Papa John's worldwide has reached a settlement agreement with its founder, John Schnatter, a filing on Tuesday showed, signaling an end to the acrimonious battle between the pizza chain and its former chairman. He'll do so by the company's annual meeting at the end of April as long as the company finds a mutually agreed upon independent director. Schnatter owns about 31 percent of Papa John's common stock with almost 10 million shares, according to the filing. He said the board's willingness to remove the "acting in concert" provision from the poison pill plan that made it hard for him to talk to - or plan a takeover bid with - other shareholders was key to his decision to dismiss the lawsuit.
As recently as last month, it had appeared Schnatter wasn't going to release his grip on the company without a fight.
Schnatter, who owns about 30 per cent of the company's shares, would resign from the board if the independent director is appointed before the annual stockholder meeting slated in May, Papa John's said.
Last month Papa John's International Inc. tapped the CEO of activist investment firm Starboard Value to become its chairman. 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.
According to the filing, the founder and Papa John's have come to an agreement over the composition of the board having to do with a governance agreement the company entered with a new investor, Starboard Value, in February. The company apologized for the comments, and announced in December 2017 that Schnatter would step down as CEO.
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Papa John's same-store sales plunged a year ago, leading operators to close stores and forcing the company to take the Starboard investment so it could pay down debt and invest in sales-building strategies.
Throughout the controversies, Papa John's shares and sales have continued to suffer, while the company has incurred significant costs.
Schnatter on Tuesday said that the agreement provides him with access to documents related to his departure from the company.
In return, Schnatter will withdraw two lawsuits against Papa John's.