Papa John's creates a poison pill to prevent founder John Schnatter from taking it over

  • The Papa John's board of directors has adopted a limited-duration stockholder rights plan to prevent the company's founder, John Schnatter, from taking control of the company.
  • Schnatter resigned as chairman of the board earlier this month after he admitted to using a racial slur on a conference call.
  • He has said he regrets resigning from his post.
  • Watch Papa John's trade in real time here.

The pizza chain Papa John's has adopted a so-called poison pill designed to prevent the company's founder, John Schnatter, from taking over the company.

Schnatter resigned as the chairman of the board this month after he admitted to using a racial slur during a May conference call with a marketing agency. Days later he said he made a mistake resigning from the position. He still owns 29% of the company, according to Bloomberg data, and remains a director on its board. He stepped down as CEO at the beginning of the year.

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Papa John's controversial founder John Schnatter
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Papa John's controversial founder John Schnatter
John Schnatter, founder and chief executive of Papa John's Pizza, arrives at the 2011 American Music Awards in Los Angeles November 20, 2011. REUTERS/Danny Moloshok (UNITED STATES - Tags: ENTERTAINMENT BUSINESS FOOD) (AMA-ARRIVALS)
John Schnatter (R), founder and chief executive of Papa John's Pizza, arrives at the 2011 American Music Awards in Los Angeles November 20, 2011. REUTERS/Danny Moloshok (UNITED STATES - Tags: ENTERTAINMENT BUSINESS FOOD) (AMA-ARRIVALS)
MIAMI, FL - JULY 11: A Papa John's restaurant is seen on July 11, 2018 in Miami, Florida. The founder of Papa John's pizza, John Schnatter, apologized Wednesday for using the N-word on a conference call in May. (Photo by Joe Raedle/Getty Images)
CLEVELAND, OH - OCTOBER 12, 2014: 'Papa' John Schnatter, founder and CEO of 'Papa John's Pizza' takes part in a radio show prior to a game between the Pittsburgh Steelers and Cleveland Browns on October 12, 2014 at FirstEnergy Stadium in Cleveland, Ohio. Cleveland won 31-10. (Photo by Nick Cammett/Diamond Images/Getty Images)
INDIANAPOLIS, IN - MAY 24: Papa John's founder and CEO John Schnatter attends the Indy 500 on May 23, 2015 in Indianapolis, Indiana. (Photo by Michael Hickey/Getty Images)
LOS ANGELES, CA - APRIL 04: John Schnatter and Halston Sage attend a basketball game between the Dallas Mavericks and the Los Angeles Lakers at Staples Center on April 4, 2014 in Los Angeles, California. (Photo by Noel Vasquez/GC Images)
CLEVELAND, OH - OCTOBER 12, 2014: 'Papa' John Schnatter, founder and CEO of 'Papa John's Pizza' takes part in a radio show prior to a game between the Pittsburgh Steelers and Cleveland Browns on October 12, 2014 at FirstEnergy Stadium in Cleveland, Ohio. Cleveland won 31-10. (Photo by Nick Cammett/Diamond Images/Getty Images)
LAS VEGAS, NV - APRIL 07: John Schnatter, Founder and Chairman of the Board for Papa John's Pizza, gives a thumbs up before a charity exhibition race against Antron Brown (not pictured) during the the 19th Annual DENSO Spark Plugs NHRA Four-Wide Nationals Saturday, April 7, 2018, in Las Vegas, Nevada. (Photo by: Marc Sanchez/Icon Sportswire via Getty Images)
NEW YORK, NY - JANUARY 31: John H. Schnatter, Founder, Chairman & CEO of Papa John's International, Inc. rings the NASDAQ Opening Bell at NASDAQ MarketSite on January 31, 2014 in New York City. (Photo by Rob Kim/Getty Images)
NEW YORK, NY - FEBRUARY 01: Dallas Cowboys owner Jerry Jones (L) and Papa John's Pizza founder John Schnatter attend the DirecTV Super Saturday Night at Pier 40 on February 1, 2014 in New York City. (Photo by Charles Norfleet/FilmMagic)
Spider Man and Papa John Founder John Schnatter at the Spider-Man and Papa John's Honor 'Hometown Super-Heroes' October 29, 2007 in Times Square in New York City. (Photo by Mark Von Holden/WireImage)
LOS ANGELES, CA - NOVEMBER 20: Founder of Papa John's Pizza John Schnatter attends the Official After Party for the 2011 American Music Awards held at the Conga Room at L.A. LIVE on November 20, 2011 in Los Angeles, California. (Photo by John Shearer/AMA2011/Getty Images for AMA)
LOS ANGELES, CA - NOVEMBER 20: 'Papa John's' Pizza Founder John Schnatter arrives at the 2011 American Music Awards held at Nokia Theatre L.A. LIVE on November 20, 2011 in Los Angeles, California. (Photo by Frazer Harrison/AMA2011/Getty Images for AMA)
NEW YORK - OCTOBER 29: Founder of Papa John's John Schnatter speaks onstage at the Spider-Man and Papa John's Pizza's announcement of 'Hometown Super-Heroes' in Times Square October 29, 2007 in New York City. (Photo by Bryan Bedder/Getty Images)
LOUISVILLE, KY - MAY 06: Paps John's CEO John Schnatter attends the 132nd Kentucky Derby at Churchill Downs on May 6, 2006 in Louisville, Kentucky. (Photo by Paul Hawthorne/Getty Images)
John Schnatter, founder & Pres. of a chain of Papa John's pizza restaurants, w. employees at one of his 1,049 outlets, making a surprise quality check on a row of pizzas layed out on counter at restaurant. (Photo by Taro Yamasaki/The LIFE Images Collection/Getty Images)
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In a press release out Sunday, the company's board of directors announced a plan aimed at preventing Schnatter from taking over the pizza chain. It created a limited-duration stockholder rights plan the board said was designed to "protect the interests of the company and its stockholders by reducing the likelihood that any person or group gains control of Papa John's through open market accumulation or other tactics without paying an appropriate control premium." The board also declared a dividend distribution for each share of outstanding stock.

Shares of the pizza chain have tumbled 24% since November, when Schnatter slammed the NFL for "poor leadership" and blamed player protests for a slump in sales. Schnatter resigned as CEO in December after facing backlash for his criticism of the league.

The company killed its sponsorship deal with the NFL in late February — after reporting that comparable sales dropped 3.9% in North America in the fourth quarter.

Papa John's shares were down 3.42% ahead of Monday's opening bell.

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