‘Farcical cover up for a coup’: Demoulas fired by Market Basket board, who describe fired exec as ‘dictator’

The board of Market Basket voted unanimously Tuesday to remove Arthur Demoulas as president and CEO, board chair Jay Hachigian said Wednesday.

“Despite extensive efforts by the Board and Mr. Demoulas to come to terms, the mediation was not successful,” Hachigian said in a statement. “The Market Basket Board late yesterday voted unanimously to remove Arthur T. Demoulas as President and CEO of Market Basket.”

In a statement, Demoulas’ spokesperson, Justine Griffin, said the fired executive is “deeply disappointed” that mediation efforts failed.

“Over time, it became clear to us that this was not a good faith effort by the board or his sisters to reach agreement on the issues created by their abrupt actions placing Arthur T. Demoulas, his family and members of his senior management team on leave,” Griffin said. “It is now crystal clear that they had no intention of reinstating Mr. Demoulas.”

Market Basket customer expressed surprise after Demoulas’ firing was announced.

“I’m very shocked,” said Salem Market Basket shopper Sue Crowley. “The store can’t run without him. I don’t understand it, actually. I don’t understand it at all. Why ruin a good thing?”

Demoulas was placed on paid administrative leave in May amid an investigation into his conduct, alleging he planned to disrupt business operations with a work stoppage.

Last month, a judge granted Market Basket’s request for a restraining order against two fired executives accused of pressuring store employees into a work shutdown.

Joe Schmidt and Tom Gordon were ordered to stay away from the supermarket’s stores and offices.

Schmidt, the former director of operations, and Gordon, former grocery director, were initially placed on administrative leave, but last month were fired over claims of insubordination and inappropriate communications with employees.

The supermarket claimed Schmidt was caught on surveillance video breaking and entering into store headquarters in Tewksbury after hours, using the master key that the company said he has refused to return.

In the board’s complaint in connection with the removal, filed in the Delaware Court of Chancery, they allege that after the suspension of Demoulas and his allies in May, Demoulas “directly and through various proxies, has engaged in a scorched-earth campaign to disrupt Company operations, threaten and intimidate Company associates to stay loyal to him, and smear the Board and the other stockholders of the Company in the media – all in his own self-interest to return to power.”

The complaint alleges that Demoulas refused to work in cooperation with the board in order to retain consolidated control of the company under himself, including insisting on choosing his own eventual successor.

“Demoulas forced the Board to choose between accepting his autocratic control of Market Basket or terminating him in order to protect a vibrant and growing business that cannot flourish over the long-term under the leadership of a dictator,” the complaint reads.

Griffin called the board’s actions “a farcical cover up for a coup”.

“The so-called investigation was designed from the start to falsely tarnish the reputation of Mr. Demoulas and his leadership team,” Griffin said. “Mediation has now demonstrated that to be true. These three board members and the sisters who elected them have removed the senior leadership of the company and all independent board members. All of this is in clear violation of their fiduciary duty – they took a company that was operating at peak performance and recklessly threw it into turmoil and did so in a needlessly public manner and on baseless grounds fabricated from the start.”