EQUITY AND NONCONTROLLING INTEREST

12 Months Ended

Dec. 31, 2019

EQUITY AND NONCONTROLLING INTEREST

We had 1,055,000,000 authorized shares of capital stock as of December 31, 2019. Of this total, 900,000,000 shares were designated as Common Stock, 150,000,000 shares were designated as Class B Stock and 5,000,000 shares were designated as Preferred Stock. Each class has a par value of one dollar per share.

Holders of the Common Stock and the Class B Stock generally vote together without regard to class on matters submitted to stockholders, including the election of directors. The holders of Common Stock have 1 vote per share and the holders of Class B Stock have 10 votes per share. However, the Common Stock holders, voting separately as a class, are entitled to elect one-sixth of the Board. With respect to dividend rights, the Common Stock holders are entitled to cash dividends 10% higher than those declared and paid on the Class B Stock.

Class B Stock can be converted into Common Stock on a share-for-share basis at any time. During 2019 and 2017 no shares of Class B Stock were converted into Common Stock. During 2018, 6,000 shares of Class B Stock were converted into Common Stock.

Changes in the outstanding shares of Common Stock for the past three years were as follows:



For the years ended December 31,	2019		2018		2017
Shares issued	359,901,744		359,901,744		359,901,744
Treasury shares at beginning of year	(150,172,840	)	(149,040,927	)	(147,642,009	)
Stock repurchases:
Shares repurchased in the open market under pre-approved share repurchase programs	(1,386,193	)	(1,406,093	)	—
Shares repurchased directly from the Milton Hershey School Trust	—		(450,000	)	(1,500,000	)
Shares repurchased to replace Treasury Stock issued for stock options and incentive compensation	(2,674,349	)	(615,719	)	(1,278,675	)
Stock issuances:
Shares issued for stock options and incentive compensation	3,161,071		1,339,899		1,379,757
Retirement of treasury shares	138,348,719		—		—
Treasury shares at end of year	(12,723,592	)	(150,172,840	)	(149,040,927	)
Change in Common Stock due to retirement of treasury shares	(138,348,719	)	—		—
Net shares outstanding at end of year	208,829,433		209,728,904		210,860,817

We are authorized to purchase our outstanding shares in open market and privately negotiated transactions. The programs have no expiration date and acquired shares of Common Stock will be held as treasury shares. Purchases under approved share repurchase authorizations are in addition to our practice of buying back shares sufficient to offset those issued under incentive compensation plans.

Retirement of Treasury Shares

During 2019, we retired 138,348,719 shares or $6,423,267 of the Company’s treasury shares previously repurchased. Under the applicable state law, these shares resume the status of authorized and unissued shares upon retirement. In accordance with our accounting policy, we record any excess of repurchase price over par value to retained earnings. As a result, our retained earnings were reduced by $6,284,919 during 2019. This transaction was approved by the Board on October 11, 2019.

Hershey Trust Company

Hershey Trust Company, as trustee for the Milton Hershey School Trust (the "Trust") and as direct owner of investment shares, held 123,600 shares of our Common Stock as of December 31, 2019. As trustee for the Trust, Hershey Trust Company held 60,612,012 shares of the Class B Stock as of December 31, 2019, and was entitled to cast approximately 80% of all of the votes entitled to be cast on matters requiring the vote of both classes of our common stock voting together. Hershey Trust Company, as trustee for the Trust, or any successor trustee, or Milton Hershey School, as appropriate, must approve any issuance of shares of Common Stock or other action that would result in it not continuing to have voting control of our Company.

In November 2018, the Company entered into a Stock Purchase Agreement with Hershey Trust Company, as trustee for the Trust, pursuant to which the Company agreed to purchase 450,000 shares of the Company’s common stock from the Trust at a price equal to $106.30 per share, for a total purchase price of $47,835.

In August 2017, the Company entered into a Stock Purchase Agreement with Hershey Trust Company, as trustee for the Trust, pursuant to which the Company agreed to purchase 1,500,000 shares of the Company’s common stock from the Trust at a price equal to $106.01 per share, for a total purchase price of $159,015.

Noncontrolling Interest in Subsidiary

We currently own a 50% controlling interest in LSFC, a joint venture established in 2007 in China for the purpose of manufacturing and selling product to the joint venture partners.

A roll-forward showing the 2019 activity relating to the noncontrolling interest follows:



	Noncontrolling Interest
Balance, December 31, 2018	$	8,545
Net loss attributable to noncontrolling interest	(2,940		)
Other comprehensive income - foreign currency translation adjustments	167
Balance, December 31, 2019	$	5,772

The 2019 net loss attributable to the noncontrolling interest reflects the 50% allocation of LSFC-related business realignment and impairment costs (see Note 9).