By Sarah Masessa, News Correspondent
After a six-week standoff between Market Basket cousins Arthur T. and Arthur S. Demoulas that left the supermarket chain in ruins, an agreement has been reached.
Thousands of employees walked away from their jobs when CEO Arthur T. Demoulas was fired in June, insisting that they would only work underhis guidance.Since then, employees and customers have held boycotts and rallies, vendors have cut their ties with the company and sales have dropped 90 percent.
At the end of August, the board of directors in Tewksbury, Mass. agreed to sell all shares of the company to Arthur T. Demoulas. The deal gives the former CEOfull authority to manage the supermarket chain, much to the delight of employees eager to get back to work and customers ready to purchase fairly priced items from the store. Arthur T.Demoulas and his sisters already own 49.5 percent of the company, and they now plan to buy out the other 50.5 percent fromtheircousin Arthur S. Demoulas for $1.5 billion.
Transcripts from Market Basket board meetings dating as far back as 2009 showcase the rivalry between Arthur T. and Arthur S. Demoulas.According to the Boston Globe, during a November 2009 board meeting, Arthur T. Demoulas proposed to give employees up to $40 billion in bonuses, an idea that was heavily opposed by Arthur S. Demoulas.
In 2010, Arthur T. Demoulasclaimed authority to give out between$20 million and$40 million in employee bonuses without the board’s approval. When asked about it, he stated, “My management style is not to come back to this board to request and ask for permission. I’m going to do it. I think the discretion of compensation of the people in the company… should be 1,000 percent with the CEO.”
Arthur T. Demoulas’s idea of leadership, however, differed with that of several directors. In 2011 and 2012, they sought to place a cap on how much Arthur T. Demoulas could spend without first receiving approval from the supermarket’s board.
More transcripts from a 2011 board meeting reveal Arthur T. Demoulas’s authoritative stance: “I do not know of any restriction that’s out there, and I do not care to have any restriction, quite frankly.”
Though Arthur T. Demoulas was not fired until June, the board, led by Arthur S. Demoulas, had begun to consider removing him a full year earlier. Its members were concerned by what they considered to be Arthur T. Demoulas’s reckless spending of company resources. Some of these resources were not the company’s at all but rather were private transactions with members of the Demoulas family.
For more than a decade now, the Demoulas family feud has affected many people. Those most affected, however, are at the heart of the Market Basket issue: the 25,000 full-time and part-time workers who make up the chain. Many employees walked out at the news of Arthur T. Demoulas’s removal because they saw it as a dispute and a struggle to put people over profits.
Employees began to organize almost immediately. On June 24, the day after the CEO was fired, approximately 300 Market Basket workers rallied outside the store’s Chelsea location. Additionally, many managers willfully resigned, worried that their benefits would be slashed under new leadership without Arthur T. Demoulas.
For nearly a month, the situation remained fairly quiet. Then, on July 16, employees at the supermarket’s Tewksbury headquarters issued a written list of demands, including the immediate reinstatement of Arthur T. Demoulas as CEO “or else.” The board was given until 4:30 p.m. the next day to respond.
The board’s response, however, did not meet the employees’ demands: it announced it would hold a meeting. According to employees, anything other than an agreement to reinstae Arthur T. Demoulas would be interpreted as a refusal to cooperate with workers. In turn, about 2,500 protesters rallied at Market Basket headquarters the next day.
As the storm continued, political leaders began to involve themselves in the dispute. 17 Massachusetts lawmakers urged a boycott of the supermarket chain. Additionally, the attorneys general of both Massachusetts and New Hampshire informed the Market Basket board that they were well aware of the current situation and expressed concern for the employees, who had so far gone several weeks without pay.
On July 21, another rally, more than double the size of the one a few days earlier, took place. Four days later, protesters saw their largest rally yet: a gathering of anywhere between 6,000 and 15,000 people, according to estimates. Arthur T. and Arthur S. Demoulas increased the possibility of a peaceful negotiation, as Arthur T. Demoulas announced his first buyout offer.
The heart of the debate rests in employee benefits, power in the hands of executives and who should benefit most from the $4 billion the company brings in annually. The two sides disagree on whether that majority should belong to stockholding family members or the chain’s employees.
Arthur S. Demoulas believes it should all stay in the family, as family members who own stock and have been with the company the longest should be rewarded for their loyalty.
However, Arthur T. Demoulas champions the supermarket’s employees and consumers. He believes that the company as a whole would be better served by opening more stores in more areas, thus serving more consumers and employing more workers. Arthur T. Demoulas also plans to award workers larger bonuses as incentive to work harder and more efficiently.
Both sides met a number of times between Arthur T. Demoulas’s initial offer and the final resolution. In the meantime, the board demanded that employees get back to work, a demand that was met with little enthusiasm. The protesters continued to hold their ground, holding another rally at the Tewksbury headquarters on Aug. 5 with over 10,000 attendees.
Gov. Deval Patrick joined the political leaders who had commented on the situation, offering his assistance in reaching a quick and peaceful situation. The board, however, did not take advantage of his offer, and negotiations continued. A less spirited rally, this time with only a few hundred attendees, took place on Aug. 16. Two days later, several vendors announced that they had cut ties with Market Basket based on mismanagement of finances. The supermarket’s board met a few more times with a renewed ambition to resolve the issue within the week.
The resolution reached on Aug. 27 finally settled the dispute. Market Basket’s board of directors has one request for employees: get back to work, and help its stores thrive once more. A daunting task, perhaps, since the grocery chain’s shelves have been stripped bare of fresh meat and produce because of snapped ties with vendors.
The company issued a statement thanking both consumers and employees for their patience as they worked through the feud.
“Our shared goal is to return Market Basket to the supermarket that its customers have come to rely on for service, quality and best prices,” it said.
In the wake of the drama, a Facebook page entitled “Save Market Basket” was created. One user commented, “Tonight we raise a glass to Artie T. and each other as we have achieved the most improbable of upsets. Tomorrow we go to work and never, in the history of people going to work, will so many people be so happy to punch the clock.”
Photo courtesy Mark Sardella, Creative Commons
