Papa John’s International, Inc. (NASDAQ:PZZA) stock closed the market yesterday up +5% after the company’s founder, John Schnatter, finally announced his resignation from the board. According to CNBC, the pizza company and its founder reached a settlement agreement, ending the drawn-out battle between the former chairman and Papa John’s.
Papa John’s Strikes a Deal
According to a Tuesday regulatory filing, Papa John’s said it would cooperate with Schnatter to find a mutually acceptable independent director to take his place. As per the agreement, the new director would not be affiliated with Schnatter or the company’s new hedge fund investor Starboard Value.
Last month, Papa John’s announced that it received a $200 million investment from Starboard Value, as well as a new Chairman. This investment was something the company desperately needed to help keep it afloat, after having a whirlwind of a year in 2018.
In December of 2017, Schnater stepped down from his CEO position following criticism from comments he made on a quarterly conference call with analysts about the NFL’s leadership. At the time, Papa John’s biggest sponsor, the National Football League, had been dealing with the controversial kneeling during the National Anthem, bringing to light the nation’s racial injustices.
The company’s troubles started back up again in July of 2018 when Schnatter made a public racial slur and description of violence against minorities in an interview. Schnatter’s comments sparked huge concern from the company’s board and shareholders, not wanting to lose its biggest sponsor (the NFL), and so the board took immediate action to try to remove Schnatter from the company.
The issue was that Schnatter still held a large interest in the company and a board position. After well over a year, it seems that Schnatter has finally decided to step away.
“I’m happy that we were able to enter into this agreement and allow the new leadership being implemented by Jeff Smith and Starboard to help Papa John’s regain its strength and market position,” Schnatter said in a statement to CNBC.
Despite the resignation from the board, Schnatter still holds roughly a 31% stake in Papa John’s, but will no longer have any say so in the direction of the company. The company’s same-store sales plummeted -7.3% in North America last year due to all the company’s uncertainty.
Papa John’s Stock Movement
According to Yahoo Finance, PZZA just opened the market at $45.46 a share, down -$0.10 (-0.22%).
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