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A look at a decade of Demoulas fighting

The Globe obtained partial transcripts of Market Basket board meetings that reveal the arguments that have been raging within the company over the years. Here are samples of their disputes. Related: Read more documents | Full coverage

June 2003
‘See, you’re already threatening me.’
In its early years, board meetings were often contentious. Arthur S. and Gerard Levins, the other appointee of his side of the family, were constantly fighting with other board members about access to information and other matters. In this exchange, they bickered about efforts to improve decorum at board meetings.
Edward H. Pendergast
Former Director
Arthur S. Demoulas
Director
Bill Shea
Former board Chairman, represents shareholders on Arthur T.’s side of the family
Gerard Levins
Director, represents shareholders on Arthur S.’s side of the family
See conversation
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Bill Shea
I think there have been times when people have been very uncomfortable with the way that the dialogue has gone on, because people have been interrupted, and people have felt that they haven’t been able to get what they wanted to say out on the table properly; and that we could do some of this stuff in a hell of a lot less time...
Arthur S.
Whatever complaints somebody has, I agree with you. Put them in writing, and spell them out A to Z. And if they have any complaints about me and my behavior, highlight them.
Bill Shea
And you have to know, because of full disclosure, that people have said that. They have a problem with your behavior, and that comes from –
Arthur S.
Well, I have a problem with your behavior. And I have a problem with Sumner Darman’s behavior, and I have a problem with [Terence] Carleton’s behavior. And you know something, I’m sitting here doing what is best for the company.
Bill Shea
I want it put on the record, and if someone complains, I want it in writing.
Arthur S.
You know something, Mr. Shea? I know what this is all about, and you know, the funny thing is we all know –
Bill Shea
What’s it all about?
Arthur S.
We always know.
Bill Shea
What’s it all about?
Arthur S.
Excuse me. Did you say, ‘Don’t interrupt’? Were you that guy that said, ‘Don’t interrupt’? Then don’t interrupt me. OK. I see right through this. You guys have your little games you play every single meeting.
Bill Shea
Then I’m going to challenge you not to interrupt other people.
Arthur S.
Oh. Well, you do that.
Bill Shea
How about that?
Arthur S.
You do that. That’s very nice of you.
Bill Shea
Huh?
Arthur S.
Yes.
Bill Shea
The first time you interrupted today –
Arthur S.
I’m so threatened by you pointing your finger at me.
Bill Shea
The first time you interrupt today –
Arthur S.
What are you going to do?
Bill Shea
You’re going to hear the same thing.
Arthur S.
Oh is that right?
Bill Shea
That’s right.
Arthur S.
Oh well –
Bill Shea
Or we’ll adjourn the meeting.
Arthur S.
See, you’re already threatening me.
Bill Shea
I’m not threatening you. You threatened me.
Arthur S.
The other thing is, don’t interrupt the meeting and you color the record all you like, Mr. Shea. Color the record.
Bill Shea
And you haven’t done that for the past four or five years?
Arthur S.
Color it in your defense. Color it in your defense.
Bill Shea
You got a comment, Gerry?
Gerard Levins
Yes I do... Mr. Demoulas asked you about 20 minutes ago what the conversation was with Mr. Darman, and it was ‘they’, ‘that.’ Now Mr. Demoulas asked you, and you said, ‘It was you Mr. Demoulas.’ Didn’t you have the guts 20 minutes ago to say that they were talking about Mr. Demoulas? Now all of a sudden you have the guts to say, ‘Oh, they’re talking about Mr. Demoulas’? You don’t need to comment. It’s on the record. You’re inconsistent time and time again, and the record speaks for itself.
Arthur S.
Well, I’ll tell you why he’s inconsistent. Because you’re a liar. That’s why you’re inconsistent.
Ed Pendergast
That was an example where there was no recognition given, and you interrupted. I think that we all should wait until we’re recognized before we say something. If we can do that, perhaps we can be a little more civil about the process, and I’d appreciate it if everybody, you and everybody else, would try to do that.
