Karcher Says Board Kept Him in Dark : Management: In answer to contentions of new Carl's Jr. chairman, founder says directors distort his actions.


Carl N. Karcher, steaming over his ouster as chairman of the Carl's Jr. chain, says that he is now required to contact corporate security before visiting his own office and that he prays his onerous personal debts won't land him in the "poorhouse."

Speaking at length for the first time since board members forced him out at Carl Karcher Enterprises, he said directors have kept him in the dark on company matters and are now distorting his actions over the past year.

The first hint of trouble, Karcher said, came in January when the company's new president ended Karcher's 50-year tradition of starting business meetings with a prayer and pledge of allegiance to the flag.

"The way I've been treated, I'm surprised that my (office) key still fits," the 76-year-old company founder said. "I've spoken to several retired chairmen in the last few weeks to see how they were treated . . . and nobody was treated the way I was."

Still silent on how he might challenge the board, Karcher described the rough-and-tumble months leading up to his ouster during a wide-ranging interview Tuesday conducted in the library of the Anaheim home where his family has lived for more than 40 years.

Karcher has made only limited comments since Sept. 1, when he issued a statement saying he would try to replace board members who disagreed with him on a controversial marketing plan for the Carl's Jr. fast-food restaurant chain.

Karcher said he was speaking out now to correct "half-truths" in a Monday article in The Times in which newly elected company Chairman Elizabeth A. Sanders described Karcher as an obstructionist who has "run roughshod" over the company.

Karcher disputed Sanders' contention that he was interfering with the board's plan to boost flagging sales and profit at the 560-unit Carl's Jr. chain. "I had been in the dark, hidden, out of the loop," Karcher said. "I didn't develop this company by being out of the loop. . . . It bothered me being left out."

Karcher described Sanders, a longtime company board member and Karcher family friend, as a "great, personable person . . . (who) did a great job at Nordstrom," where she rose to executive rank after starting out as a sales clerk at the department store chain. When asked if she is qualified to lead the company, Karcher responded: "I asked her to resign from the board. I think that answers it."

His comments were most pointed on the subject of Donald E. Doyle Jr., who became president on Jan. 5 with Karcher's blessing.

Karcher alleged that Doyle and the company's directors acted in concert to change the bylaws so that the chairman's role was eliminated. The board, he said, also granted "illegal" employment contracts to executives other than himself and gradually forced him from day-to-day operations.

Karcher described Doyle as the ringleader: "I think it (started) with Don Doyle without a doubt, and he got his senior management team behind (him). . . . I think that he sold the board on (his) philosophy."

Some of Karcher's complaints were admittedly petty: He said Doyle refused to pay for a fax machine that Karcher wanted to install at his Anaheim home. And Karcher acknowledged that dropping the prayer and pledge from meetings was "no big thing."

But Karcher said he refused to sit idly by when he learned of the "illegal employment contracts," the decision to eliminate the chairman's role and the refusal to test-market Green Burrito Mexican-style food items at Carl's Jr.

Doyle said Tuesday that "there has never been any kind of conspiracy or plot or plan to ease Carl out of the company. And nothing would have made the board or me happier than to see Carl link arms with us and move the company forward."

Doyle said the removal of the chairman's position from the list of officers was a simple typographical error that was subsequently corrected. And he said that employment contracts are common "given the uncertainty" of a company that has gone through an unsuccessful buyout attempt. Karcher wasn't considered for a contract because he never asked for one, Doyle said.

As for the fax machine for Karcher's home, that was a legitimate purchase, Doyle said. Karcher's expense voucher was returned, however, because the chairman wanted to charge other items, including California Angels season tickets, Doyle said.

"I said, 'These are personal, and you need to take care of them yourself,' " Doyle said.

Karcher's highly publicized feud with the board was sparked late last year when the board rejected his bid to buy back Carl Karcher Enterprises with financing from Freeman Spogli & Co., a Los Angeles investment firm. The deal would have allowed Karcher to exchange stock for cash that he needed to repay loans.

His personal debts "are like an elephant stepping on you," Karcher said. "They are pretty heavy. And they've got the control."

Completing the failed leveraged buyout "would have gotten me out of trouble," Karcher said. "When they turned me down, that put me back in the box. . . . I hope and pray I'm not going to the poorhouse."

Karcher's personal finances took a beating in recent months because, like many Southern Californians, he invested in real estate just as the market soured. "I made some big mistakes," Karcher said. "Everyone in (real estate) went down the tubes. I got trapped in that."

Karcher invested at least $13 million in Monnig Development Inc., an Inland Empire construction company that fell upon hard times amid charges of mismanagement. That investment, Karcher said, "cost me a fortune."

But he vehemently denied the board's oft-repeated charge that he stood to benefit financially if Karcher Enterprises agreed to the Green Burrito plan. Board members allege that Karcher would have received a $6-million loan had the proposal gone forward.

After the directors rejected the marketing agreement, Karcher said, he went public with his bid to replace the board. He maintained that disagreement about the test was one of several serious differences he had with the directors and Doyle over the company's future.

"They betrayed me, no question," Karcher said of the board members, who have been both friends and business associates for a decade or longer. "It's sad."

Despite being unseated, Karcher remains buoyant about the company's future.

While meeting with reporters on Tuesday, he continued his longstanding custom of handing out trademark cards that are redeemable for cheeseburgers at Carl's Jr. outlets. A company spokeswoman said the restaurants will continue to honor the cards, which bear the founder's signature.

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