JPMORGAN CHASE & CO | 2013 | FY | 3

Earnings per share
Earnings per share (“EPS”) is calculated under the two-class method under which all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities based on their respective rights to receive dividends. JPMorgan Chase grants restricted stock and RSUs to certain employees under its stock-based compensation programs, which entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock; these unvested awards meet the definition of participating securities. Options issued under employee benefit plans that have an antidilutive effect are excluded from the computation of diluted EPS.
The following table presents the calculation of basic and diluted EPS for the years ended December 31, 2013, 2012 and 2011.
Year ended December 31,
(in millions,
except per share amounts)
2013
2012
2011
Basic earnings per share
 
 
 
Net income
$
17,923

$
21,284

$
18,976

Less: Preferred stock dividends
805

653

629

Net income applicable to common equity
17,118

20,631

18,347

Less: Dividends and undistributed earnings allocated to participating securities
525

754

779

Net income applicable to common stockholders
$
16,593

$
19,877

$
17,568

Total weighted-average basic shares outstanding
3,782.4

3,809.4

3,900.4

Net income per share
$
4.39

$
5.22

$
4.50

 
 
 
 
Diluted earnings per share
 
 
 
Net income applicable to common stockholders
$
16,593

$
19,877

$
17,568

Total weighted-average basic shares outstanding
3,782.4

3,809.4

3,900.4

Add: Employee stock options, SARs and warrants(a)
32.5

12.8

19.9

Total weighted-average diluted shares outstanding(b)
3,814.9

3,822.2

3,920.3

Net income per share
$
4.35

$
5.20

$
4.48

(a)
Excluded from the computation of diluted EPS (due to the antidilutive effect) were options issued under employee benefit plans and the warrants originally issued in 2008 under the U.S. Treasury’s Capital Purchase Program to purchase shares of the Firm’s common stock. The aggregate number of shares issuable upon the exercise of such options and warrants was 6 million, 148 million and 133 million for the years ended December 31, 2013, 2012 and 2011, respectively.
(b)
Participating securities were included in the calculation of diluted EPS using the two-class method, as this computation was more dilutive than the calculation using the treasury stock method.

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