8. Share-Based Compensation

The Amended and Restated Tutor Perini Corporation Long-Term Incentive Plan (the “Plan”) provides for various types of share-based grants, including restricted and unrestricted stock units and stock options. Restricted and unrestricted stock units give the holder the right to exchange their stock units for shares of the Company’s common stock on a one-for-one basis. Stock options give the holder the right to purchase shares of the Company’s common stock at an exercise price equal to the fair value of the Company’s common stock on the date of the stock option’s award. Restricted stock units and stock options are usually subject to certain service and performance conditions and may not be sold or otherwise transferred until those restrictions have been satisfied; however, unrestricted stock units have no such restrictions. The term for stock options is limited to 10 years from the date of grant. As of December 31, 2016, there were 327,584 shares available to be granted under the Company’s share-based compensation plan.

Many of the awards issued under the Plan contain separate tranches, each for a separate performance period and each with a performance target to be established subsequent to the award date; accordingly, the tranches are accounted for under ASC 718 Stock Compensation (“ASC 718”) as separate grants, with the grant date being the date the performance targets for a given tranche are established and communicated to the grantee. Similarly, for these awards, compliance with the requirements of the Plan is also based on the number of units granted in a given year, as determined by ASC 718, rather than the number of units awarded in a given year. As a result, as of December 31, 2016, the Company had outstanding awards with 448,000 restricted stock units and 448,000 stock options that had not been granted yet. These units will be granted in 2017, 2018 and 2019 when the performance targets for those respective years are established.

The following table summarizes restricted stock unit and stock option activity:



	Restricted Stock Units			Stock Options
		Weighted-			Weighted-
		Average			Average
		Grant Date			Exercise/
		Fair Value			(Strike) Price
	Number	Per Share		Number	Per Share
Outstanding as of December 31, 2013	361,668	$	17.30	1,295,000	$	20.20
Granted	996,597		27.10	714,000		18.40
Expired or forfeited	(20,000)		24.77	—		—
Vested/exercised	(281,668)		16.76	(20,000)		12.54
Outstanding as of December 31, 2014	1,056,597	$	26.54	1,989,000	$	19.63
Granted	321,500		23.07	259,000		16.07
Expired or forfeited	(281,560)		23.89	(250,000)		15.97
Vested/exercised	(370,940)		27.07	—		—
Outstanding as of December 31, 2015	725,597	$	25.28	1,998,000	$	19.62
Granted	483,387		19.14	274,000		16.20
Vested/exercised	(52,500)		18.74	(97,500)		12.72
Outstanding as of December 31, 2016	1,156,484	$	22.64	2,174,500	$	19.50

The following table summarizes unrestricted stock units issued to the members of the Company’s Board of Directors as part of their annual retainers:



	Unrestricted Stock Units
			Weighted-
			Average
			Grant Date
			Fair Value
Year	Number		Per Share
2014	$	47,873	$	30.81
2015		68,160		21.93
2016		64,603		21.67

The fair value of unrestricted stock units issued during 2016, 2015 and 2014 was approximately $1.4 million, $1.5 million and $1.5 million, respectively.

The fair value of restricted stock units that vested during 2016, 2015 and 2014 was approximately $1.0 million, $8.0 million and $8.0 million, respectively. The aggregate intrinsic value, representing the difference between the market value on the date of exercise and the option price of the stock options exercised during 2016 and 2014 was $1.1 million and $0.3 million, respectively. As of December 31, 2016, the balance of unamortized restricted stock and stock option expense was $6.5 million and $0.7 million, respectively, which will be recognized over weighted-average periods of 1.3 years for restricted stock units and 0.5 years for stock options.

The 2,174,500 outstanding stock options as of December 31, 2016 had an intrinsic value of $18.5 million and a weighted-average remaining contractual life of 4.3 years. Of those outstanding options: 1) 1,402,500 were exercisable with an intrinsic value of $11.3 million, a weighted-average exercise price of $19.95 per share and a weighted-average remaining contractual life of 3.1 years; and 2) 772,000 have been granted but have not vested, of which 756,876 are expected to vest and have an intrinsic value of $7.2 million, a weighted-average exercise price of $18.49 and a weighted-average remaining contractual life of 6.5 years.

The fair value on the grant date and the significant assumptions used in the Black-Scholes option-pricing model are as follows:



	Year Ended December 31,
	2016			2015			2014
Total stock options granted		274,000			259,000			714,000
Weighted-average grant date fair value	$	5.31		$	12.48		$	17.69
Weighted-average assumptions:
Risk-Free Rate		1.2	%		1.3	%		1.8	%
Expected life of options(a)		4.2			4.7			5.7
Expected volatility(b)		40.6	%		45.5	%		50.6	%
Expected quarterly dividends	$	—		$	—		$	—

(a)

Calculated using the simplified method due to the terms of the stock options and the limited pool of grantees.

(b)

Calculated using historical volatility of the Company’s common stock over periods commensurate with the expected life of the option.

For the respective years ended December 31, 2016, 2015 and 2014, the Company recognized, as part of general and administrative expense, costs for stock-based payment arrangements for both employees of $13.4 million, $9.5 million and $18.6 million and non-employee directors of $1.4 million, $1.5 million and $1.4 million, with related aggregate tax benefits of $6.1 million, $4.6 million and $8.1 million, respectively.