When were 15,600,000 Class A-2 units granted to Benjamin Franklin Plumbing executives?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
ested performance vesting stock-based compensation arrangements.
AB Assetco LLC and Subsidiaries
Notes to Consolidated Financial Statements (in thousands of dollars)
Years Ended December 31, 2024, 2023 and 2022
Class A-2 Units Issued to Certain Executives
From time to time the Partnership provides certain executives with ownership interests in the Partnership (known as Class A-2 Units) in exchange for promissory notes and rollover equity, in accordance with the Contribution, Rollover and Subscription agreement. Under the terms of this agreement, the Company's executives were provided ownership interests in the Partnership in exchange for promissory notes.
These agreements are in substance, compensation arrangements and are accounted for as instruments similar to a stock option. Compensation expense is recognized at each balance sheet date with the changes in value recorded in the consolidated statements of operations with the corresponding recognition of the noncash contribution from the Partnership in additional paid in capital in the consolidated balance sheets.
The Company elected to account for these awards using the intrinsic valuation technique which represents excess value of the employees' Class A-2 units that were exchanged for promissory notes over the exercise price (which represents the face value of the promissory notes plus accrued interest). 15,600,000 of A-2 units were granted on Septembe
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to the 2025 Benjamin Franklin Plumbing Franchise Disclosure Document, 15,600,000 Class A-2 units were granted to certain executives on September 21, 2018. The document specifies that the company accounts for these agreements as compensation arrangements, similar to stock options. The company uses the intrinsic valuation technique to account for these awards, which represents the excess value of the employees' Class A-2 units exchanged for promissory notes over the exercise price.
The intrinsic value of these awards on the grant date was equal to the value of the award. The FDD states that there were no additional grants or forfeitures of these awards during the year ended December 31, 2022.
All Class A-2 units issued in 2018 were settled as a result of the HELOC Transaction based on the Transaction Date fair value. As a result, the Company recognized a gain of $3,585 for the year ended December 31, 2022 in stock-based compensation expense on the consolidated statements of comprehensive loss.