Arthur T. Demoulas’s personal touch can cut both ways
In the spring of 1983, 28-year-old Arthur T. Demoulas approached his fellow directors on the board of Demoulas Super Markets and said the family grocery business — now known as Market Basket — should launch a pharmacy division. The board turned him down.
But 14 years later, the Massachusetts Supreme Judicial Court upheld a lower court's ruling that the young heir had invited the rejection by providing "misleading, inaccurate, and materially incomplete" information to the board. That rejection, the high court agreed, allowed him to open his own pharmacy chain, Lee Drug, sell its nine stores to Walgreens in 1990, and keep his cousins, the children of his late Uncle George, from sharing in the business opportunity.
Arthur T., now 59, has been cast as a hero in the Market Basket drama pitting thousands of disgruntled workers against a new corporate management team controlled by his cousin, Arthur S. Demoulas, the youngest of George's four children. Yet his management style — chronicled in court documents and transcripts of board meetings — also reveals a tougher side than his public image as a perpetually generous, kind-hearted executive.
Adept as he is at recalling names, birthdays, and milestones of even low-level employees, according to Market Basket workers,he also can cite the price of corn at a competitor off the top of his head. And his sharp wit — honed at Bentley University in Waltham — can morph into a sharp tongue the instant a colleague questions his decisions.
In one 2012 exchange among board members, Arthur T. summarized his view of corporate governance in a single sentence: "There's only one boss in this company."
Arthur T., who is trying to buy control of the Market Basket chain from his cousins, declined an interview request through a spokeswoman, citing confidentiality provisions of the negotiations.
The grandson of the company founder, Arthur T. is the only son among the four children of Telemachus and Irene Demoulas. Brought up in the family business, Arthur T. is still remembered by longtime employees and customers as a young boy learning at the feet of his father.
He joined the company board in 1974, just a year out of high school, and rose to president in 2008, winning the affection and loyalty of workers who credit him with fighting tight-fisted relatives to preserve strong wages, bonuses, and a retirement plan, while keeping prices low for customers.
In one memorable gesture, Arthur T. authorized the company to make up a $46 million loss sustained by employees' profit-sharing fund during the 2008 financial meltdown.
He lives in the same Lowell neighborhood where he was raised until adolescence. In keeping with Greek tradition, he named his first son, Telemachus, after his father. He and his wife, Maureen, also have three daughters, Madeline, Irene (after Arthur T.'s mother), and Mary.
Since Arthur T.'s dismissal as president at the end of June, employees have held rallies and promoted a customer boycott of the grocery chain's 71 stores — all to demand his reinstatement. Some have resigned or gone on strike until Arthur T. is back in charge. Others have been fired for their roles in the demonstrations.
Talk to almost anyone on the picket line, and you'll hear a story about Arthur T.'s famous personal touch — how he checks on ill workers, asks about kids and spouses, and offers comfort at funerals. At one rally in Tewksbury, Middleton store manager Terry McCarthy described a call he received from Arthur T. two years ago, when a serious car accident sent his daughter to the hospital.
"Mr. D got on the phone call, very reassuring, very professional like he always is," McCarthy recalled. "He said, 'Terry, is that hospital able to handle her injury?' The next question he asked — I'll take it to my grave — he said, 'Do we need to move her?' "
Arthur T.'s use of "we" suggested a family bond, McCarthy said. Market Basket workers often describe the company as a family and liken Arthur T.'s ouster to the loss of a father.
Beyond business, Arthur T. has overseen two family foundations that in the last six years have donated a combined $29.3 million to schools, hospitals, civic groups, and other charities, according to tax filings.
Ironically, Arthur T. appears to be at his worst in interactions with relatives. The pharmacy episode is just one of several instances in which courts determined he and his father deprived the other side of the family of business prospects, and even shares of Market Basket.
In 1954, Telemachus and George bought the grocery business started by their father and were equal partners until George's unexpected death from a heart attack in 1971. In the ensuing years, courts have ruled, Telemachus systematically transferred many of George's shares to his side of the family. The majority stake enjoyed today by Arthur S. and his siblings is the result of a $500 million judgment awarded to George's children as repayment for bad-faith dealings.
That followed a protracted, bitter legal battle in the 1990s. In one ugly scene during a civil trial in 1994, Arthur T. threw a punch at Arthur S. Later two lawyers who represented Arthur T. were disbarred.
In an attempt to remove Middlesex Superior Court Judge Maria Lopez from a case, Gary C. Crossen and Kevin P. Curry set up a sham job interview with one of Lopez's former clerks. They hoped the clerk would expose bias by the judge and secretly taped the conversation, a violation of Massachusetts law.
Instead of severing ties, Arthur T. has kept Crossen on in an advisory role, according to people briefed on his current bid to buy out his cousins. The two sides have said they hope to reach an agreement by the end of the week.
Relations within the Demoulas clan were not always so tense. As a boy Arthur T. enjoyed a brotherly relationship with his cousin Evan, George's second child, who is the same age. Arthur S. is three years younger.
George Koumantzelis, who grew up in Lowell near Arthur T.'s childhood home, remembers the cousins gathering to play sports and trick-or-treating together on Halloween.
Arthur T. and Evan shared a love of football and in high school were two of the top running backs in the Merrimack Valley League — Artie, as he was called, taking handoffs for Andover High and Evan for Dracut High.
Artie's team got the best of Evan's when they met in the fall of 1972, during their senior years. Arthur T. scored the final touchdown for Andover in a 33-6 victory, part of an 8-1 season that was the best in school history at the time.
Fifteen years later, it was Evan who first grew suspicious that he'd been beaten again — this time on an uneven playing field. A routine tax audit alerted him and his siblings that Telemachus, as executor of George's estate, had sold much of George's stake in the grocery business to his own side of the family, instead of passing down shares to his brother's children.
By 1987, the Telemachus branch of the Demoulas family controlled 92 percent of the company.
Evan died in a car crash in 1993 at age 38. He had hoped his bond with Arthur T. could help the family divide shares and profits, without a long legal fight, said Carol Cohen, who was co-lead counsel for George's side. But by the time lawsuits began in 1990, family ties were too frayed.
"Money changes people," said Koumantzelis. "I'm not privy to the details, but it breaks my heart."