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Stock Options and awards

3 Months Ended

Mar. 30, 2024

Stock Options and awards

Stock Options and awards

Note H - Stock Options and Awards

On February 19, 2020, the Board of Directors of the Company (the “Board”) adopted the Eastern Company 2020 Stock Incentive Plan (the “2020 Plan”), which replaced The Eastern Company 2010 Executive Stock Incentive Plan after its expiration in February 2020. On April 29, 2020, at the Company’s 2020 Annual Meeting of Shareholders, the shareholders of the Company approved and adopted the 2020 Plan. The Company has no other existing plan pursuant to which equity awards may be granted.

Incentive stock options granted under the 2020 Plan must have exercise prices that are not less than 100% of the fair market value of the Company’s common stock on the dates the stock options are granted. Restricted stock awards may also be granted to participants under the 2020 Plan with restrictions determined by the Compensation Committee of the Board. Under the 2020 Plan, non-qualified stock options granted to participants will have exercise prices determined by the Compensation Committee of the Board. The Company did not grant any stock awards during the first three months of fiscal 2024 and fiscal 2023. For the first three months of fiscal years 2024 and 2023, the Company used fair market value to determine the associated expense with stock awards.

The 2020 Plan also permits the issuance of Stock Appreciation Rights (“SARs”). The SARs are in the form of an option with a cashless exercise price equal to the difference between the fair value of the Company’s common stock at the date of grant and the fair value as of the exercise date resulting in the issuance of the Company’s common stock. The Company did not issue any SARs during the first three months of fiscal 2024 and 2023.

Stock-based compensation expense (income), including forfeitures, in connection with SARs and stock awards previously granted to employees was approximately $434,000 and $(184,000) in the first quarter of 2024 and the first quarter of 2023, respectively.

As of March 30, 2024, there were 879,924 shares of Company common stock reserved and available for future grant under the 2020 Plan.

The following tables set forth the outstanding SARs for the period specified:

		Three Months Ended								Year Ended
		March 30, 2024								December 30, 2023
		Units				Weighted Average Exercise Price				Units				Weighted Average Exercise Price
Outstanding at beginning of period			13,000			$	24.19				146,166			$	23.22
Expired			(9,000	)			26.30				(50,833	)			24.24
Exercised			-				-				(33,333	)			21.10
Forfeited			-				-				(49,000	)			22.80
Outstanding at end of period			4,000			$	20.20				13,000			$	24.19

SARs Outstanding and Exercisable
Range of Exercise Prices				Outstanding as of March 30, 2024				Weighted Average Remaining Contractual Life				Weighted Average Exercise Price				Exercisable as of March 30, 2024				Weighted Average Remaining Contractual Life				Weighted Average Exercise Price

$	20.20				4,000				1.1			$	20.20				4,000				1.1			$	20.20

The following tables set forth the outstanding stock awards for the period specified:

		Three Months Ended				Year Ended
		March 30, 2024				December 30, 2023
		Shares				Shares
Outstanding at beginning of period			89,400				64,500
Issued			-				82,800
Exercised			(23,734	)			(10,600	)
Forfeited			(1,433	)			(47,300	)
Outstanding at end of period			64,233				89,400

As of March 30, 2024, outstanding SARs and stock awards had an intrinsic value of $2,245,274.