Dive Brief:
- Market Basket’s board has placed CEO Arthur T. Demoulas on paid administrative leave while its executive committee investigates his recent conduct, including allegations that he was planning a work stoppage, according to a release the board issued Wednesday.
- A spokesperson for Demoulas released a statement to local media saying that the investigation by Demoulas’ three sisters and the company’s board is “a farcical cover for a hostile takeover” of the company.
- This marks the latest dramatic turn for the popular New England grocer, which faced a widely publicized revolt from shoppers in 2014 after the board ousted Demoulas. Demoulas eventually acquired the business for $1.6 billion.
Dive Insight:
Local reports indicate this investigation is the culmination of a long-running dispute between Demoulas and members of the company’s board.
According to The Boston Globe, Demoulas and Market Basket’s board have clashed over the past year over issues including corporate oversight and leadership succession. Board Chairman Jay Hachigian told WBZ News on Wednesday that conflict between the two parties “has been brewing for years.”
In its statement, the company’s executive committee said there are “credible allegations” that Demoulas planned 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,” the release stated. “Mr. Demoulas has also resisted an appropriate succession plan for Market Basket, asserting that he has the unilateral right to appoint his children to succeed him without any consideration of the view of the Board or the majority owners of Market Basket.”
The board also placed Demoulas’ son Telemachus and daughter Madeline as well as “several other Market Basket executives” on leave, Justine Griffin, a spokesperson for Demoulas, told local news station WCVB, without disclosing who the other impacted executives are. Griffin noted that the company under Demoulas’ leadership paid off the $1.6 billion in debt it used to finance the 2014 purchase of the grocery chain.
“The company is currently operating at its peak performance and the notion that this board is going to conduct an investigation is a farcical cover for a hostile takeover,” the statement read.
The news echoes Demoulas’ ouster a little over a decade ago by the grocer’s board, which set off a widespread protest among customers and workers, and eventually forced the company’s sale to the popular executive.
The board said in its release that Demoulas will continue to be paid and receive his full share of company distributions. The committee also noted that the move will not impact store operations nor employees’ job status and pay.
Market Basket operates 90 stores across Massachusetts, Rhode Island, New Hampshire and Maine. Founded over a century ago, its stores are known for their strong customer service, low prices and no-frills approach, and the company frequently scores highly in industry rankings like Dunnhumby’s Retailer Preference Index.
