ARGAN INC

Our executive compensation primarily includes a base salary, annual cash bonuses, deferred compensation, and long-term equity-based compensation. Based on the performance goals and strategic initiatives of the executive, the long-term equity-based compensation may include as a component of their overall executive compensation the following: non-qualified stock options to purchase shares of our Common Stock (“NQSOs”), time-based restricted stock units (“TRSUs”), total stockholder return performance-based restricted stock units (“PRSUs”), earnings per share performance-based restricted stock units (“EPRSUs”), and renewable energy performance-based restricted stock units (“RRSUs”).

Annually, the Compensation Committee considers elements of executive compensation, individually and in the aggregate, when making decisions regarding the ratification and/or approval of compensation amounts for each NEO. The Compensation Committee has reviewed the structure of the Company’s executive compensation program for imprudent risks, and it has discussed the findings of this risk assessment with management. The members of the Compensation Committee believe that our executive compensation program does not motivate employees to take risks that are reasonably likely to have a material adverse effect on us.

Annual Base Salaries. Each NEO is paid an annual base salary that reflects the value of the executive’s skills to the Company, experience with the Company, prior record of achievement, expectations for future accomplishments, and other factors considered important to the Company. Base salary levels are established to attract quality executives, to provide a fixed base of cash compensation, and to recognize the challenges and varied skill requirements of different positions.

Base salaries are reviewed annually and from time to time in connection with a promotion or other change in responsibilities. In making individual salary recommendations to the Compensation Committee, our CEO evaluates the performance of the other NEOs, reviews market compensation levels for comparable positions, and considers the particular executive’s potential attractiveness to other companies while being mindful of the overall financial health and performance of the Company. The Compensation Committee reviews the salary recommendations of the CEO and, together with impressions formed based on the observations and experience of the members, approves base salaries for NEOs. The Compensation Committee also sets the base salary for the CEO. In so doing, the Compensation Committee members annually review the performance of the CEO and other relevant information.

Annual Cash Bonuses. The Compensation Committee may award cash bonus payments to NEOs to recognize and to reward individual performance that has meaningfully enhanced the operations and financial results of the Company during the most recently completed fiscal year. Awards are intended to convey to executives that good performance is recognized and valued by the Board.

Furthermore, we believe that annual cash bonus awards strongly encourage executives to continue to improve their efforts in delivering annual results that are aligned with our long-term goals. At the conclusion of each fiscal year, the CEO submits recommended annual cash bonus award amounts for each of the other NEOs to the Compensation Committee for consideration, modification at their discretion, and, ultimately, for approval.

The amounts of annual cash bonuses awarded to our holding company employees have typically been modest and have varied within a fairly narrow range. However, the Compensation Committee has adopted a policy that caps the annual cash incentive awards for the CEO and CFO to 200% of base salary. We believe that this policy mitigates the risk of excessive windfall awards, while not limiting our ability to adequately reward them for their performance. The employment agreements for Messrs. Watson and Baugher provide for annual target bonus payments of 100% and 75% of base salary, respectively, subject to the satisfaction of reasonable performance criteria as established each year at the discretion of the Board of Directors.

Long-Term Equity-Based Compensation. NEOs are eligible to receive long-term equity-based compensation awards under our 2020 Stock Plan. The long-term equity-based compensation awarded to executives is largely a combination of TRSUs, PRSUs, EPRSUs, and RRSUs. Over the past several years, we have reduced the number of NQSO awards. The Compensation Committee members believe that the current combinations of these types of long-term equity-based awards respond to the objectives of our executive compensation program which encourage the accomplishment of the following:

The vesting period for TRSUs is three years. We believe that TRSU awards encourage increased holdings of our stock by our executives and help to retain talent over the long term.

PRSUs have typically been awarded to certain executives annually since 2018. These awards vest over three-year periods based on our total stockholder return relative to the return of each award’s designated peer group of companies. We believe that this type of incentive award is more consistent with market practice. We also believe that the measurement of total stockholder return is an appropriate performance metric as it directly ties NEO compensation to the value created for our stockholders, ensuring that executives are rewarded only to the extent that our investors benefit from share price appreciation and relative market outperformance. Our investors expressed support for our use of restricted stock units as an element of our executive compensation program and the use of this specific performance metric.

