(9) Stock-Based Compensation

The Company is authorized to grant up to 8,500,000 stock-based compensation awards to key executives, employees and directors of the Company under the Amended and Restated 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.

The Company intends to settle stock awards in shares upon vesting to the extent that the Company has shares available under the Plan. A total of 114,928 shares of common stock remain available for future grant under the Plan at March 31, 2015.

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 restricted stock unit 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 service period. As of March 31, 2015, the Compensation Committee has approved the grant of an aggregate of 6,228,430 restricted stock unit awards under the 2004 Stock Option and Incentive Plan (and amendments) to eligible participants.

During March of 2015, the Compensation Committee established the 2015 performance targets for 291,500 restricted stock units awarded in 2015, 2013, and 2012. The restricted stock unit awards granted during the first quarter of 2015 had a weighted average grant date fair value of $23.35. The grant date fair value is determined based on the closing price of the Company’s common stock on the date of the grant.

During March of 2014, the Compensation Committee established the 2014 performance targets for 866,500 restricted stock units awarded in 2014, 2013, and 2012. The restricted stock unit awards granted during the first quarter of 2014 had a weighted average grant date fair value of $27.33. The grant date fair value is determined based on the closing price of the Company’s common stock on the date of the grant.

1,560 restricted stock unit awards were forfeited during the three months ended March 31, 2015.

During the three months ended March 31, 2015 and 2014, the Company recognized $5.6 million and $3.9 million, respectively, of compensation expense related to restricted stock unit awards, and such expense is included in general and administrative expenses in the Consolidated Statements of Operations. As of March 31, 2015, there was $19.9 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 2.5 years.

A summary of restricted stock unit awards activity for the three months ended March 31, 2015 is as follows:



				Aggregate
		Weighted Average		Intrinsic
	Number	Grant Date		Value
	of Shares	Fair Value		(in thousands)
Granted and Unvested - January 1, 2015	1,056,597	$	26.54	$	25,432
Activity during the three months ended March 31, 2015:
Vested	(335,940)	$	27.64	$	7,323
Granted	291,500	$	23.35	$	6,807
Forfeited	(1,560)	$	28.59	$	—
Total Granted and Unvested - March 31, 2015	1,010,597	$	27.78	$	23,597
Approved for grant	709,500		(a)	$	16,567
Total Awarded and Unvested - March 31, 2015	1,720,097		n.a.	$	40,164

(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, 2015 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
2015		5,000
2016		302,500
2017		957,597
2018		296,000
2019		159,000
		1,720,097

35,000 of the unvested restricted stock unit awards will vest based on the satisfaction of service requirements and 1,685,097 of the unvested restricted stock unit awards 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, 2015, the Compensation Committee has approved the award of an aggregate of 3,385,465 stock options to eligible participants.

In March 2015, the Compensation Committee established certain performance targets for 259,000 stock options awarded in 2015, 2014, 2013, and 2012. The stock option awards granted during the first quarter of 2015 had a weighted average grant date fair value of $12.64.

In March 2014, the Compensation Committee established certain performance targets for 714,000 stock options awarded in 2014, 2013 and 2012. The stock option awards granted during the first quarter of 2014 had a weighted average grant date fair value of $17.69.

For the three months ended March 31, 2015 and 2014, the Company recognized compensation expense of $3.6 million and $1.5 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, 2015, there was $7.5 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 2.4 years.

A summary of stock option activity for the three months ended March 31, 2015 is as follows:



		Weighted Average
	Number	Grant Date		Exercise
	of Shares	Fair Value		Price
Total Granted and Outstanding - January 1, 2015	1,989,000	$	12.75	$	19.63
Activity during the three months ended March 31, 2015:
Granted	259,000	$	12.64	$	16.07
Exercised	—	$	—	$	—
Forfeited	—	$	—	$	—
Total Granted and Outstanding - March 31, 2015	2,248,000	$	12.50	$	19.22
Approved for grant	677,000		(a)		20.75
Total Awarded and Outstanding - March 31 2015	2,925,000		n.a.		19.57

(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 1,485,000 stock options that have vested and were exercisable at March 31, 2015 at a weighted average exercise price of $19.57 per share.

Of the remaining stock options outstanding, approximately 475,000 stock options will vest based on the satisfaction of service requirements and 2,450,000 stock options will vest based on the satisfaction of both service requirements and the achievement of performance targets.

At March 31, 2015, the outstanding stock options of 2,248,000 had an intrinsic value of $11.2 million and a weighted average remaining contractual life of 5.9 years.

The following table details the key assumptions used in estimating the grant date fair values of stock option awards granted during the first quarter of 2015 based on the Black Scholes option pricing model using the following key assumptions:



Awarded during		2015			2013			2013			2012
Number of options		100,000			5,000			4,000			150,000
Risk-free interest rate		1.46	%		1.67	%		1.67	%		1.15	%
Expected life of options (years)		5.50			6.76			6.75			4.06
Expected volatility of underlying stock		45.11	%		49.29	%		49.29	%		45.92	%
Expected quarterly dividends (per share)	$	0.00		$	0.00		$	0.00		$	0.00