24/7 Wall St.

Papa John’s International Inc. (NASDAQ: PZZA) announced Friday morning that NBA Hall of Famer Shaquille O’Neal is teaming up with the company as a member of the board of directors and an investor in nine Papa John’s restaurants in the Atlanta area. O’Neal will also sign a marketing agreement with the company to be an ambassador for the brand.

Getting O’Neal onboard is one of the best moves the company has made since it parted ways with its founder and former board chair and chief executive, John Schnatter, who was not only Papa John’s namesake but had also become its most visible spokesman. Replacing him with an instantly recognizable and congenial spokesman was imperative. It was either that or change the company’s name and branding.

Getting Shaq likely did not come cheap. In 2018 the company paid directors a retainer of $50,000 plus a standard equity grant valued at $125,000 in equally valued portions of restricted stock and stock options. Excluding Schnatter, who received $660,018 in option awards last year, and Christopher Coleman, the board chair who received $415,372 in 2018 compensation, the four board members who served for the full year earned around $280,000 each.

O’Neal’s marketing deal to be Papa John’s ambassador was surely the key to this deal. We won’t know until about this time next year how the company will compensate O’Neal for his ambassadorship. Assume that he will have to give up all his other promotional deals and work for Papa John’s exclusively. With the right creative juice, though, O’Neal is probably worth every penny the company will pay him. Papa John’s CEO Steve Ritchie acknowledged O’Neal’s standing:

In addition to his business acumen, Shaquille understands how to build lasting connections with consumers and energize employees. I look forward to working with him as a board member and brand partner to advance the many initiatives we are pursuing across the organization to create even greater success for Papa John’s and our stakeholders.

Schnatter’s name and face were the previous “lasting connection” Papa John’s had with customers. Given some time, O’Neal could replace him and put the company back on its feet (it’s faced four straight quarters of downward revisions to earnings and same-store sales). Will activist investor Starboard Value and its CEO Jeff Smith, who was recently named chair of Papa John’s board, give O’Neal the time and money to make that happen? Will we see Shaq and Joe Montana in commercials by next fall? Lots of questions; answers coming soon.

The company’s stock traded up about 4% around noon Friday, at $48.80 in a 52-week range of $38.05 to $64.18. The stock’s 12-month consensus price target is $50.00.