https://www.sec.gov/Archives/edgar/data/80424/000008042412000063/fy2012financial

Question

https://www.sec.gov/Archives/edgar/data/80424/000008042412000063/fy2012financialstatementsf.htm

Proctor & Gamble offers a variety of stock-based compensation plans to its executives. Refer to P&G;'s 2012 annual report to answer the following questions related to stock-based compensation, dilutive securities, and earnings per share The 2012 annual report of Proctor& Gamble can be found at sec.gov/Archives/edgar/data/80424/ 00008042412000063/h 2012financialstatementsf h P&G;'s fiscal year end is June 30 Stock-Based Compensation 1. How does P&G; determine the exercise price for its stock options? 2. What are the terms of the following stock options (e.g. period of benefit and exercisable time frame)? K ey manager stock option awards (since Sept 2002) a. b. Kev manager restricted stock units c. Senior level executive performance stock units 3. How much stock-based compensation expenselcost did P&G; recognize in 2012 for all of its stock-based compensation plans? NOTE: ignore related tax benefits. What percentage is this of total after-tax net income for the year (round to one decimal place)?

Explanation / Answer

1. P&G determine the exercise price for its stock options as the average price of the Company's common stock on the date of the grant.

2. Terms of following stock options:-

3. Stock based compensation expense/cost recognised in 2012 are $317.

Percentage of stock based compensation cost in total net income after tax are 3% ($317/$10904*)

* Net earning as per Note 6 in FY 2012 financial statements.

S.No. Stock Options Vesting period Exercisebale time frame a Key manager stock option awards (Sept 2002) Post 3 years from grant date 10 year life from grant date b Key manager restrcited stock units 5 years from grant date 5 years from grant date c Senior level executive performance stock units Post 3 years after respective grant date Post 3 years after respective grant date

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