LOUISVILLE, Ky. – It has been a little more than a month since a special committee of the board of directors of Papa John’s International Inc. approved and directed the company to terminate John H. Schnatter’s founder agreement. If the company was hoping Schnatter would go silently into the night, it was wrong.
In an Aug. 27 letter posted to his personal website, Schnatter, who is still Papa John’s largest shareholder and owns almost a third of the company, took aim at the company’s performance, saying that the source of poor performance is due to “rot at the top.”
“Bad financial decisions, insufficient management skills to correct them, a toxic senior management culture, and serious misconduct at the top levels of our leadership team have prompted some in the company to use me as an excuse to distract from those cold realities,” Schnatter said.
He expressed a passion for the company that he said carries his name “on every pizza box.”
“Papa John’s is not just an investment for me,” he said. “It’s my life, my job and my passion. I care about this company. I care about its franchisees, employees, customers and shareholders. My name is on every pizza box. I will do everything I can to make sure Papa John’s thrives, not only as a shareholder, but as someone who loves this company and the people who dedicate their lives to it.”
Schnatter voiced some of his sharpest criticism toward Steve Ritchie, CEO of Papa John’s. Schnatter claims he told the Papa John’s board in June that Ritchie needed to be let go. Saying he gave Ritchie every chance to prove himself, Schnatter in his Aug. 27 letter claimed Ritchie “is out of his depth as CEO.”
Meanwhile, in an Aug. 29 letter, the special committee of independent directors of Papa John’s board of directors defended Ritchie while offering a stern rebuke of Schnatter’s actions.
“John Schnatter is promoting his self-interest at the expense of all others in an attempt to regain control,” the special committee said. “John Schnatter is harming the company, not helping it, as evidenced by the negative impact his comments and actions have had on our business and that of our franchisees. We have tried to meet directly with John Schnatter to discuss how we can move forward in the best interest of all stakeholders. However, John Schnatter had not responded to our requests until last week when his attorney conveyed his conditions for a meeting, stating John Schnatter would agree to meet only if we cancelled the annual Operators Conference (OpCon) and allowed John Schnatter alone to reschedule it to a date, time and location of his choosing. OpCon, which is being held this week, is a critical annual meeting that brings together approximately 1,500 team members and franchisees from all around the world. John Schnatter’s demand that it be cancelled just one week in advance was unreasonable and does not support his purported concern for the future success of Papa John’s franchisees, employees and team members.”
The special committee said Schnatter has demonstrated a continued pattern of ignoring decisions of the board, including talking about the National Football League controversy related to the National Anthem and holding meetings with another restaurant company’s executives without Mr. Ritchie after being specifically told to only have the meeting with the CEO present.
“It is unfortunate that John Schnatter continues to make allegations in the public domain,” the special committee said. “The special committee has an ongoing independent outside audit and investigation to review any allegations, which we are striving to complete in the most expedient way. John Schnatter’s attacks on the company, its board and management seem to serve only his interests. As the independent directors, we will defend the company against his actions and continue to do what is right for Papa John’s and our stakeholders.”
Papa John’s share price closed at $46.54 on Aug. 29 on the Nasdaq, down 17 percent from $55.83 just prior to Schnatter’s ouster and down 39 percent from the 52-week high of $75.82 set back on Sept. 13, 2017.