Earnings Per Share

12 Months Ended

Dec. 31, 2022

The following is a reconciliation of the shares used in calculating basic and diluted EPS:


	Year Ended December 31,
	2022		2021		2020
Net income (in millions)	$	355	$	427	$	254
Shares (in thousands):
Weighted average common shares outstanding	180,189		180,225		180,094
Add: Participating securities (a)	28		22		22
Weighted average common shares outstanding — Basic	180,217		180,247		180,116
Plus incremental shares from assumed conversions: (b)
Dilutive effect of stock options	549		871		671
Dilutive effect of restricted stock units and performance share units	213		408		312
Weighted average common shares outstanding — Diluted	180,979		181,526		181,099
Basic earnings per share	$	1.97	$	2.37	$	1.41
Diluted earnings per share	$	1.96	$	2.35	$	1.40

(a)Restricted stock units containing rights to non-forfeitable dividends that participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing EPS.

(b)Incremental shares from stock options, restricted stock units and performance share units are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock units and performance share units, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards. Performance share units are included in the treasury stock calculation of diluted earnings per share based upon achievement of underlying performance and market conditions at the end of the reporting period, as applicable. See Note 16, "Share-Based Compensation Plans" for further detail on the performance share units.


	Year Ended December 31,
(in thousands)	2022	2021	2020
Stock options	1,453	1,132	1,545
Restricted stock units	353	271	362
Performance share units	284	330	305