Average Dilutive Effect Of Equity Forwards

[Table of Contents](#i6266d2788e5849989ad57be380853c2d_7)Entergy Corporation and SubsidiariesNotes to Financial Statements  
Earnings per Share  
The following table presents Entergy’s basic and diluted earnings per share calculation included on the consolidated statements of operations:

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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|   | For the Years Ended December 31, |
|   | 2021 |  | 2020 |  | 2019 |
|   | (In Millions, Except Per Share Data) |
|   |   |  | $/share |  |   |  | $/share |  |   |  | $/share |
| Net income attributable to Entergy Corporation | $1,118.5  |  |  |   |  | $1,388.3  |  |  |   |  | $1,241.2  |  |  |   |
| Basic shares and earnings per average common share | 200.9  |  |  | $5.57  |  |  | 200.1  |  |  | $6.94  |  |  | 195.2  |  |  | $6.36  |  |
| Average dilutive effect of: |   |  |   |  |   |  |   |  |   |  |   |
| Stock options | 0.4  |  |  | (0.01) |  |  | 0.5  |  |  | (0.02) |  |  | 0.6  |  |  | (0.02) |  |
| Other equity plans | 0.6  |  |  | (0.02) |  |  | 0.5  |  |  | (0.02) |  |  | 0.8  |  |  | (0.03) |  |
| Equity forwards | —  |  |  | —  |  |  | —  |  |  | —  |  |  | 0.4  |  |  | (0.01) |  |
| Diluted shares and earnings per average common shares | 201.9  |  |  | $5.54  |  |  | 201.1  |  |  | $6.90  |  |  | 197.0  |  |  | $6.30  |  |

  
The calculation of diluted earnings per share excluded 1,013,320 options outstanding at December 31, 2021, 523,999 options outstanding at December 31, 2020, and 173,290 options outstanding at December 31, 2019 because they were antidilutive. In addition, as discussed further in Note 7 to the financial statements, at December 31, 2021, 1,158,917 shares under then outstanding forward sale agreements were not included in the calculation of diluted earnings per share because their effect would have been antidilutive.  
Stock-based Compensation Plans  
Entergy grants stock options, restricted stock, performance units, and restricted stock unit awards to key employees of the Entergy subsidiaries under its Equity Ownership Plans, which are shareholder-approved stock-based compensation plans.  These plans are described more fully in Note 12 to the financial statements.  The cost of the stock-based compensation is charged to income over the vesting period.  Awards under Entergy’s plans generally vest over three years. Entergy accounts for forfeitures of stock-based compensation when they occur. Entergy recognizes all income tax effects related to share-based payments through the income statement.  
Accounting for the Effects of Regulation  
Entergy’s Utility operating companies and System Energy are rate-regulated enterprises whose rates meet three criteria specified in accounting standards.  The Utility operating companies and System Energy have rates that (i) are approved by a body (its regulator) empowered to set rates that bind customers; (ii) are cost-based; and (iii) can be charged to and collected from customers.  These criteria may also be applied to separable portions of a utility’s business, such as the generation or transmission functions, or to specific classes of customers.  Because the Utility operating companies and System Energy meet these criteria, each of them capitalizes costs that would otherwise be charged to expense if the rate actions of its regulator make it probable that those costs will be recovered in future revenue.  Such capitalized costs are reflected as regulatory assets in the accompanying financial statements.  When an enterprise concludes that recovery of a regulatory asset is no longer probable, the regulatory asset must be removed from the entity’s balance sheet.  
An enterprise that ceases to meet the three criteria for all or part of its operations should report that event in its financial statements.  In general, the enterprise no longer meeting the criteria should eliminate from its balance sheet all regulatory assets and liabilities related to the applicable operations.  Additionally, if it is determined that a 55
