- 46 -
shares. He stated that such a buyer would expect his investment in
J.R. Simplot Co. to provide an economic return14 over time.
Mr. Ettelson concluded that a buyer would not pay a
significant premium for decedent's class A voting shares vis-a-vis
decedent's class B nonvoting shares because the voting rights
acquired with the class A shares could not influence the buyer's
economic return. In reaching this conclusion, Mr. Ettelson
believed that because the controlling voting power of J.R. Simplot
Co. was held by only three individuals (other than decedent), all
of whom were related and had family interests to protect, a
hypothetical "outside" investor would have difficulty changing the
Simplot family's philosophy with regard to dividends, salaries, and
other perquisites. He further believed that an outside investor
would have difficulty in building a majority position (from the
investor's 23.55-percent minority interest) due to the fairly even
distribution of the class A voting stock among the three family
members and their desire to maintain control of the Company within
the family group.
Mr. Ettelson examined empirical market data, reviewing
approximately 40 public company dual class stock situations where
14 According to Mr. Ettelson, a buyer's economic return
consists of the future stream of dividends or other forms of cash
benefits such as salary, expense reimbursements, or other
perquisites that the buyer could reasonably expect to receive
from his ownership of the 18 class A voting and 3,942.048 class B
nonvoting shares, as well as any "exit dividend" (the amount
received when the buyer sells or liquidates his shares
individually or through the sale or liquidation of the business).
Page: Previous 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 NextLast modified: May 25, 2011