The Company grants share-based awards under the 2004 Employee and Director Equity-Based Compensation Plan ("2004 Plan"), which provides long-term incentive compensation to employees and directors consisting of: stock appreciation rights ("SARs"), performance-based restricted stock units, time-vested restricted stock units and other stock awards.

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:


(Millions of dollars)	2024		2023		2022
Cost of products sold	$	51	$	50	$	46
Selling and administrative expense	156		170		156
Research and development expense	42		41		37
Integration, restructuring and transaction expense	—		—		1
Total share-based compensation cost	$	249	$	261	$	240

Tax benefit associated with share-based compensation costs recognized	$	58	$	58	$	55

Total share-based compensation expense includes pre-tax compensation expense included in Income from Discontinued Operations, Net of Tax that was not material in 2022.

SARs 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:


	2024	2023	2022
Risk-free interest rate	4.51%	3.78%	1.41%
Expected volatility	22.0%	21.0%	22.0%
Expected dividend yield	1.59%	1.53%	1.42%
Expected life	7.0 years	7.0 years	7.3 years
Fair value derived	$63.05	$57.80	$49.45

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 0.1 million shares during 2024 to satisfy the SARs exercised.


	SARs (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (Millions of dollars)
Balance at October 1	4,905	$	211.47
Granted	597	238.89
Exercised	(297)	154.25
Forfeited, canceled or expired	(210)	237.09
Balance at September 30	4,995	$	217.07	5.25	$	125
Vested and expected to vest at September 30	4,863	216.50		5.17	$	125
Exercisable at September 30	3,669	$	209.57	4.18	$	121


(Millions of dollars)	2024		2023		2022
Total intrinsic value of SARs exercised	$	25	$	126	$	184

Total fair value of SARs vested	$	31	$	34	$	36

Performance-based restricted stock units cliff vest three years after the date of grant. These units are tied to the Company’s performance against pre-established targets over a performance period of three years. The performance measures for fiscal years 2024, 2023 and 2022 were average annual currency-neutral revenue growth and average annual return on invested capital, with the combined factor subject to adjustment based on the Company's relative total shareholder return (measures the Company’s stock performance during the performance period against that of peer companies). Under the Company’s long-term incentive program, the

actual payout under these awards may vary from zero to 200% of an employee’s target payout, based on the Company’s actual performance over the performance period of three years. In fiscal year 2021, the Company also issued additional performance-based time-vested units to certain key executives, a portion of which cliff vested in fiscal year 2024 based on the Company’s performance against average annual growth in the Company’s Adjusted EPS over a performance period of three years. The fair value was based on the market price of the Company’s stock on the date of grant, and compensation cost was adjusted for subsequent changes in the expected outcome of performance-related conditions.

Time-vested restricted stock unit awards vest on a graded basis over a period of three years, except for certain key executives of the Company, including the executive officers, for which such units generally vest one year following the employee’s retirement. The related share-based compensation expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility. The fair value of all time-vested restricted stock units is based on the market value of the Company’s stock on the date of grant.


	Performance-Based				Time-Vested
	Stock Units (in thousands)		Weighted Average Grant Date Fair Value		Stock Units (in thousands)	Weighted Average Grant Date Fair Value
Balance at October 1	963		$	226.51	1,716	$	225.33
Granted	387		223.60		922	231.32
Distributed	(145)		212.46		(556)	225.13
Forfeited or canceled	(213)		219.15		(390)	231.68
Balance at September 30	991	(a)	$	229.02	1,693	$	227.20
Expected to vest at September 30	465	(b)	$	229.96	1,549	$	226.80

(b)Net of expected forfeited units and units in excess of the expected performance payout of 71 thousand and 454 thousand shares, respectively.


	Performance-Based						Time-Vested
	2024		2023		2022		2024		2023		2022
Weighted average grant date fair value of units granted	$	223.60	$	227.11	$	242.39	$	231.32	$	231.58	$	239.39


	Performance-Based						Time-Vested
(Millions of dollars)	2024		2023		2022		2024		2023		2022
Total fair value of units vested	$	45	$	28	$	14	$	179	$	169	$	169

At September 30, 2024, the weighted average remaining vesting term of performance-based and time vested restricted stock units is 1.24 and 0.87 years, respectively.

The amount of unrecognized compensation expense for all non-vested share-based awards as of September 30, 2024, is approximately $253 million, which is expected to be recognized over a weighted-

average remaining life of approximately 1.8 years. At September 30, 2024, 10.0 million shares were authorized for future grants under the 2004 Plan. The Company has a policy of satisfying share-based payments through either open market purchases or shares held in treasury. At September 30, 2024, the Company has sufficient shares held in treasury to satisfy these payments.

As of September 30, 2024, 81 thousand shares were held in trust relative to a Director's Deferral plan, which provides a means to defer director compensation, from time to time, on a deferred stock or cash basis. Also as of September 30, 2024, 200 thousand shares were issuable under a Deferred Compensation Plan that allows certain highly-compensated employees, including executive officers, to defer salary, annual incentive awards and certain equity-based compensation.