EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 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 March 31,
millions except per-share amounts	2023		2022
Net income	$	1,263	$	4,876
Less: Preferred stock dividends and redemption premiums	(280)		(200)
Net income attributable to common stock	$	983	$	4,676
Less: Net income allocated to participating securities	(6)		(34)
Net income, net of participating securities	$	977	$	4,642
Weighted-average number of basic shares	901.2		936.7
Basic income per common share	$	1.08	$	4.96
Net income attributable to common stock	$	983	$	4,676
Less: Net income allocated to participating securities	(6)		(34)
Net income, net of participating securities	977		4,642
Weighted-average number of basic shares	901.2		936.7
Dilutive securities	74.1		61.0
Dilutive effect of potentially dilutive securities	975.3		997.7
Diluted income per common share	$	1.00	$	4.65

For the three months ended March 31, 2023, there were no Occidental common stock warrants nor options that were excluded from diluted shares. For the three months ended March 31, 2022, warrants and options covering approximately 84 million shares of Occidental common stock were excluded from diluted shares as their effect would have been anti-dilutive.

The following table presents Occidental's common share activity, including its $3.0 billion stock repurchase plan announced in February 2023, exercises of options and warrants, and other transactions in Occidental's common stock in the first quarter of 2023:

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

(a)    Approximately $9 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 March 31, 2023, Occidental has 103.9 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, the agreement includes a mandatory redemption provision that obligates Occidental to redeem the 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 the preferred stock before August 2029. After August 2029, Occidental can voluntarily redeem the preferred stock at a 5% premium to face value.

Dividends on the 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 $200 million in preferred stock dividends in the first quarter of 2023.

In March 2023, Occidental triggered the mandatory redemption provision. Occidental accrued redemptions of preferred stock with a face value of $647 million, and an additional $65 million premium. To the extent Occidental's trailing 12-month distributions to common shareholders remains above $4.00 per share, Occidental is required to continue to match any common shareholder distributions with preferred stock redemptions. Of the $712 million mandatory redemptions accrued as of March 31, 2023, $551 million of preferred stock redemptions, inclusive of a 10% premium, were settled in cash subsequent to March 31, 2023 but before the date of this filing.

The following table presents the number of shares of preferred stock which were obligated to be redeemed as of March 31, 2023.

shares of Preferred stock	Three months ended March 31, 2023
Preferred stock, as of December 31, 2022	100,000
Less: Obligated redemptions	(6,468)
Preferred stock, as of March 31, 2023	93,532

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	March 31, 2023
Preferred dividends	$	200
Redemption premium	65
Redemption value in excess of carrying value	15
Preferred dividend and redemption premiums	$	280