Niles Company granted 27 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $9 per share on January 1, 2012, the grant date. When calculating diluted EPS at December 31, 2013, what will be the net increase in the denominator of the EPS fraction if the market price of the common shares averaged $9 per share during 2013? (Enter your answer in millions of shares.) Solution Increase in the denominator Figures in Million Total ESOP Granted 27 million Total Period (years) 3 years Period from Jan 1 2012 to Dec 2013 2 years Increase in the denominator (Shares)27*(2/3) 18 million.

1. Niles Company granted 27 million of its no par common shares to executives, subject to
forfeiture if employment is terminated within three years. The common shares have a market
price of $9 per share on January 1, 2012, the grant date. When calculating diluted EPS at
December 31, 2013, what will be the net increase in the denominator of the EPS fraction if the
market price of the common shares averaged $9 per share during 2013? (Enter your answer in
millions of shares.)
Solution
Increase in the denominator Figures in Million Total ESOP Granted 27 million Total Period
(years) 3 years Period from Jan 1 2012 to Dec 2013 2 years Increase in the denominator
(Shares)27*(2/3) 18 million