EARNINGS PER SHARE AND STOCKHOLDERS EQUITY

12 Months Ended

Dec. 31, 2021

EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

Earnings Per Share and Stockholders' Equity

NOTE 12—EARNINGS PER SHARE AND STOCKHOLDERS’ EQUITY

Earnings per share (“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 2020 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, 2021, 2020, and 2019 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 years ended December 31,
EPS Calculations (in thousands, except per share amounts)	2021		2020		2019
Calculation of basic EPS
Walker & Dunlop net income	$	265,762	$	246,177	$	173,373
Less: dividends and undistributed earnings allocated to participating securities		8,837		7,337		5,649
Net income applicable to common stockholders	$	256,925	$	238,840	$	167,724
Weighted-average basic shares outstanding		31,081		30,444		29,913
Basic EPS	$	8.27	$	7.85	$	5.61
Calculation of diluted EPS
Net income applicable to common stockholders	$	256,925	$	238,840	$	167,724
Add: reallocation of dividends and undistributed earnings based on assumed conversion		93		120		126
Net income allocated to common stockholders	$	257,018	$	238,960	$	167,850
Weighted-average basic shares outstanding		31,081		30,444		29,913
Add: weighted-average diluted non-participating securities		452		639		902
Weighted-average diluted shares outstanding		31,533		31,083		30,815
Diluted EPS	$	8.15	$	7.69	$	5.45

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, 2021, 2020, and 2019 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 2020 Equity Incentive Plan (and predecessor plans), 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, 2021, 2020, and 2019, the Company repurchased and retired 150 thousand, 179 thousand, and 200 thousand restricted shares at a weighted average market price of $109.57, $66.38, and $54.02, upon grantee vesting, respectively. For the years ended December 31, 2021 and 2020, the Company repurchased and retired 24 thousand and 99 thousand restricted share units at a weighted average market price of $100.36 and $78.79, respectively.

Stock Repurchase Programs

In February 2022, the Company’s Board of Directors approved a new stock repurchase program that permits the repurchase of up to $75.0 million of the Company’s common stock over a 12-month period beginning on February 13, 2022.

In February 2021, the Company’s Board of Directors authorized the Company to repurchase up to $75.0 million of its common stock over a 12-month period beginning on February 12, 2021. In 2021, the Company did not repurchase any shares of its common stock under the share repurchase program. The Company had $75.0 million of authorized share repurchase capacity remaining under the 2021 share repurchase program as of December 31, 2021.

In 2020, the Company repurchased 459 thousand shares of its common stock under a share repurchase program at a weighted average price of $56.77 per share and immediately retired the shares, reducing stockholders’ equity by $26.1 million.

In 2019, the Company repurchased 135 thousand shares of its common stock under a 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.

Dividends

In February 2022, our Board of Directors declared a dividend of $0.60 per share for the first quarter of 2022. The dividend will be paid on March 10, 2022 to all holders of record of our restricted and unrestricted common stock as of February 22, 2022.

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.

Other Equity-Related Transactions

As disclosed in NOTE 7, the Company issued $120.6 million of Company stock in connection with acquisitions in 2021, a non-cash transaction. Additionally, in 2021, $9.6 million of stock was issued to employees for which we had an accrued liability prior to the issuance of the award. Upon issuance, the accrued liability was reclassed to APIC, a non-cash transaction.

In 2020, the Company purchased the noncontrolling interests held by two members of WDIS for an aggregate consideration of $32.0 million, which consisted of $10.4 million in cash, a $5.7 million reduction in receivables (a non-cash transaction), $5.9 million in Company stock (a non-cash transaction), and $10.0 million of contingent consideration (a non-cash transaction). The $32.0 million aggregated purchase price resulted in reductions to APIC of $24.1 million for the excess of the purchase price over the noncontrolling interest balance.

As a result of the transactions, the Company recorded Net income (loss) from noncontrolling interests only for the first quarter of 2020 on the Consolidated Statements of Income.

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.