Papa John’s can’t remove founder from board now

Papa John’s International has taken steps to keep ousted founder John Schnatter from winning control of the company by buying a majority of its shares. But it won’t be able to remove him from the board, an expert on corporate law says.

Unless he leaves voluntarily, he will remain as a director at least until the company’s next annual shareholders’ meeting next May.

Under the law in Delaware, where Papa John’s is incorporated, only shareholders – not the board – can vote to remove a director, said Lawrence Hamermesh, a professor emeritus of corporate law at Widener University’s Delaware Law School.

Given that Schnatter owns nearly 30 percent of the shares, such a vote is unlikely, but the board could decide not to renominate him, Hamermesh said.

Schnatter’s lawyer, Patricia Glaser, has told the board he will fight any effort to remove him.

Papa John’s board members announced late Sunday that they had approved a plan to block Schnatter from buying a controlling stake in the company. The board adopted what is known as a “poison pill,” which makes such a move prohibitively expensive.

“The adoption of the Rights Plan is intended to … protect the interests of the company and its stockholders by reducing the likelihood that any person or group gains control of Papa John’s through open market accumulation or other tactics without paying an appropriate control premium,” the company said in a statement.

Schnatter resigned as board chairman after Forbes reported that Schnatter used the N-word during a media training session.

Schnatter publicly apologized for the incident but said later that he made a mistake in resigning. He also charged that the board forced him to step down without conducting an investigation of what happened.

The company announced that a special committee of board members had hired the Washington-based international law firm of Akin Gump Strauss Hauer & Feld to oversee an audit.

Thomas Novelly and Andrew Wolfson