12. EQUITY-BASED COMPENSATION

Equity-based payments to employees and directors, including grants of stock options, restricted stock units, and restricted stock, are recognized in the statements of operations based on the grant-date fair value of the award. The Company uses the straight-line method of attributing the value of stock-based compensation expense over the vesting periods. Stock compensation expense recognized during the period is based on the value of the portion of equity-based awards that is ultimately expected to vest during the period. Vesting requirements vary for directors, executives, and key employees with a vesting period that typically equals four years with graded vesting.

The Gibraltar Industries, Inc. 2005 Equity Incentive Plan (the Plan) is an incentive compensation plan that allows the Company to grant equity-based incentive compensation awards to eligible participants to provide them an additional incentive to promote the business of the Company, to increase their proprietary interest in the success of the Company, and to encourage them to remain in the Company's employ. Awards under the plan may be in the form of options, restricted shares, restricted units, performance shares, performance stock units, and rights. The Plan provides for the issuance of up to 3,000,000 shares of common stock. Of the total number of shares of common stock issuable under the Plan, the aggregate number of shares which may be issued in connection with grants of incentive stock options and rights cannot exceed 900,000 shares. Vesting terms and award life are governed by the award document.

The following table provides the number of restricted stock units (that will convert to shares upon vesting), shares of restricted stock, and non-qualified stock options that were issued during the years ended December 31 along with the weighted-average grant-date fair value of each award:


	2011			2010			2009
	Number of Awards	Weighted Average Grant Date Fair Value		Number of Awards	Weighted Average Grant Date Fair Value		Number of Awards	Weighted Average Grant Date Fair Value



Awards
Restricted stock units	315,834	$	11.05	169,867	$	16.80	287,153	$	11.89
Restricted shares	6,000	$	13.63	6,000	$	12.74	6,000	$	7.92
Non-qualified stock options	239,000	$	5.19	131,000	$	4.62	146,850	$	7.88

At December 31, 2011, 832,000 shares were available for issuance under the Plan as incentive stock options or other stock awards.

The Company also has stock options and restricted stock outstanding under plans that were terminated prior to the 2005 Equity Incentive Plan. The termination of those plans did not modify, amend, or otherwise affect the terms of any outstanding awards on the date of termination. The Company recognized the following compensation expense in connection with awards that vested under the Plan and previously terminated plans along with the related tax benefits recognized during the years ended December 31 (in thousands):


	2011		2010		2009
Expense recognized under terminated plans	$	47	$	47	$	47
Expense recognized under the Plan		4,595		4,268		4,360
Total stock compensation expense	$	4,642	$	4,315	$	4,407

Tax benefits recognized related to stock compensation expense	$	1,764	$	1,640	$	1,675

On March 24, 2011, the Company's Chairman and Chief Executive Officer surrendered a portion of his 2010 restricted stock unit grant. The unamortized portion of compensation expense related to these awards, totaling $885,000, was accelerated and recognized as stock compensation expense for the year ended December 31, 2011.

The fair value of the restricted shares and restricted stock units issued during the three years ended December 31, 2011 was based on the grant-date market price. The fair value of stock options granted was estimated on the date of grant using the Black-Scholes option pricing model. Expected stock volatility was based on volatility of the Company's stock price using a historical period commensurate with the expected life of the options. The following table provides the weighted average assumptions used to value stock options issued during the years ended December 31:


			Expected Life (in years)	Expected Stock Volatility		Risk-free Interest Rate		Annual Forfeiture Rate		Expected Dividend Yield
Year of
Grant	Fair Value
2011	$	5.19	5.80	58.3	%	1.1	%	18.0	%	0.0	%
2010	$	4.62	5.70	55.9	%	1.7	%	18.0	%	0.0	%
2009	$	7.88	5.20	67.6	%	2.3	%	8.2	%	0.1	%

In September 2009, the Company awarded 905,000 performance stock units. As of December 31, 2011, 868,000 of the originally awarded performance stock units remained outstanding after forfeitures and re-issuances. The final number of performance stock units earned was determined based on the Company's total stockholder returns relative to a peer group for three separate performance periods, consisting of the years ended December 31, 2009, 2010, and 2011. The performance stock units earned were converted to cash based on the trailing 90-day closing price of the Company's common stock as of the last day of the third performance period and was paid in January 2012. During the three performance periods, participants earned between 0% and 200% of target, aggregating 684,299 performance stock units compared to the target of 868,000 awards.

