income tax expense $ 492  $ 142  **
Effective income tax rate 17.2  % 5.1  % 12.1 ppt
Net income $ 2,361  $ 2,631  (10)%
Diluted earnings per share $ 2.47  $ 2.68  (8)%
Diluted weighted-average shares outstanding 956  981  (3)%
**    Not meaningful.
The following table provides a summary of our key non-GAAP operating results1, adjusted to exclude the impact of gains and losses on our equity investments, Special Items (which represent litigation judgments and settlements and certain one-time items) and the related tax impacts on our non-GAAP adjustments. In addition, we have presented growth rates, adjusted for the impact of currency:
Three Months Ended March 31, Increase/(Decrease)
2023 2022 As adjusted Currency-neutral
($ in millions, except per share data)
Adjusted net revenue $ 5,748  $ 5,136  12% 15%
Adjusted operating expenses $ 2,401  $ 2,182  10% 12%
Adjusted operating margin 58.2  % 57.5  % 0.7 ppt 1.0 ppt
Adjusted effective income tax rate 18.3  % 5.3  % 13.0 ppt 13.3 ppt
Adjusted net income $ 2,678  $ 2,702  (1)% 2%
Adjusted diluted earnings per share $ 2.80  $ 2.76  1% 4%
1    See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Key highlights for the three months ended March 31, 2023, versus the comparable period in 2022:
Net revenue Adjusted net revenue
Three Months Ended March 31, 2023
Adjusted net revenue increased 15% on a currency-neutral basis. The increase was attributable to growth in both our payment network and value-added services and solutions.
GAAP Non-GAAP
(currency-neutral)
up 11% up 15%
Operating expenses Adjusted
operating expenses
Three Months Ended March 31, 2023
Adjusted operating expenses increased 12% on a currency-neutral basis, which includes 2 percentage points of growth due to acquisitions. The remaining increase was primarily due to higher personnel costs.
GAAP
Non-GAAP
(currency-neutral)
up 18% up 12%
Effective income
tax rate
Adjusted effective
income tax rate
Three Months Ended March 31, 2023
The adjusted effective income tax rate of 18.3% was higher than the prior year rate of 5.3% due to a prior year discrete tax benefit related to final U.S. tax regulations published in the first quarter of 2022, which resulted in a valuation allowance release of $333 million, as well as an increase in the U.K. statutory tax rate effective in 2023.
GAAP Non-GAAP
17.2% 18.3%
Other financial highlights for the three months ended March 31, 2023 were as follows:
•We generated net cash flows from operations of $1.9 billion.
•We repurchased 8.0 million shares of our common stock for $2.9 billion and paid dividends of $0.5 billion.
•We completed a debt offering for an aggregate principal amount of $1.5 billion.
Non-GAAP Financial Information
Non-GAAP financial information is defined as a numerical measure of a company’s performance that excludes or includes amounts so as to be different than the most comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Our non-GAAP financial measures exclude the impact of gains and losses on our equity investments which includes mark-to-market fair value adjustments, impairments and gains and losses upon disposition and the related tax impacts. Our non-GAAP financial measures also exclude the impact of special items, where applicable, which represent litigation judgments and settlements and certain one-time items, as well as the related tax impacts (“Special Items”). Our non-GAAP financial measures for the comparable periods exclude the impact of the following:
Gains and Losses on Equity Investments
•In the three months ended March 31, 2023 and 2022, we recorded net losses of $212 million ($176 million after tax, or $0.18 per diluted share) and $76 million ($67 million after tax, or $0.07 per diluted share), respectively, primarily related to unrealized fair market value adjustments on marketable and nonmarketable equity securities.
Special Items
Litigation provisions
•In the three months ended March 31, 2023, we recorded charges of $211 million ($140 million after tax, or $0.15 per diluted share) as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Russia-related impacts
•In the three months ended March 31, 2022, we recorded a net charge of $4 million ($3 million after tax, or an immaterial impact per diluted share), directly related to imposed sanctions and the suspension of our business operations in Russia. The net charge is comprised of general and administrative expenses of $34 million, primarily related to reserves on uncollectible balances with certain sanctioned customers, offset by net benefits of $30 million in net revenue, primarily related to a reduction in payment network rebates and incentives liabilities as a result of lower estimates of customer performance for certain customer business agreements due to the suspension of our business operations in Russia.
See Note 6 (Investments) and Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report and “Management Discussion and Analysis of Financial Condition and Results of Operations - Russia and Ukraine” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 for further discussion related to certain of our non-GAAP financial measures. We excluded these items because management evaluates the underlying operations and performance of the Company separately from these recurring and nonrecurring items.
We believe that the non-GAAP financial measures presented facilitate an understanding of our operating performance and provide a meaningful comparison of our results between periods. We use non-GAAP financial measures to, among other things, evaluate our ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation.
Currency-neutral Growth Rates
We present growth rates adjusted for the impact of currency which is a non-GAAP financial measure. Currency-neutral growth rates are calculated by remeasuring the prior period’s results using the current period’s exchange rates for both the translational and transactional impacts on operating results. The impact of currency translation represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The impact of the transactional currency represents the effect of converting revenue and expenses occurring in a currency other than the functional currency of the entity. The impact of the related realized gains and losses resulting from our foreign exchange derivative contracts designated as cash flow hedging instruments is recognized in the respective financial statement line item on the statement of operations when the underlying forecasted transactions impact earnings. We believe the presentation of currency-neutral growth rates provides relevant information to facilitate an understanding of our operating results.
The translational and transactional impact of currency and the related impact of our foreign exchange derivative contracts designated as cash flow hedging instruments (“Currency impact”) has been excluded from our currency-neutral growth rates and has been identified in our “Drivers of Change” tables. See “Foreign Currency - Currency Impact” for further information on our currency impacts and “Financial Results - Net Revenue” and “Financial Results - Operating Expenses” for our "Drivers of Change” tables.
Net revenue, operating expenses, operating margin, other income (expense), effective income tax rate, net income and diluted earnings per share adjusted for the impact of gains and losses on our equity investments, Special Items and/or the impact of currency, are non-GAAP financial measures and should not be relied upon as substitutes for measures calculated in accordance with GAAP.

30 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following tables reconcile our reported financial measures calculated in accordance with GAAP to the respective adjusted non-GAAP financial measures:
Three Months Ended March 31, 2023
Net revenue  Operating expenses Operating margin Other income (expense) Effective income tax rate  Net income  Diluted earnings per share
($ in millions, except per share data)
Reported - GAAP $ 5,748  $ 2,612  54.6  % $ (283) 17.2  % $ 2,361  $ 2.47 
(Gains) losses on equity investments ** ** ** 212  —  % 176  0.18 
Litigation provisions ** (211) 3.7  % ** 1.1  % 140  0.15 
Adjusted - Non-GAAP $ 5,748  $ 2,401  58.2  % $ (71) 18.3  % $ 2,678  $ 2.80 
Three Months Ended March 31, 2022
Net revenue  Operating expenses Operating margin Other income (expense) Effective income tax rate  Net income  Diluted earnings per share
($ in millions, except per share data)
Reported - GAAP $ 5,167  $ 2,217  57.1  % $ (177) 5.1  % $ 2,631  $ 2.68 
(Gains) losses on equity investments ** ** ** 76  0.2  % 67  0.07 
Russia-related impacts (30) (34) 0.4  % ** —  % 3  — 
Adjusted - Non-GAAP $ 5,136  $ 2,182  57.5  % $ (101) 5.3  % $ 2,702  $ 2.76 
Note: Tables may not sum due to rounding.
**    Not applicable.
The following table represents the reconciliation of our growth rates reported under GAAP to our non-GAAP growth rates:
Three Months Ended March 31, 2023 as compared to the Three Months Ended March 31, 2022
Increase/(Decrease)
Net revenue  Operating expenses Operating margin Effective income tax rate  Net income  Diluted earnings per share
Reported - GAAP 11% 18% (2.5) ppt 12.1 ppt (10)% (8)%
(Gains) losses on equity investments ** ** ** (0.2) ppt 4% 4%
Litigation provisions ** (10)% 3.7 ppt 1.1 ppt 5% 5%
Russia-related impacts 1% 2% (0.4) ppt — ppt —% —%
Adjusted - Non-GAAP 12% 10% 0.7 ppt 13.0 ppt (1)% 1%
Currency impact 1
 3% 2% 0.3 ppt 0.3 ppt 3% 3%
Adjusted - Non-GAAP - currency-neutral 15% 12% 1.0 ppt 13.3 ppt 2% 4%
Note: Table may not sum due to rounding.
**    Not applicable.
1    See “Non-GAAP Financial Information” for further information on Currency impact.
Key Metrics and Drivers
In addition to the financial measures described above in “Financial Results Overview”, we review the following metrics to evaluate and identify trends in our business, measure our performance, prepare financial projections and make strategic decisions. We believe that the key metrics presented facilitate an understanding of our operating and financial performance and provide a meaningful comparison of our results between periods. 
Operating Margin measures how much profit we make on each dollar of sales after our operating costs but before other income (expense) and income tax expense. Operating margin is calculated by dividing our operating income by net revenue.
Key Drivers
Gross Dollar Volume (“GDV”)1 measures dollar volume of activity, including both domestic and cross-border volume, on cards carrying our brands during the period, on a local currency basis and U.S. dollar-converted basis. GDV represents purchase volume plus cash volume; “purchase volume” means the aggregate dollar amount of purchases made with Mastercard-branded cards for the relevant period; and “cash volume” means the aggregate dollar amount of cash disbursements and includes the impact of balance transfers and convenience checks obtained with Mastercard-branded cards for the relevant period. Information denominated in U.S. dollars relating to GDV is

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which our volumes are reported. These exchange rates are calculated on a quarterly basis using the average exchange rate for each quarter.  We report period-over-period rates of change in purchase volume and cash volume on the basis of local currency information, in order to eliminate the impact of changes in the value of currencies against the U.S. dollar in calculating such rates of change.
Cross-border Volume Growth2 measures the growth of cross-border dollar volume during the period, on a local currency basis and U.S. dollar-converted basis, for all Mastercard-branded programs.
Switched Transactions2 measures the number of transactions switched by Mastercard, which is defined as the number of transactions initiated and switched through our network during the period.
1    Data used in the calculation of GDV is provided by Mastercard customers and is subject to verification by Mastercard and partial cross-checking against information provided by Mastercard’s transaction switching systems. All data is subject to revision and amendment by Mastercard or Mastercard’s customers. Starting in the first quarter of 2022, data related to sanctioned Russian banks was not reported to us and therefore such amounts are not included. Subsequent to the suspension of our business operations in Russia in March 2022, there is no Russian data to be reported.
2    Growth rates are normalized to eliminate the effects of differing switching and carryover days between periods, as needed. Carryover days are those where transactions and volumes from days where the Company does not clear and settle are processed.
The following tables provide a summary of the growth trends in our key drivers.
Three Months Ended March 31,
2023 2022
Increase/(Decrease)
USD Local USD Local
Mastercard-branded GDV growth 1
 10% 15% 12% 17%
United States 9% 9% 14% 14%
Worldwide less United States 11% 18% 11% 19%
Cross-border volume growth 1
 29% 35% 45% 53%
Mastercard-branded GDV growth adjusted for Russia 1,2
 11% 16% 16% 20%
Worldwide less United States GDV growth adjusted for Russia 1,2
 12% 20% 17% 24%
Cross-border volume growth adjusted for Russia 1,2
 33% 40% 45% 52%
Three Months Ended March 31,
2023 2022
Increase/(Decrease)
Switched transactions growth 12% 22%
Switched transactions growth adjusted for Russia 2
 20% 24%
1    Excludes volume generated by Maestro and Cirrus cards.
2    Starting in the first quarter of 2022, as a result of imposed sanctions and the suspension of our business operations in Russia, we have provided adjusted growth rates for our key drivers excluding activity from Russian issued cards from the prior periods. See “Management Discussion and Analysis of Financial Condition and Results of Operations - Russia and Ukraine” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 for further information.
Key Metrics related to the Payment Network
Assessments represent agreed-upon standard pricing provided to our customers based on various forms of payment-related activity. Assessments are used internally by management to monitor operating performance as it allows for comparability and provides visibility into cardholder trends. Assessments do not represent our net revenue.
The following provides additional information on our key metrics related to the payment network:
•Domestic assessments are charges based on activity related to cards that carry the Company’s brands where the merchant country and the country of issuance are the same. These assessments are primarily driven by the domestic dollar volume of activity (e.g., domestic purchase volume, domestic cash volume) or the number of cards issued.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
•Cross-border assessments are charges based on activity related to cards that carry the Company’s brands where the merchant country and the country of issuance are different. These assessments are primarily driven by the cross-border dollar volume of activity (e.g., cross-border purchase volume, cross-border cash volume).
•Transaction processing assessments are charges primarily driven by the number of switched transactions on our payment network. Switching activities include:
◦Authorization, the process by which a transaction is routed to the issuer for approval
◦Clearing, the determination and exchange of financial transaction information between issuers and acquirers after a transaction has been successfully conducted at the point of interaction
◦Settlement, which facilitates the determination and exchange of funds between parties
These assessments can also include connectivity services and network access which are based on the volume of data transmitted and the number of authorization and settlement messages.
•Other network assessments are charges for licensing, implementation and other franchise fees.
The following table provides a summary of our key metrics related to the payment network.
Three Months Ended March 31,
2023 2022 Increase/(Decrease) Currency-neutral Increase/(Decrease)
($ in millions)
Domestic assessments $ 2,254  $ 2,108  7% 9%
Cross-border assessments 1,849  1,390  33% 39%
Transaction processing assessments 2,752  2,457  12% 14%
Other network assessments 212  168  26% 28%
Foreign Currency
Currency Impact
Our primary revenue functional currencies are the U.S. dollar, euro, Brazilian real and the British pound. Our overall operating results are impacted by currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency.
Our operating results are also impacted by transactional currency. The impact of the transactional currency represents the effect of converting revenue and expense transactions occurring in a currency other than the functional currency. Changes in currency exchange rates directly impact the calculation of gross dollar volume (“GDV”) and gross euro volume (“GEV”), which are used in the calculation of our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives. In most non-European regions, GDV is calculated based on local currency spending volume converted to U.S. dollars using average exchange rates for the period. In Europe, GEV is calculated based on local currency spending volume converted to euros using average exchange rates for the period. As a result, our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives are impacted by the strengthening or weakening of the U.S. dollar versus non-European local currencies and the strengthening or weakening of the euro versus other European local currencies. For example, our billing in Australia is in the U.S. dollar, however, consumer spend in Australia is in the Australian dollar. The currency transactional impact of converting Australian dollars to our U.S. dollar billing currency will have an impact on the revenue generated. The strengthening or weakening of the U.S. dollar is evident when GDV growth on a U.S. dollar-converted basis is compared to GDV growth on a local currency basis. For the three months ended March 31, 2023, GDV on a U.S. dollar-converted basis increased 10% while GDV on a local currency basis increased 15% versus the comparable period in 2022. Further, the impact from transactional currency occurs in our key metric related to transaction processing assessments as well as value-added services and solutions revenue and operating expenses when the transacting currency of these items is different than the functional currency of the entity.
To manage the impact of foreign currency variability on anticipated revenues and expenses, we may enter into foreign exchange derivative contracts and designate such derivatives as hedging instruments in a cash flow hedging relationship as discussed further in Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.
Foreign Exchange Activity
We incur foreign currency gains and losses from remeasuring monetary assets and liabilities, including settlement assets and obligations, that are denominated in a currency other than the functional currency of the entity. To manage this foreign exchange risk, we may enter

