16. Earnings per Common Share.
Basic EPS is computed by dividing earnings (loss) applicable to Morgan Stanley common shareholders by the weighted average number of common shares outstanding for the period. Common shares outstanding include common stock and vested RSUs where recipients have satisfied either the explicit vesting terms or retirement eligibility requirements. Diluted EPS reflects the assumed conversion of all dilutive securities. The Company calculates EPS using the two-class method and determines whether instruments granted in share-based payment transactions are participating securities (see Note 2). The following table presents the calculation of basic and diluted EPS (in millions, except for per share data):
| 2013 | 2012 | 2011 | ||||||
| Basic EPS: | ||||||||
| Income from continuing operations | $ | 3,656 | $ | 757 | $ | 4,696 | ||
| Net gain (loss) from discontinued operations | (43) | (41) | (51) | |||||
| Net income | 3,613 | 716 | 4,645 | |||||
| Net income applicable to redeemable noncontrolling interests | 222 | 124 | — | |||||
| Net income applicable to nonredeemable noncontrolling interests | 459 | 524 | 535 | |||||
| Net income applicable to Morgan Stanley | 2,932 | 68 | 4,110 | |||||
| Less: Preferred dividends (Series A Preferred Stock) | (44) | (44) | (44) | |||||
| Less: Preferred dividends (Series B Preferred Stock) | — | — | (196) | |||||
| Less: MUFG stock conversion | — | — | (1,726) | |||||
| Less: Preferred dividends (Series C Preferred Stock) | (52) | (52) | (52) | |||||
| Less: Preferred dividends (Series E Preferred Stock) | (18) | — | — | |||||
| Less: Preferred dividends (Series F Preferred Stock) | (6) | — | — | |||||
| Less: Wealth Management JV redemption value adjustment (see Note 3) | (151) | — | — | |||||
| Less: Allocation of (earnings) loss to participating RSUs(1): | ||||||||
| From continuing operations | (6) | (2) | (26) | |||||
| From discontinued operations | — | — | 1 | |||||
| Earnings (loss) applicable to Morgan Stanley common shareholders | $ | 2,655 | $ | (30) | $ | 2,067 | ||
| Weighted average common shares outstanding | 1,906 | 1,886 | 1,655 | |||||
| Earnings (loss) per basic common share: | ||||||||
| Income from continuing operations | $ | 1.42 | $ | 0.02 | $ | 1.28 | ||
| Net gain (loss) from discontinued operations | (0.03) | (0.04) | (0.03) | |||||
| Earnings (loss) per basic common share | $ | 1.39 | $ | (0.02) | $ | 1.25 | ||
| Diluted EPS: | ||||||||
| Earnings (loss) applicable to Morgan Stanley common shareholders | $ | 2,655 | $ | (30) | $ | 2,067 | ||
| Weighted average common shares outstanding | 1,906 | 1,886 | 1,655 | |||||
| Effect of dilutive securities: | ||||||||
| Stock options and RSUs(1) | 51 | 33 | 20 | |||||
| Weighted average common shares outstanding and common stock equivalents | 1,957 | 1,919 | 1,675 | |||||
| Earnings (loss) per diluted common share: | ||||||||
| Income from continuing operations | $ | 1.38 | $ | 0.02 | $ | 1.27 | ||
| Net gain (loss) from discontinued operations | (0.02) | (0.04) | (0.04) | |||||
| Earnings (loss) per diluted common share | $ | 1.36 | $ | (0.02) | $ | 1.23 | ||
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(1) RSUs that are considered participating securities participate in all of the earnings of the Company in the computation of basic EPS, and, therefore, such RSUs are not included as incremental shares in the diluted calculation.
The following securities were considered antidilutive and, therefore, were excluded from the computation of diluted EPS:
| Number of Antidilutive Securities Outstanding at End of Period: | 2013 | 2012 | 2011 | ||||
| (shares in millions) | |||||||
| RSUs and performance-based stock units | 3 | 8 | 21 | ||||
| Stock options | 33 | 42 | 57 | ||||
| Total | 36 | 50 | 78 | ||||