Earnings Per Share

3 Months Ended

Mar. 31, 2022

Basic earnings per share is calculated by dividing net income attributable to the Company's common stockholders by the weighted average number of shares of Class A common stock outstanding for the period. As of March 31, 2022, there were 27,614,903 shares of Class A common stock outstanding. As of March 31, 2022, the Company has included 246,803 fully vested, unissued restricted stock units and restricted shares in its calculation of basic earnings per share. As of December 31, 2021, there were 27,778,964 shares of Class A common stock outstanding. As of December 31, 2021, the Company has included 972,732 fully vested, unissued restricted stock units and restricted shares in its calculation of basic earnings per share.

Diluted earnings per common share are calculated by adjusting the weighted average outstanding shares to assume conversion of all potentially dilutive items. The Company uses the treasury stock method to reflect the potential dilutive effect of the unvested restricted shares and restricted stock units. In calculating the number of dilutive shares outstanding, the shares of common stock underlying unvested restricted shares and restricted stock units are assumed to have been delivered, for the entire period being presented. The number of performance-linked unvested restricted stock units that are included in the calculation are at the amount that could be earned using current payout rates. The assumed proceeds from the assumed vesting, delivery and exercising were calculated as the amount of compensation cost attributed to future services and not yet recognized.

The Company previously concluded that it had the intent and ability to settle the December 2022 Convertible Notes in cash and, as a result, the convertible notes did not have an impact on the Company's diluted earnings per share calculation. On March 24, 2021, the Company issued a redemption notice announcing that the Company would redeem all of the December 2022 Convertible Notes (See Note 12). On June 24, 2021, the Company cash settled the December 2022 Convertible Notes up to the principal amount of the December 2022 Convertible Notes and share settled through the delivery of shares of the Company’s Class A common stock for the remainder of the conversion obligation in excess of the principal amount. The shares of the Company’s Class A common stock issued are within basic earnings per share subsequent to June 24, 2021. Prior to that date, the Company has applied the if-converted method to the portion of the December 2022 notes above the principal amount that settled in shares upon a conversion in dilutive earnings per share.

On December 31, 2021, the Company irrevocably elected to cash settle $1,000.00 of its obligation in respect of each conversion of any share of the Series A Convertible Preferred Stock. Prior to this date, the Company could elect to settle the Series A Convertible Preferred Stock in shares, cash, or a combination of both. Effective January 1, 2022, Company adopted ASC 470-20, which requires the Company to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of potential share settlement (if the effect is more dilutive) for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. With the adoption of this guidance, the Company is required to include the portion of the Series A Convertible Preferred Stock that can be settled in Class A common stock (the amount in excess of $1,000.00 per share of the Series A Convertible Preferred Stock) in the diluted earnings per share calculation. As a result, the Series A Convertible Preferred Stock impacts the Company’s diluted earnings per share calculation for the March 31, 2022 (See Note 2).

The computation of earnings per share is as follows:


	Three Months Ended March 31,
		2022		2021
		(dollars and share data in thousands, except per share data)
Net income (loss)		$	55,147	$	152,066
Net income (loss) attributable to non-controlling interests in consolidated subsidiaries and investment funds		20,131		4,562
Net income (loss) attributable to Cowen Inc.		35,016		147,504
Preferred stock dividends		1,698		1,698
Net income (loss) attributable to Cowen Inc. common stockholders for basic earnings per share		33,318		145,806
Change in fair value of contingently issuable shares		41		—
Net income (loss) attributable to Cowen Inc. common stockholders for diluted earnings per share		$	33,359	$	145,806

Shares for basic and diluted calculations:
Weighted average shares used in basic computation		28,386		27,359

Performance based restricted stock		374		445
Contingently issuable common stock in connection with acquisitions		82		—
December 2022 Convertible Notes		—		2,659
Series A Convertible Preferred Stock		708		—
Restricted stock		2,222		3,102
Weighted average shares used in diluted computation		31,772		33,565
Earnings (loss) per share:
Basic		$	1.17	$	5.33
Diluted		$	1.05	$	4.34