Rather than celebrating such a milestone, the sisters and the board have been at odds with Demoulas, who was eventually put on leave by the board in May. That prompted the family strife over the future of the 90-store supermarket chain, known for its low prices and personalized service, to spill out into the public view.
Demoulas is calling the board’s supposed investigation into his activities a sham meant to hide the real reason for his firing: to appease his sisters amid years-long intrafamily disputes. His firing, he claims, was basically a done deal all along and not pursued for valid business reasons. The process, he claims, was “riddled with conflicts, trickery, deceit, and pervasive breaches of fiduciary duties.”
In particular, Demoulas says his disagreements with his sisters — Caren, Glorianne, and Frances — revolve around three main areas: public recognition for Market Basket’s success, distribution of corporate profits to the family members, and the management of a family trust. Demoulas says his sisters have never worked at Demoulas Super Markets, as the chain is formally known, at any point and are instead motivated by self-interest and helping their now-adult children.
In the years following the 2014 deal, Demoulas claims, his sisters became uncomfortable with the recognition Demoulas received as a result of that transaction and the chain’s subsequent growth. The company, which now has more than 30,000 employees, is on track to generate $8 billion in revenue this year, or more than twice its revenue 11 years ago.
Among the issues Demoulas cited: how much a development firm that worked with Market Basket and was run by two of the sisters’ husbands should be compensated by the supermarket chain as they wound down the business. Demoulas also claims that once the $1.6 billion in debt was finally paid off, the sisters wanted to increase the shareholder distributions beyond the $40 million a year, after taxes, that they had been getting. The two sides have also sparred about who would succeed Demoulas, who is 70.
Demoulas concludes: “In short, the Sisters’ actions to overtake the Board and expel Mr. Demoulas from the thriving Company were fueled by greed and envy.”
The board initially put Demoulas on leave in May ostensibly to conduct its investigation, along with several lieutenants and two of his adult children who have been working at the chain; a number of those top leaders have since been fired. Demoulas claims he has tried to be cooperative with the board, as opposed to its portrayal of him as an autocratic dictator, and had hoped to be reinstated through mediation that took place last month. That mediation, instead, culminated in his firing.
The Market Basket board responded on Wednesday with a statement saying it’s unfortunate that Demoulas has chosen to lash out with personal attacks against the three board members and his sisters, repeating “tired accusations” that “are simply not true.” The board noted that Demoulas has so far refused to allow the findings of its investigation to be made public.
The board said it has been trying unsuccessfully to persuade Demoulas to provide such basic information as forward-looking budgets, advance notice of large capital expenditures, or potential successors other than his children.
The board said it respects Demoulas’s professional accomplishments but simply could not do its job without more cooperation from him. A CEO, the board said, should not stay in charge of a company if he refuses to be accountable to the board and that it’s always been within Demoulas’s control to be accountable instead of autocratic. Market Basket has performed well in the four months since he was put on leave, with “strong year over year sales numbers,” as well as a stable workforce and leadership under interim chief executive Don Mulligan, the board said.
“Rather than cooperate and accept accountability in his role as CEO of Market Basket, Mr. Demoulas has retained a team of lawyers to hurl untrue accusations at his family and the Board,” the board said. “The accusations conjured against the Board and the majority stockholders in court papers and PR statements are outlandish and dramatic and they’re not true.”
The board said it’s committed to preserving the chain’s culture and service, and noted that a trial in Delaware is scheduled to take place in December on the board’s decision to fire Demoulas, and his counterclaims.
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.
