Basic net income per share is based on the weighted average number of common shares outstanding. Diluted net income per share is based on the weighted average number of common shares outstanding and potentially dilutive shares. The dilutive effect of employee stock-based compensation is included in the computation of diluted net income per share. The dilutive effect of stock-based compensation is calculated by using the treasury stock method and expected proceeds upon exercise or issuance of the stock-based compensation. The treasury stock method assumes that the proceeds from stock-based compensation are used to purchase the Company’s common stock at the average market price during the period. The following table summarizes the shares, in thousands, used in computing basic and diluted net income per share:



	Years ended December 31,
	2019	2018	2017
Average common shares outstanding during the period for basic computation	215,550	177,904	177,612
Effect of dilutive securities:
Tangible equity units	-	-	-
Employee stock-based compensation	381	495	563
Average common shares outstanding during the period for diluted computation	215,931	178,399	178,175

For the years ended December 31, 2019 and 2017, all of the Company’s employee stock options were included in the calculation of diluted net income per share as the calculated cost to exercise the stock options was less than the average market price of the Company’s common stock during these periods. For the year ended December 31, 2018, the Company’s employee stock options to purchase 8,596 shares of common stock were excluded from the calculation of diluted net income per share as the calculated cost to exercise the stock options was greater than the average market price of the Company’s common stock during this period.

For the year ended December 31, 2019, the average common shares outstanding during the period for basic computation includes the weighted-average impact of 10,533,133 shares, based on the minimum number of shares of 11,425,345 to be issued in April 2022 upon settlement of the stock purchase contracts issued in April 2019 under the tangible equity units.

Equity per common share was $17.58 and $11.28 and at December 31, 2019 and 2018, respectively. These amounts were computed by dividing Essential Utilities stockholders’ equity by the number of shares of common stock outstanding at the end of each year.