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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 June 30, 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
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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 July 24, 2023, there were 934,847,899 shares outstanding of the registrant’s Class A common stock, par value $0.0001 per share; and 7,364,444 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 JUNE 30, 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 JUNE 30, 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 and Six Months Ended June 30, 2023 and 2022
Consolidated Statement of Comprehensive Income — Three and Six Months Ended June 30, 2023 and 2022
Consolidated Balance Sheet — June 30, 2023 and December 31, 2022
Consolidated Statement of Changes in Equity — Three and Six Months Ended June 30, 2023 and 2022
Consolidated Statement of Cash Flows — Six Months Ended June 30, 2023 and 2022

MASTERCARD JUNE 30, 2023 FORM 10-Q 5

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Operations (Unaudited)
  Three Months Ended June 30, Six Months Ended June 30,
  2023 2022 2023 2022
  (in millions, except per share data)
Net Revenue $ 6,269  $ 5,497  $ 12,017  $ 10,664 
Operating Expenses:
General and administrative 2,200  1,947  4,243  3,791 
Advertising and marketing 201  210  368  391 
Depreciation and amortization 192  189  383  381 
Provision for litigation 20  133  231  133 
Total operating expenses 2,613  2,479  5,225  4,696 
Operating income 3,656  3,018  6,792  5,968 
Other Income (Expense):
Investment income 59  7  114  12 
Gains (losses) on equity investments, net 123  (117) (89) (193)
Interest expense (144) (114) (276) (224)
Other income (expense), net 10  4  16  8 
Total other income (expense) 48  (220) (235) (397)
Income before income taxes 3,704  2,798  6,557  5,571 
Income tax expense 859  523  1,351  665 
Net Income $ 2,845  $ 2,275  $ 5,206  $ 4,906 
Basic Earnings per Share $ 3.01  $ 2.34  $ 5.48  $ 5.04 
Basic weighted-average shares outstanding 946  971  949  974 
Diluted Earnings per Share $ 3.00  $ 2.34  $ 5.47  $ 5.02 
Diluted weighted-average shares outstanding 949  974  952  977 

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

6 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Comprehensive Income (Unaudited)
  Three Months Ended June 30, Six Months Ended June 30,
  2023 2022 2023 2022
  (in millions)
Net Income $ 2,845  $ 2,275  $ 5,206  $ 4,906 
Other comprehensive income (loss):
Foreign currency translation adjustments 53  (710) 147  (774)
Income tax effect —  31  (14) 43 
Foreign currency translation adjustments, net of income tax effect 53  (679) 133  (731)
Translation adjustments on net investment hedges (11) 314  (85) 400 
Income tax effect 2  (70) 19  (89)
Translation adjustments on net investment hedges, net of income tax effect (9) 244  (66) 311 
Cash flow hedges (14) 6  (24) 7 
Income tax effect 6  (2) 6  (2)
Reclassification adjustments for cash flow hedges 9  —  17  (5)
Income tax effect (5) —  (4) 1 
Cash flow hedges, net of income tax effect (4) 4  (5) 1 
Reclassification adjustments for defined benefit pension and other postretirement plans —  (1) —  (1)
Income tax effect —  —  —  — 
Defined benefit pension and other postretirement plans, net of income tax effect —  (1) —  (1)
Investment securities available-for-sale
 —  (2) 2  (4)
Income tax effect —  —  —  1 
Investment securities available-for-sale, net of income tax effect —  (2) 2  (3)
Other comprehensive income (loss), net of income tax effect 40  (434) 64  (423)
Comprehensive Income $ 2,885  $ 1,841  $ 5,270  $ 4,483 

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


MASTERCARD JUNE 30, 2023 FORM 10-Q 7

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheet (Unaudited)
June 30, 2023 December 31, 2022
  (in millions, except per share data)
Assets
Current assets:
Cash and cash equivalents $ 6,170  $ 7,008 
Restricted cash for litigation settlement 598  589 
Investments 344  400 
Accounts receivable 3,763  3,425 
Settlement assets 1,378  1,270 
Restricted security deposits held for customers 1,723  1,568 
Prepaid expenses and other current assets 2,554  2,346 
Total current assets 16,530  16,606 
Property, equipment and right-of-use assets, net of accumulated depreciation and amortization
of $2,082 and $1,904, respectively
 1,986  2,006 
Deferred income taxes 1,121  1,151 
Goodwill 7,579  7,522 
Other intangible assets, net of accumulated amortization of $2,087 and $1,960, respectively
 4,049  3,859 
Other assets 7,739  7,580 
Total Assets $ 39,004  $ 38,724 
Liabilities, Redeemable Non-controlling Interests and Equity
Current liabilities:
Accounts payable $ 643  $ 926 
Settlement obligations 1,142  1,111 
Restricted security deposits held for customers 1,723  1,568 
Accrued litigation 1,079  1,094 
Accrued expenses 7,117  7,801 
Short-term debt 1,336  274 
Other current liabilities 1,596  1,397 
Total current liabilities 14,636  14,171 
Long-term debt 14,284  13,749 
Deferred income taxes 395  393 
Other liabilities 4,110  4,034 
Total Liabilities 33,425  32,347 
Commitments and Contingencies
Redeemable Non-controlling Interests 22  21 
Stockholders’ Equity
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,401 and 1,399 shares issued and 936 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 5,622  5,298 
Class A treasury stock, at cost, 465 and 451 shares, respectively
 (56,659) (51,354)
Retained earnings 57,730  53,607 
Accumulated other comprehensive income (loss) (1,189) (1,253)
Mastercard Incorporated Stockholders' Equity 5,504  6,298 
Non-controlling interests 53  58 
Total Equity 5,557  6,356 
Total Liabilities, Redeemable Non-controlling Interests and Equity $ 39,004  $ 38,724 

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

8 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Changes in Equity (Unaudited)
Three Months Ended June 30, 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 March 31, 2023 $ —  $ —  $ 5,376  $ (54,241) $ 55,424  $ (1,229) $ 5,330  $ 56  $ 5,386 
Net income —  —  —  —  2,845  —  2,845  —  2,845 
Activity related to non-controlling interests —  —  —  —  —  —  —  (3) (3)
Redeemable non-controlling interest adjustments —  —  —  —  (1) —  (1) —  (1)
Other comprehensive income (loss) —  —  —  —  —  40  40  —  40 
Dividends —  —  —  —  (538) —  (538) —  (538)
Purchases of treasury stock —  —  —  (2,423) —  —  (2,423) —  (2,423)
Share-based payments —  —  246  5  —  —  251  —  251 
Balance at June 30, 2023 $ —  $ —  $ 5,622  $ (56,659) $ 57,730  $ (1,189) $ 5,504  $ 53  $ 5,557 
Six Months Ended June 30, 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 —  —  —  —  5,206  —  5,206  —  5,206 
Activity related to non-controlling interests —  —  —  —  —  —  —  (5) (5)
Redeemable non-controlling interest adjustments —  —  —  —  (4) —  (4) —  (4)
Other comprehensive income (loss) —  —  —  —  —  64  64  —  64 
Dividends —  —  —  —  (1,079) —  (1,079) —  (1,079)
Purchases of treasury stock —  —  —  (5,317) —  —  (5,317) —  (5,317)
Share-based payments —  —  324  12  —  —  336  —  336 
Balance at June 30, 2023 $ —  $ —  $ 5,622  $ (56,659) $ 57,730  $ (1,189) $ 5,504  $ 53  $ 5,557 

MASTERCARD JUNE 30, 2023 FORM 10-Q 9

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Changes in Equity (Unaudited) - (Continued)
Three Months Ended June 30, 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 March 31, 2022 $ —  $ —  $ 5,026  $ (44,994) $ 47,800  $ (798) $ 7,034  $ 68  $ 7,102 
Net income —  —  —  —  2,275  —  2,275  —  2,275 
Activity related to non-controlling interests —  —  —  —  —  —  —  (3) (3)
Redeemable non-controlling interest adjustments —  —  —  —  (2) —  (2) —  (2)
Other comprehensive income (loss) —  —  —  —  —  (434) (434) —  (434)
Dividends —  —  —  —  (474) —  (474) —  (474)
Purchases of treasury stock —  —  —  (2,365) —  —  (2,365) —  (2,365)
Share-based payments —  —  137  —  —  —  137  —  137 
Balance at June 30, 2022 $ —  $ —  $ 5,163  $ (47,359) $ 49,599  $ (1,232) $ 6,171  $ 65  $ 6,236 

Six Months Ended June 30, 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 —  —  —  —  4,906  —  4,906  —  4,906 
Activity related to non-controlling interests —  —  —  —  —  —  —  (6) (6)
Redeemable non-controlling interest adjustments —  —  —  —  (4) —  (4) —  (4)
Other comprehensive income (loss) —  —  —  —  —  (423) (423) —  (423)
Dividends —  —  —  —  (951) —  (951) —  (951)
Purchases of treasury stock —  —  —  (4,776) —  —  (4,776) —  (4,776)
Share-based payments —  —  102  5  —  —  107  —  107 
Balance at June 30, 2022 $ —  $ —  $ 5,163  $ (47,359) $ 49,599  $ (1,232) $ 6,171  $ 65  $ 6,236 

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

10 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Cash Flows (Unaudited)
  Six Months Ended June 30,
  2023 2022
  (in millions)
Operating Activities
Net income $ 5,206  $ 4,906 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of customer and merchant incentives 782  812 
Depreciation and amortization 383  381 
(Gains) losses on equity investments, net 89  193 
Share-based compensation 243  175 
Deferred income taxes 24  (466)
Other 37  18 
Changes in operating assets and liabilities:
Accounts receivable (268) (257)
Settlement assets (108) 255 
Prepaid expenses (1,286) (1,033)
Accrued litigation and legal settlements (20) 85 
Restricted security deposits held for customers 155  (252)
Accounts payable (287) (110)
Settlement obligations 31  (239)
Accrued expenses (707) (282)
Net change in other assets and liabilities 343  53 
Net cash provided by operating activities 4,617  4,239 
Investing Activities
Purchases of investment securities available-for-sale (157) (124)
Purchases of investments held-to-maturity (31) (139)
Proceeds from sales of investment securities available-for-sale 45  14 
Proceeds from maturities of investment securities available-for-sale 102  113 
Proceeds from maturities of investments held-to-maturity 91  160 
Purchases of property and equipment (190) (201)
Capitalized software (395) (280)
Purchases of equity investments (53) (43)
Proceeds from sales of equity investments 44  6 
Acquisition of businesses, net of cash acquired —  (313)
Other investing activities (71) (5)
Net cash used in investing activities (615) (812)
Financing Activities
Purchases of treasury stock (5,294) (4,788)
Dividends paid (1,086) (956)
Proceeds from debt, net 1,550  843 
Tax withholdings related to share-based payments (79) (136)
Cash proceeds from exercise of stock options 172  68 
Other financing activities 3  (6)
Net cash used in financing activities (4,734) (4,975)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents 57  (202)
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents (675) (1,750)
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 $ 8,521  $ 8,152 

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

MASTERCARD JUNE 30, 2023 FORM 10-Q 11

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 global technology company in the 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 June 30, 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 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 and six months ended June 30, 2023 and 2022 and as of June 30, 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 and six months ended June 30, 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. The final fair value of the purchase price allocation was not materially different than the preliminary estimated fair value. 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.

12 MASTERCARD JUNE 30, 2023 FORM 10-Q

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 June 30, Six Months Ended June 30,
2023 2022 2023 2022
(in millions)
Net revenue by category:
Payment network $ 4,073  $ 3,609  $ 7,723  $ 7,008 
Value-added services and solutions 2,196  1,888  4,294  3,656 
Net revenue $ 6,269  $ 5,497  $ 12,017  $ 10,664 
Net revenue by geographic region:
North American Markets 1
 $ 2,138  $ 2,008  $ 4,034  $ 3,738 
International Markets 4,131  3,489  7,983  6,926 
Net revenue $ 6,269  $ 5,497  $ 12,017  $ 10,664 
1.North American Markets includes the United States and Canada, excluding the U.S. Territories.
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:
June 30,
2023		 December 31,
2022
(in millions)
Receivables from contracts with customers
Accounts receivable
 $ 3,531  $ 3,213 
Contract assets
Prepaid expenses and other current assets 108  118 
Other assets 421  442 
Deferred revenue 1
Other current liabilities 567  434 
Other liabilities 290  248 
1    Revenue recognized from performance obligations satisfied during the three and six months ended June 30, 2023 was $457 million and $828 million, respectively.
Note 4. Earnings Per Share
The components of basic and diluted earnings per share (“EPS”) for common shares were as follows:
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(in millions, except per share data)
Numerator
Net income $ 2,845  $ 2,275  $ 5,206  $ 4,906 
Denominator
Basic weighted-average shares outstanding 946  971  949  974 
Dilutive stock options and stock units 2  3  3  3 
Diluted weighted-average shares outstanding 1
 949  974  952  977 
Earnings per Share
Basic $ 3.01  $ 2.34  $ 5.48  $ 5.04 
Diluted $ 3.00  $ 2.34  $ 5.47  $ 5.02 
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.

MASTERCARD JUNE 30, 2023 FORM 10-Q 13

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.
June 30,
2023		 December 31,
2022
(in millions)
Cash and cash equivalents $ 6,170  $ 7,008 
Restricted cash and restricted cash equivalents
Restricted cash for litigation settlement 598  589 
Restricted security deposits held for customers 1,723  1,568 
Prepaid expenses and other current assets 30  31 
Cash, cash equivalents, restricted cash and restricted cash equivalents $ 8,521  $ 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:
June 30,
2023		 December 31,
2022
(in millions)
Available-for-sale securities 1
 $ 279  $ 272 
Held-to-maturity securities 2
 65  128 
Total investments $ 344  $ 400 
1See Available-for-Sale Securities section below for further detail.
2Held-to-maturity securities represent investments in time deposits that mature within one year. The cost of these securities approximates fair value.
Investment income on the consolidated statement of operations primarily consists of interest income generated from cash, cash equivalents, held-to maturity 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 and six months ended June 30, 2023 and 2022 were not material.
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:
  June 30, 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 $ 100  $ —  $ (1) $ 99  $ 91  $ —  $ (2) $ 89 
Corporate securities 183  —  (3) 180  187  —  (4) 183 
Total $ 283  $ —  $ (4) $ 279  $ 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 June 30, 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.

14 MASTERCARD JUNE 30, 2023 FORM 10-Q

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 June 30, 2023 was as follows:
 
  Amortized Cost Fair Value
  (in millions)
Due within 1 year $ 167  $ 166 
Due after 1 year through 5 years 116  113 
Total $ 283  $ 279 
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 June 30, 2023
(in millions)
Marketable securities $ 399  $ —  $ —  $ 55  $ 8  $ 462 
Nonmarketable securities 1,331  53  (44) (144) 6  1,202 
Total equity investments $ 1,730  $ 53  $ (44) $ (89) $ 14  $ 1,664 
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:
June 30,
2023		 December 31,
2022
(in millions)
Measurement alternative
 $ 991  $ 1,087 
Equity method
 211  244 
Total Nonmarketable securities $ 1,202  $ 1,331 
The following table summarizes the total carrying value of the Company’s Measurement alternative investments, including cumulative unrealized gains and losses through June 30, 2023:
(in millions)
Initial cost basis
 $ 529 
Cumulative adjustments 1:
Upward adjustments 629 
Downward adjustments (including impairment) (167)
Carrying amount, end of period $ 991 
1 Includes immaterial translational impact of currency.

