Percentage vesting upon retirement for each full year of employment subsequent to the grant date (as a percent)

[Table of Contents](#i8e6404ebd98d416daa7f88f48159b601_7)EDWARDS LIFESCIENCES CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)  
  
The table below presents the computation of basic and diluted earnings per share (in millions, except for per share information):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | Years Ended December 31, |
|   | 2021 |  | 2020 |  | 2019 |
| Basic: |   |  |   |  |   |
| Net income | $ | 1,503.1  |  |  | $ | 823.4  |  |  | $ | 1,046.9  |  |
| Weighted-average shares outstanding | 623.3  |  |  | 622.6  |  |  | 624.8  |  |
| Basic earnings per share | $ | 2.41  |  |  | $ | 1.32  |  |  | $ | 1.68  |  |
| Diluted: |   |  |   |  |   |
| Net income | $ | 1,503.1  |  |  | $ | 823.4  |  |  | $ | 1,046.9  |  |
| Weighted-average shares outstanding | 623.3  |  |  | 622.6  |  |  | 624.8  |  |
| Dilutive effect of stock plans | 7.9  |  |  | 9.3  |  |  | 11.9  |  |
| Dilutive weighted-average shares outstanding | 631.2  |  |  | 631.9  |  |  | 636.7  |  |
| Diluted earnings per share | $ | 2.38  |  |  | $ | 1.30  |  |  | $ | 1.64  |  |

  
Stock options, restricted stock units, and market-based restricted stock units to purchase approximately 1.8 million, 2.0 million, and 1.5 million shares were outstanding for the years ended December 31, 2021, 2020, and 2019, respectively, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.  
Stock-based Compensation  
The Company measures and recognizes compensation expense for all stock-based awards based on estimated fair values. Stock-based awards consist of stock options, restricted stock units (service-based and market-based), and employee stock purchase subscriptions. Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period (vesting period) on a straight-line basis. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Upon exercise of stock options or vesting of restricted stock units, the Company issues common stock.  
Total stock-based compensation expense was as follows (in millions):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | Years Ended December 31, |
|   | 2021 |  | 2020 |  | 2019 |
| Cost of sales | $ | 20.4  |  |  | $ | 17.2  |  |  | $ | 14.7  |  |
| Selling, general, and administrative expenses | 65.6  |  |  | 56.6  |  |  | 51.2  |  |
| Research and development expenses | 23.3  |  |  | 18.8  |  |  | 15.4  |  |
| Total stock-based compensation expense | 109.3  |  |  | 92.6  |  |  | 81.3  |  |
| Income tax benefit | (18.9) |  |  | (15.4) |  |  | (14.8) |  |
| Total stock-based compensation expense, net of tax | $ | 90.4  |  |  | $ | 77.2  |  |  | $ | 66.5  |  |

  
Upon a participant's retirement, all unvested stock options are immediately forfeited. In addition, upon retirement, a participant will immediately vest in 25% of service-based restricted stock units for each full year of employment with the Company measured from the grant date. All remaining unvested service-based restricted stock units are immediately forfeited. For market-based restricted stock units, upon retirement and in certain other specified cases, a participant will receive a pro-rated portion of the shares that would ultimately be issued based on attainment of the performance goals as determined on the vesting date. The pro-rated portion is based on the participant's whole months of service with the Company during the performance period prior to the date of termination.  
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