Papa John’s International Inc. (NASDAQ: PZZA) founder John Schnatter, who was pushed out first as chief executive officer and then as board chair, claims the board ousted him unfairly. He has sued the company, likely with the aim of returning to both positions and taking complete control of the company.
In the meantime, the action is likely to tear to pieces the pizza retailer, which is already bleeding.
In an action filed in Delaware court:
Mr. Schnatter’s attorneys are seeking to inspect Company documents because of the unexplained and heavy-handed way in which the Company has treated him since the publication of a story that falsely accused him of using a racial slur.
Notably, he apologized for the incident. After using the n-word on a conference call, he released a statement in which he said he used “inappropriate and hurtful language.” For some reason, he changed his mind. Now he wants to know the context in which his board dismissed him, if it was not already obvious.
Schnatter also attacked the new CEO:
Steve Ritchie would be a great executive for another company. I just don’t think he’s the right fit for Papa John’s at this time.
Ritchie has been CEO since December. The company has been in decline for quarters. The stock’s price is down 41% in the past two years. A new CEO has not destroyed the company in seven months.
Schnatter’s decision will be a huge distraction to Papa John’s board and senior management. The negative publicity will drive away more customers. The stock price will continue to fall. Schnatter will destroy what he invented.
24/7 Wall St.
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