EML Eastern Company

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On January 26, 2023, The Eastern Company (the “Company”) announced that, on January 22, 2023, Peter O’Hara notified the Company of his resignation from his office as Vice President and Chief Financial Officer of the Company, effective as of the close of business on February 3, 2023, to pursue other opportunities.

On January 26, 2023, the Company announced that Nicholas Vlahos, age 41, has been appointed as Vice President and Chief Financial Officer of the Company effective as of the close of business on February 3, 2023. Mr. Vlahos will serve as the principal accounting officer and the principal financial officer of the Company.  Mr. Vlahos joined the Company in 2017 as Treasurer and, since 2022, has served as Vice President of Finance, Treasurer and Secretary.  Prior to joining the Company, Mr. Vlahos served as Director of Finance, Accounting and Human Resources at Fischer Technology, Inc.   

On February 1, 2023, the Company entered into an offer letter (the “Offer Letter”) with Mr. Vlahos providing that Mr. Vlahos will serve as Vice President, Chief Financial Officer, Treasurer and Secretary, effective as of the close of business on February 3, 2023. The Offer Letter provides for a base salary of $350,000 per year. The Offer Letter also provides that Mr. Vlahos will be eligible for (a) annual incentive compensation based on the achievement of annual financial goals, with target incentive compensation equal to 50% of base salary, and (b) a long-term incentive award equal to 40% of base salary and subject to vesting and the achievement of long-term financial goals, with an award agreement to be provided in March 2023.  The Offer Letter also provides for benefits including health and dental plans and flexible spending accounts, life insurance, short- and long-term disability and long-term care coverage, subject to applicable waiting periods, and participation in the Company’s 401(k) plan, including an automatic 3% Company contribution and a 50% matching contribution up to 3% or more of compensation.

The Company entered into a Severance Agreement (the “Severance Agreement”) with Mr. Vlahos on February 1, 2023. The purpose of the Severance Agreement is to provide severance benefits to Mr. Vlahos should he become terminated by the Company. Should Mr. Vlahos be terminated by the Company for any reason other than “Good Reason,” or if there is a constructive termination, he is entitled to receive a lump-sum payment of his annual base salary plus an estimate of his annual bonus for the year in which the termination date occurs, based on achievement against pro-rata targets, and vesting of all equity and equity-based awards. Such benefits are contingent upon timely execution by Mr. Vlahos of a non-competition agreement and a release and waiver of claims in favor of the Company.

The foregoing descriptions of the Offer Letter and the Severance Agreement are summaries and are qualified in their entirety by reference to the complete terms of such agreements, which are filed herewith as Exhibits 10.1 and 10.2, respectively, and are incorporated by reference herein.

There are no arrangements or understanding between Mr. Vlahos and any other persons pursuant to which he was selected as an officer. Mr. Vlahos has no family relationships with any of the Company’s directors or executive officers and has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.