ARBOR REALTY TRUST INC Earnings Per Share Disclosure
Note 13—Earnings Per Share
Basic EPS is calculated by dividing net income attributable to Arbor Realty Trust, Inc. by the weighted average number of shares of common stock outstanding during each period inclusive of unvested restricted stock with full dividend participation rights. Diluted EPS is calculated by dividing net income by the weighted average number of shares of common stock outstanding plus the additional dilutive effect of common stock equivalents during each period using the treasury stock method. Our common stock equivalents include the weighted average dilutive effect of performance-based restricted stock units granted to our chief executive officer in the first quarter of 2015 as well as the weighted average dilutive effect of warrants for the period of time that they were outstanding during 2014 and 2013.
The following is a reconciliation of the numerator and denominator of the basic and diluted EPS computations for the years presented:
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Year Ended December 31, |
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2015 |
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2014 |
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2013 |
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Basic |
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Diluted |
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Basic |
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Diluted |
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Basic |
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Diluted |
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Net income attributable to common stockholders(1) |
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$ |
45,875,094 |
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$ |
45,875,094 |
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$ |
85,792,235 |
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$ |
85,792,235 |
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$ |
16,667,955 |
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$ |
16,667,955 |
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Weighted average number of common shares outstanding |
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50,857,750 |
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50,857,750 |
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50,143,648 |
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50,143,648 |
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42,399,872 |
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42,399,872 |
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Dilutive effect of restricted stock units(2) |
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— |
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149,578 |
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— |
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— |
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— |
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— |
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Dilutive effect of warrants(3) |
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— |
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— |
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— |
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224,696 |
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— |
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435,272 |
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Weighted average number of common shares outstanding |
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50,857,750 |
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51,007,328 |
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50,143,648 |
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50,368,344 |
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42,399,872 |
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42,835,144 |
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Net income per common share(1) |
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$ |
0.90 |
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$ |
0.90 |
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$ |
1.71 |
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$ |
1.70 |
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$ |
0.39 |
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$ |
0.39 |
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(1) |
Net of preferred stock dividends and noncontrolling interest. |
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(2) |
Mr. Kaufman was granted restricted stock units which vest at the end of a four-year performance period based upon our achievement of total stockholder return objectives. See Note 12—"Equity" for further details. |
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(3) |
On July 1, 2014, we acquired and canceled all of our warrants. See Note 12—"Equity" for further details. |
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About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.