Share-based Compensation

3 Months Ended

Mar. 31, 2012

Share-based Compensation [Abstract]

Share-based Compensation

(9) Share-based Compensation

The Company accounts for its share-based compensation arrangements by recognizing compensation expense for the fair value of the share awards granted ratably over their vesting period. All compensation expense related to share-based compensation arrangements is recorded in sales, general and administrative expense. The unrecognized compensation cost as of March 31, 2012 associated with all share-based payment arrangements is $16,771 and the weighted average period over which it is to be expensed is 1.6 years.

2012 Long-Term Compensation Plan

On March 7, 2012, the Human Resources Committee (the “Committee”) of the Board of Directors of the Company approved equity awards under the Company’s 2012 Long-Term Compensation Plan (“2012 LTC Plan”) for executive officers and other select personnel. The 2012 LTC Plan awards included restricted stock units (“RSUs”) and performance share units (“PSUs”). All 2012 LTC Plan awards are subject to the terms of the Company’s 2008 A.M. Castle & Co. Omnibus Incentive Plan, amended and restated as of April 28, 2011.

The 2012 LTC Plan consists of three components of share-based payment awards as follows:

Restricted Share Units—the Company granted 181 RSUs with a grant date fair value of $10.02 per share unit, which was established using the market price of the Company’s stock on the date of grant. The RSUs cliff vest on December 31, 2014. Each RSU that becomes vested entitles the participant to receive one share of the Company’s common stock. The number of shares delivered may be reduced by the number of shares required to be withheld for federal and state withholding tax requirements (determined at the market price of Company shares at the time of payout).

Performance Share Units—the Company granted 362 PSUs, half of which contain a market- based performance condition and half of which contained a non-market-based performance condition.

PSUs containing a market-based performance condition—the potential award for PSUs containing a market-based performance condition is dependent on relative total shareholder return (“RTSR”), which is measured over a three-year performance period, beginning January 1 ^st of the year of grant. RTSR is measured against a group of peer companies either in the metals industry or in the industrial products distribution industry (the “RTSR Peer Group”). The number of performance shares, if any, that vest based on the performance achieved during the three-year performance period, will vest at the end of the three-year performance period. Each performance share that becomes vested entitles the participant to receive one share of the Company’s common stock. The number of shares delivered may be reduced by the number of shares required to be withheld for federal and state withholding tax requirements (determined at the market price of Company shares at the time of payout).

The grant date fair value for the PSUs containing the RTSR market-based performance condition under the 2012 LTC Plan of $13.78 was estimated using a Monte Carlo simulation with the following assumptions:

	2012
Expected volatility		85.0	%
Risk-free interest rate		0.40	%
Expected life (in years)		2.81
Expected dividend yield		—

Compensation expense for performance awards containing a market-based performance condition is recognized regardless of whether the market condition is achieved to the extent the requisite service period condition is met. As of March 31, 2012, no performance awards containing a market condition are estimated to be issued under the 2012 LTC Plan. However, a maximum of 361 shares could potentially be issued if the Company achieves the market condition at the end of the performance period.

PSUs containing a non-market-based performance condition—the potential award for PSUs containing a non-market-based performance condition is determined based on the Company’s average actual performance versus Company-specific target goals for Return on Invested Capital (“ROIC”) (as defined in the 2012 LTC Plan) for the three-year performance period beginning on January 1 ^st of the year of grant. Partial performance awards can be earned for performance less than the target goal, but in excess of minimum goals and award distributions twice the target can be achieved if the maximum goals are met or exceeded. The number of performance shares, if any, that vest based on the performance achieved during the three-year performance period, will vest at the end of the three-year performance period. Compensation expense recognized is based on management’s expectation of future performance compared to the pre-established performance goals. If the performance goals are not expected to be met, no compensation expense is recognized and any previously recognized compensation expense is reversed. The grant date fair-value of the PSUs containing a non-market-based performance condition was established using the market price of the Company’s stock on the date of grant. The award information associated with non-market-based performance condition awards is summarized below:

Share type	Grant Date Fair Value		Estimated Number of PSUs to be Issued		Maximum Number of PSUs that could Potentially be Issued
Non-market-based performance condition	$	10.02		345		361