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services rendered). For fiscal year 1989, Messrs. Mitchell and
DeJoria agreed that each of them would receive a $2 million annual
salary and a $15 million management fee. The JPMS board approved
these compensation amounts on October 21, 1988.
From the inception of JPMS until the moment of Mr. Mitchell’s
death, the only dividend declared by JPMS was for its fiscal year
ended July 31, 1988. The dividend was originally set at $1.4
million, but the dividend was subsequently raised to $2.5 million.
Robert Taylor was president and chief executive officer of
Minnetonka Corp. (Minnetonka), a publicly traded company. As
chairman, Mr. Taylor was responsible for Minnetonka’s strategic
acquisitions.
Mr. Taylor initiated discussions with Mr. DeJoria in the fall
of 1987 (JPMS’s 1988 fiscal year) when JPMS’s sales were
approximately $50 million. Mr. Taylor informed Mr. DeJoria that
Minnetonka was willing to pay $100 million to acquire all of the
JPMS stock, assuming officers’ salaries were revised. Mr. Taylor
regarded the level of compensation for Messrs. Mitchell and DeJoria
as too high; he considered a more appropriate level of compensation
to be in the $500,000 to $1 million range, including performance
bonuses. Mr. DeJoria insisted on a $125 million acquisition price.
Mr. Taylor refused to raise Minnetonka’s bid, and the negotiations
were terminated.
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