(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 September 30, 2013, the Compensation Committee has approved the grant of an aggregate of 5,033,333 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, 66,667 restricted stock unit awards were forfeited during the nine months ended September 30, 2013.

For the three and nine months ended September 30, 2013, the Company recognized $1.5 million and $5.0 million, respectively, of compensation expense related to restricted stock awards, and such expense is included in general and administrative expenses in the Consolidated Condensed Statements of Operations. As of September 30, 2013 there was $2.7 million of unrecognized compensation cost related to the unvested restricted stock awards which, absent significant forfeitures in the future, is expected to be recognized over a weighted average period of approximately 2.1 years.

A summary of restricted stock awards activity for the nine months ended September 30, 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	(514,999	)	$	20.72	$	9,560
Granted	196,668		$	19.27	$	4,193
Forfeited	(66,667	)	$	14.23	—
Total Granted and Unvested	756,668		$	16.99	$	16,132
Approved for grant	852,500		(a)		$	18,175
Total Awarded and Unvested - September 30, 2013	1,609,168		n.a.		$	34,307

(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 restricted stock awards at September 30, 2013 are scheduled to vest as follows, subject where applicable to the achievement of performance targets. As described above, certain performance targets have not yet been established.

		Number
Vesting Date		of Awards
2013		185,000
2014		546,668
2015		187,500
2016		202,500
2017		442,500
2018		36,000
2019		9,000
Total		1,609,168

Of the unvested restricted stock awards, 160,000 will vest based on the satisfaction of service requirements and 1,449,168 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 September 30, 2013, the Compensation Committee has approved the award of an aggregate of 2,410,465 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 and nine months ended September 30, 2013, the Company recognized compensation expense of $0.5 million and $1.6 million, respectively, related to stock option awards, and such expenses are included in general and administrative expenses in the Consolidated Condensed Statements of Operations. As of September 30, 2013, there was $0.9 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 2.0 years.

A summary of stock options activity under the plan for the nine months ended September 30, 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		$	6.93	$	20.33
Exercised	(40,465	)	$	6.18	$	13.77
Forfeited	(50,000	)	$	7.25	—
Total Granted and Outstanding	1,375,000		$	9.61	$	19.45
Approved for grant	725,000		(a)		$	11.61
Total Awarded and Outstanding - September 30, 2013	2,100,000		n.a.		$	16.75

(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 860,000 stock options that have vested and were exercisable at September 30, 2013 at a weighted average exercise price of $22.10 per share.

Of the remaining stock options outstanding, 282,500 stock options will vest based on the satisfaction of service requirements and 957,500 stock options will vest based on the satisfaction of both service requirements and the achievement of performance targets.

At September 30, 2013, the outstanding stock options of 1,375,000 had an intrinsic value of $3.8 million and a weighted average remaining contractual life of 5.8 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