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
into foreign exchange derivative contracts to economically hedge the foreign currency exposure of a portion of our nonfunctional currency monetary assets and liabilities. The gains or losses resulting from the changes in fair value of these contracts are intended to reduce the potential effect of the underlying hedged exposure and are recorded net within general and administrative expenses on the consolidated statement of operations. The impact of this foreign exchange activity, including the related hedging activities, has not been eliminated in our currency-neutral results.
Our foreign exchange risk management activities are discussed further in Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.
Risk of Currency Devaluation
We are exposed to currency devaluation in certain countries. In addition, we are subject to exchange control regulations that restrict the conversion of financial assets into U.S. dollars. While these revenues and assets are not material to us on a consolidated basis, we can be negatively impacted should there be a continued and sustained devaluation of local currencies relative to the U.S. dollar and/or a continued and sustained deterioration of economic conditions in these countries.
Financial Results
Net Revenue
The components of net revenue were as follows:
  Three Months Ended March 31, Increase/(Decrease)
  2023 2022
  ($ in millions)
Payment network $ 3,650  $ 3,399  7%
Value-added services and solutions 2,098  1,768  19%
Total net revenue 5,748  5,167  11%
Special Items 1
 —  (30) **
Adjusted net revenue (excluding Special Items 1)
 $ 5,748  $ 5,136  12%
Note: Table may not sum due to rounding.
**    Not meaningful.
1    See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
2023
For the three months ended March 31, 2023, net revenue increased 11% versus the comparable period in 2022. Adjusted net revenue increased 12%, or 15% on a currency-neutral basis. The increase in net revenue was attributable to both our payment network and value-added services and solutions.
Net revenue from our payment network increased 7%, or 10% on a currency-neutral basis, in 2023 versus 2022. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting trends of growth in our key drivers. The 10% increase on a currency-neutral basis is 1 percentage point lower due to the Russia-related Special Item in 2022. Net revenue from our payment network includes $3,417 million of rebates and incentives provided to customers, which increased 25%, or 28% on a currency-neutral basis, in 2023 versus 2022, primarily due to an increase in our key drivers as well as new and renewed deals. The 28% increase on a currency-neutral basis is 1 percentage point higher due to the Russia-related Special Item in 2022.
Net revenue from our value-added services and solutions increased 19%, or 21% on a currency-neutral basis, in 2023 versus 2022, which includes a 1 percentage point increase from acquisitions. The remaining increase was driven primarily by the continued growth of our cyber and intelligence solutions, driven by growth in our underlying key drivers and fraud solutions as well as scaling of our identity and authentication solutions. In addition, growth in our data analytics, consulting and marketing services, as well as our loyalty solutions, further contributed to the increase.
2022
For the three months ended March 31, 2022, net revenue increased 24% versus the comparable period in 2021. Adjusted net revenue increased 24%, or 27% on a currency-neutral basis. The increase in net revenue was attributable to both our payment network and value-added services and solutions and included 2 percentage points of growth from acquisitions.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net revenue from our payment network increased 28%, or 33% on a currency-neutral basis, in 2022 versus 2021. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting trends of growth in our key drivers. The 33% increase on a currency-neutral basis is 1 percentage point higher due to the Russia-related Special Item in 2022. Net revenue from our payment network includes $2,724 million of rebates and incentives provided to customers, which increased 25%, or 28% on a currency-neutral basis, in 2022 versus 2021, primarily due to an increase in our key drivers as well as new and renewed deals. The 28% increase on a currency-neutral basis is 1 percentage point lower due to the Russia-related Special Item in 2022.
Net revenue from our value-added services and solutions increased 17%, or 20% on a currency-neutral basis, in 2022 versus 2021, which includes a 6 percentage point increase from acquisitions. The remaining increase was driven primarily by the continued growth of our cyber and intelligence solutions, driven by growth in our underlying key drivers as well as the scaling of our authentication solutions. In addition, growth in our consulting and data analytics services further contributed to the increase.
See Note 3 (Revenue) to the consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022 for a further discussion of how we recognize revenue.
Drivers of Change
The following table summarizes the drivers of change in net revenue:
Three Months Ended March 31,
Increase/(Decrease)
Operational Acquisitions
Currency Impact 3
Special Items 4
 Total
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Payment network 11  % 1 33  % 1 —  % —  % (3) % (6) % (1) % 1  % 7  % 28  %
Value-added services and solutions 20  % 2 14  % 2 1  % 6  % (2) % (3) % ** ** 19  % 17  %
Net revenue 14  % 25  % —  % 2  % (3) % (3) % (1) % 1  % 11  % 24  %
Note: Table may not sum due to rounding.
**    Not applicable.
1Includes impacts from our key drivers and metrics, offset by rebates and incentives.
2Includes impacts from cyber and intelligence, data and services, processing and gateway, ACH batch and real-time account-based domestic and cross-border payments and solutions, opening banking and digital identity, offset by rebates and incentives.
3Includes the translational and transactional impact of currency and the related impact of our foreign exchange derivative contracts designated as cash flow hedging instruments.
4See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
Operating Expenses
For the three months ended March 31, 2023, operating expenses increased 18% versus the comparable period in 2022. Adjusted operating expenses increased 10%, or 12% on a currency-neutral basis, versus the comparable period in 2022, which includes a 2 percentage point increase from acquisitions. The remaining increase was primarily due to higher personnel costs.
The components of operating expenses were as follows:
Three Months Ended March 31, Increase/ (Decrease)
2023 2022
($ in millions)
General and administrative $ 2,043  $ 1,844  11%
Advertising and marketing 167  181  (8)%
Depreciation and amortization 191  192  —%
Provision for litigation 211  —  **
Total operating expenses 2,612  2,217  18%
Special Items 1
 (211) (34) **
Adjusted total operating expenses (excluding Special Items 1)
 $ 2,401  $ 2,182  10%
Note: Table may not sum due to rounding.
**    Not meaningful.
1    See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Drivers of Change
The following tables summarize the drivers of changes in operating expenses:
Three Months Ended March 31, 2023
Increase/(Decrease)
Operational Acquisitions
Currency Impact 1
Special
Items 2
 Total
General and administrative 13% 2% (2)% (2)% 11%
Advertising and marketing (6)% —% (3)% ** (8)%
Depreciation and amortization —% 2% (3)% ** —%
Provision for litigation ** ** ** ** **
Total operating expenses 10% 2% (2)% 8% 18%
Note: Table may not sum due to rounding.
**    Not applicable/meaningful.
1Represents the translational and transactional impact of currency.
2See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
General and Administrative
For the three months ended March 31, 2023, general and administrative expenses increased 11%, or 13% on a currency-neutral basis, versus the comparable period in 2022. Current period results include growth of 2 percentage points from acquisitions. The remaining increase was primarily due to higher personnel costs to support our continued investment in our strategic initiatives across payments, services and new network capabilities, partially offset by a decrease of 2 percentage points from the Special Item for Russia-related impacts in 2022.
The components of general and administrative expenses were as follows:
Three Months Ended March 31, Increase/(Decrease)
  2023 2022
  ($ in millions)
Personnel 1
 $ 1,426  $ 1,181  21%
Professional fees 100  86  16%
Data processing and telecommunications 235  235  —%
Foreign exchange activity 2
 16  36  **
Other 1
 266  306  (13)%
Total general and administrative expenses $ 2,043  $ 1,844  11%
Note: Table may not sum due to rounding.
**    Not meaningful.
1    For the three months ended March 31, 2022, total general and administrative expenses includes a Special Item for Russia-related impacts of $34 million, of which $5 million is included within Personnel and $29 million is included within Other. See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
2    Foreign exchange activity includes the impact of remeasurement of assets and liabilities denominated in foreign currencies net of the impact of gains and losses on foreign exchange derivative contracts. See Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1 for further discussion.
Advertising and Marketing
For the three months ended March 31, 2023, advertising and marketing expenses decreased 8%, or 5% on a currency-neutral basis, versus the comparable period in 2022, primarily due to a decrease in spending on marketing campaigns and advertising, partially offset by an increase in spending on sponsorships.
Depreciation and Amortization
For the three months ended March 31, 2023, depreciation and amortization expenses were relatively flat on both an as reported and a currency-neutral basis, versus the comparable period in 2022.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Provision for Litigation
For the three months ended March 31, 2023, we recorded litigation provisions of $211 million as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation. See Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report and “Non-GAAP Financial Information” in this section for further discussion.
Other Income (Expense)
For the three months ended March 31, 2023, other income (expense) was unfavorable $106 million, versus the comparable period in 2022, primarily due to higher net losses in the current year versus the prior year related to unrealized fair market value adjustments on marketable and nonmarketable equity securities. Adjusted other income (expense) was favorable $30 million versus the prior year, primarily due to an increase in our investment income, partially offset by increased interest expense related to our 2022 and 2023 debt issuances.
The components of other income (expense) were as follows:
Three Months Ended March 31, Increase/ (Decrease)
  2023 2022
  ($ in millions)
Investment income $ 55  $ 5  **
Gains (losses) on equity investments, net (212) (76) **
Interest expense (132) (110) 20%
Other income (expense), net 6  4  **
Total other income (expense) (283) (177) **
(Gains) losses on equity investments 1
 212  76  **
Adjusted total other income (expense) 1
 $ (71) $ (101) (30)%
Note: Table may not sum due to rounding.
**    Not meaningful.
1    See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
Income Taxes
The effective income tax rates were 17.2% and 5.1% for the three months ended March 31, 2023 and 2022, respectively. The adjusted effective income tax rates were 18.3% and 5.3% for the three months ended March 31, 2023 and 2022, respectively. Both the as reported and as adjusted effective income tax rates were higher versus the comparable period in 2022, primarily due to a prior year discrete tax benefit related to final U.S. tax regulations published in the first quarter of 2022, which resulted in a valuation allowance release of $333 million associated with the U.S. foreign tax credit carryforward deferred tax asset. Additionally, the U.K. statutory tax rate increase, effective in 2023, contributed to the higher as reported and as adjusted effective income tax rates.
Liquidity and Capital Resources
We rely on existing liquidity, cash generated from operations and access to capital to fund our global operations, capital expenditures, investments in our business and current and potential obligations. The following table summarizes the cash, cash equivalents, investments and credit available to us:
March 31,
2023		 December 31,
2022
(in billions)
Cash, cash equivalents and investments 1
 $ 7.0  $ 7.4 
Unused line of credit 8.0  8.0 
1    Investments include available-for-sale securities and held-to-maturity securities. This amount excludes restricted cash and restricted cash equivalents of $2.2 billion at March 31, 2023 and December 31, 2022.
We believe that our existing cash, cash equivalents and investment securities balances, our cash flow generating capabilities, and our access to capital resources are sufficient to satisfy our future operating cash needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with our existing operations and potential obligations which include litigation provisions and credit and settlement exposure.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our liquidity and access to capital could be negatively impacted by global credit market conditions. We guarantee the settlement of many of the transactions between our customers. Historically, payments under these guarantees have not been significant; however, historical trends may not be an indication of potential future losses. The risk of loss on these guarantees is specific to individual customers, but may also be driven by regional or global economic conditions, including, but not limited to the health of the financial institutions in a country or region. See Note 16 (Settlement and Other Risk Management) to the consolidated financial statements in Part I, Item 1 for a description of these guarantees.
Our liquidity and access to capital could also be negatively impacted by the outcome of any of the legal or regulatory proceedings to which we are a party. For additional discussion of these and other risks facing our business, see Part I, Item 1A - Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022 and Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report.
Cash Flow
The table below shows a summary of the cash flows from operating, investing and financing activities:
Three Months Ended March 31,
  2023 2022
  (in millions)
Net cash provided by operating activities $ 1,919  $ 1,782 
Net cash used in investing activities (397) (287)
Net cash used in financing activities (1,955) (2,154)
Net cash provided by operating activities increased $137 million for the three months ended March 31, 2023, versus the comparable period in 2022, primarily due to higher net income after adjusting for non-cash items and an increase in restricted security deposits held for customers and income taxes payable, partially offset by higher accounts receivable balances.
Net cash used in investing activities increased $110 million for the three months ended March 31, 2023, versus the comparable period in 2022, primarily due to an increase in capitalized software.
Net cash used in financing activities decreased $199 million for the three months ended March 31, 2023, versus the comparable period in 2022, primarily due to higher proceeds from debt issuances partially offset by higher repurchases of our Class A common stock.
Debt and Credit Availability
In March 2023, the Company issued $750 million principal amount of notes due March 2028 and $750 million principal amount of notes due March 2033 (collectively the “2023 USD Notes”). The net proceeds from the issuance of the 2023 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $1.489 billion. Our total debt outstanding was $15.6 billion and $14.0 billion at March 31, 2023 and December 31, 2022, respectively, with the earliest maturity of INR22.7 billion ($277 million as of March 31, 2023) of principal occurring in July 2023.
In April 2023, the Company entered into an additional unsecured INR4.97 billion ($61 million as of the date of settlement) term loan, also due July 2023 (the “2023 INR Term Loan”).
As of March 31, 2023, we have a commercial paper program (the “Commercial Paper Program”), under which we are authorized to issue up to $8 billion in outstanding notes, with maturities up to 397 days from the date of issuance. In conjunction with the Commercial Paper Program, we have a committed unsecured $8 billion revolving credit facility (the “Credit Facility”) which expires in November 2027.
Borrowings under the Commercial Paper Program and the Credit Facility are to be used to provide liquidity for general corporate purposes, including providing liquidity in the event of one or more settlement failures by our customers. In addition, we may borrow and repay amounts under these facilities for business continuity purposes. We had no borrowings outstanding under the Commercial Paper Program or the Credit Facility at March 31, 2023 and December 31, 2022.
See Note 10 (Debt) to the consolidated financial statements included in Part I, Item 1 for further discussion on our debt and Note 15 (Debt) to the consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022 for further discussion on our debt, the Commercial Paper Program and the Credit Facility.
Dividends and Share Repurchases
We have historically paid quarterly dividends on our outstanding Class A common stock and Class B common stock. Subject to legally available funds, we intend to continue to pay a quarterly cash dividend. The declaration and payment of future dividends is at the sole discretion of our Board of Directors after taking into account various factors, including our financial condition, operating results, available cash and current and anticipated cash needs.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Aggregate payments for quarterly dividends totaled $545 million for the three months ended March 31, 2023.
On December 6, 2022, our Board of Directors declared a quarterly cash dividend of $0.57 per share paid on February 9, 2023 to holders of record on January 9, 2023 of our Class A common stock and Class B common stock. The aggregate amount of this dividend was $545 million.
On February 14, 2023, our Board of Directors declared a quarterly cash dividend of $0.57 per share payable on May 9, 2023 to holders of record on April 7, 2023 of our Class A common stock and Class B common stock. The aggregate amount of this dividend is estimated to be $541 million.
Repurchased shares of our common stock are considered treasury stock. In December 2022 and November 2021, our Board of Directors approved share repurchase programs of our Class A common stock authorizing us to repurchase up to $9.0 billion and $8.0 billion, respectively. The program approved in 2022 will become effective after completion of the share repurchase program approved in 2021. The timing and actual number of additional shares repurchased will depend on a variety of factors, including cash requirements to meet the operating needs of the business, legal requirements, as well as the share price and economic and market conditions. The following table summarizes our share repurchase authorizations and repurchase activity of our Class A common stock through March 31, 2023:
(in millions, except average price data)
Remaining authorization at December 31, 2022 $ 12,174 
Dollar-value of shares repurchased during the three months ended March 31, 2023 1
 $ 2,878 
Remaining authorization at March 31, 2023 $ 9,296 
Shares repurchased during the three months ended March 31, 2023 8.0 
Average price paid per share during the three months ended March 31, 2023 $ 361.70 
1    The dollar-value of shares repurchased does not include a 1% excise tax on share repurchases that became effective January 1, 2023. The incremental tax is recorded in treasury stock on the consolidated balance sheet and is payable annually beginning in 2024.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, if any, and the potential impact of these pronouncements refer to Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements included in Part I, Item 1.
Item 3. Quantitative and qualitative disclosures about market risk
Market risk is the potential for economic losses to be incurred on market risk sensitive instruments arising from adverse changes in factors such as interest rates and foreign currency exchange rates. Our exposure to market risk from changes in interest rates and foreign exchange rates is limited. Management monitors risk exposures on an ongoing basis and establishes and oversees the implementation of policies governing our funding, investments and use of derivative financial instruments to manage these risks.
Foreign currency and interest rate exposures are managed through our risk management activities, which are discussed further in Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.
Foreign Exchange Risk
We enter into foreign exchange derivative contracts to manage currency exposure associated with anticipated receipts and disbursements occurring in a currency other than the functional currency of the entity. We may also enter into foreign currency derivative contracts to offset possible changes in value of assets and liabilities due to foreign exchange fluctuations. The objective of these activities is to reduce our exposure to transaction gains and losses resulting from fluctuations of foreign currencies against our functional currencies, principally the U.S. dollar and euro. The effect of a hypothetical 10% adverse change in the value of the functional currencies could result in a fair value gain of approximately $16 million and loss of approximately $94 million on our foreign exchange derivative contracts outstanding at March 31, 2023 and December 31, 2022, respectively, before considering the offsetting effect of the underlying hedged activity.
We are also subject to foreign exchange risk as part of our daily settlement activities. To manage this risk, we enter into short duration foreign exchange contracts based upon anticipated receipts and disbursements for the respective currency position. This risk is typically limited to a few days between when a payment transaction takes place and the subsequent settlement with our customers. A hypothetical 10% adverse change in the value of the functional currencies would not have a material impact to the fair value of our short duration foreign exchange derivative contracts outstanding at March 31, 2023 and December 31, 2022, respectively.
We are further exposed to foreign exchange rate risk related to translation of our net investment in foreign subsidiaries where the functional currency is different than our U.S. dollar reporting currency. To manage this risk, we may enter into foreign exchange derivative contracts to hedge a portion of our net investment in foreign subsidiaries. The effect of a hypothetical 10% adverse change in the value of

