Company: DHR
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000313616-25-000043
Chunk: 259

Company: DANAHER CORP /DE/
Filing Date: 2025-02-20
Form: 10-K
Item: Item 5
Chunk 259
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 the Black-Scholes model to value options granted during the years ended December 31: 202420232022Risk-free interest rate4.1 – 4.5%3.5 – 4.5%1.8 – 4.0%Weighted average volatility28.9 %27.8 %30.3 %Dividend yield0.4 %0.5 %0.4 %Expected years until exercise5.0 – 7.05.0 – 7.05.0 – 7.5The 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 whose maturity period equals or approximates the option’s expected term.  Expected volatility is based on implied volatility from traded options on the Company’s stock and historical volatility of the Company’s stock.  The dividend yield is calculated by dividing the Company’s annual common stock dividend, based on the most recent quarterly dividend rate, by the closing stock price on the grant date.  To estimate the option exercise timing used in the valuation model (which impacts the risk-free interest rate and the expected years until exercise), in addition to considering the vesting period and contractual term of the option, the Company analyzes and considers actual historical exercise experience for previously granted options.  The Company stratifies its employee population into multiple groups for option valuation and attribution purposes based upon distinctive patterns of forfeiture rates and option holding periods, as indicated by the ranges set forth in the table above for the risk-free interest rate and the expected years until exercise.The amount of stock-based compensation expense recognized during a period is also based on the portion of the awards that are ultimately expected to vest.  The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revises those estimates in subsequent periods if actual forfeitures differ from those estimates.  Ultimately, the total expense recognized over the vesting period will equal the fair value of awards that actually vest.

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The following summarizes the components of the Company’s continuing operations stock-based compensation expense for the years ended December 31 ($ in millions): 202420232022RSUs/PSUs:Pretax compensation expense$159 $173 $172 Income tax benefit(33)(38)(36)RSU/PSU expense, net of income taxes126 135 136 Stock options:Pretax compensation expense