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(CNBC)   Papa John's set to adopt a "poison pill" to thwart Racist John from taking over the company's board. That poison pill will be one slice of "pizza" for every share owned   ( cnbc.com) divider line
    More: Followup, Stock, poison pill, Papa John, Wall Street Journal, board members, founder John Schnatter, Poison pill, shareholder rights plan  
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2417 clicks; posted to Business » on 22 Jul 2018 at 4:36 PM (21 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



37 Comments     (+0 »)
 
View Voting Results: Smartest and Funniest
 
2018-07-22 02:01:19 PM  
img.fark.netView Full Size
 
2018-07-22 02:29:46 PM  
There were no survivors...
 
2018-07-22 03:51:35 PM  
And then the murders began...
 
2018-07-22 04:06:04 PM  
Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?
 
2018-07-22 04:26:55 PM  

DannyBrandt: Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?


Because often there are other investors in the company by the time it goes public.  The investors are given a certain percentage of the company in exchange for providing money to help grow the business.  Unless you're already wealthy when you start the business, you need to have some kind of outside investment in order to grow it to the point you can take it public (offering stock)

Also, it's very likely that he sold some of his stock in the company over the years.  That's not uncommon as well as it's always a good idea to diversify your holdings so you don't lose everything that you've built up.
 
2018-07-22 04:47:52 PM  

DannyBrandt: Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?


I figure he needed cash to grow it that large and sold 70% just to get to IPO.
 
2018-07-22 04:57:23 PM  

Spandau: DannyBrandt: Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?

Because often there are other investors in the company by the time it goes public.  The investors are given a certain percentage of the company in exchange for providing money to help grow the business.  Unless you're already wealthy when you start the business, you need to have some kind of outside investment in order to grow it to the point you can take it public (offering stock)

Also, it's very likely that he sold some of his stock in the company over the years.  That's not uncommon as well as it's always a good idea to diversify your holdings so you don't lose everything that you've built up.


That makes sense.

Thanks. I want to make a joke about him selling 20% of his business to buy a sh*tty old Camaro, though.
 
2018-07-22 05:00:23 PM  
It sounds to me as though the board has considered Schnatter a liability for a while. If this racist outburst had come out of the blue, I think they would have given him a time-out, not the boot. Especially since he controls 30% of the voting stock.

It would only take another 30% of the outstanding shares to side with Schnatter in order for Papa John to prevail in a show-down. It doesn't look like he has that much support.
 
2018-07-22 05:05:58 PM  
Have you ever seen a Papa John's in a black or hispanic part of town? It's been racist all along.
 
2018-07-22 05:06:29 PM  

aaronx: It sounds to me as though the board has considered Schnatter a liability for a while. If this racist outburst had come out of the blue, I think they would have given him a time-out, not the boot. Especially since he controls 30% of the voting stock.

It would only take another 30% of the outstanding shares to side with Schnatter in order for Papa John to prevail in a show-down. It doesn't look like he has that much support.


The sad fact is, it kind of takes a psychopath to create a large, successful business. Their lack of compassion and guild is useful. You don't become a millionaire or billionaire by being nice. You pretty much have to accept that you will have no friends, and lots of enemies. If you are a psychopath, that doesn't bother you. Other people aren't "real".

But once the business is up-and-running smoothly, they often become a problem. Psychopaths don't play well with others, and don't realize when they are alienating customers, and generally aren't good at taking advice from anyone.

It's a common occurrence.
 
2018-07-22 05:12:09 PM  

LordOfThePings: [img.fark.net image 480x640]


MMMM...garlic powder and prison grade margarine
 
2018-07-22 05:13:45 PM  

foo monkey: And then the murders began...


He seems like a man that sheds his skin twice a year.
 
2018-07-22 05:17:13 PM  

Spandau: DannyBrandt: Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?

Because often there are other investors in the company by the time it goes public.  The investors are given a certain percentage of the company in exchange for providing money to help grow the business.  Unless you're already wealthy when you start the business, you need to have some kind of outside investment in order to grow it to the point you can take it public (offering stock)

Also, it's very likely that he sold some of his stock in the company over the years.  That's not uncommon as well as it's always a good idea to diversify your holdings so you don't lose everything that you've built up.


