EARNINGS PER SHARE

Information concerning the Company’s common stock has been adjusted to give effect to the 5% stock dividends paid to Company stockholders on September 29, 2015, September 26, 2014 and September 27, 2013. The dividends were recorded at par value of $584 in 2015, $520 in 2014 and $450 in 2013, since the Company did not have retained earnings in each of the aforementioned years. In connection with the 5% stock dividends, the Company increased the number of shares subject to outstanding stock options by 5% and reduced the exercise prices accordingly.

For purposes of calculating basic earnings per share (“EPS”), net income available to common stockholders attributed to Vector Group Ltd. for the period are reduced by the contingent interest and the non-cash interest expense associated with the discounts created by the beneficial conversion features and embedded derivatives related to the Company’s convertible debt issued. The convertible debt issued by the Company are participating securities due to the contingent interest feature and had no impact on EPS for the years ended December 31, 2015, 2014 and 2013 as the dividends on the common stock reduced earnings available to common stockholders so there were no unallocated earnings.

As discussed in Note 14, the Company has stock option awards which provide for common stock dividend equivalents at the same rate as paid on the common stock with respect to the shares underlying the unexercised portion of the options. These outstanding options represent participating securities under authoritative guidance. The Company recognizes payments of the dividend equivalent rights ($5,566, net of income taxes of $211, and $4,612, net of income taxes of $306, and $4,007, net of income taxes of $91, for the years ended December 31, 2015, 2014 and 2013, respectively) on these options as reductions in additional paid-in capital on the Company’s consolidated balance sheet. As a result, in its calculation of basic EPS for the years ended December 31, 2015, 2014 and 2013, respectively, the Company has adjusted its net income for the effect of these participating securities as follows:



	2015			2014			2013
Net income attributed to Vector Group Ltd.	$	59,198		$	36,856		$	37,300
Income attributable to participating securities	(1,752		)	(1,024		)	(1,023		)
Net income available to common stockholders attributed to Vector Group Ltd.	$	57,446		$	35,832		$	36,277

Basic EPS is computed by dividing net income available to common stockholders attributed to Vector Group Ltd. by the weighted-average number of shares outstanding, which includes vested restricted stock.

Diluted EPS includes the dilutive effect of non-vested restricted stock grants, stock options and convertible securities. Diluted EPS is computed by dividing net income available to common stockholders by the diluted weighted-average number of shares outstanding, which includes dilutive non-vested restricted stock grants, stock options and convertible securities.

Basic and diluted EPS were calculated using the following shares for the years ended December 31, 2015, 2014 and 2013:



	2015	2014	2013
Weighted-average shares for basic EPS	117,760,538	108,075,400	100,886,113
Plus incremental shares related to stock options and non-vested restricted stock	32,030	66,732	261,837
Weighted-average shares for diluted EPS	117,792,568	108,142,132	101,147,950

The following non-vested restricted stock and shares issuable upon the conversion of convertible debt were outstanding during the years ended December 31, 2015, 2014 and 2013 but were not included in the computation of diluted EPS because the exercise prices of the options and the per share expense associated with the restricted stock were greater than the average market price of the common shares during the respective periods, and the impact of common shares issuable under the convertible debt were anti-dilutive to EPS.



	Year Ended December 31,
	2015		2014		2013
Weighted-average shares of non-vested restricted stock	N/A		N/A		30,319
Weighted-average expense per share	N/A		N/A		$	15.10
Weighted-average number of shares issuable upon conversion of debt	25,113,350		32,216,245		30,862,794
Weighted-average conversion price	$	19.55	$	16.83	$	13.81

The Company’s convertible debt was anti-dilutive in 2015, 2014 and 2013.