Dilutive Securities Effect On Basic EPS, dilutive Restricted Stock Units, per diluted share

33 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2022 and 2021

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| Three Months Ended September 30, | 2022 |  | 2021 |
| (in millions, except per share data) | Income |  | Shares |  | $ per Share |  | Income |  | Shares |  | $ per Share |
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| BASIC EARNINGS PER SHARE |  |  |  |  |  |  |  |  |  |  |  |
| Income from continuing operations attributable to The AES Corporation common stockholders | $ | 421  |  |  | 668  |  |  | $ | 0.63  |  |  | $ | 343  |  |  | 667  |  |  | $ | 0.52  |  |
| EFFECT OF DILUTIVE SECURITIES |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |
| Stock options | —  |  |  | 1  |  |  | —  |  |  | —  |  |  | 1  |  |  | —  |  |
| Restricted stock units | —  |  |  | 2  |  |  | —  |  |  | —  |  |  | 2  |  |  | (0.01) |  |
| Equity units | —  |  |  | 40  |  |  | (0.04) |  |  | 1  |  |  | 41  |  |  | (0.03) |  |
| DILUTED EARNINGS PER SHARE | $ | 421  |  |  | 711  |  |  | $ | 0.59  |  |  | $ | 344  |  |  | 711  |  |  | $ | 0.48  |  |
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| Nine Months Ended September 30, | 2022 |  | 2021 |
| (in millions, except per share data) | Income |  | Shares |  | $ per Share |  | Income |  | Shares |  | $ per Share |
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| BASIC EARNINGS PER SHARE |  |  |  |  |  |  |  |  |  |  |  |
| Income from continuing operations attributable to The AES Corporation common stockholders | $ | 357  |  |  | 668  |  |  | $ | 0.53  |  |  | $ | 219  |  |  | 666  |  |  | $ | 0.32  |  |
| EFFECT OF DILUTIVE SECURITIES |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |
| Stock options | —  |  |  | 1  |  |  | —  |  |  | —  |  |  | 1  |  |  | —  |  |
| Restricted stock units | —  |  |  | 2  |  |  | —  |  |  | —  |  |  | 3  |  |  | —  |  |
| Equity units | 1  |  |  | 40  |  |  | (0.03) |  |  | 1  |  |  | 31  |  |  | (0.01) |  |
| DILUTED EARNINGS PER SHARE | $ | 358  |  |  | 711  |  |  | $ | 0.50  |  |  | $ | 220  |  |  | 701  |  |  | $ | 0.31  |  |

The calculation of diluted earnings per share excluded 2 million outstanding stock awards for the three and nine months ended September 30, 2022 and 1 million for the three and nine months ended September 30, 2021, which would be anti-dilutive. These stock awards could potentially dilute basic earnings per share in the future. Due to the full retrospective adoption of ASU 2020-06, an additional 1 million potential shares of common stock related to the assumed share settlement of the Contract Adjustment Payments were included in diluted weighted-average shares outstanding for the three and nine months ended September 30, 2021.As described in Note 11—Equity, the Company issued 10,430,500 Equity Units in March 2021 with a total notional value of $1,043 million. Each Equity Unit has a stated amount of $100 and was initially issued as a Corporate Unit, consisting of a 2024 Purchase Contract and a 10% undivided beneficial ownership interest in one share of Series A Preferred Stock. Prior to February 15, 2024, the Series A Preferred Stock may be converted at the option of the holder only in connection with a fundamental change. On and after February 15, 2024, the Series A Preferred Stock may be converted freely at the option of the holder. Upon conversion, the Company will deliver to the holder with respect to each share of Series A Preferred Stock being converted (i) a share of our Series B Preferred Stock, or, solely with respect to conversions in connection with a redemption, cash and (ii) shares of our common stock, if any, in respect of any conversion value in excess of the liquidation preference of the preferred stock being converted. The conversion rate was initially 31.5428 shares of common stock per one share of Series A Preferred Stock, which was equivalent to an initial conversion price of approximately $31.70 per share of common stock. As of September 30, 2022, due to customary anti-dilution provisions, the conversion rate was 31.5756, equivalent to a conversion price of approximately $31.67 per share of common stock. The Series A Preferred Stock and the 2024 Purchase Contracts are being accounted for as one unit of account. In calculating diluted EPS, the Company has applied the if-converted method to determine the impact of the forward purchase feature and considered if there are incremental shares that should be included related to the Series A Preferred conversion value.20. RISKS AND UNCERTAINTIESCOVID-19 Pandemic — The COVID-19 pandemic has severely impacted global economic activity, including electricity and energy consumption, and caused significant volatility and negative pressure in financial markets. The magnitude and duration of the COVID-19 pandemic is unknown at this time and may have material and adverse effects on our results of operations, financial condition, and cash flows in future periods.Goodwill — The Company considers a reporting unit at risk of impairment when its fair value does not exceed its carrying amount by more than 10%. During the annual goodwill impairment test performed as of October 1, 2021, the Company had no reporting units considered to be “at risk,” as the fair value of all reporting units exceeded their carrying amounts by more than 10%. The Company monitors its reporting units for interim impairment indicators, and has determined that no triggering events requiring a reassessment of goodwill impairment exist as of September 30, 2022.However, the Company has seen degradation in certain inputs to the discount rate used in our goodwill impairment analysis, such as increasing interest rates and country risk premiums in certain markets, since the date   

