REX AMERICAN RESOURCES Corp Stock Compensation Disclosure
| 11. | EMPLOYEE BENEFITS |
The Company maintains the REX 2015 Incentive Plan, approved by its shareholders, which reserves a total of 550,000 shares of common stock for issuance pursuant to its terms. The plan provides for the granting of shares of stock, including options to purchase shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock, and restricted stock unit awards to eligible employees, non-employee directors and consultants. The Company measures share-based compensation grants at fair value on the grant date, adjusted for estimated forfeitures. The Company records noncash compensation expense related to liability and equity awards in its consolidated financial statements over the requisite service period on a straight-line basis. At January 31, 2017, 525,330 shares remain available for issuance under the Plan. As a component of their compensation, restricted stock has been granted to directors at the market price of REX common stock on the date of the grant. In addition one third of executives’ incentive compensation is payable by an award of restricted stock based on the then market price of REX common stock.
At January 31, 2017 and 2016, unrecognized compensation cost related to nonvested restricted stock was approximately $214,000 and $136,000, respectively.
The following table summarizes non-vested restricted stock award activity for the fiscal years 2016 and 2015:
| 2016 | ||||||||||||
| Weighted | Weighted | |||||||||||
| Average Grant | Average Remaining | |||||||||||
| Non-Vested | Date Fair Value | Vesting Term | ||||||||||
| Shares | (000’s) | (in years) | ||||||||||
| Non-Vested at January 31, 2016 | 3,168 | $ | 200 | 2 | ||||||||
| Granted | 21,502 | 1,269 | ||||||||||
| Forfeited | — | — | ||||||||||
| Vested | 1,320 | 83 | ||||||||||
| Non-Vested at January 31, 2017 | 23,350 | $ | 1,386 | 2 | ||||||||
| 2015 | ||||||||||||
| Weighted | Weighted | |||||||||||
| Average Grant | Remaining Vesting | |||||||||||
| Non-Vested | Date Fair Value | Vesting Term | ||||||||||
| Shares | (000’s) | (in years) | ||||||||||
| Non-Vested at January 31, 2015 | — | $ | — | |||||||||
| Granted | 3,168 | 200 | ||||||||||
| Forfeited | — | — | ||||||||||
| Vested | — | — | ||||||||||
| Non-Vested at January 31, 2016 | 3,168 | $ | 200 | 2 | ||||||||
The following summarizes stock option activity for fiscal year 2014:
| 2014 | ||||||||||||
| Weighted | ||||||||||||
| Average | ||||||||||||
| Shares | Exercise | |||||||||||
| (000’s) | Price | |||||||||||
| Outstanding—Beginning of year | 84 | $ | 12.37 | |||||||||
| Exercised | (84 | ) | 12.37 | |||||||||
| Canceled or expired | — | — | ||||||||||
| Outstanding—End of year | — | |||||||||||
| Exercisable—End of year | — | |||||||||||
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.