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Note 15 - Equity Incentive Plan and Stock Based Compensation | 6 Months Ended
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May 31, 2020
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] |
| 15 ) | Equity Incentive Plan and Stock Based Compensation
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 adds an additional 500,000 shares to the number of shares reserved for issuance pursuant to equity awards. No further stock options will be awarded 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 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 six months ended May 31, 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 15,000 shares were issued to directors as part of the director compensation policy, which vested immediately upon grant. In comparison, during the first six months of fiscal 2019, restricted stock awards of 69,937 shares were issued to various employees, directors, and consultants, which vest over three years from the date of issuance, and restricted stock awards of 16,000 were issued to directors as part of the director compensation policy. During the first six months of fiscal 2020, no shares of restricted stock were forfeited upon departure of any employees compared to 1,400 shares of restricted stock forfeited during the same period of fiscal 2019. 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 six months ended May 31, 2020 or in the same respective period of fiscal 2019. The Company incurred a total of $115,172 and $152,752 of stock-based compensation expense for restricted stock awards during the three and six months ended May 31, 2020, respectively, compared to $53,898 and $119,444 of stock-based compensation expense for restricted stock awards for the same respective periods of fiscal 2019. The Company repurchased 3,954 shares and 14,471 shares from employees in the form of treasury stock as consideration for payroll taxes paid on the employee’s behalf for the three and six months ended May 31, 2020, respectively, compared to 0 and 5,493 for the same periods in fiscal 2019. Stock compensation net of treasury shares repurchased for the six months ended May 31, 2020 was $126,216 compared to $108,624 for the same period in fiscal 2019.

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