Note I – Stock Options and Awards

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 Company has no other existing plan pursuant to which equity awards may be granted.

Restricted stock unit awards may be granted to participants under the 2020 Plan with restrictions determined by the Compensation Committee of the Board.  During the first three months of fiscal 2026 and 2025, the Company granted stock awards with respect to 52,992 and 35,856 shares of Company common stock, respectively, that were subject to the satisfaction of performance measurements or time-based requirements.  For the first three months of fiscal years 2026 and 2025, the Company used fair market value to determine the associated expense with stock awards.

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.  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 issued 69,264 and 48,240 options during the first three months of fiscal 2026 and 2025, respectively.  For the first three months of fiscal 2026, the Company used several assumptions which included an expected term of three years, volatility deviation of 43.08%, and a risk-free rate of 3.63% to determine the expense associated with options.  For the first three months of fiscal 2025, the Company used several assumptions which included an expected term of three years, volatility deviation of 40.34% and a risk-free rate of 4.34% to determine the expense associated with options.

Stock-based compensation income, including forfeitures, in connection with stock options and stock awards previously granted to employees was approximately $(307,000) and $(153,000) in the first quarter of 2026 and the first quarter of 2025, respectively. 

As of April 4, 2026, there were 691,997 shares of Company common stock reserved and available for future grant under the 2020 Plan.

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

The following table sets forth the outstanding stock awards for the period specified:

As of April 4, 2026, outstanding stock options and stock awards had an intrinsic value of $1,794,000.