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Wednesday, June 25, 2014

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

Market Basket employees and customers remained uncertain about what happens next Tuesday after news that the company’s well-liked president, Arthur T. Demoulas, had been fired in the latest saga of a popular grocery chain’s family feud.

For employees, a major concern is the generous profit-sharing retirement plan. It’s 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 employees and customers remained uncertain about what happens next Tuesday after news that the company’s well-liked president, Arthur T. Demoulas, had been fired in the latest saga of a popular grocery chain’s family feud.

For employees, a major concern is the generous profit-sharing retirement plan. It’s 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 and has been in effect 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 a 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.

Protests were reported at a few stores in Massachusetts and Rhode Island. More than 70 stores operate under the Market Basket name in the Northeast.

At the big, relatively new Amherst Street store in Nashua on Tuesday morning, city resident Leo Lambert 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 he’s 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.

At the Hudson Market Basket on Lowell Road, Ray and Irene Tremblay, of Tyngsborough, Mass., pushed an empty shopping cart across the parking lot Tuesday morning, ready to do their weekly shopping.

“I’m very sad about it. I think the guy was doing a great job,” said Ray, who has been shopping at Market Basket stores for many years, having grown up in just over the border near Lowell, Mass.

The couple have family members who work for the company and feel bad for the employees.

“They’re all worried about it,” Ray said. “We’ll see what happens on their end.”

“Sometimes, the family just does not mix,” he said, along with, “This guy was really people-oriented.”

Also unloading his recent purchases in the parking lot was Mike Breen, of Nashua, who hasn’t seen any changes yet.

“It’s still the cheapest in the area,” he said.

He’s been shopping at a Market Basket since it opened in Nashua and hopes the company keeps its prices down.

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 result was a court-ordered balance of the board of directors between the sons of each brother – Arthur T. Demoulas and Arthur S. Demoulas – that still 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 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.

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