This is not a man that has sane,sensible ideas firm in the knowledge that he is not larger than life.

Nossir, this is a 1000 foot tall monument to hubris made out of petroleum based cheese product.
 
2018-07-22 05:21:12 PM  

realmolo: aaronx: It sounds to me as though the board has considered Schnatter a liability for a while. If this racist outburst had come out of the blue, I think they would have given him a time-out, not the boot. Especially since he controls 30% of the voting stock.

It would only take another 30% of the outstanding shares to side with Schnatter in order for Papa John to prevail in a show-down. It doesn't look like he has that much support.

The sad fact is, it kind of takes a psychopath to create a large, successful business. Their lack of compassion and guild is useful. You don't become a millionaire or billionaire by being nice. You pretty much have to accept that you will have no friends, and lots of enemies. If you are a psychopath, that doesn't bother you. Other people aren't "real".

But once the business is up-and-running smoothly, they often become a problem. Psychopaths don't play well with others, and don't realize when they are alienating customers, and generally aren't good at taking advice from anyone.

It's a common occurrence.


Greed needs to be classified as a mental illness.
 
2018-07-22 05:25:31 PM  

Spandau: DannyBrandt: Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?

Because often there are other investors in the company by the time it goes public.  The investors are given a certain percentage of the company in exchange for providing money to help grow the business.  Unless you're already wealthy when you start the business, you need to have some kind of outside investment in order to grow it to the point you can take it public (offering stock)

Also, it's very likely that he sold some of his stock in the company over the years.  That's not uncommon as well as it's always a good idea to diversify your holdings so you don't lose everything that you've built up.


I'm going to pile on just a bit:

Early in the process, most every entrepreneur envisions owning a controlling share in their concept. Ideally, it would be 100% forever. In practicality, the founder often doesn't have the cash or other resources to turn the concept into a proven business or even if he/she does achieve business success independently, it's nigh impossible to grow quickly enough to reach market saturation before a competitor recognizes the business model and leverages investment resources to reach those new markets before the original founder does. So, the entrepreneur is faced with a choice of either accepting investment resources to turn the company into a national/global brand, or to go slowly and risk being unknown and pushed out of the market by a competitor who was willing to grow quickly. It's a really tough decision, and few entrepreneurs want to sell off portions of their equity, so sometimes there's ways to negotiate debt only investments that convert to equity in specific cases (like late or non-payments). Anyway, this is the entrepreneur's dilemma: give up the majority of control, or limit your concept's growth.

The investors, generally, are rather savvy. They usually don't fully trust the business founder, but like the business model and where things are headed. In return for their investments, often they will want to have the majority in aggregate (if there's multiple investors) or if it's a singular investor who buys, say, 40% of the equity there would likely be conditions under which those shares become worth 60% (or more). This helps protect the investors, and the company, from a founder who had a great idea and business model but is a terrible leader and can't be entrusted to manage the company on a daily basis. Equally common is for these investors to demand specific board seats for individuals with experience in the industry who can provide advice and guidance to the fledgling company as it grows. So, in order for investors to consider writing a check with multiple commas, there needs to be a way for the investors to oust the founder(s) and limit the impacts from his/her damaging choices. Of course, if things are going well, these investors aren't likely to replace the founder because it takes effort and risk to make such a drastic change.

For very large corporations, the effective "controlling share" can be relatively small. If you take a Fortune 500 company that's running okay (or better than okay) and purchase roughly 10% of the stock, you'll have effective control so long as your ideas aren't too far out there. This is because many of the public shareholders aren't going to vote or they will generally go along with the company's vision forward. It's only when things turn ugly that 10% is no longer substantial enough to wield considerable influence over the board and executives--unless you know what you're doing in those cases, the smarter play is to sell your shares to the activist investors and allow them to attempt to correct the business and take on all the risk while you put your money elsewhere.
 
