COMMON STOCK

12 Months Ended

Dec. 31, 2019

Treasury Stock

In November 2017, the Board of Directors approved a stock repurchase program authorizing the Company to purchase up to $1.0 billion of the Company's common stock. In May 2019, the Board of Directors approved a new stock repurchase program authorizing the Company to purchase up to an additional $1.0 billion of the Company's common stock. The repurchase programs do not have an expiration date. Stock repurchased under the programs may be used to offset obligations under the Company's employee stock-based benefit programs and stock-based business acquisitions, and will reduce the total shares outstanding.

During 2019, 2018, and 2017, the Company repurchased 1.5 million, 5.5 million, and 7.7 million shares, respectively, at an aggregate cost of $263.3 million, $795.5 million, and $763.3 million, respectively, including shares purchased under the accelerated share repurchase ("ASR") agreements described below and shares acquired to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued to employees. The timing and size of any future stock repurchases are subject to a variety of factors, including expected dilution from stock plans, cash capacity, and the market price of the Company's common stock.

Accelerated Share Repurchase

During 2019, 2018, and 2017, the Company entered into ASR agreements providing for the repurchase of the Company's common stock based on the volume-weighted average price ("VWAP") of the Company's common stock during the term of the

agreements, less a discount. The following table summarizes the terms of the ASR agreements (dollars and shares in millions, except per share data):



			Initial Delivery					Final Settlement
Agreement Date	Amount Paid		Shares Received	Price per Share (a)		Value of Shares as % of Contract Value		Settlement Date	Total Shares Received	Average Price per Share (a)
November 2017	$	150.0	1.1	$	109.86	80	%	December 2017	1.3	$	114.85
April 2018	$	400.0	2.5	$	127.36	80	%	July 2018	2.8	$	142.37
October 2018	$	250.0	1.4	$	139.22	80	%	November 2018	1.7	$	150.54
May 2019	$	150.0	0.7	$	178.66	80	%	May 2019	0.8	$	178.42
May 2019	$	100.0	0.5	$	170.02	80	%	June 2019	0.6	$	178.46

The ASR agreements were accounted for as two separate transactions: (1) the value of the initial delivery of shares was recorded as shares of common stock acquired in a treasury stock transaction on the acquisition date and (2) the remaining amount of the purchase price paid was recorded as a forward contract indexed to the Company's own common stock and was recorded in "Additional Paid-in Capital" on the consolidated balance sheets. The initial delivery of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share. The Company determined that the forward contract indexed to the Company's common stock met all the applicable criteria for equity classification and, therefore, was not accounted for as a derivative instrument.

Employee and Director Stock Plans

The Edwards Lifesciences Corporation Long-term Stock Incentive Compensation Program (the "Program") provides for the grant of incentive and non-qualified stock options, restricted stock, and restricted stock units for eligible employees and contractors of the Company. Under the Program, these grants are awarded at a price equal to the fair market value at the date of grant based upon the closing price on that date. Options to purchase shares of the Company's common stock granted under the Program generally vest over predetermined periods of between three to four years and expire seven years after the date of grant. Service-based restricted stock units of the Company's common stock granted under the Program generally vest over predetermined periods ranging from three to four years after the date of grant. Market-based restricted stock units of the Company's common stock granted under the Program vest over three years based on a combination of certain service and market conditions. The actual number of shares issued will be determined based on the Company's total stockholder return relative to a selected industry peer group. Performance-based restricted stock units vest based on a combination of certain service conditions and upon achievement of specified milestones. Under the Program, the number of shares of common stock available for issuance under the Program was 109.2 million shares. No more than 11.2 million shares reserved for issuance may be granted in the form of restricted stock or restricted stock units.

The Company also maintains the Nonemployee Directors Stock Incentive Compensation Program (the "Nonemployee Directors Program"). Under the Nonemployee Directors Program, annually each nonemployee director may receive up to 40,000 stock options or 16,000 restricted stock units of the Company's common stock, or a combination thereof, provided that in no event may the total value of the combined annual award exceed $0.2 million. These grants generally vest over one year from the date of grant. Under the Nonemployee Directors Program, an aggregate of 2.8 million shares of the Company's common stock has been authorized for issuance.

