Papa John’s tries to ward off founder
Papa John’s is attempting to ward off its controversial founder from amassing a controlling stake in the company by adopting a “poison-pill” plan.
The company is struggling to distance itself from John Schnatter, who resigned as chairman this month after his use of a racial slur during a media training session was revealed. Schnatter has since said his resignation was a “mistake” and criticized the company’s handling of the incident.
Papa John’s, based in Louisville, Ky., said its shareholder rights plan would be activated if anyone acquires 15 percent or more of outstanding shares without board approval. The plan works by letting shareholders buy additional stock at a discounted price, which in turn would dilute the acquirer’s shares.
Papa John’s said Schnatter and his affiliates, who currently own more than 30 percent of shares, have been grandfathered into the plan. But they will be considered an acquiring party if they amass 31 percent or more of shares, the company said.
The company said the plan won’t keep its board from considering any offer that is fair and in the best interest of shareholders.