[11] Stock-Based Compensation

Tutor Perini Corporation Long-Term Incentive Plan

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 stock options, stock appreciation rights, restricted stock unit awards, unrestricted stock awards, deferred stock awards and dividend equivalent rights. 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.

A total of 330,286 shares of common stock are available for future grant under the Plan at December 31, 2013.

Restricted Stock Unit Awards

Restricted stock unit 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 common 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 service period. As of December 31, 2013, the Compensation Committee has approved the grant of an aggregate of 5,188,333 restricted stock unit awards to eligible participants.

The restricted stock unit awards granted in 2013, 2012 and 2011 had weighted-average grant date fair values of $19.87, $14.39 and $19.03, respectively. The grant date fair value is determined based on the closing price of the Company’s common stock on the date of grant.

The following table presents the compensation expense recognized related to the restricted stock unit awards which is included in general and administrative expenses in the Consolidated Statements of Operations:

	Year ended December 31,
	2013		2012		2011
	(in millions)
Restricted Stock Compensation Expense	$	4.9	$	7.1	$	5.7
Related Income Tax Benefit	$	1.9	$	1.5	$	2.5

As of December 31, 2013, there was $2.4 million of unrecognized compensation expense related to the unvested restricted stock unit awards which, absent significant forfeitures in the future, is expected to be recognized over a weighted-average period of approximately 2.0 years.

During 2013, the Compensation Committee established the 2013 performance targets for 181,668 restricted stock units awarded in 2009 and 2010, and for 65,000 restricted stock units awarded in 2013. During 2013, the Compensation Committee approved the award of 312,500 new restricted stock units.

A summary of restricted stock unit awards activity during the year ended December 31, 2013 is as follows:

						Aggregate
			Weighted Average			Intrinsic
	Number		Grant Date			Value
	of Shares		Fair Value			(in thousands)
Total Granted and Unvested - January 1, 2013	1,141,666		$	18.12		$	15,641
Vested	(849,999	)	$	19.91		$	17,505
Granted	246,668		$	19.87		$	6,487
Forfeited	(176,667	)	$	13.66		—
Total Granted and Unvested	361,668		$	17.30		$	9,512
Approved for grant	957,500				(a)	$	25,182
Total Awarded and Unvested — December 31, 2013	1,319,168		n.a.			$	34,694

(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 unit awards at December 31, 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

2014		286,668
2015		342,500
2016		202,500
2017		442,500
2018		36,000
2019		9,000
Total		1,319,168

Approximately 150,000 of the unvested restricted stock unit awards will vest based on the satisfaction of service requirements and 1,169,168 will vest based on the satisfaction of both service requirements and the achievement of pre-tax income 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 December 31, 2013, the Compensation Committee has approved an aggregate of 2,535,465 stock option awards to eligible participants.

The stock option awards granted in 2013, 2012 and 2011 had weighted-average grant date fair values of $7.90, $5.65 and $9.31, respectively. The grant date fair value is determined based on the Black-Scholes option pricing model as discussed below.

The following table presents the compensation expense recognized related to stock option grants which is included in general and administrative expenses in the Consolidated Statements of Operations:

	Year ended December 31,
	2013		2012		2011
	(in millions)
Stock Option Compensation Expense	$	1.7	$	2.4	$	3.1
Related Income Tax Benefit	$	0.7	$	1.0	$	1.3

As of December 31, 2013, there was $979,000 of unrecognized compensation expense related to the outstanding stock option grants which, absent significant forfeitures in the future, is expected to be recognized over a weighted- average period of approximately 2.0 years.

During 2013, the Compensation Committee established the 2013 performance targets for 150,000 stock options awarded in 2009 and 50,000 stock options awarded in 2013. During 2013, the Compensation Committee approved the award of 170,000 new stock options.

A summary of stock option activity during the year ended December 31, 2013 is as follows:

			Weighted Average
	Number		Grant Date			Exercise
	of Shares		Value			Price
Total Granted and Outstanding - January 1, 2013	1,315,465		$	9.72		$	18.91
Granted	200,000		$	7.90		$	20.80
Exercised	(80,465	)	$	6.71		$	13.16
Forfeited	(140,000	)	$	6.76		—
Total Granted and Outstanding	1,295,000		$	9.94		$	20.20
Approved for grant	800,000				(a)	$	12.61
Total Awarded and Outstanding — December 31, 2013	2,095,000		n.a.			$	17.30

(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 1,045,000 options that have vested and were exercisable at December 31, 2013 at a weighted average exercise price of $20.41 per share.

Of the remaining options outstanding, approximately 50,000 will vest based on the satisfaction of service requirements and 1,000,000 will vest based on the satisfaction of both service requirements and the achievement of performance targets.

At December 31, 2013, the outstanding options of 1,295,000 had an intrinsic value of $7.9 million and a weighted- average remaining contractual life of 5.6 years.

The following table details the key assumptions used in estimating the grant date fair values of stock option awards granted during 2013, 2012 and 2011 based on the Black-Scholes option pricing model:

	Grant dates established during
	2013				2012				2011
Awarded during	2013		2009 (1)		2012		2009 (1)		2011		2011		2011		2009 (1)

Number of options	50,000		150,000		15,000		150,000		140,000		30,000		40,465		150,000
Risk-free interest rate	1.64	%	0.48	%	1.12	%	0.88	%	1.13	%	1.25	%	0.89	%	2.74	%
Expected life of options (years)	5.7		3.6		7.3		4.4		6.0		6.5		5.0		6.5
Expected volatility of underlying stock	51.81	%	51.00	%	50.59	%	53.89	%	49.86	%	48.70	%	51.62	%	46.94	%
Expected quarterly dividends (per share)	—		—		—		—		—		—		—		—

(1) During 2009, the Compensation Committee approved the award of 750,000 stock options that vest in five equal annual installments from 2010 to 2014 subject to the achievement of pre-tax income performance targets established by the Compensation Committee for fiscal years 2009 to 2013. The Compensation Committee has established the performance targets for fiscal years 2011, 2012 and 2013, and these tranches were deemed granted for accounting purposes.