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Table of Contents

  1. Audit Committee Charter
  2. Compensation Committee Charter
  3. Nominating Committee Charter
  4. Criteria for Nomination as Director


Argan, Inc
Audit Committee Charter

Purpose

The principal purpose of the Audit Committee (the “Committee”) of Argan, Inc. (the “Company”) is to assist the Board of Directors (the “Board”) in fulfilling its responsibility to oversee (i) management’s conduct of the Company’s financial reporting process, including reviewing the financial reports and other financial information provided by the Company and the Company’s systems of internal accounting controls, (ii) the Company’s independent registered public accountants’ qualifications and independence and the audit and non-audit services provided to the Company, and (iii) the performance of the Company’s independent registered public accountants.

Membership

The Committee shall be comprised of not less than three members of the Board, and the Committee’s composition will meet the independence and other requirements of Section 301 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), applicable rules of the Securities and Exchange Commission (the “SEC”), and applicable stock exchange rules.

Key Responsibilities

The Committee's job is one of oversight. It is recognized that the Company’s management is responsible for preparing the Company’s financial statements and that the independent registered public accountants are responsible for auditing those financial statements to confirm that they present fairly in all material respects and are prepared in accordance with generally accepted accounting principles (“GAAP”). Additionally, it is recognized that financial management and the independent registered public accountants have more time and knowledge and more detailed information about the Company than do Committee members; consequently, in carrying out its oversight responsibilities, the Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to the independent registered public accountants’ work. In carrying out its oversight role, the Committee shall perform the following functions, which are set forth as a guide and may be varied from time to time as appropriate under the circumstances.

Independent Registered Public Accountants and Audit Process

  • The Committee shall have the ultimate authority and responsibility to select, establish the compensation for, evaluate and, where appropriate, replace the independent registered public accountants, and the independent registered public accountants shall report directly to the Committee.
  • The Committee shall review and approve the independent registered public accountants' compensation and the proposed terms of their engagement, and consider their audit plan and procedures and review any problems arising from the annual audit examination.
  • The Committee shall pre-approve all audit and non-audit services provided to the Company by the independent registered public accountants. The Committee shall prohibit, as required by law, the independent registered public accountants from performing non-audit services.
  • The Committee shall:
    • Request from the independent registered public accountants, at least annually, a formal written statement delineating all relationships between the auditor and the Company consistent with Independence Standards Board Standard No. 1;
    • Discuss with the independent registered public accountants any such disclosed relationships and their impact on the independent registered public accountants’ independence;
    • Develop guidelines for the Company’s hiring of employees of the independent registered public accountants who were engaged on the Company’s account, which shall include a prohibition on hiring any such employee as chief executive officer, chief financial officer, chief accounting officer, controller, or any equivalent positions, during periods specified by applicable legal requirements; and
    • Obtain and review, at least annually, a report by the independent registered public accountants describing: the firm’s internal quality-control procedures and, in order to assess the auditors’ independence, all relationships between the independent registered public accountants and the Company.

Financial Statements

  • The Committee shall review with management and the independent registered public accountants the audited financial statements and the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) disclosures to be included in the Company’s Annual Report on Form 10-KSB or 10-K and the Annual Report to Stockholders, and review and consider with the independent registered public accountants the matters required to be discussed by Statement on Auditing Standards (“SAS”) No. 61. The Committee shall determine whether to recommend inclusion of these financial statements in these reports.
  • The Committee shall review with management and the independent registered public accountants, the Company’s financial results and MD&A disclosures to be included in the Company’s Quarterly Reports on Form 10-QSB or 10-Q and the matters required to be discussed by SAS No. 61, prior to the Company’s filing of the Form 10-QSB or 10Q.
  • The Committee shall review with management the types of information to be disclosed and the presentations to be made in earnings press releases.
  • The Committee shall require the independent registered public accountants to report timely to the Committee all critical accounting policies and practices to be used by the Company, alternative treatments that have been discussed with management and the ramifications of the use of such alternatives, and the treatment preferred by the independent registered public accountants.
  • The Committee shall require the independent registered public accountants to report timely to the Committee material written communications made to management, such as any management letter or schedule of unadjusted differences.
  • The Committee shall review major changes and other major questions of choice respecting the application of appropriate accounting principles, and the existence and substance of any material accruals, reserves and estimates in the preparation of the Company’s financial statements. The Committee shall discuss with the independent registered public accountants, and confirm that the Company’s financial statements reflect, all material correcting adjustments identified by them in accordance with GAAP and SEC rules and regulations.
  • The Committee shall review material pending legal proceedings involving the Company and consider other contingent liabilities, as well as other risks and exposures that may have a material impact on the financial statements.
  • The Committee shall review with management and the independent registered public accountants the financial statement effects of pending regulatory and accounting initiatives.
  • The Committee shall review with management, for a general understanding, management’s risk assessment and risk management guidelines.
  • The Committee shall review off-balance sheet transactions.
  • The Committee shall review and oversee the resolution of any significant potential disputes or disagreements between management and the Company’s independent registered public accountants that arose in connection with the preparation of the Company’s financial statements or financial reporting generally.
  • The Committee shall prepare an Audit Committee Report for inclusion in the Company’s annual meeting of stockholders proxy statement as required by SEC regulations.