MASTERCARD JUNE 30, 2023 FORM 10-Q 15

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:
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(in millions)
Measurement alternative investments:
Upward adjustments $ 6  $ 17  $ 6  $ 103 
Downward adjustments (including impairment) (2) (12) (135) (12)
Marketable securities:
Unrealized gains (losses), net 121  (126) 55  (288)
Note 7. Fair Value Measurements
The Company’s financial instruments are carried at fair value, cost or amortized cost on the consolidated balance sheet. The Company classifies its fair value measurements of financial instruments into a three-level hierarchy (the “Valuation Hierarchy”).
Financial Instruments - Carried at Fair Value
Financial instruments carried at fair value are categorized for fair value measurement purposes as recurring or non-recurring in nature.

16 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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:
  June 30, 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 $ 39  $ 60  $ —  $ 99  $ 35  $ 54  $ —  $ 89 
Corporate securities —  180  —  180  —  183  —  183 
Derivative instruments 2:
Foreign exchange contracts —  49  —  49  —  108  —  108 
Marketable securities 3:
Equity securities 462  —  —  462  399  —  —  399 
Deferred compensation plan 4:
Deferred compensation assets 86  —  —  86  74  —  —  74 
Liabilities
Derivative instruments 2:
Foreign exchange contracts $ —  $ 55  $ —  $ 55  $ —  $ 21  $ —  $ 21 
Interest rate contracts —  105  —  105  —  105  —  105 
Deferred compensation plan 5:
Deferred compensation liabilities 84  —  —  84  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.
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.

MASTERCARD JUNE 30, 2023 FORM 10-Q 17

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Instruments - Not Carried at Fair Value
Debt
Debt instruments are carried on the consolidated balance sheet at amortized cost. 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 June 30, 2023, the carrying value and fair value of debt was $15.6 billion and $14.4 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:
June 30,
2023		 December 31,
2022
(in millions)
Customer and merchant incentives $ 1,472  $ 1,392 
Prepaid income taxes 65  34 
Other 1,017  920 
Total prepaid expenses and other current assets $ 2,554  $ 2,346 
Other assets consisted of the following:
June 30,
2023		 December 31,
2022
(in millions)
Customer and merchant incentives $ 4,778  $ 4,578 
Equity investments 1,664  1,730 
Income taxes receivable 656  633 
Other 641  639 
Total other assets $ 7,739  $ 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:
June 30,
2023		 December 31,
2022
  (in millions)
Customer and merchant incentives $ 5,397  $ 5,600 
Personnel costs 754  1,322 
Income and other taxes 449  279 
Other 517  600 
Total accrued expenses $ 7,117  $ 7,801 
Customer and merchant incentives represent amounts to be paid to customers under business agreements. As of June 30, 2023 and December 31, 2022, long-term customer and merchant incentives included in other liabilities were $2,507 million and $2,293 million, respectively.

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2023 and December 31, 2022, the Company’s provision for litigation was $1,079 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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PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Debt
Debt consisted of the following:
June 30,
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 817  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 872  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
April 2023 INR Term Loan 3
 9.480  % Term Loan due July 2023 61  —  9.705  %
2022 INR Term Loan 4
 8.640  % Term Loan due July 2023 277  275  9.090  %
15,840  14,239 
Less: Unamortized discount and debt issuance costs (115) (111)
Less: Cumulative hedge accounting fair value adjustments 5
 (105) (105)
Total debt outstanding 15,620  14,023 
Less: Short-term debt 6
 (1,336) (274)
Long-term debt $ 14,284  $ 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 INR4.97 billion Indian rupee-denominated loan issued in April 2023.
4 INR22.7 billion Indian rupee-denominated loan issued in July 2022.
5 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.
6 The INR Term Loans due July 2023 and the 2014 USD Notes due April 2024 are classified as short-term debt on the consolidated balance sheet as of June 30, 2023. The INR Term Loan due July 2023 is classified as short-term debt on the consolidated balance sheet as of December 31, 2022.

20 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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 June 30, 2023) term loan originally 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 June 30, 2023) term loan, also originally due July 2023 (the “April 2023 INR Term Loan”). The net proceeds of the April 2023 INR Term Loan, after deducting issuance costs, were INR4.96 billion ($61 million as of the date of settlement).
In July 2023, the Company modified and combined each of the 2022 INR Term Loan and April 2023 INR Term Loan, increasing the total of the unsecured loans to INR28 billion ($342 million as of the date of settlement), which was an increase of INR412 million ($5 million as of the date of settlement) due July 2024.
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 June 30, Six Months Ended June 30,
2023 2022 2023 2022
(in millions, except per share data)
Dividends declared per share $ 0.57  $ 0.49  $ 1.14  $ 0.98 
Total dividends declared $ 538  $ 474  $ 1,079  $ 951 

MASTERCARD JUNE 30, 2023 FORM 10-Q 21

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Common Stock Activity
The following table presents the changes in the Company’s outstanding Class A and Class B common stock:
Three Months Ended June 30,
2023 2022
  Outstanding Shares Outstanding Shares
  Class A Class B Class A Class B
(in millions)
Balance at beginning of period 941.4  7.5  966.5  7.7 
Purchases of treasury stock (6.5) —  (6.9) — 
Share-based payments 0.9  —  0.4  — 
Conversion of Class B to Class A common stock 0.1  (0.1) —  — 
Balance at end of period 935.9  7.4  960.0  7.7 
Six Months Ended June 30,
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 (14.4) —  (13.7) — 
Share-based payments 1.7  —  1.5  — 
Conversion of Class B to Class A common stock 0.2  (0.2) 0.1  (0.1)
Balance at end of period 935.9  7.4  960.0  7.7 
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:
Six Months Ended June 30,
2023 2022
(in millions, except per share data)
Dollar-value of shares repurchased 1
 $ 5,294  $ 4,788 
Shares repurchased 14.4  13.7 
Average price paid per share $ 367.00  $ 350.10 
1The six months ended June 30, 2023 dollar-value of shares repurchased does not include a 1% excise tax 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 June 30, 2023, the remaining authorization under the share repurchase programs approved by the Company’s Board of Directors was $6.9 billion.

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PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 six months ended June 30, 2023 and 2022 were as follows:
December 31, 2022 Increase / (Decrease) Reclassifications June 30, 2023
(in millions)
Foreign currency translation adjustments 1
 $ (1,414) $ 133  $ —  $ (1,281)
Translation adjustments on net investment hedges 2
 309  (66) —  243 
Cash flow hedges
Foreign exchange contracts 3
 (8) (18) 11  (15)
Interest rate contracts (123) —  2  (121)
Defined benefit pension and other postretirement plans (11) —  —  (11)
Investment securities available-for-sale (6) 2  —  (4)
Accumulated other comprehensive income (loss) $ (1,253) $ 51  $ 13  $ (1,189)
December 31, 2021 Increase / (Decrease) Reclassifications June 30, 2022
(in millions)
Foreign currency translation adjustments 1
 $ (739) $ (731) $ —  $ (1,470)
Translation adjustments on net investment hedges 2
 34  311  —  345 
Cash flow hedges
Foreign exchange contracts 3
 4  5  (6) 3 
Interest rate contracts (128) —  2  (126)
Defined benefit pension and other postretirement plans 21  —  (1) 20 
Investment securities available-for-sale (1) (3) —  (4)
Accumulated other comprehensive income (loss) $ (809) $ (418) $ (5) $ (1,232)
1During the six months ended June 30, 2023, the decrease in the accumulated other comprehensive loss related to foreign currency translation adjustments was driven primarily by the appreciation of the British pound and euro against the U.S. dollar. During the six months ended June 30, 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.
2During the six months ended June 30, 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 six months ended June 30, 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.
Note 13. Share-Based Payments
During the six months ended June 30, 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.

MASTERCARD JUNE 30, 2023 FORM 10-Q 23

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 23.2% and 18.7% for the three months ended June 30, 2023 and 2022, respectively. The higher effective income tax rate for the three months ended June 30, 2023, versus the comparable period in 2022, was primarily due to a $212 million discrete tax expense to establish a valuation allowance associated with the U.S. foreign tax credit carryforward deferred tax asset resulting from foreign tax legislation enacted in Brazil in the current period. The U.K. statutory tax rate increase, effective in 2023, also contributed to the higher effective income tax rate for the current period.
The effective income tax rates were 20.6% and 11.9% for the six months ended June 30, 2023 and 2022, respectively. The higher effective income tax rate for the six months ended June 30, 2023, versus the comparable period in 2022, was primarily due to changes in the valuation allowance associated with the U.S. foreign tax credit carryforward deferred tax asset. In 2022, the Company recognized a discrete tax benefit related to final U.S. tax regulations published in the first quarter of 2022 (the “2022 Regulations”), which resulted in a valuation allowance release of $333 million. In the second quarter of 2023, foreign tax legislation was enacted in Brazil which changed the treatment of foreign taxes paid under the 2022 Regulations. Therefore, the Company recognized a $212 million discrete tax expense in 2023 to establish the valuation allowance on the remaining U.S. foreign tax credit carryforward deferred tax asset. The foreign tax legislation allows the Company the ability to generate additional foreign tax credits going forward. The U.K. statutory tax rate increase, effective in 2023, also contributed to the higher effective income tax rate in 2023.
On July 21, 2023, the U.S. Department of Treasury released Notice 2023-55 (the “Notice”), providing taxpayers relief from certain aspects of the 2022 Regulations for 2022 and 2023. The Company is evaluating the impacts of the Notice to its effective tax rate, as well as deferred tax assets and corresponding valuation allowance.
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 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.

24 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 could petition the U.S. Supreme Court to request that the court agree 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.
As of June 30, 2023 and December 31, 2022, Mastercard had accrued a liability of $1,067 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 June 30, 2023 and December 31, 2022, Mastercard had $598 million and $589 million, respectively, in a qualified cash

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PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
settlement fund related to the Damages Class litigation and classified as restricted cash on its consolidated balance sheet. The reserve as of June 30, 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. During the second quarter of 2023, Mastercard incurred charges of $20 million as a result of settlements with a number of U.K. and Pan-European merchants. Following these settlements, approximately £1.1 billion (approximately $1.4 billion as of June 30, 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.
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 June 30, 2023). In June 2023, the court denied the plaintiffs’ collective action application. The plaintiffs were granted two months from the date of the court decision in which to file an amended collective action application otherwise, the case will be dismissed.
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 £10 billion (approximately $13 billion as of June 30, 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. In July 2023, the trial court held an additional hearing regarding whether any causal connection existed between the levels of Mastercard’s intra-EEA interchange fees and 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 June 30, 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 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

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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. In July 2023, the D.C. Circuit Court affirmed the district court order granting class certification. Mastercard has the opportunity to request permission to appeal the decision.
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 concluded.
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. Briefing on plaintiffs’ motion to amend the class definition and Mastercard’s cross-motion to decertify the stand alone fax recipient class was completed in April 2023.
U.S. Federal Trade Commission Investigation
In June 2020, the U.S. Federal Trade Commission’s Bureau of Competition (“FTC”) informed Mastercard that it 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. Following a public comment period, the FTC finalized the consent agreement in May 2023.
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.

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PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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. The duration of the settlement exposure is short-term and generally limited to a few days.
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 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:
June 30,
2023		 December 31, 2022
(in millions)
Gross settlement exposure
 $ 70,079  $ 64,885 
Risk mitigation arrangements applied to settlement exposure 1
 (10,568) (9,224)
Net settlement exposure 1
 $ 59,511  $ 55,661 
1The Company corrected its estimated net settlement exposure as of December 31, 2022. The correction was not material to the net settlement exposures previously reported and had no impact to any of the Company’s financial statement line items.
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 $341 million and $342 million at June 30, 2023 and December 31, 2022, respectively, of which the Company has risk mitigation arrangements for $273 million at June 30, 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.
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

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PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 and six months ended June 30, 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 and six months ended June 30, 2023 and 2022 were not material.
As of June 30, 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 and six months ended June 30, 2023 and 2022, the Company recorded pre-tax net foreign currency gains (losses) of $(4) million and $(39) million and $148 million and $199 million, respectively, in other comprehensive income (loss).
As of June 30, 2023 and December 31, 2022, the Company had net foreign currency gains of $243 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.

MASTERCARD JUNE 30, 2023 FORM 10-Q 29

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:
June 30, 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
 $ 714  $ 5  $ 26  $ 642  $ 4  $ 15 
Interest rate contracts in a fair value hedge 2
 1,000  —  105  1,000  —  105 
Foreign exchange contracts in a net investment hedge 1
 2,235  12  17  1,814  103  4 
Derivatives not designated as hedging instruments
Foreign exchange contracts 1
 2,193  32  12  521  1  2 
Total derivative assets/liabilities $ 6,142  $ 49  $ 160  $ 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 June 30, Location of Gain (Loss) Reclassified from AOCI into Earnings Three Months Ended June 30,
2023 2022 2023 2022
(in millions) (in millions)
Derivative financial instruments in a cash flow hedge relationship:
Foreign exchange contracts $ (14) $ 6  Net revenue $ (8) $ 1 
Interest rate contracts $ —  $ —  Interest expense $ (1) $ (1)
Derivative financial instruments in a net investment hedge relationship:
Foreign exchange contracts $ (7) $ 166 
Gain (Loss)
Recognized in OCI		 Gain (Loss)
Reclassified from AOCI
Six Months Ended June 30, Location of Gain (Loss) Reclassified from AOCI into Earnings Six Months Ended June 30,
2023 2022 2023 2022
(in millions) (in millions)
Derivative financial instruments in a cash flow hedge relationship:
Foreign exchange contracts $ (24) $ 7  Net revenue $ (14) $ 8 
Interest rate contracts $ —  $ —  Interest expense $ (3) $ (3)
Derivative financial instruments in a net investment hedge relationship:
Foreign exchange contracts $ (46) $ 201 
The Company estimates that $28 million, pre-tax, of the net deferred loss on cash flow hedges recorded in accumulated other comprehensive income (loss) at June 30, 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.

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PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The amount of gain (loss) recognized on the consolidated statement of operations for non-designated derivative contracts is summarized below: 
  Three Months Ended June 30, Six Months Ended June 30,
Derivatives not designated as hedging instruments: 2023 2022 2023 2022
(in millions)
Foreign exchange derivative contracts
General and administrative $ 10  $ 12  $ 25  $ 13 
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. However, the Company has elected to present derivative assets and liabilities on a gross basis on the consolidated balance sheet. 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.

