The circus-like atmosphere surrounding one of the country’s most successful retailers continues. Market Basket, the high-volume, family-owned New England regional supermarket chain owned by the Demoulas family has named Donald T. Mulligan as its new interim chief executive.
The announcement, made on September 16, makes Mulligan the first non-family member to lead the 95-store Tewksbury, MA-based merchant in its 108-year-old history. It follows the termination of former CEO Arthur T. (“Artie T.”) Demoulas a week earlier.
Before his firing by the company’s board of directors, Artie T., who has been Market Basket’s chief executive since 2014, was suspended on May 29 and placed on paid administrative leave following a festering dispute with the company’s board which accused him of intentionally not divulging key information about the company and then about attempting to orchestrate a company-wide work stoppage, a claim Artie T. has described as “a farcical cover for a hostile takeover.”
Since then, already strained relations between the supermarket operator’s six-member board (three of whom are Artie T’s sisters) and Artie T. have gotten worse. The three sisters – Glorianne Demoulas Farham, Caren Demoulas Pasquale and Frances Demoulas Kettenbach – control 61.3 percent of the company’s stock. Their brother Artie T. has a 28.4 percent equity stake.
Specifically, the board said that Artie T. resisted an appropriate succession plan for Market Basket, adding that he has claimed that he has the right to name his children to succeed him, without input from the board or the majority owners of the company, the directors said.
Intra-family disputes have become the norm for a company that was founded in 1917 and whose dynamic growth came when second generation brothers Telemachus (“Mike”) and George Demoulas acquired control of the organization in the 1950s. George died in 1971, and Mike Demoulas passed away in 2003.
Since the early 1990s, the offspring of the two brothers have been at odds, with the children of George Demoulas successfully winning a multi-million judgment after they claimed they were financially mistreated when Mike Demoulas was CEO.
In 2014, Artie T. (this time with help of his three sisters) battled with his cousin Arthur S. Demoulas over control of the organization. Ultimately, Arthur S. was paid $1.6 billion to drop his lawsuit and Artie T. had been in control of Market Basket since then until his May suspension and subsequent termination earlier this month.
The state of the company during the May-September period continued to be disruptive. Included in the May suspensions were Artie T.’s two children – Madeleine and Telemachus – as well as those of two key associates aligned with Artie T. – Joseph Schmidt and Tom Gordon (who were subsequently fired). Also fired was Bill Shea, a board member allegedly tied to Artie T.
Earlier this summer, both sides agreed to try to resolve their issues through non-binding mediation. On September 3, according to Market Basket’s board of directors, a meeting was held in Delaware before former Vice Chancellor Joseph Slights III and the mediation continued via video conference on September 9. The parties agreed not to comment publicly during that time.
Then, on September 9, according to a statement from the board, “after extensive efforts by the board and Mr. Demoulas to come to terms, the mediation was not successful.” Subsequently, the Market Basket board voted unanimously to remove Arthur T. Demoulas as president and CEO of Market Basket. The board has filed an action in the Delaware Court of Chancery in connection with the removal.
In naming Mulligan as its interim CEO, Market Basket is promoting its chief financial officer who has been with the retailer since 1983, to the top post.
“Don Mulligan is the voice of consistency at Market Basket, one that our associates and customers can count on to proudly continue the same thriving culture and the ‘More For Your Dollar’ shopping experience. The board has worked closely with Mr. Mulligan and has come to appreciate his exceptional business acumen, the respect and admiration our associates have for him, and his deep understanding of the history and culture that make Market Basket so special,” said Market Basket board chair Jay K. Hachigian. “We are thrilled to have a homegrown leader of Mr. Mulligan’s caliber step into the role of interim CEO to guide Market Basket and ensure seamless leadership for our associates, customers, and communities.”
