Earnings Per Share

9 Months Ended

Sep. 30, 2021

11. Earnings Per Share

The Company computes earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. The Series A Preferred Stock is considered participating securities because it has dividend rights determined on an as-converted basis in the event of Company’s declaration of a dividend or distribution for common shares. On March 26, 2021, the Company repurchased 3,700 thousand shares of its common stock from affiliates of Kohlberg Kravis Roberts & Co. L.P., (“KKR”) a related party of the Company, for a total cost of $119. In August 2021, the Company repurchased 11,073 thousand shares of its common stock and 1,000 thousand shares of its preferred stock from affiliates of KKR for a total cost of $396. After giving effect to the transaction, KKR no longer held any equity interests in the Company.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
Computation of Earnings Per Share	2021		2020		2021		2020
Net income from continuing operations	$	310	$	187	$	1,296	$	105
Less: Net income attributable to non-controlling interests	—		5		—		2
Less: Undistributed earnings from continuing operations attributable to participating stockholders	1		2		9		1
Less: Premium on retirement of preferred stock	28		—		28		—
Net income from continuing operations attributable to Mr. Cooper common stockholders	$	281	$	180	$	1,259	$	102

Net (loss) income from discontinued operations	$	(11)	$	27	$	3	$	11
Less: Undistributed earnings from discontinued operations attributable to participating stockholders	—		—		—		—
Net (loss) income from discontinued operations attributable to Mr. Cooper common stockholders	$	(11)	$	27	$	3	$	11

Net income	$	299	$	214	$	1,299	$	116
Less: Net income attributable to non-controlling interests	—		5		—		2
Net income attributable to Mr. Cooper	299		209		1,299		114
Less: Undistributed earnings attributable to participating stockholders	1		2		9		1
Less: Premium on retirement of preferred stock	28		—		28		—
Net income attributable to common stockholders	$	270	$	207	$	1,262	$	113

Earnings from continuing operations per common share attributable to Mr. Cooper:
Basic	$	3.56	$	1.98	$	14.85	$	1.12
Diluted	$	3.42	$	1.91	$	14.20	$	1.09

Earnings from discontinued operations per common share attributable to Mr. Cooper:
Basic	$	(0.14)	$	0.28	$	0.04	$	0.11
Diluted	$	(0.13)	$	0.27	$	0.03	$	0.11

Earnings per common share attributable to Mr. Cooper:
Basic	$	3.42	$	2.26	$	14.89	$	1.23
Diluted	$	3.29	$	2.18	$	14.23	$	1.20

Weighted average shares of common stock outstanding (in thousands):
Basic	78,944		91,682		84,809		91,688
Dilutive effect of stock awards	2,826		2,563		3,176		1,529
Dilutive effect of participating securities	301		839		658		839
Diluted	82,071		95,084		88,643		94,056