(

)

Equity Incentive Plan

November 30, 2017,

the Company had

one

equity incentive plan, the

2011

Plan, which is described below. The compensation cost charged against income was

$113,039

and

$79,979

for

2017

and

2016,

respectively, for all awards granted under the

2011

Plan during such years. The total income tax deductions for share-based compensation arrangements were

$68,886

and

$88,278

for

2017

and

2016

respectively.

compensation cost was capitalized as part of inventory or fixed assets.

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

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 annually granted

1,000

stock units annually or initially upon their election to the board, which are fully vested. In addition, directors

may

elect to receive cash retainer fees in the form of fully-vested restricted stock issued under the

2011

Plan.

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.

	201 7		201 6
Expected Volatility		-		-
Expected Dividend Yield		-		-
Expected Term (in years)		-		-
Risk-Free Rate		-		-

The following is a s

ummary of activity under the plans as of

November 30, 2017

and

2016,

and changes during the years then ended:

2017

Option Activity

Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options O utstanding at the Beginning of the Period		143,500		$	8.78
Granted		-			-				-
Exercised		-			-				-
Options Expired or Forfeited		(47,500	)		10.84
Options O utstanding at the End of the Period		96,000			7.77		3.55		-
Options Exer cisable at the End of the Period		96,000			7.77		3.55		-

2016

Option Activity

Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options Outstanding at the Beginning of the Period		174,000		$	8.39		-		-
Granted		-			-		-		-
Exercised		-			-		-		-
Options Expired or Forfeited		(30,500	)		6.39		-		-
Options Outstanding at the End of the Period		143,500			8.78		3.37		-
Options Exercisable at the End of the Period		143,500			8.78		3.37		-

o options were granted during fiscal

2017

2016.

As of both

November 30, 2017

and

November 30, 2016,

there were

non-vested options. As of

November 30, 2017,

there was

unrecognized compensation cost related to non-vested share-based compensation arrangements under the plan related to stock options.

options vested during fiscal

2017.

uring fiscal

2016,

5,000

options vested and compensation expense of

$3,881

was recognized in

2016

for the vesting of stock options. The total fair value of options vested during fiscal

2016

was

$1.14.

The

Company received

cash from the exercise of options during fiscal years

2017

2016.

During fiscal year

2017

, the Company issued

53,700

shares of restricted stock, and

22,550

shares of restricted stock became unrestricted. During fiscal year

2017,

there were

4,000

shares of restricted stock forfeited, and

none

were forfeited in fiscal year

2016.

During fiscal year

2016,

the Company issued

48,000

shares of restricted stock, and

12,550

shares of restricted stock became unrestricted. Compensation expense of

$113,039

and

$76,098

was recognized in fiscal years

2017

and

2016,

respectively, for shares of restricted stock.