By Chris Morris
August 30, 2018

Papa John’s has dropped all pretense of a cordial relationship with company founder John Schnatter, blasting him in an open letter, accusing him of regularly circumventing the company’s board of directors and making unscripted comments that damaged the company’s reputation and share prices.

In an 813-word letter, the special committee of the Papa John’s board of directors refuted Schnatter’s recent allegations that he had been asked to become executive chairman and said Schnatter’s infamous comments blaming the NFL for poor pizza sales were “off script” and done in defiance of the board’s instructions.

“The Board specifically directed John Schnatter not to talk about the NFL controversy related to the National Anthem on the 2017 third quarter earnings call,” the group wrote. “In direct defiance of these instructions, John Schnatter made unscripted comments about the NFL controversy.”

The committee accused Schnatter of “promoting his self interest at the expense of all others in an attempt to regain control” of the company and said attempts to meet with the founder have been ignored until last week, when he agreed to meet only if the company would cancel an annual meeting of franchisees. (The company refused.)

Papa John’s is reacting to a letter Schnatter issued Monday in which he claimed the board is making him a scapegoat. In that note, he says the company asked him to become executive chairman in June, replacing Steve Ritchie due to the company’s poor financial performance. Schnatter also alleged the company’s human resources department “has detailed evidence of sexual misconduct, harassment and intimidation by virtually everyone in Steve’s inner circle and relating to board members as well.”

The letter from Papa John’s said “it is simply not true that the Board asked John Schnatter to become executive chairman,” but did not address the sexual misconduct accusations.

Rather, it says, the estrangement between Schnatter and Ritchie began when the company decided to implement a marketing plan that did not feature the founder. At that point, the company says, Schnatter “began to criticize the management team and undermine the new CEO’s leadership,” even going so far as to produce separate commercials that featured him.

Schnatter resigned as chairman in July, after admitting to using the n-word on a conference call. The company has worked to distance itself from the founder, even kicking him out of his office. Schnatter has since said he should not have resigned, prompting the board to consider a “poison pill” to fight off any possible takeover attempt by the founder.

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