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Note 12 - Equity Incentive Plan

12 Months Ended

Nov. 30, 2021

Share-based Payment Arrangement [Text Block]

(12)

Equity Incentive Plan

On 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 added an additional 500,000 shares to the number of shares reserved for issuance pursuant to equity awards. No 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.

Shares issued under the 2020 equity plan for the years ended November 30, 2021 and 2020 are as follows:

	For the Twelve Months Ended
	November 30, 2021		November 30, 2020
Shares issued to directors, employees, and consultants (immediate vesting)		25,000		45,000
Shares issued to directors, employees, and consultants (three-year vesting)		88,500		108,750
Shares forfeit		-		(4,833	)
Total shares issued		113,500		148,917

Book and tax stock-based compensation expense for the years ended November 30, 2021 and 2020 are as follows:

	For the Twelve Months Ended
	November 30, 2021			November 30, 2020
Stock-based compensation expense		265,541			247,645
Treasury share repurchase expense		(30,470	)		(30,996	)
Stock-based compensation expense net of treasury repurchases		235,071			216,649

	For the Twelve Months Ended
	November 30, 2021		November 30, 2020
Tax deductions from stock-based compensation expense		246,862		176,435

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. No stock options were granted during the years ended November 30, 2021 or 2020.

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.

	2021		2020
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, 2021 and 2020, and changes during the years then ended:

2021 Option Activity
Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options O/S at beginning of period		36,000		$	6.40
Granted		-		$	-
Exercised		-		$	-				-
Options Expired or Forfeited		(14,000	)	$	7.14
Options O/S at end of Period		22,000		$	5.93		2.04		-
Options Exer. At end of the Period		22,000		$	5.93		2.04		-

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 Exer. At end of the Period		36,000		$	6.40		2.57		-

No options were granted or vested during the 2021 or 2020 fiscal years. As of both November 30, 2021 and November 30, 2020, there were no non-vested options. As of November 30, 2021, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements under the plan related to stock options.

The Company received no cash from the exercise of options during the 2021 or 2020 fiscal years.