Basic and Diluted Earnings Per Share

9 Months Ended

Jan. 31, 2023

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 nine months ended January 31, 2023, restricted stock awards of 1.2 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 nine months ended January 31, 2022, restricted stock awards of 1.2 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.

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


	Three Months Ended January 31,				Nine Months Ended January 31,
	2023		2022		2023		2022

	(in thousands, except per share data)
Net income attributable to Korn Ferry	$	11,247	$	84,101	$	162,035	$	234,696
Less: distributed and undistributed earnings to nonvested restricted stockholders	249		1,798		3,545		5,363
Basic net earnings attributable to common stockholders	10,998		82,303		158,490		229,333
Add: undistributed earnings to nonvested restricted stockholders	72		1,658		3,017		4,908
Less: reallocation of undistributed earnings to nonvested restricted stockholders	72		1,643		2,997		4,856
Diluted net earnings attributable to common stockholders	$	10,998	$	82,318	$	158,510	$	229,385

Weighted-average common shares outstanding:
Basic weighted-average number of common shares outstanding	51,278		52,999		51,639		52,958
Effect of dilutive securities:
Restricted stock	150		490		352		573
ESPP	3		6		8		7
Diluted weighted-average number of common shares outstanding	51,431		53,495		51,999		53,538

Net earnings per common share:
Basic earnings per share	$	0.21	$	1.55	$	3.07	$	4.33
Diluted earnings per share	$	0.21	$	1.54	$	3.05	$	4.28