As she loaded her groceries into her car in the parking lot of the Market Basket in Waltham, Margarita Londono of Newton succinctly summed up the feeling that’s shared by many of the supermarket’s loyal fans amid the ongoing drama in the chain’s leadership ranks.
“I hope it gets resolved in a way that we don’t have that many changes in the stores,” Londono said. “It looks like they haven’t finished the arguments, and they still have the family dilemma of what to do and who should be running it.”
Indeed, the arguments continue.
Earlier Wednesday, the Market Basket board announced it had fired the company’s CEO, Arthur T. Demoulas.
It’s the latest episode in a nasty history within the Demoulas family that has dragged on for years, including a six-week strike in 2014 in reaction to the last time Arthur T. Demoulas was fired. He was reinstated shortly after.
The current situation stems from a leadership and succession dispute between Arthur T. and his three sisters, Frances, Caren, and Glorianne. Arthur T. was suspended from his position in May, and the company filed a lawsuit on Tuesday that accused him of “exercising his own unfettered discretion as to virtually every important decision at the Company – while ignoring and stonewalling the Market Basket Board.” The lawsuit says he plotted to unilaterally install his own children as his successors, and that he was “preparing the ground for another work stoppage.”
In a written statement, the chair of the Market Basket board, Jay K. Hachigian, said the decision to fire Demoulas this time was the result of a unanimous vote by the Market Basket board, following an unsuccessful attempt to come to terms with him through mediation.
“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,” Hachigian said.
A spokesperson for Demoulas said in a written statement that he is “deeply disappointed” that the mediation failed and describes the board’s actions as a “farcical cover up for a coup.”
“The so-called investigation was designed from the start to falsely tarnish the reputation of Mr. Demoulas and his leadership team,” the statement from spokesperson Justin Griffin says. “Mediation has now demonstrated that to be true. These three board members and the sisters who elected them have removed the senior leadership of the company and all independent board members. All of this is in clear violation of their fiduciary duty – they took a company that was operating at peak performance and recklessly threw it into turmoil and did so in a needlessly public manner and on baseless grounds fabricated from the start.”
The statement says the board fired Arthur T. in a meeting Tuesday night without providing him “any meaningful opportunity to be heard, in violation of the company bylaws.”
The dispute over leadership is a meaningful one, says Tom Kochan of the MIT Sloan School of Management, because to the people of this region, Market Basket is more than just a supermarket. The company has a long history in Massachusetts and New England, having been founded in 1917 by Arthur T.’s grandparents, Greek immigrants Athanasios “Arthur” and Efrosini Demoulas
“The reality is Market Basket is a community asset,” Kochen said. “People value it because it provides good service, good prices, good jobs. And the public is hungry for a company like that. And they demonstrated that in 2014 when the first episode occurred and everyone rallied around the employees who rallied their CEO.”
It’s unlikely we’ll see a repeat of that protest this time, though, Kochan said.
“I would be very surprised. I think it’s very hard to pull that off,” he said. “It happened once. It had all media attention, support from the community, support from politicians. I think we are in a different situation today, with all the anxiety people are experiencing at the moment in the country. And I think it would be harder to mobilize in this context than it was in 2014.”
As he left the Waltham store Wednesday, Market Basket customer Rob Anderson, a Waltham resident, said he worried the change in leadership could ultimately lead to private equity ownership of the supermarket chain.
“I’m worried that if Market Basket gets sold to private equity, it’s going to suffer the same fate as Toys ‘R’ Us, Joanne Fabrics, etc,” Anderson said, referring to companies that have now gone out of business. “We’re just going to lose something that people care about and we’re not going to be able to replace it with anything. And we’re all going to be stuck paying higher prices at Stop & Shop and Shaw’s and wherever else there is to go.”
That’s a real possibility, Kochan said.
“The Demoulas family still has ownership of the company, but they’ve added some private equity professionals to the board,” Kochan said. “And so that’s, I think, what has some people worried, that there may be a shift toward a private equity strategy that is much more short-term and much more focused on how they can pull money out of the company for the owners.”
For others shopping at the Market Basket in Waltham on Wednesday, the key issue isn’t who leads the company. It’s how much all those grocery bags add up to.
“You can tell from the people shopping, they’re still coming as long as the price is the price,” Peter Cormier of Chelsea said as he looked around at the busy parking lot. “I don’t think the shoppers will so much care about [who the CEO is]... because if the prices are what they are now, the people will keep coming.”
