Stock-Based Compensation and Other Employee Benefit Plans

The Company has certain stock-based compensation plans with stock options and restricted share awards outstanding as of December 31, 2012: the 2003 Employee Stock Incentive Plan, as amended; the Amended and Restated 2003 Stock Incentive Plan for Non-Employees, as amended; and individual option and restricted stock agreements. The Directors’ Plan expired in 2004 and no future stock options can be granted under this plan. In addition, the MasTec, Inc. 2011 Employee Stock Purchase Plan (the “2011 ESPP”) replaced the 1997 Non-Qualified Employee Stock Purchase Plan as of July 1, 2011. Under the 2011 ESPP, 1,000,000 shares of the Company’s common stock are available for purchase at a discount by eligible employees. Under plans currently in effect, there were a total of 3,947,895 shares available for grant as of December 31, 2012.

Restricted Share Awards

MasTec grants restricted share awards, which are valued based on the market price of MasTec common stock on the date of grant. Total unearned compensation related to restricted share awards as of December 31, 2012 was approximately $8.3 million, which is expected to be recognized over a weighted average period of approximately 2 years. The total intrinsic value, or fair value, of restricted share awards that vested, which is based on the market price on the date of vesting, was $7.3 million, $11.1 million and $1.2 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Following is a summary of restricted share award activity during the years indicated:



	Restricted Shares		Weighted Average Grant Date Fair Value
Non-vested restricted shares, as of December 31, 2010	1,009,777		$	9.32
Granted	364,784		17.06
Vested	(646,531	)	8.00
Canceled/forfeited	(11,250	)	9.80
Non-vested restricted shares, as of December 31, 2011	716,780		$	14.45
Granted	397,623		21.22
Vested	(347,889	)	12.68
Canceled/forfeited	(11,500	)	15.02
Non-vested restricted shares, as of December 31, 2012	755,014		$	18.82

Stock Options

The Company has granted options to purchase its common stock to employees and members of the Board of Directors and affiliates under various stock option plans at not less than the fair market value of the underlying stock on the date of grant. No stock options have been granted since 2006.

The following is a summary of stock option activity during the years indicated:



	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value ⁽¹⁾ (in millions)
Options outstanding as of December 31, 2010	2,588,170		$	10.27	3.87	$	11.2
Exercised	(1,132,396	)	10.25
Canceled/forfeited	(10,000	)	13.95
Options outstanding as of December 31, 2011	1,445,774		$	10.25	3.16	$	10.3
Options exercisable as of December 31, 2011	1,445,774		$	10.25	3.16	$	10.3

Options outstanding as of December 31, 2011	1,445,774		$	10.25	3.16	$	10.3
Exercised	(391,949	)	9.46
Canceled/forfeited	—		—
Options outstanding as of December 31, 2012	1,053,825		$	10.55	2.31	$	15.2
Options exercisable as of December 31, 2012	1,053,825		$	10.55	2.31	$	15.2


⁽¹⁾	Amount represents the difference between the exercise price and the market price of the Company’s stock on the last trading day of the corresponding period, multiplied by the number of in-the-money options.

All outstanding stock options were fully vested as of December 31, 2011. The total intrinsic value of options exercised during the years ended December 31, 2012, 2011 and 2010, which is based on the difference between the exercise price and the market price of the Company’s stock at the date of exercise, was $5.1 million, $10.3 million and $0.8 million, respectively. Proceeds from options exercised during the years ended December 31, 2012, 2011 and 2010, totaled $3.7 million, $11.6 million and $2.6 million, respectively.

Stock Based Compensation Expense and Related Tax Benefit

Details of stock based compensation expense and related tax benefits for the periods indicated are as follows (in millions):



	Years Ended December 31,
	2012		2011		2010
Stock based compensation expense:
Restricted share awards	$	4.4	$	3.6	$	3.8
Stock options	—		—		0.1
Total stock based compensation expense	$	4.4	$	3.6	$	3.9
Income tax benefit from stock based compensation:
Restricted share awards	$	1.8	$	3.4	$	1.3
Stock options	0.7		2.9		(0.3		)
Total income tax benefit from stock based compensation	$	2.5	$	6.3	$	1.0
Excess tax benefit from stock based compensation:
Vested restricted shares ⁽¹⁾	$	0.1	$	2.1	$	—
Stock options exercised ⁽¹⁾	0.7		5.7		—
Total excess tax benefit from stock based compensation ⁽¹⁾	$	0.8	$	7.8	$	—


⁽¹⁾	Excess tax benefits, which represent cash flows from tax deductions in excess of compensation expense recognized for stock options exercised and vested restricted shares, are classified as financing cash flows in the Company’s consolidated statements of cash flows.

401(k) Plan. MasTec has a 401(k) plan covering all eligible employees. Subject to certain dollar limits, eligible employees may contribute up to 75% of their pre-tax annual compensation to the 401(k) plan. Effective January 1, 2011, MasTec increased its 100% match of employee contributions from 1% to 2.5% of the employee’s salary, capped at $2,500 per employee. Effective January 1, 2011, matching contributions are payable annually, 50% in shares of MasTec common stock and 50% in cash. During the years ended December 31, 2012, 2011 and 2010, matching contributions totaled approximately $2.1 million, $1.7 million and $0.8 million, respectively.

Deferred Compensation Plan. MasTec offers a deferred compensation plan to its highly compensated employees. These employees are allowed to contribute a percentage of their pre-tax annual compensation to the deferred compensation plan. Effective January 1, 2011, MasTec increased its 100% match of employee contributions from 1% to 2.5% of the employee’s salary, capped at $2,500 per employee. Effective January 1, 2011, matching contributions are payable annually. Currently, management intends to provide for matching contributions in cash, however, matching contributions can also be provided for 50% in shares of MasTec common stock and 50% in cash, at MasTec’s election. Deferred compensation plan assets and related liabilities of approximately $3.2 million and $3.3 million are included in other long-term assets and other long-term liabilities, respectively, as of December 31, 2012. As of December 31, 2011, deferred compensation plan assets and related liabilities totaled $2.6 million and $2.2 million, respectively.

Employee Stock Purchase Plan. The 2011 ESPP became effective on July 1, 2011. Under the 2011 ESPP, eligible employees can purchase MasTec, Inc. common stock at a 15% discount through after-tax payroll deductions, allocating from 1% to 15% of their compensation each pay period. Eligible employees can also make lump sum purchases. Stock purchases under the 2011 ESPP are subject to a quarterly maximum of 5,000 shares per employee, and on an annual basis, the value of stock purchased cannot exceed $25,000 per employee.