Note F - Stock Options and awards

Stock Options

As of September 28, 2019, the Company had one stock option plan, The Eastern Company 2010 Executive Stock Incentive Plan (the “2010 Plan”), for officers, other key employees, and non-employee Directors. Incentive stock options granted under the 2010 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 2010 Plan with restrictions determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”). Under the 2010 Plan, non-qualified stock options granted to participants have exercise prices determined by the Compensation Committee. During the third quarters of 2019 and 2018, no stock option or restricted stock grants were issued subject to meeting performance measurements. For the nine months of 2019, the Company used several assumptions, which included an expected term of 3.5 to 4 years, volatility deviation of 28.88% to 32.33% and a risk-free rate of 1.42% to 2.48%. For the nine months of 2018, the Company used several assumptions, which included an expected term of 3.5 years, volatility deviation of 29.5% and a risk-free rate of 2.33%.

The 2010 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. During the third quarter of 2019, the Company issued 60,000 SARs in relation to the acquisition of Big 3 Precision.

Stock-based compensation expense in connection with SARs previously granted to employees in the third quarter of 2019 and 2018 was approximately $108,000 and $74,000, respectively, and for the first nine months of fiscal years 2019 and 2018 was approximately $281,000 and $203,000, respectively.

As of September 28, 2019, there were 178,500 shares of Company common stock reserved and available for future grant under the above noted 2010 Plan.

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

	Nine Months Ended September 28, 2019					Year Ended December 29, 2018
	Units			Weighted - Average Exercise Price		Units			Weighted - Average Exercise Price
Outstanding at beginning of period		189,167		$	21.46		141,500		$	20.36
Issued		96,000			23.99		51,000			24.90
Exercised		(1,667	)		19.10		--			--
Forfeited		--			--		(3,333	)		19.10
Outstanding at end of period		283,500			22.36		189,167			21.46

SARs Outstanding and Exercisable
Range of Exercise Prices		Outstanding as of September 28, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Exercisable as of September 28, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$	19.10-26.30		283,500		3.5	$	22.36		38,003		2.5		19.10

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

	Nine Months Ended September 28, 2019				Year Ended December 29, 2018
	Shares		Weighted - Average Exercise Price		Shares		Weighted - Average Exercise Price
Outstanding at beginning of period		25,000	$	—		25,000	$	—
Issued		—		—		—		—
Forfeited		—		—		—		—
Outstanding at end of period		25,000		—		25,000		—

Stock Grants Outstanding and Exercisable
Range of Exercise Prices		Outstanding as of September 28, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Exercisable as of September 28, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$	0.00		25,000		2.6		—		—		—		—

As of September 28, 2019, outstanding SARs and options had an intrinsic value of $1,180,600.