(13)

Equity Incentive Plan

November

30,

2016,

the Company had

one

equity incentive plan, the

2011

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

$79,979

and

$28,484

for

2016

and

2015,

respectively, for all awards granted under the

2011

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

$88,278

and

$20,462

for

2016

and

2015

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 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 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.

	2016		2015
Expected Volatility		-		30.55	%
Expected Dividend Yield		-		1.574	%
Expected Term (in years)		-		2
Risk-Free Rate		-		3.25	%

Summary of activity under the plans as of

November

30,

2016

and

2015,

and changes during the years then ended as follows:

201

Option Activity

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

2015

Option Activity

Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options Outstanding at beginning of period		160,000	$	8.72		-		-
Granted		14,000	$	4.70		-		-
Exercised		-	$	-		-		-
Options Expired or Forfeited		-	$	-		-		-
Options Outstanding at end of Period		174,000	$	8.39		4.68		-
Options Exercisable at end of Period		169,000	$	8.47		4.57		-

The weighted-average grant-date fair value of options granted during the fiscal year

2015

was

$1.14,

and

options were granted during fiscal

2016.

Compensation expense of

$3,881

and

$8,022

was recognized in

2016

and

2015,

respectively, for the vesting of stock options.

A summary of the status of the Company’s non-vested option shares as of

November

30,

2016,

and changes during the year ended

November

30,

2016,

is presented below:

Non-vested Option Shares	Shares			Weighted Average Grant Date Fair Value
Non-vested at Beginning of Period		5,000
Granted		-
Vested		(5,000	)	$	1.14
Forfeited		-
Non-vested at End of Period		-

As of

November

30,

2016,

there was

unrecognized compensation cost related to non-vested share-based compensation arrangements under the plan related to stock options. The total fair value of options vested during the years ended

November

30,

2016

and

2015

was

$1.14

and

respectively.

The Company received

cash from the exercise of options during fiscal years

2016

2015.

During the fiscal year

2016

the Company issued

48,000

shares of restricted stock, and

12,550

shares of restricted stock became unrestricted. During the fiscal year

2015

the Company issued

12,500

shares of restricted stock, and

4,150

shares of restricted stock became unrestricted. Compensation expense of

$76,098

and

$20,462

was recognized in

2016

and

2015,

respectively, for shares of restricted stock.