NOTE 5 – EQUITY-BASED COMPENSATION:

The 2020 Graham Corporation Equity Incentive Plan (the "2020 Plan") was approved by the Company’s stockholders at the Annual Meeting on August 11, 2020 and provides for the issuance of 422 shares of common stock in connection with grants of incentive stock options, non-qualified stock options, restricted stock units and stock awards to officers, key employees and outside directors.  The shares available for issuance include 112 remaining available shares under the Company’s prior plan, the Amended and Restated 2000 Graham Corporation Incentive Plan to Increase Shareholder Value (the "2000 Plan").  As of August 11, 2020, the effective date of the 2020 Plan, no further awards will be granted under the 2000 Plan.  However, any previously outstanding award granted under the 2000 Plan remains subject to the terms of such plan until the time it is no longer outstanding.

 No restricted stock awards were granted in the three-month periods ended September 30, 2020 and 2019.  Restricted stock awards granted in the six-month periods ended September 30, 2020 and 2019 were 113 and 83, respectively.  Restricted shares of 54 and 40 granted to officers in fiscal 2021 and fiscal 2020, respectively, vest 100% on the third anniversary of the grant date subject to the satisfaction of the performance metrics for the applicable three-year period.  Restricted shares of 38 and 28 granted to officers and key employees in fiscal 2021 and fiscal 2020, respectively, vest 33⅓% per year over a three-year term.  Restricted shares of 21 and 15 granted to directors in fiscal 2021 and fiscal 2020, respectively, vest 100% on the first year anniversary of the grant date.  Stock

options may be granted at prices not less than the fair market value at the date of grant and expire no later than ten years after the date of grant.  No stock option awards were granted in the three-month or six-month periods ended September 30, 2020 and 2019.

During the three months ended September 30, 2020 and 2019, the Company recognized equity-based compensation costs related to restricted stock awards of $316 and $313, respectively.  The income tax benefit recognized related to equity-based compensation was $73 and $69 for the three months ended September 30, 2020 and 2019, respectively.  During the six months ended September 30, 2020 and 2019, the Company recognized equity-based compensation costs related to restricted stock awards of $471 and $401, respectively.  The income tax benefit recognized related to equity-based compensation was $111 and $89 for the six months ended September 30, 2020 and 2019, respectively.   

The Company has an Employee Stock Purchase Plan (the "ESPP"), which allows eligible employees to purchase shares of the Company's common stock at a discount of up to 15% of its fair market value on the (1) last, (2) first or (3) lower of the last or first day of the six-month offering period.  A total of 200 shares of common stock may be purchased under the ESPP.  During the three months ended September 30, 2020 and 2019, the Company recognized equity-based compensation costs of $14 and $11, respectively, related to the ESPP and $3 and $2, respectively, of related tax benefits.  During the six months ended September 30, 2020 and 2019, the Company recognized equity-based compensation costs of $23 and $11, respectively, related to the ESPP and $5 and $2, respectively, of related tax benefits.