Market Basket CEO Arthur T. Demoulas fired by board of directors after mediation fails

By AARON PARSEGHIAN

Market Basket CEO Arthur T. Demoulas has been fired, the board of directors announced Wednesday.

The two sides went to mediation last week in Delaware to try and end the struggle for control of the Massachusetts-based supermarket chain, but failed to resolve their issues.

“Despite extensive efforts by the Board and Mr. Demoulas to come to terms, the mediation was not successful. The Market Basket Board late yesterday voted unanimously to remove Arthur T. Demoulas as President and CEO of Market Basket. The Board has filed an action in the Delaware Court of Chancery in connection with the removal,” board chair Jay Hachigian said in a statement Wednesday.

Related: Why was “Artie T.” fired? The history of the Market Basket family drama.

Arthur T. Demoulas statement

Demoulas, 70, said he was “disappointed that mediation failed,” in a statement through his spokesperson Justine Griffin.

“Over time, it became clear to us that this was not a good faith effort by the board or his sisters to reach agreement on the issues created by their abrupt actions placing Arthur T. Demoulas, his family and members of his senior management team on leave. It is now crystal clear that they had no intention of reinstating Mr. Demoulas,” Griffin said.

“Their predetermined actions are further made clear by the fact that they fired Mr. Demoulas in a 10:30 PM board meeting last night, without providing him any meaningful opportunity to be heard, in violation of the company bylaws.” 

The board’s announcement revealed the first details of last week’s closed door meetings, which were held in Delaware where Market Basket is incorporated.

“The Board met with Mr. Demoulas on Sept. 3 in a confidential mediation in Delaware before former Vice Chancellor Joseph Slights III and continued the mediation via video conference on Sept. 9. The parties agreed not to comment publicly during that time,” Hachigian said.

“We assure our valued associates and customers that, as we have demonstrated over the past several months, Market Basket will not change its operations, profit-sharing, bonuses or culture, and will continue to offer the best groceries at the lowest prices anywhere in New England-well into the future.”

Who owns Market Basket?

The board filed a complaint in court in Delaware Tuesday, asking for a declaration that Demoulas was “validly terminated.” In the filing, they said, “Mr. Demoulas contests his termination.”

According to the document, Arthur T. Demoulas owns 28.4 percent of Market Basket and his three sisters collectively own 61.3 percent. The other 10.3 percent is in a trust for the 14 children of Demoulas and his sisters.

In the document, the board called Demoulas a “dictator” and claimed he “has said, “[t]here’s only one boss in the company. There’s not two. There’s not three. There’s not five.” The board also stated “for years Mr. Demoulas has acted as if he were the sole owner of the Company and rejected any form of even the most basic oversight by the Board.” 

“That is not how the leader-the President and CEO-of an iconic company like Market Basket is supposed to or required to act,” the board added.

Demoulas, his daughter Madeline, his son Telemachus, director of operations Joseph Schmidt, grocery director Tom Gordon and a third executive were all suspended and put on paid leave back on May 28. At the time, the board said it was looking into allegations that Demoulas was planning a work stoppage. Demoulas called the probe a “farcical cover for a hostile takeover.”

Market Basket boycott

In the summer of 2014, Demoulas was forced out when the Market Basket board was controlled by his cousin. That sparked a customer boycott and non-union workers walked out to support Demoulas, who is best known as “Artie T.” That boycott lasted six weeks and Demoulas and his three sisters took control of the company, which is based in Tewksbury.

But earlier this year, the board that’s controlled by his sisters suspended Demoulas, suspecting he was planning another walkout. The board also said Demoulas had not given them key financial information or a succession plan. In July, the board fired Schmidt and Gordon, who were loyal to Demoulas. He called the move “heartless.” Last month, a judge approved a restraining order to keep Schmidt and Gordon away from any Market Basket property.

Three weeks ago, the board removed director Bill Shea, the lone board member who supported Demoulas.

The dispute has created tension in the company. A director who’s been with Market Basket for 35 years said the culture there now is full of “fear and hostility.”

“This punitive atmosphere has created a chilling effect where many now fear speaking openly.” Valerie Polito, Director of Advertising and Store Operations Supervisor, wrote in a letter to the board on July 18. The board said her letter was part of Demoulas’s “ruthless, no-holds-barred attack on Market Basket.” Four workers then came out to support Polito, saying the company was “headed for a serious struggle.”

Market Basket customers react

Market Basket customers in Waltham had a mixed reaction to the firing Wednesday.

“I’m not surprised because his behavior was totally inappropriate. It’s too bad because he was a hero. The employees were championing him. They were really going to bat for him, which is very rare in a big company. Now I’m sure there’s always two sides of the story,” shopper Robert Hargrove told WBZ-TV.

“I think if he’s really good to his employees and it seems to be thriving here, then I don’t see what the problem is,” said shopper Emily Sweeney. 

Market Basket has 90 stores in Massachusetts, Rhode Island, New Hampshire and Maine.