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Papa John's Takes Another Step Toward Distancing Itself From Founder

Shares of Papa John's International Inc. are down more than 30 percent as the company struggles with former CEO John Schnatter's use of a racial slur during a media training session

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    Papa John's Takes Another Step Toward Distancing Itself From Founder
    Michael Hickey/Getty Images
    In this file photo, Papa John's founder and CEO John Schnatter attends the Indy 500 on May 23, 2015 in Indianapolis, Indiana.

    What to Know

    • John Schnatter stepped down as the company's CEO last year

    • He is still the pizza chain's biggest shareholder

    • Schnatter is still on the company's board

    Papa John's is attempting to ward off its disgraced founder 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. He stepped down late last year as CEO after becoming enmeshed in the national anthem issue involving NFL players, saying it was hurting pizza sales.

    Schnatter, who later said his resignation was a mistake, is still the pizza chain's biggest shareholder. He founded the company in 1984.

    Papa John's, based in Louisville, Kentucky, said late Sunday it will put a shareholder rights plan in place for a year. The plan would be activated if anyone acquires 15 percent or more of the company's outstanding shares without board approval.

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    That would effectively prevent Schnatter, who holds 30 percent of all outstanding stock, from gaining a controlling stake in the company.

    The company said the plan won't keep its board from considering any offer that is fair and in the best interest of shareholders.

    Papa John's International Inc. has started scrubbing Schnatter's image from its marketing materials and has said it's evaluating all of its ties with him.

    Several Major League Baseball teams have responded to Schnatter's remarks by suspending their relationships with the company. 

    Schnatter still serves as a board member.

    It's holding off Schnatter as it struggles to reinvigorate the brand. Shares of Papa John's International Inc. are down more than 30 percent over the past year.

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