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Stockholders' Equity

9 Months Ended

Sep. 30, 2020

Stockholders' Equity

Stockholders' Equity

10.

Stockholders’ Equity

Earnings per Share

The components of basic and diluted earnings per share were as follows:


		Three months ended					Nine months ended
		September 30,					September 30,
		2020			2019		2020			2019

		(in thousands, except per share amounts)
Net income attributable to Waddell & Reed Financial, Inc.		$	30,523		33,054		$	77,333		99,056

Weighted average shares outstanding, basic and diluted			64,240		72,387			65,795		74,446

Earnings per share, basic and diluted		$	0.48		0.46		$	1.18		1.33

Dividends

During the quarter, the Board of Directors declared a quarterly dividend on our Class A common stock in the amount of $0.25 per share with a November 2, 2020 payment date and an October 12, 2020 record date. The total dividend to be paid on November 2, 2020 is $15.6 million.

Common Stock Repurchases

The Board of Directors has authorized the repurchase of our Class A common stock in the open market and/or private purchases. The acquired shares may be used for corporate purposes, including issuing shares to employees in our stock-based compensation programs.

There were 2,617,108 shares and 2,480,019 shares repurchased in the open market or privately during the three months ended September 30, 2020 and 2019, respectively, which includes 19 shares repurchased from employees who tendered shares to cover income tax withholdings with respect to vesting of stock awards during the three months ended September 30, 2019. There were 7,892,913 shares and 6,849,238 shares repurchased in the open market or privately during the nine months ended September 30, 2020 and 2019, respectively, which includes 451,245 shares and 440,002 shares, respectively, repurchased from employees who tendered shares to cover income tax withholdings with respect to vesting of stock awards during these two reporting periods.

Accumulated Other Comprehensive Income

The following tables summarize accumulated other comprehensive income activity for the three and nine months ended September 30, 2020 and September 30, 2019.


		For the three months ended September 30,
							Total
		Unrealized			Postretirement		accumulated
		gains (losses) on			benefits		other
		AFS investment			unrealized		comprehensive
		securities			gains (losses)		income (loss)

		(in thousands)
Balance at June 30, 2020		$	3,874		613		4,487
Other comprehensive loss before reclassification			(371)		—		(371)
Amount reclassified from accumulated other comprehensive income			(140)		(51)		(191)
Net current period other comprehensive loss			(511)		(51)		(562)
Balance at September 30, 2020		$	3,363		562		3,925


Balance at June 30, 2019		$	2,142		939		3,081
Other comprehensive income before reclassification			379		—		379
Amount reclassified from accumulated other comprehensive income			(83)		(94)		(177)
Net current period other comprehensive income (loss)			296		(94)		202
Balance at September 30, 2019		$	2,438		845		3,283


		For the nine months ended September 30,
							Total
		Unrealized			Postretirement		accumulated
		gains (losses)			benefits		other
		on investment			unrealized		comprehensive
		securities			gains (losses)		income (loss)

		(in thousands)
Balance at December 31, 2019		$	2,521		713		3,234
Other comprehensive income before reclassification			1,344		—		1,344
Amount reclassified from accumulated other comprehensive income			(502)		(151)		(653)
Net current period other comprehensive income (loss)			842		(151)		691
Balance at September 30, 2020		$	3,363		562		3,925


Balance at December 31, 2018		$	(797)		1,128		331
Other comprehensive income before reclassification			3,413		—		3,413
Amount reclassified from accumulated other comprehensive income			(178)		(283)		(461)
Net current period other comprehensive income (loss)			3,235		(283)		2,952
Balance at September 30, 2019		$	2,438		845		3,283

Reclassifications from accumulated other comprehensive income (loss) and included in net income are summarized in the tables that follow.


					Tax
For the three months ended September 30, 2020		Pre-tax			expense		Net of tax		Statement of income line item

		(in thousands)
Reclassifications included in net income:
Gains on available for sale debt securities		$	184		(44)		140		Investment and other income
Amortization of postretirement benefits			67		(16)		51		Compensation and benefits
Total		$	251		(60)		191

					Tax
For the three months ended September 30, 2019		Pre-tax			expense		Net of tax		Statement of income line item

		(in thousands)
Reclassifications included in net income:
Gains on available for sale debt securities		$	109		(26)		83		Investment and other income
Amortization of postretirement benefits		$	124		(30)		94		Compensation and benefits
Total		$	233		(56)		177


					Tax
For the nine months ended September 30, 2020		Pre-tax			expense		Net of tax		Statement of income line item

		(in thousands)
Reclassifications included in net income:
Gains on available for sale debt securities		$	661		(159)		502		Investment and other income
Amortization of postretirement benefits			201		(50)		151		Compensation and benefits
Total		$	862		(209)		653



					Tax
For the nine months ended September 30, 2019		Pre-tax			expense		Net of tax		Statement of income line item

		(in thousands)
Reclassifications included in net income:
Gains on available for sale debt securities		$	234		(56)		178		Investment and other income
Amortization of postretirement benefits			371		(88)		283		Compensation and benefits
Total		$	605		(144)		461

The combined disclosure used to capture the disclosure pertaining to an entity's earnings per share and disclosures related to accounts comprising shareholders' equity, including other comprehensive income. Includes: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables; effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

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