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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 June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease)
2023 2022 2023 2022
($ in millions, except per share data)
Net revenue $ 6,269  $ 5,497  14% $ 12,017  $ 10,664  13%
Operating expenses $ 2,613  $ 2,479  5% $ 5,225  $ 4,696  11%
Operating income $ 3,656  $ 3,018  21% $ 6,792  $ 5,968  14%
Operating margin 58.3  % 54.9  % 3.4 ppt 56.5  % 56.0  % 0.6 ppt
Income tax expense $ 859  $ 523  64% $ 1,351  $ 665  **
Effective income tax rate 23.2  % 18.7  % 4.5 ppt 20.6  % 11.9  % 8.7 ppt
Net income $ 2,845  $ 2,275  25% $ 5,206  $ 4,906  6%
Diluted earnings per share $ 3.00  $ 2.34  28% $ 5.47  $ 5.02  9%
Diluted weighted-average shares outstanding 949  974  (3)% 952  977  (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 June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease)
2023 2022 As adjusted Currency-neutral 2023 2022 As adjusted Currency-neutral
($ in millions, except per share data)
Adjusted net revenue $ 6,269  $ 5,491  14% 15% $ 12,017  $ 10,627  13% 15%
Adjusted operating expenses $ 2,592  $ 2,313  12% 13% $ 4,993  $ 4,496  11% 12%
Adjusted operating margin 58.6  % 57.9  % 0.8 ppt 0.8 ppt 58.4  % 57.7  % 0.7 ppt 0.9 ppt
Adjusted effective income tax rate 23.9  % 18.8  % 5.1 ppt 5.1 ppt 21.2  % 12.3  % 8.9 ppt 9.0 ppt
Adjusted net income $ 2,742  $ 2,497  10% 11% $ 5,420  $ 5,199  4% 6%
Adjusted diluted earnings per share $ 2.89  $ 2.56  13% 14% $ 5.69  $ 5.32  7% 9%
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 and six months ended June 30, 2023, versus the comparable periods in 2022:
Net revenue Adjusted net revenue
Three Months Ended June 30, 2023
GAAP Non-GAAP
(currency-neutral)
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.
up 14% up 15%
Six Months Ended June 30, 2023
GAAP Non-GAAP
(currency-neutral)
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.
up 13% up 15%
Operating expenses Adjusted
operating expenses
Three Months Ended June 30, 2023
GAAP
Non-GAAP
(currency-neutral)
Adjusted operating expenses increased 13% on a currency-neutral basis. The increase was primarily due to higher personnel costs.
up 5% up 13%
Six Months Ended June 30, 2023
GAAP
Non-GAAP
(currency-neutral)
Adjusted operating expenses increased 12% on a currency-neutral basis, which includes 1 percentage point of growth due to acquisitions. The remaining increase was primarily due to higher personnel costs.
up 11% up 12%
Effective income
tax rate
Adjusted effective
income tax rate
Three Months Ended June 30, 2023
The adjusted effective income tax rate of 23.9% was higher than the prior year rate of 18.8% primarily due to the establishment of a valuation allowance in 2023 of $212 million and the U.K. statutory tax rate increase, effective in 2023.
GAAP Non-GAAP
23.2% 23.9%
Six Months Ended June 30, 2023
The adjusted effective income tax rate of 21.2% was higher than the prior year rate of 12.3% primarily due to the establishment of a $212 million valuation allowance in 2023 and the release of a $333 million valuation allowance in 2022. The U.K. statutory tax rate increase, effective in 2023, also contributed to the higher adjusted effective income tax rate in 2023.
GAAP Non-GAAP
20.6% 21.2%
Other financial highlights for the six months ended June 30, 2023 were as follows:
•We generated net cash flows from operations of $4.6 billion.
•We repurchased 14.4 million shares of our common stock for $5.3 billion and paid dividends of $1.1 billion.
•We completed a debt offering for an aggregate principal amount of $1.5 billion and entered into an Indian rupee-denominated term loan for $0.1 billion.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 and six months ended June 30, 2023, we recorded net gains of $123 million ($118 million after tax, or $0.12 per diluted share) and net losses of $89 million ($58 million after tax, or $0.06 per diluted share), respectively, primarily related to unrealized fair market value adjustments on marketable and nonmarketable equity securities.
•In the three and six months ended June 30, 2022, we recorded net losses of $117 million ($113 million after tax, or $0.12 per diluted share) and $193 million ($181 million after tax, or $0.18 per diluted share), respectively, primarily related to unrealized fair market value adjustments on marketable and non-marketable equity securities.
Special Items
Litigation provisions
•In the three months ended June 30, 2023, we recorded charges of $20 million ($15 million after tax, or $0.02 per diluted share) as a result of settlements with a number of U.K. and Pan-European merchants. In the six months ended June 30, 2023, we recorded charges of $231 million ($156 million after tax, or $0.16 per diluted share) primarily as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation.
•In the three and six months ended June 30, 2022, we recorded charges of $133 million ($89 million after tax, or $0.09 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.
Russia-related impacts
•In the three and six months ended June 30, 2022, we recorded net charges of $26 million ($20 million after tax, or $0.02 per diluted share) and $30 million ($24 million after tax, or $0.02 per diluted share), respectively, directly related to imposed sanctions and the suspension of our business operations in Russia. The net charges are comprised of general and administrative expenses of $33 million and $67 million, respectively, primarily related to incremental employee-related costs and reserves on uncollectible balances with certain sanctioned customers. These charges are partially offset by net benefits of $6 million and $37 million, respectively, 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

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
The following tables reconcile our reported financial measures calculated in accordance with GAAP to the respective adjusted non-GAAP financial measures:
Three Months Ended June 30, 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 $ 6,269  $ 2,613  58.3  % $ 48  23.2  % $ 2,845  $ 3.00 
(Gains) losses on equity investments  ** ** ** (123) 0.7  % (118) (0.12)
Litigation provisions  ** (20) 0.3  %  ** —  % 15  0.02 
Adjusted - Non-GAAP $ 6,269  $ 2,592  58.6  % $ (75) 23.9  % $ 2,742  $ 2.89 
Six Months Ended June 30, 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 $ 12,017  $ 5,225  56.5  % $ (235) 20.6  % $ 5,206  $ 5.47 
(Gains) losses on equity investments ** ** ** 89  0.2  % 58  0.06 
Litigation provisions ** (231) 1.9  % ** 0.4  % 156  0.16 
Adjusted - Non-GAAP $ 12,017  $ 4,993  58.4  % $ (146) 21.2  % $ 5,420  $ 5.69 
Three Months Ended June 30, 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 $ 5,497  $ 2,479  54.9  % $ (220) 18.7  % $ 2,275  $ 2.34 
(Gains) losses on equity investments ** ** ** 117  (0.6) % 113  0.12 
Litigation provisions ** (133) 2.4  % ** 0.7  % 89  0.09 
Russia-related impacts (6) (33) 0.5  % ** —  % 20  0.02 
Adjusted - Non-GAAP $ 5,491  $ 2,313  57.9  % $ (104) 18.8  % $ 2,497  $ 2.56 
Six Months Ended June 30, 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 $ 10,664  $ 4,696  56.0  % $ (397) 11.9  % $ 4,906  $ 5.02 
(Gains) losses on equity investments ** ** ** 193  (0.2) % 181  0.18 
Litigation provisions ** (133) 1.2  % ** 0.5  % 89  0.09 
Russia-related impacts (37) (67) 0.5  % ** 0.1  % 24  0.02 
Adjusted - Non-GAAP $ 10,627  $ 4,496  57.7  % $ (205) 12.3  % $ 5,199  $ 5.32 
Note: Tables may not sum due to rounding.
**    Not applicable.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following tables represent the reconciliation of our growth rates reported under GAAP to our non-GAAP growth rates:
Three Months Ended June 30, 2023 as compared to the Three Months Ended June 30, 2022
Increase/(Decrease)
Net revenue  Operating expenses Operating margin Effective income tax rate  Net income  Diluted earnings per share
Reported - GAAP 14% 5% 3.4 ppt 4.5 ppt 25% 28%
(Gains) losses on equity investments ** ** ** 1.3 ppt (11)% (11)%
Litigation provisions ** 5% (2.1) ppt (0.7) ppt (3)% (3)%
Russia-related impacts —% 2% (0.5) ppt — ppt (1)% (1)%
Adjusted - Non-GAAP 14% 12% 0.8 ppt 5.1 ppt 10% 13%
Currency impact 1
 1% 1% — ppt — ppt 1% 1%
Adjusted - Non-GAAP - currency-neutral 15% 13% 0.8 ppt 5.1 ppt 11% 14%
Six Months Ended June 30, 2023 as compared to the Six Months Ended June 30, 2022
Increase/(Decrease)
Net revenue  Operating expenses Operating margin Effective income tax rate  Net income  Diluted earnings per share
Reported - GAAP 13% 11% 0.6 ppt 8.7 ppt 6% 9%
(Gains) losses on equity investments ** ** ** 0.4 ppt (3)% (3)%
Litigation provisions ** (2)% 0.7 ppt (0.1) ppt 1% 1%
Russia-related impacts —% 2% (0.3) ppt (0.1) ppt —% —%
Adjusted - Non-GAAP 13% 11% 0.9 ppt 8.9 ppt 4% 7%
Currency impact 1
 2% 1% — ppt 0.1 ppt 2% 2%
Adjusted - Non-GAAP - currency-neutral 15% 12% 0.9 ppt 9.0 ppt 6% 9%
Note: Tables 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 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.
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.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
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 June 30, Six Months Ended June 30,
2023 2022 2023 2022
Increase/(Decrease) Increase/(Decrease)
USD Local USD Local USD Local USD Local
Mastercard-branded GDV growth 1
 10% 12% 8% 14% 10% 14% 10% 15%
United States 6% 6% 10% 10% 7% 7% 12% 12%
Worldwide less United States 12% 16% 7% 16% 12% 17% 9% 17%
Cross-border volume growth 1
 23% 24% 46% 58% 26% 29% 45% 56%
Mastercard-branded GDV growth adjusted for Russia 1,2
 10% 12% 13% 20% 11% 14% 14% 20%
Worldwide less United States GDV growth adjusted for Russia 1,2
 12% 16% 14% 25% 12% 18% 15% 24%
Cross-border volume growth adjusted for Russia 1,2
 23% 24% 50% 64% 27% 31% 48% 59%
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Increase/(Decrease) Increase/(Decrease)
Switched transactions growth 17% 12% 15% 16%
Switched transactions growth adjusted for Russia 2
 17% 22% 18% 23%
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.
•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).

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
•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 June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease)
2023 2022 As reported Currency-neutral 2023 2022 As reported Currency-neutral
($ in millions) ($ in millions)
Domestic assessments $ 2,468  $ 2,251  10% 11% $ 4,722  $ 4,359  8% 10%
Cross-border assessments 2,050  1,612  27% 29% 3,899  3,002  30% 33%
Transaction processing assessments 2,979  2,572  16% 16% 5,731  5,029  14% 15%
Other network assessments 270  213  28% 30% 483  381  27% 29%
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”), 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. GDV is calculated based on local currency spending volume converted to U.S. dollars and euro 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 and euro versus 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 and six months ended June 30, 2023, GDV on a U.S. dollar-converted basis increased 10% and 10%, respectively, while GDV on a local currency basis increased 12% and 14%, respectively, versus the comparable periods 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 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.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease)
  2023 2022 2021 2023 2022 2023 2022 2021 2023 2022
  ($ in millions) ($ in millions)
Payment network $ 4,073  $ 3,609  $ 2,875  13% 26% $ 7,723  $ 7,008  $ 5,523  10% 27%
Value-added services and solutions 2,196  1,888  1,653  16% 14% 4,294  3,656  3,160  17% 16%
Total net revenue 6,269  5,497  4,528  14% 21% 12,017  10,664  8,683  13% 23%
Special Items 1
 —  (6) —  ** ** —  (37) —  ** **
Adjusted net revenue
(excluding Special Items 1)
 $ 6,269  $ 5,491  $ 4,528  14% 21% $ 12,017  $ 10,627  $ 8,683  13% 22%
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 June 30, 2023, net revenue increased 14% versus the comparable period in 2022. Adjusted net revenue increased 14%, 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 13%, or 14% on a currency-neutral basis, versus the comparable period in 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. Net revenue from our payment network includes $3,694 million of rebates and incentives provided to customers, which increased 22% as reported and on a currency-neutral basis, versus the comparable period in 2022, primarily due to an increase in our key drivers as well as new and renewed deals.
Net revenue from our value-added services and solutions increased 16% as reported and on a currency-neutral basis, versus the comparable period in 2022. The increase was driven primarily by the continued growth of (i) our cyber and intelligence solutions, driven by our underlying key drivers and demand for our fraud and security solutions and (ii) continued demand for our consulting and marketing services, partially offset by other solutions.
For the six months ended June 30, 2023, net revenue increased 13% versus the comparable period in 2022. Adjusted net revenue increased 13%, 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 10%, or 12% on a currency-neutral basis, versus the comparable period in 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 12% 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 $7,111 million of rebates and incentives provided to customers, which increased 23%, or 25% on a currency-neutral basis, versus the comparable period in 2022, primarily due to an increase in our key drivers as well as new and renewed deals. The 25% increase on a currency-neutral basis is 1 percentage point higher due to the Russia-related Special Item in 2022.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net revenue from our value-added services and solutions increased 17%, or 18% on a currency-neutral basis, versus the comparable period in 2022, which includes a 1 percentage point increase from acquisitions. The remaining increase was driven primarily by the continued growth of (i) our cyber and intelligence solutions, driven by our underlying key drivers and (ii) demand for our fraud and security solutions, and demand for our consulting and marketing services, as well as our loyalty solutions.
2022
For the three months ended June 30, 2022, net revenue increased 21% versus the comparable period in 2021. Adjusted net revenue increased 21%, 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.
Net revenue from our payment network increased 26%, or 31% on a currency-neutral basis, versus the comparable period in 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. Net revenue from our payment network includes $3,039 million of rebates and incentives provided to customers, which increased 18%, or 22% on a currency-neutral basis, versus the comparable period in 2021, primarily due to an increase in our key drivers as well as new and renewed deals.
Net revenue from our value-added services and solutions increased 14%, or 19% on a currency-neutral basis, versus the comparable period in 2021, which includes a 3 percentage point increase from acquisitions. The remaining increase was driven primarily by the continued growth of (i) our cyber and intelligence solutions, driven by growth in our underlying key drivers as well as the scaling of our authentication solutions and (ii) our data analytics services.
For the six months ended June 30, 2022, net revenue increased 23% versus the comparable period in 2021. Adjusted net revenue increased 22%, 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.
Net revenue from our payment network increased 27%, or 32% on a currency-neutral basis, versus the comparable period in 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 32% 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 $5,763 million of rebates and incentives provided to customers, which increased 21%, or 25% on a currency-neutral basis, versus the comparable period in 2021, primarily due to an increase in our key drivers as well as new and renewed deals. The 25% 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 16%, or 20% on a currency-neutral basis, versus the comparable period in 2021, which includes a 5 percentage point increase from acquisitions. The remaining increase was driven primarily by the continued growth of (i) our cyber and intelligence solutions, driven by growth in our underlying key drivers as well as the scaling of our authentication solutions and (ii) our data analytics services.
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.

40 MASTERCARD JUNE 30, 2023 FORM 10-Q

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 change in net revenue:
Three Months Ended June 30,
Increase/(Decrease)
Operational Acquisitions
Currency Impact 3
Special Items 4
 Total
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Payment network 14  % 1 31  % 1 ** ** (1) % (6) % —  % —  % 13  % 26  %
Value-added services and solutions 16  % 2 16  % 2 —  % 3  % —  % (5) % ** ** 16  % 14  %
Net revenue 15  % 26  % —  % 1  % (1) % (6) % —  % —  % 14  % 21  %
Six Months Ended June 30,
Increase/(Decrease)
Operational Acquisitions
Currency Impact 3
Special Items 4
 Total
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Payment network 13  % 1 31  % 1 ** ** (2) % (5) % (1) % 1  % 10  % 27  %
Value-added services and solutions 18  % 2 15  % 2 1  % 5  % (1) % (4) % ** ** 17  % 16  %
Net revenue 15  % 25  % —  % 2  % (2) % (5) % —  % —  % 13  % 23  %
Note: Tables 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 June 30, 2023, operating expenses increased 5% versus the comparable period in 2022. Adjusted operating expenses increased 12%, or 13% on a currency-neutral basis, versus the comparable period in 2022, primarily due to higher personnel costs.
For the six months ended June 30, 2023, operating expenses increased 11% versus the comparable period in 2022. Adjusted operating expenses increased 11%, or 12% on a currency-neutral basis, versus the comparable period in 2022, which includes a 1 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 June 30, Increase/ (Decrease) Six Months Ended June 30, Increase/ (Decrease)
2023 2022 2023 2022
($ in millions)
General and administrative $ 2,200  $ 1,947  13% $ 4,243  $ 3,791  12%
Advertising and marketing 201  210  (4)% 368  391  (6)%
Depreciation and amortization 192  189  2% 383  381  1%
Provision for litigation 20  133  ** 231  133  **
Total operating expenses 2,613  2,479  5% 5,225  4,696  11%
Special Items 1
 (20) (166) ** (231) (200) **
Adjusted total operating expenses (excluding Special Items 1)
 $ 2,592  $ 2,313  12% $ 4,993  $ 4,496  11%
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.

