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STOCK OPTIONS AND AWARDS

12 Months Ended

Jan. 01, 2022

8. STOCK OPTIONS AND AWARDS

Stock Awards

As of January 1, 2022, the Company has one incentive stock award plan, The Eastern Company 2020 Stock Incentive Plan (the “2020 Plan”), for officers, other key employees, and non-employee Directors. The Eastern Company 2010 Executive Stock Incentive Plan expired in February 2020. Incentive stock awards 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 awards are granted. Restricted stock awards may also be granted to participants under the 2020 Plan with restrictions determined by the Compensation Committee of the Company’s Board of Directors. Under the 2020 Plan, non-qualified stock awards granted to participants will have exercise prices determined by the Compensation Committee of the Company’s Board of Directors. The Company granted 27,300 awards during 2021. During 2020 the Company did not grant stock awards or restricted stock.

The 2020 Plan also permits the issuance of Stock Appreciation Rights (“SARs”). The SARs are in the form of an award 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 SARs during 2021 and issued 44,000 SARs during 2020.

8. STOCK OPTIONS AND AWARDS (continued)

Stock-based compensation expense in connection with stock awards and SARs granted to employees during fiscal year 2021 was $418,000 and for 2020 was $376,000. For the period of 2021, the Company used several assumptions which included an expected term of 4 years, volatility deviation of 47.25% to 48.55% and a risk-free rate of 0.18% to 0.35%. For the period of 2020, the Company used several assumptions which included an expected term of 4 years, volatility deviation of 38.62% and a risk-free rate of 0.26%.

As of January 1, 2022, there were 804,703 shares of common stock reserved and available for future grant under the above noted 2020 Plan.

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

	Year Ended January 1, 2022					Year Ended January 2, 2021
	Units			Weighted - Average Exercise Price		Units			Weighted - Average Exercise Price
Outstanding at beginning of period		244,001		$	21.87		276,000		$	22.30
Issued		-					44,000			20.20
Exercised		(55,668	)		19.31		-			-
Forfeited		(7,500	)		21.20		(75,999	)		22.00
Outstanding at end of period		180,833			22.88		244,001			21.87

SARs Outstanding and Exercisable

Range of Exercise Prices

Outstanding as of

January 1, 2022

Weighted- Average Remaining Contractual Life

Weighted- Average Exercise Price

Exercisable as of

January 1, 2022

Weighted- Average Remaining Contractual Life

Weighted- Average Exercise Price

20.20-$26.30

180,833

1.6

22.88

118,335

1.12

23.30

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

	Year Ended January 1, 2022			Year Ended January 2, 2021
	Shares			Shares
Outstanding at beginning of period		25,000			25,000
Issued		27,300			—
Forfeited		(25,000	)		—
Outstanding at end of period		27,300			25,000

As of January 1, 2022, outstanding SARs and awards had an intrinsic value of $1,087,570.