Earnings Per Share

3 Months Ended

Mar. 31, 2020

Basic earnings per share ("EPS") amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The information used to compute basic and diluted EPS attributable to the Company's common shareholders was as follows (shares in millions):


	First quarter ended
	March 31,
	2020		2019
Net income	$	215	$	187
Less: preferred stock dividends declared	(1)		(1)
Net income available to the Company's common shareholders - basic	214		186
Add: Interest expense related to convertible notes	—		4
Net income available to the Company's common shareholders - diluted	$	214	$	190

Average shares outstanding - basic	435		471
Effect of dilutive securities:
Stock options	1		—
Stock and performance awards	4		4
Convertible notes⁽¹⁾	—		14
Average shares outstanding - diluted	440		489

⁽¹⁾The convertible notes matured on October 15, 2019. No shares of the Company’s common stock were issued in connection with the maturity or the final conversion of the convertible notes. As of October 15, 2019, the calculation of average diluted shares outstanding ceased to include the approximately 15 million shares of common stock and the corresponding interest expense previously attributable to the convertible notes.

Common stock outstanding at March 31, 2020 and 2019 was 436 and 453, respectively. The decrease in common stock outstanding at March 31, 2020 was primarily due to the impact of share repurchases of 55 in 2019. As average shares outstanding are used in the calculation for both basic and diluted EPS, the full impact of share repurchases was not realized in EPS in the first quarter ended March 31, 2019, as the share repurchases occurred at varying points during 2019.

The following shares were excluded from the calculation of average shares outstanding – diluted as their effect was anti-dilutive (shares in millions).


	First quarter ended
	March 31,
	2020	2019

Stock options⁽¹⁾	4	8

⁽¹⁾The average exercise price per share of options was $27.65 for the first quarter ended March 31, 2020 and $26.67 for the first quarter ended March 31, 2019.