Stock-Based Compensation

12 Months Ended

Jan. 31, 2012

Stock- Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 15 – STOCK-BASED COMPENSATION

In June 2011, the stockholders approved the adoption of the 2011 Stock Plan (the “Stock Plan”) including 500,000 shares of the Company’s common stock reserved for issuance thereunder. The Stock Plan, which will expire in July 2021, serves to replace the Argan, Inc. 2001 Stock Option Plan (the “Option Plan”) which expired in July 2011. As was the case under the Option Plan, the Company’s Board of Directors may make awards under the Stock Plan to officers, directors and key employees. Awards may include incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”), and restricted or unrestricted stock. ISOs granted under the Option Plan shall have an exercise price per share at least equal to the common stock’s market value per share at the date of grant, a ten-year term, and typically shall become fully exercisable one year from the date of grant. NSOs may be granted at an exercise price per share that differs from the common stock’s market value per share at the date of grant, may have up to a ten-year term, and become exercisable as determined by the Company’s board of directors, typically one year from the date of award. At January 31, 2012, there were 1,192,000 shares of the Company’s common stock reserved for issuance under the two plans.

A summary of activity under the Option and Stock Plans for the two years ended January 31, 2012 is presented below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Term (years)		Weighted Average Fair Value
Outstanding, February 1, 2010		497,000		$	10.27		6.47	$	5.45
Granted		237,000		$	13.46
Exercised		(13,000	)	$	7.00
Forfeited		(45,000	)	$	12.64
Outstanding, January 31, 2011		676,000		$	11.29		5.78	$	5.79
Granted		212,000		$	13.92
Exercised		(55,000	)	$	9.36
Forfeited		(16,000	)	$	11.36
Outstanding, January 31, 2012		817,000		$	12.10		4.94	$	5.68
Exercisable, January 31, 2012		605,000		$	11.47		4.89	$	5.89

A summary of the change in the number of shares of common stock subject to non-vested options to purchase such shares for the two years ended January 31, 2012 is presented below:

	Shares			Weighted Average Fair Value
Non-vested, February 1, 2010		123,000		$	7.21
Granted		237,000		$	6.31
Vested		(123,000	)	$	6.96
Non-vested, January 31, 2011		237,000		$	6.31
Granted		212,000		$	5.09
Vested		(232,000	)	$	6.34
Forfeited		(5,000	)	$	4.98
Non-vested, January 31, 2012		212,000		$	5.09

The total intrinsic value amounts for the stock options exercised during the years ended January 31, 2012 and 2011 were $238,000 and $56,000, respectively. At January 31, 2012, the aggregate intrinsic value amounts for outstanding and exercisable stock options at January 31, 2012 were $1,958,000 and $1,834,000, respectively.

The total fair value amounts for stock options vested during the years ended January 31, 2012 and 2011 were $1,470,000 and $860,000, respectively. Compensation expense amounts recorded in the years ended January 31, 2012 and 2011 related to stock options were $637,000 and $1,502,000, respectively. At January 31, 2012, there was $740,000 in unrecognized compensation cost related to stock options granted under the Stock and Option Plans. The end of the period over which the compensation expense for these awards is expected to be recognized is December 2013.

The Company estimates the weighted average fair value of stock options on the date of award using a Black-Scholes option pricing model, which was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Current guidance provided by the SEC permits the use of a “simplified method” in developing the estimates of the expected terms of “plain-vanilla” share options under certain circumstances, including situations where a company having historical stock option exercise experience that is insufficient to provide a reasonable basis upon which to estimate expected terms. The Company utilizes the simplified method to estimate the expected terms of its stock option awards.

The fair value amounts per share of options to purchase shares of the Company’s common stock awarded during the fiscal years ended January 31, 2012 and 2011 were determined at the dates of grant using the following weighted-average assumptions:

	2012	2011
Risk-free interest rate	2.57%	3.41%
Expected volatility	44.88%	62.03%
Expected life	4.26 years	3.65 years
Dividend yield	—  %	—  %

During the year ended January 31, 2012, the Company awarded 5,000 shares of restricted stock to an employee. The aggregate market value of the shares is being amortized over the two-year vesting period to compensation expense, which was approximately $15,000 for the year ended January 31, 2012.

Warrants to purchase 160,000 shares of the Company’s common stock were outstanding as of January 31, 2012, exercisable at a price of $7.75 per share. The warrants were issued in connection with the Company’s private placement of common stock in April 2003 to three individuals who became the executive officers of the Company upon completion of the offering and also to an investment advisory firm. A former director of the Company is the chief executive officer of the investment advisory firm and related party, MSR Advisors, Inc. The fair value of the issued warrants of $849,000 was recognized as offering costs. All warrants are exercisable and expire in December 2012.

The Company also has 401(k) savings plans pursuant to which the Company makes discretionary contributions for the eligible and participating employees. The Company’s expense for these defined contribution plans totaled approximately $31,000 and $42,000 for continuing operations for the years ended January 31, 2012 and 2011, respectively.