NOTE 5 – EQUITY-BASED COMPENSATION:

The 2020 Graham Corporation Equity Incentive Plan (the "2020 Plan"), as approved by the Company’s stockholders at the Annual Meeting on August 11, 2020, 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 shares that remain available 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, stock options for 33 shares and 53 shares of unvested restricted stock under the 2000 Plan remains subject to the terms of such plan until the time such options expire or are exercised and such shares of restricted stock vest or are forfeited.

No restricted stock awards were granted in the three-month periods ended December 31, 2021 and 2020. 162 and 113 restricted stock awards were granted in the nine-month periods ended December 31, 2021 and 2020, respectively. 88 restricted shares and 54 restricted shares were granted to officers in fiscal 2022 and fiscal 2021, respectively, that vest 100% on the third anniversary of the grant date subject to the satisfaction of the performance metrics for the applicable three-year period. 54 restricted shares and 38 restricted shares granted to officers and key employees in fiscal 2022 and fiscal 2021, respectively, vest 33⅓% per year over a three-year term. 20 restricted shares and 21 restricted shares granted to directors in fiscal 2022 and fiscal 2021, respectively, vest 100% on the first year anniversary of the grant date. No stock option awards were granted in the nine-month periods ended December 31, 2021 and 2020.

During the three months ended December 31, 2021 and 2020, the Company recognized equity-based compensation costs related to restricted stock awards of $260 and $312, respectively. The income tax benefit recognized related to equity-based compensation was $58 and $72 for the three months ended December 31, 2021 and 2020, respectively. During the nine months ended December 31, 2021 and 2020, the Company recognized equity-based compensation costs related to restricted stock awards of $575 and $783, respectively. The income tax benefit recognized related to equity-based compensation was $127 and $183 for the nine months ended December 31, 2021 and 2020, 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 December 31, 2021 and 2020, the Company recognized equity-based compensation costs of $9 and $15, respectively, related to the ESPP and $1 and $4, respectively, of related tax benefits. During the nine-months ended December 31, 2021 and 2020, the Company recognized equity-based compensation costs of $24 and $38, respectively, related to the ESPP and $5 and $9, respectively, of related tax benefits.