Shares and Stockholders' Equity

12 Months Ended

Dec. 31, 2020

Shares and Stockholders' Equity [Abstract]

Shares and Stockholders' Equity

15. Shares and Stockholders’ Equity

Common Shares

The changes in our common stock (number of shares) were as follows:

	For the Years Ended December 31,
	2020		2019		2018
Common Stock
Balance as of beginning-of-year	196,668,532		205,862,760		218,090,114
Stock issued for exercise of warrants	-		258,633		212,670
Stock compensation/issued for benefit plans	547,209		942,318		800,325
Retirement/cancellation of shares	(4,886,050	)	(10,395,179	)	(13,240,349	)
Balance as of end-of-year	192,329,691		196,668,532		205,862,760
Common Stock as of End-of-Year
Basic basis	192,329,691		196,668,532		205,862,760
Diluted basis	193,672,296		199,196,043		209,034,686

Our common stock is without par value.

Average Shares

A reconciliation of the denominator (number of shares) in the calculations of basic and diluted earnings (loss) per common share was as follows:

	For the Years Ended December 31,
	2020		2019		2018
Weighted-average shares, as used in basic calculation	193,610,225		200,608,737		215,936,448
Shares to cover exercise of outstanding warrants	-		58,765		568,602
Shares to cover non-vested stock	687,240		973,901		1,534,142
Average stock options outstanding during the year	746,742		1,507,049		1,739,029
Assumed acquisition of shares with assumed proceeds
from exercising outstanding warrants	-		(9,594	)	(81,260	)
Assumed acquisition of shares with assumed
proceeds and benefits from exercising stock
options (at average market price for the year)	(576,582	)	(1,033,507	)	(1,074,406	)
Shares repurchasable from measured but
unrecognized stock option expense	(2,445	)	(217	)	(14,600	)
Average deferred compensation shares	-		-		944,151
Weighted-average shares, as used in diluted calculation	194,465,180		202,105,134		219,552,106

In the event the average market price of LNC common stock exceeds the issue price of stock options and the options have a dilutive effect to our EPS, such options will be shown in the table above.

We have participants in our deferred compensation plans who selected LNC stock as the measure for the investment return attributable to all or a portion of their deferral amounts. For the year ended December 31, 2018, the effect of settling this obligation in LNC stock (“equity classification”) was more dilutive than the scenario of settling in cash (“liability classification”). Therefore, for our EPS calculation for this period, we added these shares to the denominator and adjusted the numerator to present net income as if the shares had been accounted for under equity classification by removing the mark-to-market adjustment included in net income attributable to these deferred units of LNC stock. The amount of this adjustment was $18 million for the year ended December 31, 2018.

The outstanding warrants issued in 2009, each representing the right to purchase one share of our common stock, expired on July 10, 2019.

AOCI

The following summarizes the components and changes in AOCI (in millions):

