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EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY | 9 Months Ended
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Sep. 30, 2023
Stockholders' Equity Note [Abstract] |
Earnings Per Share and Stockholders' Equity |
NOTE 9 - EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY
The following table presents the calculation of basic and diluted EPS attributable to common stockholders:
| Three months ended September 30, | Nine months ended September 30,
millions except per-share amounts | 2023 | 2022 | 2023 |  | 2022
Net income | $ | 1,375 |  | $ | 2,746 |  | $ | 3,498 |  |  | $ | 11,377 |
Less: Preferred stock dividends and redemption premiums | (219) |  | (200) |  | (754) |  |  | (600) |
Net income attributable to common stock | $ | 1,156 |  | $ | 2,546 |  | $ | 2,744 |  |  | $ | 10,777 |
Less: Net income allocated to participating securities | (7) |  | (18) |  | (17) |  |  | (76) |
Net income, net of participating securities | $ | 1,149 |  | $ | 2,528 |  | $ | 2,727 |  |  | $ | 10,701 |
Weighted-average number of basic shares | 884.0 | 922.0 | 891.9 |  | 933.0
Basic income per common share | $ | 1.30 |  | $ | 2.74 |  | $ | 3.06 |  |  | $ | 11.47 |
Net income attributable to common stock | $ | 1,156 |  | $ | 2,546 |  | $ | 2,744 |  |  | $ | 10,777 |
Less: Net income allocated to participating securities | (6) |  | (17) |  | (16) |  |  | (70) |
Net income, net of participating securities | $ | 1,150 |  | $ | 2,529 |  | $ | 2,728 |  |  | $ | 10,707 |
Weighted-average number of basic shares | 884.0 |  | 922.0 |  | 891.9 |  |  | 933.0 |
Dilutive securities | 74.2 |  | 80.5 |  | 72.5 |  |  | 72.9 |
Dilutive effect of potentially dilutive securities | 958.2 |  | 1,002.5 |  | 964.4 |  |  | 1,005.9 |
Diluted income per common share | $ | 1.20 |  | $ | 2.52 |  | $ | 2.83 |  |  | $ | 10.64 |
For the three and nine months ended September 30, 2023 and 2022, there were no Occidental common stock warrants nor options that were excluded from diluted shares. The following table presents Occidental's common share activity, including exercises of options and warrants, other transactions in Occidental's common stock in 2023 and treasury stock purchased both under its $3.0 billion stock repurchase plan announced in February 2023 and from the trustee of Occidental's defined contribution savings plan:
Period | Exercise of Warrants and Options (a) | Other (b) | Treasury Stock Purchases | Common Stock Outstanding (c)
December 31, 2022 |  |  |  | 899,858,944 |
First Quarter 2023 | 268,371 |  | 3,935,166 |  | (12,511,237) |  | 891,551,244 |
Second Quarter 2023 | 205,631 |  | 158,473 |  | (7,233,460) |  | 884,681,888 |
Third Quarter 2023 | 2,468,799 |  | 19,248 |  | (9,468,451) |  | 877,701,484 |
Total 2023 | 2,942,801 |  | 4,112,887 |  | (29,213,148) |  | 877,701,484 |
(a) Approximately $70 million of cash was received as a result of the exercise of common stock warrants and options. (b) Consists of issuances from the 2015 long-term incentive plan, the OPC savings plan and the dividend reinvestment plan. (c) As of September 30, 2023, Occidental has 101.4 million outstanding warrants with a strike of $22.00 per share and 83.9 million of warrants with a strike of $59.62 per share. PREFERRED STOCK REDEMPTION In connection with the Anadarko acquisition, Occidental issued 100,000 shares of series A preferred stock, with a face value of $100,000 per share and a liquidation preference of $105,000 per share plus unpaid accrued dividends. Prior to August 2029, a mandatory redemption provision obligates Occidental to redeem preferred stock at a 10% premium to face value on a dollar-for-dollar basis for every dollar distributed to common shareholders (either via common stock dividends or share repurchases) above $4.00 per share, on a trailing 12-month basis. Preferred redemptions can settle between 30 and 60 days from the date Berkshire Hathaway is notified of the redemption obligation and accrued unpaid dividends are paid up to but not including the redemption date. Occidental cannot voluntarily redeem preferred stock before August 2029. After August 2029, Occidental can voluntarily redeem preferred stock at a 5% premium to face value. Dividends on preferred stock accrue on the face value at a rate per annum of 8%, but will be paid only when, and if, declared by Occidental’s Board of Directors. At any time, when such dividends have not been paid in full, the unpaid amounts will accrue dividends, compounded quarterly, at a rate per annum of 9%. Following the payment in full of any accrued but unpaid dividends, the dividend rate will remain at 9% per annum. If preferred dividends are not paid in full, Occidental is prohibited from paying dividends on common stock. Occidental paid $187 million in preferred stock dividends in the third quarter of 2023. In the three months ended September 30, 2023, Occidental triggered and redeemed preferred stock with a face value of $342 million, and incurred $34 million in redemption premiums. In the nine months ended September 30, 2023, Occidental redeemed preferred stock with a face value of $1.5 billion, and incurred $151 million in redemption premiums. To the extent Occidental's trailing 12-month distributions to common shareholders is above $4.00 per share, Occidental is required to match any common shareholder distributions with preferred stock redemptions. As of the date of this filing, approximately $8.5 billion face value of preferred stock remains outstanding. The following table presents preferred stock redemption activity for the nine months ended September 30, 2023:
shares of preferred stock |
Preferred stock, as of December 31, 2022 | 100,000 |
Less: Preferred redemptions | (15,103) |
Preferred stock, as of September 30, 2023 | 84,897 |
The carrying value of preferred stock is less than the face value. The difference between carrying value and face value, along with the redemption premium, reduces net income available to common stockholders. The following presents the components of preferred stock dividends and redemptions:
millions | Three months ended September 30, 2023 | Nine months ended September 30, 2023
Preferred dividends | $ | 177 |  | $ | 567 |
Redemption premium | 34 |  | 151 |
Redemption value in excess of carrying value | 8 |  | 36 |
Preferred dividend and redemption premiums | $ | 219 |  | $ | 754 |

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