The board of directors of feuding US family business Market Basket have hired an executive recruitment firm in a possible move to oust second-gen chief executive Arthur T DeMoulas.
They have also agreed to distribute $250 million (€187 million) among the Massachusetts supermarket chain’s nine family shareholders – a motion likely supported by DeMoulas’s rival and cousin Arthur S DeMoulas, who wants a greater share of company profits.
DeMoulas has led the supermarket chain since 2008 and is widely liked by employees and local shoppers alike for the worker-friendly environment he has created at the company and the priority he places on low prices over fast growth and large profit margins.
Arthur S, however, has been leading a campaign to have him replaced.
Although a decision was not made to oust DeMoulas at last week’s meeting, the board voted to appoint executive search firm Spencer Stuart, sparking speculation his replacement is being sought.
The Boston Globe reported that the distribution of a $250 million dividend was a win for Arthur S, who reportedly has sought three times the $500 million dividend paid out to shareholders over the past 10 years.
In a third vote at the meeting the board decided to appoint a credit facility, indicating they plan expansion through debt – something the chain has previously avoided.
It also voted to replace two of the three trustees who oversee the company’s employee profit-sharing scheme. Established in 1963, the scheme, paid out at retirement, provides up to 20% of an employee’s annual pay.
Last year, Market Basket saw revenues of $4 billion, with profits of $217 million.
The DeMoulas Saga
The company has operated under a cloud since 1971 with the death of one of the chain's founders, George DeMoulas.
Brother's Telemachus – "Mike" – and George DeMoulas took over their parent's small grocery store in 1954 and transformed the business into a chain of 15 stores. Following George's death, Mike was left as sole head of the business.
Each brother had agreed to provide for the other's family, but in 1990 George's heirs brought a lawsuit against Mike claiming he had cheated them out of all but 8% of the company's stock by dividing the chain's assets into a web of shell corporations and arguing these companies were separate from the main Market Basket company.
In 1994 a judge finally ruled Mike DeMoulas had defrauded his brother's family out of nearly $500 million and transferred 51% of Market Basket's stock to George's family.
Mike died on 2003 at the age of 82, but his heirs are making sure the family feud is kept alive and well. Mike's son, Arthur T DeMoulas, was elected chief executive of the company in 2008.