Papa John’s founder John Schnatter is thinking about selling his stake in the pizza chain

GP: John Schnatter, Papa Johns Pizza Founder 120401
Papa John’s Pizza founder John Schnatter arrives at the 2012 Academy of Country Music Awards in Las Vegas.Denise Truscello | WireImage | Getty Images

Papa John’s founder John Schnatter is thinking about selling his stake in the company.

Schnatter has solicited financial advisors’ help about selling all or part of his 31% stake in the pizza chain, according to an SEC filing on Monday.

Papa John’s will report its first-quarter results after the bell Tuesday. Wall Street is expecting the company to report earnings of 24 cents per share and revenue of $385.5 million, according to a survey of analysts by Refinitiv. The company is also expected to report declining same-store sales growth once again.

Ten months ago, the pizza chain ousted Schnatter as chairman after it was reported that he used a racial slur on a conference call. Sales tumbled, and Papa John’s has struggled to recover. At the same time, Schnatter filed several lawsuits against the company he founded in a bid to regain control but agreed to dismiss them as part of a settlement with Papa John’s.

Under the terms of the settlement, Schnatter’s term as a director expired last week, and he did not seek reelection. The company has also terminated his contractual rights as its founder under the founder’s agreement, the filing said. As a result, he no longer has a formal role within the company.

Schnatter and Papa John’s have discussed appointing a new independent director but have not made a decision yet, according to the filing.

Papa John’s has been taking steps to turn the business around. In February, activist hedge fund Starboard Value invested $200 million in the chain and named its chief executive, Jeffrey Smith, as new chairman. As part of its strategy to repair its image with U.S. customers, Papa John’s added retired basketball star Shaquille O’Neal to its board and has plans to make him the new face of the brand.

Shares of the company, which has a market value of $1.7 billion, are up 34% so far this year. They were down 1% in Tuesday’s premarket.

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