In April 2023, we added EPRSUs to augment the overall executive compensation program. EPRSU awards focus on the growth of the Company’s diluted EPS over a three-year period, a metric that we believe is a meaningful measurement of value provided to stockholders. These changes were made, in part, to address the negative impacts of stock options on dividend distributions, to encourage increased holdings of our stock, and to retain talent over the long term.

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In April 2021, the Company began to award RRSUs to incentivize the CEO of Gemma to add new business that grows the number and value of renewable energy projects awarded to Gemma. Pursuant to the RRSU awards, shares of Common Stock are earned based on the amount of renewable energy projects awarded during certain periods within the three-year term of the RRSU agreement. Since the inception of the RRSU program, Gemma's renewable energy platform has grown substantially, establishing a strong and self-sustaining market presence that the Compensation Committee believes no longer requires the same level of incentive support that was appropriate during the program's earlier stages. In recognition of this maturation and the platform's demonstrated ability to compete for and win renewable energy projects on its own merits, the Compensation Committee determined that no additional RRSU awards were warranted at this time. The Compensation Committee will continue to evaluate the appropriate mix of incentive compensation for Gemma's leadership as the renewable business continues to evolve.

The awards of NQSOs have become a less significant portion of our executive composition program over recent years. Stock options are typically used as incentives to align the priorities of NEOs with those of our stockholders because stock options provide value to holders only when our stock price increases from the date of grant to the date of exercise. In addition, except with respect to certain terminations following a change in control of the Company, the continued employment of a stock option holder is required for the vesting of each stock option to occur. Thus, the potential realization of the value of outstanding but unvested stock options meaningfully encourages executives to remain with the Company, as leaving the Company results in the forfeiture of the value and potential gain associated with any unvested stock option awards. Since January 2018, our stock option awards have included a standard vesting period of three years, a change from the one-year period we used previously.

Deferred Compensation. The Deferred Income Plan is a nonqualified and unfunded deferred compensation program offered to a select group of management at Gemma, including Mr. Collins. None of our other NEOs is a participant in the plan. Eligible participants may elect to defer a specified percentage or dollar amount of their compensation, including base salary and incentive compensation. The Company may make discretionary employer credits to participant accounts, subject to vesting schedules established by the Company at the time of any such credit.

The Company retains full use of all deferred amounts until distribution is required. Participant accounts are credited or debited with deemed investment gains or losses based on investment funds selected by each participant. The Company does not guarantee any rate of return, and participant accounts may appreciate or depreciate depending on the performance of their deemed investment elections. None of the deemed investment choices provide above-market or preferential rates of return. Participants may schedule an in-service distribution or elect to receive their balance following separation from service, in accordance with Section 409A of the Internal Revenue Code (“IRC”) as applicable.

Severance and Change in Control Benefits. Providing severance and change in control benefits assists the Company in attracting and retaining executive talent. Severance benefits vary by NEO, and in the event of employment termination, each NEO may be paid severance benefits in certain circumstances pursuant to each executive’s individual agreement negotiated with the Company.

Provisions in each NEO’s employment agreement provide for certain benefits upon a change in control, as defined. Each of our stock plans, the corresponding executive employment agreements, and the individual stock award agreements describe the effects on outstanding stock options and other stock awards of the termination of a holder’s employment with the Company under various circumstances, including the provision that all outstanding stock options and other stock awards shall generally become fully vested upon a change in control of the Company, as defined therein.

Other Benefits. We maintain three tax-qualified defined contribution retirement plans (the “401(k) Plans”) that cover substantially all salaried and hourly employees. Each of the NEOs participates in a 401(k) Plan. Each employee, including officers, is entitled to participate in only one of the 401(k) Plans. The Company provides a matching contribution to employee 401(k) contributions, allowing eligible participants, including NEOs, to receive additional retirement savings benefits through Company-matched funds. We do not maintain any defined benefit pension plan or non-tax qualified supplemental retirement plan. Group benefits for active employees, such as medical, dental, vision, life insurance and disability coverages are available to substantially all salaried and hourly employees, including NEOs, through our employee health and welfare plans.

