Chatham Lodging Trust Earnings Per Share Disclosure
| 10. | Earnings Per Share |
The two class method is used to determine earnings per share because unvested restricted shares and unvested LTIP units are considered to be participating shares. The LTIP units held by the non-controlling interest holders, which may be converted to common shares of beneficial interest, have been excluded from the denominator of the diluted earnings per share calculation as there would be no effect on the amounts since limited partners' share of income or loss would also be added back to net income or loss. Unvested restricted shares, unvested long-term incentive plan units and unvested Class A Performance LTIP units that could potentially dilute basic earnings per share in the future would not be included in the computation of diluted loss per share for the periods where a loss has been recorded, because they would have been anti-dilutive for the periods presented. For the years ended December 31, 2025, 2024 and 2023, the Company excluded , 414,635, and 157,641, respectively, of unvested shares and units as their effect would have been anti-dilutive.
The following is a reconciliation of the amounts used in calculating basic and diluted net income per share (in thousands, except share and per share data):
| For the year ended | ||||||||||||
| December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Numerator: | ||||||||||||
| Net income (loss) attributable to common shareholders | $ | 7,103 | $ | (3,784 | ) | $ | (5,306 | ) | ||||
| Dividends paid on unvested shares and units | (197 | ) | (127 | ) | (110 | ) | ||||||
| Net income (loss) attributable to common shareholders | $ | 6,906 | $ | (3,911 | ) | $ | (5,416 | ) | ||||
| Denominator: | ||||||||||||
| Weighted average number of common shares - basic | 48,793,017 | 48,900,997 | 48,847,386 | |||||||||
| Effect of dilutive securities: | ||||||||||||
| Unvested shares and units | 1,199,052 | — | — | |||||||||
| Weighted average number of common shares - diluted | 49,992,069 | 48,900,997 | 48,847,386 | |||||||||
| Basic income (loss) per common share: | ||||||||||||
| Net income (loss) attributable to common shareholders per weighted average basic common share | $ | 0.14 | $ | (0.08 | ) | $ | (0.11 | ) | ||||
| Diluted income (loss) per common share: | ||||||||||||
| Net income (loss) attributable to common shareholders per weighted average diluted common share | $ | 0.14 | $ | (0.08 | ) | $ | (0.11 | ) | ||||
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.