Shares and Stockholders' Equity

6 Months Ended

Jun. 30, 2021

Shares and Stockholders' Equity [Abstract]

12. Shares and Stockholders’ Equity

Common Shares

The changes in our common stock (number of shares) were as follows:



	For the Three			For the Six
	Months Ended			Months Ended
	June 30,			June 30,
	2021		2020	2021		2020
Common Stock
Balance as of beginning-of-period	191,149,192		193,208,244	192,329,691		196,668,532
Stock compensation/issued for benefit plans	171,688		38,859	882,826		388,495
Retirement/cancellation of shares	(2,230,932	)	-	(4,122,569	)	(3,809,924	)
Balance as of end-of-period	189,089,948		193,247,103	189,089,948		193,247,103

Common Stock as of End-of-Period
Basic basis	189,089,948		193,247,103	189,089,948		193,247,103
Diluted basis	191,389,750		193,962,833	191,389,750		193,962,833

Our common stock is without par value.

Average Shares

A reconciliation of the denominator (number of shares) in the calculations of basic and diluted earnings (loss) per common share was as follows:



	For the Three				For the Six
	Months Ended				Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Weighted-average shares, as used in basic calculation	189,987,670		193,228,547		190,878,951		194,152,672
Shares to cover non-vested stock	1,278,175		448,982		1,133,618		651,289
Average stock options outstanding during the period	1,902,854		572,544		1,483,184		784,396
Assumed acquisition of shares with assumed
proceeds and benefits from exercising stock
options (at average market price for the period)	(1,462,891	)	(469,928	)	(1,114,026	)	(586,764	)
Shares repurchasable from measured but
unrecognized stock option expense	(38,204	)	(3,693	)	(19,715	)	(1,846	)
Average deferred compensation shares	534,794		-		-		1,236,744
Weighted-average shares, as used in diluted calculation ⁽¹⁾	192,202,398		193,776,452		192,362,012		196,236,491

⁽¹⁾Due to reporting a net loss for the three and six months ended June 30, 2020, basic shares were used in the diluted earnings per share (“EPS”) calculation for these periods, as the use of diluted shares would have resulted in a lower loss per share.

In the event the average market price of LNC common stock exceeds the issue price of stock options and the options have a dilutive effect to our EPS, such options will be shown in the table above.

We have participants in our deferred compensation plans who selected LNC stock as the measure for the investment return attributable to all or a portion of their deferral amounts. This obligation is settled in either cash or LNC stock pursuant to the applicable plan document. For the three months ended June 30, 2021, and the six months ended June 30, 2020, the effect of settling obligations in LNC stock (“equity classification”) was more dilutive than the scenario of settling in cash (“liability classification”). Therefore, for our EPS calculation for these periods, we added these shares to the denominator and adjusted the numerator to present net income as if the shares had been accounted for under equity classification by removing the mark-to-market adjustment included in net income attributable to these deferred units of LNC stock. The amount of this adjustment was less than $1 million for the three months ended June 30, 2021, and $10 million for the six months ended June 30, 2020.

AOCI

The following summarizes the components and changes in AOCI (in millions):



	For the Six
	Months Ended
	June 30,
	2021			2020
Unrealized Gain (Loss) on Fixed Maturity AFS Securities
Balance as of beginning-of-year	$	9,611		$	5,983
Cumulative effect from adoption of new accounting standard		-			45
Unrealized holding gains (losses) arising during the period		(3,329	)		3,775
Change in foreign currency exchange rate adjustment		(39	)		(93	)
Change in DAC, VOBA, DSI, future contract benefits and other contract holder funds		1,345			(1,351	)
Income tax benefit (expense)		429			(495	)
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		(2	)		(44	)
Associated amortization of DAC, VOBA, DSI and DFEL		(9	)		62
Income tax benefit (expense)		2			(4	)
Balance as of end-of-period	$	8,026		$	7,850
Unrealized Other-Than-Temporary-Impairment on Fixed Maturity AFS Securities
Balance as of beginning-of-year	$	-		$	45
Cumulative effect from adoption of new accounting standard		-			(45	)
Balance as of end-of-period	$	-		$	-
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	(402	)	$	(11	)
Unrealized holding gains (losses) arising during the period		140			(192	)
Change in foreign currency exchange rate adjustment		45			97
Change in DAC, VOBA, DSI and DFEL		(11	)		(116	)
Income tax benefit (expense)		(36	)		43
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		8			23
Associated amortization of DAC, VOBA, DSI and DFEL		(1	)		(19	)
Income tax benefit (expense)		(1	)		(1	)
Balance as of end-of-period	$	(270	)	$	(182	)
Foreign Currency Translation Adjustment
Balance as of beginning-of-year	$	(12	)	$	(17	)
Foreign currency translation adjustment arising during the period		2			(11	)
Balance as of end-of-period	$	(10	)	$	(28	)
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year	$	(266	)	$	(327	)
Adjustment arising during the period		(1	)		10
Balance as of end-of-period	$	(267	)	$	(317	)

The following summarizes the reclassifications out of AOCI (in millions) and the associated line item in the Consolidated Statements of Comprehensive Income (Loss):


	For the Six
	Months Ended
	June 30,
	2021			2020
Unrealized Gain (Loss) on Fixed Maturity AFS Securities
Gross reclassification	$	(2	)	$	(44	)	Realized gain (loss)
Associated amortization of DAC,
VOBA, DSI and DFEL		(9	)		62		Realized gain (loss)
Reclassification before income
tax benefit (expense)		(11	)		18		Income (loss) before taxes
Income tax benefit (expense)		2			(4	)	Federal income tax expense (benefit)
Reclassification, net of income tax	$	(9	)	$	14		Net income (loss)

Unrealized Gain (Loss) on Derivative Instruments
Gross reclassifications:
Interest rate contracts	$	1		$	1		Net investment income
Interest rate contracts		(12	)		(8	)	Interest and debt expense
Foreign currency contracts		21			22		Net investment income
Foreign currency contracts		(2	)		8		Realized gain (loss)
Total gross reclassifications		8			23
Associated amortization of DAC,
VOBA, DSI and DFEL		(1	)		(19	)	Commissions and other expenses
Reclassifications before income
tax benefit (expense)		7			4		Income (loss) before taxes
Income tax benefit (expense)		(1	)		(1	)	Federal income tax expense (benefit)
Reclassifications, net of income tax	$	6		$	3		Net income (loss)