7/12/18: Papa John’s Chairman Resigns After His Racial Slur: Did crisis help the board?

By Eve Tahmincioglu

The fallout continued following the resignation of Papa John’s embattled chairman John Schnatter who confirmed publicly that he used a racial slur during a May conference call.

The call was with Papa John’s marketing agency Laundry Service and, according to a Forbes article, “it was designed as a role-playing exercise for Schnatter in an effort to prevent future public-relations snafus. Schnatter caused an uproar in November 2017 when he waded into the debate over national anthem protests in the NFL and partly blamed the league for slowing sales at Papa John’s.”

Unfortunately, Schnatter, who is the founder of the pizza chain, dug an even deeper hole. The article said he was asked by the agency’s staffer “how he would distance himself from racist groups online. He responded by downplaying the significance of his NFL statement. ‘Colonel Sanders called blacks n-----s,’ Schnatter said, before complaining that Sanders never faced public backlash.”

Given the ongoing nature of Schnatter’s behavior, was it something he exhibited in the boardroom? And if so, what is the board’s role in the scandal?

Corporate crisis and reputation adviser Davia B. Temin, CEO of Temin and Company Inc., weighs in:

“It is always difficult when a founder, major shareholder, CEO and board chair acts inappropriately. Who steps up to challenge him or her?

“In this particular case, the founder had already stepped down as formal operating CEO, but clearly he had not done so informally, or in practice. 

“There are so many disturbing aspects to this story.  First a chair/former CEO who feels so invulnerable — and is so cut off from the standards of the day — that he feels able to utter the worst racial slurs with impunity.

“But, second, is a ‘marketing agency’ charged with correcting his public behavior not only failed, but they [might have] went public with it. In my world, that would have been done differently — the coaching would have been very tough, but very private. It would have been done one on one, and in person. And it would have never been disclosed. 

“So everything was leaking in this model. Everyone appears to have felt empowered to act badly and to go public with everything.

“It probably took such a dire situation for the board to be able to act in this situation. Sometimes crisis acts as a sanitizer — the ultimate sanitizer.  And I think that’s what happened here.”