Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Stock-Based Compensation

Stock-Based Compensation

16. Stock-Based Compensation:

Stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized over the employee requisite service period. The following table presents total stock-based compensation cost included in income from continuing operations.

	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	2020		2019		2020		2019
Cost	$	42	$	29	$	109	$	71
Selling, general and administrative		129		147		401		313
Research, development and engineering		50		44		147		84
Pre-tax stock-based compensation cost	$	222	$	220	$	658	$	468
Income tax benefits		(50)		(50)		(146)		(104)
Total net stock-based compensation cost	$	172	$	170	$	512	$	364

Pre-tax stock-based compensation cost for the three months ended September 30, 2020 increased $2 million compared to the corresponding period in the prior year. This was primarily due to increases related to restricted stock units ($49 million), offset by decreases related to performance share units ($27 million) and the conversion of stock-based compensation previously issued by Red Hat ($20 million).

Pre-tax stock-based compensation cost for the nine months ended September 30, 2020 increased $189 million compared to the corresponding period in the prior year. This was primarily due to increases related to restricted stock units ($112 million) and the conversion of stock-based compensation previously issued by Red Hat ($107 million), partially offset by decreases in performance share units ($29 million).

Total unrecognized compensation cost related to non-vested awards at September 30, 2020 was $1.4 billion and is expected to be recognized over a weighted-average period of approximately 2.5 years.

Capitalized stock-based compensation cost was not material at September 30, 2020 and 2019.