- 43 -
In his discounted cash-flow analysis, Mr. Hanan projected
JPMS' anticipated cash-flows for 5 years after 1989, and discounted
the cash-flows to a present value at the valuation date. For
purposes of this analysis, Mr. Hanan again assumed executive
compensation would be set at $5 million. Accordingly, Mr. Hanan
determined that as of April 21, 1989, the discounted cash-flow
control value of JPMS was $295 million, while the discounted cash-
flow value of JPMS' equity was $218 million on a publicly traded,
minority-interest basis.
Finally, although Mr. Hanan proposed an $81 million fair
market value for the 1,226 shares of JPMS common stock, he concedes
that "because of a likely disagreement between the buyer/seller and
[Mr.] DeJoria over [Mr.] DeJoria's compensation and the possibility
of litigation, the value of the subject stock could be as high as
$165.3 million and as low as $57.7 million."22
2. The Brennan Report
Respondent also offered the expert report of E. James Brennan
III,23 president of Brennan, Thomsen Associates, Inc. Mr. Brennan
regularly testifies as an expert witness regarding personnel
management and pay practices, particularly in the area of executive
compensation.
22 Mr. Hanan reached the $57.7 million figure by assuming
that Mr. DeJoria's compensation would be set at $12 million for
fiscal year 1990 and $17 million per year thereafter.
23 Respondent chose not to put E. James Brennan III on the
stand.
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