Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

7. 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)	2019		2018		2019		2018
Cost	$	29	$	19	$	71	$	60
Selling, general and administrative		147		95		313		264
Research, development and engineering		44		15		84		47
Pre-tax stock-based compensation cost	$	220	$	129	$	468	$	371
Income tax benefits		(50)		(29)		(104)		(88)
Total net stock-based compensation cost	$	170	$	100	$	364	$	283

Pre-tax stock-based compensation cost for the three months ended September 30, 2019 increased $91 million compared to the corresponding period in the prior year. This was primarily due to increases related to issuances and conversions of stock-based compensation for Red Hat ($79 million) and restricted stock units ($10 million).

Pre-tax stock-based compensation cost for the nine months ended September 30, 2019 increased $98 million compared to the corresponding period in the prior year. This was primarily due to increases related to issuances and conversions of stock-based compensation for Red Hat ($79 million) and restricted stock units ($25 million).

As of September 30, 2019, the total unrecognized compensation cost of $1.4 billion related to non-vested awards was expected to be recognized over a weighted-average period of approximately 2.5 years.

There was no significant capitalized stock-based compensation cost at September 30, 2019 and 2018.