Stock Issued under SARs exercised (in shares)

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Notes to Consolidated Financial Statements — (Continued)Becton, Dickinson and Company  
  
The fair value of share-based payments is recognized as compensation expense in net income. BD estimates forfeitures based on experience at the time of grant and adjusts expense to reflect actual forfeitures. The amounts and location of compensation cost relating to share-based payments included in the consolidated statements of income is as follows:

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Millions of dollars) | 2021 |  | 2020 |  | 2019 |
| Cost of products sold | $ | 43  |  |  | $ | 40  |  |  | $ | 37  |  |
| Selling and administrative expense | 158  |  |  | 150  |  |  | 145  |  |
| Research and development expense | 36  |  |  | 34  |  |  | 32  |  |
| Acquisitions and other restructurings | 1  |  |  | 20  |  |  | 50  |  |
|  | $ | 238  |  |  | $ | 245  |  |  | $ | 265  |  |
|  |  |  |  |  |  |
| Tax benefit associated with share-based compensation costs recognized | $ | 55  |  |  | $ | 57  |  |  | $ | 62  |  |

Upon the Company's acquisition of Bard in 2018, certain pre-acquisition equity awards of Bard were converted into either BD SARs or BD restricted stock awards, as applicable. These awards have substantially the same terms and conditions as the converted Bard awards immediately prior to the acquisition date. Compensation expense of $16 million and $40 million associated with these replacement awards was recorded in Acquisitions and other restructurings in 2020 and 2019, respectively.Stock Appreciation RightsSARs represent the right to receive, upon exercise, shares of common stock having a value equal to the difference between the market price of common stock on the date of exercise and the exercise price on the date of grant. SARs generally vest over a period of four years and have a term of ten years. The fair value of awards was estimated on the date of grant using a lattice-based binomial option valuation model and these valuations were largely based upon the following weighted-average assumptions:

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|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2021 |  | 2020 |  | 2019 |
| Risk-free interest rate | 0.68% |  | 1.69% |  | 3.05% |
| Expected volatility | 23.0% |  | 19.0% |  | 18.0% |
| Expected dividend yield | 1.46% |  | 1.24% |  | 1.27% |
| Expected life | 7.4 years |  | 7.4 years |  | 7.2 years |
| Fair value derived | $44.38 |  | $48.82 |  | $51.86 |

     Expected volatility is based upon historical volatility for the Company’s common stock and other factors. The expected life of SARs granted is derived from the output of the lattice-based model, using assumed exercise rates based on historical exercise and termination patterns, and represents the period of time that SARs granted are expected to be outstanding. The risk-free interest rate used is based upon the published U.S. Treasury yield curve in effect at the time of grant for instruments with a similar life. The dividend yield is based upon the most recently declared quarterly dividend as of the grant date. The Company issued 0.4 million shares during 2021 to satisfy the SARs exercised.78
