As of December 31, 2023, the Company had three active stock-based compensation plans, which are described below. The compensation cost that has been recorded under salary and benefits expense in the non-interest expense section of the consolidated statements of income for these plans was $103,000 and $335,000 for the years ended December 31, 2023 and 2022.

The Company’s 2006 Stock Option Plan (the “Stock Option Plan”), which was approved by the Company’s stockholders, permitted the grant of options to its employees and non-employee directors for up to 297,562 shares of common stock. The Stock Option Plan expired on October 24, 2016, and grants of options can no longer be awarded.

Both incentive stock options and non-qualified stock options have been granted under the Stock Option Plan. The exercise price of each stock option equals the market price of the Company’s common stock on the date of grant and an option’s maximum term is ten years. The stock options generally vest over a five year period.

A summary of the status of the Stock Option Plan during the year ended December 31, 2023 and 2022 is presented below:


	2023					2022
	Options		Weighted Average Exercise Price		Remaining Contractual Life	Options			Weighted Average Exercise Price		Remaining Contractual Life
Outstanding at beginning of year		58,857	$	14.38			64,548		$	14.38
Granted		—		—			—			—
Exercised		—		—			—			—
Forfeited		—		—			(5,691	)	$	14.38
Outstanding at end of period		58,857	$	14.38	2.8 years		58,857		$	14.38	3.8 years
Options exercisable at end of period		58,857	$	14.38	2.8 years		58,857		$	14.38	3.8 years
Fair value of options granted		—		—			—		$	—

At December 31, 2023, stock options had no intrinsic value and there were no remaining options available for grant under the Stock Option Plan. At December 31, 2023 all compensation cost and expense related to the Stock Option Plan has been recognized in prior periods.

The Company’s 2012 Equity Incentive Plan (the “EIP”), which was approved by the Company’s stockholders on May 23, 2012, authorizes the issuance of up to 180,000 shares of common stock pursuant to grants of restricted stock awards and up to 20,000 shares of common stock pursuant to grants of incentive stock options and non-qualified stock options, subject to permitted adjustments for certain corporate transactions. Employees and non-employee directors of Lake Shore Bancorp or its subsidiaries are eligible to receive awards under the EIP, except that non-employee directors may not be granted incentive stock options.

The Board of Directors granted restricted stock awards under the EIP during 2023 as follows:

        Grant Date

        Number of Restricted Stock Awards

        Vesting

        Fair Value per Share of Award on Grant Date

        Awardees

January 17, 2023

2,709

100% on January 17, 2024

12.92

 Non-employee directors

January 18, 2023

4,573

100% on January 18, 2024

12.90

 Non-employee directors

January 18, 2023

1,000

20% per year with first vesting date on January 18, 2024

12.90

 Employees

A summary of the status of unvested restricted stock awards under the EIP for the years ended December 31, 2023 and 2022 is as follows:


	At December 31, 2023			Weighted Average Grant Price (per Share)		At December 31, 2022			Weighted Average Grant Price (per Share)
Unvested shares outstanding at beginning of year		43,866		$	15.02		29,495		$	15.24
Granted		8,282			12.91		29,132			14.81
Vested		(11,734	)		15.39		(4,145	)		15.00
Forfeited		(22,296	)		14.93		(10,616	)		15.07
Unvested shares outstanding at end of period		18,118		$	13.91		43,866		$	15.02

As of December 31, 2023, there were 109,620 shares of restricted stock vested or distributed to eligible participants under the EIP and 52,261 remaining shares available for grant. Compensation expense related to restricted stock awards under the EIP amounted to $17,000 and $225,000 for the years ended December 31, 2023 and 2022, respectively. At December 31, 2023, $60,000 of unrecognized compensation cost related to unvested restricted stock awards is expected to be recognized over a period of 10.2 months.

A summary of the status of stock options under the EIP for the years ended December 31, 2023 and 2022 is as follows:


	2023						2022
	Options			Exercise Price		Remaining Contractual Life	Options		Exercise Price		Remaining Contractual Life
Outstanding at beginning of year		20,000		$	14.38			20,000	$	14.38
Granted		—			—			—		—
Exercised		—			—			—		—
Forfeited		—			—			—		—
Expired		(6,899	)	$	14.38
Outstanding at end of period		13,101				2.8 years		20,000	$	14.38	3.8 years

Options exercisable at end of period		13,101		$	14.38	2.8 years		20,000	$	14.38	3.8 years

Fair value of options granted		—			—			—		—

At December 31, 2023, stock options outstanding had no intrinsic value and there were 6,899 remaining options available for grant under the EIP. At December 31, 2023, all compensation cost and expense related to the stock options granted under the EIP has been recognized in prior periods.

The Company established the ESOP for the benefit of eligible employees of the Company and Bank. All Company and Bank employees meeting certain age and service requirements are eligible to participate in the ESOP. Participants’ benefits become fully vested after five years of service once the employee is eligible to participate in the ESOP. The Company utilized $2.6 million of the proceeds of its 2006 stock offering to extend a loan to the ESOP and the ESOP used such proceeds to purchase 238,050 shares of stock on the open market at an average price of $10.70 per share, plus commission expenses. As a result of the purchase of shares by the ESOP, total stockholders’ equity of the Company was reduced by $2.6 million. As of December 31, 2023, the balance of the loan to the ESOP was $1.3 million and the fair value of unallocated shares was $1.1 million. As of December 31, 2023, there were 74,895 allocated shares and 103,153 unallocated

shares compared to 83,467 allocated shares and 103,153 unallocated shares at December 31, 2022. The ESOP compensation expense was $86,000 for the year ended December 31, 2023 and $110,000 for the year ended December 31, 2022 based on 7,935 shares earned in each of those years.