Shake Shack 2015 Annual Report Download - page 66

Table of Contents
SSE HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except unit, share, per unit and per share amounts)
NOTE 10 : MEMBERS' EQUITY
On December 15, 2014, our Board of Directors approved a special distribution to our members in the amount of $21,851, which was paid on December 30, 2014. The Board of
Directors also approved an additional distribution to our members, to the extent the gross proceeds of the Corporation's IPO exceed the anticipated gross proceeds (including as a result
of the exercise by the underwriters of their option to purchase additional shares of Class A common stock), in an amount equal to the product of (i) the increased gross proceeds and
(ii) 0.273, to be paid from the proceeds of the IPO (the " Additional Distribution "). See Note 19 , Subsequent Events .
NOTE 11 : EQUITY-BASED COMPENSATION
Unit Appreciation Rights
Prior to the IPO, we maintained a Unit Appreciation Rights Plan (the " Plan
"), effective in fiscal year 2012, and as amended, whereby we had the authority to grant up to 31,303 unit
appreciation rights (" UARs
") to employees. The UARs granted were subject to continued employment and were only exercisable upon a qualifying transaction, which was either a
change of control or an initial public offering, each as defined in the Plan. Upon the occurrence of a qualifying transaction, each UAR entitled the holder to receive a payment from us
with such payment, and related compensation expense, determined by multiplying (i) the excess, if any, of the qualifying transaction price over the base amount of the UAR, by (ii) the
stated number of Class B units deemed covered by the UAR. Effective October 30, 2014, the Plan was amended to provide that the payment to which UAR holders were entitled upon
the occurrence of a qualifying transaction would be in the form of securities of the Company or one of its affiliates or such other form of payment as we determined in our sole
discretion. The UARs would have terminated on the tenth anniversary of the grant date or upon termination of employment, if earlier.
A summary of UAR activity for fiscal 2014 is as follows:
No compensation expense was recorded in fiscal 2014 and fiscal 2013 related to the outstanding UARs as we determined that, as of the period end, it was not probable that a qualifying
transaction would occur.
On February 4, 2015, we amended and restated our limited liability company agreement to, among other things, (i) provide for a new single class of common membership interests in
SSE Holdings (" LLC Interests ") and (ii) exchange all of the then existing membership interests of our members for LLC Interests (together, the " Recapitalization Transaction
"). The
22,554
outstanding UARs, as of December 31, 2014, equate to 767,947 LLC Interests with a weighted average base price of $5.68, after giving effect to the Recapitalization
Transaction.
The Corporation's IPO constitutes a qualifying transaction under the terms of the Plan, resulting in a qualifying transaction price of $715.02. 339,306 shares of the Corporation's Class
A common stock were issued in settlement of the outstanding UARs, net of employee withholding taxes. We recognized compensation expense of $11,762 in fiscal 2015 upon
settlement of the outstanding UARs.
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2014
Weighted
Average
Base
UARs Price
Outstanding at beginning of period
13,379
$
156.10
Granted
11,025
237.04
Forfeited
(1,850
)
(179.86
)
Outstanding at end of period
22,554
$
193.51