March 22, 2019
(Reuters) – Pizza chain Papa John’s, trying to bounce back from a series of high-profile PR blunders, on Friday named basketball star Shaquille O’Neal as its newest board member and announced an $8.25 million three-year endorsement deal with the four-time NBA champion.
The company’s shares rose nearly 6 percent in morning trade.
O’Neal will also be an investor in nine Papa John’s restaurants in Atlanta, the company said. He currently owns a Krispy Kreme Doughnuts franchise in Atlanta and previously owned 27 Five Guys Burgers and Fries franchises.
“This is a triple threat opportunity for me. I am excited to join the Board and to help lead from the top, while also investing in nine stores in my home town of Atlanta and being an ambassador for the brand,” O’Neal said in a statement.
Papa John’s has been trying to fend off rivals such as Dominos Pizza Inc and Yum Brands Inc’s Pizza Hut. Its sales have taken a hit following a public battle with its founder John Schnatter for control of the company.
O’Neal’s investment shows that the company is making swift progress in cleaning up its image after the Schnatter battle that saw the company lose its National Football League sponsorship deal and reportedly led NFL star Peyton Manning to sell his stake in 31 Papa John’s franchises last year.
Including O’Neal, six new directors have been added to the 12-member board so far this year. This includes board chairman and independent director Jeff Smith, the chief executive officer of Starboard Value LP.
Schnatter was booted as chairman last July following reports he had used a racial slur on a media training conference call, and to counter the bad publicity, the company revamped its advertising, removed Schnatter as the brand’s spokesperson and from its marketing materials and pizza boxes.
In March, the company said Schnatter was leaving the board as part of a settlement resolving the bitter dispute and would find a mutually acceptable independent director who would not be affiliated with Schnatter or hedge fund investor Starboard, which owns a nearly 10 percent stake in the restaurant chain.
(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Maju Samuel)