Papa John’s founder Schnatter to resign from board
Papa John’s has just charted a path forward without Papa John.
Embattled pizza chain Papa John’s International Inc. said founder John Schnatter will resign from the board, bringing to a close months of tensions in the management ranks.
Schnatter, who owns almost one-third of the shares, will help the company identify a mutually acceptable independent director to take his place, the company said Tuesday in a filing. The founder also agreed to dismiss a Delaware lawsuit related to his exit from the chairman’s seat. His term as director will expire at the 2019 annual meeting or when the independent director is appointed, whichever comes first.
The move comes about a month after the pizza chain landed a $200 million cash infusion from activist hedge fund Starboard Value LP, which put its chief executive officer, Jeff Smith, in charge of Papa John’s. Under Smith’s guidance, Papa John’s is planning new marketing to help reverse a sales slump that worsened last summer after the founder used a racial slur on a conference call. He has said the comment was taken out of context.
Tensions at the company have been high for months. Schnatter sued the chain last year, demanding internal files related to directors’ handling of his ouster as chairman. The Delaware Chancery Court in January ruled that he could get access to some of those materials.
As recently as last month, it had appeared top shareholder Schnatter wasn’t going to release his grip on the company without a fight. Starboard’s cash infusion came after Papa John’s board, which had been evaluating strategic options, including potentially seeking a buyer, turned down a similar investment deal from Schnatter himself.