	For the Years Ended December 31,
	2020			2019			2018
Unrealized Gain (Loss) on AFS Securities
Balance as of beginning-of-year	$	5,983		$	557		$	3,486
Cumulative effect from adoption of new accounting standards		45			-			674
Unrealized holding gains (losses) arising during the year		7,925			9,267			(6,274	)
Change in foreign currency exchange rate adjustment		180			46			(107	)
Change in DAC, VOBA, DSI, future contract benefits and other contract holder funds		(3,569	)		(2,462	)		1,748
Income tax benefit (expense)		(970	)		(1,457	)		981
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		(53	)		(28	)		(42	)
Associated amortization of DAC, VOBA, DSI and DFEL		32			(12	)		(20	)
Income tax benefit (expense)		4			8			13
Balance as of end-of-year	$	9,611		$	5,983		$	557
Unrealized OTTI on AFS Securities
Balance as of beginning-of-year	$	45		$	33		$	44
(Increases) attributable to:
Cumulative effect from adoption of new accounting standards		(45	)		-			9
Gross OTTI recognized in OCI during the year		-			(16	)		-
Change in DAC, VOBA, DSI and DFEL		-			1			-
Income tax benefit (expense)		-			3			-
Decreases attributable to:
Changes in fair value, sales, maturities or other settlements of AFS securities		-			31			(19	)
Change in DAC, VOBA, DSI and DFEL		-			(1	)		(6	)
Income tax benefit (expense)		-			(6	)		5
Balance as of end-of-year	$	-		$	45		$	33
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	(11	)	$	139		$	(29	)
Cumulative effect from adoption of new accounting standard		-			-			(6	)
Unrealized holding gains (losses) arising during the year		(257	)		(93	)		144
Change in foreign currency exchange rate adjustment		(174	)		(52	)		111
Change in DAC, VOBA, DSI and DFEL		(17	)		(4	)		(13	)
Income tax benefit (expense)		94			31			(51	)
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		48			42			24
Associated amortization of DAC, VOBA, DSI and DFEL		(1	)		(1	)		(2	)
Income tax benefit (expense)		(10	)		(9	)		(5	)
Balance as of end-of-year	$	(402	)	$	(11	)	$	139
Foreign Currency Translation Adjustment
Balance as of beginning-of-year	$	(17	)	$	(23	)	$	(14	)
Foreign currency translation adjustment arising during the year		5			6			(9	)
Balance as of end-of-year	$	(12	)	$	(17	)	$	(23	)
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year	$	(327	)	$	(299	)	$	(257	)
Cumulative effect from adoption of new accounting standard		-			-			(35	)
Adjustment arising during the year		74			(20	)		(12	)
Income tax benefit (expense)		(13	)		(8	)		5
Balance as of end-of-year	$	(266	)	$	(327	)	$	(299	)

‎

The following summarizes the reclassifications out of AOCI (in millions) and the associated line item in the Consolidated Statements of Comprehensive Income (Loss):

	For the Years Ended December 31,
	2020			2019			2018
Unrealized Gain (Loss) on AFS Securities
Gross reclassification	$	(53	)	$	(28	)	$	(42	)	Total realized gain (loss)
Associated amortization of DAC,
VOBA, DSI and DFEL		32			(12	)		(20	)	Total realized gain (loss)
Reclassification before income										Income (loss) from continuing
tax benefit (expense)		(21	)		(40	)		(62	)	operations before taxes
Income tax benefit (expense)		4			8			13		Federal income tax expense (benefit)
Reclassification, net of income tax	$	(17	)	$	(32	)	$	(49	)	Net income (loss)
Unrealized OTTI on AFS Securities
Gross reclassification	$	-		$	4		$	8		Total realized gain (loss)
Change in DAC, VOBA, DSI and DFEL		-			-			-		Total realized gain (loss)
Reclassification before income										Income (loss) from continuing
tax benefit (expense)		-			4			8		operations before taxes
Income tax benefit (expense)		-			(1	)		(2	)	Federal income tax expense (benefit)
Reclassification, net of income tax	$	-		$	3		$	6		Net income (loss)
Unrealized Gain (Loss) on Derivative Instruments
Gross reclassifications:
Interest rate contracts	$	2		$	3		$	4		Net investment income
Interest rate contracts		(16	)		(5	)		(7	)	Interest and debt expense
Foreign currency contracts		56			35			27		Net investment income
Foreign currency contracts		6			9			-		Total realized gain (loss)
Total gross reclassifications		48			42			24
Associated amortization of DAC,
VOBA, DSI and DFEL		(1	)		(1	)		(2	)	Commissions and other expenses
Reclassifications before income										Income (loss) from continuing
tax benefit (expense)		47			41			22		operations before taxes
Income tax benefit (expense)		(10	)		(9	)		(5	)	Federal income tax expense (benefit)
Reclassifications, net of income tax	$	37		$	32		$	17		Net income (loss)