Basic and Diluted Earnings per Share

6 Months Ended

Jun. 30, 2015

Note 15 – Basic and Diluted Earnings per Share

Basic earnings per share 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 earnings per share by dividing net income attributable to Ocwen, as adjusted to add back any preferred stock dividends, by the weighted average number of common shares outstanding including the potential dilutive common shares related to outstanding stock options, restricted stock awards and preferred stock. The following is a reconciliation of the calculation of basic earnings per share to diluted earnings per share for the three and six months ended June 30:



	Three Months				Six Months
	2015		2014		2015		2014
Basic earnings per share:
Net income attributable to Ocwen common stockholders	$	9,738	$	65,958	$	44,093	$	125,462

Weighted average shares of common stock	125,311,133		134,221,668		125,291,788		134,724,905

Basic earnings per share	$	0.08	$	0.49	$	0.35	$	0.93

Diluted earnings per share:
Net income attributable to Ocwen common stockholders	$	9,738	$	65,958	$	44,093	$	125,462
Preferred stock dividends (1)	—		—		—		—
Adjusted net income attributable to Ocwen	$	9,738	$	65,958	$	44,093	$	125,462

Weighted average shares of common stock	125,311,133		134,221,668		125,291,788		134,724,905
Effect of dilutive elements:
Preferred stock (1)	—		—		—		—
Stock options	1,830,496		3,479,499		1,777,888		3,693,916
Common stock awards	10,850		4,626		6,502		4,191
Dilutive weighted average shares of common stock	127,152,479		137,705,793		127,076,178		138,423,012

Diluted earnings per share	$	0.08	$	0.48	$	0.35	$	0.91

Stock options and common stock awards excluded from the computation of diluted earnings per share:
Anti-dilutive (2)	1,846,374		50,000		1,928,638		25,000
Market-based (3)	924,438		272,500		924,438		272,500

(1)

Prior to the conversion of our remaining preferred stock into common stock in July 2014, we computed the effect on diluted earnings per share using the if-converted method. For purposes of computing diluted earnings per share, we assume the conversion of the preferred stock into shares of common stock unless the effect is anti-dilutive. Conversion of the preferred stock was not assumed for the three and six months ended June 30, 2014 because the effect would have been antidilutive.


(2)	These options were anti-dilutive because their exercise price was greater than the average market price of our stock.


(3)	Shares that are issuable upon the achievement of certain performance criteria related to Ocwen’s stock price and an annualized rate of return to investors.