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Note 13 - Equity Incentive Plan and Stock Based Compensation | 12 Months Ended
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Nov. 30, 2023
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] |
(13) | 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 replaced 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. 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 Plan for the years ended November 30, 2023 and 2022 are as follows:
|  | For the Twelve Months Ended |
|  | November 30, 2023 |  |  | November 30, 2022 |
Shares issued to directors (immediate vesting) |  |  | 25,000 |  |  |  | 25,000 |
Shares issued to directors, employees, and consultants (three-year vesting) |  |  | 82,250 |  |  |  | 94,500 |
Unvested shares forfeit upon termination |  |  | (13,999 | ) |  |  | (9,333 | )
Total shares issued |  |  | 93,251 |  |  |  | 110,167 |
Book and tax stock-based compensation expense for the years ended November 30, 2023 and 2022 are as follows:
|  | For the Twelve Months Ended |
|  | November 30, 2023 |  |  | November 30, 2022 |
Stock-based compensation expense |  |  | 292,185 |  |  |  | 287,721 |
Treasury share repurchase expense |  |  | (68,536 | ) |  |  | (92,432 | )
Stock-based compensation expense net of treasury repurchases |  |  | 223,649 |  |  |  | 195,289 |
|  | For the Twelve Months Ended |
|  | November 30, 2023 |  |  | November 30, 2022 |
Tax deductions from stock-based compensation expense |  |  | 232,723 |  |  |  | 314,306 |
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, 2023 or 2022. The following is a summary of activity under the plans as of November 30, 2023 and 2022, and changes during the years then ended: 2023 Option Activity
|  |  |  |  |  |  |  |  |  | Weighted Average |  |  |  |  |
|  |  |  |  |  | Weighted Average |  |  | Remaining |  |  | Aggregate |
Options |  | Shares |  |  | Exercise Price |  |  | Contractual Term |  |  | Intrinsic Value |
Options O/S at beginning of period |  |  | 12,000 |  |  | $ | 5.75 |  |  |  |  |  |  |  |  |
Granted |  |  | - |  |  | $ | - |  |  |  |  |  |  |  |  |
Exercised |  |  | - |  |  | $ | - |  |  |  |  |  |  |  | - |
Options Expired or Forfeited |  |  | (4,000 | ) |  | $ | 6.40 |  |  |  |  |  |  |  |  |
Options O/S at end of Period |  |  | 8,000 |  |  | $ | 5.43 |  |  |  | 0.90 |  |  |  | - |
Options Exer. At end of the Period |  |  | 8,000 |  |  | $ | 5.43 |  |  |  | 0.90 |  |  |  | - |
2022 Option Activity
|  |  |  |  |  |  |  |  |  | Weighted Average |  |  |  |  |
|  |  |  |  |  | Weighted Average |  |  | Remaining |  |  | Aggregate |
Options |  | Shares |  |  | Exercise Price |  |  | Contractual Term |  |  | Intrinsic Value |
Options O/S at beginning of period |  |  | 22,000 |  |  | $ | 5.93 |  |  |  |  |  |  |  |  |
Granted |  |  | - |  |  | $ | - |  |  |  |  |  |  |  |  |
Exercised |  |  | - |  |  | $ | - |  |  |  |  |  |  |  | - |
Options Expired or Forfeited |  |  | (10,000 | ) |  | $ | 6.15 |  |  |  |  |  |  |  |  |
Options O/S at end of Period |  |  | 12,000 |  |  | $ | 5.75 |  |  |  | 1.40 |  |  |  | - |
Options Exer. At end of the Period |  |  | 12,000 |  |  | $ | 5.75 |  |  |  | 1.40 |  |  |  | - |

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