Note 13 - Equity Incentive Plan

12 Months Ended

Nov. 30, 2024

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. During each of fiscal years 2024 and 2023, directors were 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 pursuant to a Board approved director compensation policy.

Shares issued under the 2020 Plan for the years ended November 30, 2024 and 2023 are as follows:

	For the Twelve Months Ended
	November 30, 2024			November 30, 2023
Shares issued to directors (immediate vesting)		25,000			25,000
Shares issued to directors, employees, and consultants (three-year vesting)		69,000			82,250
Unvested shares forfeit upon termination		(51,749	)		(13,999	)
Net shares issued		42,251			93,251

Book and tax stock-based compensation expense for the years ended November 30, 2024 and 2023 are as follows:

	For the Twelve Months Ended
	November 30, 2024			November 30, 2023
Stock-based compensation expense		182,847			292,185
Treasury share repurchase expense		(37,654	)		(68,536	)
Stock-based compensation expense net of treasury repurchases		145,193			223,649

	For the Twelve Months Ended
	November 30, 2024		November 30, 2023
Tax deductions from stock-based compensation expense		202,557		232,723

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, 2024 or 2023.

The following is a summary of activity under the plans as of November 30, 2024 and 2023, and changes during the years then ended:

2024 Option Activity

						Weighted Average
				Weighted Average		Remaining		Aggregate
Options	Shares			Exercise Price		Contractual Term		Intrinsic Value
Options O/S at beginning of period		8,000		$	5.43
Granted		-		$	-
Exercised		-		$	-				-
Options Expired or Forfeited		(4,000	)	$	6.15
Options O/S at end of Period		4,000		$	4.70		0.39		-
Options Exer. at end of the Period		4,000		$	4.70		0.39		-

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		-