(

)

Equity Incentive Plan

The compensation cost charged against income was

$247,645

and

$195,416

for the

2020

and

2019

fiscal years, respectively. The total income tax deductions for share-based compensation arrangements were

$176,435

and

$122,022

for the

2020

and

2019

fiscal years, respectively.

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

February 25, 2020,

the Board of Directors of the Company (the “Board”) authorized and approved the Art's-Way Manufacturing Co., Inc.

2020

Equity Incentive Plan (the

“2020

Plan”). The

2020

Plan was approved by the stockholders on

April 30, 2020.

The

2020

Plan replaces the Art's-Way Manufacturing Co., Inc.

2011

Equity Incentive Plan (the

“2011

Plan”) and adds an additional

500,000

shares to the number of shares reserved for issuance pursuant to equity awards.

further awards will be made under the

2011

Plan or other prior plans. Awards to directors and executive officers under the

2020

Plan are governed by the forms of agreement approved by the Board of Directors. Stock options or other awards granted prior to

February 25, 2020

are governed by the applicable prior plan and the forms of agreement adopted thereunder.

The

2020

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 has approved a director compensation policy pursuant to which non-employee directors are automatically granted restricted stock awards of

1,000

shares of fully vested common stock annually or initially upon their election to the Board and another

1,000

shares of fully vested common stock on the last business day of each fiscal quarter. During the year ended

November 30, 2020,

restricted stock awards of

128,750

shares were issued to various employees, directors, and consultants, which vest over the next

three

years, and restricted stock awards of

25,000

shares were issued to directors as part of the director compensation policy, which vested immediately upon grant. In comparison, during fiscal

2019,

restricted stock awards of

56,750

shares were issued to various employees, directors, and consultants, which vest over

three

years from the date of issuance, restricted stock awards of

9,000

shares were issued to various employees, which vested immediately upon grant, and restricted stock awards of

31,687

were issued to directors as part of the director compensation policy. During the

2020

fiscal year,

74,685

shares of restricted stock became unrestricted,

4,833

shares of restricted stock were forfeited, and the Company bought

16,255

shares back as treasury stock from employees to pay payroll tax on vested shares. During

2019

fiscal year,

32,600

shares of restricted stock became unrestricted,

1,400

shares of restricted stock were forfeited, and the Company bought

9,556

shares back as treasury stock from employees to pay payroll tax on vested shares.

Stock-based compensation expense reflects the fair value of stock-based awards measured at the grant date and recognized over the relevant vesting period. The Company estimates the fair value of each stock-based option award on the measurement date using the Black-Scholes option valuation model which incorporates assumptions as to stock price volatility, the expected life of the options, risk-free interest rate, and dividend yield. 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.

stock options were granted during the years ended

November 30, 2020

2019.

Stock compensation net of treasury shares repurchased for the year ended

November 30, 2020

was

$216,649

compared to

$176,093

for the same period in fiscal

2019.

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.

	20 20		201 9
Expected Volatility		-		-
Expected Dividend Yield		-		-
Expected Term (in years)		-		-
Risk-Free Rate		-		-

The following is a summary of activity under the plans as of

November 30, 2020

and

2019,

and changes during the years then ended:

2020 Option Activity
Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options O/S at beginning of period		59,000		$	6.07
Granted		-		$	-
Exercised		-		$	-				-
Options Expired or Forfeited		(23,000	)	$	5.56
Options O/S at end of Period		36,000		$	6.40		2.57		-
Options Exercisable At end of the Period		36,000		$	6.40		2.57		-

2019 Option Activity
Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options O/S at beginning of period		59,000	$	6.07
Granted		-	$	-
Exercised		-	$	-				-
Options Expired or Forfeited		-	$	-
Options O/S at end of period		59,000	$	6.07		2.86		-
Options Exercisable at end of the period		59,000	$	6.07		2.86		-

options were granted or vested during the

2020

2019

fiscal years. As of both

November 30, 2020

and

November 30, 2019,

there were

non-vested options. As of

November 30, 2020,

there was

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

The Company received

cash from the exercise of options during the

2020

2019

fiscal years.