Stock Compensation Plans

3 Months Ended

Mar. 31, 2016

6. STOCK COMPENSATION PLANS

As of March 31, 2016, the Company’s primary type of stock-based compensation was restricted stock units. Stock-based compensation expense for the following periods were:



In millions	Three months ended March 31
In millions	2016	2015
Restricted stock units	$13	$9
Tax benefit	(4)	(3)
Total stock-based compensation (net of tax)	$9	$6

Stock-based compensation expense is recognized in the financial statements based upon fair value.

During the three months ended March 31, 2016, the Company issued price-contingent restricted stock units with a performance period of 60 months. Vesting of these units is dependent upon the attainment of target stock prices and service conditions. The Company estimated the fair value and derived service period using the Monte Carlo simulation option pricing model. The Company amortizes the fair value of these awards over the explicit service period of 36 to 48 months, which was longer than the derived service period, adjusted for estimated forfeitures. Provided that the explicit service period is rendered, the total fair value of the price-contingent restricted stock units at the date of grant is recognized as compensation expense even if the market condition is not achieved. However, the number of shares that ultimately vest can vary significantly with the performance of the specified market criteria. The weighted-average assumptions used and the resulting estimates of fair value were as follows:



	Three months ended March 31, 2016
Expected volatility	33.9%
Expected dividend yield	—
Risk-free rate	1.21%
Weighted average fair value per share	$14.93

Expected volatility is based on the historical volatility derived from NCR stock price movements over the last 60 months. The risk-free interest rate was based upon the U.S. Treasury yield curve in effect at the time of grant with a remaining term of 60 months.

As of March 31, 2016, the total unrecognized compensation cost of $155 million related to unvested restricted stock grants is expected to be recognized over a weighted average period of approximately 1.4 years.