MASTERCARD JUNE 30, 2023 FORM 10-Q 41

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 June 30, 2023
Increase/(Decrease)
Operational Acquisitions
Currency Impact 1
Special
Items 2
 Total
General and administrative 15% —% (1)% (2)% 13%
Advertising and marketing (4)% —% —% ** (4)%
Depreciation and amortization 1% —% —% ** 2%
Provision for litigation ** ** ** ** **
Total operating expenses 12% —% (1)% (7)% 5%
Six Months Ended June 30, 2023
Increase/(Decrease)
Operational Acquisitions
Currency Impact 1
Special
Items 2
 Total
General and administrative 14% 1% (1)% (2)% 12%
Advertising and marketing (5)% —% (1)% ** (6)%
Depreciation and amortization 1% 1% (1)% ** 1%
Provision for litigation ** ** ** ** **
Total operating expenses 11% 1% (1)% —% 11%
Note: Tables 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 June 30, 2023, general and administrative expenses increased 13%, or 14% on a currency-neutral basis, versus the comparable period in 2022. The 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.
For the six months ended June 30, 2023, general and administrative expenses increased 12%, or 13% on a currency-neutral basis, versus the comparable period in 2022. Current period results include growth of 1 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.

42 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The components of general and administrative expenses were as follows:
Three Months Ended June 30, Increase/ (Decrease) Six Months Ended June 30, Increase/(Decrease)
  2023 2022 2023 2022
  ($ in millions)
Personnel 1
 $ 1,495  $ 1,319  13% $ 2,921  $ 2,500  17%
Professional fees 114  109  5% 214  195  10%
Data processing and telecommunications 246  225  9% 481  460  5%
Foreign exchange activity 2
 24  35  ** 40  71  **
Other 1
 321  259  24% 587  565  4%
Total general and administrative expenses $ 2,200  $ 1,947  13% $ 4,243  $ 3,791  12%
Note: Table may not sum due to rounding.
**    Not meaningful.
1    For the three months ended June 30, 2022, total general and administrative expenses includes a Special Item for Russia-related impacts of $33 million, of which $31 million is included within Personnel and $2 million is included within Other. For the six months ended June 30, 2022, total general and administrative expenses includes a Special Item for Russia-related impacts of $67 million, of which $35 million is included within Personnel and $32 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 June 30, 2023, advertising and marketing expenses decreased 4% on both an as reported and 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. For the six months ended June 30, 2023, advertising and marketing expenses decreased 6%, 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 and six months ended June 30, 2023, depreciation and amortization expenses were relatively flat on both an as reported and a currency-neutral basis, versus the comparable periods in 2022.
Provision for Litigation
For the three months ended June 30, 2023, we recorded litigation provisions of $20 million as a result of settlements with a number of U.K. and Pan-European merchants. For the six months ended June 30, 2023, we recorded litigation provisions of $231 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 as well as settlements with a number of U.K. and Pan-European merchants. 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.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Other Income (Expense)
For the three months ended June 30, 2023, other income (expense) was favorable $268 million, versus the comparable period in 2022, primarily due to net gains in the current year versus the net losses in the prior year related to unrealized fair market value adjustments on marketable equity securities. Adjusted other income (expense) was favorable $29 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.
For the six months ended June 30, 2023, other income (expense) was favorable $162 million, versus the comparable period in 2022, primarily due to lower 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 $59 million versus the prior year, primarily due to an increase in our investment income, partially offset by increased interest expense related to our 2022 and 2023 debt issuances.
The components of other income (expense) were as follows:
Three Months Ended June 30, Increase/ (Decrease) Six Months Ended June 30, Increase/ (Decrease)
  2023 2022 2023 2022
  ($ in millions)
Investment income $ 59  $ 7  ** $ 114  $ 12  **
Gains (losses) on equity investments, net 123  (117) ** (89) (193) **
Interest expense (144) (114) 27% (276) (224) 23%
Other income (expense), net 10  4  ** 16  8  **
Total other income (expense) 48  (220) ** (235) (397) **
(Gains) losses on equity investments 1
 (123) 117  ** 89  193  **
Adjusted total other income (expense) 1
 $ (75) $ (104) (28)% $ (146) $ (205) (29)%
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 23.2% and 18.7% for the three months ended June 30, 2023 and 2022, respectively. The adjusted effective income tax rates were 23.9% and 18.8% for the three months ended June 30, 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 $212 million discrete tax expense to establish a valuation allowance associated with the U.S. foreign tax credit carryforward deferred tax asset resulting from foreign tax legislation enacted in Brazil in the current period. The U.K. statutory tax rate increase, effective in 2023, also contributed to the higher as reported and as adjusted effective income tax rates for the current period.
The effective income tax rates were 20.6% and 11.9% for the six months ended June 30, 2023 and 2022, respectively. The adjusted effective income tax rates were 21.2% and 12.3% for the six months ended June 30, 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 changes in the valuation allowance associated with the U.S. foreign tax credit carryforward deferred tax asset. In 2022, we recognized a discrete tax benefit related to final U.S. tax regulations published in the first quarter of 2022 (“2022 Regulations”), which resulted in a valuation allowance release of $333 million. In the second quarter of 2023, foreign tax legislation was enacted in Brazil which changed the treatment of foreign taxes paid under the 2022 Regulations. Therefore, we recognized a $212 million discrete tax expense in 2023 to establish the valuation allowance on the remaining U.S. foreign tax credit carryforward deferred tax asset. The foreign tax legislation allows us the ability to generate additional foreign tax credits going forward. The U.K. statutory tax rate increase, effective in 2023, also contributed to the higher effective income tax rate in 2023.
On July 21, 2023, the U.S. Department of Treasury released Notice 2023-55 (the “Notice”), providing taxpayers relief from certain aspects of the 2022 Regulations for 2022 and 2023. We are evaluating the impacts of the Notice to our effective tax rate, as well as deferred tax assets and corresponding valuation allowance.

44 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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:
June 30,
2023		 December 31,
2022
(in billions)
Cash, cash equivalents and investments 1
 $ 6.5  $ 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 $2.4 billion and $2.2 billion at June 30, 2023 and December 31, 2022, respectively.
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.
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:
Six Months Ended June 30,
  2023 2022
  (in millions)
Net cash provided by operating activities $ 4,617  $ 4,239 
Net cash used in investing activities (615) (812)
Net cash used in financing activities (4,734) (4,975)
Net cash provided by operating activities increased $378 million for the six months ended June 30, 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, partially offset by higher employee incentives and customer incentive payments.
Net cash used in investing activities decreased $197 million for the six months ended June 30, 2023, versus the comparable period in 2022, primarily due to less cash paid for business acquisitions in the current year partially offset by an increase in capitalized software.
Net cash used in financing activities decreased $241 million for the six months ended June 30, 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 in the current year.

MASTERCARD JUNE 30, 2023 FORM 10-Q 45

PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Debt and Credit Availability
In March 2023, we 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. In April 2023, we entered into an additional unsecured INR4.97 billion ($61 million as of June 30, 2023) term loan, originally due July 2023 (the “April 2023 INR Term Loan”). Our total debt outstanding was $15.6 billion and $14.0 billion at June 30, 2023 and December 31, 2022, respectively, with the earliest maturity of INR28 billion ($338 million as of June 30, 2023) of principal occurring in July 2023.

In July 2023, we modified and combined each of the 2022 INR Term Loan and April 2023 INR Term Loan, increasing the total amount of the unsecured loans to INR28 billion ($342 million as of the date of settlement), which was an increase of INR412 million ($5 million as of the date of settlement) due July 2024.
As of June 30, 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 June 30, 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.
Aggregate payments for quarterly dividends totaled $1,086 million for the six months ended June 30, 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 paid 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 was $541 million.
On June 26, 2023, our Board of Directors declared a quarterly cash dividend of $0.57 per share payable on August 9, 2023 to holders of record on July 7, 2023 of our Class A common stock and Class B common stock. The aggregate amount of this dividend is estimated to be $538 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 became effective in April 2023 after the 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 June 30, 2023:
(in millions, except average price data)
Remaining authorization at December 31, 2022 $ 12,174 
Dollar-value of shares repurchased during the six months ended June 30, 2023 1
 $ 5,294 
Remaining authorization at June 30, 2023 $ 6,880 
Shares repurchased during the six months ended June 30, 2023 14.4 
Average price paid per share during the six months ended June 30, 2023 $ 367.00 
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.

46 MASTERCARD JUNE 30, 2023 FORM 10-Q

PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 $26 million and loss of approximately $94 million on our foreign exchange derivative contracts outstanding at June 30, 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 June 30, 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 the U.S. dollar could result in a fair value loss of approximately $251 million and $203 million on our foreign exchange derivative contracts designated as a net investment hedge at June 30, 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 June 30, 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 June 30, 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

MASTERCARD JUNE 30, 2023 FORM 10-Q 47

PART I
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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 June 30, 2023 that has materially affected, or is reasonably likely to materially affect, Mastercard's internal control over financial reporting.

48 MASTERCARD JUNE 30, 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 second quarter of 2023, we repurchased 6.5 million shares for $2.4 billion at an average price of $373.52 per share of Class A common stock. The following table presents our repurchase activity on a cash basis during the second 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
April 1 - 30 2,070,540  $ 367.29  2,070,540  $ 8,535,407,807 
May 1 - 31 2,250,153  $ 379.19  2,250,153  $ 7,682,181,892 
June 1 - 30 2,148,089  $ 373.59  2,148,089  $ 6,879,666,632 
Total 6,468,782  $ 373.52  6,468,782 
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.

50 MASTERCARD JUNE 30, 2023 FORM 10-Q

Item 5. Other information
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the three months ended June 30, 2023, certain of our officers and directors adopted or terminated trading arrangements for the sale of shares of our common stock as follows:
Action Date Plans Number of Securities to be Sold Expiration
Rule 10b5-1 1
Non-Rule 10b5-1 2
Sachin Mehra,
Chief Financial Officer
 Adoption May 1, 2023 X - 16,838 shares of Class A Common Stock underlying employee stock options The earlier of (i) date when all securities under plan are exercised and sold and (ii) December 31, 2023
Timothy Murphy, Chief Administrative Officer
 Adoption May 3, 2023 X - 14,761 shares of Class A Common Stock underlying employee stock options and 256 shares of Class A Common Stock The earlier of (i) date when all securities under plan are exercised and sold and (ii) December 31, 2023
Julius Genachowski, Director
 Adoption May 15, 2023 X - 622 shares of Class A Common Stock The earlier of (i) date when all shares under plan are sold and (ii) February 29, 2024
Ajay Bhalla, President, Cyber and Intelligence Solutions
 Adoption June 15, 2023 X - 13,996 shares of Class A Common Stock underlying employee stock options The earlier of (i) date when all securities under plan are exercised and sold and (ii) March 1, 2024
12,292 shares of Class A Common Stock underlying employee stock options The earlier of (i) date when all securities under plan are exercised and sold and (ii) May 15, 2024
1 Intended to satisfy the affirmative defense conditions of Rule 10b5-1(c)
2 Not intended to satisfy the affirmative defense conditions of Rule 10b5-1(c)
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.

MASTERCARD JUNE 30, 2023 FORM 10-Q 51

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.

52 MASTERCARD JUNE 30, 2023 FORM 10-Q

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

MASTERCARD JUNE 30, 2023 FORM 10-Q 53
EX-10.1 2 exb101-06302023.htm EX-10.1 Document


EXHIBIT 10.1

MASTERCARD
SENIOR EXECUTIVE ANNUAL INCENTIVE COMPENSATION PLAN

As Amended and Restated Effective June 12, 2023

Mastercard International Incorporated and subsidiaries (collectively or individually, as the context requires, the “Company”) has adopted the Mastercard Senior Executive Annual Incentive Compensation Plan (the “Plan”) to reward senior executives for successfully achieving performance goals that are in direct support of corporate and business unit/regional goals.
ARTICLE I
DEFINITIONS
Section 1.1    “Board” shall mean the Board of Directors of the Company.
Section 1.2    “Committee” shall mean the Human Resources and Compensation Committee of the Board of Directors of the Company, or such other committee or subcommittee designated by the Board to administer the Plan.
Section 1.3    “Disability” shall mean total and permanent disability in accordance with the Company’s long-term disability plan, as determined by the Committee.
Section 1.4    “Participant” shall mean, with respect to any Performance Period, all members of the Company's Executive Leadership team (ELT) Team and such other employees who are selected in writing by the Committee in its sole and absolute discretion.
Section 1.5    “Performance Period” shall mean a period of no less than 90 days during which the attainment of performance targets shall be measured for purposes of determining the amount of incentive compensation payable hereunder, as established by the Committee.
Section 1.6    “Retirement” shall have the meaning set forth in the Mastercard Incorporated 2006 Long Term Incentive Plan, as amended from time to time (the “LTIP”).
ARTICLE II
BONUS AWARDS
Section 2.1    Performance Targets.
(a) The Committee (or subcommittee described in Section 6.1(a) below), will establish performance targets for each Performance Period. The performance targets for a Performance Period shall be based upon one or more of the following objective business criteria, or such other criteria determined by the Committee, in its discretion: (i) revenue; (ii) earnings (including earnings before interest, taxes, depreciation and amortization, earnings before interest and taxes, and earnings before or after taxes); (iii) operating income; (iv) net income; (v) profit or operating margins; (vi) earnings per share; (vii) return on assets; (viii) return on equity; (ix) return on invested capital; (x) economic value-added; (xi) stock price; (xii) gross dollar volume; (xiii) total shareholder return; (xiv) market share; (xv) book value; (xvi) expense management; (xvii) cash flow; (xviii) customer satisfaction; and (xix) strategic corporate or individual objectives. The foregoing criteria may relate to the Company, one or more of its affiliated employers or subsidiaries or one or more of its divisions, regions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the Committee shall determine. In establishing performance targets under Section 2.1(b) based on these business criteria, the Committee may provide that the targets shall be adjusted to reflect specified extraordinary, unusual and/or non-recurring items.

1


(b)    The performance targets shall be established by the Committee (or subcommittee) for a Performance Period (i) while the outcome for that Performance Period is substantially uncertain and (ii) no more than 90 days or, if less, the number of days which is equal to 25 percent of the relevant Performance Period, after the commencement of the Performance Period to which the performance target relates.
Section 2.2    Bonus Awards.
(a)    The maximum bonus award payable to any Participant with respect to any calendar year of the Company shall not exceed $10,000,000. The Committee shall establish a target level of bonus for each year for each Participant and the maximum bonus payable to each Participant shall be 250 percent of the Participant’s target bonus; provided, however, that the aggregate maximum bonus payable to all Participants shall be 200 percent of the aggregate target bonuses.
(b)    Prior to the payment of a bonus award to any Participant, the Committee (or subcommittee described in Section 6.1(a) below) shall certify in writing the level of performance attained for the Performance Period to which such bonus award relates. The Committee shall have no discretion to increase the amount of a Participant’s maximum bonus award that would otherwise be payable to the Participant upon the achievement of specified levels of the performance target established by the Committee, however, the Committee may exercise negative discretion to make an award to any Participant for any Performance Period in an amount that is less than such maximum bonus award.
ARTICLE III
PAYMENT OF BONUS AWARD
Section 3.1    Form of Payment. Each Participant’s bonus award shall be paid in cash.
Section 3.2    Timing of Payment. Unless otherwise elected by the Participant pursuant to Section 3.3 below, each bonus award shall be paid in the first 2 ½ months of the year following the end of the Performance Period.
Section 3.3    Deferral of Payment. Payments of bonus awards under the Plan are eligible for deferral as allowed under the Mastercard Incorporated Deferral Plan.
ARTICLE IV
BONUS AWARD RECOUPMENT POLICY
Section 4.1 Forfeiture/Recoupment in the event of restatement.

