The board of directors at Market Basket has filed a comprehensive complaint against former CEO Arthur T. Demoulas following his termination. The 35-page document, submitted to the Chancery Court in Delaware, outlines serious allegations including bullying tactics and a consistent refusal to cooperate with the board. The case comes after a mediation session that took place last week in Delaware, where the holding company of Market Basket is registered.
The complaint, lodged by Demoulas Supermarkets Inc. and board members Steven Collins, Michael Keyes, and Chair Jay Hachigian, asserts that Arthur T. had a “long-standing history” of making key decisions autonomously while disregarding the board’s oversight responsibilities. The document states, “After joining the Board, the Plaintiff Directors decided to depart from the path of the prior Board members, who either capitulated to Mr. Demoulas’s bullying tactics or, like recently removed board member Bill Shea, willingly did his bidding.”
The complaint highlights internal conflicts, particularly the removal of Shea from the board’s chairmanship in March, which reportedly angered Arthur T. The board claims it attempted to collaborate with him for years but faced resistance. “Mr. Demoulas would have none of it,” the complaint states, detailing how he allegedly failed to provide the board with an annual budget or grant them access to senior management. The former CEO even restricted board meetings to hotel venues rather than allowing access to the Market Basket headquarters in Tewksbury, Massachusetts.
Additionally, the board contends that Arthur T. obstructed the process of succession planning. The complaint alleges he refused to engage in discussions regarding potential successors, instead proposing his own children for leadership roles without allowing the board to evaluate their qualifications. This unilateral decision-making is described as an attempt to maintain control over the company.
In response to Arthur T.’s suspension on May 28, the board claims he launched a “scorched-earth campaign” aimed at undermining their authority. The complaint accuses him of using media appearances by former employees to attack the board and incite loyalty among staff. “Mr. Demoulas has been behind numerous television and radio appearances, as well as interviews in the press,” it states, mentioning former employees Joseph Schmidt and Tom Gordon, who were dismissed for misconduct.
The board alleges that Arthur T. orchestrated a campaign to undermine their credibility, including a call for a boycott of the company published in a Boston Globe op-ed. The complaint further contends that he did not take steps to halt his supporters’ negative media narrative following his suspension.
The backdrop to these events includes a noteworthy incident in 2014 when Arthur T. was ousted, leading to significant employee walkouts and public backlash that ultimately resulted in his reinstatement following a $1.6 billion buyout of the company from his relatives. The board’s complaint indicates that efforts to professionalize governance at Market Basket began in 2019, with the intention of implementing effective oversight that had been absent in previous years.
As tensions continue to rise, the board is seeking a court declaration affirming the validity of Arthur T.’s termination. It remains unclear whether he will file a countersuit in response to these allegations, but the unfolding situation has significant implications for the future of Market Basket and its leadership structure.
