Demoulas CEO Facing Board Challenge

TEWKSBURY, Mass. — Demoulas Supermarkets could be on the verge of a major shakeup as infighting between descendants of the company’s founding brothers has flared up again.

A slate of directors of the company, which operates New England’s successful Market Basket chain, is seeking the ouster of chief executive officer Arthur T. Demoulas as soon as next week. Arthur T. Demoulas is the son of company co-founder Telemachus “Mike” Demoulas.

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His opponents are led by Arthur S. Demoulas, son of the company’s co-founder George Demoulas. The Demoulas cousins have battled for decades for control of the company, beginning when the family of George Demoulas accused the Mike Demoulas side of stealing shares in the company.

The latest flare-up came after a board member loyal to Arthur T. Demoulas, Rafaele Evans, switched allegiances and supported Arthur S. Demoulas, a Boston Globe report said. That group, along with three newly named independent directors, attempted to vote out Arthur T. Demoulas late last month but board members loyal to him skipped the vote, preventing a quorum. The group then filed suit, accusing Arthur T. of reckless spending. The judge in that case ordered the board to meet on Thursday.

Arthur T. Demoulas has served as CEO since 2008 and led Market Basket on a recent building spree, growing sales by 52% behind 12 new stores and 11 renovations.

A spokeswoman for Arthur T. Demoulas told SN Friday that the directors attempting to remove him would look to raise prices, slow capital expenditures and take on $1.5 billion in debt to fund payouts.

Market Basket operates 71 stores and posted sales of $4 billion and net income of $217 million in 2012.

“By every industry standard — total revenue, operating margin, sales per square foot, lowest consumer prices — Market Basket is the leader in its region, despite being a regional company competing against much larger companies in an intensely competitive industry,” the spokeswoman, Justine Griffin, told SN. “The secret to that success has been Market Basket’s philosophy, which is to take care of our customers and employees first, control our properties and have no debt. We expect that members of the board, current and newly elected, will fulfill their fiduciary duty and not allow the demand of certain shareholders for millions of dollars in distributions to come before the interests of the company’s employees, its customers and the communities we serve.”