Note 13 - Equity Plans

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

13. Equity Plans:

Restricted Stock Units and Performance Share Units

Pursuant to the Amended and Restated Olympic Steel 2007 Omnibus Incentive Plan (the Incentive Plan), the Company may grant stock options, stock appreciation rights, restricted shares, restricted share units (RSUs), performance shares, and other stock- and cash-based awards to employees and directors of, and consultants to, the Company and its affiliates. Since adoption of the Incentive Plan, 1,400,000 shares of common stock have been authorized for equity grants.

On an annual basis, the compensation committee of the Company’s Board of Directors awards RSUs to each non-employee director as part of their annual compensation. The annual awards for 2022 and 2021 per director were $80,000. Subject to the terms of the Incentive Plan and the RSU agreement, the RSUs vest after one year of service (from the date of grant). The RSUs are not converted into shares of common stock until the director either resigns or is terminated from the board of directors.

Prior to 2021, under the Incentive Plan, each eligible participant was awarded RSUs with a dollar value equal to 10% of the participant’s base salary, up to an annual maximum of $17,500. The RSUs have a five-year vesting period and the RSUs convert into the right to receive shares of common stock upon a participant’s retirement, or earlier upon the participant’s death or disability or upon a change in control of the Company. Under the Incentive Plan, the Company awards RSUs to newly-appointed executive officers, based upon a percentage of their base salary. Upon Mr. Greiff’s promotion to President and Chief Operating Officer on January 1, 2020, he received 15,694 RSUs. The RSUs will vest five years from the grant date, or earlier upon death or disability or upon a change in control of the Company. Due to the COVID-19 pandemic, no RSU awards were granted in 2021.

In January 2022, the Company adopted a new C-Suite Long-Term Incentive Plan (the C-Suite Plan) that operates under the Senior Manager Stock Incentive Plan. Under the C-Suite Plan, the Chief Executive Officer, the Chief Financial Officer and the President and Chief Operating Officer are eligible for participation. In each calendar year, the Committee may award eligible participants a long-term incentive of both a restricted stock unit (RSU) grant and a performance stock unit (PSU) grant. Additionally, the Committee may offer a long-term cash incentive (split equally between service and performance-based portions) to supplement both the RSU and PSU grants in order to arrive at the total long-term award target. The total long-term award target is $1.1 million for the Chief Executive Officer, $0.3 million for the Chief Financial Officer and $0.6 million for the President and Chief Operating Officer. The PSUs will vest if the return on net assets, calculated as EBITDA divided by Average Accounts Receivable, Inventory and Property and Equipment, exceeds 5 percent. Each RSU and service-based cash incentive vests three years after the grant date. Each vested RSU will convert into the right to receive one share of common stock. During 2022, a total of 20,000 RSUs and 20,000 PSUs were granted to the participants under the C-Suite Plan, and $0.5 million and $0.5 million, respectively, were granted in service-based and performance-based cash awards. If the return on net assets falls below 5 percent, no performance-based incentive will be awarded. The maximum performance-based award is achieved if return on net assets exceeds ten percent, and is capped at 150% of the grant.

The performance-based awards granted in 2022 are expected to vest at 150% of the grant. All pre-tax charges related to the long-term cash incentives were included in the caption “Administrative and general” on the accompanying Consolidated Statements of Comprehensive Income (Loss). The total remaining estimated compensation cost of non-vested awards total $0.9 million and the weighted average remaining vesting period is 2 years as of December 31, 2022.

Stock-based compensation expense recognized on RSUs for the years ended December 31, 2022, 2021 and 2020, respectively, is summarized in the following table:

	For the years ended December 31,
(in thousands)	2022		2021		2020
RSU expense before taxes of the Plan	$	1,297	$	1,045	$	1,265
RSU expense after taxes		954		767		1,024

All pre-tax charges related to RSUs and PSUs were included in the caption “Administrative and general” on the accompanying Consolidated Statements of Comprehensive Income (Loss). The total compensation cost of non-vested awards totaled $1.3 million and the weighted average remaining vesting period is 1.2 years as of December 31, 2022.

The following table summarizes the activity related to RSUs and PSUs for the year ended December 31, 2022, 2021 and 2020:

	2022					2021					2020
	Number of Shares			Weighted Average Estimated Fair Value		Number of Shares			Weighted Average Estimated Fair Value		Number of Shares			Weighted Average Estimated Fair Value
Beginning balance		576,867		$	18.29		610,540		$	18.14		636,086		$	19.25
Granted		55,558			25.56		20,604			23.29		70,588			11.92
Converted into shares		(5,841	)		18.16		(49,191	)		18.67		(94,161	)		20.27
Forfeited		(9,066	)		17.52		(5,086	)		17.55		(1,973	)		18.14
Outstanding at December 31		617,518		$	18.95		576,867		$	18.29		610,540		$	18.14
Vested at December 31		423,941		$	19.24		370,771		$	18.78		375,692		$	18.88

No RSUs were used to fund the Supplemental Executive Retirement Plan, or SERP, in 2022, 2021 or 2020.

Phantom Stock Units

In January 2022, the Company adopted a new Senior Manager Phantom Stock Plan (the “Phantom Stock Plan”) that operates under the Senior Manager Stock Incentive Plan. Under the Phantom Stock Plan, certain senior managers are eligible to participate in the plan. The Phantom Stock Plan supersedes any previous stock incentive programs offered to the eligible participants. Each year, eligible participants will receive an award of Phantom Stock Units (“Phantom Units”) of up to $30 thousand. The number of Phantom Units granted on the Grant Date is determined by dividing the amount of the Phantom Units granted by the closing price of a share of the Company’s common stock on the Grant Date. Each Phantom Unit Award under this plan shall vest 3 years after the Grant Date (“the Vesting Date”). Upon vesting, the Company will pay the Participant in cash, the value of the vested Phantom Units multiplied by the closing price of a share of the Company’s common stock on the Vesting Date.

Pre-tax charges related to Phantom Stock Units for the year ended December 31, 2022, totaled $0.3 million and were included in the caption “Administrative and general” on the accompanying Consolidated Statements of Comprehensive Income (Loss). The total estimated remaining compensation cost of non-vested awards total $0.7 million and the weighted average remaining vesting period is 2 years as of December 31, 2022.