Papa John’s International Inc.’s board members voted to adopt a “poison pill” on Sunday to prevent its controversial founder from gaining a controlling interest in the pizza chain, according to people familiar with the matter.
The board, which is expected to announce the poison pill Monday morning, has been trying to sever ties with John Schnatter, who founded Papa John’s 34 years ago, following revelations that he used a racial slur during a recent conference call.
Schnatter owns 29% of Papa John’s PZZA, +1.16% shares and has indicated that he won’t cede control of the company without a fight.
Boards can adopt shareholder-rights plans, commonly known as poison pills, to block an investor from accumulating a majority stake in a company — a defensive move intended to thwart a hostile takeover. They are usually employed to block activist shareholders from gaining more control.
An expanded version of this report appears on WSJ.com.
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