Panera Bread Co. has agreed to pay $5.75 million to shareholders who alleged the chain misled investors about the success of its Crispani pizza. The company had expected the menu item, launched in 2006, to boost sales 3 percent to 5 percent.
The Crispani was available only after 4 p.m. to reach dinner guests and expand the daypart. However, by 2008, Panera Bread executives decided to take the item off the menu.
The Western Washington Laborers-Employers Pension Trust filed a class-action lawsuit in January 2008 in the U.S. District Court in St. Louis on behalf of shareholders who bought Panera common stock between Nov. 1, 2005 and July 26, 2007. The shareholders contend the company inflated the product's success to boost stock.
According to a story in the St. Louis Post-Dispatch, Mike Bongiorno, an attorney representing Sunset Hills, Mo.-based Panera, said the settlement amount is covered by Panera's insurers, and will not be borne by the company or executives.
From the story:
The "misstatements and omissions had the cause and effect of creating in the market an unrealistically positive assessment of Panera Bread and its business, prospects and operations," the lawsuit stated.
Judge E. Richard Webber granted preliminary approval of the settlement Tuesday, which was reached after a mediation process. The settlement will be distributed to those who bought or acquired the stock during the disputed period.
