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NOTE 20 BASIC AND DILUTED EARNINGS PER SHARE (EPS)
 6 Months Ended
Jun. 30, 2013
Earnings Per Share, Basic and Diluted [Abstract]  
BASIC AND DILUTED EARNINGS PER SHARE (EPS)
Note 20 Basic and Diluted Earnings Per Share (EPS)

Basic EPS excludes common stock equivalents and is calculated by dividing net income attributable to Ocwen common stockholders by the weighted average number of common shares outstanding during the year. We calculate diluted EPS by dividing net income attributable to Ocwen, as adjusted to add back preferred stock dividends and interest expense net of income tax on the Convertible Notes, by the weighted average number of common shares outstanding including the potential dilutive common shares related to outstanding stock options, restricted stock awards, the Preferred Shares and the Convertible Notes. The following is a reconciliation of the calculation of basic EPS to diluted EPS for the periods ended June 30:

    Three Months     Six Months  
    2013     2012     2013     2012  
Basic EPS:                                
Net income attributable to Ocwen common stockholders   $ 74,116     $ 44,833     $ 116,692     $ 64,182  
                                 
Weighted average shares of common stock     135,690,264       134,856,101       135,664,242       132,752,848  
                                 
Basic EPS   $ 0.55     $ 0.33     $ 0.86     $ 0.48  
                                 
Diluted EPS:                                
Net income attributable to Ocwen common stockholders   $ 74,116     $ 44,833     $ 116,692     $ 64,182  
Preferred stock dividends (1)     2,605       —       —       —  
Interest expense on Convertible Notes, net of income tax (2)     —       —       —       98  
Adjusted net income attributable to Ocwen   $ 76,721     $ 44,833     $ 116,692     $ 64,280  
                                 
Weighted average shares of common stock     135,690,264       134,856,101       135,664,242       132,752,848  
Effect of dilutive elements:                                
   Preferred Shares (1)     5,095,942       —       —       —  
   Convertible Notes (2)     —       —       —       2,028,868  
   Stock options     3,924,536       3,297,798       3,913,463       3,317,685  
   Common stock awards     10,305       1,474       14,253       1,421  
Dilutive weighted average shares of common stock     144,721,047       138,155,373       139,591,958       138,100,822  
                                 
Diluted EPS   $ 0.53     $ 0.32     $ 0.84     $ 0.47  
                                 
Stock options excluded from the computation of diluted EPS:                                
Anti-dilutive (3)     —       166,250       —       158,750  
Market-based (4)     1,530,000       558,750       1,530,000       558,750  
(1) The effect of our Preferred Shares on diluted EPS is computed using the if-converted method. In the three months ended June 30, 2013, the effect of the Preferred Shares was dilutive, and we added back preferred stock dividends, including the deemed dividend related to the BCF of the Preferred Shares, to net income. We assumed no conversion to common shares for the six months ended June 30, 2013 because the effect was anti-dilutive.
(2) Prior to the redemption of the 3.25% Convertible Notes in March 2012, we also computed their effect on diluted EPS using the if-converted method. Interest expense and related amortization costs applicable to the Convertible Notes, net of income tax, were added back to net income. We assumed the conversion of the Convertible Notes into shares of common stock for purposes of computing diluted EPS unless the effect was anti-dilutive. We issued 4,635,159 shares of common stock upon conversion of $56.4 million of the Convertible Notes.
(3) These stock options were anti-dilutive because their exercise price was greater than the average market price of our stock.
(4) Shares that are issuable upon the achievement of certain performance criteria related to OCN’s stock price and an annualized rate of return to investors.