Kroger 2012 Annual Report Download - page 113

A-55
NO T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S , CO N T I N U E D
9 . E A R N I N G S P E R C O M M O N S H A R E
Net earnings attributable to The Kroger Co. per basic common share equals net earnings attributable to
The Kroger Co. less income allocated to participating securities divided by the weighted average number of
common shares outstanding. Net earnings attributable to The Kroger Co. per diluted common share equals
net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the
weighted average number of common shares outstanding, after giving effect to dilutive stock options. The
following table provides a reconciliation of net earnings attributable to The Kroger Co. and shares used in
calculating net earnings attributable to The Kroger Co. per basic common share to those used in calculating
net earnings attributable to The Kroger Co. per diluted common share:
For the year ended
February 2, 2013
For the year ended
January 28, 2012
For the year ended
January 29, 2011
(in millions, except
per share amounts)
Earnings
(Numer-
ator)
Shares
(Denomi-
nator)
Per
Share
Amount
Earnings
(Numer-
ator)
Shares
(Denomi-
nator)
Per
Share
Amount
Earnings
(Numer-
ator)
Shares
(Denomi-
nator)
Per
Share
Amount
Net earnings attributable
to The Kroger Co.
per basic
common share . . . . . $1,485 533 $2.78 $598 590 $1.01 $1,109 635 $1.75
Dilutive effect of
stock options . . . . . . 43 3
Net earnings attributable
to The Kroger Co.
per diluted
common share . . . . . $1,485 537 $2.77 $598 593 $1.01 $1,109 638 $1.74
The Company had undistributed and distributed earnings to participating securities totaling $12, $4 and
$7 in 2012, 2011 and 2010, respectively.
For the years ended February 2, 2013, January 28, 2012 and January 29, 2011, there were options
outstanding for approximately 12.2 million, 12.2 million and 21.2 million common shares, respectively, that
were excluded from the computation of net earnings attributable to The Kroger Co. per diluted common
share. These shares were excluded because their inclusion would have had an anti-dilutive effect on EPS.
1 0 . S T O C K O P T I O N P L A N S
The Company grants options for common shares (“stock options”) to employees, as well as to its non-
employee directors, under various plans at an option price equal to the fair market value of the stock at the
date of grant. The Company accounts for stock options under the fair value recognition provisions. Under this
method, the Company recognizes compensation expense for all share-based payments granted. The Company
recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service
period of the award. Equity awards may be made at one of four meetings of its Board of Directors occurring
shortly after the Company’s release of quarterly earnings. The 2012 primary grant was made in conjunction
with the June meeting of the Company’s Board of Directors.
Stock options typically expire 10 years from the date of grant. Stock options vest between one and five
years from the date of grant. At February 2, 2013, approximately 15 million common shares were available for
future option grants under these plans.
In addition to the stock options described above, the Company awards restricted stock to employees
under various plans. The restrictions on these awards generally lapse between one and five years from the
date of the awards. The Company records expense for restricted stock awards in an amount equal to the fair
market value of the underlying shares on the grant date of the award, over the period the awards lapse. As
of February 2, 2013, approximately 8 million common shares were available under the 2005, 2008 and 2011