Arthur S.
Maybe we could be balanced in the process –
Bill Shea
Wait a second, Arthur.
Arthur S.
He finished. He finished. Don’t tell me to stop.
Bill Shea
Are you recognized?
Arthur S.
Don’t tell me to stop.
Bill Shea
Are you recognized by the chair?
Arthur S.
What, are you going to run this like a third-grade class?
Bill Shea
See, Arthur, this is exactly –
Arthur S.
Why don’t we get on with the meeting Mr. Shea?
Bill Shea
No.
Arthur S.
OK, all you –
Bill Shea
Gerry, you’re recognized.
Arthur S.
You know, your complaints about me –
Bill Shea
Gerry, you’re recognized.
Arthur S.
— should be in writing to my attorney.
Bill Shea
Stop it. (To the reporter). Don’t take this down.
There is a discussion off the record.
Bill Shea
We’ll recess the meeting for ten minutes.
November 2009
‘When you hired me, you hired my management style.’
The board is debating Arthur T.’s authority to give out $20 million to $40 million in employee bonuses in 2010 without the board’s approval.
Arthur T. Demoulas
Company President
Arthur S. Demoulas
Director
Gerard Levins
Director, represents shareholders on Arthur S.’s side of the family
See conversation
Collapse conversation
Arthur T.
This is running the business and treating the people the way they should be treated and running the business the way it should be run. That’s my reference to this extraordinary bonus that we anticipate, and we’ll put our Ps and Qs together and do the right thing.
Arthur S.
When do you think it’s going to be in 2010?
Arthur T.
I would say it would be third or fourth quarter.
Arthur S.
And what do you think it’s going to – what do you anticipate it to be?
Arthur T.
I don’t know yet.
Arthur S.
Do you have any clue whatsoever?
Arthur T.
It will be substantial. I would say in the $20 million to $40 million range.
Arthur S.
And so that’s above and beyond what the other one was or 20 to 40 –
Arthur T.
Which other one? Referring to the one last June, the $2.7 million one?
Arthur S.
The normal bonus.
Arthur T.
The extraordinary is above and beyond the December bonus and above and beyond the March bonus.
Arthur S.
So next third or fourth quarter, whatever bonuses they normally get –
Arthur T.
This is above and beyond that.
Arthur S.
It would be $20 to $40 million above that?
Arthur T.
That’s correct. The details aren’t ironed out yet. The timetable’s not committed yet. Is it 100 percent that were going to do it? It’s not 100 percent, but it’s on our radar screen.
Gerard Levins
Just one follow-up. When would the board find out that it’s definitive? The reason I bring it up is because last year I didn’t think it was $20 million. Now it’s $20 to $40 million. We’re contributing $40 million-plus to the profit-sharing plan this year, based on performance and everything that you mentioned earlier. And now it sounds like this has potentially doubled, and it’s going to be at your discretion and management’s discretion.
Arthur T.
That’s correct.
Gerard Levins
And so my question is: When does the board find out that its going to go forward?
Arthur T.
Probably the first meeting after it happens.
Arthur S.
After it happens?
Arthur T.
Right.
Arthur S.
Not before? You’re not going to talk about it before with the board?
Arthur T.
Are you looking for notification, or are you looking to have approval from the board?
Arthur S.
We’re looking for notification and justification and what the reasons are.
Arthur T.
Well, I just gave you the reasons; and if you’re looking for notification, we’ll consider letting the board know before it happens. If not, we’ll let you know right after it happens.
Arthur S.
Well, it’s his job to inform the board; and it’s his job to inform the board beforehand, not after it’s done. It’s extraordinary. It’s an extra $20 million or $40 million.
Arthur T.
I want to tell you, Arthur, you hired me to run the company, OK; and when you hired me, you hired my management style. And my management style, OK, is to do what’s in the best interests of Demoulas Super Markets, OK, on any topic that I believe we’re doing that’s in the best interests of Demoulas Super Markets, OK. And my management style is not to come back to this board to request and ask for permission. I’m going to do it...