2018-07-22 05:27:41 PM  

realmolo: aaronx: It sounds to me as though the board has considered Schnatter a liability for a while. If this racist outburst had come out of the blue, I think they would have given him a time-out, not the boot. Especially since he controls 30% of the voting stock.

It would only take another 30% of the outstanding shares to side with Schnatter in order for Papa John to prevail in a show-down. It doesn't look like he has that much support.

The sad fact is, it kind of takes a psychopath to create a large, successful business. Their lack of compassion and guild is useful. You don't become a millionaire or billionaire by being nice. You pretty much have to accept that you will have no friends, and lots of enemies. If you are a psychopath, that doesn't bother you. Other people aren't "real".

But once the business is up-and-running smoothly, they often become a problem. Psychopaths don't play well with others, and don't realize when they are alienating customers, and generally aren't good at taking advice from anyone.

It's a common occurrence.


There's more truth to that than just about psycophathy.  You, as a person, never get to where you want to be in life by observing rules or "playing nice."

This is the ugly nature inborn to all humans.  The ironic part is that you'll spend your whole life, beginning to end, listening to all of this stupid antipodal rhetoric about morality as if living some shiatty disney movie

But in the end it's up to you to decide how much of living a lie for the sake of comfort with others is enough (or how much it means to you, for that matter)

You're an apex predator. Just like your parents, and their ancestors.
 
2018-07-22 05:38:44 PM  

wildcardjack: Have you ever seen a Papa John's in a black or hispanic part of town? It's been racist all along.


Yes, but then I live in New York, where lots of parts of town are black or hispanic. The franchises around us seem to be owned/operated by Indians/Pakistanis.
 
2018-07-22 05:50:08 PM  

wildcardjack: Have you ever seen a Papa John's in a black or hispanic part of town?


Yes, you should get out more
 
2018-07-22 06:13:13 PM  

wildcardjack: Have you ever seen a Papa John's in a black or hispanic part of town? It's been racist all along.


Given the Fark demographic I would say "no".
 
2018-07-22 06:14:12 PM  

wildcardjack: Have you ever seen a Papa John's in a black or hispanic part of town? It's been racist all along.


Yes I have, I don't dispute your claim though
 
2018-07-22 06:18:48 PM  

DannyBrandt: Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?


Each round of financing (the Series A, Series B, etc.) dilutes the ownership percentage. Usually, the first or first two funding rounds won't cause dilution because the company will allocate a certain percentage for sale to the first few rounds of funding. But by the fourth or fifth round of funding, everyone gets diluted because there's no more unallocated shares available.

Most founders don't get to keep more than 20% or so after the multiple rounds of funding and the IPO.
 
2018-07-22 06:21:53 PM  

realmolo: aaronx: It sounds to me as though the board has considered Schnatter a liability for a while. If this racist outburst had come out of the blue, I think they would have given him a time-out, not the boot. Especially since he controls 30% of the voting stock.

It would only take another 30% of the outstanding shares to side with Schnatter in order for Papa John to prevail in a show-down. It doesn't look like he has that much support.

The sad fact is, it kind of takes a psychopath to create a large, successful business. Their lack of compassion and guild is useful. You don't become a millionaire or billionaire by being nice. You pretty much have to accept that you will have no friends, and lots of enemies. If you are a psychopath, that doesn't bother you. Other people aren't "real".

But once the business is up-and-running smoothly, they often become a problem. Psychopaths don't play well with others, and don't realize when they are alienating customers, and generally aren't good at taking advice from anyone.

It's a common occurrence.


40% of founders of companies that reach IPO aren't there by the time of the IPO.
 
2018-07-22 06:24:06 PM  
Wasn't terribly surprised when this came out, given what we knew already about the guy. But, then when he began to double down and make things worse instead of staying quiet and waiting for things to blow over, I began to suspect this might be his revenge, in a way. The company that shares his 'name' pissed him off, so he's going to continue to trashing his name (and the stock value) by not shutting up. In doing so, he hopes that they will buy him out, so he can walk away from the whole thing and let them deal with the fallout.
 
