Earnings Per Share

12 Months Ended

Dec. 31, 2019

EARNINGS PER SHARE

Information concerning the Company’s common stock has been adjusted to give retroactive effect to the 5% stock dividends distributed to Company stockholders on September 27, 2019, September 27, 2018 and September 28, 2017. All per share amounts and references to share amounts have been updated to reflect the retrospective effect of the stock dividends. The dividends were recorded at par value of $703 in 2019, $671 in 2018 and $644 in 2017, 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 is 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, 2019, 2018 and 2017 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 ($8,967, net of income taxes of $0, $8,696, net of income taxes of $0, and $7,655, net of income taxes of $0, for the years ended December 31, 2019, 2018 and 2017, respectively) on these options as reductions in additional paid-in-capital on the Company’s consolidated balance sheet. For the years ended December 31, 2019 and 2018, the Company included the income tax benefit associated with the dividend equivalent rights as a component of income tax expense due to the adoption of ASU 2016-09. As a result, in its calculation of basic EPS for the years ended December 31, 2019, 2018 and 2017, respectively, the Company has adjusted its net income for the effect of these participating securities as follows:



	For the year ended December 31,
	2019			2018			2017
Net income attributed to Vector Group Ltd.	$	100,974		$	58,105		$	84,572
Income attributable to participating securities	(7,464		)	(7,016		)	(6,071		)
Net income available to common stockholders attributed to Vector Group Ltd.	$	93,510		$	51,089		$	78,501

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.

Net income for purposes of determining diluted EPS was as follows:



	For the year ended December 31,
	2019			2018			2017
Net income attributed to Vector Group Ltd.	$	100,974		$	58,105		$	84,572
Income attributable to 7.5% Variable Interest Senior Convertible Notes	(1,255		)	—			—
Income attributable to participating securities	(7,464		)	(7,016		)	(6,071		)
Net income available to common stockholders attributed to Vector Group Ltd.	$	92,255		$	51,089		$	78,501

Basic and diluted EPS were calculated using the following common shares for the years ended December 31, 2019, 2018 and 2017:



	For the year ended December 31,
	2019	2018	2017
Weighted-average shares for basic EPS	146,633,036	146,362,270	145,987,002
Plus incremental shares related to convertible debt	718,918	—	—
Plus incremental shares related to stock options and non-vested restricted stock	16,509	122,542	284,817
Weighted-average shares for diluted EPS	147,368,463	146,484,812	146,271,819

The following non-vested restricted stock and shares issuable upon the conversion of convertible debt were outstanding during the years ended December 31, 2019, 2018 and 2017, but were not included in the computation of diluted EPS because the impact of common shares issuable under the convertible debt were anti-dilutive to EPS.



	Year Ended December 31,
	2019		2018		2017
Weighted-average shares of non-vested restricted stock	1,207,366		—		—
Weighted-average expense per share	$	17.97	$	—	$	—
Weighted-average number of shares issuable upon conversion of debt	11,118,139		30,212,414		30,260,607
Weighted-average conversion price	$	20.27	$	16.14	$	16.15