Earnings per share (EPS)

12 Months Ended

Dec. 31, 2020

21.	Earnings per share (EPS)

The Company uses the two-class method of computing basic EPS due to the existence of non-vested restricted stock awards with nonforfeitable rights to dividends or dividend equivalents (referred to as participating securities). Basic EPS is computed using the weighted average number of common shares outstanding during each of the respective years. Diluted EPS is computed using the

weighted average number of common and common equivalent shares outstanding during each of the respective years using the more dilutive of either the treasury stock method or two-class method. The difference between basic and diluted shares, if any, largely results from common equivalent shares, which represents the dilutive effect of the assumed exercise of certain outstanding share options, the assumed vesting of restricted stock granted to employees and directors, or the satisfaction of certain necessary conditions for contingently issuable shares (see Note 18).

For each of the three years ended December 31, 2020, 2019, and 2018, no significant adjustments were made to net income for purposes of calculating basic and diluted EPS. The following is a reconciliation of the weighted average shares used in the diluted EPS computations.

	Year Ended December 31,
	2020		2019		2018
Weighted average common shares-basic		19,267,920		18,903,289		18,494,002
Effect of diluted securities:
Unexercised stock options and employee stock purchase plan		51,951		—		313,648
Unvested time-based restricted stock awards		71,847		—		—
Unvested performance-based restricted stock awards		—		—		103,960
Weighted average common shares-diluted		19,391,718		18,903,289		18,911,610

There were 1,449,630; 1,704,708; and 349,930 weighted average outstanding options, restricted stock, and performance-based or market-based equity awards not included in the diluted earnings per share computation for the years ended December 31, 2020, 2019, and 2018, respectively, because inclusion of these awards was anti-dilutive or, for performance-based and market-based awards, all necessary conditions have not been satisfied by the end of the respective period.