THE COLONY, Texas—A May 11 decision made by Pizza Inn's board of directors has ended concerns over possible payouts of millions of dollars to key Pizza Inn officers relative to a perceived change of board control (see Newcastle gains control of Pizza Inn board and Battle for the Board at Pizza Inn).
In a filing with the Securities and Exchange Commission, the 415-unit company disclosed that the Feb. 11, 2004, installation of new board members nominated by Newcastle Partners (its largest shareholder), did not constitute a change of control.
Several Pizza Inn executives, including CEO Ronald Parker, claimed their labor agreements provided for $7.2 million in parachute payments if a change of board control occurred during the company's annual meeting on Feb. 11. During the meeting, three Newcastle nominees, Ramon D. Phillips, Robert B. Page and Steven J. Pully, were elected unanimously to the board.
According to several SEC filings, Newcastle contended that all three men technically were incumbent directors, and that their appointment would not trigger change of control provisions in the contracts of those Pizza Inn executives.
In the May 11 SEC filing, Pizza Inn said the issue was put to rest when independent legal counsel convinced its Audit Committee and its board that any claimed change of control would likely not stand up in court.