John Schnatter, Papa John’s International, Inc.’s founder and largest shareholder, filed an Amended Complaint in the Delaware Court of Chancery, challenging the “Acting in Concert” provision of the “Poison Pill” rights plan adopted by Papa John’s previous Board of Directors in July 2018.
Mr. Schnatter’s attorney Garland A. Kelley emphasized that the Amended Complaint is not an attack on Mr. Jeff Smith, Starboard Value LP or the other newly installed member of the Board of Directors.
“Mr. Schnatter welcomes the comments that have come from Mr. Smith and the Company in the past few days,” said Mr. Kelley. “Indeed, today’s amended lawsuit reflects support for Mr. Smith and his plans to invigorate the Company for the benefit of all shareholders.”
Mr. Kelley added, “The prior Board, however, took numerous steps to entrench themselves, and today’s action seeks to undo that improper conduct.”
In particular, the Amended Complaint seeks to invalidate the “wolfpack” provision the prior Board inserted into the Poison Pill, which wrongly precludes shareholders from holding any substantive discussion about the Company. It goes far beyond what Delaware law permits, and unreasonably curtails the rights and legitimate interests of all shareholders.
The Amended Complaint also seeks to undo one provision of a voting agreement between the Company and Starboard, where the Board required Starboard to vote its Company shares solely in favor the Board’s preferred list of 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.