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JPMS on the Trust's behalf, alleging that Mr. DeJoria's
compensation was excessive. The suit was filed in both the
Superior Court for the State of California and the U.S. District
Court for the Central District of California.
In response to Mr. Fujieki's allegations of shareholder
derivative claims, JPMS formed a Special Litigation Committee (SLC)
comprising JPMS' outside directors: Kenin Spivak, Paul Rupert, and
David Tisdale. Among other things, the SLC was to evaluate Mr.
Fujieki's allegations to decide whether to pursue the derivative
claims on JPMS' behalf. The SLC hired Towers Perrin as executive
compensation consultants to assist the SLC.
In April 1995, the litigation between the Trust and JPMS was
settled; the SLC determined that the settlement agreement was in
JPMS' best interests. The JPMS Board and shareholders, as well as
the court, approved the settlement agreement. Neither the SLC, the
JPMS Board, nor the court determined that Mr. DeJoria's
compensation was unreasonable.
N. The Estate Tax Return, Notice of Deficiency, and Petition
On its estate tax return, petitioner valued the Trust's
interest in the 1,226 shares of JPMS common stock at the moment of
decedent's death at $28.5 million. This figure was based upon a
KPMG valuation analysis prepared at Mr. Fujieki's request. (KPMG
utilized both the comparable companies and discounted cash-flow
analyses.)
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