12. EARNINGS PER SHARE

Basic earnings per share attributable to Legg Mason, Inc. shareholders ("EPS") is calculated by dividing Net Income (Loss) Attributable to Legg Mason, Inc. (adjusted by removing earnings allocated to participating securities) by the weighted-average number of shares outstanding, which excludes participating securities. Legg Mason issues to employees restricted stock and restricted stock units that are deemed to be participating securities prior to vesting, because the related unvested restricted shares/units entitle their holder to nonforfeitable dividend rights. In this circumstance, accounting guidance requires a “two-class method” for EPS calculations that excludes earnings (potentially both distributed and undistributed) allocated to participating securities and does not allocate losses to participating securities.

Diluted EPS is similar to basic EPS, but the effect of potential common shares is included in the calculation unless the potential common shares are antidilutive. For periods with a net loss, potential common shares other than participating securities, are considered antidilutive and are excluded from the calculation.

During fiscal 2017, 2016, and 2015, pursuant to the $1,000,000 share repurchase authorization discussed in Note 10, Legg Mason purchased and retired 11,697, 4,537, and 6,931 shares of its common stock, respectively, for $381,672, $209,632, and $356,522, respectively, through open market purchases. The total repurchases reduced weighted-average shares outstanding by 6,005, 2,564, and 3,528 shares for the years ended March 31, 2017, 2016, and 2015, respectively.

The par value of the shares repurchased is charged to common stock, with the excess of the purchase price over par first charged against additional paid-in capital, with the remaining balance, if any, charged against retained earnings.

The following table presents the computations of basic and diluted EPS:



	Years Ended March 31,
	2017		2016			2015
Basic weighted-average shares outstanding for EPS	100,580		107,406			112,019
Potential common shares:
Dilutive employee stock options	219		—			1,227
Diluted weighted-average shares outstanding for EPS	100,799		107,406			113,246

Net Income (Loss) Attributable to Legg Mason, Inc.	$	227,256	$	(25,032	)	$	237,080
Less: Earnings (distributed and undistributed) allocated to participating securities	7,384		2,288			6,340
Net Income (Loss) (Distributed and Undistributed) Allocated to Shareholders (Excluding Participating Securities)	$	219,872	$	(27,320	)	$	230,740

Net Income (Loss) per share Attributable to Legg Mason, Inc. Shareholders
Basic	$	2.19	$	(0.25	)	$	2.06
Diluted	$	2.18	$	(0.25	)	$	2.04

The weighted-average shares exclude weighted-average unvested restricted shares deemed to be participating securities of 3,335, 2,831, and 3,065 for the years ended March 31, 2017, 2016, and 2015, respectively.

The diluted EPS calculations for the years ended March 31, 2017, 2016, and 2015, exclude any potential common shares issuable under the 14,205 warrants issued in connection with the repurchase of Convertible Notes in May 2012 because the market price of Legg Mason common stock did not exceed the exercise price, and therefore, the warrants would be antidilutive.

Options to purchase 3,454 and 1,319 for the years ended March 31, 2017 and 2015, respectively, were not included in the computation of diluted EPS because the presumed proceeds from exercising such options, including the related income tax benefits, exceed the average price of the common shares for the period and, therefore, the options are deemed antidilutive. The diluted EPS calculation for the year ended March 31, 2016, excludes 814 potential common shares that are antidilutive due to the net loss in the year.

Further, market- and performance-based awards are excluded from potential dilution until the designated market or performance condition is met. Unvested restricted shares for the years ended March 31, 2017, 2016, and 2015, were antidilutive and, therefore, do not further impact diluted EPS.