Gerard Levins
I guess the reason I bring the issue up, Arthur, is I’m not saying I’m opposed to additional bonuses; but the concern of mine is July of 2008, when I proposed an additional distribution to the shareholders, there were several members of the board, in addition to yourself and Mr. Mulligan, that stated we really didn’t have the money because we had all these projects lined up and that cash is king. Even the chairman said he wouldn’t give any distribution when a distribution was voted on subsequent to that. However, we did have $46 million as a restorative payment. In the April and July meetings this year, when I proposed an additional shareholder distribution, there were several members of the board in addition to yourself who stated we need as much cash as possible because we don’t know what’s out there. And we went from, you know, 15 percent to 20 percent for the profit-sharing plan. And there was a reason why management decided not to add the additional X number of dollars last January and February. And I know the discussion took place, I believe –
Arthur T.
All right. Get to the point. Get to the point. Let me give you two points. No. 1., you completely misstate the record we told you back then that we needed the money or we didn’t have the money, OK, No.1, and No. 2, you’re mixing apples and oranges completely. We’re talking about the running of this company here and the management of this company here, OK, on a day-to-day basis, OK. And you’re talking about money in the company and the big picture potentially in this company and the growth of this company here. So you’re completely mixing apples and oranges when you’re trying to compare the fact on how we treat our people and pay our people, OK, compensate our people, and what I think is in the best interests of this company in the big picture. We have three vital pieces of this company here. No. 1 is its people. Without them this place goes down the tubes quicker than you can say hi-ho. No. 2 is our low-price offering that we have and our low-cost structure. And No. 3 is that we’ve got no debt. So you’re completely mixing apples with oranges when you’re trying to apply the 20 percent recommendation on the profit-sharing plan today to an extraordinary bonus to our people next September or October.
October 2011
‘In my religion we believe only the pope is infallible.’
A recurring dispute among the Arthur S. and Arthur T. shareholders – and the directors who represent each side – is how much cash should be distributed to shareholders and how much should be reinvested into real estate, construction of new stores, and employee bonuses. In this excerpt from an Oct. 17, 2011, meeting, the directors debate that question in detail.
At the end of the meeting, director Levins proposes to investigate how much debt the company can take on in order to make a distribution to shareholders. The board, at the time controlled by Arthur T., rejects it by a narrow margin.
Arthur T. Demoulas
Company President
Nabil El-Hage
Former independent Director
Bill Shea
Former board Chairman, represents shareholders on Arthur T.’s side of the family
Gerard Levins
Director, represents shareholders on Arthur S.’s side of the family
Ken Tuchman
Former Director
See conversation
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Bill Shea
This kind of strikes at I think where we’ve been at for a long time, and I think there are obviously differences of opinion, and I think the opinions may well be valid on as many sides as there are. No. 1, you’ve said consistently that you don’t believe there should be any dividend to shareholders, and certainly a large-sized dividend you’ve said no to pretty much categorically. The other thing that I hear, and I wonder if we’ve had enough discussion – is the number of stores and the number of opportunities and the amount of the cash flow it’s going to take over a period of time. I’d like longer rather than shorter. But you’re the management team. And if those two questions can be answered, one, which is really the opportunities now, given what I’ve heard about what you can buy real estate for – you’ve been financing some of these, some of these purchases, and I think you have a better idea on the size of the stores that you want – how much excess cash do you really have?...I think we need to hear from you and Don (Mulligan) exactly how you feel about the opportunities that are out there and how much money you’re going to burn. And then everyone at least will have a starting point.
Arthur T.