2018-07-22 06:35:26 PM  

LordOfThePings: [img.fark.net image 480x640]


Worse.Than.Meth
 
2018-07-22 07:01:35 PM  

dericwater: Most founders don't get to keep more than 20% or so after the multiple rounds of funding and the IPO.


See? These are things I don't know. I can replace a toilet main, but I don't know squat about stock options.
 
2018-07-22 07:51:13 PM  

DannyBrandt: dericwater: Most founders don't get to keep more than 20% or so after the multiple rounds of funding and the IPO.

See? These are things I don't know. I can replace a toilet main, but I don't know squat about stock options.


Imagine all the shareholders are sitting around a poker table. Each shareholder has some number of chips (of the same color/denomination). Collectively, the sum of all the chips equals to the total shares of the company. Each shareholder's chip stash is his or her percentage of the company. Suppose the total number of chips is 1,000 and you have 257 chips, I have 191, and so on. Then you have 25.7% of the company and I have 19.1% of the company.

An investor comes by and says, "I'll pay $1,000,000 for 10% of the company." That means, after he antes up $1M, the company is now worth $10M (also known as "post-money"). That means the pre-money was worth $9M. That tells you the value of each of the chips. They're worth $9,000 per chip because 1,000 chips at $9,000 is $9M. Now, rather than this investor buy from among the players, he just goes and get $1M worth of $9K-valued chips. He brings to the table 111.111 chips (fractional chips is no biggie since all this is done on a spreadsheet). Now, the table has a total of 1,111.111 chips, each worth $9K for a grand total of $10M.

Your 257 chips is still your 257 chips. But now, instead of 25.7% ownership, your ownership percentage is 257/1111.111 = 23.13%. My 191 chips gives me 191/1111.111 = 17.19%. Our ownership percentages have been diluted.

But we're worth more. Well, we could be worth less, depending on whether the investment of $1M for 10% causes the funding round to be a down-round or not. What was the prior valuation? Let's say prior to the investor coming in, the company was worth $2M. Then, each of the 1,000 chips was worth $2K. Your 257 chips gave you $514,000 of market value. My 191 chips gave me $382,000 of market value. The new investor says our company, with his $1M is now worth $10M, so your 257 chips are now worth $2,313,000 and my 191 chips are now worth $1,719,000, because the chips are now worth $9K each.

Rather than having a fixed number of chips (the 1,000 chips), it's easier to keep track by having the investor "bring along" new chips to enter the game. Then, your chip count and all other current players' chip counts remain the same. All the players and their chip counts are put into a sheet call the cap table.

As you can see, if you have multiple rounds where new investors come in and adds more money at new (and hopefully, higher) valuation, your percentage share will go down, always. The new value of the chip is determined by what the investor decides is his or her percentage based on what he or she is willing to ante up. So after four or five rounds of funding, a founder's 75% ownership gets diluted perhaps down to 35%. Uber, for example, had a Series G funding round, it's 7th round of funding post and pre-seed/seed/post-seed rounds. The founders of Uber will most assuredly see their ownership percentage somewhere in the 30% range, if not lower.
 
2018-07-22 08:17:16 PM  

DannyBrandt: Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?


Lots of reasons. As others have said, it is likely a large proportion was sold before it was a huge success.

Second, in a large public company with diverse shareholders, 30% is usually pretty effective control. Most shareholders will not exercise their voting rights and if you hold shares, you will see that if you do not take part in the meeting, the voting rights to your shares will automatically go to Management (i.e. the largest shareholder in this case).

Third, someone tried to buy up a majority of shares, there are usually mechanisms (like the one they are using now) to prevent them taking over.

Fourth, often the founders have special shares that give them disproportionate voting rights. For example, Zuckerberg owns about 15% all outstanding FB shares, but most of those are Class B shares that give him effective control of the company due to extra voting rights.

I don't know the details in this case, but this is very common.
 
2018-07-22 08:18:00 PM  

Spandau: DannyBrandt: Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?

Because often there are other investors in the company by the time it goes public.  The investors are given a certain percentage of the company in exchange for providing money to help grow the business.  Unless you're already wealthy when you start the business, you need to have some kind of outside investment in order to grow it to the point you can take it public (offering stock)

Also, it's very likely that he sold some of his stock in the company over the years.  That's not uncommon as well as it's always a good idea to diversify your holdings so you don't lose everything that you've built up.


