Estimated annual forfeiture rate (as a percent)

[Table of Contents](#i8e6404ebd98d416daa7f88f48159b601_7)EDWARDS LIFESCIENCES CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)14.    COMMON STOCK (Continued)by local law. The ESPP for United States employees is qualified under Section 423 of the Internal Revenue Code. The number of shares of common stock authorized for issuance under the ESPP was 50.4 million shares.  
The fair value of each option award and employee stock purchase subscription is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following tables. The risk-free interest rate is estimated using the United States Treasury yield curve and is based on the expected term of the award. Expected volatility is estimated based on a blend of the weighted-average of the historical volatility of Edwards Lifesciences' stock and the implied volatility from traded options on Edwards Lifesciences' stock. The expected term of awards granted is estimated from the vesting period of the award, as well as historical exercise behavior, and represents the period of time that awards granted are expected to be outstanding. The Company uses historical data to estimate forfeitures and has estimated an annual forfeiture rate of 6.4%.  
The Black-Scholes option pricing model was used with the following weighted-average assumptions for options granted during the following periods:  
Option Awards

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2021 |  | 2020 |  | 2019 |
| Average risk-free interest rate | 0.8  | % |  | 0.3  | % |  | 2.3  | % |
| Expected dividend yield | None |  | None |  | None |
| Expected volatility | 34  | % |  | 33  | % |  | 30  | % |
| Expected life (years) | 5.0 |  | 5.0 |  | 5.1 |
| Fair value, per share | $ | 28.90  |  |  | $ | 21.70  |  |  | $ | 18.17  |  |

  
The Black-Scholes option pricing model was used with the following weighted-average assumptions for ESPP subscriptions granted during the following periods:  
ESPP

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2021 |  | 2020 |  | 2019 |
| Average risk-free interest rate | 0.1  | % |  | 1.3  | % |  | 2.4  | % |
| Expected dividend yield | None |  | None |  | None |
| Expected volatility | 37  | % |  | 33  | % |  | 27  | % |
| Expected life (years) | 0.6 |  | 0.6 |  | 0.6 |
| Fair value, per share | $ | 23.07  |  |  | $ | 16.61  |  |  | $ | 16.43  |  |

  
The fair value of market-based restricted stock units was determined using a Monte Carlo simulation model, which uses multiple input variables to determine the probability of satisfying the market condition requirements. The weighted-average assumptions used to determine the fair value of the market-based restricted stock units during the years ended December 31, 2021, 2020, and 2019 included a risk-free interest rate of 0.4%, 0.2%, and 2.2%, respectively, and an expected volatility rate of 34.4%, 32.7%, and 29.4%, respectively.  
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