It's not official yet, but abundant murmurings from inside and outside Pizza Inn assert CEO Ronald Parker is gone: cleaned out his office on Nov. 29, never to return (read CEO Parker is out at Pizza Inn).

The 410-unit chain hasn't made an announcement yet because Parker's contract allows a 10-day grace period in which he can change his mind and re-stake his claim to the helm. Sources close to the story insist, however, that's highly unlikely.

Until at least Dec. 8, outsiders will remain in the dark about exactly why, after two-and-a-half tumultuous years as CEO, Parker packed up and said goodbye. And even then the official announcement likely will provide little more than a vague "left to pursue other interests" reason for his leaving. It's doubtful it will say anything about the company's poor performance under Parker's leadership, or his stubborn belief that, despite Pizza Inn's losses, he deserved his annual $1.1 million pay package.

It's

Steve Coomes, Senior Editor

also unlikely the statement will mention the golden parachute written into Parker's employment contract. That clause said he would get a $5.4 million payout should any changes to Pizza Inn's board threaten his livelihood.

Were I writing the "he's gone" announcement, that issue would top my list of reasons why Parker's doing the "See ya'" shuffle. My guess is Pizza Inn's largest shareholder, Newcastle Partners, would agree. Multiple regulatory documents detail just how much of a problem Newcastle has had with Pizza Inn's field marshal taking home half the company's profits every year — while threatening it with a payout that would push it toward bankruptcy.

Greedy history

The turmoil at Pizza Inn began in August of 2002, when then-CEO C. Jeffrey Rogers was forced to leave the company. Some time before, Rogers borrowed $1.9 million from Pizza Inn to buy a major hunk of its stock. Not long after, the stock soured, shoving Rogers' debt under water and dragging down his net worth with it. Believing Rogers couldn't pay the company back, he was told to hit the bricks, and Pizza Inn wrote off the debt as a loss. Parker, Roger's handpicked president, was appointed CEO.

On Dec. 6, 2002, however, Rogers cut a shrewd deal by selling 2.7 million shares of Pizza Inn stock to Newcastle Partners. The sale — which represented 27 percent of Pizza Inn's outstanding shares — gave him more than enough cash to pay off his debt to Pizza Inn on Dec. 9, plus it gave Newcastle a controlling interest (36 percent) in the pizza chain. (Interestingly, when Pizza Inn subsequently refigured its financial statements for that year to undo what initially was a $1.9 million loss, the company turned its best profit in years.)

Certain that Newcastle would move to protect its investment by appointing handpicked members to Pizza Inn's board, Parker and his three top executives — senior vice president, corporate development, general counsel and corporate secretary B. Keith Clark; senior vice president of franchise operations and concept development Ward T. Olgreen; and chief financial officer and vice president of distribution Shawn M. Preator — called a fateful board meeting nine days later. During the gathering, parts of Pizza Inn's bylaws were changed to protect the quartet's positions from a potential challenge by a Newcastle-dominated board.

In short, the execs' employment contracts were also changed to read, essentially, "If you do anything to push us out, we'll gut the company financially." Parachute payouts to the men would be distributed as followed: Parker would get $5.4 million; Clark $762,000; Olgreen $630,000; and Preator, $597,000 — amounts struggling Pizza Inn could ill afford to pay.

Several months later, after two Newcastle nominees were seated on the board, Pizza Inn sought the opinion of outside lawyers to gauge whether "a change of control" had occurred; if so, Team Parker would get its loot. In April of

start quotePeople will remember Parker for his greed and for his insistence that he deserved more than he really did. They'll remember he did little to earn a lot, and that his backroom dealings very well could have turned Pizza Inn permanently inside outend quote

2004, however, it was decided there was no change of control.

In June, Clark resigned from Pizza Inn and said the company owed him his "change of control" money. Pizza Inn not only refused his request, it sent the issue to arbitration, where it remains. And now the company is suing the law firm that advised its executive team to amend the company's bylaws and create the egregious parachute payouts. Not so ironically, that law firm is Clark's former employer.

Overpaid for poor performance

This year has been a dark one for Parker. The company's Compensation Committee branded him as overpaid not only based on his performance at Pizza Inn, but in comparison to execs at similar-size firms.

That claim is more than justified.

As determined by Parker's contract, he is entitled to a pay package of nearly $1.1 million, half of all Pizza Inn's profits for fiscal 2004 (which ended in June). A closer look at Parker's salary sheds some light on why the committee thinks this: a base salary of $550,000, a mandatory minimum annual bonus equal to $275,000 plus "certain defined benefits, which, in fiscal 2004, totaled approximately $176,084." (How 'bout that? "Mandatory minimum bonus." Last I heard, bonuses were earned. But I digress.)

Pizza Inn's revenue for 2004 did rise to $60.2 million, up from $58.8 million in 2003. But comparable-store sales slid 1.3 percent and profits dropped nearly $1 million.

By comparison, in 2003, 2,900-unit Papa John's racked up $946 million in revenue and profits of $34 million, yet CEO John Schnatter's take-home pay for the year was $650,000, about half of Parker's. Plus, because Papa John's is struggling, and because Schnatter wanted to provide some bonus incentives for company management, he refused his stock options and cut his own pay by $200,000.

Hmm. Papa John's store numbers are seven times greater than Pizza Inn's, the company posted nearly 16 times Pizza Inn's revenue and 17 times its profits, and yet Parker made more than Schnatter.

Go figure.

What happens next?

One can only guess what will happen next at Pizza Inn. Clearly it needs a new CEO, and it's likely more shuffling near the top is on the way. Change is desperately needed in the form of a fresh turnaround team, but heaven knows those are hard to come by.

Like many legendary pizza companies, Pizza Inn has risen, fallen and risen again, only to face new struggles such as this one. Rogers brought the chain back from bankruptcy in the early 1990s, only to see it founder 10 years later.

In fairness to Parker, he inherited a sickly child struggling to get well in the midst of a brutal recession. But seemingly without conscience, he denied the reality of the grave situation and chose to cut himself an Elvis-sized-slice of the company's paltry profit pie.

Since I began covering this story more than a year ago, I've come to know many Pizza Inn shareholders, franchisees and executives at least casually. And either I'm easily duped, or these truly are decent, hardworking people who simply want a return on their money and the sweat equity they've invested in Pizza Inn.

Knowing these same people better than I, why couldn't Ronnie Parker just humble himself a little and say, "You know, times are tough for everyone right now, so I'm going to do the decent thing and sacrifice along with you." Couldn't he have just foregone his "mandatory bonus" or maybe even hung some of his own salary out there as an incentive to others on the team? Heck, even if none of that got the ship moving in the right direction again, at least people might be able to remember him as a guy who cared enough to share the team's pain.

Instead, however, people will remember Parker for his greed and for his insistence that he deserved more than he really did. They'll remember he did little to earn a lot, and that his backroom dealings very well could have turned Pizza Inn permanently inside out.

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