Earnings Per Share

9 Months Ended

Dec. 31, 2011

Earnings Per Share Disclosure [Abstract]

Earnings Per Share

9. Earnings Per Share

Basic earnings per share (“EPS”) is calculated by dividing net income or loss attributable to Legg Mason, Inc. by the weighted-average number of shares outstanding. The calculation of weighted-average shares includes common shares, shares exchangeable into common stock and unvested restricted shares deemed to be participating securities. Diluted EPS is similar to basic EPS, but adjusts for the effect of potentially issuable common shares, except when inclusion is antidilutive.

In June 2011, Legg Mason issued 1,830 shares of common stock upon the exercise of purchase contracts on the remaining Equity Units. Of these shares, 1,830 and 1,231 shares are included in weighted-average shares outstanding for the three and nine months ended December 31, 2011, respectively.

Legg Mason issued 1,303 shares of restricted stock during the nine months ended December 31, 2011. No shares of restricted stock were issued during the three months ended December 31, 2011, related to annual incentive awards. Of the shares issued in the nine month period, 1,303 and 1,075 shares are included in weighted-average shares outstanding for the three and nine months ended December 31, 2011, respectively.

The following table presents the computations of basic and diluted EPS:

	Three Months Ended December 31,
	2011				2010
	Basic		Diluted		Basic			Diluted
Weighted-average basic shares outstanding	140,053		140,053		149,980			149,980
Potential common shares:
Employee stock options	—		29		—			231
Shares related to deferred compensation	—		—		—			761
Total weighted-average diluted shares	140,053		140,082		149,980			150,972
Net Income	$	35,141	$	35,141	$	53,364		$	53,364
Less: Net income (loss) attributable to noncontrolling interests	7,009		7,009		(8,256		)	(8,256		)
Net Income Attributable to Legg Mason, Inc.	$	28,132	$	28,132	$	61,620		$	61,620
Net Income per Share Attributable to  Legg Mason, Inc. Common Shareholders	$	0.20	$	0.20	$	0.41		$	0.41

	Nine Months Ended December 31,
	2011				2010
	Basic		Diluted		Basic			Diluted
Weighted-average basic shares outstanding	144,363		144,363		153,817			153,817
Potential common shares:
Employee stock options	—		65		—			200
Shares related to deferred compensation	—		—		—			531
Total weighted-average diluted shares	144,363		144,428		153,817			154,548
Net Income	$	154,222	$	154,222	$	174,995		$	174,995
Less: Net income (loss) attributable to noncontrolling interests	9,474		9,474		(9,891		)	(9,891		)
Net Income Attributable to Legg Mason, Inc.	$	144,748	$	144,748	$	184,886		$	184,886
Net Income per Share Attributable to  Legg Mason, Inc. Common Shareholders	$	1.00	$	1.00	$	1.20		$	1.20

During the nine months ended December 31, 2011, Legg Mason purchased and retired 13,597 shares of its common stock for $400,266 through open market purchases. No shares of common stock were purchased and retired during the three months ended December 31, 2011. The repurchases in the nine month period reduced weighted-average shares outstanding for the three and nine months ended December 31, 2011, by 13,597 shares and 8,432 shares, respectively.

The diluted EPS calculations for the three and nine months ended December 31, 2011 and 2010, exclude any potential common shares issuable under the convertible 2.5% senior notes and, for the three and nine months ended December 31, 2010, any potential common shares issuable under the convertible Equity Units, because the market price of Legg Mason common stock had not exceeded the price at which conversion under either instrument would be dilutive using the treasury stock method.

Options to purchase 5,760 and 5,162 shares for the three months endedDecember 31, 2011 and 2010, respectively, and 7,563 and 5,256 shares for the nine months endedDecember 31, 2011 and 2010, respectively, were not included in the computation of diluted earnings per share because the presumed per share proceeds from exercising such options, including related unamortized cost and income tax benefits, if any, exceed the average price of the common shares for the period and therefore the options are deemed antidilutive.