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Stock Options and Awards

6 Months Ended

Jun. 28, 2025

Stock Options and Awards

Stock Options and Awards

Note I - 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”). 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.

Restricted stock unit awards may be granted to participants under the 2020 Plan with restrictions determined by the Compensation Committee of the Board. During the first six months of fiscal 2025 and 2024, the Company granted stock awards with respect to 35,856 and 38,448 shares of Company common stock, respectively, that were subject to the meeting of performance measurements or time- based. For the first six months of fiscal years 2025 and 2024, the Company used fair market value to determine the associated expense with stock awards.

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. 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 issued 48,240 and 53,568 options during the first six months of fiscal 2025 and 2024, respectively. For the first six months of fiscal 2025, the Company used several assumptions which included an expected term of three years, volatility deviation of 40.34% and a risk-free rate of 4.34% to determine the expense associated with options. For the first six months of fiscal 2024, the Company used several assumptions which included an expected term of three years, volatility deviation of 38.30% and a risk-free rate of 4.51% to determine the expense associated with options.

Stock-based compensation expense (income), including forfeitures, in connection with SARs and stock awards previously granted to employees was approximately $147,000 and $(20,000) in the second quarter of 2025 and the second quarter of 2024, respectively, and was approximately $(6,000) and $414,000 in the first six months of fiscal years 2025 and 2024, respectively.

As of June 28, 2025, there were 874,096 shares of Company common stock reserved and available for future grant under the 2020 Plan.

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

		Six Months Ended								Year Ended
		June 28, 2025								December 30, 2024
		Units				Weighted Average Exercise Price				Units				Weighted Average Exercise Price
Outstanding at beginning of period			25,116			$	28.18				13,000			$	24.19
Issued			48,240				27.88				53,568				28.69
Expired			(1,500)				20.20				(9,000)				26.30
Exercised			-				-				(2,500)				20.20
Forfeited			(11,275)				28.61				(29,952)				28.69
Outstanding at end of period			60,581				28.06				25,116				28.18

SARs Outstanding and Exercisable
Range of Exercise Prices		Outstanding as of June 28, 2025				Weighted Average Remaining Contractual Life				Weighted Average Exercise Price				Exercisable as of June 28, 2025				Weighted Average Remaining Contractual Life				Weighted Average Exercise Price

$27.88 - $28.69			60,581				4.5			$	28.06				-				-				-

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

		Six Months Ended				Year Ended
		June 28, 2025				December 28, 2024
		Shares				Shares
Outstanding at beginning of period			39,592				89,400
Issued			35,856				38,448
Exercised			(4,579)				(38,534)
Forfeited			(18,834)				(49,722)
Outstanding at end of period			52,035				39,592

As of June 28, 2025, outstanding stock options and stock awards had an intrinsic value of $1,200,000.