| Shareholders' Equity |
Shareholders’ Equity Distributable Reserves As a company incorporated in England and Wales, Aon is required under U.K. law to have available “distributable reserves” to make share repurchases or pay dividends to shareholders. Distributable reserves are created through the earnings of the U.K. parent company and, among other methods, through a reduction in share capital approved by the High Court of Justice in England. Distributable reserves are not directly linked to a U.S. GAAP reported amount (e.g., retained earnings). As of December 31, 2019 and 2018, the Company had distributable reserves in excess of $32.4 billion and $2.2 billion, respectively. On July 16, 2019, we completed a reduction in share capital to create additional distributable reserves of $31 billion to support the payment of possible future dividends or future share repurchases, if and to the extent declared by the directors in compliance with their duties under U.K. law. Ordinary Shares Aon has a share repurchase program authorized by the Company’s Board of Directors. The Repurchase Program was established in April 2012 with $5.0 billion in authorized repurchases, and was increased by $5.0 billion in authorized repurchases in each of November 2014 and June 2017 for a total of $15.0 billion in repurchase authorizations. Under the Repurchase Program, Class A Ordinary Shares may be repurchased through the open market or in privately negotiated transactions, from time to time, based on prevailing market conditions, and will be funded from available capital. The following table summarizes the Company’s share repurchase activity (in millions, except per share data):
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Twelve months ended December 31 |
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2019 |
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2018 |
Shares repurchased |
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10.5 |
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|
10.0 |
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Average price per share |
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$ |
186.33 |
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$ |
143.94 |
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Costs recorded to retained earnings |
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Total repurchase cost |
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$ |
1,950 |
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$ |
1,447 |
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Additional associated costs |
|
10 |
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|
7 |
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Total costs recorded to retained earnings |
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$ |
1,960 |
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$ |
1,454 |
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At December 31, 2019, the remaining authorized amount for share repurchase under the Repurchase Program was approximately $2.0 billion. Under the Repurchase Program, the Company has repurchased a total of 128.7 million shares for an aggregate cost of approximately $13.0 billion. Net Income Per Share Weighted average ordinary shares outstanding are as follows (in millions):
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Years ended December 31 |
2019 |
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2018 |
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2017 |
Basic weighted average ordinary shares outstanding |
238.6 |
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|
245.2 |
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|
258.5 |
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Dilutive effect of potentially issuable shares |
2.0 |
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|
1.8 |
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|
2.2 |
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Diluted weighted average ordinary shares outstanding |
240.6 |
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|
247.0 |
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|
260.7 |
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Potentially issuable shares are not included in the computation of diluted net income per share if their inclusion would be antidilutive. There were no shares excluded from the calculation in any of the years presented. Dividends During 2019, 2018, and 2017, the Company paid dividends of $410 million, $382 million, and $364 million, respectively, to holders of its Class A Ordinary Shares. Dividends paid per Class A Ordinary Share were $1.72, $1.56, and $1.41 for the years ended December 31, 2019, 2018, and 2017, respectively. Accumulated Other Comprehensive Loss Changes in Accumulated other comprehensive loss by component, net of related tax, are as follows (in millions):
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Change in Fair Value of Financial Instruments (1) |
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Foreign Currency Translation Adjustments |
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Postretirement Benefit Obligation (2) |
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Total |
Balance at January 1, 2017 |
$ |
(37 |
) |
|
$ |
(1,264 |
) |
|
$ |
(2,611 |
) |
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$ |
(3,912 |
) |
Other comprehensive income (loss) before reclassifications |
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Other comprehensive income (loss) before reclassifications |
18 |
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|
397 |
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(220 |
) |
|
195 |
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Tax benefit (expense) |
(3 |
) |
|
(5 |
) |
|
55 |
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|
47 |
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Other comprehensive income (loss) before reclassifications, net |
15 |
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|
392 |
|
|
(165 |
) |
|
242 |
|
Amounts reclassified from accumulated other comprehensive income (loss) |
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|
|
|
|
|
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Amounts reclassified from accumulated other comprehensive income (loss) |
(2 |
) |
|
(7 |
) |
|
236 |
|
|
227 |
|
Tax benefit (expense) |
(1 |
) |
|
— |
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|
(52 |
) |
|
(53 |
) |
Amounts reclassified from accumulated other comprehensive income (loss), net |
(3 |
) |
|
(7 |
) |
|
184 |
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|
174 |
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Net current period other comprehensive income (loss) |
12 |
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|
385 |
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|
19 |
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|
416 |
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Balance at December 31, 2017 |
(25 |
) |
|
(879 |
) |
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(2,592 |
) |
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(3,496 |
) |
Adoption of new accounting guidance (3) |
(1 |
) |
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— |
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— |
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(1 |
) |
Balance at January 1, 2018 |
(26 |
) |
|
(879 |
) |
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(2,592 |
) |
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(3,497 |
) |
Other comprehensive income (loss) before reclassifications |
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|
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Other comprehensive income (loss) before reclassifications |
(15 |
) |
|
(437 |
) |
|
(124 |
) |
|
(576 |
) |
Tax benefit (expense) |
18 |
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|
(3 |
) |
|
28 |
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|
43 |
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Other comprehensive income (loss) before reclassifications, net |
3 |
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|
(440 |
) |
|
(96 |
) |
|
(533 |
) |
Amounts reclassified from accumulated other comprehensive income (loss) |
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Amounts reclassified from accumulated other comprehensive income (loss) |
11 |
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|
— |
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|
146 |
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|
157 |
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Tax benefit (expense) |
(3 |
) |
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— |
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|
(33 |
) |
|
(36 |
) |
Amounts reclassified from accumulated other comprehensive income (loss), net |
8 |
|
|
— |
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|
113 |
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|
121 |
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Net current period other comprehensive income (loss) |
11 |
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(440 |
) |
|
17 |
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(412 |
) |
Balance at December 31, 2018 |
(15 |
) |
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(1,319 |
) |
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(2,575 |
) |
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(3,909 |
) |
Other comprehensive income (loss) before reclassifications |
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Other comprehensive income (loss) before reclassifications |
(10 |
) |
|
15 |
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(287 |
) |
|
(282 |
) |
Tax benefit (expense) |
1 |
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(1 |
) |
|
58 |
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|
58 |
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Other comprehensive income (loss) before reclassifications, net |
(9 |
) |
|
14 |
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|
(229 |
) |
|
(224 |
) |
Amounts reclassified from accumulated other comprehensive income (loss) |
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Amounts reclassified from accumulated other comprehensive income (loss) |
14 |
|
|
— |
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|
109 |
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|
123 |
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Tax benefit (expense) |
(2 |
) |
|
— |
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|
(21 |
) |
|
(23 |
) |
Amounts reclassified from accumulated other comprehensive income (loss), net |
12 |
|
|
— |
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|
88 |
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|
100 |
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Net current period other comprehensive income (loss) |
3 |
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|
14 |
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|
(141 |
) |
|
(124 |
) |
Balance at December 31, 2019 |
$ |
(12 |
) |
|
$ |
(1,305 |
) |
|
$ |
(2,716 |
) |
|
$ |
(4,033 |
) |
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(1) |
Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Revenue, Interest expense, and Compensation and benefits in the accompanying Consolidated Statements of Income. See Note 15 “Derivatives and Hedging” for additional information regarding the Company’s derivative and hedging activity. |
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(2) |
Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income (expense). | (3) Refer to Note 2 “Summary of Significant Accounting Principles and Practices ” for further information.
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