Stock-Based Compensation and Other Employee Benefit Plans

The Company has certain stock-based compensation plans, under which stock options and restricted share awards are available for issuance or outstanding, including the MasTec, Inc. 2013 Incentive Plan (the "2013 Incentive Plan"), which became effective in May 2013. As of September 30, 2013, the 2013 Incentive Plan had 4,926,681 shares available for issuance. In addition, the Company has certain employee stock purchase plans under which shares of the Company's common stock are available for purchase by eligible employees. In March 2013, the Company authorized the issuance of up to 1,000,000 new shares of MasTec, Inc. common stock to eligible employees under the MasTec, Inc. Bargaining Units Employee Stock Purchase Plan (the "2013 Bargaining Units ESPP"). The 2013 Bargaining Units ESPP became effective on July 1, 2013. The MasTec, Inc. 2011 Employee Stock Purchase Plan (the “2011 ESPP" and, together with the 2013 Bargaining Units ESPP, the "ESPPs") also provides for the issuance of up to 1,000,000 shares of MasTec, Inc. common stock for eligible employees.

Under all stock-based compensation plans in effect as of September 30, 2013, there were a total of 6,383,118 shares available for grant or issuance.

Restricted Share Awards

MasTec grants restricted share awards, which are valued based on the market price of MasTec common stock on the date of grant. Total unearned compensation related to restricted share awards as of September 30, 2013 was approximately $17.4 million, which is expected to be recognized over a weighted average period of approximately 1.4 years. The total intrinsic value, or fair value, of restricted share awards that vested, which is based on the market price on the date of vesting, was $0.9 million and $2.0 million for the three and nine month periods ended September 30, 2013 and $0.7 million and $2.9 million for the three and nine month periods ended September 30, 2012, respectively.

During the second quarter of 2013, the Company entered into an agreement with the previous owners of EC Source to establish an incentive program for its employees and granted 350,000 restricted share awards (the “EC Source Share Award”). The former owners of EC Source contributed cash and shares of MasTec common stock to the Company in connection with the EC Source Share Award. In the event that shares granted under the EC Source Share Award are forfeited prior to vesting, the former owners of EC Source will be re-issued the pro-rata percentage of the former owners' contributed shares to total shares awarded under the EC Source share grant. As of September 30, 2013, the Company did not anticipate the occurrence of any such forfeitures.



Activity, restricted share awards:	Restricted Shares		Per Share Weighted Average Grant Date Fair Value
Non-vested restricted shares, as of December 31, 2012	782,281		$	19.10
Granted	428,262		31.04
Vested	(64,288	)	18.22
Canceled/forfeited	(15,187	)	15.35
Non-vested restricted shares, as of September 30, 2013	1,131,068		$	23.72

Stock Options

The Company has granted options to purchase its common stock to employees and members of the Board of Directors and affiliates under various stock option plans at not less than the fair market value of the underlying stock on the date of grant. All outstanding stock options are fully vested.



Activity, stock options:	Stock Options		Per Share Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value ⁽¹⁾ (in millions)
Options outstanding as of December 31, 2012	1,043,825		$	10.50	2.33	$	15.1
Exercised	(498,123	)	9.91
Canceled/forfeited	(35,000	)	7.74
Options outstanding as of September 30, 2013	510,702		$	11.27	2.19	$	9.7
Options exercisable as of September 30, 2013	510,702		$	11.27	2.19	$	9.7


(1)	Amount represents the difference between the exercise price and the market price of the Company’s stock on the last trading day of the corresponding period, multiplied by the number of in-the-money options.

The total intrinsic value of options exercised during the three month periods ended September 30, 2013 and 2012, which is based on the difference between the exercise price and the market price of the Company’s stock at the date of exercise, was $4.6 million and $0.4 million, respectively. The intrinsic value of options exercised during the nine month periods ended September 30, 2013 and 2012 totaled $10.4 million and $0.7 million, respectively. Proceeds from options exercised during the three month periods ended September 30, 2013 and 2012 totaled $0.4 million and $0.3 million, respectively, and totaled $3.8 million and $0.6 million for the nine months periods ended September 30, 2013 and 2012, respectively.

Employee Stock Purchase Plan

The Company's ESPPs allow qualified employees to purchase MasTec, Inc. common stock at 85% of the fair market value of the common stock at the lower of (i) the date of commencement of the offering period or (ii) the last day of the exercise period, as defined in the plan document. Through June 30, 2013, the offering period was an annual period, composed of four interim exercise periods. Effective July 1, 2013, the offering period became quarterly.



	Nine Months Ended September 30,
Activity, employee stock purchase plan:	2013		2012
Cash proceeds (in millions)	$	6.0	$	0.9
Number of common shares	436,925		67,073
Weighted average price per share	$	13.69	$	13.43
Weighted average grant date fair value per share	$	5.55	$	3.96

The fair value of purchases under the Company's ESPP is estimated using the Black-Scholes option-pricing valuation model.

Stock Based Compensation Expense and Tax Benefits

Details of stock based compensation expense and related tax benefits for the periods indicated are as follows (in millions):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Stock based compensation expense	$	3.0	$	1.2	$	9.6	$	3.4
Income tax benefit from stock based compensation	4.5		0.7		7.7		1.6
Excess tax benefit from stock based compensation ⁽¹⁾	$	3.0	$	0.2	$	4.4	$	0.3


(1)	Excess tax benefits, which represent cash flows from tax deductions in excess of the tax effect of compensation expense recognized for stock options exercised and vested restricted shares, are classified as financing cash flows in the Company’s condensed unaudited consolidated statements of cash flows.

Shares Withheld for Payroll Taxes

In connection with the issuance of shares under share-based compensation awards, at the employees' election, the Company withholds shares of common stock for tax withholding obligations. These shares are repurchased or withheld in conjunction with net share settlement of the related awards upon vesting, for restricted stock awards, or upon exercise, for stock options. Withheld shares, which are valued at the share price on the date of vesting or exercise, as applicable, are classified as a reduction to additional paid-in capital. The value of shares withheld for payroll taxes under share-based compensation arrangements was $2.4 million for the nine month period ended September 30, 2013.