Investing

Good Riddance to Papa John's CEO

Douglas A. McIntyre

Published: December 22, 2017 6:25 am

Last Updated: January 12, 2020 5:12 am

For some reason Papa John’s International Inc. (NASDAQ: PZZA) founder and former CEO John Schnatter felt it important to vent his opinions about NFL player protests. That probably cost him his job.

He said he believed that the protests hurt the NFL’s ratings and image. As a major sponsor of the NFL, he said he also believed the protests and a tainted view of the NFL by the public cost Papa John’s sales. He could not produce any solid evidence that this was true. The board did not need a controversial chief executive.

CEOs who take social positions outside their company’s usually endanger sales. Former Starbucks Corp. (NASDAQ: SBUX) CEO Howard Schultz has taken positions on national elections. He took the chance he might have alienated some of his clientele. There is no solid evidence of this, for or against. However, he clearly took positions that could have hurt revenue, and therefore investors, many of who are his company employees.

CEOs often offer opinions as groups. The most well-known of these is the Business Round Table, which represents large company CEOs. The organization claims its members run companies with $7 trillion in sales and that employ 16 million people. Its leader, Jamie Dimon, chief executive of JPMorgan Chase & Co. (NYSE: JPM), also offers opinions of his own from subjects as wide as the value of bitcoin to the effect of the U.S. corporate tax rate. The Business Council recently made its own announcement about tax reform:

“Congress and the Administration have achieved critical reform that will grow the economy, raise wages for American workers and boost business investment and hiring in the United States,” said Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase & Co. and Chairman of Business Roundtable. “Business Roundtable has long advocated for corporate tax reform because it is good for all Americans.”

“The Congress and the President have delivered on significant tax reform aimed at encouraging investment in the United States, increased wages and jobs, and economic growth,” said Mark A. Weinberger, Global Chairman and CEO of EY and Chair of the Business Roundtable Tax and Fiscal Policy Committee. “It’s now up to business to innovate and invest in workers to help our economy achieve its potential. The opportunity is great.”

At least in this case, he had the backing of a number of his peers.

Do CEO positions on social matters and politics hurt their ability to draw and keep clients? Schnatter probably lost his job because his board said yes.