EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2019

EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

Earnings Per Share

NOTE 11—EARNINGS PER SHARE AND STOCKHOLDERS’ EQUITY

EPS is calculated under the two-class method. The two-class method allocates all earnings (distributed and undistributed) to each class of common stock and participating securities based on their respective rights to receive dividends. The Company grants share-based awards to various employees and nonemployee directors under the 2015 Equity Incentive Plan that 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.

The following table presents the calculation of basic and diluted EPS for the years ended December 31, 2019, 2018, and 2017 under the two-class method. Participating securities were included in the calculation of diluted EPS using the two-class method, as this computation was more dilutive than the treasury-stock method.

	For the year ended December 31,
EPS Calculations (in thousands, except per share amounts)	2019		2018		2017
Calculation of basic EPS
Walker & Dunlop net income	$	173,373	$	161,439	$	211,127
Less: dividends and undistributed earnings allocated to participating securities		5,649		5,790		8,443
Net income applicable to common stockholders	$	167,724	$	155,649	$	202,684
Weighted-average basic shares outstanding		29,913		30,202		30,176
Basic EPS	$	5.61	$	5.15	$	6.72
Calculation of diluted EPS
Net income applicable to common stockholders	$	167,724	$	155,649	$	202,684
Add: reallocation of dividends and undistributed earnings based on assumed conversion		126		170		313
Net income allocated to common stockholders	$	167,850	$	155,819	$	202,997
Weighted-average basic shares outstanding		29,913		30,202		30,176
Add: weighted-average diluted non-participating securities		902		1,182		1,210
Weighted-average diluted shares outstanding		30,815		31,384		31,386
Diluted EPS	$	5.45	$	4.96	$	6.47

The assumed proceeds used for calculating the dilutive impact of restricted stock awards under the treasury method includes the unrecognized compensation costs associated with the awards. An immaterial number of average outstanding options to purchase common stock and average restricted shares were excluded from the computation of diluted earnings per share under the treasury method for the years ended December 31, 2019, 2018, and 2017 because the effect would have been anti-dilutive (the exercise price of the options or the grant date market price of the restricted shares was greater than the average market price of the Company’s shares during the periods presented).

Under the 2015 Equity Incentive Plan, subject to the Company’s approval, grantees have the option of electing to satisfy tax withholding obligations at the time of vesting or exercise by allowing the Company to withhold and purchase

the shares of stock otherwise issuable to the grantee. For the years ended December 31, 2019, 2018, and 2017, the Company repurchased and retired 0.2 million, 0.2 million, and 0.2 million restricted shares at a weighted average market price of $54.02, $51.86, and $41.21, upon grantee vesting, respectively. For the year ended December 31, 2019, the Company repurchased and retired 0.2 million restricted share units at a weighted average market price of $54.49. For the year ended December 31, 2017, the Company repurchased and retired 0.3 million restricted share units at a weighted average market price of $39.82. The Company did not repurchase any restricted share units during the year ended December 31, 2018.

During 2017, the Company repurchased 0.3 million shares of its common stock under a share repurchase program at a weighted average price of $47.10 per share and immediately retired the shares, reducing stockholders’ equity by $16.0 million.

During 2018, the Company repurchased 1.2 million shares of its common stock under a share repurchase program at a weighted average price of $45.64 per share and immediately retired the shares, reducing stockholders’ equity by $57.0 million.

In February 2019, the Company’s Board of Directors authorized the Company to repurchase up to $50.0 million of its common stock over a 12-month period beginning on February 11, 2019. During 2019, the Company repurchased 0.1 million shares of its common stock under the share repurchase program at a weighted average price of $48.52 per share and immediately retired the shares, reducing stockholders’ equity by $6.6 million. The Company had $45.8 million of authorized share repurchase capacity remaining under the 2019 share repurchase program as of December 31, 2019.

In February 2020, the Company’s Board of Directors approved a new stock repurchase program that permits the repurchase of up to $50.0 million of the Company’s common stock over a 12-month period beginning on February 11, 2020.

In 2018, the Company’s Board of Directors declared, and the Company paid, aggregate cash dividends of $1.00 per share ($0.25 per share for each quarter). The dividends were paid to all holders of record of our restricted and unrestricted common stock.

In 2019, the Company’s Board of Directors declared, and the Company paid, aggregate cash dividends of $1.20 per share ($0.30 per share for each quarter). The dividends were paid to all holders of record of our restricted and unrestricted common stock. The dividends paid during the year ended December 31, 2019 are an insignificant portion of the Company’s net income for the year ended December 31, 2019 and retained earnings and cash and cash equivalents as of December 31, 2019.

On February 4, 2020, our Board of Directors declared a quarterly dividend of $0.36 per share. The dividend will be paid March 9, 2020 to all holders of record of our restricted and unrestricted common stock as of February 21, 2020.

During 2019, the Company made an advance to one of the noncontrolling interest holders in the amount of $1.7 million to allow the noncontrolling interest holder to make a required contribution to WDIS. As this was a non-cash transaction, the amounts are not presented in the Consolidated Statements of Cash Flows.

The Term Loan contains direct restrictions to the amount of dividends the Company may pay, and the warehouse debt facilities and agreements with the Agencies contain minimum equity, liquidity, and other capital requirements that indirectly restrict the amount of dividends the Company may pay. The Company does not believe that these restrictions currently limit the amount of dividends the Company can pay for the foreseeable future.