Stock-Based Compensation

6 Months Ended

Jun. 30, 2022

Stock-Based Compensation

Stock-Based Compensation

17. Stock-Based Compensation:

Stock-based compensation cost for stock awards and stock options 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 June 30,				Six Months Ended June 30,
(Dollars in millions)	2022		2021		2022		2021
Cost	$	43	$	35	$	84	$	68
Selling, general and administrative		153		141		289		256
Research, development and engineering		58		50		115		99
Pre-tax stock-based compensation cost	$	254	$	225	$	488	$	423
Income tax benefits		(82)		(64)		(139)		(112)
Total net stock-based compensation cost	$	172	$	162	$	348	$	311

Effective April 1, 2022, the company increased the discount for eligible participants under its Employees Stock Purchase Plan (ESPP) from 5 percent to 15 percent off the average market price on the date of purchase. With this change, the ESPP is considered compensatory under the accounting requirements for stock-based compensation.

Pre-tax stock-based compensation cost for the three months ended June 30, 2022 increased $29 million compared to the corresponding period in the prior year, including increases in ESPP ($14 million), performance share units ($8 million), stock options ($5 million) and restricted stock units ($2 million). The increases primarily relate to the ESPP being considered compensatory and a change in the timing of the company’s executive grant cycle in 2022.

Pre-tax stock-based compensation cost for the six months ended June 30, 2022 increased $64 million compared to the corresponding period in the prior year, including increases in restricted stock units ($29 million), ESPP ($14 million), performance share units ($10 million) and stock options ($10 million). The increases are driven by the same factors described above.

Total unrecognized compensation cost related to non-vested awards at June 30, 2022 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 June 30, 2022 and 2021.