On August 22, 2023, the Board of Directors approved the Farmers and Merchants Bancshares, Inc. 2023 Equity Compensation Plan (the “Equity Plan”). The Equity Plan allows the Board of Directors or its Compensation Committee to grant awards that may be payable in shares of common stock or the cash equivalent thereof.

The Company complies with the provisions of ASC Topic 718, Compensation-Stock Compensation, in measuring and disclosing stock compensation cost. The measurement objective in ASC Paragraph 718-10-30-6 requires public companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The cost is recognized in expense over the period in which an employee is required to provide service in exchange for the award (the vesting period).

During the year ended December 31, 2023, 2,000 fully vested shares of common stock and restricted stock units (the “RSUs”) related to 3,000 shares of common stock were granted to one executive officer. One-third of the RSUs vested on September 22, 2024, one-third vested on September 22, 2025, and one-third will vest on September 22, 2026, provided that the grantee is employed and in good standing with the Company on the vesting date.

A summary of the Company’s restricted stock unit grant activity for the year ended December 31, 2025 is shown below:

The compensation cost charged to income in respect of awards granted under the Equity Plan was $18.0 thousand for years ended December 31, 2025 and 2024. As of December 31, 2025, there was $13.6 thousand of unrecognized compensation cost related to the unvested RSUs which are expected to be recognized over a period of nine months.