Alcoa 2013 Annual Report Download - page 153

At December 31, 2013, there was $16 and $39 of unrecognized compensation expense (pretax) related to non-vested
stock option grants and non-vested stock award grants, respectively. This expense is expected to be recognized over a
weighted average period of 1.6 years. As of December 31, 2013, the following table summarizes the unrecognized
compensation expense expected to be recognized in future periods:
Stock-based compensation
expense (pretax)
2014 $36
2015 18
2016 1
Totals $55
S. Earnings Per Share
Basic earnings per share (EPS) amounts are computed by dividing earnings, after the deduction of preferred stock
dividends declared and dividends and undistributed earnings allocated to participating securities, by the average
number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially
dilutive share equivalents outstanding not classified as participating securities.
The information used to compute basic and diluted EPS attributable to Alcoa common shareholders was as follows
(shares in millions):
2013 2012 2011
(Loss) income from continuing operations attributable to Alcoa common shareholders $(2,285) $ 191 $ 614
Less: preferred stock dividends declared 2 2 2
(Loss) income from continuing operations available to common equity (2,287) 189 612
Less: dividends and undistributed earnings allocated to participating securities - - 1
(Loss) income from continuing operations available to Alcoa common shareholders—
basic (2,287) 189 611
Add: interest expense related to convertible notes - - 30
(Loss) income from continuing operations available to Alcoa common shareholders—
diluted $(2,287) $ 189 $ 641
Average shares outstanding—basic 1,070 1,067 1,061
Effect of dilutive securities:
Stock options -37
Stock and performance awards - 6 4
Convertible notes - - 89
Average shares outstanding—diluted 1,070 1,076 1,161
Participating securities are defined as unvested share-based payment awards that contain nonforfeitable rights to
dividends or dividend equivalents (whether paid or unpaid) and are included in the computation of EPS pursuant to the
two-class method. Prior to January 1, 2010, under Alcoa’s stock-based compensation programs, certain employees
were granted stock and performance awards, which entitle those employees to receive nonforfeitable dividends during
the vesting period on a basis equivalent to the dividends paid to holders of Alcoa’s common stock. As such, these
unvested stock and performance awards met the definition of a participating security. Under the two-class method, all
earnings, whether distributed or undistributed, are allocated to each class of common stock and participating securities
based on their respective rights to receive dividends. At December 31, 2013 and 2012, there were no outstanding
participating securities, as all such securities have vested and were converted into shares of common stock. At
December 31, 2011 there were 2 million participating securities outstanding.
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