2


If a Participant is a Covered Executive under the Mastercard Incorporated Executive Officer Incentive Compensation Recovery Policy (the "Executive Recoupment Policy"), the Participant's bonus award under the Plan is subject to mandatory recoupment upon an Accounting Restatement (as defined in the Executive Recoupment Policy) in accordance with the terms of such policy and applicable Securities and Exchange Commission and New York Stock Exchange rules. Further, in the event of an Accounting Restatement, the Committee, at its discretion, may require recoupment of any bonus paid to a Participant who is not a Covered Executive under the Executive Recoupment Policy, by applying the terms of the Executive Recoupment Policy to such Participant to the full extent determined appropriate by the Committee.

Section 4.2    Forfeiture/Recoupment in the event of detrimental behavior. In the event a Participant engages in misconduct which has or might reasonably be expected to have material reputational or other harm to the Company or in any other conduct constituting “Cause” as defined in the LTIP (together, “Misconduct”), or in the event that the Participant has known of or been willfully blind to Misconduct on the part of any individual over whom the Participant has supervisory authority, the Committee has the discretion to forfeit the Participant’s bonus award for the Performance Period in which the Misconduct was discovered or any prior Performance Period and recover bonus awards that were paid under the Plan to the Participant (or, in the case of a deferred or bonus, earned by such Participant) in any prior year.
Section 4.3    Forfeiture/Recoupment required by law. The Recoupment Policy set forth in this Article IV shall be applied by the Committee to the maximum extent required under applicable law, and otherwise, at the Committee's discretion, to the maximum extent permitted under applicable law. Further, the Recoupment Policy 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, and shall apply notwithstanding anything to the contrary in the Plan.
ARTICLE V
TERMINATIONS
Section 5.1    Terminations. Unless otherwise determined by the Committee, a Participant who, whether voluntarily or involuntarily, is terminated, demoted, transferred or otherwise ceases to be a Participant at any time prior to the date a bonus award is paid in respect of a Performance Period shall not be eligible to receive any bonus award with respect to such Performance Period. Notwithstanding the foregoing, (i) in the event of a Participant’s death during a Performance Period or prior to the date a bonus award is paid in respect of a Performance Period, the Participant shall receive within 75 days of death the target award payable for the Performance Period of the Participant’s death; (ii) in the event of a Participant’s termination by reason of Disability during the Performance Period or prior to the date a bonus award is paid in respect of a Performance Period, the Participant shall receive within 75 days of such termination a partial target award, prorated based on the portion of the Performance Period that elapsed prior to such termination of employment by reason of Disability; and (iii) in the event of a Participant’s Retirement during a Performance Period or prior to the date a bonus award is paid in respect of a Performance Period, the Participant shall receive a partial award based on the level of performance attained for such Performance Period, as determined pursuant to Section 2.2(b), prorated based on the portion of the Performance Period that elapsed prior to the Participant’s Retirement, and paid to the Participant in accordance with Section 3.2 above.


3


ARTICLE VI
ADMINISTRATION
Section 6.1    Administration.
(a)    The Plan shall be administered by the Committee, which may delegate its duties and powers in whole or in part to any subcommittee thereof.
(b)    It shall be the duty of the Committee to conduct the general administration of the Plan in accordance with its provisions. The Committee shall have the power to interpret the Plan, and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. The Committee’s decisions or actions in respect thereof shall be conclusive and binding upon any and all Participants and their beneficiaries, successors and assigns, and all other persons.

ARTICLE VII
OTHER PROVISIONS
Section 7.1    Term. This Plan, as approved by the Committee on June 12, 2023, shall be effective for bonuses awarded for 2023 and thereafter.
Section 7.2    Amendment, Suspension or Termination of the Plan. This Plan does not constitute a promise to pay and may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board or the Committee.
Section 7.3    Bonus Awards and Other Plans. Nothing contained in the Plan shall prohibit the Company from granting awards or authorizing other compensation to any Participant under any other plan or authority or limit the authority of the Company to establish other special awards or incentive compensation plans providing for the payment of incentive compensation to Participants.
Section 7.4    Miscellaneous.
(a)    The Company shall deduct all federal, state and local taxes required by law to be withheld from any bonus award earned by or paid to a Participant hereunder, including, without limitation, any Federal Insurance Contributions Act taxes required to be withheld on a deferred bonus award prior to its payment.
(b)    In no event shall the Company be obligated to pay to any Participant a bonus award for a Performance Period by reason of the Company’s payment of a bonus award to such Participant in any other Performance Period.
(c)    The rights of Participants under the Plan shall be unfunded and unsecured. Amounts payable under the Plan are not and will not be transferred into a trust or otherwise set aside, except as provided in the Mastercard Incorporated Deferral Plan, in the event of a deferral thereunder. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any bonus award under the Plan.

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(d)    Nothing in this Plan or in any instrument executed pursuant hereto shall confer upon any person any right to continue in the employment or other service of the Company, or shall affect the right of the Company to terminate the employment or other service of any person at any time with or without cause.
(e)    No rights of any Participant to payments of any amounts under the Plan shall be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of other than by will or by laws of descent and distribution, and any such purported sale, exchange, transfer, assignment, pledge, hypothecation or disposition shall be void.
(f)    Any provision of the Plan that is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of the Plan.
(g)    The validity, construction, interpretation and administration of the Plan and any bonus awards under the Plan and of any determinations or decisions made thereunder, and the rights of all persons having or claiming to have any interest herein or thereunder, shall be governed by, and determined exclusively in accordance with, the laws of New York (determined without regard to its conflict of laws provisions).

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EX-10.2 3 exb102-06302023.htm EX-10.2 Document

