Earnings Per Share

12 Months Ended

Dec. 31, 2019

The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution:



	Fiscal Years
	2019		2018			2017
Numerator (Dollars in Millions):
Net Earnings	$	3,331	$	3,309		$	5,471
Dividend Equivalents on Restricted Stock	—		(1		)	(1		)
Net Earnings, Attributable to Common Shareholders	$	3,331	$	3,308		$	5,470

Denominator (Units in Millions):
Average Common Shares Outstanding	796		857			911
Other Potentially Dilutive Common Shares	2		4			3
Average Common Shares Outstanding, Assuming Dilution	798		861			914

Net Earnings Per Share, Basic	$	4.18	$	3.86		$	6.01
Net Earnings Per Share, Assuming Dilution	$	4.17	$	3.84		$	5.99

Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares of common stock outstanding and common stock equivalents adjusted for the effects of common stock that may be issued as a result of potentially dilutive instruments. CSX's potentially dilutive instruments are made up of equity awards including performance units and employee stock options.

When calculating diluted earnings per share, the potential shares that would be outstanding if all outstanding stock options were exercised are included. This number is different from outstanding stock options, which is included in Note 4, Stock Plans and Share-Based Compensation, because it is offset by shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent. Approximately 877 thousand, 479 thousand and 7.6 million of total average outstanding stock options for 2019, 2018 and 2017, respectively, were excluded from the diluted earnings per share calculation because their effect was antidilutive.

Share Repurchase Programs

In January 2019, the Company announced a $5 billion share repurchase program ("January 2019 program"). At December 31, 2019, approximately $1.8 billion of authority remains under this program. Previously, share repurchases were completed under the following:


•	A share repurchase program originally announced in October 2017 for $1.5 billion, and later increased to $5 billion in February 2018, that was completed in January 2019 ("October 2017 program").


•	A share repurchase program originally announced in April 2017 for $1 billion, and later increased to $1.5 billion in July 2017, that was completed in October 2017.


•	A $2 billion share repurchase program announced in April 2015 that was completed in April 2017.

NOTE 2. Earnings Per Share, continued

Share repurchases may be made through a variety of methods including, but not limited to, open market purchases, purchases pursuant to Rule 10b5-1 plans, accelerated share repurchases and negotiated block purchases. The timing of share repurchases depends upon management's assessment of marketplace conditions and other factors, and the program remains subject to the discretion of the Board of Directors. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase. In accordance with the Equity Topic in the Accounting Standards Codification ("ASC"), the excess of repurchase price over par value is recorded in retained earnings.

Share Repurchase Activity

During 2019, 2018, and 2017, CSX repurchased the following shares:



	Fiscal Years
	2019		2018		2017
Shares Repurchased (Units in Millions)	48		72		39
Cost of Shares (Dollars in Millions)	$	3,373	$	4,671	$	1,970
Average Price Paid per Share	$	70.54	$	64.64	$	50.80

On October 17, 2019, the Company repurchased 4.7 million shares for $319 million from MR Argent Advisor LLC, a CSX shareholder, on behalf of certain limited partners of its affiliated funds (“Mantle Ridge”) under the January 2019 program. A member of CSX’s Board of Directors, Paul C. Hilal, founded and controls Mantle Ridge and each of its related entities. The ownership position of Mantle Ridge is detailed in the Company's Proxy Statement on Schedule 14A filed on March 22, 2019, and subsequent Form 4 filings with the SEC. Shares purchased from Mantle Ridge are included in the table above.

In August 2019, the Company entered into an agreement to repurchase shares of the Company’s common stock under the January 2019 program. Under this agreement, the Company made a prepayment of $250 million to a financial institution and settlement occurred in September 2019. At settlement, the Company received approximately 4 million shares, calculated based on the volume-weighted average price of the Company’s common stock over the term of the agreement, less a discount. Shares purchased under this agreement are included in the table above.

During 2018, the Company entered into four accelerated share repurchase agreements to repurchase shares of the Company’s common stock under the October 2017 program. Under these agreements, the Company paid $1.5 billion and received approximately 22 million total shares. Shares purchased under accelerated share repurchase agreements are included in the table above.