Stock Compensation Plans

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

8. STOCK COMPENSATION PLANS

As of September 30, 2022, the Company’s primary type of stock-based compensation was restricted stock units and stock options. Stock-based compensation expense for the following periods were:


In millions	Three months ended September 30				Nine months ended September 30
	2022		2021		2022		2021
Restricted stock units	$	22	$	30	$	76	$	96
Stock options	4		6		14		17
Employee stock purchase plan	2		2		7		6
Stock-based compensation expense	28		38		97		119
Tax benefit	(5)		(5)		(13)		(14)
Stock-based compensation expense (net of tax)	$	23	$	33	$	84	$	105

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

On February 25, 2022, the Company granted market-based restricted stock units with 100% of the award vesting on December 31, 2024. The number of awards that vest are subject to the performance of the Company's stock price from the date of grant to December 31, 2024. The fair value was determined to be $57.67 per share based on using a Monte-Carlo simulation model and will be recognized over the requisite service period. The table below details the assumptions used in determining the fair value of the market-based restricted stock units.



Dividend yield	—	%
Risk-free interest rate	1.73	%
Expected volatility	59.26	%

Expected volatility for the market-based restricted stock units is calculated as the historical volatility of the Company’s stock over a period of three years, as management believes this is the best representation of prospective trends. The risk-free interest rate was determined based on a three year U.S. Treasury yield curve in effect at the time of the grant.

As of September 30, 2022, the total unrecognized compensation cost of $151 million related to unvested restricted stock grants is expected to be recognized over a weighted average period of approximately 1.0 years. As of September 30, 2022, the total unrecognized compensation cost of $5 million related to unvested stock option grants is expected to be recognized over a weighted average period of approximately 0.3 years.

Employee Stock Purchase Plan The Company's Employee Stock Purchase Plan (“ESPP”) provides employees a 15% discount on stock purchases using a three-month look-back feature where the discount is applied to the stock price that represents the lower of NCR’s closing stock price on either the first day or the last day of each calendar quarter. Participants can contribute between 1% and 10% of their compensation.

For the three months ended September 30, 2022, employees purchased 0.4 million shares, at a discounted price of $16.16. For the three months ended September 30, 2021, employees purchased 0.2 million shares, at a discounted price of 32.95.