QUAINT OAK BANCORP INC

Share-Based Compensation

Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost is measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock option and restricted share plans.

The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the closing price of the Company’s common stock on the grant date is used for restricted stock awards.

At* December 31, 2023,the Company has outstanding equity awards under three share-based plans: the2013* Stock Incentive Plan, the2018 Stock Incentive Plan, and the2023 Stock Incentive Plan. Outstanding awards under these plans were made in* May 2018and May 2023.These plans are more fully described in Note14.*

The Company also has an employee stock ownership plan (“ESOP”). This plan is more fully described in Note14. As shares are contributed to the ESOP and allocated among participants, the Company recognizes compensation expense equal to the average market price of the shares.