Proctor and Gamble 2013 Annual Report Download - page 66

64 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
Net earnings attributable to Procter & Gamble and common shares used to calculate basic and diluted net earnings per share
were as follows:
Years ended June 30 2013 2012 2011
NET EARNINGS FROM CONTINUING OPERATIONS $ 11,402 $ 9,317 $ 11,698
Net earnings from discontinued operations —1,587 229
NET EARNINGS 11,402 10,904 11,927
Net earnings attributable to noncontrolling interests (90)(148)(130)
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMB 11,312 10,756 11,797
Preferred dividends, net of tax benefit (244)(256)(233)
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE AVAILABLE
TO COMMON SHAREHOLDE 11,068 10,500 11,564
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO
PROCTER & GAMBLE AVAILABLE TO COMMON SHAREHOLDERS $ 11,068 $ 8,913 $ 11,335
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO
PROCTER & GAMBLE (Diluted) $ 11,312 $ 9,169 $ 11,568
Shares in millions; Years ended June 30 2013 2012 2011
Basic weighted average common shares outstanding 2,742.9 2,751.3 2,804.0
Effect of dilutive securities
Conversion of preferred shares(1) 116.8 123.9 128.5
Exercise of stock options and other unvested equity awards(2) 70.9 66.0 69.4
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2,930.6 2,941.2 3,001.9
(1) Despite being included currently in diluted net earnings per common share, the actual conversion to common stock occurs when the
preferred shares are sold. Shares may only be sold after being allocated to the ESOP participants pursuant to the repayment of the
ESOP's obligations through 2035.
(2) Approximately 12 million in 2013, 67 million in 2012 and 93 million in 2011 of the Company's outstanding stock options were not
included in the diluted net earnings per share calculation because the options were out of the money or to do so would have been
antidilutive (i.e., the total proceeds upon exercise would have exceeded the market value of the underlying common shares).
NOTE 8
STOCK-BASED COMPENSATION
We have stock-based compensation plans under which we
annually grant stock option, restricted stock, restricted stock
unit (RSU) and performance stock unit (PSU) awards to key
managers and directors. Exercise prices on options granted
have been, and continue to be, set equal to the market price
of the underlying shares on the date of the grant. Since
September 2002, the key manager stock option awards
granted vest after three years and have a 10-year life. The
key manager stock option awards granted from July 1998
through August 2002 vested after three years and have a 15-
year life. Key managers can elect to receive up to 100% of
the value of their option award in RSUs. Key manager
RSUs vest and are settled in shares of common stock five
years from the grant date. The awards provided to the
Company's directors are in the form of restricted stock and
RSUs.
In addition to our key manager and director grants, we make
other minor stock option and RSU grants to employees for
which the terms are not substantially different than those
described in the preceding paragraph. In 2011, we
implemented a performance stock program (PSP) and
granted PSUs to senior level executives. Under this
program, the number of PSUs that will vest three years after
the respective grant date is based on the Company's
performance relative to pre-established performance goals
during that three year period.
A total of 180 million shares of common stock were
authorized for issuance under stock-based compensation
plans approved by shareholders in 2003 and 2009. A total of
56 million shares remain available for grant under the 2003
and 2009 plans.
Total stock-based compensation expense for stock option
grants was $249, $317 and $358 for 2013, 2012 and 2011,
respectively. Total compensation expense for restricted
stock, RSUs and PSUs was $97, $60 and $56 in 2013, 2012
and 2011, respectively. The total income tax benefit
recognized in the income statement for stock options,
restricted stock, RSUs and PSUs was $96, $102 and $117 in
2013, 2012 and 2011, respectively.
In calculating the compensation expense for stock options
granted, we utilize a binomial lattice-based valuation model.
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