One thing, Bill. A distribution to the shareholders, I don’t want to give you the impression that I’m opposed to a distribution forever and a day. I think you know the B shareholders have never offered up for a distribution, and we certainly believe that the money in the company is where we’re going to get the best return, especially in today’s environment. I think there’s a solid argument that taking money out of the company is hurting the shareholders and not helping the shareholders. But I don’t want to give the impression that I’m not for a distribution at the proper time...We’re going on the premise that we don’t want debt. We don’t want to deal with debt, and we think for all the right reasons. That’s why we’re going to be around long-term... As far as projects, we are looking at today no less than 50 projects. There are actively being looked at no less than 50 projects. So if you look down the road 12 or 24 months, I’m not suggesting the hit rate is going to be 50 by any stretch, but pick a number – 20 percent, 10 projects, $20 million a piece, $200 million; 30 projects, 15 percent, $300 million. And I’m not talking projects that are four and five and six years out. I’m talking about projects that are made up of relocations, replacement store locations, new locations. We’re looking at new locations. We’re looking defensively in some fashion on parcels that we believe other major players are interested in to protect our turf... We need some time to play things out and see how things develop. That’s why the topic of distributions at every such meeting gets into a situation where management is looking down the road and trying to see how things develop and what the needs are, but you need to give those things a little bit of time. What I’m saying is if we end up with $600 million in cash this year, it may climb to 625 or 650, or it may drop down to 5 or 4 or 3. I can’t tell you exactly. I can tell you for certain there’s 50 projects we’re looking at. How fast they come on board, what deals are struck, how the scope of that deal is made all plays a part in what cash is available.
Gerard Levins
I haven’t heard anything about some of the items I put on the agenda as far as store openings, store construction, proposed acquisitions, expansions, other than we have 50 out there. And I’m very interested in getting an update on what’s going on out there.
Arthur T.
I think the only new one on here that you’ll see is Westford. We have a $45 million loan commitment to a developer in Westford, Mass., which is probably a good example to spend five minutes on. We have a store in Westford, Mass. The lease is coming up in four or five years. A very productive store, an undersized store, a store that’s tight on parking, and not a lot of options. There’s a development across the street that’s been in the works for the past several years with a developer, and the timing was right after some negotiation over the years to make a move there to try to get a little leverage on – it’s a solo location that we have across the street – when our lease comes due and so forth. ...We negotiated a pad lease for 99 years, for $250,000 a year, with no increases... If all goes according to plan, we’ll have a new store across the street from our present store in the fashion that we want it... So you lend $45. We put up our facility, another $15 million; and there’s a third layer of that, give another $15, $25 million in terms of rounding out our strategy to bolster our position in the Westford marketplace and protect our position...so you’ve got one location that’s a $60 to $75 million use of cash, OK, all to what is in the best interests of this company long-term and short-term.
Gerard Levins
When did this come about, this Westford idea, this transaction?
Arthur T.
When did it come about in terms of what?
Gerard Levins
Well, on Aug. 2, 2011, the board — the information said we were in the process of considering an interior remodel and possible expansion of the market. Since Aug. 2, we, you said, invested, lent $45 million?
Arthur T.
That’s correct.
Gerard Levins
Can I get all the paperwork with respect to the financing? Was it a related-party?
Arthur T.
No.
Gerard Levins
$45 million to me is a lot of money...Can I have the name of the nominee trust?
Arthur T.
We can give you the information on it, Gerry. My point is I don’t want to get derailed on the information that you’re interested in, Gerry. All that information is available. I think the point being made is the bigger picture that you’re looking at is we’ve got cash. We’ve got no debt. There’s no interest in debt. We’ve got a scope of projects that have been building over the years. I think it’s been very productive for what we’ve been doing. We’re out there. We’re making deals...The topic of discussion today has been cash. It’s been projects. It’s been use of cash. I know you want to nitpick it to death, Gerry, and do a little investigation as to what it is. We can get you all those documents. The fact of the matter is there was a deal made. It was made in the best interests of the company. And it’s to give this board a good idea of how quickly $50 or $60 or $75 million gets used.
Gerard Levins
I heard Arthur say I’m nitpicking. I asked him about a $45 million investment loan.
Arthur T.
Gerry, listen, you make the record however you want to make it. I’m not here for that baloney. I haven’t got the patience for that baloney.
