EARNINGS PER COMMON SHARE

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan, RSUs, and the assumed conversion of mandatory convertible preferred stock. The effect of potentially dilutive securities is reflected in diluted earnings per share by application of the "treasury stock method" for outstanding restricted stock awards and stock options. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. For the issue of the mandatory convertible preferred stock, we use "if-converted method." Under the if-converted method, the preferred dividend applicable to convertible preferred stock is added back to net income attributable to Stericycle, the numerator. The Mandatory Convertible Preferred shares are assumed to be converted to common shares at the beginning of the period or, if later, at the time of issuance, and the resulting common shares are included in the denominator. In applying the if-converted method, conversion shall not be assumed for purposes of computing diluted EPS if the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share:



	Years Ended December 31,
	2015		2014		2013
Numerator:
Net income attributable to Stericycle, Inc.	$	267,046	$	326,456	$	311,372
Less: mandatory convertible preferred stock dividend	10,106		—		—
Numerator for basic earnings per share attributable to Stericycle, Inc. common shareholders	256,940		326,456		311,372
Denominator:
Denominator for basic earnings per share-weighted average shares	84,944,841		84,932,792		85,902,550
Effect of diluted securities:
Employee stock options	1,217,768		1,300,820		1,489,438
Mandatory convertible preferred stock (1)	—		—		—
Denominator for diluted earnings per share-adjusted weighted average shares and after assumed exercises	86,162,609		86,233,612		87,391,988
Earnings per share – Basic	$	3.02	$	3.84	$	3.62
Earnings per share – Diluted	$	2.98	$	3.79	$	3.56

(1) In 2015, the weighted average common shares issuable upon the assumed conversion of the mandatory convertible preferred stock totaling 1,648,318 shares were excluded from the computation of diluted earnings per share as such conversion would have been anti-dilutive.

In 2015, 2014 and 2013, options to purchase 818,093 shares, 830,755 shares, and 846,808 shares, respectively, at exercise prices of $117.09-$141.56, $105.12-$132.95, and $94.76-$119.19 were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.

For additional information regarding outstanding employee stock options, see Note 6 - Stock Based Compensation in the Notes to the Consolidated Financial Statements.