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PART I
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
the U.S. dollar could result in a fair value loss of approximately $250 million and $203 million on our foreign exchange derivative contracts designated as a net investment hedge at March 31, 2023 and December 31, 2022, respectively, before considering the offsetting effect of the underlying hedged activity.
Interest Rate Risk
Our available-for-sale debt investments include fixed and variable rate securities that are sensitive to interest rate fluctuations. Our policy is to invest in high quality securities, while providing adequate liquidity and maintaining diversification to avoid significant exposure. A hypothetical 100 basis point adverse change in interest rates would not have a material impact to the fair value of our investments at March 31, 2023 and December 31, 2022.
We are also exposed to interest rate risk related to our fixed-rate debt. To manage this risk, we may enter into interest rate derivative contracts to hedge a portion of our fixed-rate debt that is exposed to changes in fair value attributable to changes in a benchmark interest rate. The effect of a hypothetical 100 basis point adverse change in interest rates would not have a material impact to the fair value of our interest rate derivative contracts designated as a fair value hedge of our fixed-rate debt at March 31, 2023 and December 31, 2022, respectively, before considering the offsetting effect of the underlying hedged activity.
Item 4. Controls and procedures
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to ensure that information that is required to be disclosed in the reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our President and Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding disclosure. The President and Chief Executive Officer and the Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report and, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date.
Changes in Internal Control over Financial Reporting
There was no change in Mastercard’s internal control over financial reporting that occurred during the three months ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, Mastercard's internal control over financial reporting.

40 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART II


PART II
ITEM 1. LEGAL PROCEEDINGS
Item 1. Legal proceedings
Refer to Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1.
Item 1A. Risk factors
For a discussion of our risk factors, see Part I, Item 1A - Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022.
Item 2. Unregistered sales of equity securities and use of proceeds
Issuer Purchases of Equity Securities
During the first quarter of 2023, we repurchased 8.0 million shares for $2.9 billion at an average price of $361.70 per share of Class A common stock. The following table presents our repurchase activity on a cash basis during the first quarter of 2023:
Period Total Number
of Shares
Purchased		 Average Price
Paid per Share
(including
commission cost)		 Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
Dollar Value of
Shares that may yet
be Purchased under
the Plans or
Programs 1, 2
January 1 - 31 2,258,292  $ 367.17  2,258,292  $ 11,344,781,381 
February 1 - 28 2,490,299  $ 366.46  2,490,299  $ 10,432,174,055 
March 1 - 31 3,208,405  $ 354.16  3,208,405  $ 9,295,891,709 
Total 7,956,996  $ 361.70  7,956,996 
1    Dollar value of shares that may yet be purchased under the repurchase programs is as of the end of the period.
2 In December 2022 and November 2021, our Board of Directors approved share repurchase programs of our Class A common stock authorizing us to repurchase up to $9.0 billion and $8.0 billion, respectively.
Item 5. Other information
Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, we hereby incorporate by reference herein the disclosure contained in Exhibit 99.1.
Item 6. Exhibits
Refer to the Exhibit Index included herein.

42 MASTERCARD MARCH 31, 2023 FORM 10-Q

PART II
EXHIBIT INDEX
Exhibit index
Exhibit
Number		 Exhibit Description
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH* XBRL Taxonomy Extension Schema Document
101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* XBRL Taxonomy Extension Label Linkbase Document
101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document
+    Management contracts or compensatory plans or arrangements.
*    Filed or furnished herewith.
The agreements and other documents filed as exhibits to this Report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and should not be relied upon for that purpose. In particular, any representations and warranties made by the Company in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

MASTERCARD MARCH 31, 2023 FORM 10-Q Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES
Signatures
MASTERCARD INCORPORATED
(Registrant)
Date: April 27, 2023 By:
/S/ MICHAEL MIEBACH
Michael Miebach
President and Chief Executive Officer
(Principal Executive Officer)
Date: April 27, 2023 By: /S/ SACHIN MEHRA
Sachin Mehra
Chief Financial Officer
(Principal Financial Officer)
Date: April 27, 2023 By:
/S/ SANDRA ARKELL
Sandra Arkell
Corporate Controller
(Principal Accounting Officer)

44 MASTERCARD MARCH 31, 2023 FORM 10-Q
EX-10.1 2 exb101-03312023.htm EX-10.1 Document

EXHIBIT 10.1

FORM OF
RESTRICTED STOCK UNIT AGREEMENT
20xx GRANT

[effective for awards granted on and subsequent to March 1, 2023]

Name: xxxxxx
$ Granted: $ xxx,xxx


THIS AGREEMENT, dated as of March 1, 20xx, (“Grant Date”) is between Mastercard Incorporated, a Delaware Corporation (“Company”), and you (the “Employee”). Capitalized terms that are used but not defined in this Agreement have the meanings given to them in the 2006 Long Term Incentive Plan, as amended (“Plan”).
WHEREAS, the Company has established the Plan, the terms of which are made a part hereof;
WHEREAS, the Human Resources and Compensation Committee of the Board of Directors of the Company (“Committee”) has approved this grant under the terms of the Plan;
NOW, THEREFORE, the parties hereby agree as follows:
1.    Grant and Acceptance of Units.
Subject to the terms and conditions of this Agreement and of the Plan, the Company hereby grants to the Employee <xxx> Units, as reflected in the Employee’s grant statement, the terms of which statement are incorporated as a part of this Agreement. The Units comprising this award will be recorded in an unfunded Units account in the Employee’s name maintained on the books of the Company (“Account”). Each Unit represents the right to receive one share of the Company’s $0.0001 par value Class A Common Stock (“Common Shares”) under the terms and conditions set forth below.
The Employee is required to accept or reject the award of Units and the terms of this Agreement by no later than February 1, 20xx or prior to such earlier vesting event pursuant to Section 2(c) below. If the Employee fails to accept or reject the award of Units by the foregoing deadline, the Employee shall be deemed to have accepted the Units and the terms of this Agreement, provided that if the Employee is required to agree to the restrictive covenants in Section 10, the Employee must affirmatively accept or the Units may be subject to cancellation.








