Arthur T. rejects Market Basket board's overture - Eagle-Tribune: News

Arthur T. rejects Market Basket board's overture

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Posted: Friday, August 8, 2014 11:56 pm | Updated: 1:07 pm, Wed Dec 24, 2014.

Statement From the Independent Directors of DSM 8.8

Copy of Governor's Statement

Former Market Basket CEO Arthur T. Demoulas Friday rejected a board offer of “a path forward” intended to bring to an end a crippling work stoppage, employee protest and customer boycott because it does not satisfy his prior offer to return as chief executive of the embattled supermarket chain while a deal to sell the company is worked out.

In dueling statements late Friday afternoon, three members of the board of directors offered Demoulas and his entire former management team an assistance role in an offer that specifically refused to give him control of the company, while Demoulas responded by calling the statement “disingenuous” and accused the board of “games” and “window dressing” designed to stabilize the company while it is sold to an outside bidder.

The members, all appointed by the majority of the company shareholders who are aligned with Demoulas’ rival and cousin Arthur S. Demoulas, said they gave the offer to Arthur T.’s legal team, but had not received any response. Arthur T. said the board had rejected several of his offers, including one on Thursday.

Market Basket, a 71-store supermarket chain that brought in an estimated $4.6 billion in revenue last year, has been losing millions of dollars a day since warehouse workers and drivers walked off the job July 18, leaving store shelves empty of perishable groceries. Employees and customers led a boycott, protested constantly for three weeks and held several rallies demanding Arthur T.’s return as CEO.

Gov. Deval Patrick Friday cautiously waded into the dispute for the first time, sending a letter to the company’s entire seven-member board, which includes Arthur S., urging them “as governor and as a citizen” to resolve a standoff that “has gotten out of hand” and recently resulted in thousands of part-time employees losing all their hours. Patrick had resisted getting embroiled in the issue for weeks, insisting it is a private matter in which a governor should not meddle.

The three board members, Keith O. Cowan, Eric Gebaide and Ronald G. Weiner, said their offer included having Arthur T. “and his entire former management team, including all individuals who resigned or were dismissed, to assist the company’s return to normal business operations.”

But the board members repeated their support for the current co-chief executives hired after Arthur T.’s firing June 23, Felicia Thornton and James Gooch, and said they would not put him in charge, the key demand by striking warehouse workers, protesting employees and boycotting customers.

“That agreement would not place Mr. Demoulas in control of the company during this interim period, but would instead retain the current management,” the board members said.

Arthur T., through a spokeswoman, rejected the offer, saying the only acceptable resolution would include restoring him as president of the company.

“This is an attempt to have him stabilize the company while they consider selling it to another bidder,” the spokeswoman said. “This is far too serious a situation for these games and attempts at window dressing. It is a serious issue that deserves a serious solution. Market Basket’s associates, customers, vendors and communities deserve better than that.”

Arthur T. Sunday evening announced his own proposal to stabilize the company that reinstates him as CEO while negotiations over selling the company continue. He said Friday his offer is serious and should be accepted.

“Five weeks ago these board members voted to fire Arthur T. Demoulas and banned him from company property,” the spokeswoman said. “Since that time, the company has spiraled downward and Arthur T. has worked feverishly to purchase the company. On three separate occasions since that time, including as recently as yesterday, Arthur T. has offered in writing and otherwise to try to bring back his entire management team to work to stabilize the company. Each offer was rejected.”

Former employees loyal to Arthur T. Friday were skeptical of the board members’ offer.

“This seems like a ploy to get people excited,” said Tom Trainor, a former grocery supervisor who was among eight senior employees fired July 20 for their roles in organizing the warehouse shutdown and employee protests. “We’re not going to go back to rebuild this company so it can be sold.”

Joe Schmidt, a former operations supervisor who also was fired July 20, called it a public relations move without substance. “I think the board of directors has received an offer for Arthur T. to purchase 50 percent of the company, and I’m disappointed they’re not pursuing that,” he said.

In his letter Friday, Gov. Patrick urged the board of directors to come to an agreement and to contact his office if he or his staff could assist in solving the crisis.

“By any measure, the disruption that followed your recent change in CEO has gotten out of hand, and I am writing to urge you to find a prompt resolution,” Patrick wrote.

He reiterated his position that the governor should not take sides in leadership disputes in a privately-owned company.

“I do not express a view about who the CEO of Market Basket should be,” he wrote. “I do not believe that is the appropriate role of government or a governor, although I have been criticized by some for that view. However, I also believe that your failure to resolve this matter is not only hurting the company’s brand and business, but also many innocent and relatively powerless workers whose livelihoods depend on you.”

Employees of the chain began protesting Arthur T.’s firing July 18 with a rally at company headquarters in Tewksbury, the same day warehouse workers and drivers walked off the job. Eight senior employees were fired July 20 in response, and thousands of employees and customers have held rallies in Tewksbury and have picketed headquarters since.

As a result, many estimate the company’s sales have plummeted by 90 percent. Store managers, following a directive from Thornton to schedule according to current sales, eliminated hours for thousands of part-time employees, who make up the large majority of Market Basket’s workforce.

The current co-CEOs and the employees by turns have escalated the crisis over the last three weeks. The CEOs fired the eight executives, have threatened to replace workers not on the job and last week held a job fair to recruit new employees, while the managers have threatened a mass resignation, picketed the job fair, cut their entire part-time staff and have urged customers to boycott the stores they run as employees protest outside.

Arthur T. has offered to buy the 50.5 percent of the company Arthur S. and his family own. The board of directors has said it is considering his and other offers.

Follow Douglas Moser on Twitter @EagleEyeMoser.





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