Papa John’s board OKs ‘poison pill’ to block founder from gaining control
The boardroom battle at Papa John’s got a little uglier on Sunday.
The pizza chain’s board, looking to further distance itself from the company’s controversial founder, voted on Sunday to adopt a poison pill to keep John Schnatter from gaining a controlling stake in the Louisville, Kent., company, according to a report.
The move is expected to be made public on Monday, the report said, citing people familiar with the matter.
Schnatter, who founded the company with a single oven in his father’s tavern in the 1980s, stepped down as chairman earlier this month after it was learned that he used the N-word during an internal conference call in May.
Schnatter owns 29 percent of the company — and has said he will not step away from the board. He has also said his relinquishing his chairman’s job was a mistake.
With the 56-year old executive promising not to go quietly and the board looking to put more distance between it and its toxic founder, the situation on Sunday was ripe for confrontation.
As of 10 p.m., the company had not disclosed its Sunday vote on a poison pill, which was first reported by the Wall Street Journal.
Schnatter has admitted he used the racial slur during a media training session — and quickly apologized — but said he was pushed to do so by the chain’s outside marketing firm.
After it was learned that Schnatter used the N-word, the chain found itself in the middle of a national dust-up — as several marketing partners dropped their relationship with the chain and/or Schnatter.
Schnatter had been a highly visible spokesperson for the 5,212-store chain — appearing in TV commercials and even in the company’s logo.
A special committee of the board decided to remove Schnatter’s likeness from the logo — and barred him from talking to the media. It also voided an agreement it had with the executive that allowed him to use space at its headquarters for offices and hinted that it wanted him to step down entirely from the board.
Schnatter then lawyered up — and made moves to secure his rights for what he saw as an inevitable showdown with the board. The lawyer also claimed the move to evict him from the office space was not proper.
Poison pills like the one approved by the Papa John’s board are usually put in place to thwart a move by a hostile outside investor. In this case, the hostile “outsider” is the founder.
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