NOTE 3—EARNINGS PER COMMON SHARE

Basic earnings per share was determined by dividing net income allocable to common stockholders for each year by the weighted average number of shares of common stock outstanding during the applicable year. Net income is also allocated to the unvested restricted stock outstanding during each year, as the restricted stock is entitled to receive dividends and is therefore considered a participating security. As of December 31, 2018, the shares of common stock underlying the restricted stock units awarded under the 2016 Incentive Plan are excluded from the basic earnings per share calculation, as these units are not participating securities. The restricted stock units issued pursuant to the 2009 and 2016 Incentive Plans are referred to as “RSUs”.

Diluted earnings per share reflects the potential dilution that could occur if securities or other rights exercisable for, or convertible into, common stock were exercised or converted or otherwise resulted in the issuance of common stock that shared in the earnings of the Company.

The following table identifies the number of shares of common stock underlying the RSUs awarded under the 2016 Incentive Plan that are included in the calculation of diluted weighted average number of shares of common stock:

Year Ended

December 31, 2018

December 31, 2017

Return on

Capital

Stockholder

Capital

Stockholder

Date of Award and Total Number of Underlying Shares

metric

Return metric

Total

metric

Return metric

Total

September 26, 2017

76,250 shares(a)

34,633

4,462

39,095

33,353

38,125

71,478

July 1, 2018

76,250 shares(b)

33,388

—

33,388

n/a

68,021

4,462

72,483

33,353

38,125

71,478

(a)

Includes shares that would be issued pursuant to the respective metrics, assuming the end of the period was the June 30, 2020 vesting date. None of the remaining 37,155 shares and 4,772 shares are included at December 31, 2018 and 2017, respectively, as the applicable metrics had not been met for these shares.

(b)

Includes shares that would be issued pursuant to the respective metrics, assuming the end of the period was the June 30, 2021 vesting date. None of the remaining 42,862 shares are included at December 31, 2018, as the applicable metrics had not been met for these shares.

In 2010, RSUs exchangeable for up to 200,000 shares of common stock were awarded pursuant to the 2009 Incentive Plan. In June 2017, 113,584 of these shares vested and such shares were

See Note 12 for information regarding the Company’s equity incentive plans.

There were no options outstanding to purchase shares of common stock or other rights exercisable for, or convertible into, common stock in 2018, 2017 and 2016.

The following table provides a reconciliation of the numerator and denominator of earnings per share calculations (amounts in thousands, except per share amounts):


	Year Ended December 31,
	2018		2017		2016
Numerator for basic and diluted earnings per share:
Net income	$	21,564	$	24,249	$	24,481
Less net income attributable to non-controlling interests		(899)		(102)		(59)
Less earnings allocated to unvested restricted stock (a)		(1,173)		(1,072)		(999)
Net income available for common stockholders: basic and diluted	$	19,492	$	23,075	$	23,423
Denominator for basic earnings per share:
Weighted average number of common shares		18,575		17,944		16,768
Effect of diluted securities:
RSUs		13		103		114
Denominator for diluted earnings per share:
Weighted average number of shares		18,588		18,047		16,882

Earnings per common share, basic	$	1.05	$	1.29	$	1.40
Earnings per common share, diluted	$	1.05	$	1.28	$	1.39

(a)

Represents an allocation of distributed earnings to unvested restricted stock that, as participating securities, are entitled to receive dividends.