One side of the family wants to keep running the family business. The other wants spendable wealth. Same old story? Yes, but the Demoulas saga is supersized and, seemingly, unending.
Once upon a time, two Demoulas brothers turned their parents' little store into a supermarket chain. When one brother died, the other brother carried on, treating his sibling's widow and family generously while sneaking away with most of their company stock. Result, an historic court battle. The legal shenanigans were worthy of a John Grisham novel.
Now the Demoulas family feud has been rebooted by the next generation. Arthur S. Demoulas and his side of the family seek to oust his cousin, Arthur T. Demoulas, as CEO. The board of directors, thought to be now controlled by Arthur S. (we didn't say this story was easy to follow) votes today.
Arthur T. is beloved by his employees. His defense of their profit-sharing plan seems to been what rekindled the family fight.
The protesting shareholders have been especially outraged by a profit-sharing plan that they believe has enriched rank-and-file employees at the expense of the family. Indeed, Arthur T. Demoulas proudly declares that some employees retire with well over $1 million in their profit-sharing plans.
In one telling episode, one of the funds in which the profit-sharing money is invested suffered a $46 million quarterly loss during the 2008 financial meltdown. Arthur T. Demoulas says he insisted that the company immediately make up the loss to his employees’ accounts. That enraged his cousins, who maintained that no investment comes without risk.Demoulas' Market Basket stores are thriving and highly popular. Our local branch sometimes suffers from an overflowing parking lot. For the last several days, employees have asked customers to sign a petition to the board, asking that Arthur T. be retained.
Yes, I signed.
Update: After meeting for thirteen hours, the board adjourned without taking a vote on ousting Arthur T.
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2 comments:
So, to be clear, Arthur T. is the son of Telemachus, who was responsible for the fraud. He was the one who authorized the scam to try to overturn the judgment. Not an admirable character, the guy who got your vote.
Is it possible he was so angry about losing the case that he gave the employees $46 million to keep it out of the hands of the "enemy" side of the family? Like, if I can't have it you can't either?
At first Telemachus sounded like the bad guy to me, too. But perhaps he wanted the shares not to enrich himself but to control the company and save it from the side of the family that wanted to cash out.
In the fall of 2007, the profit-sharing plan invested in preferred shares of Fannie Mae and Freddy Mac. Six months later, both madcap mortgage kids were receiving CPR. You can see why Arthur T might have felt bad about the timing.
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