STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2017

NOTE 11 - STOCK-BASED COMPENSATION

Restricted Stock

Under the restricted stock plans approved by our shareholders, directors, consultants and employees were awarded shares of DXP's common stock. The shares of restricted stock granted to employees and that are outstanding as of September 30, 2017 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 the 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 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 was 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. At September 30, 2017, 401,223 shares were available for future grants.

Changes in restricted stock for the nine months ended September 30, 2017 were as follows:

	Number of Shares			Weighted Average Grant Price
Non-vested at December 31, 2016		143,380		$	26.76
Granted		18,672		$	34.07
Forfeited		(298	)	$	59.60
Vested		(79,853	)	$	25.14
Non-vested at September 30, 2017		81,901		$	29.88

Compensation expense, associated with restricted stock, recognized in the nine months ended September 30, 2017 and 2016 was $1.4 million and $1.9 million, respectively. Related income tax benefits recognized in earnings for the nine months ended September 30, 2017 and 2016 were approximately $0.6 million and $0.6 million, respectively. Unrecognized compensation expense under the Restricted Stock Plan at September 30, 2017 and December 31, 2016 was $1.9 million and $2.7 million, respectively. As of September 30, 2017, the weighted average period over which the unrecognized compensation expense is expected to be recognized is 17.4 months.