12. Stock-Based Compensation

Total stock-based compensation expense recognized for the years ended December 31, 2011, 2010 and 2009 was $1.5, $1.2 and $0.4, respectively. Stock-based compensation expense is included in our consolidated statements of operations in “Selling, general and administrative expense.”

2005 Stock and Incentive Plan

Metals USA Holdings’ Amended and Restated 2005 Stock and Incentive Plan (the “2005 Plan”) permits the issuance of options and restricted stock awards to employees and directors of the Company. The Plan has reserved for issuance up to 2.4 million shares of common stock. The Plan has two tranches of options, Tranche A and Tranche B. Tranche A options vest on a pro-rata basis over five years, have a term of ten years, and expire if not exercised. Tranche B options, which include both a service and a performance condition, vest on the eighth anniversary of the date of grant or earlier dependent on the satisfaction of an internal rate of return on capital invested, have a term of ten years from date of grant, and expire if not exercised.

Tranche A Options

The weighted average grant-date fair value of Tranche A options outstanding as of December 31, 2011 was calculated using the following assumptions:


Expected dividend yield			0.0%
Expected stock price volatility			54.9%
Risk free interest rate			4.3 - 4.6%
Expected term of options (in years)			6.5

The following is a summary of stock option activity for Tranche A options for the year ended December 31, 2011:


	Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Number of Options
Balance, December 31, 2010	$	3.65	$	3.20				404,936
Granted		—		—				—
Exercised		—		—				—
Canceled or expired		3.98		2.30				(3,704	)

Balance, December 31, 2011	$	3.65	$	3.21		4.0		401,232

Vested and Exercisable as of:
December 31, 2011			$	3.21		4.0		389,553

A summary of Tranche A nonvested stock options for the year ended December 31, 2011 is presented below:


	Weighted Average Grant - Date Fair Value		Number of Options
Nonvested at December 31, 2010	$	3.85		20,183
Granted		—		—
Vested		3.60		(8,504	)
Canceled or expired		—		—

Nonvested at December 31, 2011	$	0.71		11,679

As of December 31, 2011, all compensation cost associated with the Tranche A options had been recognized. The aggregate intrinsic value of the outstanding Tranche A options was $3.2 as of December 31, 2011.

Tranche B Options

The weighted average grant-date fair value of Tranche B options outstanding as of December 31, 2011 was calculated using the following assumptions:


Expected dividend yield			0.0%
Expected stock price volatility			54.3%
Risk free interest rate			5%
Expected term of options (in years)			8.0

The following is a summary of stock option activity for Tranche B options for the year ended December 31, 2011:


	Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Number of Options
Balance, December 31, 2010	$	3.97	$	2.30				50,816
Granted		—		—				—
Exercised		—		—				—
Canceled or expired		3.97		2.30				(3,704	)

Balance, December 31, 2011	$	3.97	$	2.30		3.9		47,112

Vested and Exercisable as of:
December 31, 2011			$	2.30		3.9		47,112

All Tranche B stock options outstanding as of December 31, 2011 are fully vested and exercisable. As of December 31, 2011, all compensation cost associated with the Tranche B options had been recognized. The aggregate intrinsic value of the outstanding Tranche B options was $0.4 as of December 31, 2011.

2010 Long-Term Incentive Plan

On March 19, 2010, our Board of Directors adopted, and our stockholders approved, the Metals USA Holdings 2010 Long-Term Incentive Plan (the “2010 Plan”). The purposes of the 2010 Plan are to further the growth and success of Metals USA and to reward and incentivize the outstanding performance of our key employees, directors, consultants and other service providers by aligning their interests with those of stockholders through equity-based compensation and enhanced opportunities for ownership of shares of our common stock.

Subject to adjustment, the 2010 Plan authorizes the issuance of up to 2.6 million shares of common stock pursuant to the grant or exercise of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other equity-based awards.

The 2010 Plan is administered by our Board of Directors or the Compensation Committee thereof, or such other committee of the Board of Directors as the Board of Directors may designate from time to time (the “Committee”). Among other things, the Committee has the authority to select individuals to whom awards may be granted, to determine the type of award, to determine the terms and conditions of any such awards, including vesting terms, to interpret the terms and provisions of the 2010 Plan and awards granted thereunder and to otherwise administer the plan.

Stock Options

On September 13, 2010, pursuant to the 2010 Plan, 632,000 options to acquire the Company’s common stock were granted to certain members of our management and to members of our Board of Directors with an exercise price equal to the fair market value as of the date of the grant. The options granted to management vest ratably over four years and have a contractual term of ten years. The options granted to the members of our Board of Directors vest ratably over three years and also have a contractual term of ten years.

The fair value of the 2010 Plan option awards was estimated on the date of grant using a Black-Scholes option valuation model using the following valuation assumptions:


Expected dividend yield		0%
Expected stock price volatility		62.5%
Risk free interest rate		1.51%
Expected term (in years) — management options		5.0
Expected term (in years) — Board of Director options		4.0
Exercise price	$	13.17

The following is a summary of stock option activity for the 2010 Plan options for the year ended December 31, 2011:


	Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Number of Options
Balance, December 31, 2010	$	6.94	$	13.17				632,000
Granted		—		—				—
Exercised		—		—				—
Canceled or expired		7.02		13.17				(6,600	)

Balance, December 31, 2011	$	6.94	$	13.17		8.5		625,400

Vested and Exercisable as of:
December 31, 2011			$	13.17		8.5		164,300

A summary of the 2010 Plan nonvested stock options for the year ended December 31, 2011 is presented below:


	Weighted Average Grant - Date Fair Value		Number of Options
Nonvested at December 31, 2010	$	6.94		632,000
Granted		—		—
Vested		6.94		(164,300	)
Canceled or expired		6.94		(6,600	)

Nonvested at December 31, 2011	$	6.94		461,100

As of December 31, 2011, outstanding options granted under the 2010 Plan had no intrinsic value (i.e. the fair market value of the Company’s common stock was less than the options’ exercise price), with approximately $2.5 of total unrecognized compensation expense remaining to be amortized over a weighted average period of 2.4 years.

Restricted Stock

On September 13, 2010, pursuant to the 2010 Plan, 130,100 shares of restricted stock were granted to certain members of our management and to members of our Board of Directors. The awards granted to management vest ratably over four years, while the awards granted to the members of our Board of Directors vest ratably over three years. The fair value of the restricted stock granted was $13.17 per share, determined based on the fair value of the Company’s common stock on the grant date. During the year ended December 31, 2011, 34,394 shares of restricted stock vested, and there were no grants or forfeitures of restricted stock awards. As of December 31, 2011, approximately $1.0 of total unrecognized compensation expense was expected to be recognized over a weighted average period of 2.4 years.

January 2012 Equity Grants

On January 1, 2012, pursuant to the 2010 Plan, 373,000 options to acquire the Company’s common stock were granted to certain members of our management and to members of our Board of Directors with an exercise price equal to the fair market value as of the date of the grant. The options granted to management vest ratably over four years from the date of grant and have a contractual term of ten years. The options granted to the members of our Board of Directors vest ratably over two years from the date of grant and also have a contractual term of ten years.

On January 1, 2012, pursuant to the 2010 Plan, 82,100 shares of restricted stock were granted to certain members of our management and to members of our Board of Directors. The awards granted to management vest ratably over four years from the date of grant, while the awards granted to the members of our Board of Directors vest ratably over two years from the date of grant.