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Consultant resigns $170k seat on Market Basket board

New Hampshire Union Leader

October 03. 2013 8:32PM

A former Harvard Business School professor has resigned his seat as an independent Market Basket director, further aggravating employee concerns about the direction of the company and its profit-sharing plan.

International business consultant Nabil El-Hage, who also served as a trustee of the company's profit-sharing plan and chairman of the governance committee, wrote in a letter to the board chairman that his Market Basket board seat had become too onerous.

El-Hage was one of three members on the board of seven not directly affiliated with the Demoulas family. His resignation, submitted on Tuesday, comes amid a series of controversial votes by the divided board, including paying a $300 million dividend to shareholders, hiring an executive search firm and opening a line of credit for the previously debt-free corporation.

Employees have rallied to support popular CEO Arthur T. Demoulas amid speculation that the newly constituted board intends to replace him, along with other top executives.

"It is very concerning that in the midst of crises the chairman of the governance committee and a key independent board member resigns," wrote Bill Shea, a board member and former chairman who has supported Arthur T. Demoulas in his struggle with cousin Arthur S. Demoulas over control of the successful grocery store chain.

"It demonstrates that the new board needs to reconsider its methods and the path that it's been on," wrote Shea in an email released Thursday.

In a separate email, El-Hage wrote that the decision to resign the $170,000 a year board position was entirely his own.

"Given recent events, serving on the board of Market Basket had evolved into a very difficult and time-consuming assignment," he wrote. "With 28 board and committee meetings over the past two-and-one-half months, the position had grown to require far more time than I had available to devote to it."

Attorneys representing the new board majority did not respond to emails or phone calls seeking comment.

Employees to rally

By Thursday morning, news of the resignation had spread among the community of 22,000 employees, many of whom are using social media to organize a "More for Your Dollar Rally" for customers and employees on Sunday at the site of a new Market Basket in Waltham, Mass., at 1265 Main St. Construction at the site has been held up due to delays in paying contractors.

A lawyer representing the development firm at the site recently told the Boston Globe that the Market Basket board stripped Arthur T. Demoulas of the power to make day-to-day business decisions and is holding up construction in Waltham.

According to Susan Miller, a clerk at a Nashua-area Market Basket, part of El-Hage's frustration may have come from a flood of employee contacts seeking information or distributions from the employee profit-sharing plan.

"Some of us part-timers are having great difficulty in finding out what is going on with our profit sharing," she said. "I, for one, have submitted a form for a partial distribution since I have had my hours reduced, and can't seem to get an answer. I have been a Market Basket employee for 17 years, never missed a day, never called out sick, went to work one time with a broken hand and worked my butt off every time I was scheduled to do so."

El-Hage works with The Consultant Group, an international business consulting firm, and is described on the group's website as, "an expert in corporate governance, corporate finance, and valuation, with more than 20 years of professional experience in executive management positions, focusing in the areas of private equity, equity financing, restructuring and venture capital."

In a posting on the Facebook page, Save Market Basket, employee Susann Gouin DesAutels wrote, "Mr. El-Hage is perhaps too busy for the MB board as he stated, but mostly (I'm thinking) this illustrious Harvard professor and businessman wants to distance himself from this mess and hopefully continue to be known and respected for his business sense."

Arthur T. Demoulas had enjoyed majority support on the seven-member board until a key family member switched her votes in June and turned the majority over to the Arthur S. faction. Hundreds of employees turned out at the first meeting of the new board in July to show their support for the incumbent CEO at a time when the grocery store chain has been enjoying great success in the marketplace.

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