Demoulas Market employees Protest FOR the CEO

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This is something you rarely hear about and I love it. A local supermarket chain – I believe the stores are only in Massachusetts and New Hampshire – owned by the Demoulas family has fired the CEO.

Employees are upset and are protesting. There is little food on the shelves in the stores with few employees working. Usually protests are to get better working conditions, more money or benefits – but this is simply being behind their leader. It is wonderful in a sense to see.

I know often times on here people are saying negative things about CEOs, big bosses, etc. and other things about businesses not caring for their employees. I always stand behind these businesses saying we have the freedom as employees or consumers to walk and/or protest if we do not like what is happening at a particular business. And here we have an example of that exactly happening and I love it.

Here is a little taste of why these employees are protesting and refuse to work:
“You have to work for this man to see,” says veteran store manager Chris Sturzo. “He is the greatest CEO in this country. I believe in him and want to work for him as long as I can. He is honorable and human.”

Indeed, many in the crowd pledged their loyalty to “Artie T” because they believe that he always put his employees and his customers first.
Store manager Stephen Distasio recounted the time he was badly hurt on the job, and Arthur T. Demoulas personally showed up at his hospital bedside, asking what his family needed in that troubled time.

“He took the time out of his busy day to come over and visit one of his employees,” marvels Distasio. “Who does that?”

“I was hired in 1974,” says Paulenka, “and I’ve never grabbed a paycheck from any place but here.”

Many like Paulenka view the company’s new leadership as corporate poachers, hired from the outside to boost the bottom line above all else.

Personally I think this works both ways – and it shows what power you can have as a consumer or employee.

http://boston.cbslocal.com/2014/07/18/market-basket-workers-to-protest-firing-of-ceo-arthur-t-demoulas/

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Type: Question • Score: 6 • Views: 2,014 • Replies: 16

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Do we know the reason for the CEO's termination?

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@Lustig Andrei,

It seems it is a combined family issues - cousin pit against cousin sort of thing.

It has been happening for a while and this one cousin has had it out for a while to get this guy ousted.

As I am not on the inside with this business don't know the specifics -- but it seems one cousin wants to increase profits (at the risk of customers and employees) while the ousted one is more customer/employee focused rather than just profits.

Those stores, I am telling you, on weekends you can't get near the place -- they are known for incredible low prices. I don't have one near me any more, but I used to live near them. The prices are very low -- but my experience - the stores appear dirty so I didn't frequent them myself. Maybe because I used to live near the really old ones. The newer ones I've heard are jammed packed and people around near love them.

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@Lustig Andrei,

This is what I found in article:"

Why was Demoulas fired?

Again, going way back here. But the board has held that Demoulas spends money unwisely—including through business deals that could be seen to be self-interested. (Monday’s rally was held at a Market Basket store that leases through a company owned by Demoulas’s brother-in-law.)

Much of the story stems from resentment between Demoulas and his similarly-named cousin Arthur S. Demoulas. The two Arthurs hate each other, partially as a result of Arthur T.’s side having stripped control of the company away from Arthur S.’s many years ago. Several years ago, after a wild run through the legal system, the courts said they agreed with that allegation and helped restore Arthur S.’s stake in the company.

Arthur S. gained control of the board of directors last year by swaying a shareholding family member to his side. The board then tried to fire Arthur T., but employee action delayed that move. The board next acted to take hundreds of millions of dollars out of cash reserves and deliver it to shareholders, to Arthur T.’s objections, before firing him on June 23.

Here is why the employees remain loyal to the CEO:
Why the loyalty?

Employees at Market Basket receive very strong benefits, including participation in a profit sharing program. The company has historically also promoted from within, and it’s very normal for upper management to have worked for the company for several decades. Employees are worried that new leadership wants to operate the company in a way that stresses profits. (Market Basket is already profitable, and does billions of dollars in revenue with its 71 stores.) This could, theoretically, threaten those employees’ livelihood. Gooch and Thornton have said they intend to keep those benefits in place.

Employees also worry new leadership aims to sell the company; Thornton’s expertise historically has been in mergers and acquisitions. They say they are fighting for the preservation of the company. Moreover, they say it’s also about Demoulas himself, whom they hold in extremely high regard.

It is indeed unusual that management and rank-and-file employees would be participating in a movement together in support of an ousted executive, which might be one reason why employees have resisted the idea of unionizing.

1 Reply

@Linkat,

in the local papers this morning --

https://fbcdn-sphotos-c-a.akamaihd.net/hphotos-ak-xpa1/t1.0-9/10363327_10152613101344445_1843693384984907860_n.jpg

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Quote:

He’s Baaaaaack: Arthur T. to Buy Market Basket

The shareholders of Market Basket have agreed to a deal that will see former CEO
Arthur T. Demoulas and his family take complete ownership of the grocery chain.

In a statement released on behalf of Arthur T. and the company, a spokesperson
confirmed the deal. The statement, in part, announced Arthur T. would return to
running the company immediately:

Effective immediately, Arthur T. Demoulas is returning to Market Basket with
day-to-day operational authority of the company.

(Read the full statement at the end of this article.)

Arthur T. and his family, who own 49.5 percent of the company, will reportedly
pay more than $1.5 billion for the 50.5 percent owned by rival family members,
including Arthur S. Demoulas. That puts the full valuation at about $3 billion,
in line with expert estimates of the company’s value prior to the summer’s events.
The Boston Globe has reported that more than $500 million of that figure will come
in the form of financing from a private equity firm.