I've seen a couple dozen episodes of Shark Tank and agree this is the most likely scenario. Papa is probably collecting a 7% royalty, that is, if he used an accurate revenue figure to estumate his valuation when making his deal.
 
2018-07-22 08:21:01 PM  
I could have the cure for cancer and still suck when it comes to managing terms on a contract.
 
2018-07-22 09:08:12 PM  
What's a poison pill?
FTFA "a poison pill - also known as a shareholder rights plan - would defend the company against a hostile take over."
HOW? Jesus, how about a little detail, ya?
 
2018-07-22 09:24:47 PM  

DannyBrandt: Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?


They recently bailed out of upstate NY.  There's one in a suburb of Buffalo, none in the Rochester area, one in Syracuse, nothing in Utica, Rome or Watertown, and one in Albany.  Three stores across all of upstate?  They closed 5 in Rochester this past spring alone.

Papa John's Pizza closes Rochester-area locations
 
2018-07-22 10:09:57 PM  

jayphat: What's a poison pill?
FTFA "a poison pill - also known as a shareholder rights plan - would defend the company against a hostile take over."
HOW? Jesus, how about a little detail, ya?


Poison Pill
 
2018-07-22 11:07:31 PM  

jayphat: What's a poison pill?
FTFA "a poison pill - also known as a shareholder rights plan - would defend the company against a hostile take over."
HOW? Jesus, how about a little detail, ya?


Yeah, this article and others are just a synopsis of a more detailed WSJ article.  You cant read the WSJ article without subscribing and Im not going to do that.
 
2018-07-23 12:21:26 AM  

Spandau: DannyBrandt: Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?

Because often there are other investors in the company by the time it goes public.  The investors are given a certain percentage of the company in exchange for providing money to help grow the business.  Unless you're already wealthy when you start the business, you need to have some kind of outside investment in order to grow it to the point you can take it public (offering stock)

Also, it's very likely that he sold some of his stock in the company over the years.  That's not uncommon as well as it's always a good idea to diversify your holdings so you don't lose everything that you've built up.


However, sometimes there are different classes of shares with different voting rights, so founders can have <50% of the stock, but >50% of the votes. You can have special shares with 10 times the number of votes, or no votes. I'm not bothering to look that up to see if it is the case here.
 
2018-07-23 12:30:27 AM  

realmolo: The sad fact is, it kind of takes a psychopath to create a large, successful business.


You once attacked the entirety of India and Pakistan as corrupt thieves. Now you're saying entrepreneurs are psychopaths. If that's the case, what do you call actual warlords or serial killers? If one sees the whole world as pathological, it's projection.
 
2018-07-23 02:01:59 PM  

Snuffybud: DannyBrandt: Honest question because I'm not really well versed in these things. Let me preface this by saying I couldn't give a crap less about Papa John.

If the guy founded the company in 1984 and obviously ran it well enough that you can find a franchise in pretty much every city...

Why in the hell does he only own 30% of his own business? Wouldn't anyone with a business that went through an IPO want to keep a controlling share?

Like 51% or something?

They recently bailed out of upstate NY.  There's one in a suburb of Buffalo, none in the Rochester area, one in Syracuse, nothing in Utica, Rome or Watertown, and one in Albany.  Three stores across all of upstate?  They closed 5 in Rochester this past spring alone.

Papa John's Pizza closes Rochester-area locations


Well Utica is a steamed ham town after all. Not that Albany knows anything about that.
 
2018-07-23 05:14:30 PM  
Their stock is tanking.

Good.

Worst pizza ever. Even without Papa John himself, their pizza tastes worse than a Totino's party pizza that was cooked in a microwave. Absolute shiat pizza. If they were offering free pizzas, I still wouldn't get one because it wouldn't be worth the gas I'd spend to get there to pick it up.

It's time they went out of business. If farking Donatos (which was awesome for thin crust) can go out of business, then Papa John's shouldn't be allowed to exist.
 
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