2.    Vesting Schedule.
Vest Date Vest Quantity
March 1, 20xx One third (33.33%)
March 1, 20xx One third (33.33%)
March 1, 20xx One third (33.33%)
(a)    Subject to (b), (c) and (d) below, the interest of the Employee in the Units shall vest with respect to one third (33.33%) of the Units granted on each of the first, second and third anniversaries of the Grant Date conditioned upon the Employee’s continued employment with the Company or an Affiliated Employer as of each such vesting date (collectively, the “Vesting Dates”). In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer for any reason other than as set forth in (b), (c) or (d), unvested Units shall be forfeited. A transfer of Employee’s employment among the Company and any Affiliated Employer shall not be treated as a Termination of Employment hereunder. As a condition of the Employee’s right to vest in the Units, the Employee may be required to execute and comply with any Mastercard LTIP Non-Competition Agreement that the Company requires for the Employee to be eligible to participate in the Plan, and to execute any other documents required by the Committee pursuant to this Agreement. If the Employee has not executed and delivered to the Company any such required Mastercard LTIP Non-Competition Agreement by the date required by the Company, which will in no event be later than the first anniversary of the Grant Date or such earlier vesting event pursuant to (c) below, the unvested Units shall be forfeited.
(b)    In the event that the Employee’s employment with the Company or an Affiliated Employer terminates by reason of the Employee’s death following the Grant Date, 100 percent of the Employee’s then unvested Units shall vest and be payable, as set forth in section 6(b). In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer due to Disability or Retirement seven months or longer after the Grant Date, unless circumstances exist at the time of Termination of Employment that would constitute Cause, unvested Units shall continue to vest as if there had been no Termination of Employment and shall be paid as set forth in section 6(a).
(c)    In the event of the Employee’s Termination of Employment by the Company or an Affiliated Employer, or successor thereto, without Cause or due to a Job Elimination or Role Refresh six months preceding or two years following a Change in Control, 100 percent of the Employee’s then unvested Units shall vest upon the later of the Employee’s termination date or the Change in Control and be payable in accordance with section 6(c).


(d) In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer due to a Job Elimination or a Role Refresh (other than in connection with a Change in Control, as provided in section 2(c)), the Employee’s interest in a pro-rata portion of the unvested Units shall continue to vest as if there had been no Termination of Employment and shall be paid as set forth in section 6(a), contingent upon the Employee’s execution and non-revocation of a separation agreement and/or a release of all claims in a form satisfactory to the Company within a period of no more than 75 days following the date of the Employee’s Termination of Employment. Such pro-rata portion of the unvested Units shall be calculated based on (A) the total Units granted multiplied by the ratio of (x) the number of calendar days worked by the Employee from the Grant Date to the Employee’s termination date, to (y) the total number of calendar days in the original vesting schedule of the Units (from the Grant Date to the third anniversary of the Grant Date) less (B) any Units previously vested. For purposes of this section 2(d), a “Job Elimination” shall mean either (i) the Employee’s involuntary and permanent Termination of Employment by the Company or an Affiliated Employer because of a permanent layoff, reduction in force, facility closing, reorganization, or consolidation, or (ii) the Employee’s involuntary Termination of Employment with the Company or an Affiliated Employer after the Employee has been offered and declined continued employment with the Company or an Affiliated Employer in a position that is, in the Company’s sole judgment, not comparable to or better than the position that the Employee previously held with the Company or an Affiliated Employer. For purposes of this section 2(d), a “Role Refresh” shall mean the Employee’s involuntary Termination of Employment by the Company or an Affiliated Employer where the Company determines that a change is in the best interests of the Company and/or an Affiliated Employer and the following conditions are met: (i) the Employee is a level 4 or higher; (ii) the Employee’s last official rating and ongoing performance level is achieves or higher; (iii) the Employee has been in substantially the same role for three (3) or more years (this requirement may be waived for employees at levels 1 and 2); and (iv) the Employee’s role is not being eliminated. Notwithstanding the foregoing, the Employee shall not be entitled to continued vesting of the Units under this Section 2(d) if the Employee incurs a “Disqualifying Event” under the terms of the Mastercard International Incorporated Severance Plan or, as applicable, the Amended and Restated Mastercard International Incorporated Executive Severance Plan. To obtain a copy of the Mastercard International Incorporated Severance Plan, please send a request to the Employment Counsel at 2000 Purchase Street, Purchase, NY 10577.

3.    Transfer Restrictions.
The Units granted hereunder may not be sold, assigned, margined, transferred, encumbered, conveyed, gifted, hypothecated, pledged, or otherwise disposed of and may not be subject to lien, garnishment, attachment or other legal process, except as expressly permitted by the Plan.
4.    Stockholder Rights.
Prior to the time that the Employee’s Units vest and the Company has issued Common Shares relating to such Units, the Employee will not be deemed to be the holder of, or have any of the rights of a holder with respect to, any Common Shares deliverable with respect to such Units. Specifically, and without limiting the foregoing, the Employee shall not be entitled to dividends or dividend equivalents prior to being issued Common Shares.


5.    Changes in Stock.
In the event of any change with respect to outstanding Common Shares contemplated by Section 4.6(1) of the Plan, the Units may be adjusted in accordance with Section 4.6(1) of the Plan.     
6.    Form and Timing of Payment.
    (a)    The Company shall pay within 60 days following each Vesting Date set forth in section 2(a) above, a number of Common Shares equal to the aggregate number of vested Units credited to the Employee as of such Vesting Date; provided, however, that payment of any Units that vest pursuant to Section 2(d) may occur within up to 74 days following the applicable Vesting Date in connection with the Employee’s execution and non-revocation of a separation agreement and/or a release of all claims. Further, in the event that a Vesting Date falls within the period the Employee has to provide a separation agreement and/or a release of all claims pursuant to Section 2(d) and such period spans two calendar years, any payment of the vested Units will be made in the second calendar year.
    (b)    In the event of vesting under section 2(b) above due to an Employee’s death, payment shall be made within 90 days following death, or where additional time is needed for administrative reasons, at such later time as is permitted under Section 409A (as defined in section 12 below).
    (c)    In the event of vesting under section 2(c) above due to Termination of Employment in connection with a Change in Control, payment shall be made as follows: (i) in the event of Termination of Employment prior to the Change in Control, within 90 days following the Change in Control; or (ii) in the event of Termination of Employment after the Change in Control, on the first business day which is at least seven months following the Termination of Employment or at such later date permitted under Section 409A.
    (d)    Notwithstanding section 6(a) above, the Company may, in its sole discretion, settle the Units in the form of a cash payment (i) to the extent settlement in Common Shares is prohibited under local law, or would require the Employee, the Company and/or the Employer to obtain the approval of any governmental and/or regulatory body in the Employee’s country of residence (or country of employment, if different) or (ii) in the event that the net number of Common Shares issuable on a Vesting Date is less than one whole Common Share. Alternatively, the Company may, in its sole discretion, settle the Units in the form of Common Shares but require the Employee to immediately sell such Common Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on behalf of the Employee).
7.    Compliance with Law.
No Common Shares (or cash pursuant to section 6(d) above) will be delivered to the Employee in accordance with section 6 above unless counsel for the Company is satisfied that such delivery will be in compliance with all applicable laws, including, without limitation, any rule, regulation or procedure of the U.S. national securities exchange upon which the Company’s Common Shares are traded or any listing agreement with any such securities exchange, or any other requirement of law or of any administrative or regulatory body having jurisdiction over the Company or an Affiliated Employer.


8.    Death of Employee.
In the event of the Employee’s death, where the death results in vesting and payment of Units under section 2(b) above, payment shall be made to the Employee’s estate.
9.    Taxes.
The Employee shall be liable for any and all taxes, including income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (“Tax-Related Items”), arising out of this grant or the issuance of the Common Shares on vesting of Units hereunder or any other taxable event in connection with the Units.
Prior to any such taxable event, the Employee (or the Employee’s estate) shall pay or make adequate arrangements satisfactory to the Company or, if different, the Employee’s employer (the “Employer”) to meet the Company’s or the Employer’s withholding obligations for Tax-Related Items. In this regard, the Company is authorized to deduct from the total number of Common Shares the Employee is to receive on settlement of the Units a number of Common Shares with a total value equal to the amount necessary to satisfy any such withholding obligation. If the Tax-Related Items withholding is satisfied by withholding in Common Shares, for tax purposes, the Employee is deemed to have been issued the full number of Common Shares subject to the vested Units, notwithstanding that a number of the Common Shares is held back solely for the purpose of paying the Tax-Related Items.
Alternatively, provided the Employee is not subject to Securities and Exchange Commission Rule 16b-3 (“Rule 16b-3”), the Company may sell or arrange for the sale of a sufficient number of Common Shares issued to the Employee upon settlement of the Units to meet the Tax-Related Items withholding obligation.
The Company (or, as applicable, the Employer) may withhold or account for Tax-Related Items by considering statutory withholding rates or other applicable withholding rates, including maximum rates applicable in the Employee’s jurisdiction(s), and will do so using the information in its applicable systems and other business records at the time of such withholding event. In the event of over-withholding, the Employee may receive a refund from the local tax authorities of any over-withheld amount in cash and will have no entitlement to the Common Share equivalent. In the event the withholding deducted is less than the Tax-Related Items for which the Employee is liable, the Employee may be required to pay any additional Tax-Related Items directly to the applicable tax authority or to the Company and/or the Employer.
Further, to the extent that any obligation to withhold Tax-Related Items arises prior to settlement of the Units, the Company may cause the Units to vest prior to any Vesting Date for the purpose of satisfying such obligation by withholding or selling of Common Shares as provided for above (to the extent such methods are otherwise permitted under this Agreement), provided that (a) to avoid a prohibited acceleration under Section 409A, the number of Units so vested will not exceed the number necessary to satisfy the liability for Tax-Related Items; and (b) if the Employee is subject to Rule 16b-3, any withholding in Common Shares pursuant to the foregoing will either be approved in advance by the Human Resources and Compensation Committee or solely at the election of the Employee. Pursuant to the foregoing and without limiting the discretion and authority of the Company as provided herein with respect to any other applicable Tax-Related Items, the Employee will have the right to elect to have the Company satisfy any Federal Insurance Contributions Act taxes required to be withheld before settlement of the Units by causing a sufficient portion of the Units to vest and withholding in Common Shares.


