Stock Compensation

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Compensation

Stock Compensation

Employees of the Company have participated in various stock-based compensation plans. Restricted stock awards and restricted stock units have been granted under the plans. Participation in these plans is reflected as compensation to the Company's employees and is included in selling and general expenses in the accompanying consolidated financial statements. Compensation is recorded based upon the estimated fair value of the award on the date of grant and is recognized on a straight-line basis over the period that the award vests.

Restricted Stock Awards and Restricted Stock Units

Effective September 24, 2009, the Company adopted the Euramax Holdings, Inc. Executive Incentive Plan (the "Plan"). Under the Plan, the Company reserved 21,737 restricted shares of Class A Common Stock for issuance to selected officers, directors and other key employees. To the extent that shares issued under the plan are forfeited or the award terminates, such shares may be reissued under the plan. The plan terminates on September 23, 2019.

A summary of changes in unvested shares of restricted stock for the year ended December 31, 2012 are as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding at December 30, 2011	9,825		$	636
Granted	1,200		784
Vested	(4,300	)	643
Forfeited	(375	)	654
Outstanding at December 31, 2012	6,350		$	658

During 2012, the Company granted 800 shares of restricted stock awards and 400 shares of restricted stock units of Class A Common Stock to employees under the plan. During 2011, the Company granted 750 shares of restricted stock awards and 700 shares of restricted stock units. The restricted stock awards and restricted stock units vest ratably over four years based upon continued employment or immediately upon a change in control or termination of employment by reason of death or disability. Restricted stock units are required to be settled by issuance of shares of the Company's common stock. Shares issued pursuant to the plan are subject to a stockholders agreement (the Stockholders Agreement) entered into in 2009. The Stockholders Agreement contains certain restrictions on the ability of stockholders to transfer common stock of the Company. The Stockholder Agreement also provides stockholders with customary tag-along rights and drag-along rights with respect to certain transfers of stock or equity securities of the Company and customary preemptive rights in connection with the issuance of common stock or equity securities by the Company.

The fair value of restricted stock awards and restricted stock units was estimated on the date of grant based on the estimated fair value of the Company's Class A common stock determined using an income and market valuation analysis. The weighted average grant date fair value of the 2012 and 2011 grants were $784 and $577 per share, respectively. During 2012, 2011, and 2010, the Company recognized expense of approximately $3.0 million, $3.0 million, and $2.3 million related to restricted stock awards and restricted stock units within selling and general expenses.

Determining the fair value of the Company's common stock requires making complex and subjective judgments. Accordingly, the Company performed valuations using an income and market approach for grants made during 2012 and 2011. The Company's income approach to valuation is based on a discounted future cash flow approach that uses its estimates of revenue, driven by assumed market growth rates, and estimated costs as well as appropriate discount rates. The Company's revenue forecasts are based on expected annual growth rates and other assumptions that are consistent with the plans and estimates the Company uses to manage the business. The Company applied discount rates of 10.3% and 11.0% in 2012 and 2011, respectively, to calculate the present value of its future cash flows, which was determined using the Capital Asset Pricing Model. The Company also applied a 25% lack of marketability discount, which accounts for the fact that private companies are less liquid than similar public companies, and a 20% minority interest discount. These discounts were estimated based on comparable market transactions and other analyses.

As of December 31, 2012, the Company had approximately $3.0 million of unrecognized compensation cost related to stock-based compensation arrangements granted under the Plan. This cost is expected to be recognized as stock-based compensation expense over a weighted-average period of approximately 1.0 year.