Papa’s Monday morning plunge. | Courtesy of Yahoo! Finance

Shares of Papa John’s plunged more than 7 percent in early morning trading after the company’s board adopted a so-called poison pill to prevent its embattled founder, John Schnatter, from taking control of the company.

Shares traded for $48.10 at 10:37 a.m., down 6.8 percent, after having fallen more than 7 percent earlier.

The company’s board, on which Schnatter still serves, had announced Sunday that it was adopting a “limited duration stockholder rights plan.” The move allows stockholders to acquire additional shares of stock at a discount if a person or group acquires more than 15 percent of the company’s common stock. The person or group making the acquisition would be excluded from those rights.

Such a maneuver, called a “flip-in poison pill,” makes any acquisition more expensive and also dilutes the value of shares and therefore discourages any such acquisition.

The ownership stake that triggers the stockholder rights plan is 15 percent — except for “John H. Schnatter and his affiliates and associates,” who own just more than 30 percent. In their case, the company said, the stockholder rights plan is set in motion when they acquire “31 percent or more of our outstanding shares of common stock.”

John Schnatter | Courtesy of WLKY

Papa John’s said in a news release Sunday that it had adopted the stockholder rights plan “to protect the interests of the company and its stockholders by reducing the likelihood that any person or group gains control of Papa John’s through open market accumulation and other tactics without paying an appropriate control premium.”

The board took the action after two challenging weeks for the company that began with Forbes revealing that Schnatter had used a racial slur on a conference call with a consultant that was to help Schnatter avoid public relations disasters.

The day of Forbes’ report, the pizza chain’s shares fell 4.8 percent, to $48.33. The following day, when the company announced Schnatter was stepping down as board chairman, shares jumped 11 percent, closing at $53.67 on July 12.

Fallout from the incident continued last week, but shares climbed 4 percent on Wednesday after The Wall Street Journal reported that Schnatter had been leading preliminary merger talks with The Wendy’s Co.

Shares fell again Thursday as investors realized that the talks appear to have stalled. Schnatter last week also said that resigning from the board was a mistake and that he would not give up his company without a fight, prompting the board’s action over the weekend.

In the last 12 months, the pizza chain’s shares have declined by more than a third. Monday morning’s share price decline wiped out about $116 million in stockholder value.