(Reuters) - Pizza chain Papa John’s International Inc, trying to recover from a string of high-profile public relations blunders, on Friday named former basketball star Shaquille O’Neal as its newest board member, brand ambassador and investor.
The move highlights the restaurant chain’s attempts to fix its image after its founder, John Schnatter, reportedly used a racial slur on a media training conference call last year. Schnatter stepped down as chairman of the Papa John’s board last summer but still holds approximately 30 percent of the company’s shares and has been feuding with the chain over control.
O’Neal, a popular product pitchman who was one of the National Basketball Association’s best players in his prime, will invest in nine of the company’s restaurants in the Atlanta area, where he lives. The star, who also owns a Krispy Kreme doughnut franchise in Atlanta and chicken restaurant Big Chicken in Las Vegas, will be paid $8.25 million for his endorsement.
“This is a triple threat opportunity for me,” said O’Neal, who played on four championship teams during his 19-year career, in a statement. “I am excited to join the board and to help lead from the top.”
A representative for Schnatter said the founder declined to comment on O’Neal’s appointment to the board.
Papa John’s shares were up nearly 4 percent in mid-day trade.
“This is one more step in the evolution of the company, the brand and our people,” said Papa John’s Chief Executive Steve Ritchie in an interview with Reuters. “With Shaq on the board, it’s a big final step for turning the page for the company.”
Papa John’s first linked up with O’Neal shortly before the Super Bowl in February, when the restaurant chain sponsored an event he hosted in Atlanta, Ritchie said. O’Neal said he was interested in becoming a franchisee, and as Papa John’s was looking to add racial diversity to its corporate board, he became a candidate as a new director, Ritchie said.
“With expertise in restaurants and marketing, Shaq checks all these boxes,” Ritchie said.
O’Neal’s directorship on the Papa John’s board is his first on a publicly traded company. He is also the pizza chain’s first African-American director.
Papa John’s competitor Pizza Hut, owned by Yum Brands Inc, replaced it as sponsor for the National Football League last year. Schnatter resigned as CEO in late 2017 after drawing criticism for comments he made about NFL leadership.
O’Neal is among the several new directors added to the 12-member Papa John’s board this year, including Chairman Jeff Smith, the chief executive officer of Starboard Value LP. Starboard earlier this year unveiled an investment of up to $250 million in Papa John’s.
To counter bad publicity, Papa John’s 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 the founder or hedge fund investor Starboard. That director has not yet been named.
O’Neal is known for his affable nature and appearing in ads for everything from Comcast and Icy Hot balm to Radio Shack and Burger King during his playing days. After retiring from the sport, he continues to appear regularly promoting Gold Bond powder and the Carnival cruise line.
Reporting by Jessica DiNapoli in New York and Aishwarya Venugopal in Bengaluru; Editing by Maju Samuel, Bill Trott and Dan Grebler
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