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Stock-Based Compensation | 6 Months Ended
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Jun. 30, 2014
Stock-Based Compensation |
Stock-Based Compensation | (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 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’s intent is to settle stock awards in shares upon vesting to the extent that the Company has approved shares available under the Plan. A total of 46,680 shares of common stock remain available for future grant under the Plan at June 30, 2014. As a result, awards of 250,000 stock options that were made in March 2014 under the Plan were not deducted from the shares of common stock remaining available for future grant and these option awards, which may at the Company’s election be settled in cash, were classified as liabilities, and compensation cost for these liability-classified awards will be remeasured at each balance sheet date until such time that the Plan has been amended to increase the number of shares available. Under FASB ASC Topic 718, “Stock Compensation”(ASC 718), options or similar instruments on shares are classified as liabilities when a cash settlement feature exists in the stock based award that can be exercised only upon the occurrence of an event that is outside the employee’s control. 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 June 30, 2014, the Compensation Committee has approved the grant of an aggregate of 5,498,333 restricted stock unit awards under the 2004 Stock Option and Incentive Plan to eligible participants. In March 2014, the Compensation Committee established certain 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. 15,000 restricted stock unit awards were forfeited during the six months ended June 30, 2014. For the three and six months ended June 30, 2014, the Company recognized $3.2 million and $7.0 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 June 30, 2014 there was $18.6 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 2.9 years. A summary of restricted stock unit awards activity for the six months ended June 30, 2014 is as follows:
|  |  |  |  |  | Aggregate |
|  |  |  | Weighted Average |  | Intrinsic |
|  | Number |  | Grant Date |  | Value |
|  | of Shares |  | Fair Value |  | (in thousands) |
Granted and Unvested - January 1, 2014 |  | 361,668 |  | $ | 17.30 |  | $ | 9,512 |
Vested |  | (161,668 | ) | $ | 19.30 |  | $ | 4,619 |
Granted |  | 866,500 |  | $ | 27.33 |  | $ | 27,503 |
Forfeited |  | (15,000 | ) | $ | 28.59 |  | — |
Total Granted and Unvested |  | 1,051,500 |  | $ | 25.10 |  | $ | 33,375 |
Approved for grant |  | 401,000 |  | (a) |  | $ | 12,728 |
Total Awarded and Unvested - June 30, 2014 |  | 1,452,500 |  | n.a. |  | $ | 46,102 |
(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 June 30, 2014 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 |
2014 |  | 125,000 |
2015 |  | 342,500 |
2016 |  | 202,500 |
2017 |  | 737,500 |
2018 |  | 36,000 |
2019 |  | 9,000 |
|  | 1,452,500 |
Approximately 150,000 of the unvested restricted stock unit awards will vest based on the satisfaction of service requirements and 1,302,500 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 June 30, 2014, the Compensation Committee has approved the award of an aggregate of 2,785,465 stock option awards to eligible participants. 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. No stock options were awarded or new performance targets were set during the second quarter of 2014. For the three and six months ended June 30, 2014, the Company recognized compensation expense of $1.3 million and $2.9 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 June 30, 2014, there was $11.2 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 3.1 years. A summary of stock option activity for the six months ended June 30, 2014 is as follows:
|  |  |  | Weighted Average |
|  | Number |  | Grant Date |  | Exercise |
|  | of Shares |  | Fair Value |  | Price |
Total Granted and Outstanding - January 1, 2014 |  | 1,295,000 |  | $ | 9.94 |  | $ | 20.20 |
Granted |  | 714,000 |  | $ | 17.69 |  | $ | 18.40 |
Exercised |  | — |  | — |  | — |
Forfeited |  | — |  | — |  | — |
Total Granted and Outstanding |  | 2,009,000 |  | $ | 12.70 |  | $ | 19.56 |
Approved for grant |  | 336,000 |  | (a) |  | $ | 11.88 |
Total Awarded and Outstanding - June 30, 2014 |  | 2,345,000 |  | n.a. |  | $ | 18.46 |
(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 1,155,000 stock options that have vested and were exercisable at June 30, 2014 at a weighted average exercise price of $20.67 per share. Of the remaining stock options outstanding, approximately 495,000 stock options will vest based on the satisfaction of service requirements and 1,850,000 stock options will vest based on the satisfaction of both service requirements and the achievement of performance targets. At June 30, 2014, the outstanding stock options of 2,009,000 had an intrinsic value of $24.5 million and a weighted average remaining contractual life of 6.4 years. No stock option awards were granted during the second quarter of 2014. 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 2014 based on the Black Scholes option pricing model using the following key assumptions:
Number of options |  | 250,000 |  | 75,000 |  | 9,000 |  | 150,000 |  | 230,000 |
Risk-free interest rate |  | 2.08 | % | 1.72 | % | 2.25 | % | 1.46 | % | 1.82 | %
Expected life of options (years) |  | 6.5 |  | 5.3 |  | 7.0 |  | 4.6 |  | 5.6 |
Expected volatility of underlying stock |  | 50.97 | % | 51.72 | % | 50.68 | % | 47.69 | % | 51.86 | %
Expected quarterly dividends (per share) |  | $ | 0.00 |  | $ | 0.00 |  | $ | 0.00 |  | $ | 0.00 |  | $ | 0.00 |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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