Earnings Per Share and Equity (Exelon)

Earnings per Share

Diluted earnings per share is calculated by dividing Net income attributable to common shareholders by the weighted average number of shares of common stock outstanding, including shares to be issued upon exercise of stock options, performance share awards and restricted stock outstanding under Exelon’s LTIPs considered to be common stock equivalents. The following table sets forth the components of basic and diluted earnings per share and shows the effect of these stock options, performance share awards and restricted stock on the weighted average number of shares outstanding used in calculating diluted earnings per share:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Exelon
Net income attributable to common shareholders	$	824	$	490	$	1,899	$	930
Weighted average common shares outstanding — basic	962		925		941		924
Assumed exercise and/or distributions of stock-based awards	3		2		2		2
Weighted average common shares outstanding — diluted	965		927		943		926

The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was approximately 7 million and 9 million for the three and nine months ended September 30, 2017, respectively, and 11 million and 12 million for the three and nine months ended September 30, 2016, respectively. There were no equity units related to the PHI Merger not included in the calculation of diluted common shares outstanding due to their antidilutive effect for the three and nine months ended September 30, 2017. The number of equity units related to the PHI Merger not included in the calculation of diluted common shares outstanding due to their antidilutive effect was less than 1 million for the three and nine months ended September 30, 2016. Refer to Note 20 — Shareholders' Equity of the Exelon 2016 Form 10-K for further information regarding the equity units.

On June 1, 2017, Exelon settled the forward purchase contract, which was a component of the June 2014 equity units, through the issuance of approximately 33 million shares of Exelon common stock from treasury stock. The issuance of shares on June 1, 2017, triggered full dilution in the EPS calculation, which prior to settlement were included in the calculation of diluted EPS using the treasury stock method.

Prior to the June 2017 issuance Exelon had approximately 35 million shares of treasury stock with a cost of $2.3 billion. After issuance, Exelon has approximately 2 million shares of Treasury stock remaining, at a historical cost of $123 million. In 2008, Exelon management decided to defer indefinitely any share repurchases.