CEO/CFO Certifications; Internal Controls and Complaints

  • The Committee shall review as appropriate with the Company’s Chief Executive Officer and Chief Financial Officer the contents of the personal certifications required to be made by them pursuant to Sections 302 and 906 of Sarbanes-Oxley.
  • The Committee shall consider the quality and adequacy of the Company’s internal controls and will review with management and the independent registered public accountants their assessments of the adequacy of internal controls, and the resolution of identified material weaknesses and reportable conditions in internal controls, including the prevention or detection of management override or compromise of the internal control system.
  • The Committee shall review the Company’s policies and procedures regarding compliance with applicable laws and regulations.
  • The Committee shall review and approve all related party transactions and any modifications thereto and consult with management, legal counsel, and the independent registered public accountants to ensure that such transactions are effected and disclosed in conformity with applicable legal requirements.
  • The Committee shall inquire into evidence of illegal conduct or non-compliance with Company policies.
  • The Committee shall establish procedures for, (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters or suspected violations of the policies and procedures of the Company and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters or suspected violations of the policies and procedures of the Company.

Procedures

  • In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the Company and authority to retain outside counsel, auditors or other experts for this purpose.
  • The Committee shall have the authority to retain, establish the compensation for and terminate outside counsel and other experts and advisors, including public accountants, as it determines appropriate to assist in the full performance of its functions.
  • The Committee shall meet as often as deemed necessary or appropriate in its judgment, generally at least four times each year, either in person or by phone. The Committee or a member of the Committee shall meet with the independent registered public accountants at least quarterly.
  • The Committee shall meet on occasion with the independent registered public accountants outside the presence of senior management.
  • The Committee shall review with the independent registered public accountants any problems or difficulties the auditors may have encountered and any management letter provided by the auditors and management's response to that letter.
  • The Committee may undertake an annual performance evaluation of the Committee.
  • The Committee shall review the adequacy of this Charter on an annual basis and recommend changes to the Board for approval.
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ARGAN, INC.
Compensation Committee Charter

Purpose

The Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Argan, Inc. (the “Company”) is responsible for implementing and reviewing executive compensation plans, policies and programs in an effort to ensure the attraction and retention of executive officers in a reasonable and cost-effective manner, to motivate their performance in the achievement of the Company’s business objectives and to align the interest of executive officers with the long-term interests of the Company’s shareholders.

Membership

The Committee shall consist of not less than three independent members of the Board. The Committee members shall be appointed for one-year terms at the annual meeting of the Board. In selecting members of the Committee, the Board will determine that each member has the appropriate experience, independence and interest to carry out his/her duties and responsibilities. Each member of the Committee shall meet the standards to qualify as an independent director within the meaning of Nasdaq Rule 4200(a)(15), an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and as a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3)(i) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Functions

The Committee shall:

  • Approve periodically a compensation policy and salary structure for executive officers of the Company which considers business and financial objectives, industry and market pay practices and/or such other information as may be deemed appropriate.
  • Review and approve the compensation (salary, bonus, incentive and other compensation) of the executive officers of the Company, excluding the Chief Executive Officer.
  • Review and recommend the annual compensation, including base salary and short and long-term incentives, of the CEO to the outside directors of the BOD for approval.
  • Review and approve perquisites offered to executive officers of the Company.
  • Review the compensation of executive officers of the Company and evaluate their compensation in light of their performance.
  • Review and approve all employment, retention and severance agreements for any executive officer of the Company.
  • Act on behalf of the Board in administering compensation plans, approved by the Board and/or the shareholders of the Company, in a manner consistent with the terms of such plans, including, the granting of stock options, restricted stock, stock units and other awards.
  • Review and make recommendations to the Board with respect to new compensation incentive plans and equity-based plans.
  • Review and make recommendations to the Board on changes in major benefit programs of executive officers of the Company.
  • Prepare a Compensation Committee Report for inclusion in the Company’s annual meeting proxy statement as required by the Securities and Exchange Commission regulations.
  • Review and obtain confirmation that compensation and perquisites are administered in compliance with applicable law and are appropriately disclosed in the Company’s annual meeting proxy statement.
  • Perform such other functions as may be assigned to the Committee, from time to time, by the Board.

