By Soundarya J and Jessica DiNapoli
(Reuters) – Papa John's founder John Schnatter is leaving his board as part of a settlement that is solving a fierce dispute over controlling the world's third largest pizza chain.
Schnatter, who owns approximately 30 percent of the company's stock, would resign from the board if the independent board member is appointed ahead of the shareholders' annual general meeting scheduled for May, according to Papa John & # 39; s. Schnatter resigned as chairman last summer after reporting he used a racist slur during a telephone conference call for media education.
Schnatter has filed several lawsuits against the company to gain control over the company he founded in his father's tavern. In January, he demanded a victory when a court ordered the chamber to provide him with some internal documents, including text messages that Papa Johns had previously denied.
After learning that Papa Johns would not nominate him On this year's board, Schnatter presented a letter last Friday in which he nominated himself according to a regulatory filing and a person familiar with the matter. The footsteps laid the foundation for a costly and distracting proxy fight that the settlement now helps to avoid.
As part of the agreement, Papa has agreed to give John & # 39; s all company records and give him the option to sue if these documents reveal a corporate misconduct, Schnatter said in a statement
. As a counterpart Schnatter has agreed to reject the lawsuits filed against the company.
"I'm grateful I did it To solve these important issues, we can focus on the company's business without the need for additional litigation," Schnatter said.
The restaurant chain agreed to cancel the provision of a poison pill, a corporate rights plan that can dilute stocks, which prevents Schnatter from talking to other shareholders about the company.
Dad John's also agreed to give up the requirement for the board to vote for the established board.
The pizza chain said last week North American sales in the same restaurant fell 7.3 percent in 2018 and sales would fall in the first half of 2019.
Shares rose about 3 percent in the morning morning trade.
(Report by Soundarya J and Siddharth Cavale in Bengaluru and Jessica DiNapoli in New York, Edited by Arun Koyyur and Susan Thomas)