Stock Options and awards

3 Months Ended

Apr. 01, 2023

Stock Options and awards

7. Stock Options and awards

Note H - Stock Options and Awards

The Eastern Company 2010 Executive Stock Incentive Plan (the “2010 Plan”), for officers, other key employees, and non-employee directors expired in February 2020. 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 2020 Plan replaced the 2010 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 2023. During the first three months of fiscal 2022, the Company granted 36,200 stock awards that were subject to the meeting of performance measurements. For the first three months of fiscal 2022, 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. During the first three months of fiscal 2023 and 2022 the Company did not issue any SARs.

Stock-based compensation (income) expense in connection with SARs previously granted to employees was approximately $(184,000) and $113,000 in the first quarter of 2023 and the first quarter of 2022, respectively.

As of April 1, 2023, there were 939,398 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
	April 1, 2023					December 31, 2022
	Units			Weighted Average Exercise Price		Units			Weighted Average Exercise Price
Outstanding at beginning of period		146,166		$	23.22		180,833		$	22.88
Issued		-			-		-			-
Expired		(42,000	)		24.90		-			-
Exercised		(33,333	)		21.10		(16,667	)		21.20
Forfeited		(32,500	)		21.97		(18,000	)		21.74
Outstanding at end of period		38,333			23.58		146,166			23.22

SARs Outstanding and Exercisable
Range of Exercise Prices	Outstanding as of April 1, 2023		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Exercisable as of April 1, 2023		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
$19.44 - $26.30		38,333		0.9	$	23.58		38,333		0.9	$	23.58

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

	Three Months Ended			Year Ended
	April 1, 2023			December 31, 2022
	Shares			Shares
Outstanding at beginning of period		64,500			27,300
Issued		-			43,300
Forfeited		(33,100	)		(6,100	)
Outstanding at end of period		31,400			64,500

As of April 1, 2023, outstanding SARs and stock awards had an intrinsic value of $611,672.