Note 10 - Stock Option Plan

12 Months Ended

Nov. 30, 2011

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

(10)         Equity Incentive Plan

On November 30, 2011, the Company had one equity incentive  plan, which is described below.  The compensation cost charged against income was $58,311 and $28,322 for 2011 and 2010, respectively.  The total income tax benefits for share-based compensation arrangements were $96,060 and $110,166 for 2011 and 2010, respectively.  No compensation cost was capitalized as part of inventory or fixed assets.

On January 27, 2011, the Board of Directors of the Company authorized and approved the Art’s-Way Manufacturing Co., Inc. 2011 Equity Incentive Plan (the “2011 Plan”), subject to approval by the stockholders on or before January 27, 2012.  The 2011 Plan was approved by the stockholders on April 28, 2011.  It replaced the Employee Stock Option Plan and the Directors’ Stock Option Plan (collectively, the “Prior Plans”), and no further stock options will be awarded under the Prior Plans.  Awards to directors and executive officers under the 2011 Plan will be governed by the forms of agreement approved by the Board of Directors.The 2011 Plan permits the plan administrator to award nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance awards, and stock appreciation rights to employees (including officers), directors, and consultants.  The Board of Directors has approved a director compensation policy pursuant to which non-employee directors are automatically granted non-qualified stock options to purchase 2,000 shares of common stock annually or initially upon their election to the Board, which are fully vested.

Stock options granted prior to January 27, 2011 are governed by the applicable Prior Plan and the forms of agreement adopted thereunder.

The fair value of each option award is estimated on the date of grant using the Black Scholes option-pricing model.  Expected volatility is based on historical volatility of the Company’s stock and other factors.  The Company uses historical option exercise and termination data to estimate the expected term the options are expected to be outstanding.  The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant.  The expected dividend yield is calculated using historical dividend amounts and the stock price at the option issuance date.

	2011			2010
Expected Volatility		57.71	%	69.98% to 75.48%
Expected Dividend Yield		0.590	%	0.712% to 0.878%
Expected Term (in years)		2			2
Risk-Free Rate		3.25	%		3.25	%

Summary of activity under the plans as of November 30, 2011, and changes during the year then ended as follows:

2011 Option Activity

Options	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Options outstanding at beginning of period		155,500	$	8.85
Granted		21,000	$	7.40
Exercised		(17,500)	$	4.25		$	96,060
Options Expired or Forfeited		(6,000)	$	5.01
Options outstanding at end of period		153,000	$	9.32	7.12	$	46,590
Options exercisable at end of period		153,000	$	9.32	7.12	$	46,590

2010 Option Activity

Options	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding at beginning of period		136,000	$	9.44
Granted		44,000	$	5.38
Exercised		(18,000)	$	4.51		$	104,567
Options Expired or Forfeited		(6,500)	$	9.81
Options outstanding at end of period		155,500	$	8.85	6.78	$	333,475
Options exercisable at end of period		125,500	$	9.76	6.09	$	197,275

The weighted-average grant-date fair value of options granted during the year 2011 and 2010 was $1.37 and $2.17, respectively.

A summary of the status of the Company’s nonvested shares as of November 30, 2011, and changes during the year ended November 30, 2011, is presented below:

Nonvested Shares	Shares		Weighted-Average Grant-Date Fair Value
Nonvested at beginning of period		30,000	$2.07
Granted		21,000	$1.37
Vested		(45,000)	$  .10
Forfeited		(6,000)	$(1.02)
Nonvested at end of period		0

As of November 30, 2011, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements under the plans.  The total fair value of shares vested during the years ended November 30, 2011 and 2010 was $4,290 and $45,514, respectively.

The cash received from the exercise of options during fiscal year 2011 was $74,429, compared to $81,240 in 2010.