Earnings per Share
We compute basic and diluted earnings per share using the two-class method, which is an earnings allocation calculation that determines EPS for each class of common stock and participating security. Our vested and exercisable stock options contain non-forfeitable rights to dividends or dividend equivalents and are classified as participating securities in the calculation of EPS. Our unvested stock options, restricted stock units, performance shares and non-employee director awards do not contain nonforfeitable rights to dividends or dividend equivalents and are therefore not classified as participating securities. See "Note 3. Significant Accounting Policies" for more detail of our EPS calculation methodology.

The following table shows the computation of our basic and diluted earnings per common share for the years ended December 31 (in millions, except per share amounts):
202320222021
Basic earnings per share:
Net income
$259.2 $155.9 $143.1 
Less: Net income allocated to participating securities(4.9)— — 
Net income available to common shareholders$254.3 $155.9 $143.1 
Weighted-average shares outstanding - basic
35.7 35.4 35.4 
Basic earnings per share
$7.13 $4.41 $4.04 
Diluted earnings per share:
Net income
$259.2 $155.9 $143.1 
Less: Net income allocated to participating securities(4.9)— — 
Net income available to common shareholders$254.3 $155.9 $143.1 
Weighted-average shares outstanding - basic
35.7 35.4 35.4 
Effect of dilutive securities:
Equity compensation plans0.1 0.5 0.6 
Weighted-average shares outstanding - diluted *
35.7 35.9 36.0 
Diluted earnings per share
$7.12 $4.35 $3.98 
________
(*) Sum of individual components may not be additive due to rounding.

Historical Timeline

Fiscal YearFiled
2023Feb 16, 2024Showing above
2022Feb 16, 2023
2021Feb 17, 2022
2020Feb 18, 2021
2019Feb 19, 2020
2018Feb 25, 2019
2017Feb 21, 2018
2016Feb 22, 2017
2015Feb 24, 2016

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.