US grocery chain Market Basket has chosen not to re-elect second-generation chief executive Arthur T DeMoulas following a longstanding feud over the direction of the family business.
In a statement, the board, chaired by DeMoulas’s cousin and rival Arthur S Demoulas, said the 58-year-old would “not retain any management responsibilities moving forward”.
Market Basket, founded initially as a small grocery store in 1917, has annual revenues of more than $4 billion (€2.9 billion) and employs 21,000.
Alongside DeMoulas, director of operations Bill Marsden and vice president Joe Rockwell were fired at Monday’s meeting in Massachusetts.
“Our crime was our commitment to Arthur T Demoulas, the employees and the promise to customers to always honour the Market Basket commitment to high-quality and value," Marsden said. “The board’s action today was driven by greed, pure and simple.”
Arthur T Demoulas is known for supporting the employees that made his company profitable, which shareholders allege is cutting into profits.
Felicia Thornton was named chief operating officer and James Gooch was named chief administrative officer. The duo previously served as consultants to the company.
"The board believes this new management team will enable Market Basket to maximise its potential and pave the way for continued success in the future," the board's statement read.
Last year, Market Basket made $217 million (€160m) in profits from its chain of more than 70 stores. The company holds no debt.
Now that Arthur T has left the business there are concerns that Arthur S will push the company to take on debt in order to pay additional dividends to family members.
Last year, Arthurs S won a historic court judgment to distribute $300 million to shareholders that was split between nine family members.
Over the last decade these individuals have received more than $500 million in dividends, but Arthur S has reportedly sought triple that amount.
Employees are also worried that a popular profit-sharing scheme will be cut and the grocery store will become more expensive for consumers.
Market Basket opened in Lowell with a small store founded by Greek immigrants Arthur and Efrosini DeMoulas.
Their sons, George and Michael, bought the chain in 1954 and rapidly expanded it into a New England powerhouse,
Feuding among family members started shortly after the death of George DeMoulas in the 1970s.
Both brothers had agreed to provide for the other’s family in the event of their deaths. But in 1990 George’s heirs – Arthur S’s side of the family – brought a lawsuit against Mike claiming he had cheated them out of all but 8% of the company's stock by dividing the chain's assets into a web of shell corporations and arguing these companies were separate from the main Market Basket company.
In 1994 a judge finally ruled Mike DeMoulas had defrauded his brother's heirs out of nearly $500 million and transferred 51% of Market Basket's stock to George's family.
Mike died on 2003 at the age of 82 and his son, Arthur T, was elected chief executive of the company in 2008.