The Lowell Sun
Updated: 08/28/2013 07:59:21 AM EDT
The process has begun to dramatically change how the Market Basket supermarket chain operates. And it's not for the better. Two brothers launched the company decades ago as a simple grocery store in Lowell's Acre neighborhood catering to the immigrant Greek community; it has grown to 72 supermarkets in three states and a $4 billion operation. Yet soon it will be run by an outside CEO and a board of directors more concerned about a few shareholders than their employees or customers. The reshaped board, which had already made known its intention to remove Arthur T. Demoulas as CEO, took further steps last week to separate the son of co-founder Telemachus "Mike" Demoulas from a leadership role in the company. The directors did so at a board meeting that was moved at the last minute to avoid the much-publicized spectacle of loyal employees demonstrating their support for Arthur T., as they had done so successfully in July. The board voted last week to hire an executive search firm, which indicates the process to secure a new CEO will soon be under way. It also approved a one-time payment of "excess cash" to shareholders -- all members of the Demoulas family -- believed to be in the neighborhood of $250 million. That's in addition to the $500 million these family members have collected over the last 10 years. It also voted to establish a credit facility, which means Market Basket may be looking to take on debt for expansion, something it has never done. Finally, in further distancing itself from the founders' principles, it reportedly replaced two of the three trustees who oversee the company's employee profit-sharing plan, an account of more than $550 million paid out to employees upon their retirement. Too generous a perk perhaps for those not sharing in its benefits. Arthur T. retained his position on that board but will likely no longer control it on behalf of employees. So in one stroke this board has severed the chain that has made Market Basket one of the most successful retail grocery outlets in New England. Since becoming CEO in 2008, Arthur T. has been the face of the company, going from store to store, letting employees know how much he appreciated their efforts. As "Artie" learned on these stops, the appreciation was mutual. That appreciation also was shared by customers, who benefited from a company with no debt that is able to provide quality goods cheaper than any of its competitors. All one has to do is check out the parking lot of a Market Basket and a nearby rival to see which business plan works. But apparently all that is about to change. This latest chain of events reflects the ongoing feud between the families of Telemachus Demoulas and his brother and co-founder George Demoulas. George's son, Arthur S. Demoulas, has successfully maneuvered the board of directors in his favor, to the detriment of his cousin, Arthur T. Other than the satisfaction derived by giving his detested cousin the boot, we don't know why Arthur S. Demoulas would alter this proven market formula. Maybe it was to reap more money from the profits. So we say to Arthur S. Demoulas, his family and whoever the CEO is down the line: What does it profit a man if he gains control but loses the soul of this company?
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