If Tax-Related Items are withheld prior to a Vesting Date by the method described in this paragraph, the number of Units in the Employee’s Account and originally scheduled to vest on the next applicable Vesting Date will be reduced by the number of Units vested and used to satisfy such Tax-Related Items.
The Employee agrees to pay to the Company or the Employer, including through withholding from the Employee’s wages or other cash compensation paid to the Employee by the Company and/or the Employer, any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Employee’s participation in the Plan that is not satisfied by the means previously described including, without limitation, any Federal Insurance Contributions Act taxes required to be withheld before settlement of the Units for which the Employee does not elect withholding in Common Shares pursuant to the preceding paragraph.
Finally, the Employee acknowledges that the ultimate liability for all Tax-Related Items legally due by the Employee is and remains the Employee’s responsibility, regardless of any withholding by the Company or the Employer, and that the Company and the Employer: (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including the grant of the Units, the vesting of the Units, the settlement of the Units, the subsequent sale of any Common Shares acquired pursuant to the Units, or the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items. The Company may refuse to issue or deliver the Common Shares, or the proceeds of the sale of Common Shares, if the Employee fails to comply with the Employee’s obligations in connection with the Tax-Related Items.
10.    Restrictive Covenants.
If, at the Grant Date, the Employee is a Vice President (or equivalent) of the Company or an Affiliated Employer or holds a role above the level of Vice President (or its equivalent), and provided that the Employee is not employed in California or Ontario, then in consideration of the grant of this award of Units, the Employee agrees to the restrictive covenants and associated remedies as set forth below, which exist independently of and in addition to any obligation to which the Employee is subject under the terms of any Mastercard LTIP Non-Competition Agreement that the Company requires the Employee to execute in order to be eligible to participate in the Plan:
(a) The Employee agrees for a period of twelve (12) months following the termination of the Employee's employment with the Company or an Affiliated Employer for any reason, the Employee will not directly or indirectly for him- or herself or any third party: (i) engage, participate or invest in (one percent (1%) ownership or more), own or become employed by or render (whether or not for compensation) any consulting, contractor, advisory or other services to or for the benefit of Visa, American Express, Discover, PayPal, China Union Pay including any of their respective subsidiaries, affiliates and successors AND any other competitor or any third party that the Employee knows intends to be a competitor of Mastercard International Incorporated including any of its subsidiaries and affiliates (collectively, "Mastercard"); (ii) solicit, induce, recruit or otherwise entice away from Mastercard any other employee, agent or consultant of Mastercard who could damage Mastercard’s interests; or (iii) solicit, induce any customer or supplier of Mastercard, or other person engaged in business with Mastercard to terminate, reduce or otherwise modify any commercial arrangement with Mastercard.


(b) Violation of Restrictive Covenants. If the Employee breaches any of the terms of the restrictive covenants in Section 10(a) above, all unvested Units shall be immediately and irrevocably forfeited. Further, with respect to any Units that vested within twelve (12) months prior to the termination of the Employee's employment with the Company or an Affiliated Employer or at any time after the Employee's termination, the Employee may be required to repay or otherwise reimburse the Company an amount having a value equal to the aggregate fair market value (determined as of the date of vesting) of any Common Shares transferred to the Employee as a result of the vesting of such Units. This Section 10(b) does not constitute the Company’s exclusive remedy for the Employee's violation of the Employee's restrictive covenant obligations, and in the event of a breach or threatened breach by the Employee of any provision of Section 10(a), the Employee agrees that the Company and any applicable Affiliated Employer shall be entitled to an injunction or restraining order to prevent such breach or threatened breach in addition to any other remedies permitted by applicable law.
This Section 10 shall be construed to the maximum extent permitted by applicable law and may be modified as strictly necessary to be legally enforceable as determined by a court of competent jurisdiction ruling on this Agreement. The Company may release the Employee from any and all provisions in this Section 10 by providing written notice of the release.
11.    Discretionary Nature of Plan.
The Employee acknowledges and agrees that the Plan is discretionary in nature and may be amended, cancelled, or terminated by the Company, in its sole discretion, at any time. The grant of Units under the Plan is a one-time benefit and does not create any contractual or other right to receive a grant of Units, other types of grants under the Plan, or benefits in lieu of such grants in the future. Future grants, if any, will be at the sole discretion of the Company, including, but not limited to, the timing of any grant, the number of Units granted and vesting provisions.
12.    Consent to On-Line Grant and Acceptance.
The Employee acknowledges and agrees that, as a term of this grant of Units, any grant, communication, or acceptance of such grant, if applicable, is permitted to be made and processed through the online system operated and maintained for this purpose. The Employee further acknowledges and agrees that execution of any documents through such system shall have the same force and effect as if executed in writing.
13.    Section 409A.
The Company intends that payments under this Agreement will either comply with or be exempt from Section 409A of the Internal Revenue Code and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from Section 409A or in compliance therewith, as applicable. To the extent the Company determines that this Agreement is subject to Section 409A, but does not conform with the requirements of Section 409A, the Company may at its sole discretion amend or replace the Agreement to cause the Agreement to comply with Section 409A. The Company makes no representation that the Agreement is exempt from or complies with Section 409A and makes no undertaking to preclude Section 409A from applying to the Agreement.


The Company will have no liability to the Employee or to any other party if the Agreement that is intended to be exempt from or compliant with Section 409A is not so exempt or compliant or for any action taken by the Company with respect thereto.
14.    Recoupment Policy.
As an additional condition of receiving the Units, the Employee agrees that the Units and any benefits the Employee may receive hereunder shall be subject to forfeiture and/or repayment to the Company: (a) to the extent required under the terms of any recoupment or “clawback” policy adopted by the Company and in effect as of the Grant Date; (b) to comply with any recoupment requirement imposed under applicable laws, rules, regulations or stock exchange listing standards, including, without limitation, pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and/or (c) in the event the Employee engages in misconduct which has or might reasonably be expected to have material reputational or other harm to the Company, provided that in such case the Company will not seek to recover Units that were paid more than three years before the date the detrimental behavior was discovered or the date the full impact of the misconduct was known, as determined by the Committee. A recovery under this section 13 can be made by withholding compensation otherwise due to the Employee, by cancelling vested but unpaid Units or by such other means determined appropriate by the Committee. The Recoupment Policy set forth in this Section 13 shall be applied by the Committee, at its discretion, to the maximum extent permitted under applicable law.
15.    Miscellaneous.
(a)    All amounts credited to the Employee’s Account under this Agreement shall continue for all purposes to be a part of the general assets of the Company. The Employee’s interest in the Account shall make the Employee only a general, unsecured creditor of the Company.
(b)    The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.
(c)    Any notice required or permitted hereunder that is not covered by section 11 above, shall be given in writing and shall be deemed effectively given upon delivery to the Employee at the address then on file with the Company or upon delivery to the Company at 2000 Purchase Street, Purchase, New York 10577, Attn: EVP, Total Rewards.
(d)    Neither the Plan nor this Agreement nor any provisions under either shall be construed so as to grant the Employee any right to remain in the employ of the Company or an Affiliated Employer. Neither the Plan nor this Agreement shall interfere with the rights of the Company or an Affiliated Employer, as applicable, to terminate the employment of the Employee and/or take any personnel action affecting the Employee without regard to the effect which such action may have upon the Employee as a recipient or prospective recipient of any benefits under the Plan or this Agreement.

The value of the Units granted hereunder is an extraordinary item of compensation outside the scope of the Employee’s terms and conditions of employment and/or employment contract, if any. As such, the Units granted hereunder are not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.


(e)    The Company reserves the right to impose other requirements on the Units, any Common Shares acquired or payment made pursuant to the Units, and the Employee’s participation in the Plan, to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable. Such requirements may include (but are not limited to) requiring the Employee to sign any agreements or undertakings that may be necessary to accomplish the foregoing.
(f)    Notwithstanding any provisions in this Agreement, the Units will be subject to any country-specific terms set forth in an addendum to this Agreement for Participants who work or reside in a country outside the United States (“Addendum”). Moreover, if the Employee relocates to one of the countries included in the Addendum, the terms for such country will apply to him or her, to the extent the Company determines that the application of such terms is necessary or advisable. The Addendum constitutes part of this Agreement.
(g)    The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. Further, upon a determination that any term or other provision of this Agreement is illegal or otherwise incapable of being enforced, such term or other provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the illegal or unenforceable term or provision.
(h)    This Agreement, along with the incorporated grant statement, an executed Mastercard LTIP Non-Competition Agreement, and any special provisions for the Employee’s country of residence or employment, as set forth in the applicable Addendum, constitutes the entire agreement of the parties with respect to the subject matter hereof.
By /s/ ______________________________________

Name:
Title:


EX-10.2 3 exb102-03312023.htm EX-10.2 Document

EXHIBIT 10.2

FORM OF
STOCK OPTION AGREEMENT
20xx GRANT
[effective for awards grnated on and subsequent to March 1, 2023]

Name: xxxxxx
$ Granted: $ xxx,xxx


THIS AGREEMENT, dated as of March 1, 20xx, (“Grant Date”) is between Mastercard Incorporated, a Delaware Corporation (“Company”), and you (the “Employee”). Capitalized terms that are used but not defined in this Agreement have the meanings given to them in the 2006 Long Term Incentive Plan, as amended (“Plan”).
WHEREAS, the Company has established the Plan, the terms of which are made a part hereof;
WHEREAS, the Human Resources and Compensation Committee of the Board of Directors of the Company (“Committee”) has approved this grant under the terms of the Plan;
NOW, THEREFORE, the parties hereby agree as follows:
1.    Grant of Stock Options.
Subject to the terms and conditions of this Agreement and of the Plan, the Company hereby grants to the Employee a nonqualified stock option (“Stock Option”) to purchase from time to time all or any part of >xxxx< common shares of the Company’s Class A Common Stock (“Common Shares”), as reflected in the Employee’s grant statement, the terms of which are incorporated as part of this Agreement, at a price per share equal to 100 percent of the Fair Market Value of the Common Shares (the closing price) on the Grant Date.
2.    Exercise.
This Stock Option is exercisable from the date and to the extent that the Employee’s interest in the Stock Option is vested, but in no event earlier than seven months after the Grant Date (other than in the case of the Employee’s death, as set forth in Section 3(b) below), until the date the term of the Stock Option expires under Section 4 below. The Employee’s interest in the Stock Option may be exercised only by delivering notice of exercise, in the form prescribed by the Company, to the Company or its designated agent, and paying the full exercise price for the shares and the full amount of any Tax-Related Items required to be withheld. Unless otherwise set forth in an addendum to this Agreement for Participants who work or reside in or relocate to a country outside the United States (“Addendum”), the exercise price may be paid by delivery of cash or a certified check, delivery of Common Shares already owned by the Employee, or by delivery of cash by a broker-dealer as a “cashless” exercise. Special rules will apply to the payment of the exercise price and any Tax-Related Items by Participants who are subject to Securities and Exchange Commission Rule 16b-3. Common Shares issued on exercise of the Stock Option shall be unrestricted Common Shares.



As a condition of the Employee’s right to exercise the Stock Option, the Employee shall be required to execute and comply with any Mastercard LTIP Non-Competition Agreement that the Company requires for the Employee to be eligible to participate in the Plan and to execute any other documents required by the Committee pursuant to this Agreement.
3.    Vesting.
Vest Date Vest Quantity
March 1, 20xx One third (33.33%)
March 1, 20xx One third (33.33%)
March 1, 20xx One third (33.33%)

(a)    Subject to (b) and (c) below, the interest of the Employee in the Stock Option shall vest with respect to one third (33.33%) of the Stock Option on each of the first, second and third anniversaries of the Grant Date, conditioned upon the Employee’s continued employment with the Company or an Affiliated Employer as of each vesting date. In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer for any reason other than as set forth in (b) or (c), the unvested portion of the Stock Option shall be forfeited. A transfer of Employee’s employment among the Company and any Affiliated Employer shall not be treated as a Termination of Employment hereunder.
(b)    In the event that the Employee’s employment with the Company or an Affiliated Employer terminates by reason of the Employee’s death after the Grant Date, 100 percent of the Employee’s interest in the Stock Option shall vest and become immediately exercisable. In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer due to Disability or Retirement seven months or longer after the Grant Date, unless circumstances exist at the time of Termination of Employment that would constitute Cause, the Employee’s interest in the Stock Option shall continue to vest and become exercisable as if there was no Termination of Employment.
(c)    In the event of the Employee’s Termination of Employment by the Company or an Affiliated Employer, or successor thereto, without Cause six months preceding or two years following a Change in Control, 100 percent of the Employee’s then unvested interest in the Stock Option shall vest upon the later of the Employee’s termination date or the Change in Control.
4.    Term and Termination.
The Stock Option shall expire on the earlier of (i) the tenth anniversary of the Grant Date, or (ii) in the case of a Stock Option that has vested at the time of an Employee’s Termination of Employment other than by death, Disability, or Retirement, 120 days from the date of the Employee’s Termination of Employment. In the event an Employee’s Termination of Employment is due to death, Disability, Retirement, or is in connection with a Change in Control under the circumstances specified in Section 3(c) above, the Stock Option shall expire on the tenth anniversary of the Grant Date.




Expiration on a date shall occur as of the closing time of regular trading on the market on which the Company’s Common Shares are traded on that date or, if that date is not a date on which such market is open for trading, as of the closing time of regular trading on the market on which the Company’s Common Shares are traded on the immediately preceding trading date. The Employee is solely responsible for any election to exercise the Stock Option, and the Company has no obligation to provide notice to the Employee of any matter, including, but not limited to, the date the Stock Option terminates. Neither the Company nor any Affiliated Employer has any liability in the event of the Employee’s failure to timely exercise any vested Stock Option prior to its expiration.