Gerard Levins
Mr. Chairman, I’m not here to argue.
Arthur T.
There’s nothing to argue. You’re nitpicking like a little lady.
Gerard Levins
Don’t get defensive.
Arthur T.
I’m not defensive at all, Gerry. Time is precious. We’ve got a business to run. We’ve got bull---- to get over. That’s nothing but bull----.
Gerard Levins
$45 million is bull----? You’re telling me as a director that $45 million is bull----?
Bill Shea
Gentlemen, please. If you have a question to ask, ask it, Gerry.
Arthur T.
So anyway, that’s it. I’m all done.
Nabil El-Hage
I have a simple question. Do we have either a bylaw or practice for some sort of limits? Can management go out and sign a $100 million check without coming to the board?
Arthur T.
I think one of the biggest successes in the past ten years has been the fact that the board has done what the board should do on governance issues, making the right decisions in the right areas when it comes to naming a president, when it comes to the restorative payment, when it comes to the distribution issues, and so forth. And they have been outstanding when it comes to allowing management to run the business, OK... Now, to a restriction on how we wheel and deal out there, I do not know of any restriction that’s out there; and I do not care to have any restrictions, quite frankly.
Nabil El-Hage
You’re not Catholic, are you Arthur?
Bill Shea
No. Is anybody anymore?
Nabil El-Hage
That’s a serious question. You’re Greek, so you practice Greek Orthodox.
Arthur T.
Right.
Nabil El-Hage
That explains it. Because in my religion we believe only the pope is infallible. So I really think as a matter of prudent business practices, anybody, no matter how good you are – and you are good – wouldn’t be hurt by consulting with your board when it comes to that kind of money. That’s a lot of money.
Arthur T.
Listen, I’ll tell you right now that the way we manage and the stage we’re in in this company here, OK, we’re going to continue to manage and make deals as we see fit, that’s in the best interests of this company here. I have no interest in having a restriction put on as to what we do and how we plan and how we go about things.
Nabil El-Hage
I hear you.
Arthur T.
That’s maybe a little bit about our style. It’s been very effective. I will say this on the record. We will not bat 100 percent. We will step in a pothole once in a while. But you know something, when you look over a period of time, I can tell you our batting average will be pretty good. If you’re suggesting on this particular deal that goes back and forth over a long period of time, massaging it, looking at it strategically watching it, the right time to step out, the right time to get a commitment, I’m going to be the guy, Arthur T. Demoulas; and to come back to this board and discuss 18 different versions of this deal with 18 different people in the room, it ain’t going to happen. So you’ve got what you’ve got. You’ve got authority to do what you want to do, and you may wish to act on that authority. But when it comes to running this business, with our better business judgment, we’ll make mistakes. We will make multimillion-dollar mistakes. We are not perfect. But our batting average is going to be damn good. This board has been together for ten years, and I’ll ask any one of you on this board about our track record. We haven’t been perfect, but our track record has been pretty damn good.
Gerard Levins
My motion is that the board create an investment committee of Nabil [El-Hage], [Ken] Tuchman, and Charles Roazen to select an investment banking firm to determine how much debt this company can put on its balance sheet to do a recap and a simultaneous dividend distribution.
Nabil El-Hage
Can you put the word “prudent” in there.
Gerard Levins
Prudent, yes. A prudent recap and simultaneous dividend distribution.
Bill Shea
Is there a second to that motion?
Ken Tuchman
If there’s no second, I’ll second it.
Nabil El-Hage
I’ll second it. I did second it.
Bill Shea
I’m sorry, Nabil, you seconded it?
Nabil El-Hage
Yes. I said I will second it as long as it’s done prudently.
Bill Shea
Any discussion? All those in favor? Opposed? Nabil [El-Hage], Gerry [Levins]; Ken Tuchman were for it; and Terry [Carleton], myself, Sumner, and Chuck were against it.
Arthur T.
Anyway, are we all wrapped up?
Bill Shea
Yes.
February 2012
‘Do you sit in front of a mirror and talk?’
