Market Basket board votes to distribute $250 million to owners
The board of Market Basket, split by a bitter family feud among the supermarket chain’s owners, has voted to distribute $250 million to the company’s nine shareholders, according to a person briefed on the board’s action.
The Market Basket board has been divided between one faction supporting chief executive Arthur T. Demoulas and another group of family members who want to replace the company’s leader, accusing him of financial mismanagement and other misdeeds.
The group opposing Arthur T. Demoulas has complained that Market Basket held too much cash and pushed the company to take on debt to pay out more to family members. Arthur T. Demoulas claimed his critics were trying to gain greater control of Market Basket so they could carry through with such payouts.
On Thursday, the board held the latest in a series of meetings since family critics advanced a proposal to fire Arthur T. Demoulas. Though directors have not voted to dismiss the chief executive, they approved a proposal to hire Spencer Stuart, an executive search firm, according to the person briefed on the meeting.
An attorney and a public relations firm representing members of the Market Basket board did not return calls Friday.
The Thursday board meeting was initially convened at the Harvard Club in Boston. Directors moved to a nearby law firm after a crowd of Market Basket employees gathered outside the club on Commonwealth Avenue. Employees of the company have protested efforts to oust Arthur T. Demoulas and other proposed changes.
The latest Demoulas family feud burst into public view last month when relatives of Arthur T. Demoulas filed legal papers accusing him of mismanagement and engaging in “self-dealing” transactions in which he directed tens of millions of dollars to real estate businesses owned by his wife and brothers-in-law. Arthur T. Demoulas said the deals in question were fully vetted and cleared by an outside arbiter.
Family members trying to oust Arthur T. Demoulas also accused him of running roughshod over the board, among other allegations.
Those relatives, including his first cousin, Arthur S. Demoulas, won a court order to hold a board meeting where they were to consider Arthur T.’s removal as president.
That meeting, held on July 18, featured loud protests from Market Basket employees who gathered outside to show support for Arthur T, and the board did not take up a motion to remove him.
The current board battle is just the latest conflict in a two-decade war over the Massachusetts-based supermarket chain, which last year recorded net income of $217 million on $4 billion in revenue.
In the 1990s, Arthur T.’s father, Telemachus Demoulas, lost a massive fraud lawsuit in which he was found liable for stealing the ownership shares of his brother’s family members, including Arthur S. Demoulas. At the time, Arthur T. was found to have engaged in the wrongdoing by improperly transferring company assets to business entities controlled by his side of the family.
Although his side lost the legal fight, Arthur T. has retained control of company operations because one member of Arthur S.’s side of the family voted with him in board elections.
But in early June, that relative, Rafaele Evans, switched sides and supported candidates backed by Arthur S., giving him control of the board.
That set off a quick chain of events — culminating in Arthur S. and others winning the court order to hold a special meeting to consider Arthur T’s firing and other management changes. The board’s subsequent meetings were so contentious that directors had planned a discussion on civility at this week’s gathering.Casey Ross can be reached at firstname.lastname@example.org