Judge backs Market Basket board
- A judge upheld Market Basket's board decision to suspend and later fire CEO Arthur T. Demoulas. - The court found directors acted in good faith despite noting Demoulas was “a good operator”. - Courts will sustain contested executive removals when boards can show documented process and proper authority. (wcvb.com)
A Delaware judge ruled on April 20 that Market Basket’s board lawfully suspended and then fired Arthur T. Demoulas as chief executive. (wpri.com) Vice Chancellor J. Travis Laster said in a 125-page opinion that Demoulas failed to prove most of the directors acted in bad faith, and that the business judgment rule protected the board’s decisions. (finance.yahoo.com) Laster wrote that Demoulas “proved to be an excellent operator, but an imperious leader,” and said the board did not remove him because of weak business results. (boston.com) The ruling lands in a grocery chain that has been run for years through a family ownership structure and repeated fights over control. Market Basket operates about 90 stores across Massachusetts, New Hampshire, Maine and Rhode Island. (newscentermaine.com) The case turned on who controlled the board and whether the directors followed corporate rules when they moved against the chief executive. Laster wrote that Arthur T. Demoulas’s three sisters gradually replaced his longtime allies with outside directors over roughly five years. (wpri.com) By the time of the showdown, those three outside directors made up a majority of the five-member board. The judge said they were independent, not simply agents of the sisters, and had authority to act. (wpri.com) Demoulas was first suspended in 2024, months before the board voted unanimously to remove him as president and chief executive after failed mediation in Delaware. He then sued for reinstatement. (cbsnews.com) Board members argued that Demoulas resisted oversight, shut relatives out of decision-making and considered leading a work stoppage if directors tried to curb his power. Laster cited his “domineering style” in siding with the board. (wcvb.com) Demoulas remained popular with many employees and shoppers because he was closely identified with the chain’s low-price model and a 2014 worker uprising that helped return him to power. That history helped turn an internal board dispute into a public fight over who speaks for Market Basket. (masslive.com) The court’s decision does not settle the family feud, but it does settle this question: the board had the power to remove him, and the judge found it used that power lawfully. (wpri.com)
