Earnings per Common Share

Basic earnings per common share is computed using the weighted average number of common shares outstanding, including vested unissued participating restricted stock units. Diluted earnings per common share is computed using the weighted average number of common and dilutive potential common shares outstanding. For the Company, dilutive potential common shares consist of outstanding stock options and unvested non-participating restricted stock units and contingently issuable performance stock awards.

The computation of basic and diluted earnings per common share is presented in the following table.



($ in millions, except per share data)	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016
Numerator:
Net income	$	666	$	520	$	1,940	$	1,037
Less: Preferred stock dividends	29		29		87		87
Net income applicable to common shareholders ⁽¹⁾	$	637	$	491	$	1,853	$	950

Denominator:
Weighted average common shares outstanding	361.3		371.5		363.5		374.4
Effect of dilutive potential common shares:
Stock options	4.4		3.2		4.3		3.3
Restricted stock units (non-participating) and performance stock awards	1.4		1.2		1.3		1.2
Weighted average common and dilutive potential common shares outstanding	367.1		375.9		369.1		378.9

Earnings per common share - Basic	$	1.76	$	1.32	$	5.10	$	2.54
Earnings per common share - Diluted	$	1.74	$	1.31	$	5.02	$	2.51

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⁽¹⁾	Net income applicable to common shareholders is net income less preferred stock dividends.

The effect of dilutive potential common shares does not include the effect of options with an anti-dilutive effect on earnings per common share because their exercise prices exceed the average market price of Allstate common shares during the period or for which the unrecognized compensation cost would have an anti-dilutive effect. Options to purchase 0.2 million and 3.6 million Allstate common shares, with exercise prices ranging from $78.35 to $93.93 and $58.14 to $71.29, were outstanding for the three-month periods ended September 30, 2017 and 2016, respectively, but were not included in the computation of diluted earnings per common share in those periods. Options to purchase 2.5 million and 4.7 million Allstate common shares, with exercise prices ranging from $74.03 to $93.93 and $57.29 to $71.29, were outstanding for the nine-month periods ended September 30, 2017 and 2016, respectively, but were not included in the computation of diluted earnings per common share in those periods.