Stock-Based Awards

The Company has certain stock-based compensation plans which provide for the grants of equity awards, including stock options, restricted shares, performance shares, restricted share units, performance share units ("Performance RSUs") and stock appreciation rights.

On November 20, 2012, the shareholders of the Company approved the Dycom Industries, Inc. 2012 Long-Term Incentive Plan (the "2012 Plan"). The 2012 Plan authorizes 3,000,000 shares of common stock for equity awards to employees and officers of the Company. No new awards will be made under the Company's previous 2003 Long-Term Incentive Plan. As of July 27, 2013, the number of shares available for grant under the 2012 Plan was 1,837,179.

Compensation expense for stock-based awards is based on the fair value at the measurement date and is included in general and administrative expenses in the consolidated statements of operations. Stock-based compensation expense and the related tax benefit recognized related to stock options and restricted share units during fiscal 2013, 2012, and 2012 were as follows:



	Fiscal Year Ended
	2013		2012		2011
	(Dollars in thousands)
Stock-based compensation	$	9,902	$	6,952	$	4,409
Tax benefit recognized in the statement of operations	$	3,782	$	2,412	$	1,284

The actual tax benefit realized for the tax deductions from option exercises and stock vestings totaled $3.4 million, $2.8 million, and $0.7 million during fiscal 2013, 2012, and 2011, respectively.

As of July 27, 2013, unrecognized compensation expense related to stock options, time-based restricted share units ("RSUs") and target Performance RSUs was $5.2 million, $6.8 million and $8.8 million, respectively. Compensation expense previously recognized with respect to Performance RSUs will be reversed to the extent the performance goals are not met. Unrecognized compensation expense related to stock options, RSUs and Performance RSUs will be recognized over a weighted-average period of 2.0 years, 3.1 years and 1.2 years, respectively, which is the weighted average remaining contractual term for RSUs and Performance RSUs. The Company may recognize an additional $7.2 million in compensation expense related to Performance RSUs if the maximum amount of restricted share units are earned based on certain performance goals being met.

The following table summarizes the significant assumptions and the valuation of stock options and restricted share units granted during fiscal 2013, 2012, and 2011:



	Fiscal Year Ended
	2013			2012			2011
Weighted average fair value of RSUs granted	$	18.52		$	19.49		$	13.60
Weighted average fair value of Performance RSUs granted	$	18.08		$	19.47		$	10.60
Weighted average fair value of stock options granted	$	11.66		$	12.51		$	8.15
Stock option assumptions:
Risk-free interest rate	1.6		%	1.8		%	2.3		%
Expected life (years)	9.3			9.4			6.8
Expected volatility	55.4		%	56.1		%	58.6		%
Expected dividends	—			—			—

Stock Options

The following table summarizes stock option award activity during fiscal 2013:



	Stock Options
	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
					(In years)	(In thousands)
Outstanding as of July 28, 2012	3,298,747		$	17.08
Granted	144,155		$	18.47
Options exercised	(544,162	)	$	9.65
Forfeited or canceled	(129,608	)	$	24.62
Outstanding as of July 27, 2013	2,769,132		$	18.27	4.9	$	26,735

Exercisable options as of July 27, 2013	1,878,315		$	20.33	3.7	$	15,549

Options exercisable presented above reflect the approximate amount of options expected to vest after giving effect to estimated forfeitures at an insignificant rate. The aggregate intrinsic values for stock options in the above table are based on the Company’s closing stock price of $26.48 on July 26, 2013. These amounts represent the total intrinsic value that would have been received by the holders of the stock-based awards had the awards been exercised and sold as of that date, before any applicable taxes. The total intrinsic value of stock options exercised was $6.0 million, $6.4 million and $1.1 million for fiscal 2013, 2012, and 2011, respectively. The Company received cash from the exercise of stock options of $5.3 million, $6.5 million, and $1.3 million during fiscal 2013, 2012, and 2011, respectively.

RSUs and Performance RSUs

RSUs and Performance RSUs are settled in one share of the Company’s common stock upon vesting. RSUs vest ratably over a period of four years and, upon each annual vesting, 50% of the newly vested shares (net of any shares used to satisfy tax withholding obligations) are restricted from sale or transferability ("restricted holdings"). The restrictions on sale or transferability of the restricted holdings will end 90 days after termination of employment of the holder. When the holder has accumulated restricted holdings having a value equal to or greater than the holder’s annual base salary then in effect, future grants will no longer be subject to the restriction on transferability.

The following table summarizes RSU and Performance RSU activity during fiscal 2013:



	Restricted Stock
	RSUs						Performance RSUs
	Share Units		Weighted Average Grant Price		Aggregate Intrinsic Value		Share Units		Weighted Average Grant Price		Aggregate Intrinsic Value
					(In thousands)						(In thousands)
Outstanding as of July 28, 2012	222,760		$	14.49			774,264		$	18.76
Granted	405,713		$	18.52			831,390		$	18.08
Share units vested	(91,413	)	$	12.79			(137,432	)	$	18.23
Forfeited or canceled	(73,742	)	$	17.69			(153,084	)	$	18.36
Outstanding as of July 27, 2013	463,318		$	17.78	$	12,269	1,315,138		$	18.44	$	34,825

Included in the RSU shares granted during fiscal 2013 was approximately 294,000 shares at a weighted average grant price of $18.54 to employees of the Acquired Subsidiaries as of the date of acquisition. The Performance RSUs in the above table represent the maximum number of awards that could vest, which is two hundred percent of the target awards. Accordingly, the target amount of Performance RSUs outstanding as of July 27, 2013 was 657,569. Approximately 265,000 Performance RSUs outstanding as of July 27, 2013 will be canceled during fiscal 2014 as a result of the fiscal 2013 performance criteria for attaining supplemental shares not being met.

The unvested RSUs reflect the approximate amount of units expected to vest after giving effect to estimated forfeitures. The total fair value of restricted share units vested during fiscal 2013, 2012, and 2011 was $4.2 million, $1.9 million, and $1.1 million, respectively.

The aggregate intrinsic values for restricted share units are based on the Company’s closing stock price of $26.48 on July 26, 2013. These amounts represent the total intrinsic value that would have been received by the holders of the stock-based awards had the awards been exercised and sold as of that date, before any applicable taxes.