What was the equity compensation for Class B and C shares for Camp Margaritaville in 2023?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
a group, are eligible to participate in the fair value gain over the initial investment made in the Company once certain specified Company benchmarks have been achieved. Grants of the aggregate number of management units (the Units) that may be issued or transferred under the MEIP are determined from time to time by the Board of Directors (the Board) of the Company, subject to the conditions and limitations set forth in the Company's Operating Agreement. The Company may grant awards to eligible participants, upon such terms and conditions as the Board shall determine, and as set forth by the Board in an award agreement.
Notes to Consolidated Financial Statements (continued)
12. Management Equity Incentive Plan (MEIP) (continued)
The Company uses the Black-Scholes simulation model under the option-pricing method to value the Units. This model incorporates various assumptions, including equity value, volatility, time to liquidity, risk-free rates, and expected dividends.
The fair value of the MEIP I and II Units for purposes of determining compensa
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, in 2023, the hurdle amounts for Class B and C shares were lowered, which led to a revaluation of the shares and incremental compensation costs. Concurrent with this change, Camp Margaritaville paid distributions to Class B and C holders, amounting to $1,080,880 and $1,225,157, respectively. The compensation costs resulting from this modification are reflected in the financial tables within the FDD. These compensation costs are included within the selling, general, and administrative expenses on the company's consolidated statements of operations.
The Class B shares are fully vested, meaning recipients have immediate ownership. Class C shares, however, have a service-based vesting component, vesting monthly on a straight-line basis over five years. Both Class B and C shares entitle recipients to a share of future profits and appreciation in Camp Margaritaville that accrue above a specified Hurdle Amount upon a Company Transaction. A Company Transaction includes events such as the sale of the company, a liquidity event, a qualified IPO, or the dissolution of the company.
For a prospective Camp Margaritaville franchisee, understanding the equity structure and compensation related to Class B and C shares is important as it reflects the overall financial management and potential distribution of profits within the company. While franchisees typically do not directly participate in these equity plans, the financial health and stability of the franchisor, as indicated by these compensation structures, can impact the support and resources available to franchisees. Reviewing the consolidated statements of operations and related notes in the FDD can provide further insights into these aspects.