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.

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Pre-tax stock-based compensation cost for the three months ended March 31, 2021 increased $24 million compared to the corresponding period in the prior year. This was due to increases in performance share units ($16 million) and restricted stock units ($8 million).

In the first quarter of 2021, the company’s Executive Compensation and Management Resources Committee of the Board of Directors approved changes to certain outstanding performance share unit targets to include the impact of the planned spin-off of Kyndryl, along with actions taken to enable the separation and enable IBM’s growth strategy under current market conditions. The impact under modification accounting was not material.

Total unrecognized compensation cost related to non-vested awards at March 31, 2021 was $1.2 billion and is expected to be recognized over a weighted-average period of approximately 2.1 years.

Capitalized stock-based compensation cost was not material at March 31, 2021 and 2020.