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Tuesday, June 24, 2014

Future of employee profit-sharing is a major question in Market Basket shake-up

Market Basket stores opened Tuesday following the news that the company’s well-liked president, Arthur T. Demoulas, had been fired in the latest saga of a family feud, with employees and customers alike uncertain about what happens next.

For employees, a major concern is the generous profit-sharing retirement plan. It available to anybody, management or line staff, part-time or full-time, as long as they work 1,000 hours in a given year – the equivalent of 50 weeks at 20 hours each or six months of full-time hours. ...

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Market Basket stores opened Tuesday following the news that the company’s well-liked president, Arthur T. Demoulas, had been fired in the latest saga of a family feud, with employees and customers alike uncertain about what happens next.

For employees, a major concern is the generous profit-sharing retirement plan. It available to anybody, management or line staff, part-time or full-time, as long as they work 1,000 hours in a given year – the equivalent of 50 weeks at 20 hours each or six months of full-time hours.

Under the plan, a percentage of the company profits are put into an account and begin to accrue, available at retirement age. The amounts differ widely, but it’s not uncommon for a mid-level employee like a produce manager to be get a payment of $10,000 or more each year.

Arthur T., as he is widely known to differentiate him from cousin Arthur S. Demoulas, has been a strong supporter of the profit-sharing, which was started by his father, has been in effect for more than 35 years.

The future of the profit-sharing plan was a central factor in a court fight over $300 million that Arthur T. lost in Massachusetts court last year, when a judge ruled that Arthur S. and his allies could distribute the money to a few board members.

“It’s a great plan,” said one employee at the Milford store, who asked not to be named. “Mothers can work part-time at night, and still get it.”

The plan is an important factor in employee morale, the worker said.

Calls to Demoulas corporate headquarters were not answered Tuesday. “No one is available to talk about it,” said a woman who answered a call.

On Monday the board of directors, controlled by Arthur S. Demoulas and allies, issued a terse statement saying that Arthur T. “was not re-elected president and will not retain any management responsibilities moving forward.” Two officials long associated with Arthur T. also were removed: Vice President Joseph Rockwell and Director of Operations William F. Marsden.

In Nashua on Tuesday morning, at the big, relatively new Amherst Street store, Leo Lambert of Nashua was asked his opinion of the news while loading his car with groceries.

“I really couldn’t believe it,” he said. “I know how the employees loved the guy.”

Lambert said he worked for Bellavance Beverage for 30 years, distributing beer and other drinks to stores throughout the region, so is familiar with their operations.

Market Basket has been the region’s standout success for grocery stores in the past several years, expanding and adding new stores as many competitors shrank. Lambert said he had seen the difference in operations and pointed to Hudson, where a new Stop & Shop was built across the street from an existing Market Basket, only to shut within a few years.

“I’d go to the Stop & Shop twice a week, deliver 50 cases of beer. I’d go to the Market Basket twice a week with a whole truckload - 1,200, 1,400 cases each time,” he said.

Nearby, a long-time Market Basket shopper who asked only to be identified as “Joyce from Boston” said the news was upsetting.

“It seems like they’re always fighting,” she said of the Demoulas family. “It’s very off-putting.”

But, she added, so far at least the family battles haven’t raised the store’s prices or affected its service, which is why she shops there.

The battle between the two cousins and their allies dates back to the 1990s when the heirs of the two brothers who ran the operation, George and Telemachus Demoulas, began the first of many court fights over finances. The results was a court-ordered balance of the board of directors between the sons of each brother – Arthur T. Demoulas and Arthur S. Demoulas– that didn’t stop the legal battles.

Arthur S. and his supporters say Arthur T. ignores the board of directors and has made it possible for his family to be involved in some questionable deals.

Supporters of Arthur T. Demoulas argue that their opponents want to take money out of the company at the expense of employees and the stores’ operation. They say his work as company president is the main reason the company has expanded to 71 stores in the Northeast even as regional competitors in the grocery business have withered.

A board of directors election last year upset that balance, leading to more public disputes that at one point resulted in public signature-gathering sessions outside stores, with employees urging support for Arthur T.

In July of 2013, the board of directors approved a $300 million payout to shareholders, who are mostly Demoulas family members, and replaced two of three trustees of the company’s profit-sharing program. On Sept. 5, Arthur T. sued the company, asking that the payout be blocked, a request that was later denied by a Suffolk County, Mass., Superior Court judge.

As a sign of how frequently the family’s legal fights have been in Bay State courts, the judge referred to the two cousins by their first name and middle initial when writing the ruling.

we get a statement at the end of the year of how much Mr. Demoulas put into it - like a retirement plan

we don’t put anything in - this is what the cmopany contributes to each worker, once they’re eligible

manager

put 14% of the company’s earnings

in their retirement plan - when we’re 59 1./2 or older, and we retire

try to go to 401K

march

$15,000

David Brooks can be reached at 594-6531 or dbrooks@nashuatelegraph.com. Also, follow Brooks on Twitter (@granitegeek)

tiffany binna?

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