Book Burning and Pizza Slinging | Ex-CEO Slugfests Heat-Up at B&N and Papa Johns

The Ex-CEOs of two category-leading, but poorly performing, national brands escalated their battles this week with a host of new allegations that forced onlookers to determine whether personal issues or financial performance were to blame.

On Tuesday morning, Demos Parneros, the recently ousted CEO of Barnes & Noble filed suit in the Manhattan Federal Court against Barnes & Noble, alleging breach of contract and defamation over his sudden July 3 termination without severance. Parneros accused founder Leonard Riggio, who has a 19% stake in the company, of engineering his firing after turning on him when an unnamed bookseller withdrew a takeover bid for the New York-based company in June.

In a statement, B&N’s board of directors called Parneros’ lawsuit “an attempt to extort money from the company by a CEO who was terminated for sexual harassment, bullying behavior and other violations of company policies.” The board went on to say that Riggio “upholds the highest standards of integrity and decency,” and called Parneros’ allegations about him “replete with lies and mischaracterizations.”

Parneros is seeking more than $4 million of severance, plus other compensatory and punitive damages.

Meanwhile, in Kentucky, Papa John’s dispatched founder and ex-CEO, John Schnatter, published a letter to the company’s 2,700 franchisees accusing his successor, Steve Ritchie, of sexual misconduct and intimidation. Schnatter, who continues to hold a 30% stake in the company, is trying to regain control after being ousted in January after coming under fire for criticizing the NFL’s leadership over national anthem protests by players.

“The company’s HR department has detailed evidence of sexual misconduct, harassment, and intimidation by virtually everyone in Ritchie’s inner circle, and relating to board members as well,” Schnatter’s letter said. The letter then went on to state that Ritchie “needed to go” as CEO because of the company’s financial decline.

“Once again, John Schnatter is making untrue and disparaging statements in a self-serving attempt to distract from the damaging impact his own words and actions have had on the company and our stakeholders,” the company said in a statement.

The disputes at Barnes and Noble and Papa Johns both illustrate how sexual misconduct allegations often surface during times of financial distress. Barnes & Noble has been struggling with years of falling sales and foot traffic as Amazon.com Inc and other rivals take away business before the June failed takeover bid resulted in the July ouster of Parneros. At Papa John’s, the company’s market cap has slid by 50-percent in the past year-and-a-half.

As the books are burned and pizzas slung, the courts will be left to determine whether the sexual misconduct alleged is unfounded and merely an excuse for the ouster of the leadership of these two poorly performing companies; or are serious incidents that demonstrate yet another fault of bad managers.