EXHIBIT 10.2
MASTERCARD INCORPORATED
EMPLOYEE STOCK PURCHASE PLAN

1.    Purpose of the Plan. The purpose of the Plan is to provide an opportunity for Eligible Employees of the Company and its Designated Companies to purchase Common Stock at a discount through voluntary Contributions, thereby attracting, retaining and rewarding such persons and strengthening the mutuality of interest between such persons and the Company’s stockholders. The Company intends for offerings under the Plan to qualify as an “employee stock purchase plan” under Section 423 of the Code (each, a “Section 423 Offering”); provided, however, that the Committee may also authorize the grant of rights under offerings of the Plan that are not intended to comply with the requirements of Section 423 of the Code, pursuant to any rules, procedures, agreements, appendices, or sub-plans adopted by the Committee for such purpose (each, a “Non-423 Offering”).
2.    Definitions.
(a)     “Affiliate” means any person or entity that directly or indirectly controls or is controlled by the Company. The term “control” (including, with correlative meaning, the terms “controlled by”), as applied to any person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting or other securities, by contract or otherwise. The Committee will have the authority to determine the time or times at which “Affiliate” status is determined within the foregoing definition.
(b)     “Applicable Law” means the requirements relating to the administration of equity-based awards under state corporate laws, United States federal and state securities laws, the Code, the rules of any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any non-U.S. jurisdiction where rights are, or will be, granted under the Plan.
(c)     “Board” means the Board of Directors of the Company.
(d)     “Change in Control” means the occurrence of any of the following events:
(i)     The acquisition by any individual entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of equity securities of the Company representing more than 30 percent of the voting power of the then outstanding equity securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”), provided, however, that for purposes of this subsection (i) the following acquisitions shall not constitute a Change in Control: (A) any acquisition by the Company, (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, and (C) an acquisition pursuant to a transaction which complies with clauses (A), (B), and (C) of subsection (iii); or
(ii)     A change in the composition of the Board as of the Effective Date (the “Incumbent Board”) that causes less than a majority of the directors of the Company then in office to be members of the Incumbent Board, provided, however, that any individual becoming a director subsequent to the Effective Date, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board; or
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(iii) Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the purchase of assets or stock of another entity (a “Business Combination”), in each case, unless immediately following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50 percent of the then outstanding combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or equivalent governing body, if applicable) of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all of substantially all of the Company’s assets directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Voting Securities, (B) no person (excluding any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) will beneficially own, directly or indirectly, more than a majority of the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership of the Company existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors (or equivalent governing body, if applicable) of the entity resulting from such Business Combination will have been members of the Incumbent Board at the time of the initial agreement, or action of the Board, providing for such Business Combination; or
(iv)     Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a transaction shall not constitute a Change in Control if its sole purpose is to change the jurisdiction of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Outstanding Company Voting Securities immediately before such transaction.
(e)     “Code” means the United States Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or United States Treasury Regulation thereunder will include such section or regulation, any valid regulation or other official applicable guidance promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(f)     “Committee” means the Human Resources and Compensation Committee of the Board or any subcommittee referred to in Section 4(e).
(g)     “Common Stock” means the Class A Common Stock, par value $0.0001, of the Company, as the same may be converted, changed, reclassified or exchanged.
(h)     “Company” means Mastercard Incorporated, a Delaware corporation, or any successor to all or substantially all of the Company’s business that adopts the Plan.
(i)     “Contributions” means the amount of Eligible Pay contributed by a Participant through payroll deductions or other payments that the Committee may permit a Participant to make to fund the exercise of rights to purchase Shares granted pursuant to the Plan. Without limitation, Contributions may include direct payments or payroll deductions from a Participant as may be accepted by the Company to adjust for the Company’s delay or mistake in processing an enrollment form or in otherwise effecting a Participant's election under the Plan or as advisable to comply with the requirements of Section 423 of the Code.
(j)     “Designated Company” means any Parent, Subsidiary or Affiliate, whether now existing or existing in the future, that has been designated by the Committee from time to time in its sole discretion as eligible to participate in the Plan. The Committee may designate any Parent, Subsidiary or Affiliate as a Designated Company in a Non-423 Offering. For purposes of a Section 423 Offering, only the Company and any Parent or Subsidiary may be Designated Companies; provided, however, that at any given time, a Parent or Subsidiary that is a Designated Company under a Section 423 Offering will not be a Designated Company under a Non-423 Offering.
(k)     “Effective Date” means the date the Plan, as adopted by the Board, is approved by the stockholders of the Company, as provided in Section 18 hereof.
(l) “Eligible Employee” means any individual in an employee-employer relationship with the Company or a Designated Company for income tax and employment tax withholding and reporting purposes.
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For purposes of clarity, and unless otherwise required by Section 423 of the Code, the term “Eligible Employee” will not include the following, regardless of any subsequent reclassification as an employee by the Company or a Designated Company, any governmental agency, or any court: (i) any independent contractor; (ii) any consultant; (iii) any individual performing services for the Company or a Designated Company who has entered into an independent contractor or consultant agreement with the Company or a Designated Company; (iv) any individual performing services for the Company or a Designated Company under a purchase order, a supplier agreement or any other agreement that the Company or a Designated Company enters into for services; (v) any individual classified by the Company or a Designated Company as contract labor (such as contractors, contract employees, job shoppers), regardless of length of service; (vi) any individual whose base wage or salary is not processed for payment by the payroll department(s) or payroll provider(s) of the Company or a Designated Company; and (vii) any leased employee. The Committee will have exclusive discretion to determine whether an individual is an Eligible Employee for purposes of the Plan.
(m)     “Eligible Pay” means the total amount paid by the Company or any Parent, Subsidiary or Affiliate to the Eligible Employee (other than amounts paid after termination of employment, even if such amounts are paid for pre-termination date services) as base salary or wages (including 13th/14th month payments, holiday pay, or similar concepts under local law) and any portion of such amounts voluntarily deferred or reduced by the Eligible Employee (i) under any employee benefit plan of the Company or a Parent, Subsidiary or Affiliate available to all levels of employees on a non-discriminatory basis upon satisfaction of eligibility requirements, and (ii) under any deferral plan of the Company (provided such amounts would not otherwise have been excluded had they not been deferred), but excluding any other form of compensation, including, without limitation, cash bonuses, commissions, overtime pay, stipends, lump sum payments in lieu of foregone merit increases, “bonus buyouts” as the result of job changes, pension, retainers, severance pay, disability pay, special stay-on bonus, income derived from stock options, stock appreciation rights, restricted stock units and dispositions of stock acquired thereunder, any other allowances, and any other special remuneration or variable pay. For Eligible Employees in the United States, Eligible Pay will include elective amounts that are not includible in gross income of the Eligible Employee by reason of Sections 125, 132(f), 402(e)(3), 402(h) or 403(b) of the Code. The Committee, in its discretion, may establish a different definition of Eligible Pay for a subsequent Offering Period, which for Section 423 Offerings shall apply on a uniform and nondiscriminatory basis. Further, the Committee will have discretion to determine the application of this definition to Eligible Employees outside the United States.
(n)     “Enrollment Period” means the period during which an Eligible Employee may elect to participate in the Plan, with such period occurring before the first day of each Offering Period, as prescribed by the Committee.
(o)     “Exchange Act” means the United States Securities Exchange Act of 1934, as amended, from time to time, or any successor law thereto, and the regulations promulgated thereunder.
(p)     “Fair Market Value” means, as of any given date, (i) the closing sales price for the Common Stock on the applicable date as quoted on the New York Stock Exchange or, if no sale occurred on such date, the closing price reported for the first Trading Day immediately prior to such date during which a sale occurred; or (ii) if the Common Stock is not traded on an exchange but is regularly quoted on a national market or other quotation system, the closing sales price on such date as quoted on such market or system, or if no sales occurred on such date, then on the date immediately prior to such date on which sales prices are reported; or (iii) in the absence of an established market for the Common Stock of the type described in (i) or (ii) of this Section 1(p), the fair market value established by the Committee acting in good faith.
(q) “Offering” means a Section 423 Offering or a Non-423 Offering of a right to purchase Shares under the Plan during an Offering Period as further described in Section 6. Unless otherwise determined by the Committee, each Offering under the Plan in which Eligible Employees of a Designated Company may participate will be deemed a separate offering for purposes of Section 423 of the Code, even if the dates of the applicable Offering Periods of each such Offering are identical, and the provisions of the Plan will separately apply to each Offering. With respect to Section 423 Offerings, the terms of separate Offerings need not be identical provided that all Eligible Employees granted purchase rights in a particular Offering will have the same rights and privileges, except as otherwise may be permitted by Code Section 423; a Non-423 Offering need not satisfy such requirements.
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(r)     “Offering Period” means the periods established in accordance with Section 6 during which rights to purchase Shares may be granted pursuant to the Plan and Shares may be purchased on one or more Purchase Dates. The duration and timing of Offering Periods may be changed pursuant to Sections 6 and 17.
(s)     “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(t)     “Participant” means an Eligible Employee who elects to participate in the Plan.
(u)     “Plan” means the Mastercard Incorporated Employee Stock Purchase Plan, as may be amended from time to time.
(v)     “Purchase Date” means the last Trading Day of each Purchase Period (or such other Trading Day as the Committee may determine).
(w)     “Purchase Period” means a period of time within an Offering Period, as may be specified by the Committee in accordance with Section 6, generally beginning on the first Trading Day of each Offering Period and ending on a Purchase Date. An Offering Period may consist of one or more Purchase Periods.
(x)     “Purchase Price” means the purchase price at which Shares may be acquired on a Purchase Date and which will be set by the Committee; provided, however, that the Purchase Price for a Section 423 Offering will not be less than eighty-five percent (85%) of the lesser of (i) the Fair Market Value of the Shares on the first Trading Day of the Offering Period or (ii) the Fair Market Value of the Shares on the Purchase Date. Unless otherwise determined by the Committee prior to the commencement of an Offering Period, the Purchase Price will be eighty-five percent (85%) of the lesser of (a) the Fair Market Value of the Shares on the first Trading Day of the Offering Period or (b) the Fair Market Value of the Shares on the Purchase Date.
(y)     “Shares” means the shares of Common Stock.
(z)     “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
(aa)     “Tax-Related Items” means any income tax, social insurance, payroll tax, payment on account or other tax-related items arising in relation to the Participant’s participation in the Plan.
(bb)     “Trading Day” means a day on which the principal exchange that Shares are listed on is open for trading.
3.    Number of Reserved Shares. Subject to adjustment pursuant to Section 16 hereof, 10,000,000 Shares may be sold pursuant to the Plan. Such Shares may be authorized but unissued Shares, treasury Shares or Shares purchased in the open market. For avoidance of doubt, up to the maximum number of Shares reserved under this Section 3 may be used to satisfy purchases of Shares under Section 423 Offerings and any remaining portion of such maximum number of Shares may be used to satisfy purchases of Shares under Non-423 Offerings.
4.    Administration of the Plan.
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(a) Committee as Administrator. The Plan will be administered by the Committee. Notwithstanding anything in the Plan to the contrary, subject to Applicable Law, any authority or responsibility that, under the terms of the Plan, may be exercised by the Committee may alternatively be exercised by the Board (in which case applicable references in the Plan to the Committee will be deemed references to the Board). Subject to Applicable Law, no member of the Board or Committee (or its delegates) will be liable for any good faith action or determination made in connection with the operation, administration or interpretation of the Plan. In the performance of its responsibilities with respect to the Plan, the Committee will be entitled to rely upon, and no member of the Committee will be liable for any action taken or not taken in reliance upon, information and/or advice furnished by the Company’s officers or employees, the Company’s accountants, the Company’s counsel and any other party that the Committee deems necessary.
(b)    Powers of the Committee. The Committee will have full power and authority to: administer the Plan, including, without limitation, the authority to (i) construe, interpret, reconcile any inconsistency in, correct any default in and supply any omission in, and apply the terms of the Plan and any enrollment form or other instrument or agreement relating to the Plan, (ii) determine eligibility and adjudicate all disputed claims filed under the Plan, including whether Eligible Employees will participate in a Section 423 Offering or a Non-423 Offering and which Subsidiaries and Affiliates of the Company (or Parent, if applicable) will be Designated Companies participating in either a Section 423 Offering or a Non-423 Offering, (iii) determine the terms and conditions of any right to purchase Shares under the Plan, (iv) establish, amend, suspend or waive such rules and regulations and appoint such agents as it deems appropriate for the proper administration of the Plan, (v) amend an outstanding right to purchase Shares, including any amendments to a right that may be necessary for purposes of effecting a transaction contemplated under Section 16 hereof (including, but not limited to, an amendment to the class or type of stock that may be issued pursuant to the exercise of a right or the Purchase Price applicable to a right), provided that the amended right otherwise conforms to the terms of the Plan, and (vi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan including, without limitation, the adoption of such rules, procedures, agreements, appendices, or sub-plans (collectively, “Sub-Plans”) as are necessary or appropriate to facilitate participation in the Plan by employees who are foreign nationals or employed outside the United States and/or to take advantage of tax-qualified treatment for the Plan that may be available in certain jurisdictions, as further set forth in Section 4(c) below.
(c)    Non-U.S. Sub-Plans. Notwithstanding any provision to the contrary in this Plan, the Committee may adopt such Sub-Plans relating to the operation and administration of the Plan to accommodate local laws, customs and procedures for jurisdictions outside of the United States, the terms of which Sub-Plans may take precedence over other provisions of this Plan, with the exception of Section 3 hereof, but unless otherwise superseded by the terms of such Sub-Plan, the provisions of this Plan will govern the operation of such Sub-Plan. To the extent inconsistent with the requirements of Section 423, any such Sub-Plan will be considered part of a Non-423 Offering, and purchase rights granted thereunder will not be required by the terms of the Plan to comply with Section 423 of the Code. Without limiting the generality of the foregoing, the Committee is authorized to adopt Sub-Plans for particular non-U.S. jurisdictions that modify or supplement the terms of the Plan to meet applicable local requirements, customs or procedures regarding, without limitation, (i) eligibility to participate, (ii) the definition of Eligible Pay, (iii) the dates and duration of Offering Periods or other periods during which Participants may make Contributions towards the purchase of Shares, (iv) the method of determining the Purchase Price and the discount from Fair Market Value at which Shares may be purchased, (v) any minimum or maximum amount of Contributions a Participant may make in an Offering Period or other specified period under the applicable Sub-Plan, (vi) the treatment of purchase rights upon a Change in Control or a change in capitalization of the Company, (vii) the handling of payroll deductions, (viii) establishment of bank, building society or trust accounts to hold Contributions, (ix) payment of interest, (x) conversion of local currency, (xi) obligations to pay payroll tax, (xii) determination of beneficiary designation requirements, (xiii) withholding procedures and (xiv) handling of Share issuances.
(d)    Binding Authority. All determinations by the Committee in carrying out and administering the Plan and in construing and interpreting the Plan and any enrollment form or other instrument or agreement relating to the Plan will be made in the Committee’s sole discretion and will be final, binding and conclusive for all purposes and upon all interested persons.
(e) Delegation of Authority. To the extent not prohibited by Applicable Law, the Committee may, from time to time, delegate some or all of its authority under the Plan to a subcommittee or subcommittees of the Committee, one or more officers of the Company or other persons or groups of persons as it deems necessary, appropriate or advisable under conditions or limitations that it may set at or after the time of the delegation. For purposes of the Plan, reference to the Committee will be deemed to refer to any subcommittee, subcommittees, or other persons or groups of persons to whom the Committee delegates authority pursuant to this Section 4(e).
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5.    Eligible Employees.
(a)    General. Any individual who is an Eligible Employee as of the commencement of an Offering Period will be eligible to participate in the Plan, subject to the requirements of Section 7.
(b)    Non-U.S. Employees. An Eligible Employee who works for a Designated Company and is a citizen or resident of a jurisdiction other than the United States (without regard to whether such individual also is a citizen or resident of the United States or is a resident alien (within the meaning of Section 7701(b)(1)(A) of the Code)) may be excluded from participation in the Plan or an Offering if the participation of such Eligible Employee is prohibited under the laws of the applicable jurisdiction or if complying with the laws of the applicable jurisdiction would cause the Plan or a Section 423 Offering to violate Section 423 of the Code. In the case of a Non-423 Offering, an Eligible Employee (or group of Eligible Employees) may be excluded from participation in the Plan or an Offering if the Committee has determined, in its sole discretion, that participation of such Eligible Employee(s) is not advisable or practicable for any reason.
(c)    Code Section 423 Limitations. Notwithstanding any provisions of the Plan to the contrary, no Eligible Employee will be granted a right to purchase Shares (i) to the extent that, immediately after the grant, such Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to purchase capital stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Parent or Subsidiary of the Company, or (ii) under a Section 423 Offering, to the extent that his or her rights to purchase capital stock under all employee stock purchase plans of the Company and any Parent and Subsidiaries accrues at a rate that exceeds Twenty-Five Thousand Dollars (US$25,000) worth of such stock (determined at the fair market value of the shares of such stock at the time such right is granted) for each calendar year in which such purchase right is outstanding.
(d)    Other Limitations on Eligibility. The Committee, in its discretion, from time to time may, prior to an Enrollment Period for all purchase rights to be granted in an Offering, determine (on a uniform and nondiscriminatory basis for Section 423 Offerings) that the definition of Eligible Employee will or will not include an individual if he or she: (i) has not completed at least two (2) years of service since his or her last hire date (or such lesser period of time as may be determined by the Committee in its discretion), (ii) customarily works not more than twenty (20) hours per week (or such lesser period of time as may be determined by the Committee in its discretion), (iii) customarily works not more than five (5) months per calendar year (or such lesser period of time as may be determined by the Committee in its discretion), (iv) is a highly compensated employee within the meaning of Section 414(q) of the Code, or (v) is a highly compensated employee within the meaning of Section 414(q) of the Code with compensation above a certain level or who is an officer or subject to the disclosure requirements of Section 16(a) of the Exchange Act, provided the exclusion is applied with respect to each Section 423 Offering in an identical manner to all highly compensated individuals of the Designated Company whose employees are participating in that Offering.
6. Offering Periods. Unless and until the Committee determines otherwise in its discretion, the Plan will be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day of the relevant Offering Period and terminating on the last Trading Day of the relevant Offering Period. Unless and until the Committee determines otherwise in its discretion, each Offering Period will consist of one (1) approximately six (6)-month Purchase Period, which will run simultaneously with the Offering Period. Unless otherwise provided by the Committee, Offering Periods will run from June 1 (or the first Trading Day thereafter) through November 30 (or the first Trading Day prior to such date) and from December 1 (or the first Trading Day thereafter) through May 31 (or the first Trading Day prior to such date). The Committee has authority to establish additional or alternative sequential or overlapping Offering Periods, a different number of Purchase Periods within an Offering Period, a different duration for one or more Offering Periods or Purchase Periods or different commencement or ending dates for such Offering Periods with respect to future offerings without stockholder approval if such change is announced prior to the scheduled beginning of the first Offering Period to be affected thereafter, provided, however, that no Offering Period may have a duration exceeding twenty-seven (27) months. To the extent that the Committee establishes additional or overlapping Offering Periods, the Committee will have discretion to structure an Offering Period so that if the Fair Market Value of a share of Common Stock on the first Trading Day of the Offering Period in which a Participant is currently enrolled is higher than the Fair Market Value of a share of Common Stock on the first Trading Day of any subsequent Offering Period, the Company will automatically enroll such Participant in the subsequent Offering Period and will terminate his or her participation in such original Offering Period.
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7.    Participation.
(a)    Enrollment and Payroll Deductions. An Eligible Employee may elect to participate in an Offering Period under the Plan during any Enrollment Period. Any such election will be made by completing the online enrollment process through the Company’s designated Plan broker or by completing and submitting an enrollment form to the Committee or its designee during such Enrollment Period, authorizing Contributions in whole percentages from one percent (1%) to ten percent (10%) of the Eligible Employee’s Eligible Pay for the Purchase Period within the Offering Period to which the deduction applies.
(b)    Election Changes. A Participant may elect to increase or decrease the rate of such Contributions during any subsequent Enrollment Period by submitting the appropriate form online through the Company’s designated Plan broker or to the Committee or its designee, provided that no change in Contributions will be permitted to the extent that such change would result in total Contributions exceeding ten percent (10%) of the Eligible Employee’s Eligible Pay, or such other minimum or maximum amount as may be determined by the Committee. During a Purchase Period, a Participant may not change his or her rate of Contributions, with the exception that the Participant may reduce his or her rate of Contributions to zero percent (0%), to become effective as soon as possible after completing an amended enrollment form (either through the Company’s online Plan enrollment process or by submitting the appropriate form to the Committee or its designee). If a Participant reduces his or her rate of Contributions to zero percent (0%) during an Offering Period, the Contributions made by the Participant prior to such reduction will be applied to the purchase of Shares on the next Purchase Date, but if the Participant does not increase such rate of Contributions above zero percent (0%) at least two weeks prior to the commencement of the next subsequent Offering Period (or by such other deadline as determined by the Committee), such action will be treated as the Participant’s withdrawal from the Plan in accordance with Section 14 hereof.
(c)    Participation in Subsequent Offering Periods. Once an Eligible Employee elects to participate in an Offering Period, then such Participant will automatically participate in the Offering Period commencing immediately following the last day of such prior Offering Period at the same Contribution level as was in effect in the prior Offering Period unless the Participant elects to increase or decrease the rate of Contributions or withdraws or is deemed to withdraw from this Plan as described above in this Section 7. A Participant that is automatically enrolled in a subsequent Offering Period pursuant to this Section 7 is not required to file any additional documentation in order to continue participation in the Plan.
(d)    Committee Authority. The Committee has the authority to change the foregoing rules set forth in this Section 7 regarding participation in the Plan.
8.    Contributions. The Company will establish an account in the form of a bookkeeping entry for each Participant for the purpose of tracking Contributions made by each Participant during the Offering Period, and will credit all Contributions made by each Participant to such account. The Company will not be obligated to segregate the Contributions from the general funds of the Company or any Designated Company nor will any interest be paid on such Contributions, unless otherwise determined by the Committee or required by Applicable Law. All Contributions received by the Company for Shares sold by the Company on any Purchase Date pursuant to this Plan may be used for any corporate purpose.
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9. Number of Shares That an Employee May Purchase. Subject to the limitations set forth in Section 5(c), each Participant will have the right to purchase as many whole and fractional Shares as may be purchased with the Contributions credited to his or her account as of the last day of the Offering Period (or such other date as the Committee may determine) at the Purchase Price applicable to such Offering Period; provided, however, that a Participant may not purchase in excess of 100 Shares under the Plan per Offering Period or such other maximum number of Shares as may be established for an Offering Period by the Committee (in each case subject to adjustment pursuant to Section 16 hereof). Notwithstanding the foregoing, the Committee may determine not to permit the issuance of fractional Shares under the Plan, in which case any amount remaining in a Participant’s account that was not applied to the purchase of Shares on a Purchase Date because it was not sufficient to purchase a whole Share will be carried forward for the purchase of Shares on the next following Purchase Date. However, any amounts not applied to the purchase of Shares during an Offering Period for any reason other than as described in the foregoing sentence shall be promptly refunded following such Purchase Date and will not be carried forward to any subsequent Offering Period.
10.    Taxes. At the time a Participant’s purchase right is exercised, in whole or in part, or at the time a Participant disposes of some or all of the Shares acquired under the Plan, the Participant will make adequate provision for any Tax-Related Items. In their sole discretion, and except as otherwise determined by the Committee, the Company or the Designated Company that employs the Participant may satisfy their obligations to withhold Tax-Related Items by (a) withholding from the Participant’s wages or other compensation, (b) withholding a sufficient number of Shares otherwise issuable following purchase having an aggregate Fair Market Value sufficient to pay the Tax-Related Items required to be withheld with respect to the Shares, (c) withholding from proceeds from the sale of Shares issued upon purchase, either through a voluntary sale or a mandatory sale arranged by the Company, or (d) any other method deemed acceptable by the Committee and permitted under Applicable Law.
11.    Brokerage Accounts or Plan Share Accounts. By enrolling in the Plan, each Participant will be deemed to have authorized the establishment of a brokerage account on his or her behalf at a securities brokerage firm selected by the Committee. Alternatively, the Committee may provide for Plan share accounts for each Participant to be established by the Company or by an outside entity selected by the Committee which is not a brokerage firm. Shares purchased by a Participant pursuant to the Plan will be held in the Participant’s brokerage or Plan share account. The Company may require that Shares be retained in such brokerage or Plan share account for a designated period of time, and/or may establish procedures to permit tracking of dispositions of Shares.
12.    Rights as a Stockholder. A Participant will have no rights as a stockholder with respect to Shares subject to any rights granted under this Plan or any Shares deliverable under this Plan unless and until recorded in the books of the brokerage firm selected by the Committee or, as applicable, the Company, its transfer agent, stock plan Committee or such other outside entity which is not a brokerage firm.
13.    Rights Not Transferable. Rights granted under this Plan are not transferable by a Participant other than by will or the laws of descent and distribution, and are exercisable during a Participant’s lifetime only by the Participant.
14.    Withdrawals. A Participant may withdraw from an Offering Period by submitting the appropriate form online through the Company’s designated Plan broker or to the Committee or its designee. A notice of withdrawal must be received no later than the last day of the month immediately preceding the month of the Purchase Date or by such other deadline as may be prescribed by the Committee. Upon receipt of such notice, automatic deductions of Contributions on behalf of the Participant will be discontinued commencing with the payroll period immediately following the effective date of the notice of withdrawal, and such Participant will not be eligible to participate in the Plan until the next Enrollment Period. Unless otherwise determined by the Committee, amounts credited to the contribution account of any Participant who withdraws prior to the date set forth in this Section 14 will be refunded, without interest (unless otherwise required by Applicable Law), as soon as practicable.
15.    Termination of Employment.
(a) General. Upon a Participant ceasing to be an Eligible Employee for any reason prior to a Purchase Date (including pursuant to Section 15(c) below, Contributions for such Participant will be discontinued and any amounts then credited to the Participant’s contribution account will be refunded, without interest, as soon as practicable, except as otherwise determined by the Committee.
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(b)    Leave of Absence. Subject to the discretion of the Committee, if a Participant is granted a paid leave of absence, payroll deductions on behalf of the Participant will continue and any amounts credited to the Participant’s Contribution account may be used to purchase Shares as provided under the Plan. If a Participant is granted an unpaid leave of absence, payroll deductions on behalf of the Participant will be discontinued and no other Contributions will be permitted (unless otherwise determined by the Committee or required by Applicable Law), but any amounts then credited to the Participant’s contribution account may be used to purchase Shares on the next applicable Purchase Date. Where the period of leave exceeds three (3) months and the Participant’s right to reemployment is not guaranteed by statute or by contract, the employment relationship will be deemed to have terminated three (3) months and one (1) day following the commencement of such leave.
(c)    Transfer of Employment. Unless otherwise determined by the Committee, a Participant shall be deemed to have ceased to be an Eligible Employee for the current Offering Period upon a transfer of employment from a Designated Company in one country to a separate Designated Company in another country, provided that, in accordance with Section 2(q) of the Plan, such Designated Companies are not participating in the same Section 423 Offering under the Plan. Any Participant who is withdrawn from the Plan pursuant to this Section 15(c) may re-enroll in the Plan for any subsequent Offering Period for which he or she is eligible pursuant to Section 7 of the plan.
16.    Adjustment Provisions.
(a)    Changes in Capitalization. In the event of any change affecting the number, class, value, or terms of the shares of Common Stock resulting from a recapitalization, stock split, reverse stock split, stock dividend, spin off, split up, combination, reclassification or exchange of Shares, merger, consolidation, rights offering, separation, reorganization or liquidation or any other change in the corporate structure or Shares, including any extraordinary dividend or extraordinary distribution (but excluding any regular cash dividend), then the Committee, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, adjust the number and class of Common Stock that may be delivered under the Plan (including the numerical limits of Sections 3 and 9), the Purchase Price per Share and the number of shares of Common Stock covered by each right under the Plan that has not yet been exercised. For the avoidance of doubt, the Committee may not delegate its authority to make adjustments pursuant to this Section. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, will affect, and no adjustment by reason thereof will be made with respect to, the number or price of Shares subject to a purchase right.
(b)    Change in Control. In the event of a Change in Control, each outstanding right to purchase Shares will be equitably adjusted and assumed or an equivalent right to purchase Shares substituted by the successor corporation or a parent or subsidiary of the successor corporation. In the event that the successor corporation in a Change in Control refuses to assume or substitute for the purchase right or the successor corporation is not a publicly traded corporation, the Offering Period then in progress will be shortened by setting a new purchase date, which will be before the date of the Company’s proposed Change in Control. At least ten (10) Trading Days prior to the new purchase date, the Committee will notify each Participant in writing of the new purchase date, and that Shares will be purchased automatically for the Participant on the new purchase date, unless prior to such date the Participant has withdrawn from the Offering Period, as provided in Section 14 hereof.
17. Amendments and Termination of the Plan. The Board or the Committee may amend the Plan at any time, provided that, if stockholder approval is required pursuant to Applicable Law, then no such amendment will be effective unless approved by the Company’s stockholders within such time period as may be required. The Board may suspend the Plan or discontinue the Plan at any time, including shortening an Offering Period in connection with a spin-off or other similar corporate event. Upon termination of the Plan, all Contributions will cease and all amounts then credited to a Participant’s account will be equitably applied to the purchase of whole Shares then available for sale, and any remaining amounts will be promptly refunded, without interest (unless otherwise required by Applicable Laws), to Participants. For the avoidance of doubt, the Board or Committee, as applicable herein, may not delegate its authority to make amendments to or suspend the operations of the Plan pursuant to this Section.
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18.    Stockholder Approval; Effective Date. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Law. The Plan will become effective on the Effective Date. For the avoidance of doubt, the Board may not delegate its authority to approve the Plan pursuant to this Section.
19.    Conditions Upon Issuance of Shares. Notwithstanding any other provision of the Plan, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company will not be required to deliver any Shares issuable upon exercise of a right under the Plan prior to the completion of any registration or qualification of the Shares under any U.S. or non-U.S. federal, state, or local securities or exchange control law or under rulings or regulations of any governmental regulatory body, or prior to obtaining any approval or other clearance from any U.S. or non-U.S. federal, state, or local governmental agency, which registration, qualification or approval the Committee will, in its absolute discretion, deem necessary or advisable. The Company is under no obligation to register or qualify the Shares with any U.S. state or non-U.S. securities commission, or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. If, pursuant to this Section 19, the Committee determines that the Shares will not be issued to any Participant, any Contributions credited to such Participant’s account will be promptly refunded, without interest (unless otherwise required by Applicable Laws), to the Participant, without any liability to the Company or any of its Subsidiaries or Affiliates (or any Parent, if applicable).
20. Code Section 409A; Tax Qualification.
(a)    Code Section 409A. Rights to purchase Shares granted under a Section 423 Offering are exempt from the application of Section 409A of the Code and rights to purchase Shares granted under a Non-423 Offering are intended to be exempt from Section 409A of the Code pursuant to the “short-term deferral” exemption contained therein. In furtherance of the foregoing and notwithstanding any provision in the Plan to the contrary, if the Committee determines that a right granted under the Plan may be subject to Section 409A of the Code or that any provision in the Plan would cause a right under the Plan to be subject to Section 409A of the Code, the Committee may amend the terms of the Plan and/or of an outstanding right granted under the Plan, or take such other action the Committee determines is necessary or appropriate, in each case, without the Participant’s consent, to exempt any outstanding right or future right that may be granted under the Plan from or to allow any such rights to comply with Section 409A of the Code, but only to the extent any such amendments or action by the Committee would not violate Section 409A of the Code. Notwithstanding the foregoing, the Company will have no liability to a Participant or any other party if the right to purchase Shares under the Plan that is intended to be exempt from or compliant with Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee with respect thereto. The Company makes no representation that the right to purchase Shares under the Plan is compliant with Section 409A of the Code.
(b)    Tax Qualification. Although the Company may endeavor to (i) qualify a right to purchase Shares for favorable tax treatment under the laws of the United States or jurisdictions outside of the United States or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment, notwithstanding anything to the contrary in this Plan, including Section 20(a) hereof. The Company will be unconstrained in its corporate activities without regard to the potential negative tax impact on Participants under the Plan.
21.    No Employment Rights. Participation in the Plan will not be construed as giving any Participant the right to be retained as an employee of the Company, its Subsidiary, or one of its Affiliates or Parent, as applicable. Furthermore, the Company, a Subsidiary, or an Affiliate (or Parent, if applicable) may dismiss any Participant from employment at any time, free from any liability or any claim under the Plan.
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22. Governing Law; Choice of Forum. Except to the extent that provisions of this Plan are governed by applicable provisions of the Code or any other substantive provision of United States federal law, this Plan will be governed by and construed in accordance with the internal laws of New York without giving effect to the conflict of laws principles thereof. The Company and each Participant, as a condition to such Participant’s participation in the Plan, hereby irrevocably submit to the exclusive jurisdiction of any state or U.S. federal court located in New York over any suit, action or proceeding arising out of or relating to or concerning the Plan. The Company and each Participant, as a condition to such Participant’s participation in the Plan, acknowledge that the forum designated by this Section 22 has a reasonable relation to the Plan and to the relationship between such Participant and the Company. Notwithstanding the foregoing, nothing in the Plan will preclude the Company from bringing any action or proceeding in any other court for the purpose of enforcing the provisions of this Section 22.
23.    Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings will not be deemed in any way material or relevant to the construction or interpretation of the Plan.
24.    Expenses. Unless otherwise set forth in the Plan or determined by the Committee, all expenses of administering the Plan, including expenses incurred in connection with the purchase of Shares for sale to Participants, will be borne by the Company and its Subsidiaries or Affiliates (or any Parent, if applicable).
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EX-10.3 4 exb103-06302023.htm EX-10.3 Document

