Basic and Diluted Earnings Per Share

6 Months Ended

Oct. 31, 2022

ASC 260, Earnings Per Share, requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends prior to vesting as a separate class of securities in calculating earnings per share. The Company has granted and expects to continue to grant to certain employees under its restricted stock agreements, grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities. Therefore, the Company is required to apply the two-class method in calculating earnings per share. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The dilutive effect of participating securities is calculated using the more dilutive of the treasury method or the two-class method.

Basic earnings per common share was computed using the two-class method by dividing basic net earnings attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per common share was computed using the two-class method by dividing diluted net earnings attributable to common stockholders by the weighted-average number of common shares outstanding plus dilutive common equivalent shares. Dilutive common equivalent shares include all in-the-money outstanding options or other contracts to issue common stock as if they were exercised or converted. Financial instruments that are not in the form of common stock, but when converted into common stock increase earnings per share, are anti-dilutive and are not included in the computation of diluted earnings per share.

During the three and six months ended October 31, 2022, restricted stock awards of 1.6 million shares and 1.2 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive. During the three and six months ended October 31, 2021, restricted stock awards of 1.2 million shares and 1.3 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive.

The following table summarizes basic and diluted earnings per common share attributable to common stockholders:


	Three Months Ended October 31,				Six Months Ended October 31,
	2022		2021		2022		2021
	(in thousands, except per share data)
Net income attributable to Korn Ferry	$	73,541	$	75,772	$	150,788	$	150,595
Less: distributed and undistributed earnings to nonvested restricted stockholders	1,615		1,654		3,295		3,321
Basic net earnings attributable to common stockholders	71,926		74,118		147,493		147,274
Add: undistributed earnings to nonvested restricted stockholders	1,436		1,510		2,945		3,005
Less: reallocation of undistributed earnings to nonvested restricted stockholders	1,432		1,497		2,927		2,974
Diluted net earnings attributable to common stockholders	$	71,930	$	74,131	$	147,511	$	147,305

Weighted-average common shares outstanding:
Basic weighted-average number of common shares outstanding	51,868		53,114		51,820		52,937
Effect of dilutive securities:
Restricted stock	134		453		319		555
ESPP	3		1		4		2
Diluted weighted-average number of common shares outstanding	52,005		53,568		52,143		53,494

Net earnings per common share:
Basic earnings per share	$	1.39	$	1.40	$	2.85	$	2.78
Diluted earnings per share	$	1.38	$	1.38	$	2.83	$	2.75