Salem Media Group, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

BASIC AND DILUTED NET EARNINGS PER SHARE

BASIC AND DILUTED NET EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2017

NOTE 14. BASIC AND DILUTED NET EARNINGS PER SHARE

Basic net earnings per share has been computed using the weighted average number of Class A and Class B shares of common stock outstanding during the period. Restricted stock awards that vested immediately during the three months ending March 31, 2017, are included in the weighted average number of common shares used to compute basic earnings per share because these restricted stock awards contain dividend participation and voting rights. Diluted net earnings per share is computed using the weighted average number of shares of Class A and Class B common stock outstanding during the period plus the dilutive effects of stock options.

Options to purchase 1,590,500 and 2,061,996 shares of Class A common stock were outstanding at March 31, 2017 and 2016, respectively. Diluted weighted average shares outstanding exclude outstanding stock options whose exercise price is in excess of the average price of the company’s stock price. These options are excluded from the respective computations of diluted net income or loss per share because their effect would be anti-dilutive. As of March 31, 2017 and 2016 there were 389,125 and 317,724 dilutive shares, respectively.