EXHIBIT 10.3

Schedule of Non-Employee Directors’ Annual Compensation

Effective July 1, 2023

Annual compensation for Board service
Role Cash Equity
Non-employee directors $100,000 $245,000
Board Chair $187,500 $332,500
Additional cash compensation for committee service
Committee Chair Non-chair
Audit $40,000 $20,000
Human Resources and Compensation $30,000 $15,000
Nominating and Corporate Governance $25,000 $12,500
Risk $40,000 $20,000

Cash compensation is paid in advance in January for the first half of the year and in arrears in December for the second half of the year. The annual retainer and any committee retainer fees are prorated for partial year Board or committee service. Under the Mastercard Incorporated Deferral Plan, directors are eligible to defer all or part of their cash compensation into a non-qualified deferred compensation arrangement. Directors who elect to defer cash compensation receive earnings on their deferrals based on investment elections. None of the investment options provides returns considered to be above-market or preferential. The equity compensation described above applies to the equity grants made to non-employee directors on June 27, 2023 in connection with the 2023 annual meeting of stockholders.

Annual equity grants are awarded upon a director's election on the date of the annual meeting of stockholders, are immediately vested with a four-year transfer restriction and are in the form of restricted stock or deferred stock units. Each director selects the form of his or her award during an annual election process. Directors elected to the board outside of the annual meeting of stockholders are granted a prorated equity award.


EX-10.4 5 exb104-06302023.htm EX-10.4 Document

EXHIBIT 10.4

FORM OF DEFERRED STOCK UNIT AGREEMENT

[effective for awards granted on and subsequent to June 27, 2023]


THIS AGREEMENT, dated as of June xx, 20xx (“Grant Date”) is between Mastercard Incorporated, a Delaware Corporation (the “Company”), and you (the “Director”). Capitalized terms that are used but not defined in this Agreement have the meanings given to them in the 2006 Non-Employee Director Equity Compensation Plan amended and restated as of June 22, 2021 (the “Plan”). 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 Director the number of Deferred Stock Units (“Units”) reflected in the Director’s grant statement, the terms and conditions 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 Director’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.
2.    Vesting.
The interest of the Director in the Units is fully vested on grant.
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 Director’s Units are settled and the Company has issued Common Shares relating to such Units, the Director 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.
5.    Dividend Equivalents.
Until such time as the Units are released to the Director, the Company will pay the Director a cash amount equal to the number of Units granted hereunder times any per share dividend payment made to stockholders of the Company’s Common Shares as long as the Director continues to hold such Units on the dividend payment date. Such payments shall be made by the end of the year in which dividends are paid to stockholders.
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6.    Changes in Stock.
In the event of any change with respect to outstanding Common Shares contemplated by Section 4.2 of the Plan, the Units may be adjusted in accordance with Section 4.2 of the Plan.
7.    Form and Timing of Payment.
The Company shall pay on the fourth anniversary of the Grant Date, June xx, 20xx (or on the first business day thereafter), a number of Common Shares equal to the aggregate number of Units granted under this Agreement; provided, however, that if the Director has timely made a valid election to defer or re-defer settlement of the Deferred Stock Units in accordance with the Plan, the Common Shares shall be paid as specified in such election. Notwithstanding the foregoing, in the event the Director has a Termination from Service, payment shall be made within 60 days of the Director’s Termination from Service.
In the event a Director is a specified employee for purposes of Code section 409A(a)(2)(B)(i) at the time of his or her Termination from Service, any payment required to be made on Termination from Service shall be made on the first day of the seventh month following Termination from Service.
8.    Compliance with Law.
No Common Shares will be delivered to the Director 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 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. 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 Director's participation in the Plan, to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable to comply with applicable laws. Such requirements may include (but are not limited to) requiring the Director to sign any agreements or undertakings that may be necessary to accomplish the foregoing.
9.    Taxes.
The Director shall be liable for any and all U.S. and foreign income and social taxes, including any required withholding taxes, arising out of this grant or the issuance of the Common Shares hereunder. To the extent withholding is required under applicable law, the Company is authorized to deduct the amount of tax withholding from the amount payable to the Director upon payment of dividend equivalents and settlement of the Units, or to obtain withholdings in any other method permitted by the Committee, and the Company will determine the amount of any such required withholding using the information in its applicable systems and other business records at the time of such withholding event. With regard to the Units, unless otherwise approved by the Committee, and provided that the withholding obligation does not arise prior to settlement of the Units, the Company shall withhold from the total number of Common Shares the Director is to receive the value equal to the amount necessary to satisfy any such withholding obligation. In accordance with U.S. federal income tax withholding requirements, the Company shall withhold on amounts payable to Directors who are considered U.S. nonresident aliens under Code Section 7701(b).
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10.    Data Privacy.
The Company and its affiliates may collect, use, process, transfer or disclose the Director’s personal data for the purpose of implementing, administering and managing the Director’s participation in the Plan, in accordance with the Company’s Employee Privacy Notice which the Director has previously received.  (Please contact the Company’s stock administrator to receive another copy of this notice.)  Notwithstanding the foregoing, if the Director resides outside the United States, the privacy provisions of the addendum to this Agreement (the “Addendum”) shall apply to the Director in place of this Section 10. The Addendum constitutes part of this Agreement.
11.    Section 409A.
The Company may at its sole discretion amend or replace this Agreement to cause the Agreement to comply with Code section 409A. The Agreement shall be construed and administered consistent with Code section 409A or an exemption from Code section 409A. This section does not create an obligation on the part of the Company to modify the terms of the Agreement, and the Company shall have no liability in the event the Agreement results in adverse tax consequences to the Director under Code section 409A.
12.    Miscellaneous.
(a)    All amounts credited to the Director’s Account under this Agreement shall continue for all purposes to be a part of the general assets of the Company. The Director’s interest in the Account shall make the Director 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 shall be given in writing and shall be deemed effectively given upon delivery to the Director at the address then on file with the Company or upon delivery to the Company at 2000 Purchase Street, Purchase, New York 10577, Attn: Executive Vice President, Total Rewards.
(d)    This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof.

By /s/________________________________
[Name]
[Title]













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ADDENDUM

If the Director resides outside the United States, in place of Section 10 of the Agreement, the Units shall be subject to the Data Privacy terms set forth below, as applicable based on the Director’s country of residence:

EUROPEAN UNION, EUROPEAN ECONOMIC AREA AND SWITZERLAND

Data Privacy Terms. The following data privacy terms, in addition to the Mastercard Employee Privacy Notice – EEA (please contact the Company’s stock administrator to request a copy of this notice), govern the grant of the Award under the Agreement to Directors who reside in the European Union and European Economic Area (which, for the avoidance of doubt, includes the United Kingdom for purposes of these data privacy terms) and in Switzerland:

Data Collection and Usage. Pursuant to applicable data protection laws, the Director is hereby notified that, in the context of the grant of the Units under the Agreement, the Company collects, processes, uses and transfers certain personal information about the Director for the exclusive legitimate purpose of facilitating the Director’s participation in the Plan, allocating Common Shares, implementing, administering and managing the Director's Units and generally administering the Director's remuneration and any related benefits (“Purposes”). The Company may process specifically the following personal information: the Director’s name, home address and telephone number, email address, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Units or any other cash or equity award granted, canceled, exercised, vested, unvested or outstanding in the Director’s favor (“Data”). The Company’s collection, processing, use and transfer of the Director's Data is necessary for the Company’s legitimate business interests of implementing, administering and managing the Director's Units and generally administering Director remuneration and any related benefits and the fulfilment of Company’s contractual obligations with the Director. The Director’s refusal to provide Data would make it impossible for the Company to perform its contractual obligations and may affect the Director's ability to receive Units. As such, by participating in the Plan, Director acknowledges the collection, use, processing and transfer of his/her Data as described herein.

