JP Morgan Chase 2014 Annual Report Download - page 282

Notes to consolidated financial statements
280 JPMorgan Chase & Co./2014 Annual Report
At each of December 31, 2014, 2013, and 2012,
respectively, the Firm had 59.8 million warrants
outstanding to purchase shares of common stock (the
“Warrants”). The Warrants are currently traded on the New
York Stock Exchange, and they are exercisable, in whole or
in part, at any time and from time to time until October 28,
2018. The original warrant exercise price was $42.42 per
share. The number of shares issuable upon the exercise of
each warrant and the warrant exercise price is subject to
adjustment upon the occurrence of certain events,
including, but not limited to, the extent regular quarterly
cash dividends exceed $0.38 per share. As a result of the
increase in the Firm’s quarterly common stock dividend to
$0.40 per share commencing with the second quarter of
2014, the exercise price of the Warrants was adjusted each
subsequent quarter, and was $42.391 as of December 31,
2014. There has been no change in the number of shares
issuable upon exercise.
On March 13, 2012, the Board of Directors authorized a
$15.0 billion common equity (i.e., common stock and
warrants) repurchase program. As of December 31, 2014,
$3.8 billion (on a trade-date basis) of authorized
repurchase capacity remained under the program. The
amount of equity that may be repurchased by the Firm is
also subject to the amount that is set forth in the Firm’s
annual capital plan that is submitted to the Federal Reserve
as part of the Comprehensive Capital Analysis and Review
(“CCAR”) process.
The following table sets forth the Firm’s repurchases of
common equity for the years ended December 31, 2014,
2013 and 2012, on a trade-date basis. There were no
warrants repurchased during the years ended
December 31, 2014, and 2013.
Year ended December 31, (in millions) 2014 2013 2012
Total number of shares of common stock
repurchased 83.4 96.1 30.9
Aggregate purchase price of common
stock repurchases $ 4,834 $ 4,789 $ 1,329
Total number of Warrants repurchased —— 18.5
Aggregate purchase price of Warrant
repurchases $ — $ — $ 238
The Firm may, from time to time, enter into written trading
plans under Rule 10b5-1 of the Securities Exchange Act of
1934 to facilitate repurchases in accordance with the
common equity repurchase program. A Rule 10b5-1
repurchase plan allows the Firm to repurchase its equity
during periods when it would not otherwise be repurchasing
common equity — for example, during internal trading
“blackout periods.” All purchases under a Rule 10b5-1 plan
must be made according to a predefined plan established
when the Firm is not aware of material nonpublic
information. For additional information regarding
repurchases of the Firm’s equity securities, see Part II, Item
5: Market for registrant’s common equity, related
stockholder matters and issuer purchases of equity
securities, on pages 18–19.
As of December 31, 2014, approximately 240 million
unissued shares of common stock were reserved for
issuance under various employee incentive, compensation,
option and stock purchase plans, director compensation
plans, and the Warrants, as discussed above.
Note 24 – Earnings per share
Earnings per share (“EPS”) is calculated under the two-class
method under which all earnings (distributed and
undistributed) are allocated to each class of common stock
and participating securities based on their respective rights
to receive dividends. JPMorgan Chase grants restricted
stock and RSUs to certain employees under its stock-based
compensation programs, which entitle recipients to receive
nonforfeitable dividends during the vesting period on a
basis equivalent to the dividends paid to holders of common
stock; these unvested awards meet the definition of
participating securities. Options issued under employee
benefit plans that have an antidilutive effect are excluded
from the computation of diluted EPS.
The following table presents the calculation of basic and
diluted EPS for the years ended December 31, 2014, 2013
and 2012.
Year ended December 31,
(in millions,
except per share amounts) 2014 2013 2012
Basic earnings per share
Net income $ 21,762 $ 17,923 $ 21,284
Less: Preferred stock dividends 1,125 805 653
Net income applicable to common
equity 20,637 17,118 20,631
Less: Dividends and undistributed
earnings allocated to participating
securities 544 525 754
Net income applicable to common
stockholders $ 20,093 $ 16,593 $ 19,877
Total weighted-average basic
shares outstanding 3,763.5 3,782.4 3,809.4
Net income per share $ 5.34 $ 4.39 $ 5.22
Diluted earnings per share
Net income applicable to common
stockholders $ 20,093 $ 16,593 $ 19,877
Total weighted-average basic shares
outstanding 3,763.5 3,782.4 3,809.4
Add: Employee stock options, SARs
and warrants(a) 34.0 32.5 12.8
Total weighted-average diluted
shares outstanding(b) 3,797.5 3,814.9 3,822.2
Net income per share $ 5.29 $ 4.35 $ 5.20
(a) Excluded from the computation of diluted EPS (due to the antidilutive effect)
were certain options issued under employee benefit plans and the Warrants. The
aggregate number of shares issuable upon the exercise of such options and
Warrants was 1 million, 6 million and 148 million for the years ended
December 31, 2014, 2013 and 2012, respectively.
(b) Participating securities were included in the calculation of diluted EPS using the
two-class method, as this computation was more dilutive than the calculation
using the treasury stock method.