The agreement was arrived at Wednesday after weeks of negotiations that appeared
to be nearing their end in the last several days. Arthur T. announced his and his family’s
bid to buy the chain in late July, a month after he was fired by the company’s
board of directors. The board met to approve the deal Wednesday night at 9:30 p.m.

(globe)

1 Reply

@Region Philbis,

An amazing story over all.

1 Reply

@rosborne979,

On the ride home, I was hearing people who called into the radio station who haven't been to a market basket or who live 20 minutes or more away from one saying they plan to go shopping there.

I haven't been to one in years as I haven't lived near one - probably am about 20 minutes from the closest. This may be unintentionally, one of the best free marketing opportunities ....

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@Linkat,

Also meant to add -- on the news last night, this subject has become a huge topic for business colleges -- a real life example and one of the most unique ones of how to run a business.

I heard one of the "fired"executives call into the radio show -- he said that their profits (of course before all this) were higher than the chain grocery stores charging significantly higher prices and that pay and reward their employees much less. I guess they have just that more volume and of course customer and employee loyalty.

1 Reply

His speech last night on the news was awesome.
A feel good story that wiped away the awful dreck that is network news.

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@Linkat,

Linkat wrote:

On the ride home, I was hearing people who called into the radio station who haven't been to a market basket or who live 20 minutes or more away from one saying they plan to go shopping there.

I haven't been to one in years as I haven't lived near one - probably am about 20 minutes from the closest. This may be unintentionally, one of the best free marketing opportunities ....

I thought that too. I've never considered going to any particular supermarket in preference to another except for whichever one is in the most convenient location at any given time. But I would notice Market Baskets now and might even consider trying one even if I had to go out of my way (a tiny bit) Wink

They're going to need the extra marketing boost to help them get ahead of the hole they're in now. But I think they will make out ok in the long run.

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http://www.boston.com/news/local/massachusetts/2014/08/29/grocery-list-lessons-from-the-market-basket-saga-don-anything-they-did/mQGUyHZtkWFE0CJl3Ali9M/story.html

Quote:

A Grocery List of PR Lessons from the Market Basket Saga: Don’t Do What They Did

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@Linkat,

The family, so it is reported, wants to sell the chain. However, with so many stores empty of goods and so few employees showing up for work, the chain of stores has suffered a major loss of revenue and of course it's net value has declined greatly.

I suspect that now that the major (?) issue has been settled, the family will still be trying to sell the chain.

Time will tell...

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So we have low prices, overpaying labor in comparison to the competition, in a low margin industry, and now they have to service a huge debt too? You can make up some ground on selling a lot of stuff, but this seems like a bridge too far.

Loyalty to the boss in great, but at the end of the day the numbers must work.

0 Replies

@Miller,

Quote:

The family, so it is reported, wants to sell the chain.

given company practices it probably has been making little/no money, so this is to be expected.

Quote:

However, with so many stores empty of goods and so few employees showing up for work, the chain of stores has suffered a major loss of revenue and of course it's net value has declined greatly.

that is a problem, but perhaps less of a problem then you might imagine if they make little to no profit on sales. Now it is all about driving value and brand loyalty with the PR on the CEO and employee loyalty to get the company ready for sale.Then new owners will come in and give the employees the shaft and try to get reasonable profits.

Quote:

I suspect that now that the major (?) issue has been settled, the family will still be trying to sell the chain.

private equity funds get paid when they sell, they are not buying stuff intending to hold on. This one owns 1/6 of the business, not enough to control anything, so they certainly have a signed deal in place as to how they are going to cash out.

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Quote:

Market Basket CEO Arthur T. Demoulas has no plans to raise prices or cut pay or benefits to employees, a top executive said yesterday, as workers and vendors came up with creative ways to continue the frantic push to “right the ship” and restock shelves at the supermarket chain’s 71 locations.

“He is committed to keeping the pricing structure,” Market Basket Operations Manager David K. McLean told the Herald. “He would not be hurting the customers. He would not be hurting the (employees). The stakeholders come first. The first stakeholder is that customer. And the shareholders come last.”

http://bostonherald.com/business/business_markets/2014/08/ceo_not_in_market_to_raise_prices

So long as all the bills get paid, to include the new loans.

1 Reply

@hawkeye10,

Quote:

All that real estate: Demoulas Super Markets owns numerous retail properties, debt-free, in the three states where the chain does business: Massachusetts, New Hampshire and Maine. As of last summer, this ownership included 15 of its 42 Massachusetts stores. (It’s not necessarily unique in this regard — Stop & Shop, for example, also owns a number of store properties.) These company-owned properties were crucial in allowing Arthur T. to line up bank financing for the deal and, presumably, to help bring Blackstone’s money into the picture. Of course, no one can borrow millions of dollars without strings attached. So it will be interesting to see if Arthur T. can continue the culture of the company — including the low prices and the generous profit-sharing — while he also balances the extra debt and the concerns of a major new shareholder.

http://www.bizjournals.com/boston/blog/mass_roundup/2014/08/here-are-five-key-factors-that-ensured-the.html?page=all

The strings on that almost half billion of private equity money will surely be the hardest to deal with.

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Demoulas Market employees Protest FOR the CEO

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