The board discussed related-party transactions that have continually led to allegations by Arthur S. and board members sympathetic to him that Arthur T. is improperly spending company money on outside entities owned by him and his relatives. El-Hage starts the discussion by asking how Arthur T., as CEO of Demoulas Super Markets, handles negotiations on rent with a real estate entity funded by him and his wife. The entity, called High Rock, is managed by a family friend, David Sweetser, and has been involved in the development of multiple Market Basket stores.
Arthur T. Demoulas
Company President
Nabil El-Hage
Former independent Director
Gerard Levins
Director, represents shareholders on Arthur S.’s side of the family
Don Mulligan
Treasurer
Summer Darman
Former Director, represents shareholders on Arthur T.’s side of the family
J. Terence Carleton
Director
See conversation
Collapse conversation
Nabil El-Hage
How do you begin the negotiation on rent? If you’re going to do a land lease with High Rock – his name is Sweetser?
Arthur T.
David Sweetser, yes.
Nabil El-Hage
Literally, what do you do? Do you sit in front of a mirror and talk? I’m being silly, but we know that your wife is the sole LP [of High Rock.] I understand he’s the general partner. I understand all of that. But the reality is you have a lot of influence in those cases where you’re dealing with him on setting the rent. So just as we say you need clarity, transparency, and fairness, I’m really curious how you would normally go about deciding what the fair rent is. You’re clearly on both sides of it. What do you do?
Arthur T.
I would handle Mr. Sweetser no differently than we handle any other landlord. You sit and you talk, and you get the lay of the land, and you try to make the best deal you can.
Nabil El-Hage
For?
Arthur T.
For DSM (Demoulas Super Markets]
Nabil El-Hage
For DSM?
Arthur T.
Absolutely. Now, if you want to go about it a different way, let me know.
Nabil El-Hage
It truly is an honest question. How do you do that? Do you squeeze him? Do you bluff him? Do you say, ‘I’m not interested in that price?’ How do you get the best deal for DSM, knowing that you have an economic interest on the other side?
Arthur T.
Well, we discuss it. We do the best job we can, and we come to an agreement on the rate, on the terms, and we go from there.
Nabil El-Hage
And in a case like this, what would the best deal look like? Would it be a percentage of revenues? Would it be a per-foot deal? Let’s assume you do a land lease and the company builds out the pad, builds the building.
Arthur T.
What I would do is I would work the numbers backwards. I would try to extract from Mr. Sweetser, ‘What do you have into this property?’ And try to negotiate a deal that is sensible for DSM and acceptable to him. If it’s not acceptable to him, we walk away and he goes about his business and comes to terms that are acceptable by today’s standards...
Later in the meeting, El-Hage makes a proposal.
Nabil El-Hage
I have a crazy idea for you. And it’s an idea that is borne out of a number of discussions with a whole bunch of people, but really including the chairman in particular. I think we all want the same thing. We all want to get to a point...where not every decision that this board makes ends up being second-guessed , everything ends up being litigated? So here is a thought for you to consider and for this board to consider. What if we said that related-party transactions that involve Arthur T. entitites, whether it’s Delta or Valley or NNA or anything that you own, control, Sweetser, High Rock, get to be reviewed and only get done if they’re approved by a majority of the non-B [Arthur T.-selected] directors? If you had five directors who are the A/Bs and the As review these transactions and you know we have the fiduciary duty to the company, it seems to me you’re there. We all want the transparency. We all want transactions that are fair...
Don Mulligan
I disagree with the premise because this is a seven-member board, and I don’t think five members should vote. And I think we all talked about this board being independent, and I believe everybody is independent.
Summer Darman
Nabil, I actually take insult at what you just suggested. You’re insinuating that I, because I’ve been elected by the B shareholders, cannot look at things disinterestedly and what is in the best interests of this company. And therefore, I really am insulted by this suggestion.
