LOUISVILLE, Ky. – A special committee of the board of directors of Papa John’s International Inc., which recently formed to evaluate and act with respect to all of the company’s relationships and arrangements with founder John H. Schnatter, has approved and directed the company to terminate Schnatter’s founder agreement.
Terms of the founder agreement defined Schnatter’s role with Papa John’s as that of advertising and brand spokesperson for the company. Schnatter resigned from Papa John’s last week after news surfaced that he used a racial slur during a May conference call. However, he remains on the company’s board and still owns shares in the company.
Additionally, the special committee approved and directed the company to terminate a sublease agreement granting Schnatter the right to use certain office space at the company’s corporate headquarters in Louisville.
Papa John’s has specifically requested that Schnatter, who founded Papa John’s in 1984, cease all media appearances and not make any further statements to the media regarding the company, its business or employees.
“Papa John’s is not an individual,” Steve Ritchie, CEO, wrote in a July 13 memo. “Papa John’s is a pizza company with 120,000 corporate and franchise team members around the world. Our employees represent all walks of life, and we are committed to fostering an inclusive and equitable workplace for all. Racism and any insensitive language, no matter what the context, simply cannot — and will not — be tolerated at any level of our company.”
Ritchie said Schnatter’s ouster is the first of several key steps to rebuild trust from the inside out.
“We will be engaging a broad set of stakeholders to chart a course forward that demonstrates our commitment to diversity, equity and inclusion,” he said. “First, we will identify and retain an independent and outside expert to audit all of our existing processes, policies and systems related to diversity and inclusion, supplier engagement and Papa John’s culture. As part of that process, we will establish a process for communicating progress against transparent goals to everyone in our Papa John’s family.
“The entire senior management team will also be visiting key locations across the country and hold listening sessions with employees in our stores to talk about what they are seeing and give them a platform to voice their concerns. To follow up, we will initiate two-way conversations to invite ongoing feedback from employees and franchisees to ensure that their voices are heard.
“I will personally be leading this effort, because there is nothing more important for Papa John’s right now. We want to regain trust, though I know we need to earn it. We will demonstrate that a diverse and inclusive culture exists at Papa John’s through our deeds and actions.”
News of Schnatter’s resignation and the company’s subsequent action to remove him from all media led to wide swings in Papa John’s share price. After opening at $50.67 on July 11, the company’s share price slid as low as $47.80 in mid-day trading on news of his resignation. After the release of Ritchie’s letter detailing Papa John’s plans moving forward, the company’s share price rebounded to as high as $55.52 on July 13.