Business Assignment 8 Earnings per Share (Grubhub) 1. Grubhub adds in 1,601,000 shares of stock representing stock options. A. Is this the actual number of shares that could be exercised? B. How is the 1,601,000 number determined? GRUBHUB INC. Notes to Consolidated Financial Statements (Continued) 14. Earnings per Share Attributable to Common Stockholders Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding during the period without consideration for common stock equivalents. Diluted net income per share attributable to common stockholders is computed by dividing net income by the weighted average number of common shares outstanding during the period and potentially dilutive common stock equivalents, including stock options, restricted stock units and restricted stock awards, except in cases where the effect of the common stock equivalent would be antidilutive. Potential common stock equivalents consist of common stock issuable upon exercise of stock options and vesting of restricted stock units and restricted stock awards using the treasury stock method. The sale of 2,820,464 shares of the Company's common stock to the Investor on April 25, 2018 resulted in an immediate increase in the outstanding shares used to calculate the weighted average common shares outstanding for the year ended December 31, 2018 (see Note 12, Stockholders' Equity). The following table presents the calculation of basic and diluted net income per share attributable to common stockholders for the years ended December 31, 2018, 2017 and 2016: Year Ended December 31, 2018 2017 2016 (in thousands, except per share data) Basic earnings per share: Net income attributable to common stockholders (numerator) $78,481 $98,983 $49,557 Shares used in computation (denominator) Weighted-average common shares outstanding 89,447 86,297 85,069 Basic earnings per share 0.88 $ 1.15 $ 0.58 $ Diluted earnings per share: Net income attributable to common stockholders (numerator) $78,481 $98,983 $49,557 Shares used in computation (denominator) Weighted-average common shares outstanding 89,447 86,297 85,069 Effect of dilutive securities: Stock options 1.601 1,059 792 Restricted stock units and restricted stock awards 1,306 826 274 Weighted-average diluted shares 92,354 88,182 86,135) Diluted earnings per share $ 0.85 $ 1.12 $ 0.58 (a)Prior to the adoption of ASU 2016-09, the treasury stock method calculation of weighted average dilutive shares outstanding for the year ended December 31, 2016 included the estimated impact of tax benefits and deficiencies. During the year ended December 31, 2016, the Company repurchased and retired 724,473 shares of its common stock at a weighted-average share price of $20.37, or an aggregate of $14.8 million. The repurchases resulted in a reduction of the outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted net earnings per share from the dates of the repurchases. See Note 12, Stockholders' Equity, for additional details