5.    Transfer Restrictions.
Other than by will or by the laws of descent and distribution, the Stock Option may not be sold, assigned, margined, transferred, encumbered, conveyed, gifted, hypothecated, pledged, or otherwise disposed of and may not be subject to lien, garnishment, attachment or other legal process, except as expressly permitted by the Plan. During the Employee’s lifetime, the Stock Option is exercisable only by the Employee.
6.    Stockholder Rights.
Prior to the time that the Company has issued Common Shares on an Employee’s exercise of the Employee’s interest in his or her Stock Option, the Employee will not be deemed to be the holder of, or have any of the rights of a holder with respect to, any Common Shares deliverable with respect to such Stock Option.
7.    Changes in Stock.
In the event of any change with respect to outstanding Common Shares contemplated by Section 4.6(1) of the Plan, the Stock Option may be adjusted in accordance with Section 4.6(1) of the Plan.
8.    Compliance with Law.
No Common Shares will be delivered to the Employee upon the Employee’s exercise of his or her interest in the Stock Option unless counsel for the Company is satisfied that such delivery will be in compliance with all applicable laws, including, without limitation, any rule, regulation or procedure of the U.S. national securities exchange upon which the Company’s Common Shares are traded or any listing agreement with any such securities exchange, or any other requirement of law or of any administrative or regulatory body having jurisdiction over the Company or an Affiliated Employer.
9.    Death of Employee.
In the event of the Employee’s death, the Stock Option shall be exercisable by the executor or administrator of the Employee’s estate or the person to whom the Stock Option has passed by will or the laws of descent and distribution in accordance with Section 5 of this Agreement.
10.    Taxes.
The Employee shall be liable for any and all taxes, including income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (“Tax-Related Items”), arising out of the transfer of Common Shares on exercise of the Stock Option or any other taxable event in connection with the Stock Option.




Prior to any such taxable event, the Employee (or the Employee’s estate) shall pay or make adequate arrangements satisfactory to the Company or, if different, the Employee’s employer (the “Employer”) to meet the Company’s or the Employer’s withholding obligations for Tax-Related Items. In this regard, the Employee may satisfy such Tax-Related Items obligations by delivery of cash or a certified check or delivery of cash by a broker-dealer as part of a “cashless” exercise. The Company is also authorized to deduct from the total number of Common Shares the Employee is to receive on exercise of the Stock Option, a number of Common Shares with a total value equal to the amount necessary to satisfy any such withholding obligation. If the Tax-Related Items withholding is satisfied by withholding in Common Shares, for tax purposes, the Employee is deemed to have been issued the full number of Common Shares subject to the exercised Stock Option, notwithstanding that a number of the Common Shares is held back solely for the purpose of paying the Tax-Related Items.
Alternatively, provided the Employee is not subject to Securities and Exchange Commission Rule 16b-3, the Company may sell or arrange for the sale of a sufficient number of Common Shares issued to the Employee upon exercise of the Stock Option to meet the Tax-Related Items withholding obligation.
The Company (or, as applicable, the Employer) may withhold or account for Tax-Related Items by considering statutory withholding rates or other applicable withholding rates, including maximum rates applicable in the Employee’s jurisdiction(s), and will do so using the information in its applicable systems and other business records at the time of such withholding event. In the event of over-withholding in or through sale of Common Shares, the Employee may receive a refund from the local tax authorities of any over-withheld amount in cash and will have no entitlement to the Common Share equivalent. In the event the withholding deducted is less than the Tax-Related Items for which the Employee is liable, the Employee may be required to pay any additional Tax-Related Items directly to the applicable tax authority or to the Company and/or the Employer.
The Employee agrees to pay to the Company or the Employer, including through withholding from the Employee’s wages or other cash compensation paid to the Employee by the Company and/or the Employer, any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Employee’s participation in the Plan that cannot be satisfied by the means previously described.
Finally, the Employee acknowledges that the ultimate liability for all Tax-Related Items legally due by the Employee is and remains the Employee’s responsibility, regardless of any withholding by the Company or the Employer, and that the Company and the Employer: (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Stock Option, including the grant of the Stock Option, the vesting of the Stock Option, the exercise of the Stock Option, the subsequent sale of any Common Shares acquired pursuant to the Stock Option, or the receipt of any dividends; and (b) do not commit to structure the terms of the grant or any aspect of the Stock Option to reduce or eliminate the Employee’s liability for Tax-Related Items. The Company may refuse to issue or deliver the Common Shares, or the proceeds of the sale of Common Shares, if the Employee fails to comply with the Employee’s obligations in connection with the Tax-Related Items.









11.    Restrictive Covenants.
If, at the Grant Date, the Employee is a Vice President (or equivalent) of the Company or an Affiliated Employer or holds a role above the level of Vice President (or its equivalent), and provided that the Employee is not employed in California or Ontario, then in consideration of the grant of this Stock Option, the Employee agrees to the restrictive covenants and associated remedies as set forth below, which exist independently of and in addition to any obligation to which the Employee is subject under the terms of any Mastercard LTIP Non-Competition Agreement that the Company requires the Employee to execute in order to be eligible to participate in the Plan:
(a)    The Employee agrees for a period of twelve months following the termination of the Employee's employment with the Company or an Affiliated Employer for any reason, the Employee will not directly or indirectly for him- or herself or any third party: (i) engage, participate or invest in (one percent (1%) ownership or more), own or become employed by or render (whether or not for compensation) any consulting, contractor, advisory or other services to or for the benefit of Visa, American Express, Discover, PayPal, China Union Pay including any of their respective subsidiaries, affiliates and successors AND any other competitor or any third party that the Employee knows intends to be a competitor of Mastercard International Incorporated including any of its subsidiaries and affiliates (collectively, "Mastercard"); (ii) solicit, induce, recruit or otherwise entice away from Mastercard any other employee, agent or consultant of Mastercard who could damage Mastercard’s interests; or (iii) solicit, induce any customer or supplier of Mastercard, or other person engaged in business with Mastercard to terminate, reduce or otherwise modify any commercial arrangement with Mastercard.
(b)    Violation of Restrictive Covenants. If the Employee breaches any of the terms of the restrictive covenants in Section 11(a) above, any outstanding portion of the Stock Option, whether vested or unvested, shall be immediately and irrevocably forfeited. Further, if any portion of the Stock Option that vested within twelve months prior to the termination of the Employee's employment with the Company or an Affiliated Employer or at any time after the Employee's termination has been exercised by the Employee, the Employee may be required to repay or otherwise reimburse the Company an amount having a value equal to the aggregate fair market value (determined as of the date of exercise) of any Common Shares transferred to the Employee as a result of the exercise of such Stock Option, less the exercise price paid for such Common Shares. This Section 11(b) does not constitute the Company’s exclusive remedy for the Employee's violation of the Employee's restrictive covenant obligations, and in the event of a breach or threatened breach by the Employee of any provision of Section 11(a), the Employee agrees that the Company and any applicable Affiliated Employer shall be entitled to an injunction or restraining order to prevent such breach or threatened breach in addition to any other remedies permitted by applicable law.
This Section 11 shall be construed to the maximum extent permitted by applicable law and may be modified as strictly necessary to be legally enforceable as determined by a court of competent jurisdiction ruling on this Agreement. The Company may release the Employee from any and all provisions in this Section 11 by providing written notice of the release.
12.    Discretionary Nature of Plan.
The Employee acknowledges and agrees that the Plan is discretionary in nature and may be amended, cancelled, or terminated by the Company, in its sole discretion, at any time.




The grant of a Stock Option under the Plan is a one-time benefit and does not create any contractual or other right to receive a grant of a Stock Option, other awards under the Plan, or benefits in lieu of such awards in the future. Future grants, if any, will be at the sole discretion of the Company, including, but not limited to, the timing of any grant, the number of Stock Options granted, and vesting provisions.
13.    Section 409A.
The Stock Option is not intended to provide for a “deferral of compensation” within the meaning of Section 409A of the Internal Revenue Code (“Section 409A”) and shall be interpreted, administered and construed in a manner consistent with that intent. To the extent the Company determines that this Agreement is subject to Section 409A, but does not conform with the requirements of Section 409A the Company may at its sole discretion amend or replace the Agreement to cause the Agreement to be exempt from or comply with Section 409A. The Company makes no representation that the Agreement is exempt from or complies with Section 409A and makes no undertaking to preclude Section 409A from applying to the Agreement. The Company will have no liability to the Employee or to any other party if the Agreement that is intended to be exempt from or compliant with Section 409A is not so exempt or compliant or for any action taken by the Company with respect thereto.
14.    Consent to On-Line Grant and Acceptance.
The Employee acknowledges and agrees that, as a term of this Stock Option grant, any grant, communication, acceptance of such grant, or exercise of such grant, is permitted to be made and processed through the on-line system operated and maintained for this purpose. The Employee further acknowledges and agrees that execution of any documents through such system shall have the same force and effect as if executed in writing.
15.    Recoupment Policy.
As an additional condition of receiving the Stock Option, the Employee agrees that the Stock Option and any benefits the Employee may receive hereunder shall be subject to forfeiture and/or repayment to the Company: (a) to the extent required under the terms of any recoupment or “clawback” policy adopted by the Company and in effect as of the Grant Date; (b) to comply with any recoupment requirement imposed under applicable laws, rules, regulations or stock exchange listing standards, including, without limitation pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and/or (c) in the event the Employee engages in misconduct which has or might reasonably be expected to have material reputational or other harm to the Company, provided that in such case the Company will not seek to recover Stock Options that became fully vested more than three years before the date the detrimental behavior was discovered or the date the full impact of the misconduct was known, as determined by the Committee. A recovery under this Section 14 can be made by withholding compensation otherwise due to the Employee, by cancelling vested or unvested Stock Options or by such other means determined appropriate by the Committee. The Recoupment Policy set forth in this Section 15 shall be applied by the Committee, at its discretion, to the maximum extent permitted under applicable law.
16.    Miscellaneous.
(a)    The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.




(b)    Any notice required or permitted hereunder that is not covered by Section 14 above shall be given in writing and shall be deemed effectively given upon delivery to the Employee at the address then on file with the Company or upon delivery to the Company at 2000 Purchase Street, Purchase, New York 10577, Attn: EVP, Total Rewards.
(c)    Neither the Plan nor this Agreement nor any provisions under either shall be construed so as to grant the Employee any right to remain in the employ of the Company or an Affiliated Employer. Neither the Plan nor this Agreement shall interfere with the rights of the Company or an Affiliated Employer, as applicable, to terminate the employment of the Employee and/or take any personnel action affecting the Employee without regard to the effect which such action may have upon the Employee as a recipient or prospective recipient of any benefits under the Plan or this Agreement.

The value of the Stock Option granted hereunder is an extraordinary item of compensation outside the scope of the Employee’s terms and conditions of employment and/or employment contract, if any. As such, the Stock Options granted hereunder are not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.
(d)    The Company reserves the right to impose other requirements on the Stock Option, any Common Shares acquired or payment made pursuant to the Stock Option, and the Employee’s participation in the Plan, to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable. Such requirements may include (but are not limited to) requiring the Employee to sign any agreements or undertakings that may be necessary to accomplish the foregoing.
(e)    Notwithstanding any provisions in this Agreement, the Stock Option will be subject to any country-specific terms set forth in the Addendum for the Employee’s country of residence or employment. Moreover, if the Employee relocates to one of the countries included in the Addendum, the terms for such country will apply to the Employee, to the extent the Company determines that the application of such terms is necessary or advisable. The Addendum constitutes part of this Agreement.
(f)    The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. Further, upon a determination that any term or other provision of this Agreement is illegal or otherwise incapable of being enforced, such term or other provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the illegal or unenforceable term or provision.
(g)    This Agreement, along with the incorporated grant statement, an executed Mastercard LTIP Non-Competition Agreement, and any special provisions for the Employee’s country of residence or employment, as set forth in the applicable Addendum, constitutes the entire agreement of the parties with respect to the subject matter hereof.







