Papa John’s Founder Supports Starboard Value Investment

The founder of Papa Johns, John Schnatter, has welcomed the investment into the chain from hedge fund Starboard Value LP.

This is according to Schnatter’s lawyer and despite the fact that the founder has filed an updated lawsuit this week against Papa John’s.

In his amended lawsuit filed under seal in the Delaware Court of Chancery, Schnatter intends to undo a new provision of a voting agreement between Papa John’s and Starboard that requires the hedge fund vote its company shares in favor of Papa John’s preferred directors.

“Such a provision serves only one purpose, to further entrench the prior board, one that has repeatedly proven itself willing to place its own self-interest above that of shareholders,” Schnatter said in a statement.

Papa John’s announced this month that Starboard will invest up to $250 million into the company and named the fund’s chief executive, Jeff Smith, as its chairman. Schnatter stepped down from his role as chairman las summer after using a racist remark on a conference call.

Schnatter, who still owns around 30% of the company, wants to gain more control of the chain. With the Starboard investment, the number of directors jumped to nine from six, diluting his influence.

“Mr. Schnatter welcomes the comments that have come from Mr. Smith and the company in the past few days,” Schnatter’s attorney Garland Kelley said.

“Today’s amended lawsuit reflects support for Mr. Smith and his plans to invigorate the company for the benefit of all shareholders.”

Disclaimer: We have no position in Papa John’s Int’l, Inc. (NASDAQ: PZZA) and have not been compensated for this article.