Shareholders’ Equity

Share Data: A summary of preferred and common share activity is presented in the following chart.



	Preferred Stock		Common Stock
	Issued	Treasury Stock	Issued		Treasury Stock
2015:
Balance at January 1, 2015	—	—	134,218,183		(6,287,907	)
Grants of restricted stock					6,648
Forfeitures of restricted stock					(13,950	)
Vesting of performance shares					211,287
Issuance of common stock due to exercise of stock options					1,576,485
Treasury stock acquired					(7,340,794	)
Retirement of treasury stock			(4,000,000	)	4,000,000
Balance at December 31, 2015	—	—	130,218,183		(7,848,231	)
2016:
Grants of restricted stock					12,549
Forfeitures of restricted stock					—
Vesting of performance shares					159,020
Issuance of common stock due to exercise of stock options					2,184,169
Treasury stock acquired					(6,694,582	)
Retirement of treasury stock			(3,000,000	)	3,000,000
Balance at December 31, 2016	—	—	127,218,183		(9,187,075	)
2017:
Grants of restricted stock					9,135
Vesting of performance shares					119,896
Issuance of common stock due to exercise of stock options					1,661,808
Treasury stock acquired					(5,228,868	)
Retirement of treasury stock			(3,000,000	)	3,000,000
Balance at December 31, 2017	—	—	124,218,183		(9,625,104	)

Acquisition of Common Shares: Torchmark shares are acquired from time to time through open market purchases under the Torchmark stock repurchase program when it is believed to be the best use of Torchmark’s excess cash flows. Share repurchases under this program were 4.1 million shares at a cost of $325 million in 2017, 5.2 million shares at a cost of $311 million in 2016, and 6.3 million shares at a cost of $359 million in 2015. When stock options are exercised, proceeds from the exercises are generally used to repurchase approximately the number of shares available with those funds in order to reduce dilution. Shares repurchased for dilution purposes were 1.1 million shares at a cost of $88 million in 2017, 1.5 million shares at a cost of $93 million in 2016, and 1.0 million shares at a cost of $60 million in 2015.

Retirement of Treasury Stock: Torchmark retired 3.0 million shares of treasury stock in 2017, 3.0 million in 2016, and 4.0 million in 2015.

Restrictions: Restrictions exist on the flow of funds to Torchmark from its insurance subsidiaries. Statutory regulations require life insurance subsidiaries to maintain certain minimum amounts of capital and surplus. Dividends from insurance subsidiaries of Torchmark are restricted based on regulations by their states of domicile. Additionally, insurance company distributions are generally not permitted in excess of statutory surplus. Subsidiaries are also subject to certain minimum capital requirements. Subsidiaries of Torchmark paid cash dividends to the Parent Company in the amount of $454 million in 2017, $438 million in 2016, and $466 million in 2015. As of December 31, 2017, dividends and transfers from insurance subsidiaries to parent available to be paid in 2018 are limited to the amount of $315 million without regulatory approval, such that $940 million was considered restricted net assets of the subsidiaries. Dividends exceeding these limitations may be available during the year pending regulatory approval. While there are no legal restrictions on the payment of dividends to shareholders from Torchmark’s retained earnings, retained earnings as of December 31, 2017 were restricted by lenders’ covenants which require the Company to maintain and not distribute $3.5 billion from its total consolidated retained earnings of $4.8 billion.

Earnings Per Share: A reconciliation of basic and diluted weighted-average shares outstanding used in the computation of basic and diluted earnings per share is as follows:



	Year Ended December 31,
	2017	2016	2015
Basic weighted average shares outstanding	116,342,529	120,001,191	125,094,628
Weighted average dilutive options outstanding	2,640,965	2,366,594	1,662,607
Diluted weighted average shares outstanding	118,983,494	122,367,785	126,757,235

For the three years ended December 31, 2017, there were no anti-dilutive shares. Income available to common shareholders for basic earnings per share is equivalent to income available to common shareholders for diluted earnings per share.