Market Basket CEO gets reprieve
Following 12 hours of debate Thursday, Arthur T. Demoulas remained president of the Market Basket supermarket chain, despite concerns among some shareholders that he has spent money recklessly and ignored the authority of directors.
The family-owned company’s board adjourned a contentious meeting at 10 p.m. without acting on a motion for Demoulas’s removal. It was unclear whether the shareholders would continue to press for his ouster.
The board meets again on Aug. 22. For now, the stalemate ends a bitter feud over the Tewksbury-based supermarket chain, which has remained highly profitable despite near constant infighting for more than 20 years.
“I am pleased with today’s result. I hope to work constructively with the board going forward,” Demoulas said in a statement. “It is my desire to continue to look out for the best interests of our customers and employees.”
Board members arrived at the meeting at the Wyndham Hotel in Andover on Thursday to find hundreds of employees chanting loudly in support of Demoulas. Many held signs saying “Save Market Basket” and offered emotional testimonials in support of his leadership.
“He’s the most honorable man I’ve ever met — loyal to his customers and employees,” said John Sevastis, 51, a store director in Fitchburg who has worked at the company for decades. “Mr. Demoulas has provided for our family, and we will never forget it.”
But some members of the Demoulas family have argued that his intentions are anything but honorable. In court papers, they accuse him of “self-dealing” transactions in which he has directed tens of millions of dollars to real estate businesses owned by his wife and brothers-in-law. They have also accused him of mismanaging the company’s employee profit-sharing plan.
Arthur T. has countered that his opponents, including his first cousin, Arthur S. Demoulas, are motivated by a desire to gain greater control of the company so they can pay themselves hundreds of millions of dollars in distributions. He has also said the deals involving his wife and brothers-in-law were fully vetted and cleared by an outside arbiter.
Arthur S. Demoulas could not be reached after the meeting for comment.
The fight is just the latest battle in a two-decade war over management and ownership of the company.
In the 1990s, Arthur T.’s father, Telemachus Demoulas, lost a massive fraud lawsuit in which he was found liable for stealing the ownership shares of his brother’s family members, including Arthur S. Demoulas. At the time, Arthur T. was found to have engaged in the wrongdoing by improperly transferring company assets to business entities controlled by his side of the family.
Although his side lost the legal fight, Arthur T. has retained control of company operations because one member of Arthur S.’s side of the family has voted with him in board elections. But in early June, that relative, Rafaele Evans, switched sides and supported candidates backed by Arthur S., giving him control of the board.
That set off a quick chain of events, and Arthur S. won a court order requiring a board meeting to address company business and consider a motion to fire Arthur T. on Thursday.
It is unclear what happened in the meeting, which was held in a private conference room at the Wyndham. Employees and relatives of the combatants swirled around the property throughout the day, unable to glean much information about the deliberations.
The board, much like the family it represents, has gained a reputation for waging bitter fights over everything from meeting decorum to real estate transactions.
Noel Gordon was among those who had gathered outside the hotel to support Arthur T. Thursday morning. She said her husband has worked for Market Basket for 30 years, starting as a bagger and moving up to a management position in the Tewksbury headquarters.
“I don’t think you’ll find another company where the CEO cares this much about his customers and employees,” Gordon said, adding, “Every family has fights, but you don’t need to bring it down to this level.”