Stock-Based Compensation

9 Months Ended

Sep. 30, 2015

5. 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)	2015		2014		2015		2014
Cost	$	24	$	33	$	78	$	92
Selling, general and administrative		82		105		260		293
Research, development and engineering		11		13		37		41
Other (income) and expense*		(5)		—		(6)		(9)
Pre-tax stock-based compensation cost		111		150		369		416
Income tax benefits		(38)		(51)		(124)		(141)
Total net stock-based compensation cost	$	73	$	99	$	244	$	276

* Reflects the one-time effects related to divestitures in 2015 and 2014.

Pre-tax stock-based compensation cost for the three months ended September 30, 2015 decreased $39 million compared to the corresponding period in the prior year. This was due to decreases related to performance share units ($31 million), restricted stock units ($7 million) and in the company’s assumption of stock-based awards previously issued by acquired entities ($1 million). Pre-tax stock-based compensation cost for the nine months ended September 30, 2015 decreased $48 million compared to the corresponding period in the prior year. This was due to decreases related to performance share units ($37 million), restricted stock units ($3 million) and the company’s assumption of stock-based awards previously issued by acquired entities ($8 million).

The amount of stock-based compensation cost included in the loss from discontinued operations, net of tax, was immaterial in all periods.

As of September 30, 2015, the total unrecognized compensation cost of $927 million related to non-vested awards was expected to be recognized over a weighted-average period of approximately 2.7 years.

There was no significant capitalized stock-based compensation cost at September 30, 2015 and 2014.