Danaher 2009 Annual Report Download - page 97

Table of Contents
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  
Risk-free interest rate 2.08 – 3.68% 2.75 – 3.80% 3.68 – 4.77%
Weighted average volatility 31% 27% 22%
Dividend yield 0.2% 0.2% 0.1 –0.2%
Expected years until exercise 6 – 9.5 6 – 9.5 7.5 – 9.5
The Black-Scholes model incorporates assumptions to value stock-based awards. The risk-free rate of interest for periods within the contractual life of the
option is based on a zero-coupon U.S. government instrument over the expected term of the equity instrument. Expected volatility is based on implied volatility
from traded options on the Company’s stock and historical volatility of the Company’s stock. To estimate the option exercise timing to be used in the valuation
model, in addition to considering the vesting period and contractual term of the option, the Company analyzes and considers actual historical exercise data for
previously granted options. At the time of grant, the Company estimates the number of options that it expects will be forfeited based on the Company’s
historical experience. Separate groups of employees that have similar behavior with regard to holding options for longer periods and different forfeiture rates are
considered separately for valuation and attribution purposes.
The following table summarizes the components of the Company’s share-based compensation program recorded as expense ($ in thousands):
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  

Pre-tax compensation expense $29,138 $25,109 $ 18,708
Tax benefit (10,853) (8,789) (6,548)
Restricted stock unit and restricted share expense, net of tax $18,285 $ 16,320 $12,160

Pre-tax compensation expense $58,212 $60,891 $54,639
Tax benefit (17,996) (16,834) (15,253)
Stock option expense, net of tax $ 40,216 $44,057 $39,386

Pre-tax compensation expense $ 87,350 $86,000 $73,347
Tax benefit (28,849) (25,623) (21,801)
Total share-based compensation expense, net of tax $58,501 $ 60,377 $51,546
Share based compensation has been recognized as a component of selling, general and administrative expenses in the accompanying Consolidated Statements
of Earnings as payroll costs of the employees receiving the rewards. As of December 31, 2009, $76 million of total unrecognized compensation cost related to
RSUs and restricted shares is expected to be recognized over a weighted average period of approximately 3 years. As of December 31, 2009, $150 million of
total unrecognized compensation cost related to stock options is expected to be recognized over a weighted average period of approximately 2 years.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2010 Powered by Morningstar® Document Research℠
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