Share-based Compensation

9 Months Ended

Sep. 30, 2011

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 September 30, 2011 associated with all share-based payment arrangements is $6,693 and the weighted average period over which it is to be expensed is 1.4 years.

2011 Long-Term Compensation Plan

On March 2, 2011, the Human Resources Committee (the “Committee”) of the Board of Directors of the Company approved equity awards under the Company’s 2011 Long-Term Compensation Plan (“2011 LTC Plan”) for executive officers and other select personnel. The 2011 LTC Plan awards included restricted stock units (“RSUs”) and performance share units (“PSUs”). All 2011 LTC Plan awards are subject to the terms of the Company’s 2008 Restricted Stock, Stock Option and Equity Compensation Plan, which was subsequently amended and renamed to the 2008 A.M. Castle & Co. Omnibus Incentive Plan as of April 28, 2011.

The 2011 LTC Plan consists of three components of share-based payment awards as follows:

Restricted Share Units — the Company granted 112 RSUs with a grant date fair value of $17.13 per share unit, which was estimated using the market price of the Company’s stock on the date of grant. The RSUs cliff vest on December 31, 2013. 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 225 PSUs, half of which contain a market-based performance condition and half of which contain 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. Compensation expense for performance awards containing a market condition is recognized regardless of whether the market condition is achieved to the extent the requisite service period condition is met. 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 of $23.89 per share for the PSUs containing the RTSR market based performance condition was estimated using a Monte Carlo simulation with the following assumptions:

	2011
Expected volatility		62.0	%
Risk-free interest rate		1.10	%
Expected life (in years)		2.84
Expected dividend yield		—

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 actual performance versus Company-specific target goals for Return on Invested Capital (“ROIC”) (as defined in the 2011 LTC Plan) for any one or more fiscal years during 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 $17.13 per share for the PSUs containing a non-market-based performance condition was estimated using the market price of the Company’s stock on the date of grant.

The status of the PSUs that were granted under the 2011 LTC Plan as of September 30, 2011 is summarized below:

	Grant Date		Estimated		Maximum Number of
	Fair Value		Number of PSUs		PSUs that could
Share type	(per share)		to be Issued		Potentially be Issued
Market-based performance condition	$	23.89		56		215
Non-market-based performance condition	$	17.13		86		215