Papa John's founder John Schnatter has agreed to leave the board as part of a settlement agreement with the company, signaling the end to an acrimonious battle for control over the world's third-largest pizza delivery chain.
The company said in a filing on Tuesday that it would co-operate with Schnatter to find a mutually acceptable independent director, who would not be affiliated with hedge fund Starboard or Schnatter.
Schnatter, who owns about 30 percent of the company's shares, would resign from the board if the independent director is appointed before the 2019 annual stockholder meeting, Papa John's said.
Schnatter has also agreed to dismiss two lawsuits: one against the company in the Delaware Chancery Court without prejudice and another in Jefferson County, Kentucky, related to a sublease agreement with prejudice, the company said.
Early last month, Papa John's snubbed an investment offer from Schnatter and instead accepted an investment of up to $250 million from Starboard in return for a nearly 10 percent stake, while naming the hedge fund's Chief Executive Officer Jeffrey Smith as its chairman.
Schnatter had filed several lawsuits against the company in a bid to regain control. He resigned as chairman last summer, following reports he had used a racial slur on a media training conference call.
He stepped down as the company's chief executive in December of 2017, after drawing criticism for comments he made against National Football League leadership.
The bad press took a toll on the company, which said last week its North America same-store sales fell 7.3 percent in 2018.
Papa John's, which expects lagging sales in the first half of 2019, blamed the negative publicity for faltering sales and pushed to improve its public image by removing Schnatter's image from promotional materials and pizza boxes.