By /s/ ______________________________________

Name:
Title:


EX-10.3 4 exb103-03312023.htm EX-10.3 Document

EXHIBIT 10.3

FORM OF
PERFORMANCE STOCK UNIT AGREEMENT
20xxGRANT
[effective for awards granted on and subsequent to March 1, 2023]

Name: xxxxxx
$ Granted: $ xxx,xxx

THIS AGREEMENT, dated as of March 1, 20xx, (“Grant Date”) is between Mastercard Incorporated, a Delaware Corporation (“Company”), and you (the “Employee”). Capitalized terms that are used but not defined in this Agreement have the meanings given to them in the 2006 Long Term Incentive Plan, as amended (“Plan”).
WHEREAS, the Company has established the Plan, the terms of which are made a part hereof;
WHEREAS, the Human Resources and Compensation Committee of the Board of Directors of the Company (“Committee”) has approved this grant under the terms of the Plan;
NOW, THEREFORE, the parties hereby agree as follows:
1.    Grant of Units.
Subject to the terms and conditions of this Agreement and of the Plan, the Company hereby grants to the Employee <xxx> Units, as reflected in the Employee’s grant statement, the terms of which statement are incorporated as a part of this Agreement. Each Unit represents the right to receive an amount of the Company’s $0.0001 par value Class A Common Stock (“Common Shares”) that varies depending on the level of performance achieved on specified performance criteria during the performance period established by the Committee, which shall be within or concurrent with the period from January 1, 20xx, through December 31, 20xx.
2.    Vesting of Units.
Subject to section 4 below, the interest of the Employee in the Units shall vest on March 1, 20xx (the “Vesting Date”), conditioned upon the Employee’s continued employment with the Company or an Affiliated Employer as of the Vesting Date, and the achievement of the performance goals established by the Committee and set forth in the Employee’s grant statement. In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer for any reason other than as set forth in section 4, unvested Units shall be forfeited. A transfer of Employee’s employment among the Company and any Affiliated Employer shall not be treated as a Termination of Employment hereunder. Vesting in Units is subject to the Committee’s exercise of downward discretion to reduce the amounts earned on achievement of performance goals. As a condition of the Employee’s right to vest in the Units, the Employee shall be required to execute and comply with any Mastercard LTIP Non-Competition Agreement that the Company requires for the Employee to be eligible to participate in the Plan, and to execute any other documents required by the Committee pursuant to this Agreement. If the Employee has not executed and delivered to the Company any such required Mastercard LTIP Non-Competition Agreement by the date required by the Company, which will in no event be later than the Vesting Date or such earlier vesting event pursuant to section 4(c)(ii) below, the unvested Units shall be forfeited.
406567701-v3\NA_DMS



3.    Form and Timing of Payment.
     (a)    Payment Date. Except as otherwise provided in section 4(a) or 4(c)(ii) below, on the first anniversary of the Vesting Date, March 1, 20xx (or if such date is not a business day, then on the first business day thereafter) (the “Payment Date”), the Company shall pay to the Employee a number of Common Shares equal to the aggregate number of Units determined to have been earned based on achievement of the performance goals.
(b)    Treatment of Vested Units. Between the Vesting Date and the Payment Date (the “Deferral Period”), the number of Units determined to have been earned (“Vested Units”) will be fully vested and nonforfeitable by the Employee, subject to section 9 below. In any case under this Agreement where the Deferral Period applies, such Vested Units will accrue dividend equivalents, consisting of a cash amount equal to the number of Vested Units held by the Employee times any per share dividend payment made to holders of the Company’s Common Shares during the Deferral Period. Such dividend equivalents will be paid to the Employee in cash on the Payment Date, along with the Common Shares distributable pursuant to section 3(a), except as otherwise provided in section 4(a) or 4(c)(ii) below. Vested Units will count as Common Shares for purpose of the Employee’s compliance with the Company’s stock ownership requirement. For purposes of this Agreement, “Vested Units” shall include Units that vest at target pursuant to sections 4(a) or 4(c).
(c)    Cash Settlement. Notwithstanding section 3(a) or (b) above, the Company may, in its sole discretion, settle the Units in the form of a cash payment to the extent settlement in Common Shares is prohibited under local law, or would require the Employee, the Company and/or the Employer to obtain the approval of any governmental and/or regulatory body in the Employee’s country of residence (or country of employment, if different). Alternatively, the Company may, in its sole discretion, settle the Units in the form of Common Shares but require the Employee to immediately sell such Common Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on behalf of the Employee).

4.    Termination of Employment; Change in Control.
    (a)    Death. In the event that the Employee’s employment with the Company or an Affiliated Employer terminates by reason of the Employee’s death prior to the Vesting Date, 100 percent of the Employee’s then unvested Units shall vest and be payable at the target level of performance and the Deferral Period shall not apply. If the Employee’s employment terminates by reason of the Employee’s death during the Deferral Period, the Employee’s Vested Units and any dividend equivalents accrued thereon will become immediately payable. In either case, payment of the Units shall be made within 90 days following death, or where additional time is needed for administrative reasons, at such later time as is permitted under Section 409A (as defined in section 14 below). Payment shall be made to the Employee’s estate.
(b) Disability or Retirement.




In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer due to Disability or Retirement seven months or longer after the Grant Date but prior to the Vesting Date, unless circumstances exist at the time of Termination of Employment that would constitute Cause, unvested Units shall continue to vest as if there had been no Termination of Employment, subject to the achievement of performance goals; provided, however, that the Committee shall have discretion to determine at any time during the vesting period that an Employee shall not vest in whole or in part in a particular Unit. Where the Employee has a Termination of Employment due to Disability or Retirement before the Vesting Date, or after the Vesting Date but during the Deferral Period, payment of any Vested Units and any dividend equivalents accrued thereon (if applicable) will be made on the Payment Date in accordance with section 3(a).
(c)    Change in Control.
(i) In the event of a Change in Control, vesting and payment will be as set forth in section 2 and section 3(a) to the extent the achievement of performance goals can continue to be measured after the Change in Control. To the extent the achievement of performance goals is no longer capable of measurement following a Change in Control, the Employee’s unvested Units shall vest at the target level of performance on the Vesting Date, conditioned upon the Employee’s continued employment (except as otherwise set forth in this section 4) with the Company or an Affiliated Employer, or successor thereto, as of the Vesting Date, and shall be paid along with any dividend equivalents accrued thereon, on the Payment Date in accordance with section 3(a).
(ii) Notwithstanding section 4(c)(i) above, in the event of the Employee’s Termination of Employment by the Company or an Affiliated Employer, or successor thereto, without Cause or due to a Job Elimination or Role Refresh six months preceding or two years following a Change in Control and prior to the Vesting Date, the Employee’s then unvested Units shall vest upon the later of the Employee’s termination date or the Change in Control and be payable at the target level of performance, and the Deferral Period shall not apply. If the Employee’s employment is terminated by the Company or an Affiliated Employer, or successor thereto, without Cause or due to a Job Elimination or Role Refresh six months preceding or two years following a Change in Control and during the Deferral Period, the Employee’s Vested Units and any dividend equivalents accrued thereon will become immediately payable. In either case, payment of the Vested Units and any dividend equivalents accrued thereon (if applicable) shall be made as follows: (i) in the event of Termination of Employment prior to the Change in Control, within 90 days following the Change in Control; or (ii) in the event of Termination of Employment after the Change in Control, on the first business day which is at least seven months after the Termination of Employment or at such later date permitted under Section 409A.
(d)    Job Elimination or Role Refresh. In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer due to a Job Elimination or a Role Refresh prior to the Vesting Date (other than in connection with a Change in Control, as provided in section 4(c)(ii)), the Employee’s interest in a pro-rata portion of the unvested Units shall continue to vest as if there had been no Termination of Employment, subject to the achievement of performance goals, provided, however, that the Committee shall have discretion to determine at any time during the vesting period that an Employee shall not vest in whole or in part in a particular Unit. Such continued vesting is contingent upon the Employee’s execution and non-revocation of a separation agreement and/or a release of all claims in a form satisfactory to the Company within a period of no more than 75 days following the date of the Employee’s




Termination of Employment. The aforementioned pro-rata portion of the unvested Units shall be calculated based on the ratio of (x) the number of calendar days worked by the Employee from the Grant Date to the Employee’s termination date, to (y) the total number of calendar days in the original vesting schedule of the Units. For purposes of this section 4(d), a “Job Elimination” shall mean either (i) the Employee’s involuntary and permanent Termination of Employment by the Company or an Affiliated Employer because of a permanent layoff, reduction in force, facility closing, reorganization, or consolidation, or (ii) the Employee’s involuntary Termination of Employment with the Company or an Affiliated Employer after the Employee has been offered and declined continued employment with the Company or an Affiliated Employer in a position that is, in the Company’s sole judgment, not comparable to or better than the position that the Employee previously held with the Company or an Affiliated Employer. For purposes of this section 4(d), a “Role Refresh” shall mean the Employee’s involuntary Termination of Employment by the Company or an Affiliated Employer where the Company determines that a change is in the best interests of the Company and/or an Affiliated Employer and the following conditions are met: (i) the Employee is a level 4 or higher; (ii) the Employee’s last official rating and ongoing performance level is achieves or higher; (iii) the Employee has been in substantially the same role for three (3) or more years (this requirement may be waived for employees at levels 1 and 2); and (iv) the Employee’s role is not being eliminated. Notwithstanding the foregoing, the Employee shall not be entitled to continued vesting of the Units under this section 4(d) if the Employee incurs a “Disqualifying Event” under the terms of the Mastercard International Incorporated Severance Plan or, as applicable, the Amended and Restated Mastercard International Incorporated Executive Severance Plan. To obtain a copy of the Mastercard International Incorporated Severance Plan, please send a request to the Employment Counsel at 2000 Purchase Street, Purchase, NY 10577. Where the Employee has a Termination of Employment due to a Job Elimination or a Role Refresh before the Vesting Date, or after the Vesting Date but during the Deferral Period, payment of any Vested Units and any dividend equivalents accrued thereon (if applicable) will be made on the Payment Date in accordance with section 3(a).





5.    Transfer Restrictions.
The Units granted hereunder may not be sold, assigned, margined, transferred, encumbered, conveyed, gifted, hypothecated, pledged, or otherwise disposed of and may not be subject to lien, garnishment, attachment or other legal process, except as expressly permitted by the Plan.
6.    Stockholder Rights.
Prior to the time that the Company has issued Common Shares to the Employee relating to the Employee’s Vested Units, the Employee will not be deemed to be the holder of, or have any of the rights of a holder with respect to, any Common Shares deliverable with respect to such Units. Specifically, and without limiting the foregoing, the Employee shall not be entitled to dividends prior to being issued Common Shares. However, the Employee will be entitled to accrue dividend equivalents during the Deferral Period as provided in section 3(b).
7.    Changes in Stock.
In the event of any change with respect to outstanding Common Shares contemplated by Section 4.6(1) of the Plan, the Units may be adjusted in accordance with Section 4.6(1) of the Plan.
8.    Compliance with Law.
No Common Shares (or cash pursuant to section 3(c) above) will be delivered to the Employee in accordance with section 3 above unless counsel for the Company is satisfied that such delivery will be in compliance with all applicable laws, including, without limitation, any rule, regulation or procedure of the U.S. national securities exchange upon which the Company’s Common Shares are traded or any listing agreement with any such securities exchange, or any other requirement of law or of any administrative or regulatory body having jurisdiction over the Company or an Affiliated Employer.
9.    Recoupment Policy.
(a) Forfeiture/Recoupment in the event of Restatement. In the event of a restatement of materially inaccurate financial results, the Committee has the discretion to recover from the Employee stock or cash equal to the value of the stock issued on settlement of these Units or issuable pursuant to any Vested Units, or the proceeds realized by the Employee on the sale of such stock to the extent the vesting schedule of the Units under section 2 includes all or part of the period covered by the restatement. If the amount that would have vested based on achievement of performance goals would have been lower had the achievement of applicable financial performance targets been calculated based on such restated financial results, the Committee may, if it determines appropriate in its sole discretion recover from the Employee stock or cash equal to the portion of the stock issued or issuable in excess of the amount that would have been paid based on the restated financial results. A recovery under this section 9(a) can be made by withholding compensation otherwise due to the Employee, by the cancelling of Vested Units during the Deferral Period or by such other means determined appropriate by the Committee. Unless otherwise required by applicable laws or stock exchange listing standards, the Company will not seek to recover amounts paid under this Agreement based on materially inaccurate financial results that are restated more than three years after the date the Company files the report with the Securities and Exchange Commission that contained such financial results.




