Share-Based Compensation

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

During the three months ended March 31, 2022, we granted 7.8 million restricted stock units ("RSUs") under the Rackspace Technology, Inc. 2020 Equity Incentive Plan with a weighted-average grant date fair value of $11.04. The majority of the RSUs were granted as part of our annual compensation award process and vest ratably over a three-year period, subject to continued service.

In addition, during the three months ended March 31, 2022, we granted 1.2 million performance stock units ("PSUs") under the Rackspace Technology, Inc. 2020 Equity Incentive Plan with a weighted-average grant date fair value of $11.70. These PSUs represent the target amount of grants, and the actual number of shares awarded upon vesting may vary depending upon the achievement of the relevant market condition which is based on Rackspace’s Total Shareholder Return (“TSR”) relative to the TSR of a comparator group of IT and Cloud Services Companies. The awards are eligible to vest in equal annual installments over three years based on the attainment of the market condition and the employee’s continued service through the end of the applicable measurement period and were valued using a Monte Carlo simulation.

Share-based compensation expense recognized was as follows:


	Three Months Ended March 31,
(In millions)	2021		2022
Cost of revenue	$	4.9	$	2.8
Selling, general and administrative expenses	12.3		14.2
Pre-tax share-based compensation expense	17.2		17.0
Less: Income tax benefit	(3.6)		(3.6)
Total share-based compensation expense, net of tax	$	13.6	$	13.4

As of March 31, 2022, there was $182.2 million of total unrecognized compensation cost related to stock options, RSUs, PSUs, and the ESPP, which will be recognized using the service period or over our best estimate of the period over which the performance condition will be met, as applicable.