Service Providers. The Company transfers the Director's Data to Morgan Stanley Smith Barney LLC (including its affiliated companies), based, in relevant part, in the United States, which assists the Company with the implementation, administration and management of the Units. In the future, the Company may select a different service provider and share Data with that service provider, which will serve in a similar manner. The Company’s service provider will open an account for the Director to receive and administer the Units. The processing of the Director's Data will take place through both electronic and non-electronic means. The Director's Data will only be accessible by those individuals requiring access to it for purposes of implementation, administration and operation of the Units and other aspects of the Director's relationship with the Company.

International Data Transfers. The Company and its service providers are based, in relevant part, in the United States, which means that it will be necessary for Data to be transferred to, and processed in, the United States. By accepting the Units, the Director understands that the providers will receive, possess, use, retain and transfer the Director's Data for the purposes of implementing, administering and managing his/her participation in the Plan. Personal Data is transferred by the Company in compliance with our Binding Corporate Rules (available upon request from the Company’s stock administrator) and other data transfer mechanisms. When transferring the Director's Data to its service providers, the Company provides appropriate safeguards through contractual protections for the transfer of personal information to third parties, such as the European Commission's Standard Contractual Clauses or their equivalent under applicable law.
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Data Subject Rights. To the extent provided by law, the Director has the right to request: access to Data, rectification of Data, erasure of Data, restriction of processing of Data, and portability of Data. The Director may also have the right to object, on grounds related to a particular situation, to the processing of Data, without cost, and to lodge a complaint with the relevant data protection supervisory authority. The Director's provision of Data is a contractual requirement. The Director understands, however, that the only consequence of refusing to provide Data is that the Company may not be able to grant Units or other awards to the Director, or administer or maintain such awards. The Director can exercise these rights or request more information on the consequences of the refusal to provide Data in various ways, as specified in the Mastercard Employee Privacy Notice – EEA.

Data Retention. The Company will use Data only as long as necessary for the Purposes, or as required to comply with legal or regulatory obligations, including tax and securities laws. When the Company no longer needs the Data, the Company will remove it from its systems. If the Company keeps Data longer, it would be to satisfy legal or regulatory obligations and the Company’s legal basis for retaining such Data would be compliance with the relevant laws or regulations.

NON-EUROPEAN UNION / EUROPEAN ECONOMIC AREA / SWITZERLAND

Data Privacy Terms. The following data privacy terms govern the grant of the Units under the Agreement to Directors who reside outside the European Union / European Economic Area and Switzerland:

The Director hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Director’s personal data as described in this Agreement and any other documents related to the Units by and among, as applicable, the Company and its affiliates for the exclusive purpose of implementing, administering and managing the Director’s Units.

The Director understands that the Company may hold certain personal data about the Director, specifically: the Director’s name, home address and telephone number, email address, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Units or any other cash or equity award granted, canceled, exercised, vested, unvested or outstanding in the Director’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Director’s Units.

The Director understands that Data may be transferred to Morgan Stanley Smith Barney LLC or other third parties which may assist the Company with the implementation, administration and management of the Units. The Director understands that the recipients of Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Director’s country. The Director understands that the Director may request a list with the names and addresses of any potential recipients of Data by contacting the Company. The Director authorizes the Company, Morgan Stanley Smith Barney LLC, and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Units to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Director’s Units.

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The Director understands that Data will be held only as long as is necessary to implement, administer and manage the Director’s Units. The Director understands that the Director may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting the Company in writing. Further, the Director understands that the Director is providing the consents herein on a purely voluntary basis. If the Director does not consent, or if the Director later seeks to revoke the Director’s consent, the Director’s service with the Company will not be affected; the only consequence of refusing or withdrawing the Director’s consent is that the Company would not be able to grant the Units or other awards to the Director or administer or maintain such awards. Therefore, the Director understands that refusing or withdrawing the Director’s consent may affect the Director’s ability to receive Units or other awards. For more information on the consequences of the Director’s refusal to consent or withdrawal of consent, the Director understands that the Director may contact [name] at [email].

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EX-10.5 6 exb105-06302023.htm EX-10.5 Document

EXHIBIT 10.5

FORM OF RESTRICTED STOCK AGREEMENT

[effective for awards granted on and subsequent to June 27, 2023]


THIS AGREEMENT, dated as of June xx, 20xx, (“Grant Date”) is between Mastercard Incorporated, a Delaware Corporation (the “Company”), and you (the “Director”). Capitalized terms that are used but not defined in this Agreement have the meanings given to them in the 2006 Non-Employee Director Equity Compensation Plan amended and restated as of June 22, 2021 (“Plan”) and, where applicable, in the 2006 Long Term Incentive Plan as amended and restated as of June 22, 2021 (“Omnibus Plan”).
WHEREAS, the Company has established the Plan, the terms of which Plan, and, to the extent applicable, the Omnibus Plan are made a part hereof;
WHEREAS, the Human Resources and Compensation Committee of the Board of Directors of the Company (the “Committee”) has approved, and the Board of Directors of the Company has ratified, this grant under the terms of the Plan;
NOW, THEREFORE, the parties hereby agree as follows:
1.    Award.
Subject to the terms and conditions of this Agreement and of the Plan, the Company hereby grants to the Director the number of shares of the Company’s $0.0001 par value Class A Common Stock (the “Common Shares”) reflected in the Director’s grant statement, the terms and conditions of which are incorporated as a part of this Agreement. The Common Shares will be subject to the terms and conditions set forth below (the “Restricted Stock”). Common Shares will be issued in the name of the Director, deposited in an account for the benefit of the Director, and subjected to appropriate transfer restrictions implemented to reflect the terms, conditions and restrictions applicable to the Restricted Stock as described herein.
2.    Vesting.
The interest of the Director in the Restricted Stock is fully vested on grant, but is subject to transfer restrictions pursuant to Section 3 below.
    3.    Transfer Restrictions.
The Restricted Stock 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 before the fourth anniversary of the Grant Date. In the event the Director has a Termination from Service before the fourth anniversary of the Grant Date, the transfer restrictions shall lapse and be removed from the Common Shares within 60 days of the Director’s Termination from Service.
4.    Stockholder Rights.
Except as otherwise provided in this Agreement, the Director will have, with respect to the Restricted Stock, all of the rights of a stockholder of the Company holding the class of Common Shares that is the subject of the Restricted Stock, including, if applicable, the right to vote the shares and the right to receive any cash dividends.
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5.    Changes in Stock.
In the event of any change with respect to outstanding Common Shares contemplated by Section 4.2 of the Plan, the Restricted Stock may be adjusted in accordance with Section 4.2 of the Plan.

6.    Compliance with Law.
No Common Shares will be delivered to the Director under this Agreement 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 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. The Company reserves the right to impose other requirements on the Restricted Stock, any Common Shares, and the Director's participation in the Plan, to the extent the Company determines, in its sole discretion that such other requirements are necessary or advisable to comply with applicable laws. Such requirements may include (but are not limited to) requiring the Director to sign any agreements or undertakings that may be necessary to accomplish the foregoing.
7.    Taxes.
The Director shall be liable for any and all U.S. and foreign income and social taxes, including any required withholding taxes, arising out of this Award. To the extent withholding is required under applicable law, the Company is authorized to deduct from the total number of Common Shares subject to the Award the total value equal to the amount necessary to satisfy any such withholding obligation. Alternatively, the Company may obtain withholdings in any other method permitted by the Committee. In either case, the Company will determine the amount of any such required withholding using the information in its applicable systems and other business records at the time of such withholding event. In accordance with U.S. federal income tax withholding requirements, the Company shall withhold on amounts payable to Directors who are considered U.S. nonresident aliens under Code Section 7701(b).
8.    Discretionary Nature of Restricted Stock Award.
The Director acknowledges and agrees that the grant of Restricted Stock is a discretionary Alternative Award under Section 6.3 of the Plan. The grant of Restricted Stock under the Plan is a one-time benefit and does not create any contractual or other right to receive a grant of Restricted Stock or other Alternative Award under the Plan in the future.
9.    Data Privacy.

The Company and its affiliates may collect, use, process, transfer or disclose the Director’s personal data for the purpose of implementing, administering and managing the Director’s participation in the Plan, in accordance with the Company’s Employee Privacy Notice which the Director has previously received.  (Please contact the Company’s stock administrator to receive another copy of this notice.) 
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Notwithstanding the foregoing, if the Director resides outside the United States, the privacy provisions of the addendum to this Agreement (the “Addendum”) shall apply to the Director in place of this Section 9. The Addendum constitutes part of this Agreement.
10.    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 shall be given in writing and shall be deemed effectively given upon delivery to the Director at the address then on file with the Company or upon delivery to the Company at 2000 Purchase Street, Purchase, New York 10577, Attn: Executive Vice President, Total Rewards.
(c)    This Agreement, the Plan and, where applicable, the Omnibus Plan, constitute the entire agreement of the parties with respect to the subject matter hereof.

By /s/ ________________________________
        [Name]
        [Title]





ADDENDUM

If the Director resides outside the United States, in place of Section 9 of the Agreement, the Award shall be subject to the Data Privacy terms set forth below, as applicable based on the Director’s country of residence:

EUROPEAN UNION, EUROPEAN ECONOMIC AREA AND SWITZERLAND

Data Privacy Terms. The following data privacy terms, in addition to the Mastercard Employee Privacy Notice – EEA (please contact the Company’s stock administrator to request a copy of this notice), govern the grant of the Award under the Agreement to Directors who reside in the European Union and European Economic Area (which, for the avoidance of doubt, includes the United Kingdom for purposes of these data privacy terms) and in Switzerland:

Data Collection and Usage. Pursuant to applicable data protection laws, the Director is hereby notified that, in the context of the grant of the Award under the Agreement, the Company collects, processes, uses and transfers certain personal information about the Director for the exclusive legitimate purpose of facilitating the Director’s participation in the Plan, allocating Common Shares, implementing, administering and managing the Director's Award and generally administering the Director's remuneration and any related benefits (“Purposes”). The Company may process specifically the following personal information: the Director’s name, home address and telephone number, email address, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Restricted Stock or any other cash or equity award granted, canceled, exercised, vested, unvested or outstanding in the Director’s favor (“Data”).
3


The Company’s collection, processing, use and transfer of the Director's Data is necessary for the Company’s legitimate business interests of implementing, administering and managing the Director's Award and generally administering Director remuneration and any related benefits and the fulfilment of Company’s contractual obligations with the Director. The Director’s refusal to provide Data would make it impossible for the Company to perform its contractual obligations and may affect the Director's ability to receive Awards. As such, by participating in the Plan, Director acknowledges the collection, use, processing and transfer of his/her Data as described herein.

Service Providers. The Company transfers the Director's Data to Morgan Stanley Smith Barney LLC (including its affiliated companies), based, in relevant part, in the United States, which assists the Company with the implementation, administration and management of the Award. In the future, the Company may select a different service provider and share Data with that service provider, which will serve in a similar manner. The Company’s service provider will open an account for the Director to receive and administer the Award. The processing of the Director's Data will take place through both electronic and non-electronic means. The Director's Data will only be accessible by those individuals requiring access to it for purposes of implementation, administration and operation of the Award and other aspects of the Director's relationship with the Company.

International Data Transfers. The Company and its service providers are based, in relevant part, in the United States, which means that it will be necessary for Data to be transferred to, and processed in, the United States. By accepting the Award, the Director understands that the providers will receive, possess, use, retain and transfer the Director's Data for the purposes of implementing, administering and managing his/her participation in the Plan. Personal Data is transferred by the Company in compliance with our Binding Corporate Rules (available upon request from the Company’s stock administrator) and other data transfer mechanisms. When transferring the Director's Data to its service providers, the Company provides appropriate safeguards through contractual protections for the transfer of personal information to third parties, such as the European Commission's Standard Contractual Clauses or their equivalent under applicable law.

Data Subject Rights. To the extent provided by law, the Director has the right to request: access to Data, rectification of Data, erasure of Data, restriction of processing of Data, and portability of Data. The Director may also have the right to object, on grounds related to a particular situation, to the processing of Data, without cost, and to lodge a complaint with the relevant data protection supervisory authority. The Director's provision of Data is a contractual requirement. The Director understands, however, that the only consequence of refusing to provide Data is that the Company may not be able to grant Restricted Stock or other awards to the Director, or administer or maintain such awards. The Director can exercise these rights or request more information on the consequences of the refusal to provide Data in various ways, as specified in the Mastercard Employee Privacy Notice – EEA.

Data Retention. The Company will use Data only as long as necessary for the Purposes, or as required to comply with legal or regulatory obligations, including tax and securities laws. When the Company no longer needs the Data, the Company will remove it from its systems. If the Company keeps Data longer, it would be to satisfy legal or regulatory obligations and the Company’s legal basis for retaining such Data would be compliance with the relevant laws or regulations.

NON-EUROPEAN UNION / EUROPEAN ECONOMIC AREA / SWITZERLAND
4



Data Privacy Terms. The following data privacy terms govern the grant of the Award under the Agreement to Directors who reside outside the European Union / European Economic Area and Switzerland:

The Director hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Director’s personal data as described in this Agreement and any other documents related to the Award by and among, as applicable, the Company and its affiliates for the exclusive purpose of implementing, administering and managing the Director’s Award.

The Director understands that the Company may hold certain personal data about the Director, specifically: the Director’s name, home address and telephone number, email address, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Restricted Stock or any other cash or equity award granted, canceled, exercised, vested, unvested or outstanding in the Director’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Director’s Award.

The Director understands that Data may be transferred to Morgan Stanley Smith Barney LLC or other third parties which may assist the Company with the implementation, administration and management of the Award. The Director understands that the recipients of Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Director’s country. The Director understands that the Director may request a list with the names and addresses of any potential recipients of Data by contacting the Company. The Director authorizes the Company, Morgan Stanley Smith Barney LLC, and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Award to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Director’s Award.

The Director understands that Data will be held only as long as is necessary to implement, administer and manage the Director’s Award. The Director understands that the Director may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting the Company in writing. Further, the Director understands that the Director is providing the consents herein on a purely voluntary basis. If the Director does not consent, or if the Director later seeks to revoke the Director’s consent, the Director’s service with the Company will not be affected; the only consequence of refusing or withdrawing the Director’s consent is that the Company would not be able to grant the Restricted Stock or other awards to the Director or administer or maintain such awards. Therefore, the Director understands that refusing or withdrawing the Director’s consent may affect the Director’s ability to receive Restricted Stock or other awards. For more information on the consequences of the Director’s refusal to consent or withdrawal of consent, the Director understands that the Director may contact [name] at [email].
5

EX-31.1 7 exb311-06302023.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 June 30, 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: July 27, 2023
By: /s/ Michael Miebach
Michael Miebach
President and Chief Executive Officer



EX-31.2 8 exb312-06302023.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 June 30, 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: July 27, 2023
By: /s/ Sachin Mehra
Sachin Mehra
Chief Financial Officer


EX-32.1 9 exb321-06302023.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 June 30, 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.
July 27, 2023
/s/ Michael Miebach
Michael Miebach
President and Chief Executive Officer



EX-32.2 10 exb322-06302023.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 June 30, 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.
July 27, 2023
/s/ Sachin Mehra
Sachin Mehra
Chief Financial Officer

EX-99.1 11 exb991-06302023.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 three months ended June 30, 2023, 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
•for some or all of the three years ended December 31, 2022 and the three months ended March 31, 2023, Mastercard processed transactions resulting from an acquirer located in the Asia/Pacific region having acquired transactions for consular services with an Iranian embassy
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 with respect to the relevant periods described above. Both the number of transactions and our estimated net revenue and net profits for these periods are de minimis.