Earnings Per Common Share

9 Months Ended

Sep. 30, 2015

Earnings Per Share

Earnings Per Common Share

15.Earnings per Common Share.

Basic earnings per common share (“EPS”) is computed by dividing earnings applicable to Morgan Stanley common shareholders by the weighted average number of common shares outstanding for the period. Common shares outstanding include common stock and vested restricted stock units (“RSUs”) where recipients have satisfied either the explicit vesting terms or retirement eligibility requirements. Diluted EPS reflects the assumed conversion of all dilutive securities. The Company calculates EPS using the two-class method, which allocates a portion of the Company’s earnings to instruments granted in share-based payment transactions that are considered participating securities (see Note 2 to the consolidated financial statements in the 2014 Form 10-K). The following table presents the calculation of basic and diluted EPS (in millions, except for per share data):

				Three Months Ended				Nine Months Ended
				September 30,				September 30,
				2015		2014		2015		2014
Basic EPS:
	Income from continuing operations		$	1,051	$	1,757	$	5,352	$	5,259
	Income (loss) from discontinued operations			(2)		(5)		(9)		(6)
	Net income			1,049		1,752		5,343		5,253
	Net income applicable to nonredeemable noncontrolling interests			31		59		124		156
	Net income applicable to Morgan Stanley			1,018		1,693		5,219		5,097
	Less: Preferred dividends			(78)		(62)		(297)		(192)
	Less: Allocation of (earnings) loss to participating RSUs(1):
		From continuing operations		(1)		(2)		(4)		(7)
	Earnings applicable to Morgan Stanley common shareholders		$	939	$	1,629	$	4,918	$	4,898
	Weighted average common shares outstanding			1,904		1,923		1,916		1,925
Earnings per basic common share:
	Income from continuing operations		$	0.49	$	0.85	$	2.57	$	2.55
	Income (loss) from discontinued operations			—		—		—		(0.01)
		Earnings per basic common share	$	0.49	$	0.85	$	2.57	$	2.54
Diluted EPS:
	Earnings applicable to Morgan Stanley common shareholders		$	939	$	1,629	$	4,918	$	4,898
	Weighted average common shares outstanding			1,904		1,923		1,916		1,925
	Effect of dilutive securities:
		Stock options and RSUs(1)		45		48		42		45
	Weighted average common shares outstanding and common
	stock equivalents			1,949		1,971		1,958		1,970
Earnings per diluted common share:
	Income from continuing operations		$	0.48	$	0.83	$	2.52	$	2.49
	Income (loss) from discontinued operations			—		—		(0.01)		—
		Earnings per diluted common share	$	0.48	$	0.83	$	2.51	$	2.49

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(1) RSUs that are considered participating securities participate in all of the earnings of the Company in the computation of basic EPS, and, therefore, such RSUs are not included as incremental shares in the diluted calculation.

The following securities were considered antidilutive and, therefore, were excluded from the computation of diluted EPS:

		Three Months Ended		Nine Months Ended
		September 30,		September 30,
Number of Antidilutive Securities Outstanding at End of Period:		2015	2014	2015	2014
		(shares in millions)
Stock options		11	13	11	13
RSUs and performance-based stock units		1	2	1	2
	Total	12	15	12	15