Chipotle Chief Financial Officer Jack Hartung explained why the fast-food chain decided to split its stock for the first time in its 30-year history in an interview with CNBC's Jim Cramer. Hartung said the company wanted to make shares more accessible to employees and increase liquidity for investors.
"We study this every year or so, we have our bankers come in, we talk about the pros and cons of doing the split," Hartung said. "And cost was never really a big problem for us, but we couldn't really find a compelling reason until recently."
Stock splits allow companies to increase their shares but not decrease their value. Chipotle in late March proposed a 50-for-1 stock split, meaning shareholders will gain 49 shares for every one they already own. The split is set to be completed in June, CNBC reported.
Hartung said "it was getting harder and harder for us to get the right denomination," when rewarding employees with stock, but he said Chipotle wants them to be able to "celebrate our success with us." He added investors started to tell the company about a year ago that "separately managed accounts were a real problem to get liquidity."
Investors care more about Chipotle's growth and results than the stock split, according to Hartung.
"We were with some of our investors last week, we didn't have one question, one comment about it at all," he said. "And generally, over the years, when we talk to our largest investor, they were largely indifferent."
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