Shares and Stockholders' Equity

3 Months Ended

Mar. 31, 2023

Shares and Stockholders' Equity [Abstract]

14. Shares and Stockholders’ Equity

Preferred Shares

Preferred stock authorized, issued and outstanding (number of shares) was as follows:


	As of March 31, 2023			As of December 31, 2022
	Shares Authorized	Shares Issued	Shares Outstanding	Shares Authorized	Shares Issued	Shares Outstanding
9.250% Fixed Rate Reset Non-Cumulative
Preferred Stock, Series C	20,000	20,000	20,000	20,000	20,000	20,000
9.000% Non-Cumulative Preferred Stock, Series D	20,000	20,000	20,000	20,000	20,000	20,000
Not designated	9,960,000	-	-	9,960,000	-	-
Total preferred shares	10,000,000	40,000	40,000	10,000,000	40,000	40,000

The per share and aggregate dividends declared for preferred stock by series (in millions except per share data) was as follows:


	For the Three Months Ended March 31,
	2023		2022
	Dividend	Aggregate	Dividend	Aggregate
Series	Per Share	Dividend	Per Share	Dividend
Series C	$ 635.94	$ 13	$ -	$ -
Series D	618.75	12	-	-
Total	$ 1,254.69	$ 25	$ -	$ -

Common Shares

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


	For the Three
	Months Ended
	March 31,
	2023	2022
Common Stock
Balance as of beginning-of-year	169,220,511	177,193,515
Stock compensation/issued for benefit plans	317,248	514,855
Retirement/cancellation of shares	-	(5,817,396	)
Balance as of end-of-period	169,537,759	171,890,974

Common Stock as of End-of-Period
Basic basis	169,537,759	171,890,974
Diluted basis	170,474,027	173,761,296

Our common stock is without par value.

Average Common 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 Three
	Months Ended
	March 31,
	2023		2022
Weighted-average shares, as used in basic calculation	169,357,846		174,153,475
Shares to cover non-vested stock	568,126		1,359,873
Average stock options outstanding during the period	26,423		2,296,869
Assumed acquisition of shares with assumed
proceeds and benefits from exercising stock
options (at average market price for the period)	(21,201	)	(1,825,626	)
Shares repurchasable from measured but
unrecognized stock option expense	-		(71,253	)
Average deferred compensation shares	553,966		521,211
Weighted-average shares, as used in diluted calculation ⁽¹⁾	170,485,160		176,434,549

⁽¹⁾Due to reporting a net loss for the three months ended March 31, 2023, basic shares were used in the diluted earnings per share calculation for this period as the use of diluted shares would have resulted in a lower loss per share.

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 earnings per share, such options will be shown in the table above.

The income used in the calculation of our diluted earnings per share is our net income (loss), reduced by preferred stock dividends. This amount is presented on our Consolidated Statements of Income (Loss).

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. This obligation is settled in either cash or LNC stock pursuant to the applicable plan document. We exclude deferred units of LNC stock that are antidilutive from our diluted earnings per share calculation. The mark-to-market adjustment of these deferred units excluded from our diluted earnings per share calculation was $3 million and $1 million for the three months ended March 31, 2023 and 2022, respectively.

AOCI

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



	For the Three
	Months Ended
	March 31,
	2023			2022
Unrealized Gain (Loss) on Fixed Maturity AFS Securities and Certain Other
Investments
Balance as of beginning-of-year	$	(8,916	)	$	9,616
Unrealized holding gains (losses) arising during the period		2,357			(10,493	)
Change in foreign currency exchange rate adjustment		76			(71	)
Change in future contract benefits and other policyholder account balances		(260	)		921
Income tax benefit (expense)		(465	)		2,057
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		(39	)		(2	)
Income tax benefit (expense)		8			-
Balance as of end-of-period	$	(7,177	)	$	2,032
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	388		$	(85	)
Unrealized holding gains (losses) arising during the period		134			44
Change in foreign currency exchange rate adjustment		(67	)		75
Income tax benefit (expense)		(15	)		(24	)
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		22			11
Income tax benefit (expense)		(5	)		(2	)
Balance as of end-of-period	$	423		$	1
Market Risk Benefit Non-Performance Risk Gain (Loss)
Balance as of beginning-of-year	$	1,741		$	1,951
Adjustment arising during the period		1,306			25
Income tax benefit (expense)		(281	)		(5	)
Balance as of end-of-period	$	2,766		$	1,971
Policyholder Liability Discount Rate Remeasurement Gain (Loss)
Balance as of beginning-of-year	$	747		$	(1,265	)
Adjustment arising during the period		(258	)		1,031
Income tax benefit (expense)		56			(220	)
Balance as of end-of-period	$	545		$	(454	)
Foreign Currency Translation Adjustment
Balance as of beginning-of-year	$	(34	)	$	(14	)
Foreign currency translation adjustment arising during the period		3			(5	)
Balance as of end-of-period	$	(31	)	$	(19	)
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year	$	(278	)	$	(219	)
Adjustment arising during the period		(2	)		4
Income tax benefit (expense)		-			(1	)
Balance as of end-of-period	$	(280	)	$	(216	)

‎

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



	For the Three
	Months Ended
	March 31,
	2023			2022
Unrealized Gain (Loss) on Fixed Maturity AFS
Securities and Certain Other Investments
Reclassification	$	(39	)	$	(2	)	Realized gain (loss)
Reclassification before income
tax benefit (expense)		(39	)		(2	)	Income (loss) before taxes
Income tax benefit (expense)		8			-		Federal income tax expense (benefit)
Reclassification, net of income tax	$	(31	)	$	(2	)	Net income (loss)

Unrealized Gain (Loss) on Derivative Instruments
Interest rate contracts	$	-		$	1		Net investment income
Interest rate contracts		6			(6	)	Interest and debt expense
Foreign currency contracts		14			13		Net investment income
Foreign currency contracts		2			3		Realized gain (loss)
Reclassifications before income
tax benefit (expense)		22			11		Income (loss) before taxes
Income tax benefit (expense)		(5	)		(2	)	Federal income tax expense (benefit)
Reclassifications, net of income tax	$	17		$	9		Net income (loss)