To submit Business Bulletin announcements, click on image.
Arthur T. Demoulas Monday lost his bid to remain at the helm of the Tewksbury-based Market Basket chain of grocery stores.
A statement from Justine Griffin, spokesperson for Demoulas, appears to acknowledge the difficulty the longtime leader would have in keeping the family business’ top job.
“Arthur T. Demoulas filed his response to the Board’s lawsuit knowing there were high hurdles given the broad latitude Delaware courts give to boards of directors. Market Basket is an incredible success by every measure. As his father before him, the late Telemachus A. Demoulas, Arthur T. has devoted his entire working life to building and growing Market Basket in a way that has brought benefit to all stakeholders—its associates, its customers, the communities that Market Basket serves and its shareholders,” she said in an email.
Delaware Chancery Court Vice Chancellor J. Travis Laster, however, ruled “Arthur had the burden at trial to prove that a majority of the current directors acted in bad faith. He failed to carry his burden. The business judgment rule protects the current directors’ decisions to suspend Arthur and his allies and subsequently to terminate Arthur.”
Laster summarized Demoulas’ approach upon becoming CEO in 2008, saying, “He proved to be an excellent operator, but an imperious leader. Arthur believes in top-down management control and sees little need for board oversight.”
The latest battle for control of Market Basket began almost a year ago when, as WHAV reported May 28, Demoulas; daughter, Madeline; son, Telemachus; and several other Market Basket executives were suspended by the board of directors, controlled by his three sisters who collectively own 60% of the grocery store chain.
At the time, the Executive Committee of the Market Basket Board of Directors said it was investigating Demoulas after receiving “credible allegations that Mr. Demoulas began to plan a disruption of the business and operations of Market Basket with a work stoppage. The executive committee believes that Mr. Demoulas and others have taken these steps as improper retaliation for the board’s directives requiring the CEO to work with the board regarding the most basic corporate oversight and to provide the board access to key employees.”
Demoulas survived another 2014 family fight when he returned as CEO six months after relatives on the company’s board changed their loyalties and fired him and two other executives. Customers and workers conducted rallies, protests and a shopper boycott that summer to have him reinstated.
Laster drew parallels between the two incidents.
“He claims he had nothing to do with the walkout or boycott, but his ability to say that results from efforts at plausible deniability. Technically, Arthur never told his top lieutenant to have any store doors locked,’ but he asked him more than once,” he wrote in the ruling.