Computation of Basic/Diluted Earnings Per Common Share

3 Months Ended

Mar. 31, 2017

Computation of Basic/Diluted Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share (amounts in millions, except per share data):



	For the Three Months Ended March 31,
	2017		2016
Numerator:
Consolidated net income	$	426	$	363
Less: Distributed earnings to unvested share-based awards that participate in earnings	—		(2		)
Less: Undistributed earnings allocated to unvested share-based awards that participate in earnings	—		(1		)
Numerator for basic and diluted earnings per common share—income available to common shareholders	$	426	$	360

Denominator:
Denominator for basic earnings per common share—weighted-average common shares outstanding	749		735
Effect of potential dilutive common shares under the treasury stock method:
Employee stock options and awards	12		14
Denominator for diluted earnings per common share—weighted-average common shares outstanding plus dilutive common shares under the treasury stock method	761		749
Basic earnings per common share	$	0.57	$	0.49
Diluted earnings per common share	$	0.56	$	0.48

Certain of our unvested restricted stock units meet the definition of participating securities as they participate in earnings based on their rights to dividends or dividend equivalents. Therefore, we are required to use the two-class method in our computation of basic and diluted earnings per common share. For the three months ended March 31, 2017 and 2016, on a weighted-average basis, we had outstanding unvested restricted stock units of less than a million and 4 million shares of common stock, respectively, that are participating in earnings.

Certain of our employee-related restricted stock units and options are contingently issuable upon the satisfaction of pre-defined performance measures. These shares are included in the weighted-average dilutive common shares only if the performance measures are met as of the end of the reporting period. Approximately 9 million and 10 million shares are not included in the computation of diluted earnings per share for the three months ended March 31, 2017 and 2016, respectively, as their respective performance measures had not yet been met.

Potential common shares are not included in the denominator of the diluted earnings per common share calculation when the inclusion of such shares would be anti-dilutive. Therefore, options to acquire 5 million and 6 million shares of common stock were not included in the calculation of diluted earnings per common share for the three months ended March 31, 2017 and 2016, respectively, as the effect of their inclusion would be anti-dilutive.