Latest news with #DemoulasFamily
CBS News
4 days ago
- Business
- CBS News
Market Basket CEO Arthur T. Demoulas is in a new fight for control of the company. Here's what we know.
What's going on at Market Basket? CEO Arthur T. Demoulas and the board of directors are in a dispute over his role with the popular supermarket chain. Here's what we know about the new Market Basket fight so far. Demoulas, two of his children and three other Market Basket executives were suspended and put on paid leave on Wednesday, May 28. The board said the CEO is being investigated by an independent law firm "for planning a work stoppage in retaliation for requests from the board for basic collaboration and oversight." Demoulas said the investigation is "a farcical cover for a hostile takeover." He said he was "ousted from his position as President and CEO of Market Basket by his three sisters and their three appointed board members - Jay Hachigian, Steven Collins, and Michael Keyes." As of Friday morning, a spokesperson for the board said, "there are currently 0 negotiations going on between Artie T and the board." Who owns Market Basket? Arthur T. Demoulas is the CEO of Market Basket, but he owns just 28-percent of the company. His three sisters each have a 20-percent share, for a total of 60-percent. The other 12-percent of the company is in a trust for the family's grandchildren. Will there be a Market Basket strike or walkout? There's been no comment from Demoulas on this. Jay Hachigian, the chair of the Board at Market Basket said, "nothing is going to change." "There's no plan to change pricing. There's no plan to change associates. There's no plan to change ownership. The business is not for sale. There really are no plans to change anything," he said in a statement. "This is really a matter strictly between the board and the CEO." Market Basket boycott There is no boycott of Market Basket right now. Back in the summer of 2014, when Arthur T. Demoulas and his sisters were in a battle with his cousin for control of the company, there was a customer boycott. Market Basket employees walked out to defend the man they know as "Artie T." It lasted six weeks and Demoulas and his sisters won. "Under Mr. Demoulas' leadership in December of 2024, the company paid off $1.6 billion in debt that financed the purchase of the company in 2014," a Demoulas spokesperson said Wednesday. However, the board said the sisters provided most of the money that allowed Market Basket to repay the $1.6 million they were loaned in 2014. Now, Demoulas is squaring off the with board, and, he says, his sisters as well. "Hijacked this company" "This is not a family dispute. This is a matter simply between the board and the CEO," Hachigian said. "Mr. Demoulas has acted for years as if he owns the entire company and can make every decision, big and small, without discussion or accountability to anyone. He has essentially hijacked this company for himself, and when the board put its foot down, he started to make plans to boycott and harm the company. It's simple: he wants it his way or no way. And that's not the way a CEO and minority owner like Arthur can be allowed to continue to conduct himself."
CBS News
5 days ago
- Business
- CBS News
Devoted Market Basket shoppers wonder what's next after CEO Arthur T. Demoulas is suspended
Market Basket shoppers at the location in Waltham, Massachusetts said they hope the company's CEO Arthur T. Demoulas and the board of directors get things settled so the New England institution will be around for years to come. "I think last time around, it was an inside job but this time around, it's an outside job and I hope they stop it because I love this store," said shopper Doris Wald. Market Basket CEO suspended The company's board suspended Demoulas on Wednesday. The board said it is investigating "credible allegations that Mr. Demoulas began to plan a disruption of the business and operations of Market Basket with a work stoppage." Demoulas said two of his children and several other executives were also placed on leave and he called the decision "a hostile takeover." The company said this will not have an affect on customers or employees. A spokesperson for Demoulas said he is a minority owner and owns 28% of the company. The spokesperson said he was ousted from his position as president and CEO by his three sisters and their three appointed board members. Market Basket Board Chair Jay Hachigian said Demoulas' sisters are not members of the board. "Mr. Demoulas has acted for years as if he owns the entire company and can make every decision, big and small, without discussion or accountability to anyone. He has essentially hijacked this company for himself, and when the board put its foot down, he started to make plans to boycott and harm the company. It's simple: he wants it his way or no way. And that's not the way a CEO and minority owner like Arthur can be allowed to continue to conduct himself," said Hachigian in a statement. "It's a family quarrel, so they'll settle it," said shopper Ottavino Forte. "Market Basket will go on and expand even more." CEO forced out in 2014 In 2014, Arthur T. Demoulas was forced out when the Market Basket board was controlled by his cousin, Arthur S. Demoulas. The move caused a customer boycott and the non-union employees to essentially go on strike. Weeks later, a deal was reached to sell the Market Basket chain to Arthur T. Demoulas for nearly $1.6 billion. "It sounded like a lot of people supported the CEO," said shopper Tyler Walsh. Online, shoppers on social media were mixed, with some saying they'd boycott again and others saying this between Demoulas and his family. Shoppers in Waltham were ambivalent about boycotting again, more than 10 years later as another dispute had started. "It took about six weeks or more for them to settle it," said Forte. "I don't want that because then they close the store," said Wald.
