July 27th, 2014

Rare twist: Employees loyal to ousted CEO protest and boycott

A grocery store chain, DeMoulas Market Basket, started in 1916 in Lowell, Massachusetts by two Greek immigrants is at the center of a rare remarkable demonstration of employee and customer loyalty.

The original Market Basket founders sold their store to two sons, brothers Mike and George, in 1954. When George died, a blood feud began, claiming (and a 1994 court agreeing) that Mike had cheated George and his family out of $500 million. George’s son, Arthur S. Demoulas, still became Boston’s 8th wealthiest person.

Arthur T. Demoulas, Mike’s son and the cousin of Arthur S., was named CEO in 2008 by the Market Basket Board of Directors controlled by Arthur S. (History from the Demoulas corporate website. More history from a Boston Globe video.)

The the all male board, led by Arthur S. attempted to fire Arthur T. in 2013, and eventually did fire him on June 23, 2014. Two other executives were fired and six quit.

As CEO, Arthur T. was committed to the firm’s 25,000 employees like few American CEOs. Said the Boston Globe about him:

It’s easy to see why the employees love Arthur T., who has been generous to them to a degree that drives his relatives crazy. One of the acts that drew their ire was replacing $46 million that their profit-sharing plan lost in the market during the 2008 financial meltdown. Arthur T. thought it was money the employees were entitled to. His cousins argued, not unreasonably, that investments sometimes go sour.

The Market Basket melodrama exploded outside the board room when loyal employees and customers took to the streets to protest and to gather signatures on petitions to re-instate Arthur T.

Here’s the account from WMUR-TV:

Clearly, the fight is part historical family feud. More important for those of us watching the dispute from outside the region is to see who prevails — the investor-driven Board or the workers and customers.

Corporations give lip service to customer service and commitment to their employees. A woman delivered 100,000 petitions signed by store customers calling for the re-instatement of Arthur T. to the Market Basket Board meeting in Boston. She confronted Arthur S. on his way into the meeting. He showed no interest in the customers’ feelings expressed through their representative. See the WMUR news video above. So much for listening to the “voice of the customer.”

The employee-led boycott has effectively emptied Market Basket shelves and meat and seafood counters. This economic pressure should convince the Board to reverse the setbacks for financial reasons alone.

The Board is playing hardball. It started terminating protesters. And part of its formal statement to the press included the following:

“The Board acknowledges that it has heard from many stakeholders. The negative behavior of certain current and former associates is at variance with the Company’s culture of putting the needs of the Market Basket customers first. It is now clear that it is in the interests of all members of the Market Basket community for normal business operations to resume immediately. Furthermore, the Board reaffirmed its election of Co-CEOs Felicia Thornton and James Gooch to manage the Company …”

Arthur T. Demoulas filed a bid with the Board to buy the 50.5% of the shares he and his faction of the Demoulas clan do not own. Given the history of fractured relationships between the families it is not realistic to think Arthur S. would sell to his ousted cousin. According to the Globe, the company is valued between $3-3.5 billion.

Arthur T. also issued a statement. He laments that the store shelves are bare and that workers were terminated. He implored the Board to consider his offer and rehire the terminated workers. He said the story is not about him. Instead it’s about the wonderful workers and customers who have come to rely on Market Basket.

It appears that Arthur T., beloved by workers in this era of unethical CEOs, the son of the cheating father, can claim the higher moral ground than his cousin Arthur S., whose father was the one treated so disrepectfully.

We watch the protests and hope for positive results. Investors be damned.


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This entry was posted on Sunday, July 27th, 2014 at 11:53 am and is filed under Fairness & Social Justice Denied, Tutorials About Bullying, WBI Education. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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