Jeffrey Smith, CEO of Starboard Value and chairman of Papa Johns’ board of directors, has resigned from the pizza company’s board effective immediately. Christopher Coleman, a board member since 2012, has been appointed as the new independent chair. In a release, the company said it is buying most of Starboard’s shares, or about $2.2 million worth, for $82.52 per share.
The activist hedge fund invested $200 million in Papa Johns in early 2019 when the company was navigating a public battle with its founder John Schnatter. The investment reduced Schnatter’s stake in the company from 30% to about 26%. Schnatter objected to the deal and offered his own proposal, which was rejected by a special committee. In a statement, Smith said Starboard’s investment four years ago came as the company “faced substantial challenges.”
“I am extremely proud of the significant progress Papa Johns has made in its customer experience, financial performance, share price performance and corporate governance … Given the strength of the team, board and overall health of Papa Johns, I feel like now was the right time for me to step down and transition board leadership," he said.
Since Starboard’s 2019 investment, Papa Johns’ stock price and operating income have more than doubled, Smith added.
“But just as importantly, the company has become a leader in product innovation, differentiated itself in the pizza delivery category and significantly improved its overall corporate governance.”
Smith also commends Papa Johns’ diversity and inclusivity work in the past four years, including its perfect score on the Human Rights Campaign Foundation’s Corporate Equality Index for the second year in a row, and its position on Forbes’ “Best Employers” and “Best Employers for Diversity” lists.
“Starboard, led by Jeff Smith, invested in Papa Johns at a challenging time for the company. The Starboard team has provided crucial guidance and insights that have helped drive our turnaround and growth over the last four years. We thank Jeff for his dedication to the Papa Johns brand and his leadership of the board,” CEO and president Rob Lynch said in a statement.
Following the repurchase, Starboard will continue to own 582,432 shares, representing approximately 2% of Papa Johns’ outstanding shares.
Contact Alicia Kelso at [email protected]