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Equity Plans

12 Months Ended

Dec. 31, 2011

11.

Equity Plans:

Stock Options

In January 1994, the Olympic Steel, Inc. Stock Option Plan (Option Plan) was adopted by the Board of Directors and approved by the shareholders of the Company. The Option Plan terminated on January 5, 2009. Termination of the Option Plan did not affect outstanding options.

A total of 1,300,000 shares of common stock were originally reserved for issuance under the Option Plan. To the extent possible, shares of treasury stock were used to satisfy shares resulting from the exercise of stock options. Options vested over periods ranging from six months to five years and all expire ten years after the grant date.

The following table summarizes the effect of the impact of stock options on the results of operations:


	For the year ended December 31,
	2011		2010		2009
Stock option expense before taxes	$	—	$	60	$	210
Stock option expense after taxes	$	—	$	34	$	129
Impact per basic share	$	—	$	—	$	0.01
Impact per diluted share	$	—	$	—	$	0.01

All pre-tax charges related to stock options were included in the caption “Administrative and general” on the accompanying Consolidated Statements of Operations.

The following table summarizes stock-based award activity during the year ended December 31, 2011:


	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2010		46,007	$	20.90
Granted		—		—
Exercised		—		—
Canceled		—		—

Outstanding at December 31, 2011		46,007	$	20.90		3.7 years	$	327

Exercisable at December 31, 2011		46,007	$	20.90		3.7 years	$	327

There were no stock options exercised during 2011. The total intrinsic value of stock options exercised during the years ended December 31, 2010 and 2009 was $112 and $227, respectively. Net cash proceeds from the exercise of stock options, exclusive of income tax benefits, were $67 and $112 for the years ended December 31, 2010 and 2009, respectively. Income tax benefits of $43 and $86 were realized from stock option exercises during the years ended December 31, 2010 and 2009, respectively. The fair value of options vested during the years ended December 31, 2010 and 2009 totaled $60 and $210, respectively.

By December 31, 2010, all expense with respect to stock option awards had been recognized and amortized into expense.

Restricted Stock Units and Performance Share Units

The Olympic Steel 2007 Omnibus Incentive Plan (the Plan) was approved by the Company’s shareholders in 2007. The Plan authorizes the Company to grant stock options, stock appreciation rights, restricted shares, restricted share units, performance shares, and other stock- and cash-based awards to employees and Directors of, and consultants to, the Company and its affiliates. Under the Plan, 500,000 shares of common stock are available for equity grants.

On each of January 2, 2009, January 4, 2010 and March 1, 2011, the Compensation Committee of the Company’s Board of Directors approved the grant of 1,800 restricted stock units (RSUs) to each non-employee Director. Subject to the terms of the 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.

On January 4, 2010, the Compensation Committee of the Company’s Board of Directors approved the grant of 23,202 RSUs in the aggregate to the members of senior management of the Company. Subject to the terms of the Plan and the RSU agreement, the RSUs vest at the end of three years from the date of grant.

In 2011, the Compensation Committee for the Company’s Board of Directors approved changes to the Senior Management Compensation Program to include an equity component in order to encourage more ownership of Common Stock by the executives. Starting in 2011, the Senior Management Compensation Program imposed stock ownership requirements upon the participants. Beginning in 2011, each participant will be required to own at least 750 shares of Common Stock for each year that the participant participates in the Senior Management Compensation Program. Any participant that fails to meet to the stock ownership requirements will be ineligible to receive any equity awards under the Company’s equity compensation plans, including the Plan, until the participant satisfies the ownership requirements. To assist participants in meeting the stock ownership requirements, on an annual basis, if a participant purchases 500 shares of Common Stock on the open market, the Company will award that participant 250 shares of Common Stock. During 2011, the Company matched 4,750 shares. Additionally, any participant who continues to comply with the stock ownership requirements as of the five-year, 10-year, 15-year, 20-year and 25-year anniversaries of the participant’s participation in the Senior Management Compensation Program will receive a restricted stock unit award with a dollar value of $25, $50, $75, $100 and $100, respectively. Restricted stock unit awards will convert into the right to receive shares of Common Stock upon a participant’s retirement, or earlier upon the executive’s death or disability or upon a change in control of the Company.

