(9) Stock-Based Compensation

The Company is authorized to grant up to 6,900,000 stock-based compensation awards to key executives, employees and directors of the Company under the Tutor Perini Corporation Long-Term Incentive Plan (the “Plan”). The Plan allows stock-based compensation awards to be granted in a variety of forms, including restricted stock awards and stock options. The terms and conditions of the awards granted are established by the Compensation Committee of the Company’s Board of Directors who also administers the Plan.

Restricted Stock Awards

Restricted stock awards generally vest subject to the satisfaction of service requirements or the satisfaction of both service requirements and achievement of certain performance targets. Upon vesting, each award is exchanged for one share of the Company’s common stock. The grant date fair values of these awards are determined based on the closing price of the Company’s stock on either the award date (if subject only to service conditions), or the date that the Compensation Committee establishes the applicable performance target (if subject to performance conditions). The related compensation expense is amortized over the applicable requisite period. As of March 31, 2013, the Compensation Committee has approved the grant of an aggregate of 4,875,833 restricted stock awards to eligible participants.

In March 2013, the Compensation Committee established the 2013 pre-tax income performance targets for 178,335 restricted stock units awarded in 2009 and 2010. Additionally, there were no restricted stock unit awards forfeited during the three months ended March 31, 2013.

For the three months ended March 31, 2013 and 2012, the Company recognized $2.3 million and $2.5 million, respectively, of compensation expense related to restricted stock awards, and such expense is included in general and administrative expenses in the Consolidated Statements of Operations. As of March 31, 2013 there was $6.0 million of unrecognized compensation cost related to the unvested awards which, absent significant forfeitures in the future, is expected to be recognized over a weighted average period of approximately 2.3 years.

A summary of restricted stock awards activity for the three months ended March 31, 2013 is as follows:

					Aggregate
			Weighted Average		Intrinsic
	Number		Grant Date		Value
	of Shares		Fair Value		(in thousands)
Granted and Unvested - January 1, 2013	1,141,666		$	18.12	$	15,641
Vested	(28,333	)	$	15.49	$	521
Granted	178,335		$	19.30	$	3,442
Forfeited	—		—		—
Total Granted and Unvested	1,291,668		$	18.34	$	24,929
Approved for grant	710,000		(a)		$	13,703
Total Awarded and Unvested - March 31, 2013	2,001,668		n.a.		$	38,632

(a) Grant date fair value cannot be determined currently because the related performance targets for future years have not yet been established by the Compensation Committee.

The outstanding unvested awards at March 31, 2013 are scheduled to vest as follows, subject where applicable to the achievement of performance targets. As described above, certain performance targets are not yet established.

		Number
Vesting Date		of Awards
2013		868,333
2014		408,335
2015		150,000
2016		165,000
2017		410,000
Total		2,001,668

Approximately 245,000 of the unvested restricted stock awards will vest based on the satisfaction of service requirements and 1,756,668 of the unvested restricted stock units will vest based on the satisfaction of both service requirements and the achievement of performance targets.

Stock Options

Stock option awards generally vest subject to the satisfaction of service requirements or the satisfaction of both service requirements and achievement of certain performance targets. The grant date fair values of these awards are determined based on the Black-Scholes option price model on either the award date (if subject only to service conditions) or the date that the Compensation Committee establishes the applicable performance target (if subject to performance conditions). The related compensation expense is amortized over the applicable requisite service period. The exercise price of the options is equal to the closing price of the Company’s common stock on the date the awards were approved by the Compensation Committee, and the awards expire ten years from the award date. As of March 31, 2013, the Compensation Committee has approved the award of an aggregate of 2,365,465 stock option awards to eligible participants.

In March 2013, the Compensation Committee established the 2013 pre-tax income performance target for 150,000 stock options awarded in 2009.

For the three months ended March 31, 2013 and 2012, the Company recognized compensation expense of $0.8 million and $0.9 million, respectively, related to stock option awards, and such expenses are included in general and administrative expenses in the Consolidated Statements of Operations. As of March 31, 2013, there was $2.4 million of unrecognized compensation expense related to the outstanding options, which, absent significant forfeitures in the future, is expected to be recognized over a weighted average period of approximately 2.3 years.

A summary of stock option activity under the plan for the three months ended March 31, 2013 is as follows:

		Weighted Average
	Number	Grant Date		Exercise
	of Shares	Fair Value		Price
Total Granted and Outstanding - January 1, 2013	1,315,465	$	9.72	$	18.91
Granted	150,000	$	9.02	$	20.33
Forfeited	—	—		—
Total Granted and Outstanding	1,465,465	$	9.65	$	19.06
Approved for grant	680,000	(a)		$	11.14
Total Awarded and Outstanding - March 31, 2013	2,145,465	n.a.		$	16.55

(a) Grant date fair value cannot be determined currently because the related performance targets for future years have not yet been established by the Compensation Committee.

There were 490,465 options that have vested and were exercisable at March 31, 2013 at a weighted average exercise price of $19.79 per share.

Of the remaining options outstanding, approximately 592,500 options will vest based on the satisfaction of service requirements and 1,062,500 options will vest based on the satisfaction of both service requirements and the achievement of performance targets.

At March 31, 2013, the outstanding options of 1,465,465 had an intrinsic value of $2.9 million and a weighted average remaining contractual life of 6.3 years.

During 2009, the Compensation Committee approved the award of 750,000 stock options that vest in five equal annual tranches from 2010 to 2014 subject to the achievement of pre-tax income performance targets established by the Compensation Committee. In March 2013, the Compensation Committee established the 2013 pre-tax income performance target for the fifth tranche of 150,000 stock options awarded in 2009. The fair value of this tranche was determined based on the Black Scholes option pricing model using the following key assumptions:

Risk-free interest rate		0.48%
Expected life of options		3.6 years
Expected volatility of underlying stock		51.00%
Expected quarterly dividends (per share)		$0.00