NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 96 CAPSTONE INFRASTRUCTURE CORPORATION Dividend equivalents are granted as of each record date for dividends on shares in accordance with Capstone's dividend policy on common shares. RSUs and PSUs do not have an exercise price and can be settled in shares or cash at the Board's discretion. Additionally, the valuation also takes into  consideration that the amount of the PSUs is subject to Capstone's total return over the period relative to a peer group. During 2013, Capstone granted to the senior management of the Corporation 243,886 Restricted Stock Units (“RSUs”) and 133,917 Performance Share Units (“PSUs”). The five-day VWAP per RSU and PSU granted January 2, 2013 was 4.00 dollars and 4.25 dollars per RSU granted March 20, 2013 and all RSUs and PSUs granted vest on December 31, 2015. In 2012, 253,959 RSUs and 141,431 PSUs were granted and they vest on December 31, 2014. The average VWAP per DSU granted during 2013 was 3.98 dollars (2012 – 4.10 dollars). As at December 31, 2013, the carrying value of the DSUs, based on a market price of 3.56 dollars, was $180 and is included in accounts payable and other liabilities in the consolidated statement of financial  position (December 31, 2012 – 4.03 dollars and $122). The DSU expense for 2013 was $88 and is recorded as compensation expense in the consolidated statement of income (2012 – $90). (B) Long-term Incentive Plan NOTE 24. SHARE-BASED COMPENSATION (A) Deferred Share Units (“VWAP”) prior to the grant date. Grants vest immediately upon the last trading day of each quarter. In addition, directors may elect to receive their quarterly director fees in the form of DSUs, which vest at the time of granting. Dividend equivalents are granted as of each payment date for  dividends on shares in accordance with Capstone's dividend policy on common shares. DSUs do not have an exercise price and can only be settled in  cash at the time a director ceases to be a board member. (1) 2016 convertible debentures were anti-dilutive for the year endedDecember 31, 2012. (2) 2017 convertible debentures were assumed on October 1, 2013, and the impact on net income (loss) is included since the acquisition date. (3) Share options and warrants issued on the acquisition of ReD were anti-dilutive for the year-ended December 31, 2013. For the year ended Dec 31, 2013 Dec 31, 2012 ($000s, except unit amounts) Number of Units Fair Value Number of Units Fair Value Outstanding at January 1 30,198 122 8,407 32 Fixed quarterly grants during the period 25,106 99 20,102 75 Redemptions in the period (6,905) (30) — — Dividend equivalents 2,268 9 1,689 7 50,667 200 30,198 114 Unrealized gain (loss) on revaluation — (20) — 8 Outstanding at December 31 50,667 180 30,198 122 The Deferred Share Units ("DSUs") are granted to eligible directors on the first day of each quarter at the five-day volume weighted average price  For the year ended Dec 31, 2013 Dec 31, 2012 Basic net income 37,439 23,668 Effect of dilutive securities: 2016 convertible debentures  (1) 2,056 — 2017 convertible debentures  (2) 431 — Diluted Net income 39,926 23,668 Basic weighted-average number of shares outstanding 81,033 75,116 Effect of dilutive securities: 2016 convertible debentures  (1) s 6,107 — 2017 convertible debentures  (2) 6,900 — Diluted weighted average number of common shares (including Class B exchangeable units) outstanding  (3) g 94,040 75,116 Diluted EPS 0.425 0.315