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policy matters. Following Mr. Mitchell's death, Mr. DeJoria
became critical to JPMS' future.
H. JPMS' Position in the Industry
JPMS was known for its styling products. Over the years, JPMS
developed into a major force in the hair care industry, with brand
recognition by the consuming public, a sophisticated distribution
network, and hundreds of hair stylists trained in the use of the
company's products. From 1982 through April 21, 1989, JPMS' share
of the salon-only market, in comparison with those of its chief
competitors, improved every year. In April 1989, JPMS was among
the top five companies in the salon-only market. The success of
the salon-only product companies attracted the attention of the
large, well-capitalized mass-market companies, which competed in
the premium-price market with products that attempted to capture
the salon-only aura but were in reality mass marketed.
I. Compensation
From JPMS' inception until Paul Mitchell's death, neither Mr.
Mitchell nor Mr. DeJoria had any formal contract with JPMS
regarding compensation. Instead, they set sales and profitability
goals for JPMS at the beginning of each fiscal year. Thereafter,
in September or October of each year, they divided equally the
company's available income.
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