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Note 12 - Equity Incentive Plan | 12 Months Ended
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Nov. 30, 2020
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] |
( 12 ) | 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. No compensation cost was capitalized as part of inventory or fixed assets. 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 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. No stock options were granted during the years ended November 30, 2020 or 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 |  |  |  | - |
No options were granted or vested during the 2020 or 2019 fiscal years. As of both November 30, 2020 and November 30, 2019, there were no non-vested options. As of November 30, 2020, 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 2020 or 2019 fiscal years.

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