SHARE-BASED COMPENSATION

9 Months Ended

Jul. 31, 2020

Share-based Payment Arrangement, Noncash Expense [Abstract]

4. SHARE-BASED COMPENSATION

Keysight accounts for share-based awards in accordance with the provisions of the authoritative accounting guidance, which requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including restricted stock units ("RSUs"), employee stock purchases made under our Employee Stock Purchase Plan (“ESPP”), employee stock option awards, and performance share awards granted to selected members of our senior management under the Long-Term Performance (“LTP”) Program, based on estimated fair values.



	Three Months Ended				Nine Months Ended
	July 31,				July 31,
	2020		2019		2020		2019
	(in millions)
Cost of products and services	$	4	$	2	$	13	$	11
Research and development	4		4		15		13
Selling, general and administrative	11		10		45		42
Total share-based compensation expense	$	19	$	16	$	73	$	66

At both July 31, 2020 and 2019, there was no share-based compensation capitalized within inventory.

The total shareholder return (TSR) based performance awards are valued using a Monte Carlo simulation model, which requires the use of highly subjective and complex assumptions, including the price volatility of the underlying stock. The valuation is done once every year in the first quarter at the time of annual grants.

The estimated fair value of restricted stock awards and the financial metrics-based performance awards is determined based on the market price of Keysight’s common stock on the grant date. The compensation cost for financial metrics-based performance awards reflects the cost of awards that are probable to vest at the end of the performance period. We did not grant option awards in the three and nine months ended July 31, 2020 and 2019.