Earnings Per Share

12 Months Ended

Dec. 31, 2021

The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution:


	Fiscal Years
	2021		2020		2019
Numerator (Dollars in Millions):
Net Earnings	$	3,781	$	2,765	$	3,331
Dividend Equivalents on Restricted Stock	—		—		—
Net Earnings, Attributable to Common Shareholders	$	3,781	$	2,765	$	3,331

Denominator (Units in Millions):
Average Common Shares Outstanding	2,250		2,300		2,389
Other Potentially Dilutive Common Shares	5		5		6
Average Common Shares Outstanding, Assuming Dilution	2,255		2,305		2,395

Net Earnings Per Share, Basic	$	1.68	$	1.20	$	1.39
Net Earnings Per Share, Assuming Dilution	$	1.68	$	1.20	$	1.39

Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares of common stock outstanding and common stock equivalents adjusted for the effects of common stock that may be issued as a result of potentially dilutive instruments. CSX's potentially dilutive instruments are made up of equity awards including performance units and employee stock options.

When calculating diluted earnings per share, the potential shares that would be outstanding if all outstanding stock options were exercised are included. This number is different from outstanding stock options, which is included in Note 4, Stock Plans and Share-Based Compensation, because it is offset by shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent. The total average outstanding equity awards that were excluded from the diluted earnings per share calculation because their effect was antidilutive is in the table below.


	Fiscal Years
	2021	2020	2019
Antidilutive stock options excluded from Diluted EPS (in millions)	2	6	3

Share Repurchase Programs

In January 2019, the Company announced a $5 billion share repurchase program ("January 2019 program"). During June 2021, this program was completed, and the Company began repurchasing shares under the $5 billion share repurchase program announced October 21, 2020 (“October 2020 program”). Total repurchase authority remaining as of December 31, 2021, was $3.0 billion. A portion of share repurchases in January 2019 were completed under a previous share repurchase program announced in October 2017.

NOTE 2. Earnings Per Share, continued

Share repurchases may be made through a variety of methods including, but not limited to, open market purchases, purchases pursuant to Rule 10b5-1 plans, accelerated share repurchases and negotiated block purchases. The timing of share repurchases depends upon management's assessment of marketplace conditions and other factors, and the program remains subject to the discretion of the Board of Directors. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase. In accordance with the Equity Topic in the Accounting Standards Codification ("ASC"), the excess of repurchase price over par value is recorded in retained earnings.

Share Repurchase Activity

During 2021, 2020, and 2019, CSX repurchased the following shares:


	Fiscal Years
	2021		2020		2019
Shares Repurchased (Units in Millions)	90		38		144
Cost of Shares (Dollars in Millions)	$	2,886	$	867	$	3,373
Average Price Paid per Share	$	31.91	$	22.90	$	23.51

On October 17, 2019, the Company repurchased 14.1 million (split-adjusted) shares for $319 million from MR Argent Advisor LLC, a CSX shareholder, on behalf of certain limited partners of its affiliated funds (“Mantle Ridge”) under the January 2019 share repurchase program. A member of CSX’s Board of Directors, Paul C. Hilal, founded and controls Mantle Ridge and each of its related entities. Shares purchased from Mantle Ridge are included in the table above.

Periodically, CSX enters into structured agreements for the repurchase of CSX shares. Upon execution of each agreement, the Company pays a fixed amount of cash in exchange for the right to receive either CSX stock or a predetermined amount of cash, including a premium. Shares acquired through these structured share repurchase agreements were recorded in common stock and retained earnings and are included in the share repurchases table above. Premiums received were not material. As a result of entering into and settling structured share repurchase agreements, the Company paid a net total of approximately $378 million and received approximately 12 million shares during the twelve months ended 2021. As of December 31, 2021, no such agreements were outstanding.

Accelerated Share Repurchases

Shares repurchased under accelerated share repurchase agreements are included in the table above. In December 2020, the Company completed an accelerated share repurchase subject to an agreement to repurchase shares of the Company’s stock under the January 2019 program. Under this agreement, the Company paid a total of $100 million and received approximately 3.3 million shares.

In August 2019, the Company entered into an accelerated share repurchase agreement under the January 2019 program. Under this accelerated share repurchase agreement, the Company made a prepayment of $250 million to a financial institution and settlement occurred in September 2019. At settlement, the Company received approximately 11.5 million shares, calculated based on the volume-weighted average price of the Company’s common stock over the term of the agreement, less a discount.

Dividend Increase

On February 16, 2022, the Company's Board of Directors authorized a 7% increase in the quarterly cash dividend to $0.10 per common share effective March 2022.