Quarterly report pursuant to Section 13 or 15(d)

Equity-Based Compensation

v2.4.0.8
Equity-Based Compensation
6 Months Ended
Jun. 30, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Equity-Based Compensation
9.

EQUITY-BASED COMPENSATION:

Stock Incentive Plans

On May 19, 2011, Quanta’s stockholders approved the 2011 Omnibus Equity Incentive Plan (the 2011 Plan). The 2011 Plan provides for the award of non-qualified stock options, incentive (qualified) stock options (ISOs), stock appreciation rights, restricted stock, RSUs, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. The purpose of the 2011 Plan is to provide participants with additional performance incentives by increasing their proprietary interest in Quanta. Employees, directors, officers, consultants or advisors of Quanta or its affiliates are eligible to participate in the 2011 Plan, as are prospective employees, directors, officers, consultants or advisors of Quanta who have agreed to serve Quanta in those capacities. An aggregate of 11,750,000 shares of Quanta common stock may be issued pursuant to awards granted under the 2011 Plan.

Additionally, pursuant to the Quanta Services, Inc. 2007 Stock Incentive Plan (the 2007 Plan), which was adopted on May 24, 2007, Quanta may award restricted stock, incentive stock options and non-qualified stock options to eligible employees, directors, and certain consultants and advisors. An aggregate of 4,000,000 shares of common stock may be issued pursuant to awards granted under the 2007 Plan. Quanta also has a Restricted Stock Unit Plan (the RSU Plan), pursuant to which RSUs may be awarded to certain employees and consultants of Quanta’s Canadian operations.

The 2011 Plan, the 2007 Plan and the RSU Plan, together with certain plans assumed by Quanta in acquisitions, are referred to as the Plans.

Restricted Stock and RSUs To Be Settled in Common Stock

During both the three months ended June 30, 2014 and 2013, Quanta granted 0.1 million shares of restricted stock and RSUs to be settled in common stock under the Plans, with weighted average grant date fair values of $33.31 and $28.46. During both the six months ended June 30, 2014 and 2013, Quanta granted 1.4 million shares of restricted stock and RSUs to be settled in common stock under the Plans, with weighted average grant date fair values of $35.11 and $29.41. The grant date fair value for awards of restricted stock and RSUs to be settled in common stock is based on the market value of Quanta common stock on the date of grant. Restricted stock and RSU awards to be settled in common stock are subject to forfeiture, restrictions on transfer and certain other conditions until vesting, which generally occurs in equal installments over a two-year or three-year period following the date of grant. During the restriction period, holders of restricted stock are entitled to vote and receive dividends on such shares.

During the three months ended June 30, 2014 and 2013, vesting activity consisted of 0.1 million and 0.2 million shares of restricted stock and RSUs settled in common stock with an approximate fair value at the time of vesting of $3.5 million and $6.8 million. During both the six months ended June 30, 2014 and 2013, vesting activity consisted of 1.1 million shares of restricted stock and RSUs settled in common stock with an approximate fair value at the time of vesting of $37.0 million and $31.1 million.

As of June 30, 2014, there was approximately $47.9 million of total unrecognized compensation cost related to unvested restricted stock and RSUs to be settled in common stock granted to both employees and non-employees. This cost is expected to be recognized over a weighted average period of 2.01 years.

RSUs To Be Settled in Cash

Certain RSUs granted by Quanta under the Plans are intended to provide plan participants with cash performance incentives that are substantially equivalent to the risks and rewards of equity ownership in Quanta. These RSUs to be settled in cash typically vest in equal installments over a two-year or three-year period following the date of grant and are subject to forfeiture under certain conditions, primarily termination of service. Upon vesting of these RSUs, the holders receive for each vested RSU an amount in cash equal to the fair market value on the vesting date of one share of Quanta common stock, as specified in the applicable award agreement.

Compensation expense related to RSUs to be settled in cash was $0.9 million and $0.5 million for the three months ended June 30, 2014 and 2013 and $1.6 million and $1.1 million for the six months ended June 30, 2014 and 2013. Such expense is recorded in selling, general and administrative expenses. RSUs that may be settled only in cash are not included in the calculation of earnings per share, and the estimated earned value of such RSUs is classified as a liability. Quanta paid $0.1 million and a nominal amount to settle liabilities related to cash-settled RSUs in the three months ended June 30, 2014 and 2013 and $2.2 million and $0.6 million to settle liabilities related to cash-settled RSUs in the six months ended June 30, 2014 and 2013. Accrued liabilities for the estimated earned value of outstanding RSUs to be settled in cash were $1.5 million and $2.1 million at June 30, 2014 and December 31, 2013.