J. Terence Carleton
I’m not trying to point at any people. Neither A director at the time...supported Arthur T. being CEO of the company. I know you’ve asked him the question, and I don’t want to answer for him, but if he was working for me, I’d say the answer is just no because two out of the five votes were from guys that wouldn’t even vote to have him run the company. So what the hell chance do you have running off with five when you start zero to two. I think it, where you’re trying to go theory-wise, everything theoretically here works until we try to put it in a practical application, and then it blows up because of the contentiousness of the two families.
August 2012
‘There’s only one boss in this company.’
Seven months later, the board, with some new members, continued to debate whether spending limits should be placed on Arthur T. The debate also involved spending on so-called related-party transactions, where Arthur T. is spending company money on services performed through entities owned by him or other relatives. Again, tempers flared quickly.
Arthur T. Demoulas
Company President
Nabil El-Hage
Former independent Director
Keith Cowan
Independent Director
Gerard Levins
Director
J. Terence Carleton
Director
Don Mulligan
Treasurer
See conversation
Collapse conversation
Keith Cowan
I would recommend that the audit committee, if that’s the right committee, establish sort of authorization guidelines. It’s well understood in public and private companies with relative guidelines. BellSouth, we were a $70 billion market cap company. The enterprise value was closer to a hundred billion. Transactions under $75 million could be approved by the CEO and CFO; 75 to 150 went to the finance committee; over 150 went to the full board. Sprint, over 75 million goes to the full board, and we’re a $30 billion company. And that can vary. But I would suggest the audit committee at least look at that. And then a further suggestion is, unfortunately, related-party transactions, it’s a penny. There’s no materiality threshold on a related-party transaction.
Nabil El-Hage
I just want to second that concept, particularly the part that we have revisited before, which is this board has said they don’t want to have to approve any transactions except for related-party transactions. And I personally think that it’s irresponsible of any board to have no limits, with all due respect to management. And Arthur and I have disagreed on this. That’s part of our job. Now, it could be a big number. But I think to say that the CEO has unfettered authority to do a $100 million deal if it’s not a related-party transaction is not fulfilling our oversight duty as a board. So I don’t know when the board wants to deal with that, but I think that it’s important to have that understanding.
Gerard Levins
Arthur, based on the various discussions we had, isn’t that your understanding, though, that there’s no limits as far as, if you find a deal that’s not a related party, that you can move forward if it’s in the best interests of the company? Are you aware of any limits on yourself?
Arthur T.
No.
Gerard Levins
That’s my understanding.
Arthur T.
Let me just interject here. I have respect for everyone. I know what you’re trying to achieve. Maybe I should throw this into the mix to the extent you’re going to discuss it in the future. I was hired here to run this company and come to the board and tell you what we’re doing. And I presume I was hired with the capability of doing the job and driving this business and so forth. With all due respect, maybe some of this is just stylistic. Maybe some of it is just knowing what our schedules are. And maybe some of this is just being around this place for a long time. It makes zero sense to me, zero sense to me, knowing what goes into these deals. And as Mr. Shea properly suggested, deals stop and they start and they take turns and they get put on the shelf and they go on for months and sometimes years. Sometimes there’s quicker deals. Sometimes there’s not. And they take all sorts of turns. And as we suggested in the past here, that we’d bring them to the table when we thought there’s an 80 or 90 percent probability of getting done. Or we could be sitting here and talking about these partially picked deals for weeks on end, let alone hours on end. With that said, I want you to know and I want the record to be clear on how I’m running this company. I’m running this company in the best interest of this organization. I’m running this company with the philosophy, very strong philosophy, there’s only one boss on this company. There’s not two. There’s not three. There’s not five. There’s only one boss in this company. In the midst of negotiating, you’re moving left, you’re moving right. You’re making commitments. You’re swinging from the hip. You’re going from the gut, and you’re going with the best interests of the company. You’re not going to be perfect. You’ll make a mistake once in a while, which we all do. But I have a very limited appetite for having a restriction on how and what amount – I don’t care if it’s ten million or it’s a billion – on this management team here. I’ll come to this board and tell you the direction that we’re going, that we should be going, only because I think that’s where the responsibility should lie. And as far as coming back here to open up the discussion, these topics here, you talk, Mr. Shea, about wasting your time. Forget it. You want to open up the discussion that we worked six months on this deal and here it is and then come back here for seven people to critique it. Everyone puts an opinion in, and they tell you we should go back out to rework something. It’s not the way I’m going to work. I think you have to have some stock in who you’re looking at, who you’re talking to, your belief in the person, in the individual, your trust and faith, knowing nobody’s perfect. There will be mistakes. There might be $10 million mistakes. There might be $20 million mistakes. But the batting average I think you can expect should be good and will be good. So to the extent you discuss that issue, I want you to keep that in mind.
