Earnings Per Share

12 Months Ended

Dec. 31, 2016

Basic earnings per share are computed based on the weighted average number of common shares outstanding. Diluted earnings per share are calculated to reflect the potential dilution that could occur if securities or other contracts were exercised or converted into common stock.

Basic and diluted earnings per common share are calculated as follows:



(In millions, except per share amounts)	2016		2015		2014
Earnings per share — basic:
Goodyear net income	$	1,264	$	307	$	2,452
Less: Preferred stock dividends	—		—		7
Goodyear net income available to common shareholders	$	1,264	$	307	$	2,445
Weighted average shares outstanding	263		269		268
Earnings per common share — basic	$	4.81	$	1.14	$	9.13

Earnings per share — diluted:
Goodyear net income	$	1,264	$	307	$	2,452
Less: Preferred stock dividends	—		—		—
Goodyear net income available to common shareholders	$	1,264	$	307	$	2,452
Weighted average shares outstanding	263		269		268
Dilutive effect of mandatory convertible preferred stock	—		—		7
Dilutive effect of stock options and other dilutive securities	3		4		4
Weighted average shares outstanding — diluted	266		273		279
Earnings per common share — diluted	$	4.74	$	1.12	$	8.78

Weighted average shares outstanding — diluted for 2016 and 2014 excludes approximately 1 million and 2 million equivalent shares, respectively, related to options with exercise prices greater than the average market price of our common stock (i.e., “underwater” options). There were no shares related to options with exercise prices greater than the average market price of our common stock for 2015.

On April 1, 2014, all outstanding shares of mandatory convertible preferred stock automatically converted into 27,573,735 shares of common stock, net of fractional shares, at a conversion rate of 2.7574 shares of common stock per share of preferred stock.