Kyndryl Holdings, Inc. Stock Compensation Disclosure
NOTE 16. STOCK-BASED COMPENSATION
Stock-based incentive awards are granted to employees under the terms of Kyndryl’s employment and the Kyndryl Plan (see Note 1 – Significant Accounting Policies). Awards under the Kyndryl Plan principally include Restricted Stock Units (RSUs), market-conditioned and performance-conditioned stock units and stock options. RSUs and stock options generally vest based on continued passage of time. Market-conditioned and performance-conditioned stock units are cliff-vested at the end of the performance period if the market or performance conditions have been satisfied.
The following table summarizes stock-based compensation cost, which is included in net income (loss).
Year Ended March 31, | |||||||||
(Dollars in millions) |
| 2025 |
| 2024 |
| 2023 | |||
Cost of services | $ | 12 | $ | 16 | $ | 21 | |||
Selling, general and administrative expense | 89 | 78 | 92 | ||||||
Pretax stock-based compensation expense | $ | 100 | $ | 95 | $ | 113 | |||
Income tax benefits | (7) | (5) | (5) | ||||||
Stock-based compensation cost, net of tax | $ | 93 | $ | 90 | $ | 108 | |||
The Company’s total unrecognized compensation cost related to non-vested awards at March 31, 2025 was $123 million and is expected to be recognized over a weighted-average period of approximately 2.1 years. Capitalized stock-based compensation cost was not material during any period presented.
Stock Units
The following table summarizes the activity related to Kyndryl’s RSUs, market-conditioned stock units and performance-conditioned stock units:
Market-Conditioned | Performance-Conditioned | |||||||||||||||||
RSUs | Stock Units | Stock Units* | ||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||
Average | Average | Average | ||||||||||||||||
| Number | Grant-Date | Number | Grant-Date |
| Number | Grant-Date | |||||||||||
of Units | Fair Value | of Units | Fair Value | of Units | Fair Value | |||||||||||||
| (in millions) |
| (per share) |
| (in millions) |
| (per share) |
| (in millions) |
| (per share) | |||||||
Nonvested balance at March 31, 2022 | 9.8 | $ | 26.36 | 1.8 | $ | 15.14 | — | $ | — | |||||||||
Awards granted | 5.0 | $ | 10.80 | 0.7 | $ | 12.51 | 2.5 | $ | 10.62 | |||||||||
Awards vested | (4.9) | 26.09 | — | — | — | — | ||||||||||||
Awards canceled/forfeited | (0.5) | 23.09 | (0.2) | 14.46 | (0.1) | 10.62 | ||||||||||||
Nonvested balance at March 31, 2023 | 9.4 | $ | 18.43 | 2.3 | $ | 14.40 | 2.3 | $ | 10.62 | |||||||||
Awards granted | 3.1 | $ | 13.52 | 0.6 | $ | 14.10 | 2.0 | $ | 13.37 | |||||||||
Awards vested | (4.0) | 21.92 | — | — | — | — | ||||||||||||
Awards canceled/forfeited | (0.4) | 17.43 | (0.1) | 14.43 | (0.1) | 11.85 | ||||||||||||
Nonvested balance at March 31, 2024 | 8.0 | $ | 15.33 | 2.9 | $ | 14.32 | 4.3 | $ | 12.28 | |||||||||
Awards granted | 1.7 | $ | 26.65 | 0.4 | $ | 26.23 | 1.2 | $ | 26.47 | |||||||||
Awards vested | (3.3) | 17.14 | (0.8) | 15.14 | — | — | ||||||||||||
Awards canceled/forfeited | (0.3) | 16.58 | (0.8) | 15.12 | (0.1) | 12.13 | ||||||||||||
Nonvested balance at March 31, 2025 | 6.1 | $ | 17.49 | 1.6 | $ | 16.33 | 5.4 | $ | 15.01 | |||||||||
| * | The grant-date fair value of performance-conditioned stock units issued was determined using the stock price at the grant date. |
The Company used the following assumptions in the Monte-Carlo simulation pricing model to estimate the grant-date fair values of the market-conditioned stock units granted within each of the following fiscal years.
Year Ended March 31, | ||||||
Market-conditioned Stock Units: | 2025 | 2024 | 2023 | |||
Share price | $26.51 | $13.55 | $10.89 | |||
Expected volatility* | 43% | 39% | 39% | |||
Risk-free interest rate | 4.60% | 4.57% - 5.38% | 2.85% | |||
Dividend yield | 0% | 0% | 0% | |||
| * | Based on the average three-year historic volatility across a group of peer companies. |
Stock Options
The following table summarizes the activity related to Kyndryl’s stock options:
Stock Options | |||||||||||||||
Weighted- | |||||||||||||||
Weighted- | Average | ||||||||||||||
Weighted- | Average | Aggregate | Remaining | ||||||||||||
Number | Average | Grant Date | Intrinsic | Contractual | |||||||||||
| of Units |
| Exercise Price | Fair Value | Value | Term | |||||||||
| (in millions) |
| (per share) | (per share) | (in millions) | (in years) | |||||||||
Outstanding balance at March 31, 2022 | 3.8 | $ | 17.76 | $ | 6.54 | $ | — | 9.7 | |||||||
Awards exercised | — | — | — | — | |||||||||||
Awards canceled/forfeited | (0.2) | 17.78 | 6.54 | ||||||||||||
Outstanding balance at March 31, 2023 | 3.7 | $ | 17.76 | $ | 6.54 | $ | — | 8.7 | |||||||
Awards exercised | (0.0) | 17.30 | 6.61 | — | |||||||||||
Awards canceled/forfeited | (0.1) | 17.78 | 6.54 | ||||||||||||
Outstanding balance at March 31, 2024 | 3.5 | $ | 17.77 | $ | 6.54 | $ | — | 7.3 | |||||||
Awards exercised | (0.4) | 17.69 | 6.56 | 4.7 | |||||||||||
Awards canceled/forfeited | (0.0) | 17.78 | 6.54 | ||||||||||||
Outstanding balance at March 31, 2025 | 3.1 | $ | 17.78 | $ | 6.54 | $ | 42.7 | 6.4 | |||||||
Options vested and exercisable at March 31, 2025 | 2.4 | $ | 17.78 | $ | 6.54 | $ | 32.1 | 6.3 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | May 30, 2025 | Showing above |
| 2024 | May 30, 2024 | |
| 2023 | May 26, 2023 | |
| 2021 | Mar 10, 2022 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.