In recognition of their performance and dedicated years of service, on December 31, 2011, the Compensation Committee of the Board of Directors granted 81,475 RSUs to Messrs. Siegal, Wolfort and Marabito. The RSUs vest in five years. Except in limited circumstances, the RSUs will not convert into shares of Common Stock until the retirements of Messrs. Siegal, Wolfort and Marabito, respectively. These RSU’s are not a part of the 2011 Senior Management Compensation Program discussed above.

The Compensation Committee of the Company’s Board of Directors also granted 34,379 and 54,024 performance-earned restricted stock units (PERSUs) in the aggregate to the members of senior management of the Company on January 2, 2008 and January 2, 2009, respectively. The PERSUs may be earned based on the Company’s performance for a period of 36 months from the date of grant, and would be converted to shares of common stock based on the achievement of two separate financial measures: (1) the Company’s EBITDA (50% weighted) and (2) return on invested capital (50% weighted). No shares will be earned unless the threshold amounts for the performance measures are met. Up to 150% of the targeted amount of PERSUs may be earned. On December 31, 2010 and December 31, 2011, PERSU’s outstanding granted on January 2, 2008 and January 2, 2009 lapsed based on failure to meet the minimum performance requirements. There are no outstanding PERSUs remaining as of December 31, 2011.

The fair value of each RSU and PERSU was estimated to be the closing price of the Common Stock on the date of the grant, which was $23.32, $26.91, $33.85 and $21.68 for the grants on December 31, 2011, March 1, 2011, January 4, 2010, and January 2, 2009, respectively.

Stock-based compensation expense recognized on RSUs and PERSUs is summarized in the following table:


	For the year ended December 31,
	2011		2010		2009
RSU and PERSU expense (reversal) before taxes	$	726	$	567	$	(1,349	)
RSU and PERSU expense (reversal) after taxes	$	484	$	318	$	(830	)
Impact per basic share	$	0.04	$	0.03	$	(0.08	)
Impact per diluted share	$	0.04	$	0.03	$	(0.08	)

All pre-tax charges related to RSUs and PERSUs were included in the caption “Administrative and General” on the accompanying Consolidated Statement of Operations.

The following table summarizes the activity related to RSUs for the twelve months ended December 31, 2011:


	Number of Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding at December 31, 2010		46,602		$	33.41
Granted		102,236		$	23.98
Converted into shares		—		$	—
Forfeited		(1,235	)	$	33.85

Outstanding at December 31, 2011		147,603		$	27.16	$	9

Vested at December 31, 2011		48,693		$	30.75	$	9

Of the RSUs granted in 2011, 9,825 were used to fund SERP contributions. There was no intrinsic value for the RSUs that were converted into shares in 2010 or 2009. There were no RSUs converted into shares during 2011. During 2010 and 2009, 7,200 and 5,400 RSUs were converted into shares, respectively.

The following table summarizes the activity related to PERSUs for the twelve months ended December 31, 2011:


	Number of Shares			Weighted Average Exercise Price			Aggregate Intrinsic Value
Outstanding at December 31, 2010		52,987		$	21.68
Granted		—		$	—
Converted into shares		—			—
Lapsed based on performance criteria		(50,809	)	$	(21.68	)
Forfeited		(2,178	)	$	(21.68	)

Outstanding at December 31, 2011		—		$	—		$	—

Vested at December 31, 2011		—		$	—		$	—

Since inception of the PERSU program, no PERSUs have been converted into shares.

All pre-tax charges related to RSUs and PERSUs were included in the caption “Administrative and General” on the accompanying Consolidated Statement of Operations.