Tax and Accounting Considerations. Section 162(m) of the IRC limits the deductibility of certain executive compensation paid by publicly held corporations. Under current law, no deduction is permitted for compensation exceeding $1,000,000 paid to any covered employee in a given tax year. Covered employees include the principal executive officer, principal financial officer, and the three other most highly compensated executive officers, and once an individual qualifies as a covered employee, the limitation continues to apply for all future years — including after retirement or separation from the company — for as long as the company pays that individual any compensation. Performance-based compensation is no longer exempt from this limitation. Consequently, we are unable to deduct compensation exceeding $1,000,000 for any of our covered employees, which includes our NEOs. The Compensation Committee and management have considered the accounting and tax impacts

related to the compensation program and continue to weigh the financial impact on the Company against the strategic value such compensation provides to our executives.

Clawback Policy.* *In October 2023, as required by the NYSE and the SEC, the Company adopted a revised clawback policy covering incentive-based compensation. Under this policy, if the Company is required to restate its financial statements due to material noncompliance with any financial reporting requirement under federal securities laws and if incentive-based compensation was paid, awarded, or issued due to an incorrect calculation of any related financial performance metric, the Board shall promptly require reimbursement to the Company of the erroneously awarded incentive-based compensation.

Insider Trading Policy.* *The Company maintains an Insider Trading Policy that governs the purchase, sale, and other transactions involving its securities. This policy applies to the Company’s directors, officers and designated key employees, their family members, and specially designated outsiders who have access to the Company’s material nonpublic information (collectively, “covered persons”). The policy prohibits covered persons from buying or selling Company securities while in possession of material, nonpublic information. These policies also forbid the use of such information for personal gain or in any way that would violate applicable laws and regulations. The Insider Trading Policy is designed to support compliance with applicable laws, regulations, and stock exchange listing standards related to insider trading. A copy of the policy is included as Exhibit 19.1 in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

No Pledging Policy. As an element of the stock ownership guidelines, no officer or director of the Company may pledge, hypothecate, or create any lien or security interest on, or enter into a margin contract secured by, any shares, options to purchase shares, or any other interest in shares of our Common Stock.

Anti-Hedging Policy. Our Board also approved an anti-hedging policy which prohibits all of our directors, employees, and agents from (i) speculative trading in our securities; (ii) engaging in hedging transactions using our securities; (iii) “short selling” our securities; or (iv) trading derivative securities, such as put options, call options, swaps, or collars related to our Common Stock.

Change-in-Control. The Compensation Committee has committed to a policy of not entering into any new employment agreements with “single-trigger” change-in-control provisions. As such, none of the current NEOs has employment agreements that include a “single-trigger” change-in-control provision.

Stock Ownership Guidelines. The Board of Directors established stock ownership guidelines for the NEOs to further align their economic interests with those of our stockholders. Under these guidelines, stock ownership includes shares owned directly or held in trust by an individual. The policy does not encompass shares that an individual has the right to acquire through the exercise of stock options. The Board periodically reviews the stock ownership guidelines and may make adjustments. The Board of Directors requires that each NEO owns a minimum number of shares of our Common Stock having a value as outlined in the table below. NEOs are expected to achieve the applicable ownership requirement within five years of becoming subject to the guidelines. Until the applicable ownership requirement is achieved, each individual is required to retain shares of Common Stock with a total value of at least 50% of the intrinsic value, net of taxes, of any shares that he or she acquires under a Company stock plan. Excluding sales of shares related to taxes associated with the exercising of stock options or vesting of stock awards, no sales of existing stockholdings are permitted until the applicable required stock ownership quantity is attained. Once the applicable ownership requirement is attained, the individual may sell any shares that exceed the applicable minimum requirement.

Equity-Based Awards Grant Practices. We do not have any program, plan, or obligation that mandates granting equity awards on predetermined dates. Additionally, we do not coordinate the timing of granting equity award to executive officers with the release of material nonpublic information. Instead, we generally aim to issue equity awards during open trading windows. Equity awards are generally granted annually during the open trading window following the issuance of our Form 10-K. However, equity awards may be granted occasionally in response to significant changes in job responsibilities, an employee’s hiring, or to support specific retention or performance objectives.

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During Fiscal 2026, the Company did not delay or accelerate the disclosure of material nonpublic information to influence the value of executive compensation. Additionally, during Fiscal 2026, the Company did not grant equity-based awards to our NEOs within a window beginning four business days before and ending one business day after the filing of a Form 10-K, Form 10-Q, or a Form 8-K disclosing material nonpublic information.