The Papa John’s board of directors announced late last night that they would be adopting something that’s known in the business industry as a “limited duration stockholder rights plan.” This is an attempt to prevent Papa “John” Schnatter from reasserting his control over his eponymous company, which has done almost everything in its power to distance itself from him after he got racist on a conference call.
Papa John himself may have been evicted from company headquarters, been removed from marketing materials, and resigned as chairman, but he still has a seat on the board, and, crucially, he and “his affiliates and associates” own 30 percent of the company. The goal of the new rights plan is to keep him and his buddies from acquiring a controlling stake in the company and returning Papa to his throne. The deal contains a so-called “poison pill” provision that kicks in if anyone acquires 15 percent of the company, or if Papa’s group bumps its stake in the company up to 31 percent. If either of those two scenarios happen, then other stakeholders would be given the opportunity to buy up stock at half the normal price, thus diluting the power of whoever is making a power play.
“The adoption of the Rights Plan is intended to enable all Papa John’s stockholders to realize the full potential value of their investment in the company,” the press release said. Papa John has been on record many times as saying he got a raw deal; the company clearly expects a fight of some kind. However, when Papas battle, it is the pizza that suffers: Papa John’s stock is tumbling following this latest news.