The Company has an employee stock purchase plan for United States employees and a plan for international employees (collectively "ESPP"). Under the ESPP, eligible employees may purchase shares of the Company's common stock at 85% of the lower of the fair market value of Edwards Lifesciences common stock on the effective date of subscription or the date of purchase. Under the ESPP, employees can authorize the Company to withhold up to 12% of their compensation for common stock purchases, subject to certain limitations. The ESPP is available to all active employees of the Company paid from the United States payroll and to eligible employees of the Company outside the United States, to the extent permitted 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 15.3 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 U.S. 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



	2019			2018			2017
Average risk-free interest rate	2.3		%	2.9		%	1.8		%
Expected dividend yield	None			None			None
Expected volatility	30		%	29		%	33		%
Expected life (years)	5.1			5.0			4.6
Fair value, per share	$	54.51		$	42.51		$	33.74

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

ESPP



	2019			2018			2017
Average risk-free interest rate	2.4		%	1.7		%	0.8		%
Expected dividend yield	None			None			None
Expected volatility	32		%	33		%	33		%
Expected life (years)	0.6			0.6			0.6
Fair value, per share	$	49.29		$	36.53		$	25.69

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, 2019, 2018, and 2017 included a risk-free interest rate of 2.2%, 2.7%, and 1.7%, respectively, and an expected volatility rate of 29.4%, 29.7%, and 30.2%, respectively.

Stock option activity during the year ended December 31, 2019 under the Program and the Nonemployee Directors Program was as follows (in millions, except years and per-share amounts):



	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding as of December 31, 2018	7.2		$	73.42
Options granted	0.7		179.53
Options exercised	(2.2	)	49.59
Outstanding as of December 31, 2019	5.7		96.57		3.4 years	$	780.9
Exercisable as of December 31, 2019	3.8		72.07		2.5 years	611.4
Vested and expected to vest as of December 31, 2019	5.4		94.13		3.3 years	756.7

The following table summarizes nonvested restricted stock unit activity during the year ended December 31, 2019 under the Program and the Nonemployee Directors Program (in millions, except per-share amounts):



	Shares		Weighted- Average Grant-Date Fair Value
Nonvested as of December 31, 2018	1.0		$	113.86
Granted (a)	0.3		182.70
Vested	(0.3	)	90.78
Forfeited (b)	(0.1	)	118.74
Nonvested as of December 31, 2019	0.9		140.68

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(a)	The shares granted includes 33,225 shares of market-based restricted stock units granted during 2019, which represents the targeted number of shares to be issued.


(b)	The shares forfeited includes 10,660 shares related to the cancellation of market-based restricted stock units since the payout percentage achieved at the end of the performance period was less than target. As described above, the actual number of shares ultimately issued is determined based on the Company's total stockholder return relative to a selected industry peer group.

The intrinsic value of stock options exercised and restricted stock units vested during the years ended December 31, 2019, 2018, and 2017 were $382.1 million, $281.1 million, and $205.2 million, respectively. The intrinsic value of stock options is calculated as the amount by which the market price of the Company's common stock exceeds the exercise price of the option. During the years ended December 31, 2019, 2018, and 2017, the Company received cash from exercises of stock options of $110.4 million, $103.7 million, and $77.6 million, respectively, and tax benefits from exercises of stock options and vesting of restricted stock units of $85.1 million, $62.5 million, and $66.9 million, respectively. The total grant-date fair value of stock options vested during the years ended December 31, 2019, 2018, and 2017 were $31.2 million, $29.0 million, and $26.3 million, respectively.

As of December 31, 2019, the total remaining unrecognized compensation expense related to nonvested stock options, restricted stock units, and employee stock purchase subscriptions amounted to $126.3 million, which will be amortized over the weighted-average remaining requisite service period of 30 months.