SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2012

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

NOTE 10 - SHARE-BASED COMPENSATION

Restricted Stock

Under the restricted stock plan approved by our shareholders (the "Restricted Stock Plan"), directors, consultants and employees may be awarded shares of DXP's common stock. The shares of restricted stock granted to employees and that are outstanding as of December 31, 2012 vest in accordance with one of the following vesting schedules: 100% one year after date of grant; 33.3% each year for three years after date of grant; 20% each year for five years after the grant date; or 10% each year for ten years after the grant date. The Restricted Stock Plan provides that on each July 1 during the term of the plan each non-employee director of DXP will be granted the number of whole shares calculated by dividing $75 thousand by the closing price of the common stock on such July 1. The shares of restricted stock granted to non-employee directors of DXP vest one year after the grant date. The fair value of restricted stock awards is measured based upon the closing prices of DXP's common stock on the grant dates and is recognized as compensation expense over the vesting period of the awards. Once restricted stock vests, new shares of the Company's stock are issued.

The following table provides certain information regarding the shares authorized and outstanding under the Restricted Stock Plan at December 31, 2012:

Number of shares authorized for grants	800,000
Number of shares granted	(688,371)
Number of shares forfeited	79,998
Number of shares available for future grants	191,627
Weighted-average grant price of granted shares	$ 19.61

Changes in restricted stock for the twelve months ended December 31, 2012 were as follows:

	Number of Shares	Weighted Average Grant Price
Non-vested at December 31, 2011	228,592	$ 21.10
Granted	76,417	$38.99
Forfeited	(19,260)	$ 32.68
Vested	(75,419)	$ 20.30
Non-vested at December 31, 2012	210,330	$ 26.85

Compensation expense, associated with restricted stock, recognized in the years ended December 31, 2012, 2011 and 2010 was $2.0 million, $1.3 million, and $1.0 million, respectively. Related income tax benefits recognized in earnings in the years ended December 31, 2012, 2011, and 2010 were approximately $0.8 million, $0.5 million, and $0.4 million, respectively. Unrecognized compensation expense under the Restricted Stock Plan at December 31, 2012 and December 31, 2011 was $4.6 million and $4.1 million, respectively. As of December 31, 2012, the weighted average period over which the unrecognized compensation expense is expected to be recognized is 28.2 months.

Stock Options

The DXP Enterprises, Inc. 1999 Employee Stock Option Plan (the "Plan"), the DXP Enterprises, Inc. Long-Term Incentive Plan and the DXP Enterprises, Inc. Director Stock Option Plan authorized the grant of options to purchase 1,800,000, 660,000 and 400,000 shares of the Company's common stock, respectively. In accordance with these stock option plans that were approved by the Company's shareholders, options were granted to key personnel for the purchase of shares of the Company's common stock at prices not less than the fair market value of the shares on the dates of grant. Most options could be exercised not earlier than 12 months nor later than 10 years from the date of grant. No future grants will be made under these stock option plans. There was no activity under the Plan during 2012 or 2011. Activity during 2010 with respect to the stock options follows:

	Shares	Options Price Per Share	Weighted Average Exercise Price	Aggregate Intrinsic Value
Outstanding and exercisable at  December 31, 2009	50,000	$  1.25 - $3.36	$  2.50	$  529,000
Exercised during 2010	(50,000)	$  1.25 - $3.36	$  2.50	$  489,000
Outstanding and exercisable at  December 31, 2010	-	-	-	-

Cash received from stock options exercised during 2012 and 2011 and 2010 was zero, zero, and $0.1 million, respectively.

During 2010, employees and directors of DXP exercised non-qualified stock options. DXP received a tax deduction for the amount of the difference between the exercise price and the fair market value of the shares recognized as income by the individuals exercising the options. The after tax benefit of the tax deduction is accounted for as an increase in paid-in capital.