- 29 -
Finally, his analysis setting the compensation at $5 million,
resulting in an enterprise value of $218 million, reflects some
power but less than control. We think that a comparison of those
values demonstrates most accurately the difference between the
value of control of the company, the value of shares having some
power, and the value of shares lacking any control. A comparison
of these values supports a minority discount of 29 percent for some
power but less than control (155/218 = 0.711) and 32 percent for
lack of any control (155/227 = 0.683).
The 49.04-percent interest in JPMS to be valued in this case
had significant power. This interest, through the cumulative
voting provision, could elect at least one of three directors. (If
there were four directors as provided for in the articles of
incorporation, decedent’s stock could elect two directors, giving
decedent’s stock power equal to that of Mr. DeJoria). Mr. Weiksner
acknowledges in his report that in some cases investors would
consider a 49.04-percent shareholding adequate to influence or even
control a company but cautions that an investor would have had no
assurance of his ability to influence the management or disposition
of the company except through cooperative means.
We find that a 29-percent discount for decedent’s 49.04-
percent shareholding is appropriate to reflect some power but less
than control. We also find that here the minority discount should
be increased by 6 percentage points (a total of 35 percent) to
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