John Schnatter oversaw a toxic “bro culture” at Papa John’s that churned through executives and included sexually inappropriate behavior, including some from Schnatter himself that resulted in two confidential settlements, according to a report out today in Forbes.
The report also suggests that current company executives are complicit in that culture, and specifically calls out current CEO Steve Ritchie.
In a statement Thursday, the company noted that it had hired law firm Akin Gump Strauss Hauer & Feld to oversee a “cultural audit and investigation of the company.”
“As previously announced, a special committee of the board of directors, comprised solely of independent directors, has retained an outside firm to oversee an audit and investigation of the culture at the company and to make recommendations for whatever changes may be necessary,” the statement said. “We take this matter seriously. If anything is found to be wrong, we are determined to take appropriate action.”
A representative for Schnatter has not yet responded to a request for comment. But in the story, Schnatter either denies or disputes many of the claims.
The story adds to the challenges surrounding Papa John’s since news first broke that Schnatter used the N-word during a conference call with Laundry Service, the marketing agency hired to help the company’s founder avoid public relations problems.
The Forbes reporter, Noah Kirsch, interviewed 37 current and former employees for his story on Papa John’s culture.
It was during his work on that story that he learned of Schnatter’s use of the racial slur.
That report ultimately led Schnatter to step down as chairman and the company to distance itself from its founder. Schnatter has since said the comments were taken out of context and charged Laundry Service with trying to extort the company over a $6 million payment.
Laundry Service has denied those allegations, according to media reports, but the firm has yet to respond to requests for comment.
Papa John’s stock fell 5% on Thursday.
The latest Forbes report said that company culture declined after Ritchie was named chief operating officer, and later president, in 2014. The report says that six former executives questioned his qualifications for the job, outside of loyalty to Schnatter himself.
It also describes a culture that included off-color jokes during off-site meetings and profanity and inappropriate comments in front of Ritchie during meetings. The report also says that Ritchie knew of issues with other executives but did nothing about it.
According to the story, Schnatter reached two confidential settlements with women who accused him of inappropriate conduct, including a mobile phone representative in 1999 who accused him of groping her. Schnatter filed a counterclaim, and the lawsuit ended with a settlement.
The other settlement came after an incident involving a young Papa John’s marketing employee at the NCAA Final Four in Detroit after Schnatter returned to the company as CEO in 2009.
In the story, Schnatter denies or disputes the allegations.