Shares and Stockholders' Equity

3 Months Ended

Mar. 31, 2022

Shares and Stockholders' Equity [Abstract]

11. Shares and Stockholders’ Equity

Common Shares

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


	For the Three
	Months Ended
	March 31,
	2022		2021
Common Stock
Balance as of beginning-of-year	177,193,515		192,329,691
Stock compensation/issued for benefit plans	514,855		711,138
Retirement/cancellation of shares	(5,817,396	)	(1,891,637	)
Balance as of end-of-period	171,890,974		191,149,192

Common Stock as of End-of-Period
Basic basis	171,890,974		191,149,192
Diluted basis	173,761,296		192,464,319

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
	Months Ended
	March 31,
	2022		2021
Weighted-average shares, as used in basic calculation	174,153,475		191,780,135
Shares to cover non-vested stock	1,359,873		989,064
Average stock options outstanding during the period	2,296,869		1,063,513
Assumed acquisition of shares with assumed
proceeds and benefits from exercising stock
options (at average market price for the period)	(1,825,626	)	(765,162	)
Shares repurchasable from measured but
unrecognized stock option expense	(71,253	)	(1,225	)
Average deferred compensation shares	521,211		-
Weighted-average shares, as used in diluted calculation	176,434,549		193,066,325

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 earnings per share (“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. We exclude deferred units of LNC stock that are antidilutive from our diluted earnings per share calculation.

AOCI

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



	For the Three
	Months Ended
	March 31,
	2022			2021
Unrealized Gain (Loss) on Fixed Maturity AFS Securities and Certain Other
Investments
Balance as of beginning-of-year	$	6,777		$	9,611
Unrealized holding gains (losses) arising during the period		(10,497	)		(7,420	)
Change in foreign currency exchange rate adjustment		(71	)		(44	)
Change in DAC, VOBA, DSI, future contract benefits and other contract holder funds		3,839			3,287
Income tax benefit (expense)		1,434			888
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		(2	)		2
Associated amortization of DAC, VOBA, DSI and DFEL		(5	)		(4	)
Income tax benefit (expense)		1			-
Balance as of end-of-period	$	1,488		$	6,324
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	(103	)	$	(402	)
Unrealized holding gains (losses) arising during the period		44			89
Change in foreign currency exchange rate adjustment		75			47
Change in DAC, VOBA, DSI and DFEL		15			14
Income tax benefit (expense)		(27	)		(30	)
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		11			3
Associated amortization of DAC, VOBA, DSI and DFEL		(2	)		(1	)
Income tax benefit (expense)		(2	)		-
Balance as of end-of-period	$	(3	)	$	(284	)
Foreign Currency Translation Adjustment
Balance as of beginning-of-year	$	(14	)	$	(12	)
Foreign currency translation adjustment arising during the period		(5	)		2
Balance as of end-of-period	$	(19	)	$	(10	)
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year	$	(219	)	$	(266	)
Adjustment arising during the period		4			(3	)
Income tax benefit (expense)		(1	)		-
Balance as of end-of-period	$	(216	)	$	(269	)

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 Three
	Months Ended
	March 31,
	2022			2021
Unrealized Gain (Loss) on Fixed Maturity AFS
Securities and Certain Other Investments
Gross reclassification	$	(2	)	$	2		Realized gain (loss)
Associated amortization of DAC,
VOBA, DSI and DFEL		(5	)		(4	)	Realized gain (loss)
Reclassification before income
tax benefit (expense)		(7	)		(2	)	Income (loss) before taxes
Income tax benefit (expense)		1			-		Federal income tax expense (benefit)
Reclassification, net of income tax	$	(6	)	$	(2	)	Net income (loss)

Unrealized Gain (Loss) on Derivative Instruments
Gross reclassifications:
Interest rate contracts	$	1		$	1		Net investment income
Interest rate contracts		(6	)		(6	)	Interest and debt expense
Foreign currency contracts		13			10		Net investment income
Foreign currency contracts		3			(2	)	Realized gain (loss)
Total gross reclassifications		11			3
Associated amortization of DAC,							Commissions and other
VOBA, DSI and DFEL		(2	)		(1	)	expenses
Reclassifications before income
tax benefit (expense)		9			2		Income (loss) before taxes
Income tax benefit (expense)		(2	)		-		Federal income tax expense (benefit)
Reclassifications, net of income tax	$	7		$	2		Net income (loss)