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Market Basket workers join feud over company CEO

New Hampshire Union Leader

July 15. 2013 9:18PM
The new 100,000-square-foot Market Basket in downtown Manchester is nearing completion. (DAVID LANE/UNION LEADER)

Market Basket employees were out in force at some of the grocery chain's New Hampshire stores over the weekend, collecting signatures for a petition in support of the incumbent CEO.

The move comes as the decades-old struggle over control of the Market Basket empire continues on Thursday, when the company's board of directors is scheduled to meet in a court-ordered session that could end the reign of Arthur T. Demoulas as CEO.

Twitter and Facebook sites linked to company employees were abuzz over the weekend, with statements of support and links to the petition on the Care2 petition site. As of Monday morning, the site had collected 34,409 signatures — well on the way to its stated goal of 35,000 by Thursday.

Supporters say they plan to present the petition at the board of directors meeting.

The face-off between family factions of the two brothers who founded the chain, based in Tewksbury, Mass., comes as the organization continues to expand in New Hampshire.

The opening of large, new stores in Nashua and Bedford in recent weeks attracted a lot of attention from the media and consumers, leaving many to wonder why the CEO would be facing a rebellion from his board of directors at a time of continued growth for the organization.

The answer goes back to a family feud that began after the death of George Demoulas in 1971 at the age of 51. He and his brother, Telemachus Demoulas, had already built the chain, known then as Demoulas Market Basket, into a multimillion dollar enterprise.

Heirs of the two brothers began a struggle for control of the company that continues to this day.

A Massachusetts Superior Court Judge ruled in the 1990s that heirs of George Demoulas had been cheated out of millions by Telemachus Demoulas and his heirs. Telemachus Demoulas died in 2003, before the lawsuit and subsequent appeals were settled.

In 2011, the descendants of George Demoulas again sued descendants of Telemachus Demoulas, including his son, Arthur T. Demoulas, company president.

At the heart of their lawsuit was a profit-sharing plan introduced by Arthur T. Demoulas that the George Demoulas faction claims has cost the company $46 million.

Turnover on the company board of directors has swayed the balance of power in favor of the George Demoulas faction, and his son, Arthur S. Demoulas, who has been trying to schedule a board meeting to vote on the ouster of his cousin as CEO.

Judge orders meeting

Board members sympathetic to Arthur T. Demoulas have been boycotting the meetings to prevent a quorum, but a Superior Court Judge, acting on appeals from the Arthur S. Demoulas faction, ordered a company meeting on July 18.

Judge Linda Giles signed an injunction on June 28 that prevents the company from entering into transactions or contracts outside of its day-to-day grocery business until the meeting takes place.

Board members supporting the leadership change have been quoted in Boston media as saying the incumbent CEO is spending recklessly without sufficient board oversight and has given lucrative contracts to companies owned by his wife and brothers-in-law.

Judging from their comments on social media and at the collection sites over the weekend, many employees see the struggle as a question of whether their profit-sharing plan will survive, or more millions will be paid in dividends to shareholders.

The employee-based Facebook page, "People of Market Basket" has more than 30,000 likes, with comments like these from long-time employee Nicky Giuliano Ruscak: "I worked for Market Basket for several years and for 30 years shopped there. They are about to chop their nose off to spite their face."

Twitter comments by customers and employees at #SaveMB and #SaveArthurT are also dominated by expressions of support for the incumbent CEO.

"Getting emotional reading employees' stories on Facebook," wrote New Hampshire resident Caitlin Joyce on #saveMB.

Cliff Favereau, who started with the company two years go in Londonderry and now works in Hudson, recalled in an interview one of his earlier experiences with Arthur T. Demoulas as a trainee at the opening of the Londonderry store.

"I did something for a customer, and he got wind of it, and came to me, shook my hand and thanked me," said Favereau, who said the CEO is routinely on hand for new openings.

"He's always there shaking hands, always there talking to people," Favereau said. He doesn't just sit behind a desk as a corporate person. He's always at a store; he's always out there. He just appreciates what we do, and it shows."

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