Kroger 2014 Annual Report Download - page 122

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A-57
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
1 1 . 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
January 31, 2015
For the year ended
February 1, 2014
For the year ended
February 2, 2013
(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 . . . . . $1,711 490 $3.49 $1,507 514 $2.93 $1,485 533 $2.78
Dilutive effect of
stock options . . . . . . 7 6 4
Net earnings attributable
to The Kroger Co.
per diluted
common share . . . . . $1,711 497 $3.44 $1,507 520 $2.90 $1,485 537 $2.77
The Company had combined undistributed and distributed earnings to participating securities totaling
$17, $12 and $12 in 2014, 2013 and 2012, respectively.
The Company had options outstanding for approximately 2.3 million, 2.3 million and 12.2 million shares,
respectively, for the years ended January 31, 2015, February 1, 2014 and February 2, 2013, which were excluded
from the computations of net earnings per diluted common share because their inclusion would have had an
anti-dilutive effect on net earnings per diluted share.
1 2 . 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 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 2014 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 January 31, 2015, approximately 22 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 and
non-employee directors 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 January 31, 2015, approximately 12 million common shares were available under