EASTERN CO Stock Compensation Disclosure
7. STOCK OPTIONS AND AWARDS
Stock Awards
As of January 3, 2026, 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. Restricted stock awards or restricted stock units may be granted to participants under the 2020 Plan with restrictions determined by the Compensation Committee of the Company’s Board of Directors. The Company granted 88,416 and 92,016 restricted stock unit awards during 2025 and 2024, respectively.
The 2020 Plan also permits the issuance of stock options. Stock option awards granted under the 2020 Plan will have exercise prices determined by the Compensation Committee of the Company’s Board of Directors 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. The Company issued 50,688 and 53,568 stock options in 2025 and 2024, respectively. For the year of 2025, the Company used several assumptions which included an expected term of 3 years, volatility deviation of 42.54% and 40.34% and a risk-free rate of 3.73% and 4.34%. For the year of 2024, the Company used several assumptions which included an expected term of 3 years, volatility deviation of 38.30% and a risk-free rate of 4.51%.
Stock-based compensation expense, including forfeitures, in connection with stock awards and stock options previously granted to employees was $254,000 and $1,030,000 for fiscal years 2025 and 2024, respectively. The Company used fair market value to determine the associated expense with stock awards for the 2025 and 2024 fiscal years.
As of January 3, 2026, there were 780,962 shares of common stock reserved and available for future grant under 2020 Plan.
The following tables set forth the outstanding stock options for the period specified:
|
| Year Ended January 3, 2026 |
|
| Year Ended December 28, 2024 |
| ||||||||||
|
| Shares |
|
| Weighted - Average Exercise Price |
|
| Shares |
|
| Weighted - Average Exercise Price |
| ||||
Outstanding at beginning of period |
|
| 25,116 |
|
| $ | 28.18 |
|
|
| 13,000 |
|
| $ | 24.19 |
|
Issued |
|
| 50,688 |
|
|
| 27.57 |
|
|
| 53,568 |
|
|
| 28.69 |
|
Expired |
|
| (1,500 | ) |
|
| 20.20 |
|
|
| (9,000 | ) |
|
| 26.30 |
|
Exercised |
|
| - |
|
|
| - |
|
|
| (2,500 | ) |
|
| 20.20 |
|
Forfeited |
|
| (16,824 | ) |
|
| 28.45 |
|
|
| (29,952 | ) |
|
| 28.69 |
|
Outstanding at end of period |
|
| 57,480 |
|
| $ | 27.77 |
|
|
| 25,116 |
|
| $ | 28.18 |
|
Stock Options Outstanding and Exercisable | ||||||||||||||||||||||||
Range of Exercise Prices |
| Outstanding as of January 3, 2026 |
|
| Weighted- Average Remaining Contractual Life |
|
| Weighted- Average Exercise Price |
|
| Exercisable as of January 3, 2026 |
|
| Weighted- Average Remaining Contractual Life |
|
| Weighted- Average Exercise Price |
| ||||||
$21.52 - $28.69 |
|
| 57,480 |
|
|
| 4.0 |
|
| $ | 27.77 |
|
|
| - |
|
|
| - |
|
|
| - |
|
The following tables set forth the outstanding stock grants for the period specified:
|
| Year Ended January 3, 2026 |
|
| Year Ended December 28, 2024 |
| ||
|
| Shares |
|
| Shares |
| ||
Outstanding at beginning of period |
|
| 39,592 |
|
|
| 89,400 |
|
Issued |
|
| 37,728 |
|
|
| 38,448 |
|
Exercised |
|
| (4,579 | ) |
|
| (38,534 | ) |
Forfeited |
|
| (24,285 | ) |
|
| (49,722 | ) |
Outstanding at end of period |
|
| 48,456 |
|
|
| 39,592 |
|
As of January 3, 2026, outstanding stock options and awards had an intrinsic value of $951,000.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 3, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
| 2023 | Mar 12, 2024 | |
| 2022 | Mar 14, 2023 | |
| 2017 | Mar 15, 2018 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.