What was the impact of modification on the fair value of Camp Margaritaville's MEIP II shares?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
based upon the volatility observed for certain guideline companies and considering the Company's expected financial leverage. The yield on treasury notes with maturities closest to the expected time to the liquidity event, as defined, was used. The Company does not intend to pay dividends in the foreseeable future; accordingly, it used a dividend rate of zero in the simulation model.
The Class B shares are fully vested. The Class C shares have a service-based component for vesting, vesting monthly on a straight-line basis over five years. The Class B and C shares entitle recipients to receive a share of future profits and appreciation in the Company that accrue above a Hurdle Amount upon a Company Transaction. A Company Transaction is defined in the MEIPs as the sale of the Company, a liqui
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, the modification of the Management Equity Incentive Plan II (MEIP II) shares had a specific impact on their fair value. The modification resulted in a $2,027,514 increase in the fair value of outstanding MEIP II shares and a corresponding $2,027,514 increase in the fair value of vested shares.
This indicates that changes to the terms or conditions of the MEIP II plan led to a re-evaluation of the shares' worth, specifically increasing their value. This could be due to factors such as adjustments to vesting schedules, performance targets, or other elements that influence the potential payout to participants.
For a prospective Camp Margaritaville franchisee, this information provides insight into the company's equity compensation structure and how modifications to such plans can affect the value of equity-based incentives. While franchisees themselves may not directly participate in the MEIP, understanding these financial instruments can offer a broader view of the company's financial management and employee motivation strategies.