Stock-Based Compensation

6 Months Ended

Jun. 30, 2020

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 June 30,				Six Months Ended June 30,
(Dollars in millions)	2020		2019		2020		2019
Cost	$	40	$	22	$	67	$	42
Selling, general and administrative		155		93		272		167
Research, development and engineering		52		21		97		39
Pre-tax stock-based compensation cost	$	247	$	135	$	436	$	248
Income tax benefits		(52)		(29)		(96)		(54)
Total net stock-based compensation cost	$	196	$	106	$	340	$	194

Pre-tax stock-based compensation cost for the three months ended June 30, 2020 increased $112 million compared to the corresponding period in the prior year. This was primarily due to increases related to the conversion of stock-based compensation previously issued by Red Hat ($62 million), restricted stock units ($45 million) and performance share units ($5 million).

Pre-tax stock-based compensation cost for the six months ended June 30, 2020 increased $188 million compared to the corresponding period in the prior year. This was primarily due to increases related to the conversion of stock-based compensation previously issued by Red Hat ($127 million) and restricted stock units ($63 million), partially offset by decreases in performance share units ($2 million).

Total unrecognized compensation cost related to non-vested awards at June 30, 2020 was $1.6 billion and is expected to be recognized over a weighted-average period of approximately 2.6 years.

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