Forbes
5 days ago
- Business
- Forbes
Market Basket's Governance Crisis: A Cautionary Tale
The recent upheaval in the senior management of Market Basket, a leading supermarket chain in the Northeast, serves as a stark reminder of the challenges inherent in family business succession planning. CEO Arthur T. Demoulas's has been suspended allegedly because he is planning a work stoppage and has circumventing established succession protocols to name his successors. This incident is a cautionary tale for estate planning professionals and family business owners. At the heart of the controversy is Demoulas's alleged attempt to appoint his children as successors without board approval. This situation underscores a breakdown in corporate governance, despite Market Basket's operational success, including the repayment of $1.6 billion in debt. The board's actions, perceived by Arthur T. as a "hostile takeover," reveal the ongoing tension between family interests and business needs. The Demoulas family has a long history of legal disputes stemming from inadequate succession planning. The initial conflict began with the absence of buy-sell agreements following co-founder George Demoulas's death. This oversight led to extended litigation and financial turmoil, culminating in a 1997 court ruling that restructured the company's governance. Another crisis in 2014, where Arthur T. was also removed at the instigation of his cousin, Arthur S. Demoulas, was characterized by an employee walkout and customer boycott, was only resolved when Arthur T. bought out Arthur S. and his family interest in the company in a costly family buyout, which burdened the company with the debt only recently paid off. In a broader context, selecting a CEO successor is complex, as is apparent in the recent announcement that Warren Buffett is stepping down from ahis management (but not board) position at Berkshire Hathaway. In family businesses, the process is further complicated both by family dynamics and by governance representing stockholders who are not in the management of the family business, as Arthur T.'s sisters are in this case. Family ties often dominate, with businesses favoring family members for leadership roles, especially when the current CEO is a family member. However, outside directors with significant shareholding can shift the decision towards external candidates. Cultural values also play a role; traditional family CEOs are more likely to choose a family member, influenced by family identity and the perceived strength of the dynasty. Gender preferences add another layer of complexity, with a bias toward male successors despite the presence of higher qualifications of female candidates, The result is only about 23% of single-family successors are female. The process is also shaped by a long-term signaling process where candidates express interest or withdraw based on personal motivations and interactions with the current leader. To ensure smooth transitions, effective succession planning requires formal strategies such as developing a clear succession plan, disclosing the successor's identity, and implementing training or mentorship programs. Regardless of business size, these elements are crucial. Additionally, integrating AI and algorithms into the selection process is emerging as a tool to enhance fairness and address biases, though ethical concerns about transparency remain. Advanced models are now used to evaluate successor competencies systematically, reducing ambiguity and subjectivity. While traditional factors like family ties and gender biases persist, there is a shift towards more transparent and effective practices through competency-based evaluations and technology use. These changes are paving the way for more inclusive and strategic successor selections in family-owned enterprises. As Market Basket navigates this governance crisis, it underscores the need for family businesses to balance family interests with robust corporate governance to ensure long-term stability and success.