Bill Shea
Don.
Don Mulligan
We had discussed – and I thought we made some real good progress in the last couple of board meetings – on getting into the audit committee and discussing it. There was an audit committee meeting that we had in Boston where I went over the construction schedule...On what Arthur has to say on this, one of the things that’s not on the schedule is a warehouse. What’s that going to cost us? If we – we all know in this room that we need another warehouse, and we’re working towards that, what it’s going to cost us, how big. If you hamper us on making that – we can have those discussions. We’re probably going to have those discussions in the future on this. We don’t want to hear, oh, we can’t go here, we can’t go there, we can’t go there because we have limits. I’m not sure we can do that. I’m not sure –
Keith Cowan
Excuse me, I’m going to stop you.
Bill Shea
Hold on.
Keith Cowan
I’m reacting. The word hamper.
Don Mulligan
I apologize if I used the wrong word... You have to learn or understand what comes behind these numbers so that you can be flexible enough to give us some flexibility to do what Arthur thinks is right for the company.
Keith Cowan
I apologize for interrupting you. And this is a personal comment. I have negotiated, executed, closed $1.2 trillion of transactions, over a thousand transactions for public companies, with public company boards, all of which have been approved by the board with the exception of one deal, and it was a smaller deal where we had a full discussion of the board. The board actually concluded that it wasn’t the right time to go forward with it. They fully supported it. They had a legitimate issue on the timing around the deal. I have never felt that the board hampered my authority on behalf of my company to get things done. In fact, in more cases than not, I’ve actually used the board to negotiate, to give me more leverage in a transaction and negotiate better deals. And to me – and this is the first meeting – there seems to be a built-up assumption that the board is here to hinder management rather than support management. And I’m only reacting to, in part, your comment when the board is here to support management, to help you get things done, but to use their – they have to use their judgment on material transactions to approve it. Otherwise we can’t comply with the law and our obligations as fiduciaries of the company with obligations to shareholders. So there can’t be, in any company of any size, a full absolute delegation of authority on transactions. There just can’t be. So we’ve got to find the right process, the right rhythm, so that you can get done exactly what you need to get done on behalf of the company and grow your shareholder value. It doesn’t need to be hard. It really doesn’t.
J. Terence Carleton
Keith, I’m with you, and we have to work our way to it, but your first assumption is going to have holes shot all over it. If you read the transcripts from the time the board got started, and I’ll let you build your own opinion on this – you try to figure out who’s supporting management and who’s not. And I’ll just tell you, as chairman of the comp. committee for that last few years when I’ve run it, no A shareholder—excuse me – no A director has ever voted to pay a bonus to the CEO. You’ve seen the numbers, the numbers of the company. And so if that – and neither A director voted to hire the CEO. So everything you’re saying, theoretically, I’m with you. I had to work my way to where I am right now over a decade. It can happen. It just may not happen the traditional way. But to start with the thought process that a management team is fully supported by a board, there’s a lot of stuff that’s happened over time, not the least of which is the demand letters asking for the removal of the CEO. So you need to temper your enthusiasm a little bit. Theoretically, we’re 100 percent together. The unique circumstances are going to be a lot different.

Texts and reporting by Casey Ross, graphic by Chiqui Esteban/Globe Staff

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