    (b)    Forfeiture/Recoupment in the event of Detrimental Behavior. In the event an Employee engages in misconduct which has or might reasonably be expected to have material reputational or other harm to the Company, the Committee has the discretion to recover stock or cash equal to the value of the stock issued on settlement of these Units or issuable pursuant to any Vested Units, or the proceeds realized by the Employee on the sale of such stock. A recovery under this section 9(b) can be made by withholding compensation otherwise due to the Employee, by the cancelling of Vested Units during the Deferral Period or by such other means determined appropriate by the Committee. The Company will not seek to recover Units that were paid more than three years before the date the detrimental behavior was discovered or the date the full impact of the misconduct was known, as determined by the Committee.
    (c)    Forfeiture/Recoupment Required by Law. The Recoupment Policy set forth in this Section 9 shall be applied by the Committee, at its discretion, to the maximum extent permitted under applicable law. Further, the Recoupment Policy set forth in this section 9 is in addition to, and not in lieu of, any recoupment requirements under the Sarbanes-Oxley Act or under other applicable laws, rules, regulations or stock exchange listing standards, including, without limitation, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and shall apply notwithstanding anything to the contrary in this Agreement or in the Plan.
10.    Taxes.
The Employee shall be liable for any and all taxes, including income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (“Tax-Related Items”), arising out of this grant, vesting, or the issuance of the Common Shares hereunder or any other taxable event in connection with the Units.
Prior to any such taxable event, the Employee (or the Employee’s estate) shall pay or make adequate arrangements satisfactory to the Company or, if different, the Employee’s employer (the “Employer”) to meet the Company’s or the Employer’s withholding obligations for Tax-Related Items. In this regard, the Company is authorized to deduct from the total number of Common Shares the Employee is to receive on settlement of the Units a number of Common Shares with a total value equal to the amount necessary to satisfy any such withholding obligation. If the Tax-Related Items withholding is satisfied by withholding in Common Shares, for tax purposes, the Employee is deemed to have been issued the full number of Common Shares subject to the Vested Units, notwithstanding that a number of the Common Shares is held back solely for the purpose of paying the Tax-Related Items.
Alternatively, provided the Employee is not subject to Securities and Exchange Commission Rule 16b-3 (“Rule 16b-3”), the Company may sell or arrange for the sale of a sufficient number of Common Shares issued to the Employee upon settlement of the Units to meet the Tax-Related Items withholding obligation.
The Company (or, as applicable, the Employer) may withhold or account for Tax-Related Items by considering statutory withholding rates or other applicable withholding rates, including maximum rates applicable in the Employee’s jurisdiction(s), and will do so using the information in its applicable systems and other business records at the time of such withholding event. In the event of over-withholding, the Employee may receive a refund from the local tax authorities of any over-withheld amount in cash and will have no entitlement to the Common Share equivalent.




In the event the withholding deducted is less than the Tax-Related Items for which the Employee is liable, the Employee may be required to pay any additional Tax-Related Items directly to the applicable tax authority or to the Company and/or the Employer.
Further, to the extent that any obligation to withhold Tax-Related Items arises prior to settlement of the Units, the Company may cause the Units to vest prior to the Vesting Date, and/or to be deemed payable prior to the Payment Date, for the purpose of satisfying such obligation by withholding or selling of Common Shares as provided for above (to the extent such methods are otherwise permitted under this Agreement), provided that (a) to avoid a prohibited acceleration under Section 409A, the number of Units so vested and/or deemed payable will not exceed the number necessary to satisfy the liability for Tax-Related Items; and (b) if the Employee is subject to Rule 16b-3, any withholding in Common Shares pursuant to the foregoing will either be approved in advance by the Human Resources and Compensation Committee or solely at the election of the Employee. Pursuant to the foregoing and without limiting the discretion and authority of the Company as provided herein with respect to any other applicable Tax-Related Items, the Employee will have the right to elect to have the Company satisfy any Federal Insurance Contributions Act taxes required to be withheld before settlement of the Units by causing a sufficient portion of the Units to be deemed payable and withholding in Common Shares. If Tax-Related Items are withheld prior to the Payment Date by the method described in this paragraph, the number of Units scheduled to be paid on the Payment Date will be reduced by the number of Units used to satisfy such Tax-Related Items.
The Employee agrees to pay to the Company or the Employer, including through withholding from the Employee’s wages or other cash compensation paid to the Employee by the Company and/or the Employer, any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Employee’s participation in the Plan that is not satisfied by the means previously described including, without limitation, any Federal Insurance Contributions Act taxes required to be withheld before settlement of the Units for which the Employee does not elect withholding in Common Shares pursuant to the preceding paragraph.
Finally, the Employee acknowledges that the ultimate liability for all Tax-Related Items legally due by the Employee is and remains the Employee’s responsibility, regardless of any withholding by the Company or the Employer, and that the Company and the Employer: (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including the grant of the Units, the vesting of the Units, the settlement of the Units, the subsequent sale of any Common Shares acquired pursuant to the Units, or the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items. The Company may refuse to issue or deliver the Common Shares, or the proceeds of the sale of Common Shares, if the Employee fails to comply with the Employee’s obligations in connection with the Tax-Related Items.
11.    Restrictive Covenants.
If, at the Grant Date, the Employee is a Vice President (or equivalent) of the Company or an Affiliated Employer or holds a role above the level of Vice President (or its equivalent), and provided that the Employee is not employed in California or Ontario, then in consideration of the grant of this award of Units, the Employee agrees to the restrictive covenants and associated remedies as set forth below, which exist independently of and in addition to any obligation to which the Employee is subject under the terms of any Mastercard LTIP Non-Competition Agreement that the Company requires the Employee to execute in order to be eligible to participate in the Plan:




(a)    The Employee agrees for a period of twelve months following the termination of the Employee's employment with the Company or an Affiliated Employer for any reason, the Employee will not directly or indirectly for him- or herself or any third party: (i) engage, participate or invest in (one percent (1%) ownership or more), own or become employed by or render (whether or not for compensation) any consulting, contractor, advisory or other services to or for the benefit of Visa, American Express, Discover, PayPal, China Union Pay including any of their respective subsidiaries, affiliates and successors AND any other competitor or any third party that the Employee knows intends to be a competitor of Mastercard International Incorporated including any of its subsidiaries and affiliates (collectively, "Mastercard"); (ii) solicit, induce, recruit or otherwise entice away from Mastercard any other employee, agent or consultant of Mastercard who could damage Mastercard’s interests; or (iii) solicit, induce any customer or supplier of Mastercard, or other person engaged in business with Mastercard to terminate, reduce or otherwise modify any commercial arrangement with Mastercard.
(b)    Violation of Restrictive Covenants. If the Employee breaches any of the terms of the restrictive covenants in Section 11(a) above, all unvested Units shall be immediately and irrevocably forfeited. Further, with respect to any Units that vested within twelve months prior to the termination of the Employee's employment with the Company or an Affiliated Employer or at any time after the Employee's termination, the Employee may be required to repay or otherwise reimburse the Company an amount having a value equal to the aggregate fair market value (determined as of the date of vesting) of any Common Shares transferred to the Employee as a result of the vesting of such Units. This Section 11(b) does not constitute the Company’s exclusive remedy for the Employee's violation of the Employee's restrictive covenant obligations, and in the event of a breach or threatened breach by the Employee of any provision of Section 11(a), the Employee agrees that the Company and any applicable Affiliated Employer shall be entitled to an injunction or restraining order to prevent such breach or threatened breach in addition to any other remedies permitted by applicable law.
This Section 11 shall be construed to the maximum extent permitted by applicable law and may be modified as strictly necessary to be legally enforceable as determined by a court of competent jurisdiction ruling on this Agreement. The Company may release the Employee from any and all provisions in this Section 11 by providing written notice of the release.
12.    Discretionary Nature of Plan.
The Employee acknowledges and agrees that the Plan is discretionary in nature and may be amended, cancelled, or terminated by the Company, in its sole discretion, at any time. The grant of Units under the Plan is a one-time benefit and does not create any contractual or other right to receive a grant of Units, other types of grants under the Plan, or benefits in lieu of such grants in the future. Future grants, if any, will be at the sole discretion of the Company, including, but not limited to, the timing of any grant, the number of Units granted and vesting provisions.
13.    Consent to On-Line Grant and Acceptance.




The Employee acknowledges and agrees that, as a term of this grant of Units, any grant, communication, or acceptance of such grant, if applicable, is permitted to be made and processed through the online system operated and maintained for this purpose. The Employee further acknowledges and agrees that execution of any documents through such system shall have the same force and effect as if executed in writing.
14.    Section 409A.
The Company intends that payments under this Agreement will either comply with or be exempt from Section 409A of the Internal Revenue Code and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from Section 409A or in compliance therewith, as applicable. To the extent the Company determines that this Agreement is subject to Section 409A, but does not conform with the requirements of Section 409A, the Company may at its sole discretion amend or replace the Agreement to cause the Agreement to comply with Section 409A. The Company makes no representation that the Agreement is exempt from or complies with Section 409A and makes no undertaking to preclude Section 409A from applying to the Agreement. The Company will have no liability to the Employee or to any other party if the Agreement that is intended to be exempt from or compliant with Section 409A is not so exempt or compliant or for any action taken by the Company with respect thereto.





15.    Miscellaneous.
(a)    All amounts granted under this Agreement shall continue for all purposes to be a part of the general assets of the Company. The Employee’s interest in the amount ultimately determined to be earned shall make the Employee only a general, unsecured creditor of the Company.
(b)    The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.
(c)    Any notice required or permitted hereunder that is not covered by section 13 above, shall be given in writing and shall be deemed effectively given upon delivery to the Employee at the address then on file with the Company or upon delivery to the Company at 2000 Purchase Street, Purchase, New York 10577, Attn: EVP, Total Rewards.
(d)    Neither the Plan nor this Agreement nor any provisions under either shall be construed so as to grant the Employee any right to remain in the employ of the Company or an Affiliated Employer. Neither the Plan nor this Agreement shall interfere with the rights of the Company or an Affiliated Employer, as applicable, to terminate the employment of the Employee and/or take any personnel action affecting the Employee without regard to the effect which such action may have upon the Employee as a recipient or prospective recipient of any benefits under the Plan or this Agreement.

The value of the Units granted hereunder is an extraordinary item of compensation outside the scope of the Employee’s terms and conditions of employment and/or employment contract, if any. As such, the Units granted hereunder are not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.
(e)    The Company reserves the right to impose other requirements on the Units, any Common Shares acquired or payment made pursuant to the Units, and the Employee’s participation in the Plan, to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable. Such requirements may include (but are not limited to) requiring the Employee to sign any agreements or undertakings that may be necessary to accomplish the foregoing.
(f)    Notwithstanding any provisions in this Agreement, the Units will be subject to any country-specific terms set forth in an addendum to this Agreement for Participants who work or reside in a country outside the United States (“Addendum”). Moreover, if the Employee relocates to one of the countries included in the Addendum, the terms for such country will apply to him or her, to the extent the Company determines that the application of such terms is necessary or advisable. The Addendum constitutes part of this Agreement.
(g)    The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. Further, upon a determination that any term or other provision of this Agreement is illegal or otherwise incapable of being enforced, such term or other provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the illegal or unenforceable term or provision.




(h)    This Agreement, along with the incorporated grant statement, an executed Mastercard LTIP Non-Competition Agreement, and any special provisions for the Employee’s country of residence or employment, as set forth in the applicable Addendum, constitutes the entire agreement of the parties with respect to the subject matter hereof.


By /s/ ______________________________________

Name:
Title:



EX-31.1 5 exb311-03312023.htm EX-31.1 Document

EXHIBIT 31.1
CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002


I, Michael Miebach, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Mastercard Incorporated for the three months ended March 31, 2023;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 27, 2023
By: /s/ Michael Miebach
Michael Miebach
President and Chief Executive Officer



EX-31.2 6 exb312-03312023.htm EX-31.2 Document

EXHIBIT 31.2
CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002


I, Sachin Mehra, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Mastercard Incorporated for the three months ended March 31, 2023;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 27, 2023
By: /s/ Sachin Mehra
Sachin Mehra
Chief Financial Officer


EX-32.1 7 exb321-03312023.htm EX-32.1 Document

EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002


In connection with the quarterly report of Mastercard Incorporated (the "Company") on Form 10-Q for the three month period ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Miebach, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
April 27, 2023
/s/ Michael Miebach
Michael Miebach
President and Chief Executive Officer



EX-32.2 8 exb322-03312023.htm EX-32.2 Document

EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002


In connection with the quarterly report of Mastercard Incorporated (the "Company") on Form 10-Q for the three month period ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sachin Mehra, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
April 27, 2023
/s/ Sachin Mehra
Sachin Mehra
Chief Financial Officer

EX-99.1 9 exb991-03312023.htm EX-99.1 Document

EXHIBIT 99.1
Section 13(r) Disclosure

Mastercard Incorporated ("Mastercard") has established a risk-based compliance program designed to prevent us from having business dealings with Iran, as well as other prohibited countries, regions, individuals or entities. This includes obligating issuers and acquirers to screen account holders and merchants, respectively, against the U.S. Office of Foreign Assets Control’s (“OFAC”) sanctions lists, including the List of Specially Designated Nationals (“SDN list”).
We identified through our compliance program that for the period covered by this Report, Mastercard processed transactions resulting from acquirers located in the Europe and Eastern Europe/Middle East/Africa regions having each acquired transactions for an Iranian airline.
OFAC regulations and other legal authorities provide exemptions for certain activities involving dealings with Iran. However, Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 requires us to disclose whether we, or any of our affiliates, have knowingly engaged in certain transactions or dealings involving the Government of Iran or with certain persons or entities found on the SDN list, regardless of whether these dealings constitute a violation of OFAC regulations.
We do not calculate net revenues or net profits associated with specific merchants (our customers’ customers). However, we used our fee schedule and the aggregate number and amount of transactions involving the above merchants to estimate the net revenue and net profit we obtained during the three months ended March 31, 2023.  Both the number of transactions and our estimated net revenue and net profits for this period are de minimis.