The cost of performance stock awards was accrued over the vesting period which ended December 31, 2011. The following table summarizes the compensation expense recognized from the change in fair value and vesting of performance stock units awarded for the years ended December 31 (in thousands):


	2011		2010		2009
Performance stock unit compensation expense	$	4,409	$	2,310	$	1,601

The Management Stock Purchase Plan (MSPP) is an integral component of the Plan and provides participants the ability to defer a portion of their salary, their annual bonus under the Management Incentive Compensation Plan, and Directors' fees. The deferral is converted to restricted stock units and credited to an account together with a company-match in restricted stock units equal to a percentage of the deferral amount. The account is converted to cash at the trailing 200-day average closing price of the Company's stock and payable to the participants upon a termination of their service to the Company. The matching portion vests only if the participant has reached their sixtieth (60^th) birthday. If a participant terminates prior to age sixty (60), the match is forfeited. Upon termination, the account is converted to a cash account that accrues interest at 2% over the then current ten-year U.S. Treasury note rate. The account is then paid out in five equal annual cash installments.

The fair value of restricted stock units held in the MSPP equals the trailing 200-day average closing price of the Company's common stock as of the last day of the period. During the years ended December 31, 2011, 2010, and 2009, respectively, 164,589, 153,383, and 130,437 restricted stock units that will convert to cash upon vesting were credited to participant accounts. At December 31, 2011 and 2010, the value of the restricted stock units in the MSPP was $11.15 and $11.03 per unit, respectively. At December 31, 2011 and 2010, 533,548 and 457,343 restricted stock units were credited to participant accounts including 65,374 and 84,635, respectively, of unvested restricted stock units.

The performance stock unit plan and the MSPP are share-based liabilities settled in cash. The following table sets forth the cash paid to settle these liability awards for the years ended December 31 (in thousands):


	2011		2010		2009
Share-based liabilities paid	$	577	$	353	$	180

The following table summarizes the ranges of outstanding and exercisable options at December 31, 2011:


Range of Exercise Prices		Options Outstanding	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Options Exercisable	Weighted Average Exercise Price
$	8.90– $8.90	106,875	8.70	$	8.90	24,750	$	8.90
$	9.74– $9.74	236,500	9.70	$	9.74	–	$	–
$	11.89– $18.78	213,025	6.70	$	15.35	159,980	$	15.92
$	20.52– $23.78	214,099	5.38	$	22.56	192,849	$	22.61
		770,499				377,579

The weighted average remaining life of options exercisable at December 31, 2011 is 6.0 years. The intrinsic value of options exercisable at December 31, 2011 was $184,000.

The following table summarizes information about stock option transactions:


			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value




	Options
Balance at January 1, 2009	598,407		$	19.01
Granted	146,850			13.56
Exercised	(5,025	)		9.38
Forfeited	(109,343	)		18.93
Balance at December 31, 2009	630,889		$	17.88
Granted	131,000			8.90
Exercised	(28,586	)		9.46
Forfeited	(103,522	)		14.25
Balance at December 31, 2010	629,781		$	17.02
Granted	239,000			9.74
Exercised	(3,375	)		9.97
Forfeited	(94,907	)		17.89
Balance at December 31, 2011	770,499		$	14.74	7.23	$	1,165,000

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on the $13.96 per share market price of the Company's common stock as of December 31, 2011, which would have been received by the option holders had all option holders exercised their options as of that date.

The following table sets forth the aggregate intrinsic value of options exercised and aggregate fair value of restricted stock units and restricted shares that vested during the years ended December 31 (in thousands):


	2011		2010		2009
Aggregate intrinsic value of options exercised	$	13	$	128	$	32
Aggregate fair value of vested restricted stock units	$	2,356	$	3,040	$	1,930
Aggregate fair value of vested restricted shares	$	155	$	150	$	48

The following table summarizes information about non-vested restricted stock units (that will convert to shares upon vesting) and restricted shares:


	Restricted Stock Units		Weighted Average Grant Date Fair Value		Restricted Shares		Weighted Average Grant Date Fair Value



Balance at January 1, 2011	542,533		$	16.53	12,000		$	15.52
Granted	315,834			11.05	6,000			13.63
Vested	(177,090	)		14.61	(12,000	)		14.58
Forfeited	(52,686	)		16.80	–			–
Balance at December 31, 2011	628,591		$	14.29	6,000		$	15.52

As of December 31, 2011, there was $4,691,000 of total unrecognized compensation cost related to non-vested options, restricted shares, and restricted stock units. That cost is expected to be recognized over a weighted average period of 3.0 years.