This story was updated with new developments on March 31 at 2:40pm EST.
When Papa John’s signed Shaquille O’Neal to a major partnership one year ago that included nine franchises and a board seat, it was seen as a major turning point for the brand. The company had spent $50 million in 2018 to scrub founder John Schnatter’s face from pizza boxes and delivery vans, and O’Neal, a high-demand product endorser, will clearly be the marketing face of the brand moving forward.
But now a proxy firm thinks O’Neal should be off the board for missing too many board meetings.
Institutional Shareholder Services (ISS), a corporate governance advisory firm, issued a report last week encouraging Papa John’s (PZZA) shareholders to vote against O’Neal’s reelection to the board at the April 23 shareholders meeting because he attended fewer than 75% of meetings in his first term as a board member.
Papa John’s disclosed in its SEC filing in advance of the April 23 meeting that every board member attended at least 75% of the 16 board meetings in 2019, “except for Shaquille O’Neal, who was unable to attend several board meetings due to prior business and broadcasting commitments made prior to Mr. O’Neal’s appointment to the Board, which could not be rescheduled.” If O’Neal attended fewer than 75% of 16 meetings, it means he missed at least five meetings.
A representative for O’Neal did not respond to Yahoo Finance’s request for comment; ISS does not comment to media beyond what’s in their reports.
Papa John’s added in its SEC filing that the company and O’Neal “do not expect these scheduling conflicts to recur in 2020.”
And on March 31, ISS reversed course, updating its report to say it supports O’Neal’s reelection.
The reasoning: ISS had not considered that O’Neal joined the board in March 2019, two months into the year. “Upon further review, O'Neal was appointed to the board in March 2019, during the fiscal year under review,” ISS writes. “Given that O'Neal's poor attendance occurred during the year he was appointed to the board, support for O'Neal's re-election is now considered warranted.”
O’Neal’s “prior business commitments” could have related to his many other sponsorships and endorsements with companies including Ring, Steady, Forto Coffee Shots, Carnival Cruises, Icy Hot, Krispy Kreme, and National General Insurance. The “broadcasting commitment” refers to his NBA gig with TNT.
In August, O’Neal told Yahoo Finance that he has been a fan of Papa John’s since college, and that when he did his homework on the corporate side of the brand, “I realized that there was a problem there: they didn’t have any diversity on the board.” He met with then-CEO Steve Ritchie and activist investor Jeff Smith of Starboard Capital and told them, “I would like to be involved, if I can be on the board and if I can purchase a couple franchises.”
Papa John’s shares are down 17% in 2020 so far.
Daniel Roberts is an editor-at-large at Yahoo Finance. Follow him on Twitter at @readDanwrite.