Earnings per Share ("EPS")

12 Months Ended

Dec. 31, 2021

Earnings per Share (“EPS”)

Basic EPS is computed by dividing net income attributable to Kraton by the weighted-average number of shares outstanding, excluding non-vested restricted stock awards during the period. Diluted EPS is computed by dividing net income attributable to Kraton by the diluted weighted-average number of shares outstanding during the period and, accordingly, reflects the potential dilution that could occur if securities or other agreements to issue common stock, such as stock options, were exercised, settled, or converted into common stock and were dilutive. The diluted weighted-average number of shares used in our diluted EPS calculation is determined using the treasury stock method.

Unvested awards of share-based payments with rights to receive dividends or dividend equivalents, such as our restricted stock awards are considered to be participating securities and therefore the two-class method is used for purposes of calculating EPS. Under the two-class method, a portion of net income is allocated to these participating securities and therefore is excluded from the calculation of EPS allocated to common stock. These shares are subject to forfeiture and restrictions on transfer until vested and have identical voting, income, and distribution rights to the unrestricted common shares outstanding.

We withheld 22,658, 33,927, and 82,721 shares of restricted stock upon vesting to satisfy employee payroll tax withholding requirements for the years ended December 31, 2021, 2020, and 2019, respectively. We immediately retired all shares withheld and the transactions were reflected in additional paid in capital and retained earnings in the Consolidated Statements of Changes in Equity and as a purchase of treasury stock in the Consolidated Statements of Cash Flows.

The computation of diluted EPS excludes weighted average restricted share units of 460,014 for the year ended December 31, 2020, as they are anti-dilutive due to a net loss attributable to Kraton.

The computation of diluted EPS excludes the effect of performance share units for which the performance contingencies had not been met as of the reporting date, amounting to 549,997, 547,912, and 378,084 units at December 31, 2021, 2020, and 2019, respectively.

The computation of diluted earnings per share excludes the effect of the potential exercise of stock options that are anti-dilutive, amounting to 309,476 options for the years ended December 31, 2019. We did not exclude any options for the year ended December 31, 2021 and 2020.

The calculations of basic and diluted EPS are as follows:


	Year Ended December 31, 2021
	Net Income Attributable to Kraton		Weighted Average Shares Outstanding	Earnings Per Share
	(In thousands, except per share data)
Basic:
As reported	$	170,226	32,108
Amounts allocated to unvested restricted shares	(56)		(10)
Amounts available to common stockholders	170,170		32,098	$	5.30
Diluted:
Amounts allocated to unvested restricted shares	56		10
Non participating share units			474
Stock options added under the treasury stock method			70
Amounts reallocated to unvested restricted shares	(55)		(10)
Amounts available to stockholders and assumed conversions	$	170,171	32,642	$	5.21


	Year Ended December 31, 2020
	Net Loss Attributable to Kraton		Weighted Average Shares Outstanding	Earnings Per Share
	(In thousands, except per share data)
Basic:
As reported	$	(225,602)	31,845
Amounts allocated to unvested restricted shares	701		(99)
Amounts available to common stockholders	(224,901)		31,746	$	(7.08)
Diluted:
Amounts allocated to unvested restricted shares	(701)		99
Non participating share units			—
Stock options added under the treasury stock method			—
Amounts reallocated to unvested restricted shares	701		(99)
Amounts available to stockholders and assumed conversions	$	(224,901)	31,746	$	(7.08)


	Year Ended December 31, 2019
	Net Income Attributable to Kraton		Weighted Average Shares Outstanding	Earnings Per Share
	(In thousands, except per share data)
Basic:
As reported	$	51,305	31,828
Amounts allocated to unvested restricted shares	(399)		(247)
Amounts available to common stockholders	50,906		31,581	$	1.61
Diluted:
Amounts allocated to unvested restricted shares	399		247
Non participating share units			259
Stock options added under the treasury stock method			41
Amounts reallocated to unvested restricted shares	(395)		(247)
Amounts available to stockholders and assumed conversions	$	50,910	31,881	$	1.60

Share Repurchase Program. In February 2019, we announced a repurchase program for up to $50.0 million of the Company’s common stock. Repurchases were made at management's discretion from time to time through privately-negotiated transactions, in the open market, or through broker-negotiated purchases in compliance with applicable securities law, including through a 10b5-1 Plan. During the year ended December 31, 2021, we did not repurchase any shares of our common stock under this program. From inception of the program through December 31, 2020, we repurchased 311,152 shares of our common stock at an average price of $32.14 per share and a total cost of $10.0 million. The program ended on February 7, 2021.