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 as of December 31, 2013. The MasTec, Inc. 2013 Incentive Plan (the "2013 Incentive Plan"), which permits the issuance of up to 2,100,000 new shares of MasTec, Inc. common stock, became effective in May 2013. The 2013 Incentive Plan replaced the 2003 Employee Stock Incentive Plan, as amended and the Amended and Restated 2003 Stock Incentive Plan for Non-Employees, as amended (together, the "2003 Plans"). Shares that remained available under the 2003 Plans became available under the 2013 Incentive Plan as of its effective date. As of December 31, 2013, the 2013 Incentive Plan had 5,059,711 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. The MasTec, Inc. Bargaining Units Employee Stock Purchase Plan (the "2013 Bargaining Units ESPP"), which became effective on July 1, 2013, permits the issuance of up to 1,000,000 new shares of MasTec, Inc. common stock to eligible employees. The MasTec, Inc. 2011 Employee Stock Purchase Plan, which became effective July 1, 2011 (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 December 31, 2013, there were a total of 6,495,617 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 December 31, 2013 was approximately $14.2 million, which is expected to be recognized over a weighted average period of approximately 1 year. 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 $2.1 million, $7.3 million and $11.7 million, respectively, for the years ended December 31, 2013, 2012 and 2011.

During the year ended December 31, 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 Award. As of December 31, 2013, the Company did not anticipate the occurrence of any such forfeitures under the EC Source Share Award.



Activity, restricted share awards:	Restricted Shares		Weighted Average Grant Date Fair Value
Non-vested restricted shares, as of December 31, 2011	715,030		$	14.44
Granted	435,005		21.46
Vested	(347,889	)	12.68
Canceled/forfeited	(19,865	)	15.52
Non-vested restricted shares, as of December 31, 2012	782,281		$	19.10
Granted	431,346		31.04
Vested	(68,122	)	18.83
Canceled/forfeited	(34,960	)	15.58
Non-vested restricted shares, as of December 31, 2013	1,110,545		$	23.86

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 (in years)	Aggregate Intrinsic Value ^(a) (in millions)
Options outstanding as of December 31, 2011	1,440,774		$	10.24	3.21	$	10.3
Exercised	(391,949	)	9.46
Canceled/forfeited	(5,000	)	14.97
Options outstanding as of December 31, 2012	1,043,825		$	10.50	2.33	$	15.1
Options exercisable as of December 31, 2012	1,043,825		$	10.50	2.33	$	15.1

Options outstanding as of December 31, 2012	1,043,825		$	10.50	2.33	$	15.1
Exercised	(513,254	)	10.04
Canceled/forfeited	(35,000	)	7.74
Options outstanding as of December 31, 2013	495,571		$	11.17	1.96	$	10.7
Options exercisable as of December 31, 2013	495,571		$	11.17	1.96	$	10.7

(a) 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 years ended December 31, 2013, 2012 and 2011, which is based on the difference between the exercise price and the market price of the Company’s stock as of the date of exercise, was $10.6 million, $5.1 million and $11.0 million, respectively. Proceeds from options exercised during the years ended December 31, 2013, 2012 and 2011 totaled $3.9 million, $3.7 million and $11.6 million, 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.



	Years Ended December 31,
Activity, employee stock purchase plan:	2013		2012		2011
Cash proceeds (in millions)	$	6.4	$	1.3	$	0.4
Number of common shares	454,523		90,614		29,162
Weighted average price per share	$	14.19	$	14.37	$	14.85
Weighted average grant date fair value per share	$	5.60	$	4.19	$	3.61

The fair value of stock purchases under the Company's ESPP is estimated using the Black-Scholes option pricing valuation model. The determination of fair value of stock-based awards using an option pricing model is affected by the Company's stock price as well as assumptions pertaining to several variables, including expected stock price volatility, the expected term of the award and the risk-free rate of interest. In the option pricing model for the Company's ESPP, expected stock price volatility is based on historical volatility of the Company's common stock. The expected term of the award is based on historical and expected exercise patterns and the risk-free rate of interest is based on U.S. Treasury yields. The Company has not paid dividends in the past, and does not anticipate paying dividends in the foreseeable future, and therefore uses an expected dividend yield of zero.

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):



	Years Ended December 31,
	2013		2012		2011
Stock-based compensation expense	$	12.9	$	4.4	$	3.6
Income tax benefit from stock-based compensation	$	9.7	$	2.5	$	6.3
Excess tax benefit from stock-based compensation ^(a)	$	4.3	$	0.8	$	7.8

(a) 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 consolidated statements of cash flows.

401(k) Plan. MasTec has a 401(k) plan covering all eligible employees. Subject to certain dollar limits, eligible employees may contribute up to 75% of their pre-tax annual compensation to the 401(k) plan. Effective January 1, 2013, the Company adopted an amendment to its 401(k) plan, which increased the Company's matching contribution to 100% of the first 3% of the employee's salary and 50% of the next 2% of the employee's salary, up to a maximum 4% employer match. For the years ended December 31, 2012 and 2011, the Company's matching contributions were 100% of the first 2.5% of the employee's salary, capped at $2,500 per employee. Discretionary matching contributions are payable annually, 50% in shares of MasTec common stock and 50% in cash. During the years ended December 31, 2013, 2012 and 2011, matching contributions totaled approximately $5.9 million, $2.1 million and $1.7 million, respectively.

Deferred Compensation Plan. MasTec offers a deferred compensation plan to its highly compensated employees. These employees are allowed to contribute a percentage of their pre-tax annual compensation to the deferred compensation plan. Effective January 1, 2013, the Company no longer matches contributions to the deferred compensation plan. For the years ended December 31, 2012 and 2011, the Company matched 100% of employee contributions up to 2.5% of the employee’s salary, capped at $2,500 per employee. Deferred compensation plan assets and related liabilities of approximately $4.4 million and $4.3 million are included in other long-term assets and other long-term liabilities, respectively, as of December 31, 2013. As of December 31, 2012, deferred compensation plan assets and related liabilities totaled $3.2 million and $3.3 million, respectively.