Schnatter was ousted Monday from his office at the Louisville-based company’s headquarters, only days after stepping down as chairman of Papa John’s, a move that became necessary after he admitted to using a racial slur during a conference call in May. Forbes first reported on Schnatter’s use of the N-word during a media training call with a marketing agency.
Hogan Lovells will advise the company’s board of directors, while Akin Gump has been retained as outside counsel for a special committee of independent directors that was formed Sunday.
The committee of independent directors was consummated “to evaluate and take action with respect to all of the company’s relationships and arrangements” with Schnatter, according to a press release by Papa John’s, which is the world’s third-largest pizza chain. The company has already terminated Schnatter’s role as a brand spokesman.
Hogan Lovells partners John Beckman and Joseph Connolly Jr. are leading the firm’s representation of the Papa John’s board, a spokesman said. Both are Washington, D.C.-based veterans of the public company securities bar, and Beckman serves as co-leader of Hogan Lovells’ public company advisory practice. Beckman has been a long-running legal adviser to Papa John’s on securities issues, including in May when he advised on a filing by the company related to stock incentives for employees.
The business and personal fallout from Schnatter’s comments has been swift and widespread. Among the sports teams cancelling sponsorships with Papa John’s are the Major League Baseball’s Miami Marlins and New York Yankees, as well as the National Football League’s Atlanta Falcons and Seattle Seahawks. (The NFL itself, no stranger to controversy, and Papa John’s had already parted ways earlier this year.) The University of Louisville has also dropped Papa John’s from the name of its football stadium, and the University of Kentucky is scraping Schnatter’s name off its Institute for the Study of Free Enterprise.
According to news reports, Schnatter was participating in a media training session with marketing agency Laundry Service Media LLC, whose own founder recently left that company, to help prevent future controversies following his comments last year that NFL players’ national anthem protests before games were costing Papa John’s on pizza sales.
“Colonel Sanders called blacks n—–s,” Schnatter said, according to the Forbes report, before complaining that the late Sanders had never faced a public backlash. Schnatter later apologized for the comments, saying, “Simply stated, racism has no place in our society.”
This the second major controversy involving Schnatter within the past year. In January, Schnatter officially resigned as CEO of Papa John’s as a result of his criticism of the NFL in its response to player protests during the national anthem. Schnatter blamed the protests for lost sales, which later led Papa John’s and the NFL to mutually terminate their sponsorship deal.
A committee of Papa John’s board announced Monday that it will hire a third party to conduct an external audit of the company’s diversity and inclusion initiatives, including its supplier and vendor engagements. Caroline Miller Oyler, Papa John’s chief legal officer, did not immediately return a request for comment about how such an audit would be applied to the company’s legal department or outside counsel hiring.
As for Schnatter, he’s not going quietly. Bloomberg reported Monday evening that he regretted stepping down as chairman of Papa John’s and believed that the company’s board mishandled the situation by asking him to resign before an investigation was completed.
CORRECTION, 7/17/18, 10:23 a.m. EDT: This article has been revised to include Akin Gump as counsel to Papa John’s special committee of directors.