Business
Demoulas alleges Market Basket board members improperly colluded with his sisters when they voted to fire him last month.
Ousted Market Basket CEO Arthur T. Demoulas is officially challenging his firing, calling on a Delaware court to help him get his old job back.
The grocery chain’s board likened Demoulas to a dictator when they voted to remove him as president and CEO on Sept. 9, a decision that was months of corporate turmoil and public mudslinging in the making.
But in a counterclaim filed Wednesday in Delaware, Demoulas alleges the board members improperly colluded with his sisters, who control about 61% of the company compared to Arthur T.’s 28%. He’s specifically accused the board of taking orders from his sisters, “who seek to line their own pockets,” get a leg up in intrafamily disputes, and “strike at Mr. Demoulas over petty family jealousies,” according to the filing.
Demoulas’s counterclaim comes after the board filed a complaint in Delaware — where Market Basket’s holding company is incorporated — to make his removal official. The strongly worded complaint alleged Demoulas “acknowledged no one’s authority but his own” and “had a long-standing history of exercising his own unfettered discretion as to virtually every important decision at the Company—while ignoring and stonewalling the Market Basket Board.”
Market Basket put Demoulas on paid leave back in May amid an investigation into allegations that he and his allies were planning a retaliatory work stoppage over the board’s attempts to exercise corporate oversight.
“Any insinuation that Mr. Demoulas would intentionally inflict harm on the Company defies reason and is untrue and defamatory,” Arthur T.’s lawyers shot back in Wednesday’s response. They further allege Demoulas was fired as the result of a process “riddled with conflicts, trickery, deceit, and pervasive breaches of fiduciary duties.”
Rather than use their independent judgment to evaluate Demoulas’s leadership, the board members “succumbed to the whims of the Sisters, to whom the [members] admittedly view themselves as beholden,” the filing claims.
Demoulas’s team is adamant his termination was “predetermined,” noting the Market Basket board voted to fire him and filed its Delaware complaint just minutes after an unsuccessful mediation session came to a close.
Now, Demoulas is asking the Delaware Court of Chancery to find that he was wrongfully removed from his post and order his reinstatement.
“It is unfortunate that Mr. Demoulas has chosen in his court papers to lash out at the Board with personal attacks against Directors as well as his sisters, who own the majority of the company, repeating the same old and tired accusations over and over, which are simply not true,” the Market Basket board fired back in a statement.
The board also disputed Demoulas’s claim that its members are “beholden” to anyone. Demoulas, the board alleges, has bucked attempts to hold him accountable and “thwarted any effort to identify and evaluate potential successors beyond his own children.”
“Rather than cooperate and accept accountability in his role as CEO of Market Basket, Mr. Demoulas has retained a team of lawyers to hurl untrue accusations at his family and the Board,” the statement continues. “That is his decision, and it is truly an unfortunate one. The accusations conjured against the Board and the majority stockholders in court papers and PR statements are outlandish and dramatic and they’re not true.”
A trial is scheduled for mid-December regarding Demoulas’s termination and counterclaims, according to the statement.
The board said it is “confident in its position,” adding, “We will see how the Court rules.”
Market Basket – Answer and Counterclaim
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