Procedures

  • The Committee shall meet regularly, with such additional meetings, as the Chair of the Committee deems necessary, and shall report to the Board following regular meetings.
  • The Chief Executive Officer of the Company shall not be present during voting or deliberations of the Committee regarding the compensation of the Chief Executive Officer.
  • The Committee shall have the authority to retain, establish the compensation for and terminate outside counsel and other experts and advisors, including compensation consultants, as it determines appropriate to assist in the full performance of its functions.
  • The Committee shall review the adequacy of this Charter on an annual basis and recommend changes to the Board for approval.
  • The Committee shall undertake an annual evaluation of the Committee.
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ARGAN, INC.
Nominating Committee Charter

Purpose

The principal purpose of the Nominating Committee (the “Committee”), in its capacity as a committee of the Board of Directors, is to (i) identify individuals qualified to become members of the Board of Directors and (ii) recommend the persons to be nominated by the Board of Directors for election as directors at the annual meeting of stockholders.

Structure and Membership

The Committee shall be comprised of not less than three members of the Board, and the Committee’s composition shall meet the requirements of applicable Nasdaq rules. Accordingly, all members of the Committee shall be “independent” directors, as defined by such rules. Members of the Committee shall be appointed by the Board of Directors. Unless the Board of Directors elects a Chair of the Committee, the Committee shall elect a Chair by majority vote. The compensation of Committee members shall be as determined by the Board of Directors. The Board of Directors may remove any member of the Committee from such Committee, with or without cause.

Authority and Responsibilities

1. Selection of Director Nominees. The Committee shall be responsible for (i) identifying individuals qualified to become members of the Board of Directors and (ii) recommending to the Board of Directors the persons to be nominated by the Board for election as directors at the annual meeting of stockholders and the persons to be elected by the Board of Directors to fill any vacancies on the Board.

2. Criteria for Selecting Directors. Directors shall not be required to meet any specific or minimum qualifications. The Committee shall, however, use the criteria set forth on Exhibit A attached hereto to guide its selection process. The Committee shall be responsible for reviewing with the Board of Directors, on an annual basis, the requisite skills and criteria for new Board members as well as the composition of the Board as a whole.

3. Stockholder Nominees. The Committee shall consider nominees for the Board of Directors recommended by stockholders. Nominations by stockholders must be in writing, must include the full name of the proposed nominee, a brief description of the proposed nominee’s business experience for at least the previous five years, and a representation that the nominating stockholder is a beneficial or record owner of the Company’s common stock. Any such submission must also be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as director if elected. Nominations should be delivered to the Nominating Committee at the following address:

Nominating Committee Argan, Inc.
c/o Corporate Secretary
One Church Street, Suite 201
Rockville, MD 20850

4. Selection Process. The Committee shall review the qualifications and backgrounds of all directors and nominees (without regard to whether a nominee has been recommended by stockholders), as well as the overall composition of the Board of Directors, and recommend a slate of directors to be nominated for election at the annual meeting of stockholders, or, in the case of a vacancy on the Board of Directors, recommend a director to be elected by the Board to fill such vacancy.

5. Search Firms. The Committee shall have the sole authority to retain and terminate any search firm to be used to identify director nominees, including sole authority to approve the search firm's fees and other retention terms. The Committee is empowered, without further action by the Board of Directors, to cause the Company to pay the compensation of any search firm engaged by the Committee.

Procedures and Administration

1. Meetings. The Committee shall meet as often as it deems necessary in order to perform its responsibilities. The Committee shall keep such records of its meetings as it shall deem appropriate.

2. Subcommittees. The Committee may form and delegate authority to one or more subcommittees (including a subcommittee consisting of a single member), as it deems appropriate from time to time under the circumstances.

3. Reports to the Board. The Committee shall report regularly to the Board.

4. Charter. The Committee shall, from time to time as it deems appropriate, review and reassess the adequacy of this Charter and recommend any proposed changes to the Board of Directors for approval.

5. Annual Self-Evaluation. At least annually, the Committee shall evaluate its own performance.

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ARGAN, INC.
Criteria for Nomination as Director

General Criteria

1. Nominees should have a reputation for integrity, honesty and adherence to high ethical standards.

2. Nominees should have demonstrated business acumen, experience and ability to exercise sound judgment in matters that relate to the current and long-term objectives of the Company and should be willing and able to contribute positively to the decision-making process of the Company.

3. Nominees should have a commitment to understand the Company and its industry and to regularly attend and participate in meetings of the Board of Directors and its committees.

4. Nominees should have the interest and ability to understand the sometimes conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all stockholders.

5. Nominees should not have, or appear to have, a conflict of interest that would impair the nominee’s ability to represent the interests of all the Company’s stockholders and to fulfill the responsibilities of a director.

6. Nominees shall not be discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability or any other basis proscribed by law. The value of diversity on the Board of Directors should be considered.

Application of Criteria to Existing Directors

The renomination of existing directors should not be viewed as automatic, but should be based on continuing qualification under the criteria set forth above. In addition, the Nominating Committee shall consider the existing directors’ performance on the Board and any committee, which shall include consideration of the extent to which the directors undertook continuing director education.

Criteria for Composition of the Board

The backgrounds and qualifications of the directors considered as a group should provide a significant breadth of experience, knowledge and abilities that shall assist the Board of Directors in fulfilling its responsibilities.

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