John Schnatter, founder and largest shareholder of Papa John’s International, Inc. has settled a dispute with the company he formerly headed by agreeing to step away from his board seat.
Schnatter was earlier ousted as CEO after a subpar financial performance by the company and comments he made regarding race and the National Football League.
The dispute had made its way to Delaware Chancery Court.
Under the terms of the agreement, the company agreed to promptly remove the “Acting in Concert” provision of the “Poison Pill” rights plan adopted by Papa John’s Board of Directors in July 2018. The action was aimed at
Schnatter not attempting to buy back the company.
Schnatter claimed the action by the board improperly restricted the ability of shareholders to communicate with each other.
Also, the company will drop the requirement that the Starboard Entities vote in favor of the incumbent board members.
In return, Schnatter has agreed to dismiss without prejudice the lawsuit he filed in Delaware Court of Chancery. The provision would allow him to refile.
The agreement will avoid a proxy contest by identifying a mutually acceptable independent director to serve on the board in his place, and to withdraw his notice to nominate himself for election to the Board at the 2019 annual meeting.
“I founded Papa John’s, built it from the ground up and remain its largest shareholder. I care deeply about its employees, franchisees, and investors and am thankful that I’ve been able to resolve these important issues, and that we can all focus on the company’s business without the need for additional litigation.”
The agreement also confirmed that the company would provide Mr. Schnatter all of the books and records as ordered by Chancery, and that Schnatter retains his ability to assert new legal claims.
Schnatter said he eager to work with Jeff Smith and Starboard to identify a new member of the board. “
