4. Shareholder remuneration system and allocation of earnings
Shareholder remuneration system
A shareholder remuneration system called the “Dividend Option” was introduced in 2011. The Bank’s Shareholders’ Annual General Meeting held on March 16, 2012 once more approved the establishment of the “Dividend Option” program for 2012 under point four of the Agenda, through two share capital increases charged to voluntary reserves, under similar conditions to those established in 2011. Under this remuneration scheme, BBVA offers its shareholders the chance to receive part of their remuneration in the form of free shares; however, they can still choose to receive it in cash by selling the rights assigned to them in each capital increase either to BBVA (by the Bank exercising its commitment to purchase the free assignment rights) or on the market.
The first capital increase charged to reserves approved by the AGM held on March 16, 2012 for the execution of the "Dividend Option" was executed in April 2012. As a result, the Bank’s common stock increased by €40,348,339.01, through the issue and circulation of 82,343,549 shares with a €0.49 par value each (see Note 27).
The second capital increase charged to reserves approved by the AGM held on March 16, 2012 for the "Dividend Option" was executed in October 2012. As a result, the Bank’s common stock increased by €32,703,288.45, through the issue and circulation of 66,741,405 shares with a €0.49 par value each (see Note 27).
Dividends
At its meeting of June 27, 2012, the Board of Directors of Banco Bilbao Vizcaya Argentaria, S.A. approved the payment of an interim dividend against 2012 earnings of €0.100 gross (€0.079 net) per outstanding share. This amount was paid on July 10, 2012.
At its meeting of December 19, 2012, the Board of Directors of Banco Bilbao Vizcaya Argentaria, S.A. approved the payment of an interim dividend against 2012 earnings of €0,100 gross (€0,079 net) per outstanding share. This amount was paid on January 10, 2013.
The provisional financial statements prepared in accordance with legal requirements evidenced the existence of sufficient liquidity for the distribution of the amounts to the interim dividend, as follows:
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|
|
Millions of Euros | |
|---|---|---|
| May 31, 2012 |
November 30, 2012 |
|
| Profit at each of the dates indicated, after the provision for income tax | 1,223 | 1,453 |
| Less - |
|
|
| Estimated provision for Legal Reserve | (24) | (53) |
| Acquisition by the bank of the free allotment rights in 2012 capital increase | (141) | (251) |
| Interim dividends for 2012 already paid | - | (538) |
| Maximum amount distributable | 1,058 | 611 |
| Amount of proposed interim dividend | 514 | 545 |
| BBVA cash balance available to the date | 1,168 | 1,024 |
The first amount of the interim dividend which was paid to the shareholders on July 10, 2012, including the shares issued in July 4 for the common stock increase described in Note 27 and after deducting the treasury shares held by the Group’s companies, amounted to €530 million.
The interim dividend which was paid to the shareholders on January 10, 2013, after deducting the treasury shares held by the Group’s companies, amounted to €544 million and was recognized under the heading “Stockholders’ funds - Dividends and remuneration” and included under the heading “Financial liabilities at amortized cost - Other financial liabilities” of the consolidated balance sheet as of December 31, 2012 (see Note 23.5).
The table below shows the allocation of the Bank’s earnings for 2012 that the Board of Directors will submit for approval by the General Shareholders’ Meeting:
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|
|
Millions of Euros |
|---|---|
| 2012 | |
| Net income for year (*) | 1,428 |
| Distribution: |
|
| Interim dividends | 1,083 |
| Acquisition by the bank of the free allotment rights(**) | 251 |
| Legal reserve | 53 |
| Voluntary reserves | 41 |